No Priors Ep. 36 | With Hubspot's Co-Founder Brian Halligan

1. 0:00 – 5:47

   HubSpot's Journey from Unlikely Startup to Industry Incumbent

   1. SGSarah Guo0:05

      Customer relationships are the lifeblood of every business, and CRM, a key system of record for every business is facing a sea change. Riding those waves is Hubspot, one of my hero companies. A unlikely SMB marketing software startup founded in 2006 in Boston has over almost two decades become the primary contender to Salesforce through brilliant strategy and consistent execution and is as much a community and a movement as a business. They've recently made big bets on AI. Today, I'm sitting down with Brian Halligan, founder, long-time CEO, and now executive chairman of Hubspot to discuss learnings from the founder journey, staying innovative as an incumbent, the impact of AI on workflow software, and his new mission in climate tech with Propeller. Brian, thanks for doing this. Welcome to No Priors.

   2. BHBrian Halligan0:48

      Thanks. I have two questions for you.

   3. SGSarah Guo0:50

      Shoot.

   4. BHBrian Halligan0:51

      Why were we an unlikely success?

   5. SGSarah Guo0:53

      Oh, uh, I hope that is not offensive.

   6. BHBrian Halligan0:56

      (laughs)

   7. SGSarah Guo0:56

      I guess-

   8. BHBrian Halligan0:56

      'Cause of Boston?

   9. SGSarah Guo0:57

      Uh, I think 'cause of Boston, because in 2006 time period, the companies ... You must have heard this from VCs. The markets that people thought were go- worth going after were, like, high-end enterprise in a small number of categories.

   10. BHBrian Halligan1:12

       Yeah. Things like that, yeah.

   11. SGSarah Guo1:13

       Right? And so the, um, the idea that you'd sell software for SMBs to manage an online presence and do social, like that, that felt unclear that you'd become a, you know, $25 billion plus business.

   12. BHBrian Halligan1:28

       Interesting. It was clear to us. (laughs)

   13. SGSarah Guo1:31

       That's what makes you the founder.

   14. BHBrian Halligan1:32

       Okay, I have another question for you. You, you referred to us as a hero company. By the way, I'm honored. Like, what's number one on your hero list?

   15. SGSarah Guo1:39

       Oh, man. Um, I feel like I'm gonna offend friends if I choose one. Uh, I don't know.

   16. BHBrian Halligan1:44

       (laughs) What's your criteria?

   17. SGSarah Guo1:46

       If I think the product has changed the world, if I think, like, the, the people just made really interesting decisions.

   18. BHBrian Halligan1:52

       Okay.

   19. SGSarah Guo1:53

       I'd probably say, like ... But this is just 'cause it's the one I'm closest to, Figma.

   20. BHBrian Halligan1:57

       Yep.

   21. SGSarah Guo1:57

       I have a lot of admiration for Dylan and Evan, and, like, I think they changed how a lot of people worked, and it was also, like, not obvious at the beginning.

   22. BHBrian Halligan2:04

       No, no. I am with you on that.

   23. SGSarah Guo2:06

       Yeah. But yeah, good questions. I'm supposed to be asking the questions.

   24. BHBrian Halligan2:09

       (laughs)

   25. SGSarah Guo2:09

       It's supposed to be easy for me, Brian.

   26. BHBrian Halligan2:12

       (laughs) All right, fire away.

   27. SGSarah Guo2:13

       Okay, so, uh, Brian, you, you actually started, I think, as a sales leader for PTC, like, famous enterprise sales organization in Asia. How did you go from that to the founder of Hubspot?

   28. BHBrian Halligan2:27

       I actually started as PTC's first BDR in its headquarters in, uh, Boston and moved in sales and channels, and then they s- they were ... The company was going incredibly well, and they moved me over to Asia to start it, so I moved to Japan, and I lived in Hong Kong for a while, and, um, yeah, I worked there for 10 years. It was a really good run. Um, but I just think of my ... I have three chapters in my story. Chapter one was PTC, enterprise sales, eat your young, really a hard-charging culture, sales-driven culture, um, terrific company in some ways, uh, unusual culture, tough place to work. I left there, and I had a second chapter that couldn't be more different. Started the sales organization for a company no one's heard of anymore called Groove Networks, and Groove's famous for its founder, a guy named Ray Ozzie, who's the father of Lotus Notes, and it did okay. Like, we got to 20 million in revenue when Microsoft bought it, and it's, like, a little part of SharePoint now, but it really didn't tip, and it ... And what was, was interesting about that company and learnings for me was Ray was a product person, and the company was very much a product company, and he referred to himself as a social anthropologist, which I thought was really interesting. He'd sort of watched where technology was going, and he thought about how human behavior would change, and then he tried to create something kind of in the future to, to match it, and he did that with L- Notes, sort of hit the nail on the head. He did it with Groove. It was a little early. Groove was, like, a little bit of Dropbox, a little bit of Slack, a little bit of Notion. It was peer, on a peer-to-peer platform. It was just a little early. Microsoft bought it, but I learned a lot, how to envision and build compelling products. He was very early on product-led growth, freemium model, and, uh, I don't know anybody else in B2B who was really doing that at the time, and so I get to ... We didn't figure it out, by the way, but we got to learn a lot along there, and then I went back to business school. In those three sort of, you know, this sort of right-wingish PTC, this sort of left-wingish Groove, and this sort of back-to-basics MIT came into my head and really influenced me personally, and I think still influence Hubspot in a lot of ways.

