Build your culture like a product, w/HubSpot's Dharmesh Shah

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1:29And right now, you can get six months of Rippling free when you sign up at rippling.com slash scale. That's R-I-P-P-L-I-N-G dot com slash scale. Don't get sad. Get Rippling. Terms and conditions apply. We didn't really use the word culture for the first five or six years of HubSpot. It was not a thing we talked about. And I know this because I went through the email logs. That's Dharmesh Shah, co-founder and CTO of HubSpot. Dharmesh only started to take culture seriously several years after launching the company, when his co-founder and HubSpot then-CEO, Brian Halligan, found himself at the center of an uncomfortable exchange with his peers.

2:12He joined this CEO group that got together once a quarter. The way I always pictured it was like group therapy for CEOs.

2:23The theme for this particular meeting was culture. They would go around the group, and when it was Brian's turn, he's like, well, you know, that's not something we're really spending time on. Culture is something that we will deal with some other day. And they came down on him hard. They're like, Brian, I don't think you understand. There's nothing more important than culture. That's the thing that will define the company's destiny over the long term. If you don't get that right, nothing else will matter. And so he nodded his head and that meeting was over. The meeting was over, but for Dharmesh, his journey as a culture builder was about to begin.

3:00Brian tells me about his meeting that he just had about culture. There's a pause in the conversation and he's like, Dharmesh, why don't you go do that? It's fair to say Dharmesh wasn't totally on board with Brian's proposal. I'm the least qualified. I know nothing about it. I'm an introvert and antisocial. This doesn't make any sense. But being the good co-founder that I am, I'm like, okay, fine, I'll dig into it. Dharmesh fell back on what he knew best, his skill set as a product designer and software engineer. So his first step was market research. His employees would be the ones buying into this culture.

3:37So he sent out a tentative company-wide email to test the market. It was a very, in my mind, innocuous request. Like, hey, I'm working on culture. I'm going to be asking for your feedback. I might do some surveys and things like that. With the email sent, Dharmesh sat back and waited for the insights to pour in. Some of the most acidic, negative, harsh commentary I've ever received came back in response to that email. And these are all people that I'd hired. I'd worked with them. And it shocked me. Your product is awful and we ain't buying it. It's the most distressing feedback a product designer can imagine.

4:18But for Dharmesh, this feedback was invaluable. So he dug deeper.

4:26What I came to learn is that people have this preconceived notion that the only companies that talk about culture are the ones that have already lost their way. They take fancy-sounding words and fancy-sounding quotes and put them on posters and put them on coffee mugs, but it actually has no discernible purpose at best, and at worst it's actually toxic because it misrepresents or is just a wrong, bad thing. For Dharmesh, these were specific, actionable insights from his customer base. Now, he had to set about intentionally building a culture for HubSpot and selling it to his employees. It would be the most important product development challenge he'd ever faced, and it would take all of his product design skills.

5:13Dharmesh authored the famed HubSpot Culture Code, the presentation deck that's inspired thousands of entrepreneurs to think more deeply about how to build their own company culture. That's why I believe that to create a company culture you're proud of, you need to build it like your product. Define it, iterate, and sell.

5:36You've got to have incredible talent at every position. It's like this huge push. There are fires burning when you're going home. Can you believe it? Such an idiot. And then you go back to, this is totally going to be amazing. There are so many easy ways. I have no idea what to do. Sorry, we made a mistake. But you have to time it right. Oops. Working out of a three-bedroom apartment. Stuff that just seems absolutely nut balls. Ten years later, we're like, well, that's just how you do it. We haven't made it just how you do it.

6:06This is Masters of Scale.

6:13I'm Reid Hoffman, co-founder of LinkedIn, partner at Greylock, and your host. And I believe that to create a company culture you're proud of, you need to build it like your product. Define it, iterate, and sell. Even if you've never built a product before, you might have a good idea about some of the key aspects of the process. Designing the original idea and outlining its features, functionality, and user experience. collaborating with a product team and iterating on the product as you go to address bugs, feedback, and shifting vision. This product approach can also be used to build a strong, adaptable culture at your business.

6:51To create an honest culture that lasts, that same dedication to outlining, collaborating, addressing user feedback, and ongoing iteration is required.

7:05I wanted to talk to Dharmesh Shah, co-founder and CTO of HubSpot, about this, because in creating the HubSpot Culture Code, he's helped establish a culture known for its transparency, customer focus, and commitment to employee empowerment. HubSpot is a platform that helps businesses manage their customer relations and marketing operations. Launched in 2006, it now has annual revenue of over$1.7 billion. dollars. Meanwhile, the HubSpot Culture Code has inspired many founders and business leaders to adopt its approach when building their own, vibrant, adaptable company cultures. At the top of the show, we heard how Dharmesh reluctantly took on the task of building culture at HubSpot.

