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My First MillionHow To Come Up With Billion Dollar Business Ideas | Hubspot Co-Founder Dharmesh Shah
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CHAPTERS
- 0:00 – 4:30
Why Renting Beats Owning a Home
The hosts and Dharmesh Shah talk about why they prefer renting. They cite avoiding maintenance headaches and high property taxes, plus the catch that family wishes and rental-free neighborhoods can force an eventual purchase.
- •Dharmesh says he is a big believer in rentals and would rent if it were up to him
- •Shaan enjoys handing broken things to someone else and notes how hard San Francisco property taxes are to beat
- •Dharmesh compares renting to living closer to The Matrix, without physical worries
- •Dharmesh's wife loves gardening and having a yard, which is hard in a rental
- •A friend told Shaan that renting is amazing until your wife wants a specific house in a neighborhood with no rentals
- 4:30 – 7:09
Does a Bad Economy Matter for Startups?
Shaan raises Paul Graham's 2008 post arguing the economy hardly matters to a founder. Dharmesh leans toward a downturn being net positive, since talent and marketing channels become cheaper.
- •Graham argues the economy doesn't matter much either way for a founder starting a startup
- •Shaan likens a startup to an ant that just needs to build a product and get customers
- •Dharmesh says layoffs free up talent that wasn't previously on the market
- •He calls venture capital a machine turning LP money into Google AdWords revenue, so less money flowing in lowers costs
- •He concludes a down economy is a relatively good time to start
- 7:09 – 15:31
Hiring Without Big Salaries and Early HubSpot Pay
The conversation turns to how a startup competes with huge tech salaries. Dharmesh describes the two kinds of arbitrage open to a founder, Shaan shares a recent hire and the Ben Graham story, and Dharmesh recounts HubSpot's early $5,000-a-month pay.
- •Dharmesh says founders must either offer superstar talent something they can't get elsewhere or spot diamonds in the rough
- •Shaan hired a young person who emailed 'I have made an irreversible decision' and took a pay cut
- •Dharmesh says salary is just one vector of value alongside learning, network and emotional value
- •He and Brian paid themselves and early hires $5,000 a month, and most early hires came from MIT Sloan
- •The risk felt low because people could pick up where they left off if it failed
- 15:31 – 23:15
HubSpot's Hiring Philosophy and Weirdos
Dharmesh explains HubSpot's early hiring approach: smart people who get things done, and no 'press release hires'. Sam and Dharmesh also trade ideas about hiring weirdos, remarkable people and 'degenerates' with deep obsessions.
- •HubSpot hired smart people with a predilection to action, and avoided press release hires
- •Sam looks for diamonds in the rough and, following Paul Graham, for 'animals' and weird people with strong opinions
- •Remarkability is one of HubSpot's five core values
- •Sam says the Bebo team hired 'degenerates' who had been obsessed with non-obvious competitive pursuits
- •Dharmesh calls this borderline pathological obsession, a trait that works well in startups
- 23:15 – 26:35
Creators, Completers and Collaborators
Dharmesh shares a framework of three types of people: creatives, completers and collaborators. He explains how he has structured his role around creativity and which non-delegatable tasks remain.
- •Creatives start things, completers finish them, and collaborators bridge gaps between people
- •People usually score high on one dimension, moderate on another and low on the third
- •Dharmesh places himself on the creative side and says he is terrible at execution
- •He has no direct reports and only attends meetings that involve creativity
- •Earnings calls and the Inbound keynote are non-delegatable for a founder
- 26:35 – 33:06
Angel Investing and the $10,000-an-Hour Rule
Sam recounts how quickly Dharmesh agrees to invest after an introduction. Dharmesh explains that he angel invests for vicarious enjoyment and bragging rights, and why he values his time at $10,000 an hour and skips due diligence.
- •Dharmesh has made a little over 100 investments, mostly without talking to the founders, usually deciding within 24 hours
- •His two reasons are living vicariously through entrepreneurs and bragging rights, not returns
- •He calls himself a warm-hearted, red-blooded capitalist
- •He uses $10,000 an hour as his time value and won't chase small refunds
- •Five hours of due diligence on a $100,000 check could effectively halve his investment, so he skips it
- 33:06 – 43:49
Building WordPlay: A Wordle Alternative
Dharmesh explains why he built WordPlay in a weekend: Wordle limitations, a desire to learn new tools, and teaching his 11-year-old son about programming. He covers its growth, the viral challenge feature, and the roughly $90,000 a month AdSense potential he tested.
- •Three motives: Wordle going to The New York Times, learning Vercel, Next.js and TypeScript, and showing his son what Python can do
- •Unlimited play and challenging friends via a link drove the viral loop
- •Around 45 million games and 9.5 million people so far, with 2,000 to 3,000 players at any time
- •AdSense could have earned about $90,000 a month, but he turned ads off because that wasn't the point
- •Average time spent grew from four minutes to 14 minutes
- 43:49 – 51:20
Feature Brainstorm for WordPlay
Shaan offers feature ideas for WordPlay, drawing on chess.com and other games. Dharmesh responds with what he has already built, including a crypto wallet idea.