   29. SGSarah Guo4:34

       When I say unlikely-

   30. BHBrian Halligan4:35

       (laughs)
2. 5:47 – 17:59

   The End of Cold Calling (and the Birth of Inbound)

   1. BHBrian Halligan5:47

      and it just didn't seem like it worked at all. Like, people were immune to the marketing at that point. They had caller ID. All of a sudden, they had ad blocker. They had DBRs. Like, no one ... Every ... Humans got really good at that point at blocking traditional marketing out.And so I was kind of wallowing in my, my playbook doesn't work. And then Dharmesh blogged his way through business school. And he was an early tech blogger. He had a blog called OnStartups.com. It's a pity he didn't keep it going. But he, any time he heard an interesting lecture, he would write about it. And I was looking at his Google Analytics reports and comparing it to all of mine. Wealthy venture-backed startups with, like, money and teams and expertise. He's crushing them. Like, by two orders of magnitude more interest in this crappy little blog, and I started describing the world as, well, my folks are doing outbound marketing, and his, he's doing inbound marketing, and you've got to match the way you market with the way humans actually shop and buy, and humans started to use Google, they stopped subscribing to magazines, they started subscribing to blogs, they started using the social media stuff. And so we sort of captured that shift and then said, well, let's build a platform to help marketers move from the old school outbound way to the new school inbound way. That was the basic foundational idea, and that was kind of chapter one. We've had a lot of chapters.

   2. SGSarah Guo7:04

      Yeah. Well, one thing that stuck through many chapters is been the Inbound Conference, a conference that over 100,000 people go to. You can give me the stats. Like people like Barack Obama speak at it. It's sort of a pilgrimage-

   3. BHBrian Halligan7:18

      Yeah.

   4. SGSarah Guo7:18

      ... for people who work in marketing. Like, uh, how did this happen? Why did you do it?

   5. BHBrian Halligan7:22

      So in the early days of HubSpot, the way we described ourselves to venture capitalists like yourself was, at the time, Salesforce was just at SFA. Salesforce.com is the sales as HubSpot is to marketing. And the good thing about that is it stuck on VCs' heads. It's like, "Oh, that sounds (laughs) like it could be a good thing." Like, we would go to Dreamforce every year, and by the way, we'd sit at Dreamforce and we'd sit there being like, "God, I hope they don't announce a marketinG (laughs) product this year." Literally the two of us would sit there like, "Fuck, please don't announce a marketing product." Anyway, we would go and we said, "That seems like a decent idea, but it's more user conference. Let's create, like, a community thing that people would come even if they're not HubSpot customers." So we said, "Let's create this Inbound thing." And we just gave it a go. We, and we had a room of 400 people in the Marriott in Kendall Square. We invited Seth Godin and David Meerman Scott and Brian Solis, as these folks are still floating around, where, who were early sort of acolytes. They may or may not call it Inbound, but basically the same ideas were coming out of their mouths. And we sold out in like five minutes, and it was really good. And so then we sort of got on the treadmill and just kind of kept doing it every year. I really enjoy it. Like, we had... My, I'll tell you, we had some amazing speakers like Reese Witherspoon and Guy Raz and people like that. But my favorite speaker, I got to interview one of my heroes, Andrew Huberman, who's, he's on my Mount Rushmore these days. And then we have, you know, 12,000 people live, couple 100,000 people, um, listen. And over time, what it's kind of turned into, like, it's like, it reminds me of a Grateful Dead kind of thing, like the parking lot outside of the Grateful Dead, uh, Grateful Dead concert. It's a community, and it's very much a community, and the thing that peoples value most aren't those big sessions. It's the smaller sessions on, like, the hell are we, what the hell is AI and how do we get our arms around this marketer, stuff like that, and people really connect.

   6. SGSarah Guo9:10

      Yeah. That's, uh, that's very cool. I know you wrote a whole book about this, but I think, uh, for anybody who is not a Dead head, right, like, uh, the, the Grateful Dead are as much about, like, community, human connection, collective experience as, as music, so.

   7. BHBrian Halligan9:25

      Few people know this, but the Grateful Dead were founded in Palo Alto in a little music shop in Palo Alto, did their first studio recording at Stanford University, so it's actually a child of Silicon Valley.

   8. SGSarah Guo9:37

      Oh. Interesting. Yeah.

   9. BHBrian Halligan9:39

      It wasn't San Francisco. Later, they later went to San Francisco and then they, they ended up in Marin, but they're, yeah, they're a child of Palo Alto.

   10. SGSarah Guo9:45

       Yeah. Doesn't strike me as the most counterculture starting point, but we'll, we'll take it.

