Zigging vs. zagging: How HubSpot built a $30B company | Dharmesh Shah (co-founder/CTO)

23:22It's nice to let them kind of participate. Our customers, our partners are well -wishers, and they can sort of now have the upside. And you don't get that in the private markets because it's a very closed, you can't just buy shares in every private company you like. I wish that existed, but it doesn't. So it's a way to let the market at large participate in your growth earlier. What about from the perspective of just staying excited and motivated and finding things to take on? Is there any lessons there for founders that are at a larger company? And just, okay, this is going to help me stay excited about what I'm doing.

23:57Yeah, I think this is, and Bezos exemplifies this, I think the best, which is just because you're a public company does not mandate that you do certain things. All that's necessary is the kind and transparency that says, here's what the company is doing. Here's what we're about. Here's what we're solving. And he had this, which is very first annual shareholder's letter, which you know, he obviously writes every year, which is, this is what Amazon is about. We're solving for the long term or whatever. And, and he didn't say this in a stark way, if you could reread the letter, it's like, but if you read between the lines, it's like, if you don't agree with this approach, you should not buy Amazon shares, right?

24:34It's like, it's a completely optional thing. You don't have to buy it, but this is the way we're going to run the business. And he stayed true to that. And you can continue to do that. I'll tell you one quick story. This is what began the anti -disweight founders that might be reluctant to go public. So one of the core values that HubSpot that's been part of the culture from the early early days, literally days, is transparency. And so one of our kind of mechanisms by which we implement transparency is we've had this thing that says, all information within HubSpot is equally shared with everyone in the company period.

25:10Right, like everything. So our balance sheet, what we raised capital at, to whether we're gonna be able to meet payroll in six weeks, all those things, everything was transparent all the time with two exceptions. One is if it was illegal for us to share, let's say if we were looking at some acquisition or whatever we had non -disclosure, or the information was not completely ours to share. And one example of that was salaries. So we feel that salaries are co -owned both by the company and by that individual, and it's not up to us to share someone's salary if they don't want to do that. Okay. All right.

25:44So, so we have that transparency and then as we go public, we have this meeting with our investment bankers and our lawyers. This is like in the IPO prep process and they sit down and it's part of this all day meeting. One of the questions is like, okay, so who are your designated insiders? Brian Norr, I had ever taken a company public before. or we don't know what that is. It's like, oh, is this kind of group of people that will have access to all the financials? And we'll know, it's like, and we're like, oh, okay, so how long is that list? And they're like, you know, five or six. And so then, you know, Brian says seven?

26:20Seven? And they're like, yeah, you can do seven. And if I say eight, like, could you do eight? And so what we're, so we discovered through that mathematical induction process, like if it's a true for n is a true for n, but it's one, is that there's no actual legal limit to how many insiders a company can have. And so we ended up doing literally the day we went public as we designated every single employee to be a designated insider. So that allowed us to maintain the transparency thing because there was no rule that said you could only have five, six, 10, and there was hundreds of people and we did not make it optional.

26:55We didn't say, oh, because our downsides to be an insider, there's windows within which you can't trade, there's stuff. But we're like, okay, well, we believe in transparency. Everyone's going to have access to it. And it's not an opt -in kind of thing. You're like, this is it. We're all there together. And it's been all, and we still do this to this day, right? Even at some thousand people, we're very insiders. So we can still share all the financials with everyone all the time. You have many contrarian opinions as what I'm getting from this conversation already. And the way you're pushing the envelope on.

27:24Can we have 10? Can we have 1 ,000? We're curious if there's anything else there, just contrarian ways of running a company. I know there's probably many, but what comes to mind? So one of the phrases we like to use in our industry overall is this kind of notion of first principles. I know who popularizes it, but it's used a lot. I'm not usually a snarky, but I'm not going to say something snarky, but I think most of the time first principles is used. It's actually used incorrectly. Because the way first principles is supposed to work as Elon would probably describe it is that it's not first principles like first principles of what we believe.

28:01these are a core kind of first principles in the company, it's the first principles of the universe. It's not what you believe is true, is what do we all collectively know to be true to the best of our knowledge? It's science, right? That's like physics. Like the first and second law of thermodynamics, those are first principles. All the layers on top of that are things that you think are true, are the Euro assumptions, or the things the decisions you made. And that's fine. Like you may have made some decisions. Like for instance, transparency is not a first principle. It's a founding principle, right?

28:27That's not what everyone should do this. It's like a completely core thing. And so, yes, I can be contrarian, but you have to limit the dimensions. So the number of things that you're contrarian on has to be greater than zero, but not too high, right? So what I think of is like, high conviction, low consensus bets, right? So high conviction is we really, really believe this. And low consensus is that most other people don't. And the other people have kind of phrased this differently. I think Peter Tio actually says it more simply and elegantly, which is you need to be right about something that other people think you're wrong about for a very long time, right?

29:05This is the thing that and you just have to be right. So one of the early kind of high conviction decisions we made at HubSpot was that we were going to focus on SMB as our target market. I'll make a case both for SMB and for having a high conviction better. It doesn't have to be a target market, but something once you make that bet. Because it's low consensus, it's going to be hard and necessary for you to have the conviction because everyone disagrees, including your board, including your investors, including potential investors. So we have that for all, literally, all 18 years of HubSpot's history.

29:38We have always had the quick, all during the IPO road shows. Like, yes, we get that youth kind of on SMB, but so what's the path to the enterprise? No, you don't understand. This is not a go -to -market strategy. This is not like, oh, we're going to conquer SMB first. This is not bowling pin. This is not Jeffrey Moore. Or this is a, we are here for SMB. This is, that's what we're doing. And so we maintain that conviction for a very long time. And that kind of helps you make other bets that are secondary, but you don't wanna reinvent everything. So I'll give you an example of something that we had in the early years of HubSpot that we kind of forewent.

30:13So in the early years of HubSpot, we're like, okay, we believe in a flat organization. One of the manifestations of that flat organization is we had no titles in the company. Nobody had a title. Right? So even though we like, you have business cards, whatever we have, but titles. If you introduce yourself in a meeting, and we had this up to like hundreds of people, what do you introduce yourself? Like, oh, I work in product, I work in engineering, or whatever, it's not like I'm director of X or VP of Y because that, the thing didn't exist. Then as we scaled, we came to the realization that there's actual value that people ascribe to titles.

30:49And the reason they ascribe value to titles is because there were rumors that there was life beyond HubSpot. Like, I couldn't believe it. Why? There's a life out there outside of HubSpot. It's like, yeah, but then when we go to the Thanksgiving dinner, whatever, and I talked to my aunt, I need some shorthand. It's like, oh, yeah, I got promoted to director. I got promoted. You know, to show some progression, because it's a signaling device. And in this life beyond HubSpot, an outside of HubSpot, it's like, other people are also that don't want to know sort of where I was. And it's like, okay. And this was the winning argument.

31:20I love this argument because we had a day -long meeting on talking about this one topic. And the winning argument was, the Hermitian Brite, I recognize why we don't have titles. I recognize this and so they made the case of, yeah, there's value. And it's like, and by virtue of you not giving us titles, that means you're having to compensate us in an economic sense in other ways, right? So you're losing out because it's like, is that value high enough to not do that? that's a strong case. And so, and then we had down to three choices. We're like, okay, well, we could have chosen to just say firm is like still no titles.

31:57We could have said, okay, we're gonna have classic titles. Then I had the option on the table of make up your own title. Like you could be grand puba of X. And that can be like, and then we ended up making a decision to go with classic titles because that actually served the need of there's a benchmark with a standard. Otherwise, it doesn't need anything. So having made up titles is pretty much the equivalent of having no titles because they lack any meat. Anyway, but that's one of those things that, okay, you sort of iterate, you change things as they go. Yeah, I think there's so much to this.