7:46Following that initial burst of scathing blowback from his employees, he decided to build a deck to record what the current state of the culture was at HubSpot, and he fell back on what he felt most comfortable doing, coding. When I wrote the culture deck, I thought of it as a piece of code. If I were to write Python code to kind of run the company, what would that code look like? Yeah, it was culture Python. It was exactly, that's what it was. It was culture Python. Dharmesh also fell back on the central principles of coding. Define your problem as narrowly as possible. Launch early, then iterate.

8:23I was very deliberate and very limited in scope in terms of what that first Culture Code deck tried to answer. And it answered exactly one question. What are the attributes that people have that increase their likelihood of being successful and happy at HubSpot? Let's just tackle this problem iteratively. Let's get the first version out there for commentary. That version 1.0 was just 16 slides. It documented the culture that had naturally merged at HubSpot. Now it was time for Dharmesh to get feedback on that first release. The team came back. It's like, oh, actually, that thing has turned out to be useful.

9:00Like, OK, good.

9:04The customer feedback was in and they were sold on the idea, but they had some feedback. But it doesn't answer enough. It's like it tells us the who, but it doesn't tell us how to make decisions. It doesn't go far enough. Wouldn't it be more useful if it also helped us with how we do things and describing to people how we make decisions and why we would do this way versus that way? A product designer refines and improves their product based on user needs, preferences, and real-world testing. So Dharmesh kept putting the culture code through this iteration cycle using surveys, focus groups, and one-on-one meetings with team members.

9:42The initial culture code prototype soon became a living document. And by seeing it grow before their eyes, based on the feedback they gave, the once skeptical customer base were now avid power users. And this is another key advantage about treating your culture as a collaborative product development project. You'll get huge buy-in from your team.

10:07Feedback from your team isn't the only tool in your product designer's kit. Inspiration can come from other products. There was another culture deck that was, in my mind, the canonical culture deck, which was the Netflix culture deck. Very, very widely read. I think they were the first ones to do a deck like that and actually kind of share it with the world. And it was brilliant. And the entire management team at HubSpot had read it multiple times. We could recite parts of it by heart because it was just so well done. Darmesh and Brian weren't just inspired by the deck, but by the way Netflix had made it public.

10:42They wondered if, by doing the same, they could get even more feedback that would help them refine it. So they reached out to Netflix's then chief talent officer and author of the Netflix Culture Deck, Patty McCord, and asked her thoughts on making Companies Culture Deck public. He's like, it was life-changing for Netflix, even though it's going to feel uncomfortable because you are going to get lots of feedback once you put something out there. It's worth it. And she looked at and provided commentary on the pre-public version of the HubSpot culture code and had great feedback on the deck. Soon after that call ended, Dharmesh got some more feedback that was unexpected, but certainly not unwelcome.

11:22I get an email from Reed Hastings, the CEO of Netflix. Says, Dharmesh, Patty McCourse sent me your culture code deck. I think it's brilliant. And like, drop the mic. My life is over. My work here is done. Of course, Dharmesh's work wasn't done. And as a seasoned product developer, he knew it full well. Remember, one of the main reasons he had made the deck public was to get even more feedback. Once we published it on the internet and had tens of thousands, hundreds of thousands, millions of people read it, it was really nice to see feedback come back on that. This is why Dharmesh is still iterating on HubSpot's culture to this day.

12:02since it was first published in 2013 that Culture Code Deck has grown from 16 to 128 slides.

12:14No great product team ever thinks, it's like, oh yeah, some user somewhere reported this bug in the thing or whatever. It's like, well, I wish they would not have told that to me. That's just going to, it's like, no, like feedback is a gift. The same should be true for a culture is that feedback is a gift. You do have to change the culture over time in order for it to continue to deliver the value for which it was created. For the rest of this episode, we're going to focus on four key components of the culture code to see how Dharmesh defined, iterated, and sold each component as if it were a product.

12:46Component one, solve for the customer. The first component we're going to look at in the HubSpot culture deck is how they make sure everything they do is focused on the customer's experience and needs. This sounds like an obvious cultural directive to build your business around, but it's surprisingly easy for businesses to lose sight of this. Dharmesh experienced this from a customer's perspective when he had issues with his internet provider. So my internet connection went down, and I have a well-known internet service provider, and they sent me an email, and here was the sentence, like, we're aware that you may have lost connection to your internet.

13:24And my reaction is, I've been a customer for 12 years. You know that I live on the internet. You know that my internet connection went down because you know what? The bits stopped flowing from my computer to your network. So don't open with this, oh, hypothetical, possibly, you know, we may have caused you some inconvenience. And not even acknowledging the fact that there's an actual problem. What infuriated Darmesh about that email wasn't just the mealy-mouthed explanation. Nowhere in this email did they actually say that they were sorry for this outage. And that's like the cardinal sin of customer experience.