   11. BHBrian Halligan9:49

       Now one of the things that's interesting that, that, about Inbound, you thought about that word, there was a huge debate in the early days of HubSpot of, what is this thing? And, and half the people were like, "You know, it's internet marketing software," wh- which it was. (laughs) And a couple of us were like, "It's inbound marketing software." Everyone was like, "What the hell is inbound marketing?" One of the early battles and decisions we made is, let's try to create a category around this idea of inbound versus outbound, and that did work. And we still have the Inbound Conference. I would just say we tried to do inbound sales, failed. Uh, very difficult to create a category it turns out. I tried to create this thing called instead of the funnel, it's the flywheel. I don't know why it worked, but some of the things we did that seemed to resonate was, there was an enemy, outbound, and I think it always helps to have an enemy. It was a little catchy. It seemed to stick in people's minds. A whole bunch of other people like Seth Godin and David Meerman Scott, Brian Solis were kind of talking about similar things and we just kind of stuck a word on it, and then we just worked it. We wrote, each wrote two blog articles a week. Someone invited us to like a flea market, we would go and speak. We, uh, wrote a book which is a crap ton of work, uh, Nights and Weekends. So anyway, we did that, and we created a category. It's, and for those of you listeners going through that battle, I would say it, it worked, and it's been one of our keys to success, but it was a ton of work and it's very hard to pull that off.

   12. SGSarah Guo11:23

       Were there a few things that made sort of the sales terminology not as successful? Because, like what we should talk about in a second, the sales product for HubSpot was incredibly successful.

   13. BHBrian Halligan11:32

       Sales product's on fire. That's our kind of second act. We tried to call it inbound sales, but sales leaders were like, "No, no, no, no, no, no, no. We do outbound sale. You don't get it. We do outbound sales. That's like what we do." And marketers, they're like, "No, no, no, no, no. We do outbound marketing." And the thing is marketer, the marketers' bosses were like, "I, I searched on our company in Google and I couldn't find us, you know? And I went on this, there's this thing called Facebook, I got an account there." They were getting asked about it, but I don't think the CEO was asking-... the head of sales about, "Why aren't we getting more inbound leads?" And then they kind of put that on marketing. Anyway, it was sort of... It was pushed back on by the salespeople. We really had to support outbound selling, um, to build a viable and, and big business on that side.

   14. SGSarah Guo12:22

       We have some friends in common, Elias and David, who were acquired into HubSpot via their own startup at the time for Performable. I don't know if you guys did any other acquisitions that were important. This one felt important. What, what did you learn about acquisitions from this?

   15. BHBrian Halligan12:38

       That one was important. And I could kind of give you the background on that. When, when Dharmesh and I started it, we were really about the top of the funnel. How do we help people turn total strangers into visitors to their website and then turn them into leads? But we hadn't really thought of like a database, segmenting the database, drip campaigns by email. Um, honestly, we weren't that passionate about it at the time. We didn't have deep d- domain (laughs) expertise about it. And so little known fact, at the time, we actually closed a round with Sequoia and some of the proceeds we were going to use, we were going to acquire a company in what we call MOFU, middle of the funnel, the database size, segmentation, drip marketing, all that stuff. Uh, we made a bid for Pardot, couldn't get to a number. I went out to Marketo's CEO and proposed MarSpot, to merge the companies, merger be full size from the CEO gig. They weren't interested at the time.

   16. SGSarah Guo13:29

       Too bad.

   17. BHBrian Halligan13:30

       I know. I think that would have been interesting. And then, you know, Dave and Elias were well-known quantities. We knew them in Boston, and they were passionate about this middle of the funnel stuff. It was an acq hire.

   18. SGSarah Guo13:41

       (laughs)

   19. BHBrian Halligan13:41

       We acquired th- them and their team, and it worked. They, we, they sort of built that middle of the funnel. I would say we haven't done m- many since at all. None of that scale. It's hard to get the cultures to match, and I think if I had it to do over with David and Elias, I think I could have done a much better job of sort of assimilating them and partnering with them. I was pretty junior at the time, still am kind of, but we've only done very small acquisitions like... I'm a big believer in the Peter Thiel-ism of you've got to be right about something that everyone else thinks you're wrong about, and you got to be right about it for a long time. And you've got to zig when everybody else says you're going to zag, and we've had a few of those in our, in our history. Okay, the first one was SMB, um, and I kind of think of us as the M in SMB. We're sort of the startup scale up. We... That's who we sell to. Uh, we don't sell to the big slow-moving enterprises. Everybody thought it was a bad idea. Every venture capitalist we spoke to, we got lots of no's from venture capitalists, and the reason was they didn't like that idea. And the question they would all ask is, "Well, who else had done it?" And at the time, it was Intuit, and they'd say, "Who else?" And really, (laughs) there was no one else. Uh, and they're like, "Why?" And we explain, "Well, historically, you couldn't get your cost" to acquire a customer down because you needed humans to do it, and there's new ways to acquire customers using, you know, inbound marketing. And then you're going to lose customers, so you need to up sell your existing ones. You got to get your total lifetime value up and your revenue retention rates over 100. If you get that math to work, you can build a scalable business. But the... (laughs) People were very skeptical. Our board members were very skeptical. Even when we went public, people were very skeptical about it. I still get asked about it all the time. Um, but we zigged when everyone else zagged, and I... You know, we diluted a lot more than (laughs) we would have if we just went to the enterprise like Marketo did. Everyone wanted us to be Marketo, just be like Marketo and Eloqua. We were like, "Well there's... They're already there. Why do we want to be like them? The world doesn't need a third one of these things." Um, the second kind of zig when everyone else is zagging was... I described earlier how Dharmesh and I would sit in the audience at, at Dreamforce hoping that salesforce.com didn't wake, want to wake up one day and say, "We're going to be the salesforce.com of marketing." And of course they did one day, um, and we saw that coming. So they bought four marketing companies in one year, and we went from being their best p- uh, uh, partner to kind of an enemy, and we pivoted. You know, we had been talking about pivoting to CRM, uh, but we pivoted and we said, "Let's, let's go to CRM. Let's come underneath them. Let's zig when everyone else is zagging. Let's not make it like theirs. Let's make it incredibly easy to use, and let's make it freemium." And everybody thought it was a terrible idea. Investors, our board, most of our employees. (laughs) But we saw it. We use Salesforce, it's hard, it's expensive, and we were like, "Let's make an easy, inexpensive one." And that was their second product, sales product. That was almost ten years ago. And now we got a... You... We have a marketing hub, sales hub, service hub, ops hub, CMS hub, commerce hub. We have a whole suite now. But we drew on a whiteboard at an off-site that we were going to transform the company from a marketing app to a CRM platform, and we drew on a whiteboard we were going to go from a pure inside sales organization to we called it freemium then, people called product-led growth. And honestly, we're still on those journeys nine years later. We're filling out that platform and we're getting better and better at that PLG motion. But I'm a big fan of zigging when everyone else is zagging.