32:27Let's just try things differently. Okay, that didn't work. Let's okay, we're just gonna do whatever everyone else is doing here. And then often you discover a thing that, okay, this is actually better. Just to understand when people have no titles, so someone say as a product manager, what do you call them a product manager? Just like, I'm an employee, I have no literally no title. So at the time we was a no title and now we have classic titles. We have levels of things. But back then it's like you're just here. No title. No, I don't know exactly. That's what you know. No title. I saw somewhere that you paid everyone $5 ,000 monthly as their salary at the beginning of the HubSpot including yourselves for a long time.

33:00Yes, sorry. Okay. Another fun fact. How long did that last by the way? I try to think back at, you know, it's a long time ago. I want to say probably like the first year, year and a half. Amazing. And one of the things that, and this is one of the kind of core, and it's not everything that, you know, we obviously not everything was right, but not everything is kind of applicable to other companies, but there are some things that I think are, and one of the things that I think are applicable is just this need to solve for simplicity, right? It's like the simpler you can make things in the early years, the better off you generally are.

33:34So part of, and this is going to sound weird, so So how we wound up with transparency is not because like some moral is like, oh, everyone deserves to have this. And this is the truth. So it was not some moral position. It was a when we hired the first employee in this post of both Bright R &D key. When we had the first employee, we had to make the decision. It was like, oh, so what files do we give them access to? What? And so Brian is like, well, like why? Well, there's nothing to hide. Why would we do that? And so then the output of that was like, okay, well, a binary decisions are much easier than non -binary decisions.

34:16It's like, okay, everything or nothing is much simpler. And then it's like, okay, well, if it works for employee number three, in the company, why wouldn't it work at four? Why wouldn't it work at five? Why wouldn't it work at 50? And we just kept doing it because it's like, okay, well, until it breaks, we'll just keep doing that. right? And so this is the, and this supplies to so many different aspects of HostPod, but is we try to start with the simplest possible thing that might work. And then if necessary, add the, you know, add the complexity, add the things or whatever, like even our original, this is actually the tactical thing that everyone should take away, especially early stage startups.

34:53Very first HostPod office has exactly four tables because the aspirations for growth, right? We were in a co -working space, so we worked back in the day here in Cambridge West Tuesdays. So we had four tiers. And the only distinguishing characteristic of the four tiers, there were two chairs that were by the window, two chairs, not by the window. OK, great. Higher that first employee, other decision we have to make is like, OK, well, where do people sit? And it felt this one is like, well, it feels unfair to us that we would just get the window seats or whatever. It's like, OK, we believe in a flat organization like why.

35:24And so what we did is we said, oh, we'll just do a lottery. OK. And it's not like, oh, whoever pulls the thing gets the window seat, whoever pulls gets to choose from the remaining seats because different people describe different utility to different seats. It's like, maybe you don't want a window seat. Maybe you like the darker corner, whatever it is. So we did that with employee number one. Then it did that with employee number two. We did it every time we hired a new employee, we would do a seat shuffle. We're going to do the lottery. We're going to go down the sequence and of all the seats, that was the algorithm.

35:56Our investors are like, oh, that's cute and that's funny. it's not going to work at 15, 20 people. It's not working at 50. It worked at 25, it worked at 50, it worked at 100, it worked at 200. We updated the algorithm, we did some local optimizations, which we said, oh, there are some groups that should not be next to other groups because engineers like QuietTime and salespeople don't. And so we're going to try to kind of optimize a little bit. So it's not completely random anymore. Now it's like within this, well, we still would do it. Then we said, okay, we're not going to do it for every hire, we're going to do it every quarter.

36:27And that stood by the way for hundreds of people. That mechanism still worked, right? It's like it's, yeah. Oh my God. So the moral of the story is that one decision of simplifying, can you imagine the amount of politics we avoid? Like in corporate America, the amount of calories spend is like, well, your office is bigger than my office. Your desk is one inch higher or one, and it's like, no, it's like all of that just went away by virtue of that one decision. And we don't even know. It's incalculable. Honestly, like how much grief that like saved us. And then there's all other kind of side benefits to it in terms of people getting to know each other better, better chemistry.

37:07There was like lots of good upside, but just the simplicity is almost always a better answer. I love that everything often comes back to some algorithm you've developed or this N plus one approach of like let's just keep going until something goes wrong. This is amazing. I'm excited for many more of these hilarious, amazing examples of how you did things differently. You've been talking about simplicity, the opposite extreme is you could say entropy. And someone told me that you have this kind of concept that as every, that every leader in every business is fighting the second law of thermodynamics, which I believe is entropy.

37:41Yeah. Well, yeah, the actual law is with a closed system. Entropy increases over time. Okay. And yeah, we don't have to get to the. I'm not a physics guy. We're getting to the real, the first principles of everything. Talk about that. What does that mean when you and what does that look like when you're running a business? Okay. So in lay person's terms, the second law of the urban dynamics, paraphrasing here, is that over time, unless you intervene, everything goes to crap. I'm paraphrasing, right? Which is essentially the amount of disorder and randomness in a system is going to increase over time.

38:15You see this? When you break an egg, the break of it, like molecules don't come together and form an egg, right? That doesn't happen. It's always the other way around, becomes disorderly and more random. That's the second law of the dynamics. And this happens in companies as well, right? Like, it happens in code. Almost every level of abstraction, you will see some variation of this. And so the way I think about this is that in the early stages of a company, you're essentially fighting to survive, just trying not to die, right? That's the thing. Like, okay, like, no, try to do one. don't die. In the second phase of a company, you're trying not to stagnate.

38:49You still want to be able to drive growth and be able to do things like, okay, we manage not to die because stagnation is essentially death. So we're still trying not to die. But then the third stage is your fighting complexity. And that's the thing that you will crumble under your own weight over time, absent some external intervention. And this, you see this happen all the time, right? And it shows up in manifest in different ways, which is everything gets more complicated. Like, you need more layers of management, more headcount, more this, more that, more everything. Everything that becomes harder, margins go to say, just bad things start to happen, become slower.

39:24And that's eventually, it's a slower death, right? Because you're at more scale now. But it's still eventual death, right? Like, the complexity does kill companies, maybe not as quickly as other things, but much more reliably than other things. And so this is why it's never too early to kind of plant the seeds of simplicity. Put them in there and make that part of the kind of culture of the organization. And we have a thing that are part of our kind of culture and guiding principles around what I call fight for simplicity. It's literally those three words, right? And the message we're trying to convey is simplicity is worth fighting for.

40:00That's like thing number one, it's important. But the other one is that it requires fighting force. It does not happen and it will be a fight because the universe is working against you and it will take calories to fight for that simplicity because everything, even well intentioned people, will introduce complexity because that's the natural way of the world. We want more tears in our pricing. We want these knobs and dials in the product. We want these more. It's like all of it. Tens towards a second law and entropy increases. Anyway. I love this. The algorithm for seeding is a good example. Is there any other examples either in the product or strategy where you pushed for simplicity and then ended up being right?

40:39Yeah, so on the product side in the early years, and Brian gets credit for the actual implementation of this. So we had a relatively broad product and we can talk about that, pros and cons of that even in the early years. But we were solving for simplicity and we got this from Apple. We'll talk a little bit more about Genesis of this. But we had a rule in the HubSpot product as the product grew in those early years that every time you added what we thought of as a knob or dial Call it a feature You had to take one out somewhere else That's a net amount of and this is a very coarse measurement, right?

41:17It's like, okay, well Not every radio button checkbox drop down whatever or menu item that you put in your nav is necessarily equivalent But it's better than nothing. It's better than having no constraints And so, and once again, this goes to the kind of binary thing. It's like it just at least forces you to think about it, right? It's like versus the other mistake I think people make in product all the time, but is that we measure the cost of a feature based on the usually, or even a new product, based on the cost of implementation. Right. That's the first order thing is like, oh, this is going to take six months to develop.

41:50It's going to be Y engineers and Z designers or whatever. second order thinking is thinking through the maintenance of that feature. It's not just the first version that goes ads. Like now we have this code base and we have to support and improve whatever I get that. The third order thinking, which I think is the most nuanced and it turns out to be the most important is the other costs that that complexity adds. Okay, so let me come back to this. So when you go from product number one to product number two, right? It's like, okay, product number two is going to cost us this much to develop. it's going to have this risk associated with whether it's successful or not, all these things.

