7 Brutal Questions for a $20B Founder

0:00We were constantly like, Salesforce is going to crush us tomorrow. Did you see their announcement? We're dead. We said that so many times.

0:16I'm excited to be on your show. It's kind of our show, Brian. Yeah, it's true. Do you consider yourself retired? I don't think I'll ever retire. But you're not the CEO of a company? No. I have a whole bunch of interesting stuff going on. Are you happier in this phase of your life than when you were running a$20 or$30 billion company? Or how about happier compared to when you were running a$10 million company? Where's your levels of happiness been? Because you've founded a company that now has, I don't know, 5 ,000, 6 ,000, 7 ,000 employees, billions in revenue. Now you're retired and you're not retired, but you're not running a company and you're a little bit of a VC and advisor.

0:55So tell me about your happiness levels between each one. Okay, I'm going to give you like the grading system in my head for a number of employees. Zero, like two to 10 employees. I was like a C. I didn't really, I could write code, but no one wanted it. Like you don't add a lot of value at that phase. 10 to 100, I was like an A. I felt like I knew what I was doing. I had been in, you know, scale-ups before. 100 to 1 ,000, you know, maybe A minus. Like I kind of felt like I knew what I was doing. 1 ,000 to 10 ,000. I didn't enjoy the secret of life is enjoying the passage of time. I wasn't really enjoying the passage of time.

1:35It was a lot of, I was just working on a lot of stuff I wasn't that interested in. So yeah, so it depended on where I was in the history of HubSpot. Like I had sort of CEO market fit between 10 and 1 ,000. That's like you're putting 100 to 1 ,000 in the same category. That's kind of astounding to me. That doesn't seem like those should be in the same category. So you enjoyed that whole range equally. Yeah, I worked when I, my first job out of school, I was the first BDR at a company called PTC. It's a CAD software company. And I joined, it was like 3 million in revenue. And when I left, it was billions in revenue.

2:13So I sort of saw that journey and I was part of that machine. And so, you know, I took a lot of that and brought it with me into HubSpot. And I just felt like I knew what I was doing in there and I was working on things I really enjoyed. There's a lot to changes between 100 and 1 ,000. I just sort of remember being quite motivated and happy with my day-to-day in there. Very little wary in that phase about what the NOM and GOV committee of the board thought. Very little interaction with our compliance and legal folks, things like that. Mostly just working on, you know, are the employees productive and happy or are the customers productive and happy?

2:50Like really focused on that. And I like that type of work. Can you go through? Okay, so your categories were 2 to 10, 10 to 100, 100 to 1 ,000, and then 1 ,000 to 10 ,000. What about how hard you are working, like in terms of hours? Yeah, people talk about 996. That was at least that for both Darmesh and I. We were pedals to the metal the entire time. And if we weren't working, we were thinking about working. It's not for the faint of heart. If you look at my life, it's kind of interesting. I'm 58. in the years I should have gotten married and had a bunch of kids, I had HubSpot. I'm still single.

3:28And yeah, you're kind of married to your company and you're full on. The 996 thing, it's at least that for the founders. And I work with a lot of founders today. That's a minimum for the founders, I would say these days. And you guys said something on a tweet that I thought was, you said it, that I thought was kind of interesting. When you're a founder, 90 % of the time, stuff's broken and you're dealing with problems and things kind of suck. I'm angry. I'm angry most of the time. Most of the time. I'm angry most of the time. 10 % of the time, it's like, we got this. We got it. Everything's going our way.

4:01The winds are back. But it's pretty rare. And like, you live your day looking at your Slack and your inbox and your texts, and it's mostly bad news in there. Well, so tell me, once a company gets to 100 or 1 ,000 employees or 10 ,000 employees, does that emotion go away? Same. It's the same ratio. it's still mostly a shit sandwich in your inbox. Do you feel existential threat? Like my business, we have plenty of money and very profitable, whatever. But for some reason, I still feel like an existential threat all the time. Whereas like, if we don't do this well, we're going out of business. We were constantly like, Salesforce is going to crush us tomorrow.

4:40Did you see their announcement? We're dead. We said that so many times. Yeah, we tend to overestimate where our competitors do and underestimate what we do. Maybe there's a correlation between how shitty you think you are and how good of an entrepreneur you make because maybe there's no correlation, but there's a correlation between people who start businesses because I noticed that I have, I personally have very negative self-talk where it's like, you're shit, you're nothing. You have to prove them wrong. You are horrible. You've barely grown. You can't do this. You have to, and it wears people out though because I actually think that that's negative.