   20. SGSarah Guo17:10

       So I have to, uh, stop you here because it feels, um, uh, so... Like, it is not under... I mean, it is under your control, but it's certainly not deterministic in terms of launching a freemium product, especially as a company that didn't start exactly that way.

   21. BHBrian Halligan17:28

       Yeah.

   22. SGSarah Guo17:29

       How did you have the confidence to say like, "We can get something organically adopted and we're going to stick with it"? And can you, can you talk about that? Because, you know, when, when the sales product, uh, for HubSpot did work, it, it really worked. Like, it grew faster and was more profitable than the original marketing business. It made you guys really important and strategic. The story played out as your strategic off-site described.

   23. BHBrian Halligan17:51

       Yeah.

   24. SGSarah Guo17:52

       But I think most people, most product teams, most companies would say like-You can't just make a freemium product, right? Or if

3. 17:59 – 23:47

   Building a Multi-Product Company

   1. SGSarah Guo17:59

      you know you can, you should call me. (laughs)

   2. BHBrian Halligan18:01

      Right. I think what's kind of interesting about that pivot, uh, we... it is that we were eight years in when we pivoted. We wanted to build a West Coast company on the East Coast. We wanted to build a multi-billion dollar company. We were... The one thing Dharmesh and I had, had in common, we had been somewhat successful earlier and we wanted to swing for the fences, so we were willing... kind of risk-seeking a little bit. And a lot of people ask me, like, "How do you become a multi-product company? How do you go from app to suite? How do you go from suite to platform?" And the, the answer is, with great difficulty. So back then, we wanted to do both things. We wanted to build a sales application and we wanted to build a freemium motion, so it's kind of two changes at a time, which may- maybe s- not... wasn't a great idea. The way we did it was, like a lot of the things at HubSpot, we copied Apple. And there's so many stories about how Steve Jobs built the Mac. I mean, they had a separate building and they had separate log-ins for that side of the building, and a separate stack, and everything was different over there. We said, "We're going to have to do that because it's such a big change." So we had a whole separate side of the building, and then we took three leaders inside of HubSpot, Bryan Balfour, who people probably know, and Christopher O'Donnell, who people may or may not know, he ran products for us for a long time, and a guy named Mark Roberge, who a lot of people know. He's kind of the sales professor at HBS now. And I jammed them together and I said, "Let's go... Let's build this thing, you know? I'll, I'll, I'll help. I'll do whatever I can to help it, but let's keep... I'll keep you isolated from all the BS." The truth is, those three couldn't c- come to grips on what the vision of the thing was. They disagreed on what the vision was. And one of my lessons learned there is people need to really want to come together. You can't kind of mush people together. I think they're immensely talented, but that... there wasn't the alchemy with the three of them. So anyway, we found other gigs and some left, and what ended up happening is, I became the co-founder with Christopher O'Donnell, and we made a couple of decisions on what the strategy would be, and we just kind of ran fast. And it took us a good two and a half years to get a half-decent sales product out there and a half-decent PLG motion, and the... And we kept it separate, so we had a separate sales team selling it. It was PLG motion, and the marketing and sales people were like, "You know, we really just want to sell that thing." (laughs) We're like, "No, you can't sell it. You can't sell it." So we had a separate instance of HubSpot to manage all the leads and everything, and then one day we're like, "Okay, we're ready. Let's merge them back together." And we did a counterintuitive thing. We took the sales business and we acquired the marketing business. So we took that freemium PLG motion and we applied it to marketing. We took a bunch of the leadership and applied it over to the marketing side. And so I say with great difficulty, like individually for me, dealing with the fallout of those three, trying to figure the strategy out, having patience through it, like, I've made a lot of mistakes and I made a lot of mistakes in there, but I consider that maybe m- m- if not... Maybe my best chapter inside HubSpot is pulling that off.

   3. SGSarah Guo20:57

      Yeah, it's extraordinary. You, you just said you wanted to build a multi-billion dollar company, like a West Coast company on the East Coast. So, uh, I also happen to know Christopher O'Donnell and he said the one question to ask you was how HubSpot succeeded more after the IPO when so many Boston-based companies have struggled.