42:24So there's going to be this kind of carrying cost for product number two. What companies don't think through is that that is in the maintenance of that. It's like, oh, we're going to need a team to kind of maintain that new product. Note what actually happens is that now when you go from product one to two, you have added dimensional complexity to your business. What I mean by that is not an incremental increase. Like, oh, we went from one to two. It's like, now every decision you make has to be made to the lens of now we have two products. We just hired an engineer. Do they work on product number one or product number two?

42:54We're going to launch a marketing campaign. Do we spend five minutes talking about product number one and two minutes talking about product number two? How do we out? How do we do anything? Every chart you look at in terms of the growth, revenue for whatever look at all of it. Now every chart that you've ever had now has to be sliced by product one and product two in order to really capture that precision. And so now you have this new dimensional complexity that you just hadn't planned on. And this applies once again, every level of abstraction. So everything you do in your business should factor in the long -term cost of that complexity.

43:27And it should be worth it. And of course, you need, and that can make the case that you need to build product number two and product number and plus one over time. But you should be mindful about the cost of that complexity. Is there something you've done to help operationalize that? Because I imagine this, everyone's like, yes, this is great. Don't do too many things. Simplify, hard to do when you're like, oh, we got a draft growth. We have this awesome idea. We have this opportunity. We have a competitor. I know this is part of the culture. So maybe that's the answer. But how do you keep people to actually this principle?

44:00So it's really hard. I'll say that. And things that have made it easier. So a little bit of using credit to HubSpot, right? So part of what has made it easier for us to keep things simple is the early constraints we impose. And we didn't know this at the time. So because we're building for SMB, we have a free VM product. All right, well, when you're doing that, there is literally a limit to how much complexity you can add, because we don't have like an army of people that are going to spend in the 18 months implementing something. We don't have like, we have to be able to support a product that's free.

44:33Like, that's hard to do, right? Like, it has to be simple enough that someone can get value from this thing. And so there's these kind of simple, self -imposing. So the, the left and I would kind to carry away is come up with systematic ways and mechanisms, as Amazon would call them, of putting guardrails and constraints in to the degree that you can. Because you can put words on a page and try to infuse it in the culture. It's like, oh, we believe in simplicity, we fight for this and you can have meetings and you can kind of get up in all hands meetings and kind of reinforce that, which I encourage you to do.

45:04But like a really, you know, reasonably well done system will outbeat any other mechanism that you can kind of try to put it in fuse, right? Like that. Those things kind of deteriorate over time as hard to scale them. So I'm a big believer in kind of systems that impose constraints versus. I can't help but talk about the S S M B P's because I deal a lot of angel investing and classically, companies that focus on small businesses are very challenging because getting to small businesses at scale is very hard. They're often kind of more old school, not early adopters. You sell one and that's just like one small customer and they're not going to upgrade and roll it out to this large group and they're not going to increase spend up very quickly.

45:48For founders that are exploring SMB or trying to win something SMB, any advice other than just maybe the devices probably don't do it. It's very hard. No, my advice is absolutely do it. Amazing. Great. We cut A because it's hard and we'll talk about that. But B, okay, so I'll tell you this quick story in terms of how we chose FMB. And so my co -founder, I met in grad school and he had done software, he's on the kind of sales and marketing side, I was on the product engineering side, didn't know each other before grad school and we met there. But one of the things we kind of, as we were kind of noodling on, and on possible ideas of working together on the startup, who said, oh, we had done both an enterprise software before, the kind of opposite of SMB.

46:36And there are definitely challenges with enterprise software, right, while the biggest one is that life as an enterprise software company sucks as a startup. Sales cycles are super long, feedback loops are super long. You have to have sale if there's all this kind of, you have revenue concentration, which means you don't completely on your product roadmap anymore because whoever is writing the biggest check. We'll ask for these three things that's really hard to say no, especially as a startup. All these things that go along with that is like, okay, we sort of know that game at the other end of the spectrum, you have consumer startups.

47:08Let's say, okay, the problem with consumer startups is they have very bi -modal outcomes. It's like, either they're going to be super successful the next meta, the next Google, the next whatever, or it's going to be to zero. Like, it is very rare that you have like, hello, you made a few million bucks or whatever, as they can either have worked because there's some massive markets. The K for SMB is you have almost the best of both worlds. You have the nicety of enterprise which is, oh, I can solve a product and people pay me money for it. I don't have to be out of repiting subsidized. I don't have this buy and little outcome.

47:40I can build an incrementally more valuable business that's measurable. So we went from 100K and AR to a million AR to 2 million AR because we're a business software company. But it has the benefit of consumer because there's millions of them out there to sell to. And there is no revenue concentration. You do control your roadmap. You have very short feedback loops. You can try pretty much anything that you want because there's, you know, like, oh, we have 50 customers with us and screw it up. There's 5 million more. I'm not going to intentionally screw it up, but you can experiment, right? You can take on risks.

48:11And so, by the way, like when HubSpot started SMB, it was literally like 100 times harder to 16 to the FMB, right? and we could not raise capital. Like it was so hard, because the coming argument was like, there literally is exactly one company in the history of software that's made a like, global brand and billions of dollars of market that was into it. No one else had ever created SMB -focused software company before. And we're like, yeah, it's like we know. But the nice thing about it is once you figure the physics of it out because it's so hard to do, you end up in this as played out. Now there's lots of work -proof points.

48:49There's Shopify. There's a bunch of companies that have succeeded in SMB. But one of the things about SMB is that in the software market, this is by the way, all I know is software. That's the kind of scope of my experience, is that in software, there's what I call reverse gravity. Over time, the market will always pull you up, right? Because what ends up happening is that smart founders and smart management teams will look of the numbers and say, oh, well, as it turns out, our bigger customers stay with its longer, pay us more, often have higher NTE, like all these things. And so if you allow yourself to come be led by that, which is, it seems like a reasonable smart thing to do, you will get pulled up in the market.

49:36And because of this reverse gravity, almost every company winds up being, that's every successful software company, ends up being an enterprise software company over the full list of time. That's what you see. Everyone, the kind of byproduct of that reverse gravity is that every software company ends up being an enterprise software company. So you end up competing with literally everyone. In the SMB world, you're only competing with the people stupid enough to stay focused on SMB or try to do that. It's a much harder thing to accomplish. But once you figure out the physics of it and make it work, it's say much more sustainable, much more fun model.

50:12So I encourage, particularly startups. And maybe you fight reverse gravity for some period of time and maybe but at least start their try to make it work until it gets really, really, really painful and then try to more, right? It's like there's just so much value in SMB. It's okay. Okay, so this theme has come up a bunch already in our conversation. Ask Chris Miller, previous podcast guest, what you're amazing at and what I should talk about. And he said that you're very good at zicking when other people are zicking and zicking when other people are zicking And I think that's already come across inter conversation.

50:45I guess is there anything else along those lines that you think might be helpful to people In terms of how you think about that or examples of that in action. So this comes down to kind of kind of high conviction low consensus pets um and so we had uh Like three things that we were zicking and by the way, it's not just me my co -founder. I both have that kind of zig versus zag and we're going to ask ourselves, and we ask ourselves this to this day, right? It's like, okay, well, we understand that this is the way the world moves, the way it's normally done. But have we considered this completely, and not the thing we should do it, but have we considered this alternate kind of, alternate path?

51:19So I would encourage you, any state of the company, you don't necessarily have to do the zig versus ag, but you should at least know what the zig would have been, and have, have talked it through. So that's kind of thing number one. And some of the best startup advice I've heard and I've ever given is startup should focus on one thing and be really, really exceptionally world class better than anyone else at that one thing. And one of our early zigs is we are going to do exactly the opposite of that. So from year one, HubSpot decided to build an SEO tool, web analytics, blogging tool, content management, all of it.