14:00Even if it's not your fault, maybe it was a partner or something outside of your control, that doesn't really matter to the customer. And it was just kind of blindingly obvious, like how could you send an email like that out without using the word sorry? For Dharmesh, this experience clearly defined the importance of making solving for the customer a core component of HubSpot's company culture. To do this, Dharmesh makes sure his team keeps as close as possible to the customer's perspective. We have a monthly meeting where the entire exec team gets together and we talk about customer issues. We have an actual live customer join us on that call.

14:35They're often customers that are not completely thrilled with us. We may have had a misstep or something like that. So it's not just the, oh, we're hearing the customer's pain. And it's not even just the, we're hearing it directly from the customer, super valuable, but we are collectively experiencing that customer pain as a group. So then we can kind of chat about it, which we do. It's like, what have we learned? What could we have done differently? What was the root cause of this thing? Just that forcing of a company to say, okay, we are going to make ourselves experience the customer pain would avoid a lot of future pain for customers.

15:05It's not just the executive team that Dharmesh wants to share in the customer pain, but also the engineers who are building the products. Nothing helps an engineer appreciate the pain they're creating when they have a bug or a missing feature that just needs to be there. than actually to feel that pain directly from customers. So we're very encouraging, sometimes draconian, about pushing engineers to talk to customers and really understanding the business, not just their particular part of the product. Notice how this cultural drive to foster a deep understanding of the customer viewpoint is self-reinforcing.

15:38When every member of the team is encouraged to talk to customers directly, then every member of the team will see just how valuable this tenant is. They'll be exposed to insights they couldn't get any other way, and they'll form a deeper empathy with their customers. This, in turn, means a stronger product, higher motivation in the team, and a drive to continue keeping the customer at the heart of the company's culture. But Dharmesh is careful to make sure the focus isn't on solving for individual customers on a case-by-case basis, but rather for the entire customer base. When we say putting the customer first, we really mean putting the collective of our customers first.

16:20We will have individual customers on certain things that are less than right. It's like, okay, well, I know you're asking for that, but what we're solving for is, what's the thing we can do that kind of raises the value that we can bring to all of our customers? With a product designer's precision, Dharmesh carefully defines exactly what it means to solve for the customer. It could easily be mistaken for a restatement of that flawed adage, the customer is always right. But it is actually a carefully engineered tenet to keep the entire company focused on the wider customer experience and to continually strive to refine that experience.

17:00Another way to keep decisions on track is by letting everyone see the big picture, which brings us to component two, extreme transparency. This notion of transparency, the reason I think it's so valuable, is empowering all individuals to kind of make good decisions on behalf of the company. This transparency grew out of HubSpot's earliest days. We were two people in a house plant sitting in a room, and we hired our first employee. Like, what are the things we share with this employee versus not? And the natural decision that we made was, like, well, everything. And so we did that for the first employee, and the second one, and the 10th one, and the 50th one, and we just never modified that rule.

17:46When it came to creating the culture code, Darmesh knew that this transparency was one of the defining factors of HubSpot's culture. And like the killer feature in any product, he knew he had to keep it, whatever the cost. It's a principle Darmesh and his co-founder, Brian, found themselves fighting particularly hard for when they were preparing their IPO in 2014. During that preparation, their legal team asked them to list HubSpot's designated insiders. I'm like, okay, so what's a designated insider? It's like, oh, well, there's these handful of people that you designate will have access to all the core financials and this very sensitive information.

18:25It's like, okay, so how many do we get to put on the list? And they're like, five to seven is usually. And so then I'm like, eight? And they're like, yeah, you can do eight. Then my co-founder's like, nine? I knew exactly where we were headed with this. Dharmesh and Brian discovered that there is no SEC regulation limiting the number of designated insiders you can have in a company. With that, they came to their decision. The decision we made was we were going to designate every individual employee at HubSpot a designated insider when we went public. At the time of their IPO, that meant HubSpot had close to 800 designated insiders.

19:07Today, that number has risen to around 7 ,000. Our motivation for doing it was very, very simple. One of our core cultural values was transparency. And had we not designated everyone an insider, we would have had to break that cultural value.

19:28This is another way creating culture is like building a product. If you compromise on the quality of one component, it can have a huge and unpredictable knock-on effect that impacts your entire business. If Darmesh and Brian had followed the conventional route of limiting the pool of designated insiders, the majority of the HubSpot team would suddenly find their vision narrowed, and a pillar of their culture would be gone. So Darmesh and Brian made an unconventional move to keep that transparency intact. It was a risk that paid off. And as we'll hear after the break, the willingness to take risks is another core component that Darmesh built into HubSpot's culture code.

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