   4. BHBrian Halligan21:15

      Yeah. See, Tom h- is a very smart man. Okay, a couple of thoughts on that. I listened to a podcast with Marc Andreessen the other day. He's obviously a big Silicon Valley booster, and he talked about... He's not crazy about investing in companies outside of Sil- Silicon Valley, because the companies tend to optimize, uh, for, like, a local maximum. Like, you want to be the biggest tech company in Boston or you want to be the biggest tech company in Austin, whereas companies in Silicon Valley want to be the biggest tech company, you know, want to beat Apple, want to beat Google. And I think he's right. I, I, e- and I've never heard anyone (laughs) say that before. When we built HubSpot, we always said we want to build a West Coast company on the East Coast, so we'd like... Once a year, we would drag the entire management team out to the West Coast to visit a whole bunch of people they respected that would push our thinking. We were really built like a West Coast company, and the East Coast companies were just thought of a little bit differently. I think one thing we did around the IPO is we always said the IPO's the starting line, not the finish line. Starting line, not the finish line. Starting line, not the finish line. (laughs) We just said that a million times, and I meant it.

   5. SGSarah Guo22:16

      Do you know how much this worked, Brian? I think it was my very first conversation. I have no idea how this came up, but my very first conversation with Chris, he brought this up and he said, "Starting line, not the finish line." (laughs) And I was like-

   6. BHBrian Halligan22:27

      How interesting.

   7. SGSarah Guo22:28

      It has permeated, uh, you know, at least your, your leadership incredibly deeply.

   8. BHBrian Halligan22:33

      Interesting. Christopher and I work really close- closely together, um, so, uh, I wouldn't be... I'm not shocked. The other thing we did is when you go public, companies change a lot, and the biggest change that happens to startups when they go public is you need to name, like, five officers, and these are five people who have access to all of the information at any given time. In exchange for all those information rights, they're locked into trading windows that they can trade the stock in. And then you have to block lots of important information t- for the rest of the employees. We flipped that and we said every, every employee... B- b- uh, the terminology is a little different, but basically every employee at HubSpot, frontline support person, anyone, they're all officers, so they all have the same access to information. Everyone's locked into certain trading windows. So it didn't feel like a big change when we went public, and I think that helped a lot. The other thing was, it was quite clear that we were heading towards being a m- uh, a CRM platform. We had our second product in the market. On the IPO road show, it was super awkward because, you know, we had a whatever, $200 million marketing business and we had this, like, $1 million sales business-

   9. SGSarah Guo23:37

      (laughs)

   10. BHBrian Halligan23:38

       ... and it was, like, the last slide and everyone just was like, "Yeah, whatever. Why... Don't even bring that up." The bankers were like, "Don't even bring it up," because no-

   11. SGSarah Guo23:45

       (laughs)

   12. BHBrian Halligan23:45

       ... no one gives any credit for it.

4. 23:47 – 32:48

   How to Stay Innovative and Hungry after Going Public

   1. BHBrian Halligan23:47

      But it was a big initiative inside the company, so people could see it. I think that helped as well.

   2. SGSarah Guo23:51

      And people believed it, and they were... They were, like, working on that despite, you know?

   3. BHBrian Halligan23:55

      Yeah. I think everyone believed us in, uh, that, that both Dharmesh and I wanted to build something big and special. There's a line we always use that we want to build a company our grandkids would be proud of-And like my dad had a really interesting career. He worked for BBN, you know, uh, in his early career. He worked for GE when it was cool to work for GE. And I brag about him. And I want my son, Luke, to brag about my career and hopefully has kids someday and they brag about my career and be proud of it. And so that's sort of what we've, that's the mantra we use over and over again.

   4. SGSarah Guo24:25

      Uh, I want to ask you one or more, two, one or two more questions about, um, about leadership and then I want to talk a little bit about AI. So we're just walking through all of my favorite HubSpot people. So JD Sherman, um, your COO for a while, at certain points managed, you know, large parts, entire organization at HubSpot, um, and was there for a long time. In terms of all the founders that listen to the podcast, many at some point think about hiring a COO. How did you guys decide to, to do this? What advice would you have for, for people?

   5. BHBrian Halligan24:55

      We hired ... So after we closed our Sequoia round, we bought Performable and we stopped like tracking expenses. We just started spending like drunken soldiers. And we just got distracted. It was a really good round. We had Sequoia, Google and Salesforce in the round and we just kind of took our eye off the ball. We had never missed a, a quarter and we missed that quarter on the revenue side and missed the expense side by a country mile. We had a couple long time board members, Larry and Dave, Larry from General Catalyst and they were like, "You know what? Maybe you could use some help." (laughs) I was like, "What do you mean?" They're like, "Yeah. We think you should hire a COO." And I pushed back. I was like, "Nah, I got this. I got this." Like, not really. And so (laughs) they're like, "Go see if you can find one." And so I interviewed a bunch of people and I met JD. And JD was a long time IBM person, which is like oof. And, and then he was at Akamai for a long time as the C- CFO at Akamai.

   6. SGSarah Guo25:58

      Wait. Is it oof like PTC people or oof?