51:53And every one of those categories that we were building a product in, literally this is year one, and had great products with great companies behind them. And so it's like, okay, well, why would you do that? And the reason is that the one thing we wanted to be good at was solving for the actual customer problem that existed. And the customer problem that existed was not a drift of tools, lots of great SEO, blogging, everything. All the tools existed, but SMB specifically did not have the wherewithal, put all those pieces together, right? So you and I, it's like, oh, I can throw a website up, I can put Google Analytics on it, that I can put a woofoo -war, typeform form on, I can do all these things, I can wire it all.

52:31No big deal, like why is this so hard? But for most people, most SMBs, that's a science project, right? And so we said, okay, in order for us to solve the actual customer problem, we have to solve the actual customer problem, even if it's uncomfortable, even though it's contrarian and every kind of instinct and every advice we've heard or given, says we should not do this, we should not go that broad. But once we make that decision, so then the other kind of lesson learned is like, And we've said this in the early years, and it's gotten better since those, let's say you do this, and this is kind of the all -in -one approach.

53:01We're going to have this broad -based product. It's like, okay, we're going to be, many miles wide and it's only so inches deep. One of the, and this goes back to our very systematic thinking, is like, okay, we're going to measure each of those individual product categories that we're now playing in. Are we in the top three in the market in that category? If the answer is yes, that means we invest it too much in that category. We should not be in the top three because our value proposition is not that we want the top three blogging tools And one of the top three web analytics tools that we have the top three whatever our value proposition is that everything works so well together At that being in the top three and having those right features or whatever doesn't matter Doesn't matter as much as the all in one and that means we over index on one individual category By virtue that was one of our kind of caeristics for being able to tell That we were over indexed on one particular aspect of it.

53:51That is hilarious We're doing the top three and we're doing the wrong thing. We're too good. And we change that over time, right? Like in the startup world and now, I would argue that most of the categories we play in, we are as, the surveys we tell you, we're in the top three in each of those categories now, right? But at the time, when we were very, very resource constrained, we were trying to be disciplined and focused and looked. Yeah, so we're just wrecking up all these very the contrarian approaches to company building. I imagine people listening to this might feel like, okay, cool, I'm just gonna build a bunch of stuff.

54:27This is great, I'll work for HubSpot. Do you have any heuristics for when it makes sense to go wide and not deep that you share with founders? When do you think it makes sense versus, now you should actually follow the common advice here? Yeah, so it comes down to what problem you're solving. So I think one of the mistakes I think founders make is that especially product oriented founders is that we kind of fall in love with the solution instead of falling in love with the actual problem. And you need to fall in love with the problem. And putting that constraint on yourself forces you to kind of understand and at least label and define what problem you're solving.

55:05Because oftentimes we can describe our product or whatever, but it's trouble sometimes as founders to describe the actual problem. So if you can make the case, which HubSpot did, It's like, okay, it's not like we need to jump to that. Like, oh, we have a certificate. We're gonna build the all in one, do all the things kind of thing. We're like, oh, and actually talking to customers, because we consider doing it. Like, oh, we'll just do this marketing piece. We'll just do this or whatever. It's like, no, that's not their issue. Their issue is like, it's like, it's like, the things don't exist. So if you have as a result of talking to customers and understanding the problem deeply, come to the conclusion that you need to do more than just one thing, but then you should force yourself to have the discipline that we did, which is, here's why we're going to go a little bit broad.

55:51And here's why we're going to make sure that that broadness doesn't kill us, right? You have to have the kind of self -imposed constraint. You can't have the best in both worlds. You can't say, we're going to be all in the one. And oh, by the way, we're going to be the best. No, you can't be the best. You can say, we'll be, we solve this particular problem the best, but we're not going to have the best product in a lot of those, any of those dimensions. I love this advice. Imagine a place where you can find all your potential customers and get your message in front of them in a cost -efficient way.

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56:59You'll be able to drive results with targeting and measurement tools built specifically for B2B. In tech, LinkedIn generated a 2 -5x higher return on app spend than any other social media platforms. Audiences on LinkedIn have two times the buying power of the average web audience, and you'll work with a partner who respects the B2B world you operate in. Make B2B marketing everything it can be and get $100 credit on your next campaign. Just go to LinkedIn .com slash podlennie to claim your credit. That's LinkedIn .com slash podlennie. terms and conditions apply. Okay, I'm gonna go in a totally different direction for now and see where this takes us.

57:36I want to talk about flash tags. Sure. So this is something that you came up with that came from a problem of your founder. People come to you for feedback. You give them some random thought and they treat that as gospel and they go do it in spending months fixing something that you're like, oh, it's just a thought. Talk about flash tags. Yeah, so this is back to the problem, right? It's not just, once again, most things exist at every level of abstraction. So anyone that manages people, anyone that leads, has this exact same issue, it's the megaphone issue, right? Like someone will pass you in the hall when we had offices in halls.

58:10You know, they'll ask you like a question and as it turns out, this is a particular true of founders, like I have an opinion on everything. Like literally everything. So if you ask me a question, I will have it. It won't be thought out. It won't be right, but I will have one, right? And so the channel just people will kind of take that and over index on what wasn't opinion and because It's inefficient to qualify every time someone asks you something, and every time you put an email out there and say, oh, by the way, this is just my MP. And you can put like, I am a show or something like that every now and then.

58:40But then people say, oh, that's just like politeness or something like that. Right. Okay. So here's what flash tags are literally. And I live most of my life through email. I do this in other media as well. It's like the hashtag that we all know, but it's a discrete set of them on an escalating set of what I call the kind of dying on the Hill spectrum. Okay, so here's how it goes. The bottom hashtag is hashtag FYI. And the definition of the FYI is I came across this interesting blog post or I found this news or whatever, just letting you know no response expected. Fine, go on with your life. Next level up is hashtag suggestion.

59:20I have the stop that came into my head because I listened to the episode on Lenny's with SAM from Microsoft or whatever. And this feels like it could be a good thing to kind of explore. But Hashtag suggestion means I still don't expect a response. You don't have to do the thing I'm asking, but it is something that I would do if I were you, or at least I would consider if I were you. Okay, next level up is Hashtag recommendation. Hashtag recommendation is, I've thought about this a lot. I've done some research, I've done some digging, I've done some soul -searching. I would do this. It's still not a, you have to do this.

59:59But if you decide not to do this, I would appreciate a response in terms of why you don't want to do this, what you learned in the process of exploring this particular thing, other alter it is, or something. So it's like a response expected, but still not a mandate. And the last one is hashtag ple. I beg of you, we don't have mandates at HubSpot. I have thought about this so much. Like to my core in my soul, I believe this is the thing we should be doing. I'm going to plea with you to please just do this. Still not a mandate, by the way. But that's the, and so now it's kind of accepted. It's on the wiki, people, it's like, and I use this multiple times every day.

1:00:43Other people at HubSpot use it. But it is remarkably effective because they're self -descriptive. Hashtags are searchable. You can go back and say, oh, I want to know the last five hashtag recommendations that I made, how those turn out. There's just so much goodness that comes out of it. It's not hard to understand or describe. It's really interesting that none of them are just do it. You say that there's no concept of there's no mandates. Essentially, why is that? Do you feel like people just treat police as okay? actually just really have to do this. So we've always had as part of kind of early manifestation of HubSpot Culture, we kind of believe in autonomy, lots of companies believe in autonomy, and we try to carry that idea as far as we can.

1:01:27And for the most part, we do that. And the hashtag plea is part of that, right? This is like, we trust our people, we try to hire the best, we expect them to learn, and we still want them to have the kind of discretion to be able to make hard decisions that we have, you know, the clue that we call them DRIs. We didn't invent that term directly responsible individual. And we'll talk more about, we should talk more about decisions and how decisions get made. But, but the reason I do hashtag plea is that it's a soft way of a mandate without being a mandate, right? It's like, okay, like me. And by the way, like the number of times that happens is like, I can count on the fingers of like one hand and still have fingers left over, right?