5:16that's a pretty poor way to motivate people. But it motivates me. I'm the same. And people say, you know, you want to be very positive and positive and motivate the people. I tend to be paranoid. I still, after all these years, have imposter syndrome. I'm a little nervous talking to you today, believe it or not. Really? Why? Yeah, I'm not. Given all the success I've had, my confidence doesn't even remotely compare to it. And my inner monologue is like, you got so much to prove, dude. Don't fuck it up. Does Dharmesh feel the same way? Yeah, I can't say for sure, but I think very much so. Do most other, so you run in a circle with some of the best entrepreneurs on earth, most successful entrepreneurs on earth.

6:03Is that the common thread? Yes, almost all of them. I interview all these CEOs and I ask them during the interviews, do you have imposter syndrome? And they hem and they hem on hot because they don't want to say they do. They do. almost all of them. Let me ask you one more question about all this, and then I want to know about more of the Sequoia stuff, because I think that's super fascinating. Sometimes, I think that with being an entrepreneur, the hard part, I've been thinking about this a lot, and I've talked about it a lot, which is the hard part emotionally isn't the risk-taking. The risk-taking is actually not that challenging, because in a lot of cases, the risk is not that big, and even if you go big, you can kind of land somewhere and be all right.

6:43The hard part is the uncertainty and like asking yourself, am I spending time for the next six or 24 months on this thing? And will it actually make my life better or get me to where I think I want to go? That uncertainty part is quite challenging. Looking back, was dedicating all this time, like do you look back at the last 20 years and you're like, that was a life well lived? Or would you have changed anything? No, I think it was. I'll take the trade off. It was a lot of fun. I mean, there was just a lot of joy. And the people at HubSpot are amazing. The customers are amazing. Partners are amazing.

7:21So many, so many happy times. A lot of down days, but like the up days definitely outweigh it. I'm super proud of what we built. You know, yeah, I wouldn't trade it. The thing I would say about HubSpot that it's a little bit of what you said, but I think of it as like HubSpot was like two steps forward, one step back. Two steps were one step back. It looks like, oh, if you look at the graphs, like, oh, that was an easy ride. It wasn't. Like we had lots of issues and lots of problems and lots of setbacks along the way. And it's a little bit, I think, what good entrepreneurs do is they just stick with it.

7:58Like there's problems and issues and that step back and they don't fold. They just like, we're going to get through it. We're going to rally the troops. We're going to figure out, we're going to learn from that mistake and go forward. Almost all the step backs were self-inflicted.

8:38so much information. And so the output is that I have this GPT that I can ask questions that I'm having issues with in my life. Like how should I respond to this email? What's the right decision knowing that you know my goals for the future, things like that. And so I worked with HubSpot to put together a step by step process showing the audience showing you the software that I use to make this the information that I had chat GPT asked me all this stuff. So it's super easy for you to use. And like I said, I use this like 10 or 20 times a day. It's literally changed my life. And so if you want that, it's free.

9:11There's a link below. Just click it, enter your email, and we will send you everything you need to know to set this up in just about 20 minutes. And I'll show you how I use it again, 10 to 20 times a day. All right. So check it out. The link is below in the description. Back to the episode. What would you have done differently to not make that mistake? Like one of the things we did that worked, we had a thing that we did called the Pothole Report. And we live in Boston in this, like this time of year is potholes everywhere. And that was the analogy we used at HubSpot. Like we would create these potholes and sometimes you kind of bounce through the pothole and it hurt a little bit.

9:49Sometimes a pothole got so big, like you drive your whole damn car in it. And oftentimes there was a series of decisions or a series of data that we could have avoided the pothole. So the pothole report was, every time we had a pothole, we'd look back and like, how should we have handled this a year ago so that wouldn't have happened? Or what data do we wish we had? I'll give you an example of it. We had a pothole in like 2011. One of the things we did at HubSpot is we hired really good support people. And our secret sauce in hiring a support is we'd walk into an Apple store, we'd buy an iPhone, we'd hire the kid who sold us the iPhone.

10:25And they wouldn't let me in the Apple store in Cambridge anymore because we hired so many people. And so, and the value prop was great. It's like, you make a little bit more money, but how'd you like to sit down at work? It was a really good value prop. How many support people did you have? We must've had 40, 30, 40. And then what we would do is we use that support group to promote into CSMs, into sales, into products. So we fed the whole company, really, these Apple store people that were terrific. and in this one particular period of time over like a few months, like we promoted a bunch of people out, congratulated the promoter of them and then we were a little behind on hiring and the customer numbers were way up and so we prided ourselves on like answering the call within 30 seconds and then staying on as long as they wanted and you know, our wait time went to like 20 minutes and customers were like, what the hell was going on?