   7. BHBrian Halligan26:01

      I mean, IBM is this huge slow company. Like we, we were very fast. We were the antithesis of IBM. But he had spent a much time at Akamai, which is a scale up we admired in Boston. He was CFO and w- and he was trains on time type of person and he's, um, um, just a wonderful, funny, great culture add. And so we convinced him to join as COO. Certain times he mar- managed small parts of the organization, certain times he managed a lot of the organization. It was a really good call, um, and I thank my board members for that heads up. Uh, later on, my board also advised me to get a coach so I hired this guy who's like a psychology professor/coach from Columbia who was really useful in coaching me over time. And then more recently, I decided to step down. You know, we got to two billion in revenue. I really didn't think the road from two billion to 20 billion was my forte. I didn't know a lot about that. Um, maybe a little less passionate about that part of the journey and we had a wonderful woman, Yamini, that was running go to market and so she's the CEO now and I'm the chairman. So I think CEOs need to be open-minded about their strengths and their weaknesses and fill them in. I think a lot of CEOs probably need a COO and a lot of CEOs should probably not retire but move into the chairman role and let somebody else run the day-to-day of the company. And they might be surprised how much, how happy they are when they do that.

   8. SGSarah Guo27:25

      So as chairman now, you still know a lot about and are very engaged in HubSpot. HubSpot has committed to, I think, big investments in AI and in, in my discussions with your leadership team, like what are you guys doing here? Um, and when did, when did you start to think about it?

   9. BHBrian Halligan27:41

      We've had an AI team for a long, long time, but it's more an ML team. It's interesting. We had a call with Sam Altman two and a half years ago. I got connected with him and I'm like, "Would you mind if I just picked your brain on AI?" Because at the time there was like an arms race for AR- AI people that cost a million dollars to hire them out of MIT.

   10. SGSarah Guo27:59

       Now it costs two.

   11. BHBrian Halligan28:00

       Yeah. And this is before Sam Altman was Sam Altman, you know? Uh, he actually ... This is before he levitated and walked on water. And he said, "First of all, don't hire, don't go hire a bunch of PhDs. You'll never keep up with the arms race." He's like, "We're at OpenAI. We keep losing people to Google." The second thing he said is, "AI is progressing in a pretty linear way now and it's getting better, but it's getting better slowly." He said, "At some point in time in the future," and he said, "I'm not sure what that point in time is going to be, it's going to go asymptotic. It's really gonna get a lot better." And so he said, "Keep chugging away and wait till that happens." (laughs) Basically what we did. And man, was he right. The second we saw ChatGPT, we tried to invest in, in OpenAI because Dharmesh had got early looks at it and we tried to get in the round with Microsoft and had a bunch of discussions with them and they bought ... At the end of the day, they wouldn't let us in, which is kind of a bummer, but uh, yeah, we were on it pre- pretty early and as soon as we started seeing it and Dharmesh started playing with the early stuff, uh, we started pushing hard on the engineering product work that... You know, certain things that come along, blockchain came along and crypto comes along and mobile comes along that are interesting. This is a big shift that's incredibly relevant to CRM, incredibly relevant to the way humans will shop and buy and this wasn't something we could kind of half measure in. So we, we kind of pivoted right into it, right, right out of the gate when ChatGPT first came out.

   12. SGSarah Guo29:30

       You've been looking at how businesses engage with customers for, for 20 years.

   13. BHBrian Halligan29:33

       Yeah.

   14. SGSarah Guo29:33

       And you've been really, really right about some of the va- macro shifts. Like how, what do you think is gonna happen about how we engage or how, how customers buy?

   15. BHBrian Halligan29:42

       I think one of the obvious things is how much better these things are getting and how quickly they're getting better and everything you've got on your website and every social post you've ever put out there, it's consumed and understands it. And so I think of Google, someone goes to Google, they ask a question, it gives you a list of blue links. You click that blue link, it, that, that prospect lands on your website. Um, but you think of ChatGPT, yeah, they keep asking it questions about you. They don't necessarily have to go to your website. Um-And so I think that'll be a big shift in having lots of high quality content is gonna be important. But I think one of the things that's not gonna work is using AI to just create tons of content. I think Sam Altman and all the people building the, the other, uh, models are gonna look at similar signals to Google. They're gonna say, "How many links are there to this site? What's the power of the links?" Other signals of credibility. You've got to create really, really, really high quality content if you want to get found in there. The other thing I think people need to do is give folks a reason to come to your site. And I've been a big advocate of ungate everything. You know, you used to have all this white papers, all this crap behind, um, gates. And I'm like, put it in your blog, whatever. I actually think maybe gates can back a little bit because then what's the reason to go to your website unless there's some additional content you get beyond that login? Um, and I think PLG and all that still is very, very viable. But I do think the world for marketers and sellers is gonna change a lot.

   16. SGSarah Guo31:07

       Uh, how do you, um... H- how does AI change like what you build at HubSpot? How are customers using what you have already built?

   17. BHBrian Halligan31:15

       Yeah, we built a bunch of stuff, some's in beta, some's in V1. Um, and it's getting nice adoption. Like the really obvious thing we did is content assist. So you're writing a blog article and you want it to write it for you, you want an image, um, landing page, um, th- that's got really nice adoption. We built like a campaign builder, so I think of AI at large in workflow apps, it used to be like humans go and create all the workflows. And now AI can just look at what's going on and create a better workflow for you, so sort of campaign assistant has been super popular. We have a thing called ChatSpot, which is basically a layer on top of, uh, OpenAI. We use Cloud, we used, uh, Anthropics models, we use different models for this and then our API, so it kind of pulls all this information together. And we're seeing a lot of people, particularly casual users of HubSpot, not want to, you know, go through 10 clicks to, to build that donut-shaped report inside of HubSpot but just say, "Hey, give me the donut-shaped report about leads last month from geography." Just a whole new UI for this stuff I think is quite interesting. We're just starting to build agents, um, we definitely got bots so a lot of our customers are starting to use our bots on their website for support, for marketing. I think what'll be interesting for companies is support organizations in, in like BDR and STR organizations are getting, are going to get incredibly efficient as these bots get smarter. Uh, and they're just gonna be able to answer so many more questions 24 hours

5. 32:48 – 38:31

   AI Workflows in CRM and the Incumbent Data Advantage

   1. BHBrian Halligan32:48

      a day. They're not gonna be tired, they're not gonna be hungover, they're not gonna make mistakes. Uh, they're gonna make mistakes but, um, I think the world's gonna shift a lot in CRM for go-to-market organizations, mostly in positive ways.