1:02:09Like that almost never gets to that. Because either I talk myself out of it, it's like, okay, and this goes to the, is this a deal I'm willing to die on? Right? It's like, okay. I get it. I may disagree. Is it the end of the world? It's really going to do that much harm and is the cost of kind of imposing that kind of founder card? You know, go do this. Does happen just not that often. So yeah, awesome. And we'll link to the, there's a post you wrote about how to use these. It's flashtax .org if you want a quick way just to get to that blog post like that believe in domain names and shortcuts Like we even some cities though You mentioned decision -making.

1:02:45There's something interesting there talk about how you make decisions at HubSpot Like most organizations HubSpot historically has made decisions poorly It's just all spectrum right I think decisions are the hardest things because it's hard to strike the balance And we've evolved it over I think we're much better than we were in our earlier years. The things we get wrong, most people get wrong. And so I'll tell you the things we get right now is that, so we like to be, we're very data oriented. We like to make data informed decisions, but data doesn't make decisions people do. So that's like thing number one.

1:03:23It's like, you have lots of geeky founding companies or whatever, it's like, oh, we have a chart that size this. So we should go do that. That doesn't work. working outside like data is awesome. And we also have one position that we designate to make the decision. And that is not necessarily the executive overlay that team is like, okay, well, so and so, and they literally owned that. And we didn't invent this idea either. This is existed long before HubSpot, but it actually works. It's like you have to decide who's gonna make a decision. And that is the like almost the number one decision to make.

1:03:56And it's like, okay, don't pick people, you'll trust to make the decision. And so that's kind of thing number two. And the biggest mistake, and we used to make this much more than we make now, is, and this, and Amazon, stayed this really well. They have, there's this called disagreeing commit. We have a slight twist on, I'll tell you why we twisted a little bit, ours is debate decide unite. That's our kind of phrase that we use in house -pile culture. But the idea here, the core premise of it is that, Once you make a decision, getting alignment around that decision, because there will always be any amount of scale, people that disagree with that decision because they were debating the other side, right?

1:04:36Like they just didn't, like they went, they would have picked option A and we ended up picking option B, but it's extremely important that even when a decision gets made and we decided to do something that's contrary to the thing that you believe it would have debated for and did debate for, you lost on that particular one, fine. hard to do, but so important, so valuable. And I'll tell you why we tweaked the Amazon one. So the disagree and commit sounds a little bit harder than we like, right? Which is, it's fine for you to disagree, but then F and commit, right? It's like, okay, I get that. I'm biased, but so the debate is, okay, so let's have open debate.

1:05:19Let's get all the options on the table. let's actually make the decision and then it's unique around that decision. Not just because it's like, okay, let's kind of come together around that. And that sounds more upspotty. It is a lot more friendly. I was thinking that as you were talking, debate, decide, unite versus disagree and commit. And then there's like, have backbone, you know, and that one. It's, yeah. So I like the other thing I'll tell you, this is a totally upspot thing, a partly a me thing, and this will not surprise you at all, is I like to think systematically around decisions. And so I'll give you an example.

1:05:59The question I ask myself when faced with a decision or a thing I'm trying to do is like, OK, if I could write Python code, a Python function to come up with an answer to this. What would be variables or the coefficients? Let's say you're not, if you're making Excel spreadsheet to make this decision, what would the columns be? All right. You don't have to decide the weights, but at least decide the factors. Then the next step is like, okay, I, you're the factors that I think matter of the making of this decision. I'm going to decide between these seven options. Here's the thing I'm going to look at, right?

1:06:32Like you would do this for picking a school to go to, or you know, it's like it works, right? And you don't have to take it to the end of the degree, but the exercise of going through it is like, okay, well, Well, step one, if I can just identify the factors that I think should impact this decision, that's an 80 % widow right there, not because it's just in your head. If the team works collectively to say, okay, here are all the factors that I think should contribute to the making of this decision, then number two is, okay, we can't assign exact weights so we can't write the Excel formula just yet or the Python code, but can we at least stack rank the factors?

1:07:06Like, this factor is more important than that factor. Now you get a closer sense of approximation, right? You're still not going to use this spreadsheet to make the decision, but the human making decision has much better information that they have than pretty going through that exercise. One of the mistakes people make around decisions, and Amazon has written about this, I'll give you a cut of my take on it, is that the calories you spend on a decision should be proportional to the consequences of that decision. Parents have plenty of, he calls them like one -way doors versus two -way doors, which is a binary heuristic, which is, I love the elegance and simplicity of that, I'm taking it one level further, which is it literally should be purportful.

1:07:46Like, okay, if you have a really, really big decision that's going to be expensive to change, really, really put a lot of calories making that decision. You might still get it wrong, but it's worth it, right? And it's not just around decisions, around activities and bets and things that you're going to do, is that the calories you spend should be kind of proportional to the outcomes and what you're seeking and the value of it. And that's one of the things I try to apply to my life is like, okay, my geeky nature wants me to go Nine miles deep and you know, you know, you know, shop writing code and do this thing or whatever But I found that that one simple thing is like, okay Is this like a first order approximation where I can just identify the factors or it can like And the other thing that helps by ways and we'll talk about this So one of is my default position on most things that I don't mean this the negative way is no It's like, oh, shiny object.

1:08:35Should I go do this? No. And then I have to sort of forcefully, it's like, OK, I need reasons to say yes. I have to force myself because it's easy to say, I love new things, I love new people. I love all that. Is then so I have a sorry, but no post. I'm like, log that life changing for me. And so the idea there is that this goes back to other first principles is time is what a few kind of constants, right? Like, every time you say yes to something by definition, you're saying no to something else. And so this goes back to the product you were using in the earlier years of house class, like, oh, when you put something in, you have to take something out because we want to kind of keep the complexity roughly constant if we can.

1:09:21Same thing. So it's okay to say yes to things, but then you have to force yourself, beta, the calories that you're committing to to say, okay, well, what am I going to take out of my schedule, out of my life in order for me to be able to make room for this thing because at the turn of the time, I have not been able to, despite my best attempts, bend the laws of space and time. So how do I make room for this new thing that I want to say yes to? Yeah. So I love them away your mind works. I'm excited to talk about culture and how this connects in the way you think about culture and through all these frameworks on lenses.

1:09:52Before we do that, you kind of hinted at this idea of how you pick what to work on. And I know you have kind of an interesting framework for how to decide what ideas are good and what ideas are worth investing in I think both as a founder and a product leader How do you think about deciding what is worth investing in so imagine the excel spreadsheet again So let's leave your value and idea for a startup for a new product and you feature whatever happens to be I think this this applies so the first thing You should look at is and I measure things on a scale of 0 to 10 because I like quantifiable things I have to be able to multiply x by y.

1:10:24Don't like letter grades is a pet peeve of mine, but anyways. So put a number on it. It's like, okay, if this thing were successful, so let's say we're just picking a new startup idea. Like I'm considering starting this new business. If it were successful, what could it be? What's the kind of magnitude of the outcome? How are you decide? It could be impact, it could be revenue, it could be market cap, it could be portfolio, whatever it is, it doesn't matter. It doesn't matter, but not relevant for this discussion. So that's the potential. Thing number two is probability of success, okay. And now that I pause here and tell you the most common mistake people make is they think through the probability first without actually forcing themselves to think through the potential.

1:11:05And here's what happens is that they apply a filter that says, oh, I only have a like one in 10 chance to pull this off. There's only a 10 % success rate or whatever. Not going to do that. Well, if it's a one in 10 % one in 10 chance at $10 billion, it might be worth it, right? Like it might be that maybe not like when it's sometimes it's you know based on stage of life and things like that in terms of you know risk keeping afford but like for instance And so by the way when I say probability is that the he's out of me it's like you can do multiple way right you can say oh here's the X percent chance you can do What statistics as an inventory that's like oh here's path A there's a Y percent chance that happens and here's what the outcome would be Z percent chance or anyway here the popular things and you come up come up with what's called the expected value anyway So let's say we just look at two branches like oh there's a 5050 chance that I'm going to make 10 million dollars and she's won't take away one branch to keep this shorter.