- •Dharmesh sees chess.com as a comp, with ratings, leaderboards, challenges and social connections
- •Shaan describes three leaderboard models: rank tiers, proximity-based rankings and seeing celebrity players
- •Shaan suggests Candy Crush-style difficulty warnings for each daily puzzle
- •Sam proposes combining tiers with harder words as you rank up
- •Shaan suggests a crypto prize pot; Dharmesh says he has added wallet connections, intending to pipe ad revenue into the pot
- 51:20 – 57:57
Buying HubSpot Stock and Staying Calm About Losses
Sam asks about Dharmesh's multimillion-dollar purchase of HubSpot shares. Dharmesh says he thought the company was undervalued, and explains why stock drops don't affect his psychology and how he views market price versus value.
- •Dharmesh bought because he thought HubSpot was undervalued given its long-term potential
- •He bought on the first day he was eligible, with regulations limiting what insiders can do
- •Paper losses in the hundreds of millions don't change his daily life
- •As the market dipped he increased his average check size, thinking valuations are adjusting
- •He says market price oscillates around value, which comes from revenue, products and customers
- 57:57 – 1:00:38
Navigating Downturns at HubSpot
Asked whether he worries about the economy and its effect on HubSpot's customers, Dharmesh describes modeling the impact and playing both defense and offense. He gives examples of actions taken in earlier crises.
- •HubSpot models the impact of a downturn on its business
- •The defensive side is keeping enough cash to weather the storm
- •The offensive side is finding ways to capitalize on the crisis
- •During the pandemic HubSpot fronted cash to partners for revenue it knew was coming
- •HubSpot is somewhat counter-cyclical as buyers become more value conscious
- 1:00:38 – 1:05:54
Big Visions and the Next Pixar
Shaan asks what Dharmesh envisioned for HubSpot's size. Dharmesh recounts the original pitch based on comparables and argues that successful ideas are usually derivatives, which leads into Shaan's tweet about building the next Pixar.
- •HubSpot used comparable software companies in its pitch and said no one had built a 10-plus billion dollar marketing software company
- •Dharmesh says marketing was increasingly becoming something software solves
- •Almost everything is derivative depending on your level of abstraction
- •He points to Facebook, Twitter, Instagram and TikTok as variations on a theme
- •Shaan describes how seeing Toy Story with his nieces sparked his Pixar idea, and Dharmesh offers to invest
- 1:05:54 – 1:14:29
The Trillion-Dollar Venn Diagram and Courage
Dharmesh lays out his Venn diagram of skills: combine rare skills that reinforce each other. Shaan adds that courage to act is an underrated third circle, illustrated by a Tim Ferriss story.
- •Intersecting skills like copywriting and crypto makes you far rarer than either alone
- •Value depends on how rare the intersection is and how well the skills reinforce each other
- •Dharmesh suggests acquiring skills that are both rare and reinforce existing strengths
- •Reactions to the Pixar tweet split between excitement and doubt
- •In Tim Ferriss's story, nobody in the first class tried the challenge because it seemed too hard
- •Shaan says courage to do the thing is the most underrated ingredient
- 1:14:29 – 1:17:48
Skills vs. Talent and Functional Decomposition
Dharmesh distinguishes skill from talent and argues most things are learnable. He applies functional decomposition from software engineering to breaking down hard goals such as public speaking.
- •Skill is learnable; talent is the rate at which you acquire a skill
- •Dharmesh says most things are skills, not talent
- •Functional decomposition breaks a problem into simple functions that are trivial at the atomic level
- •He broke public speaking into overcoming anxiety, storytelling, writing, slide design and humor
- •His conclusion is that if he can do it, anyone can
- 1:17:48 – 1:25:00
Iteration, Feedback Loops and the Marshmallow Challenge
Sam asks how much of HubSpot's success was persistence. Dharmesh answers with dreaming big and iterating small, supported by the photography class example, and Shaan describes the Marshmallow Challenge to show why shipping early beats planning.
- •Dharmesh says outcomes come from dreaming big and iterating small with tight feedback loops
- •In the photography class example, the group submitting a photo daily beat the group aiming for one best photo
- •Iteration only helps if there is meaningful feedback
- •In the Marshmallow Challenge, kids beat adults by testing the marshmallow early
- •Shaan uses the challenge to teach perfectionist teams to ship early and remove the suck over time
- 1:25:00 – 1:28:24
Wrapping Up: HubSpot Acquisition and Saying Yes Today
The hosts and Dharmesh reflect on The Hustle's sale to HubSpot and the creative freedom since. Dharmesh says value includes more than price, and they close by discussing how he got himself onto the show.
- •Sam says that as a HubSpot acquisition the creative freedom has been great, with no complaints about the podcast so far
- •Dharmesh says the deal was discussed at board level and he thinks it was fair
- •Sam thinks the podcast alone may soon be worth more than the deal
- •Dharmesh says an acquisition price is just one dimension of value, alongside happiness and the people you work with
- •Shaan notes 'sometime' tends to mean never, and praises Dharmesh for offering to record the same day