   2. SGSarah Guo33:00

      Uh, I, I feel like I've also seen, uh, you know, a dozen companies in each of the domains that you mentioned. How do you think about, you know, now being... I'm sure you still feel like the rebel, but like being an incumbent versus what advantages startups have?

   3. BHBrian Halligan33:13

      In most disruptions I think the, the, the rebels have the advantage. I don't think that's the case here. Like we have so much data over so many years about so many customers and that's what makes this stuff really sing. And as a brand new startup in this space, just you gotta get data. It's hard to get data. And so I do think incumbents like HubSpot, like Salesforce have kind of an unfair advantage. I think the fact that we leaned into it and we moved fast helps and there, there's approximately 1,000 CRM companies out there. I wouldn't imagine they're all moved as fast as Salesforce and HubSpot did. But I do think incumbents in this very rare case do have kind of an advantage. Funny of me to refer to HubSpot as an incumbent company at this point. (laughs)

   4. SGSarah Guo33:59

      Yeah. You're 20 years in and 26, 7 billion of market cap, right?

   5. BHBrian Halligan34:03

      Yeah.

   6. SGSarah Guo34:04

      Okay. We had dinner at some point where you talked about the investment in culture at HubSpot and how you and Dharmesh thought about it. It shows up in the results, you're, you guys are repeat winners on Glassdoor in terms of both like CEO to work for and best place to work. How?

   7. BHBrian Halligan34:18

      Okay. The, the early days of HubSpot, um, we didn't want to talk about culture, HR, any of that stuff the first three years. Like culture was a four-letter word. No one should bring it up. You can't measure it, it's soft. And then I joined a CEO group about three years in and I largely joined that CEO group because one of the members, uh, was a guy named Colin Engel who is the CEO of iRobot that makes those Roomba vacuum cleaners. I would describe my relationship with Colin, uh, in two words. The first is man, the second is crush. A major man crush on him. (laughs) I showed up to the first meeting, there's nine CEOs around the table. And, uh, sat right next to Colin, uh, and I didn't know this but they picked a topic and they would just go very deep into one topic all day, and it's like CEO, uh, couch down. And the topic of the day was culture. And I was like, "Is that what this... This is such a waste of time." (laughs) Can't believe I'm spending all day talking about culture. And so I didn't say anything all morning and I'm sitting next to Colin at lunch asking him questions about product and innovation. And Colin said, uh, "You don't like this culture talk, do you?" I said, "No, I think it's a waste of time." He said, "Culture is how you scale your company. Culture is how people make decisions when you're not in the room." "Okay." Took note, just waited to the afternoon. And then that next day I saw Dharmesh in the office and he said, uh, "How's Colin? How was your meeting?" I said, "Fantastic, I loved it." He said, "Tell me about it." I said, "Well, it was all about culture." He said, "Well that's... that sucks." (laughs)

   8. SGSarah Guo36:07

      (laughs)

   9. BHBrian Halligan36:08

      I said, "No, Dharmesh..."Culture is how you scale the company. Culture is how other people make decisions when you're not in the room. (laughs) And so we started chatting about it and I said, "Why don't you be the culture czar?" And in a very weak moment, Dharmesh said, "Sure." Uh, because (laughs) he's not one to take on initiatives like that. Uh, and we actually hired a terrific professor of ours from Sloan to do a project to survey our employees about the culture, and she did a Net Promoter. She said, "On a scale of one to ten, how likely are you to refer HubSpot? Why?" To a friend. And we got the results back. Almost everyone said they liked the culture, which is a real surprise to us because we didn't allow people to s- to talk about that. And then we said, "Can you build us like a version one of a culture deck?" Which was like describing our culture, what it's like to work here, the relationship with employees in the cul- company, and that was our culture code. And we totally ripped off Netflix at the time. It had something called the culture code and really worked for them. And Netflix had a very, very unique culture, and we built the same type of deliverable, very different than Netflix, but the same format. We posted it up and man it got a (laughs) huge uptick and it still does.

   10. SGSarah Guo37:22

       We'll link to the presentation.

   11. BHBrian Halligan37:24

       We have two products. We have a product that we sell to customers and if that product's high quality and unique relative to competitors, it'll be like a magnet that pulls customers in and retains them. And we have a second product that's our culture. And if it's unique relative to the competition and really high quality, it'll be like a magnet that pulls in t- employees and retains them. So we really took it quite seriously. Uh, we edit that culture document every six months to keep it fresh and make sure we're walking the walk on it. We still do a Net Promoter survey once a quarter. We publish every answer that doesn't include really bad swear words or things like that in there on our wiki so everyone can see what everyone else is saying. We address many of them oftentimes like, "Hey, we're not going to do this, but we heard you." And so we take it very, very, very seriously.