1:11:58So the expected value of that is $5 million. That's literally the expected value. It's like oh you got a 5050 chance that a 10 million dollar outcome. And let's say you have a 10 % chance at $800 million or a 500, whatever it is. So mathematically it's like okay well you should at least consider that other one, even though the chances are lower because the expected value is higher. Okay, so that's the number one. Anyone will get through the rest of the, so start with the kind of potential outcome. Then look at probably not the other way around because then you apply that mental filter and cast throwout ideas that may not have been worth throwing out.

1:12:33The third thing is, or is, what I think of is either passion or proximity. Do you care about this actual thing that you can actually kind of bring to bear? And then fourth one is, just like I need a P word, it's like prowess. Like do you have some assets, something that makes you uniquely positioned, either if you're building a new product, you have existing lines of code that you can reuse, you have a market that you already have access to, there's something about this particular idea that you have an unfair advantage pursuing, and that impacts your probability of success, right? This is the other reason, it's like you need to kind of look at all those things.

1:13:12And once again, no one thing is the deciding factor. You're not going to just pick the thing that has the high expected value, the potential times, whatever. It's like you have to sort of look at all of them and look at your own situation. But it helps to kind of think through that, to kind of have the kind of discipline, to say, how big could it be? What are the chances? How much do I care about solving this problem? Is this something that can work on for two years, ten years, twenty years? And finally, like, why me? Why me? Why my company? Why would we succeed at this? Why is our chance to success even low higher than the rest of the rest of the world?

1:13:48Okay, so we're already picturing the spreadsheet here for every idea you have you basically have a column potential probability of success proximity, you said just like a passion. Okay, passion. Yeah. I started with passion and I have an issue with passion as a word because it's ambiguous because we talk within startup circles is like oh pursue your passion. Sure, but it's like you know what most of the companies that exist today that are even successful with awesome founders, they didn't necessarily pursue their passion. It's like they kind of maybe are packed with like in their arsenal, particular problem or a market segment or something like that, but it's like it's okay to become passionate about something as you kind of dig into it or whatever.

1:14:35That's fine too. So it's Anyway, so yeah, I have one of my favorite startups that I've invested in it's called zip. It's a procurement platform The founders were not passionate about procurement when they got into the space They just saw a huge opportunity They thought they could build a much better product and they got passionate about it once they started working on it and finally That's this is the thing right so yes If you can find your true calling. This is what you're meant to do in the world and and you have the opportunity to do it great That's a tiny small fraction of people right like that's that doesn't happen.

1:15:06And then you may not even know what your passion like, especially if you're a first -time founder, it's like, okay, well, I haven't seen the world, I don't know. So yeah, it's okay. So just for people, if they're creating a spreadsheet for all their ideas and for startups, it's potential, probability of success, passion, prowess. Yes. Okay, amazing. Okay, let's talk about culture. And I know you spend a lot of your time on helping build up spots culture create, the original culture, you created this epic culture code deck, I think it's 128 pages. So maybe just to dive into it, what was that process like to define the culture of a company and maintain the culture over time?

1:15:48I'll say awful. Not the beginning of it. Okay, so I'll give you the very quick story because I, my co -founder, we're having a lot of our founders meetings, or founders dinners as we do. And he had been meeting with this CEO group and he said, oh, Dermesh, I hear this culture thing is really important. By the way, the word culture had never been mentioned prior to this conversation, the halls of HubSpot like ever. And this was how many years in. This is, I wanna say three or four years in. I can check the records because by the way, even Brian and I, even back when people worked on offices, most of our communication was over email and async.

1:16:25because we've always been big believers in the kind of written form. But anyway, I can tell you whether, in the word, cultural is used or not. So, and it was not. And so, and he's like, oh, I've heard, because you're talking to a CEO for us, culture is super important. Darmesh, can you go do that? I'm like, okay, Brian, like all the people and all of me is like, I am like literally like the bottom desk style If not, like the worst possible person is not that, I don't like people, I just don't like being around them a whole lot. And for little I know of culture, it sort of involves people, right?

1:17:03Like that, you know, I don't know, but it seems like that'd be the wrong person. By anyway, I'm team player. I'm like, okay. It does feel like it would be important. And so I took on the task. Look, and I didn't really know when he said like, like, Darmesh, can you go do that? Like, what does that mean? And so I took it to mean. It's like, okay, well, Like, culture actually already exists. We have a culture, like, it's like, whatever it is. So, and it's working pretty well. Companies doing a well. People seem happy. And so I said, okay, well, what I'm really trying to do is kind of describe the culture that's there.

1:17:39So it's not creating cultures, articulating the culture, so we know what it is. And so then this is the, you can start and be showing up again. So the question I asked myself is, I literally asked myself this question, which is, if I could write a Python function that would measure the probability of success of a new person coming into HubSpot. What would the factors be? What are the things that if I could measure if I knew I had a truth function that said, oh, let's feel zero to 10. Here's how they rank on this and this and this and this and this and this and this. I could approximate how successful and how good they're going to be for HubSpot.

1:18:12That's my exercise. Okay. So I did an internal survey and I'll tell you why this was such an awful experience in the beginning because this is also a good story. So once I took on this I sent an email to the company. It's like, hey, everyone, I'm just going to be like digging into culture. So I'm going to send this kind of survey out. I just want to get us an understanding so I can write. And the negativity and the visceral response to that one email was literally up until that point. It's still ranks in top three, like worse things I've ever like, but that people felt so negatively and so strongly.

1:18:50And I was not expecting it, right? And I'll tell you the one line that really, like, just got wrenching was like, Dermesh. Here we're talking about culture. Next we're going to have like posters up on the wall about excellence. HubSpot is not the company that I thought I joined. And like, oh, and I just like the deep part of me is like, I just did not know how overloaded that idea of culture was, right? And so then when you dig into it, it's like, oh, because so many companies had done it so poorly and just didn't walk the walk or whatever. This is why. There was a reason why there was this kind of negative response.

1:19:30So anyway. So when back to my thing is like, I get it. So I'm going to try to describe what we have in the right -to -street function. So I wrote the slide deck, which had exactly 16 slides, and that answered this one question, which is if I could write a Python code, what are the factors? So what are the attributes that we would look for in humans that and the reason I came up with that particular question is that I got this when I did the survey I did the NPS survey which everyone knows that you send it customers is like, oh, what a few of zero 10. How likely are you to recommend how spot as a place to work and that the other NPS question is like, why did you give that answer as it turns out, here's the thing that I learned which was troubling.

1:20:16everything, everyone was happy and the reason they were happy is because of the other people at HubSpot. That was the number one reason. Which is both good and bad. It's like, okay, well, that's awesome, but that doesn't tell me anything, right? It's like, okay, well, that's like a self -reinforcing kind of recursive loop. And so that's where it's like, okay, well, what makes the people at HubSpot, the people that are at HubSpot? Let's come up with the attributes that define what it means to be, what are these people that makes other people happy. And so we came up with the original kind of set of things that were embodying that slide deck.

1:20:47And I called that slide deck the culture code deck. And the reason I called it the culture code deck is not because there's a code of conduct or a moral code or this is how a company should be run. It was because if I could write code to kind of define the culture and hope about this is what the code would look like. And since that point, it's like the question I keep asking myself is if we could have an operating system that ran the company, um, so he'd keep part of me. not that you could do that, but what would that look like? And so, and the big kind of unlock, there are very few original ideas I have that are any good.

1:21:23One of them is this thing that culture is a product, period, and that every company builds two products. One is the product they build for their customers, and the other is a product they build for their team. That's what culture is, is the product you build for your team. And let's say we stipulate that that just happens to be true. Just humor me for a minute. If you assume that's true, then a bunch of things kind of follow from that that popular, right? That hypothesis, which is, oh, well, just like we would never build a product without talking to customers, we would never build a culture without talking to the customers of the product, which are the people.

1:22:05Just so we do a repeat of that original NTF survey, we've been doing every quarter now forever to figure out what the NPS of that product is, our culture product. The other thing is like, okay, well, there's no product person, the history of humankind that would have said, oh, I built this product, it's awesome. I'm done. No one would ever say that. And this is the number one mistake, I think, I think founders make is that they say, oh, we have an awesome culture and my job is to preserve the culture. That is not the job. Because the needs of your customers change, the need for the employees change, right?

1:22:47The culture exists to help the great people do great things for the company. That's why the culture is there. And the things they need later as the company scales are different. And so just like you would never freeze the lines of code of a product, you would never freeze the lines of code of a culture. Culture should be iterated on just like you iterate on product. So that was like, and there's so many other things that kind of fall. So just like in a product, you will get feedback from the customers like, oh, here are the bugs. And we actually call them bugs. It's like, oh, here are the bugs in the culture.

1:23:16And we have the all hands meeting. So we have the survey comes back once again, to your hands, transparency, notion, every single survey response. It's anonymous in terms of who submitted it. We publish it. Right. The quad score, the subjective thing, everything. And then we will categorize it. And we will then at the next all hands meeting, we call them all lines. Anyway, I love that. All minds going. And it's like, okay, so here are the things that we heard just like we would do for a product meeting. It's like, oh, we just, the customers, like, here's what we're hearing back. It's like, here's a bug that you've identified.

1:23:50Here's the ones we're going to fix. And when we're going to fix them, we're going to commit, like, oh, like you said, this was broken. Okay, we're going to do something about that. Here are the things that, like, yeah, I know you don't like it that way, but it works as design which we do in product all the time, right? And you should have the right to do that. It's like, yep, some people are going to disagree. And there may be any number of reasons why we think that needs to stay the way to end up saying necessarily forever. But as it stands, we are not prioritizing this. We are not fixing that thing that you think needs fixing for whatever reason.

1:24:21So the one lesson here is very few things I've learned that I think are universally applicable. That one I think is right. And just so much brightness and goodness falls out of that. is if you think of the people as customers, if you think of the culture as product, it takes away this kind of abstract nature of working on culture and then it takes away this thing. I heard this back in the early commentary. Five teams, they go, well, culture is not something you really build because that seems fake. That seems enough authentic that you just go, it's like, oh, we're gonna craft this culture. Like, no, it's, we craft in the same way.

1:24:57Like, I'm not saying we're gonna impose it, like we're gonna do this off in isolation, but we're gonna work on it. and it's something you actually do manifest. And it's not just up to the founders. Wow, what an amazing story. You're definitely getting laughs from it for me. I think there's at least one laugh per minute so far in this podcast. This is amazing. And I think this point you just made about your job is not to preserve the culture as a leader. I think that's really profound. Because I think most people don't think that. They think their job is we need to maintain our culture as we grow.

1:25:26It's all fading away or culture's changing. But your point is that's good and that's great. Bringing it back to product, I think this is an important thing. We kind of let this is the second order lesson learned after you start with the culture of this product. One of the challenges almost everyone will deal with is that you have these things. And so by the way, just because culture is product does not mean there's not a sense of having what some might label as core values. Because we have this in product as well. There are core values that the product believes in. We believe in about our product that we're going to kind of hold constant through it.

1:25:58Like, over building for SMB, one of the easy to use is there's constraints that we put on ourselves that are intentional that, even though we iterate, we're not gonna iterate away from these things that we just, that kind of that high conviction back thing again. But not everything that's part of your product is a core value, right? So not everything that was part of your culture earlier. So transparency is one that has endured over a long time, right, as part of our core value. And we preserved it through the IPO, I share that story. And there are things that we changed. We're part of like, oh, we believe this meritocracy thing in a flat organization, but the manifestation of that was a bug with the lack of titles, right?

1:26:35And so we changed that. It's like, okay, well, there are things. And here's the other thing that is a mixed metaphor problem and it will come with a good metaphor yet. But there are only things that you have that are kind of core and the way I describe it right now, I'm just gonna put it out there and ticking myself or not coming up with a better metaphor. or is like federal versus state law. All right. So there are federal laws, right, when we have your United States, that says, OK, here are the things. And these are the inaudible rights of all citizens in the United States, these are the things that are core.

1:27:10But then we have state things, right? It's like, oh, for this particular state, on these particular aspects, they can optimize for their particular states. It's like, yes, we understand this is the co -relate, but for RC, we're going to do this. So we have something similar at HubSpot. We have a core set of things that are part the culture, part of the thing is like, okay, here's what we believe. And then there are things that the individual groups are ahead of engineering come back. It's like, yeah, I know overall that the founders leaning is X. But for my particular group, that doesn't really make sense.

1:27:40We're going to do this. I'll give you an example. So one of the core things from the early years of HubSpot is like, we don't care about what hours you work, like from what time to what time. It's like, it doesn't matter. Like, literally, it doesn't matter. And as we didn't track it, we don't care, but then over time it's like, well, we have a support organization. And that organization, as it turns out, does matter to our customers, right? Like we need to, you know, have coverage and things like that. It's like, okay, well, that sort of makes sense, right? It's like, but then you sort of have to kind of, a pick your battles, but then kind of fight back.

1:28:09For instance, transparency, there have been times where individual, uh, org leaders like, okay, Darmesh, I know you believe in this transparency thing and Brian believes in this transparency thing, But it's inefficient for someone that is a SDR and the sales organization to have access to the high order financials It's a waste of time. It's a distraction. That's that that was the argument It's like you may be right, but the binary decision the fact that we value transparency so much Work going to yes, maybe it is a distraction fine and the other one is like oh, I don't want my team to have it because I just don't So, you know, we were hiring so fast and it's like, and once again, that's a lot of trust to put into people or whatever.

1:28:49It's like, yeah, but then this is one of the other lessons is, cultures over time become self -fulfilling prophecies. Is that so in the early, Alice, the big lesson learned. So when I put the first version, the public -facing version of the culture code out there, and I got a feedback from the team and like, they're mesh, like you say this in the culture code deck And it's just not true. It's not true enough for us to kind of like state that as a thing. And so the thing that I did is in the deck, I have what I call these little liner notes. It's like, it's definitely going on right ahead. It's like, oh, this is not really true yet.

1:29:25So it's more of an aspiration. This is how we want it to be. But we're not walking the walk yet on this thing. So I didn't take it out because I wanted to be an aspiration. And here's the thing that I may have not thought it through. I cannot take credit for it. What happened over the fullness of time is that those things that were aspirations became increasingly true by virtue of being in the deck because as people join, it's like, oh, that's the thing we aspire to. I'm going to pretend like that's actually the culture of upspot, which is exactly what we want. So it's okay to say things that are asperational, just call them out.

1:29:59Don't present things that are not true, but back off of the things that you would like to be true. Wow. There's so many lessons there. There reminds me of Airbnb actually. I was there when they created the original, there's these six core values of Airbnb. One of them was simplify, turns out. And then I don't know some number of years later, the founders realized we're not actually have a good at this. And value should deflect who you are, not who you aspire to be. And I like this middle ground you found of like, I'm gonna put in here, but I'll note, this isn't necessarily who we are. We didn't do that.

1:30:28That would have been a smart move. So they removed that core value. They're like, we're not actually this. And it going from six to four. There's another one they removed. So I was really impressed because we're like, I'm kidding. Wait, because they kept them up in meetings. They're like, it's simplifying them. No, we have this actually really complicated. Yeah. Yeah. Okay. So what I'm going to do, I have one more question about AI. And to make this work timing wise, I'm going to cut the lightning round. So I hope that's okay. Totally fine. Okay. I know AI is very top of my mind. By the way, this is my dog vocal plan to have to skip the lightning round, because that's the thing I'm not good at.

1:31:03I just, I'm not saying you're, you're, you're, I was dreading the most playing for D chess here. You knew exactly the timing and you're like, I will take this long, all these answers, so it'll perfectly play out. So now you're spending a lot of time in AI. It's on many people's minds these days. You built this product called chat spot. Is it still called chat spot or did you, is that the product you changed the name for that still chat spot? It's still chat spot, still chat spot. And I know that you've handled that off now to like a team, actually, that's working on this. It's not like just a dark mesh project anymore.