   12. SGSarah Guo38:08

       Are there, uh, answers from those surveys that have surprised you over the years?

   13. BHBrian Halligan38:14

       I mean, you're going to... Any company, people are going to complain about virtually everything. Uh, everything. At one point, we put... We had a, uh, we put a smoothie bar. We had a smoothie bar.

   14. SGSarah Guo38:25

       You are a Silicon Valley company.

   15. BHBrian Halligan38:26

       Totally. Totally.

   16. SGSarah Guo38:27

       Smoothie bar. (laughs)

   17. BHBrian Halligan38:28

       Yeah. And I don't know why this was the case,

6. 38:31 – 42:26

   Creating a Culture Code for HubSpot

   1. BHBrian Halligan38:31

      but we, we didn't have protein powder for it, and I don't know if it was like who... The person in charge was just... It was too expensive or it was hard. I don't know why, but for some reason there was no protein powder. There was like a thousand complaints about the lack of protein powder. (laughs)

   2. SGSarah Guo38:51

      (laughs)

   3. BHBrian Halligan38:51

      It was... We called it Smoothiegate. (laughs) The other thing I think we did right, by the way, Sarah, was we, um... At least for us, we didn't hire someone who was a career HR person. We had a woman in, in, uh, marketing who just was a dog on a bone about people issues all the time. I- y- she talked more about people issues than marketing issues. And we said to her like, "Why don't you just come and be our first HR person?" "I don't want to do that. I don't want to be HR. I'm a marketer." And we re-... It took weeks, months of convincing her and she finally did it. Katie Burke, she still runs our, uh, people ops. Um, and she's the one (laughs) who, who caused Smoothiegate and still will not give in on the protein powder. (laughs)

   4. SGSarah Guo39:36

      There's no protein powder?

   5. BHBrian Halligan39:38

      It's still... The... Smoothiegate, it's like eight years later, it, it persists.

   6. SGSarah Guo39:42

      Oh my gosh.

   7. BHBrian Halligan39:43

      HR people are tricky to hire because in HR you've got recruiting people, you've got compensation people, you've got culture people, you've got D&I people, you've got benefits people. And, you know, if you've got a person who runs HR, they likely grew up through one of these things and doesn't know much about the others. Very unlike sales or service where they really rhyme, most of those things in HR, they don't really rhyme that much. And so it's the one place where you can take a real athlete who's smart that can think in first principles and figure it out. And that, that was the, that was the route we took.

   8. SGSarah Guo40:19

      Uh, okay, let's talk about how, you know, you're, you're spending time now. You co-founded, um, a firm called Propeller Ventures, which focuses on developing ocean-related climate technologies. Why'd you do that?

   9. BHBrian Halligan40:33

      I got in a terrible snowmobile accident two years ago and I broke 13 bones, had five surgeries, and I was lying there in the snow thinking I was going to die. Uh, I s-... I actually was like, "I don't enjoy running the day-to-day of HubSpot anymore. I don't think I'm as good at this size as I was earlier sizes. If I make it through and live, I'm not going to come back and do it." And I... And very shortly thereafter be like, "I'd like to get into the climate game." It's the existential crisis of our life. I'm sort of a mission-driven type of person. And, uh, once I got healthy, Yamini took over as CEO. I started meeting with climate people, you know, founders, VCs, um, professors and whatnot. Everyone in climate's depressing, like, n- non-optimistic and depressing. So I sort of did a road show, and then one day I visited a place called the Woods Hole Oceanographic Institute on Cape Cod. Surprisingly, oceanographers are really optimistic about climate change. Like the ocean absorbs much of the carbon dioxide from the air, absorbs almost all the excess heat we're producing. It got us out of the last ice age. It's the only thing of scale that can really get us out of the pickle we're in. Doesn't matter how many trees we plant, we can't get there with trees. They die and give their carbon... A lot of the carbon dioxide back up. So, all right, and so I, I started volunteering for them and helping them as like, you know, we need venture involv-... We need money in venture, not just research. So we started a venture fund called Propeller, a $120 million fund where we back startups at the intersection of climate change in the ocean. And I did, did that a little over a year ago. Going great. So far, so good. We've made about ten investments.

   10. SGSarah Guo42:24

       Amazing. Um,

7. 42:26 – 43:07

   Propeller Venture Fund, Ours Oceans and Climate Investing

   1. SGSarah Guo42:26

      we're out of time here. Is there anything that you were hoping to talk about that we didn't or anything you want to add?

   2. BHBrian Halligan42:32

      No, I wanted to say I think you're doing a great job. I'm really happy you started your own fund. I'm really happy you're focused on AI. I'm really happy to be an investor in your fund. I really wish I invested more and I'm proud of you.

   3. SGSarah Guo42:44

      Oh, that's very kind.

   4. BHBrian Halligan42:45

      All right. Thanks, Sarah.

   5. SGSarah Guo42:46

      Thanks, Brian. Find us on Twitter at @nopriorspod. Subscribe to our YouTube channel if you want to see our faces. Follow the show on Apple Podcasts, Spotify, or wherever you listen. That way you get a new episode every week. And sign up for emails or find transcripts for every episode at no-priors.com.

Episode duration: 43:07