1:31:34So I don't know exactly where to go with this, but just why is AI so top of mind? And where do you think people should be spending time? Where do you think things are heading? What comes to mind around AI? Yeah, it's obviously I'm not alone in my excitement, but I will say this. So I've been so I'm about to get the 30 year anniversary of my working in like commercial software, right? like that, so I've been at this for a long, long time, and that's all I've ever known, that's all I've ever done. And the last time I was this both excited, I'll just excited because it was one of the web first came along in the middle eight nineties.

1:32:15And I'm like, oh, like this literally like changed everything, right? It's like relevant to everything. It's like, if literally everything is going to be impacted by this thing called the internet and I was in my early 20s, right? And I've been here for mobile, I've been here for social, I've seen lots of things that people got really excited about. But nothing to me has kind of hit the rickshaw's agree that AI does and the reason is, okay, so if you think about early computers, PCs, that kind of gave us compute at scale, which was awesome. The internet effectively gave us kind of distribution at scale.

1:32:54It allowed us to take information, products, whatever, and get them out of scale because everything was now connected where before it was not. What AI gives us now is cognition at scale, the ability to kind of literally amplify the human brain. Like that's never been done before. Nothing we haven't been trying, but now we have demonstrable evidence and products that actually work. we've used chat to PT and its products like it. And so it's life changing, right? And so for the product people out there, which is a lot of you, AI, so by the way, the internet unlocked a massive opportunity because especially for startups, right?

1:33:32It's like, oh, we can just reimagine the world with this new thing called the internet that was not possible a year ago. And now is what can we kind of now unlock and lock in lots of great companies that were created? I think something similar will happen here. And there's a couple of things that I think that are just technically that I think are possible vectors that kind of satisfy my spreadsheet of if I were going to choose ideas and this applies across industries is that so as software companies and product builders most of us have always called our products like oh we build intuitive products where is that good and we say that right and it turns out it's just not true.

1:34:12Because as a user of X -Product, whatever happens to be, it's like, okay, I've got this mental model, the thing I'm trying to accomplish. And then I have to translate that into a series of clicks, and drags, and touches, and swipes in order to accomplish the thing that I want in the software product that I'm using. And what varies is the degree to which that translation needs to occur. But there is a impedance mismatch, right? There's a translation that has to happen from the what's in my head. Like, I want to remove this background in Photoshop. I want to create this report in HubSpot. And so the opportunity now is that we're going from what was an imperative model.

1:34:46This is what engineers would call like a step -by -step. You give instructions to the computer like do this, do this, do this, do this, do this. And then hopefully you get the opportunity you're looking for to what engineers would call a declarative model. A declarative model is you describe the outcome you want, not the steps to get there. And the closest analogy that most people are familiar with is SQL, the Korean language, right? So before SQL, if you wanted to get data out of a system, you wrote code. It says, OK, loop over all my customer records. And then filter out the ones that have less than a million dollars of revenue and then give me the result.

1:35:18And if you else said, no, just put a wear clause on it. Describe the data you want and what columns you want and how you want to order it and what filters you want to apply. And it figures out, it the database figures out how to get you the thing that you're looking for. Now we have the ability to do that for interfaces for software. So instead of saying quick here, drag here, it's like, I want you to generate a report that's all my customers in Europe that we signed up last quarter that were more than a hundred K and AR. And you just take the thing that's in your head and express it in whatever medium you choose.

1:35:50Text voice doesn't matter. And the software now can actually the so now the technology exists to pull that off. Did not exist before and now it exists. I know I didn't exist before because six and a half years ago I built this product called growth bot. That was a chatbot for HubSpot software and business software, generally for marketing and sales people. Essentially, what chatspot is now, amazing product growth bot and it had just one teeny tiny small problem, which is it didn't work. And really welcome, Steve, really like brilliant idea, it just didn't work. The technology is wasn't there, right?

1:36:27You couldn't do it with any degree of fidelity because AI had, and now you can. And that's what kind of caused me to go, kind of, prove out my theories. Like I had a chip on my shoulder, particularly with that idea, right? But I think, and I'm not suggesting that, you know, web and mobile interfaces are gonna go away, but there are a class of use cases across pretty much all software, where we can make things easier for the human by not forcing that translation layer and just make it truly intuitive. Thank you for coming to my TED talk. So it's great about watching you because you were kind of built in public with this AI stuff that you're just you're doing it like you're approached to learning about this as building and doing when you launch chat bot or chat spot you tweeted that it took you many many late nights of work for people that want to understand what's going on get ahead of where things are going build the skills to be relevant in the future do you have any advice is it just build stuff and do or is there anything else you'd recommend for people that want to understand what the hell's going on?

1:37:33Yeah, so, and this is very simple practical advice. And this is the same thing for engineers and software as well, is don't try to go learn something because you think it's like word -full learning, find an actual problem that you care about and go try to solve it with that new thing, right? Like you have something tangible that you're trying to do. So, for instance, going back to my book, back to the talk, other I'm public speaking, it's like, okay, if I had said, oh, I want to learn about humor and stand up comedy, I don't think I would have accomplished the thing, but I had a goal in mind, right, which is like, hey, I need to be able to get up on a stage and hold up a thing, and I have this measurable thing.

1:38:13So, whatever is whatever line of business you're in, whatever you do as a professional, I guarantee you there are ways AI can help you, even with the tools that we have out there right now. So either user tools, build tools on top of the APIs that exist very easily accessible right now, and very cheap to start. Yeah, just do it and iterate. And I have a big believer also in learning in public as well. That's why the culture code is out there. It's like, okay, well, if you accept the fact that culture is a product, we're gonna learn about things much better, instead of just getting feedback from the employees at HubSpot, why don't we put it out to the world and because the internet is exactly good it telling you why you're an idiot, right?

1:38:53It's like what I was core core shrinks. So I recommend like have a go in mind, write about it. I'm a big believer in writing generally, but yeah, do it in public. I love that advice. Is there anything else that you wanted to share or touch on or leave listeners with before we wrap up? We cover a lot of territory. Yeah, we did. I might do the quick, well, I'm a head thing. I'll leave it with this. So I have my definition of success. I came up with years ago that I can still stand by, and the HubSpot actually stands by, is success is making the people who believed in you look brilliant. That's it.

1:39:40What I like about that is this is not like an inward facing thing. This is the customer of folks like, oh, all the employees that join your company when you're a founder, that we're kind of silly enough to could I join you on this thing whatever like you were spotted customers that believed in the early product that completely sucked investors that believe like all of that like do what you can to like know maybe they reflect back on is like oh why would I smart to having having believed in Lenny and and what he's doing so yeah that is really beautiful Dermesh you're wonderful thank you so much for doing this this has been a lot of fun and I'm glad we were able to put together.

1:40:16Same. We covered so much ground. We got through everything that I was hoping to get through and more. Working folks find out if they want to follow it up to you and maybe reach out if they have questions and then how can listeners be useful to you? Sure. So I'm Darmesh, D -H -A -R -M -E -S -H everywhere. I'm not only findable, I'm unavoidable on the internet, I'm sure it's out. And follow me on social media, tell me where I'm being an idiot when I can learn. And tell me your favorite thing. Leave a YouTube comment and tell me which Lenny episodes were your favorites so I can go back because I've been binge watching anyway.

1:40:52I love live, I'd love to. And then speaking of you, I know you have websites of your content, you have your YouTube channel where can folks find those things. Yeah, if you just go to darmesh .com that'll have links to the other places. And probably most often on LinkedIn as it turns out. topic for whole other day. But yeah, awesome. All right. Well, it should go to our match. Thank you so much for being here. Thank you. Bye, everyone. Thank you so much for listening. If you found this valuable, you can subscribe to the show on Apple Podcasts, Spotify, or your favorite podcast app. Also, please consider giving us a rating or a leaving review as that really helps other listeners find the podcast.

1:41:35You can find all past episodes or learn more about the show. at Lenny's Podcasts .com. See you in the next episode.