11:19That was a very solvable, predictable problem that, you know, if you had just looked at this one chart, we won't make that mistake again. We'd never make that mistake again. So, so many things like that along the way. And as you grow, if you're growing fast, everything breaks. You know, people break, processes break, systems break. Like everything's just breaking, breaking, breaking with scale. What I've noticed, particularly talking to people on MFM, is that it really takes like eight or nine years to see something become a real thing. It takes a lot longer than people think. I think HubSpot, if I remember correctly, I think you guys were at$20 million in revenue by year six, which is pretty huge.

11:57I think that what we're seeing right now about software companies growing faster, I don't think a lot of those guys are going to last. I think that there is a correlation between how fast something grows and potentially how fast it can die. But I do think that in order to build something that's a second mountain business, and so I refer to a second mountain business as something that's beyond just making your initial financial security number, that really does take decades. Do you think I'm wrong there? I don't know. I spend a lot of time in these companies that go zero to 20 in six months now.

12:31I've been shocked. I'm shocked at how fast these companies are growing. And there's a lot of them. And some of them are going to flame out. And some are going to get disrupted by the model companies. But some aren't. Some of them are pretty legit and selling to non-tech companies and building real businesses. So if I look back, assuming we're in a bubble today, I look back at the bubble in 99 that I lived through 100 years ago. It was a little bit of the same mania. The thing that's different is the startups back then, And they were only selling to each other. And when the kind of house of cards fell, it kind of fell on everybody.

13:12And they really have much growth and much revenue. That's what's different about today. And I think the difference is the products are different. You think about SaaS or you think about mobile, like SaaS kind of started in the Salesforce started in 2009, HubSpot, whatever. In a 10-year period, a whole bunch of companies were started. Not much happened after that 10-year period. and not much came out that was like, oh my God, that is amazing. The customers were blown away that they could grow that fast. The platforms were sort of set. Same thing with mobile. It all happened within like a couple of years.

13:45I kind of think the same with AI. I think most of the big AI companies are already founded and it's going to settle in relatively quickly in the next year or two. And the thing I think it'll be different too is like out of the last one, Amazon came out, Google came out, eBay came out, Salesforce came out. There were like four legit, lasting, great companies that came out. I think there'll be a lot more this time. This bubble will pop, but I think a lot more companies will come out the other side. Sequoia is the best of the best. You guys see everything and you see the best companies. What are the trends that you're seeing right now amongst the companies that are rocket ships, but also you thinking they're going to be durable?

14:26Are there any trends that you're noticing amongst the entrepreneurs that sets them apart versus previous generations? Okay, I came up with like a rubric first. So I see a lot of pitches, so many pitches. And I'm trying to, you know, what's my unfair advantage? And my unfair advantage is like, I spend a lot of time with CEOs, thinking about CEOs, thinking about the job. And I've done that. So I thought about like, what is like a rubric I can come up with? And I came up with a thing I call FLOC. F is that when the founder pitches, you get the sense they're first principled in thinking or they're just derivative in thinking.

15:00L is, are they lovable? Like, and the question I ask myself is, if I were 27 graduating from Sloan, would I walk over broken glass to work for this CEO? Which I think is a pretty good question. Were you lovable? I don't know. You tell me, you work for me. When I talked to people who used to work for you, they described you, I think, as mercurial, where they're like, you could be really happy, but I only know you as a nice, we only have a very cordial relationship. They would say when he was angry, he would get really, really angry. Very true. I was up and down, and it reflected my mood. My mood was up and down, and I had a hard time kind of hiding it.

15:45And I had great passion. that passion really showed up in an aggressive way. And I was definitely like, Darmesh was the teddy bear. I was sort of the bad cop a little bit. Like I was definitely tougher than Darmesh. And I think that yin and yang kind of worked for us. But lovable is one. And by the way, these criteria, I don't match 100 % to all of them. O is obsessed. Like I like founders who have been thinking about the damn problem for a long time. And then they finally start the company and they are just obsessive compulsive. And I like to see a founder that was obsessed with something earlier in their life.

16:20Maybe it was, they're the world's best, you know, Northeast, New England, you know, ping pong player, whatever it would be. Something where they had to go very, very deep down a rabbit hole and get very good at something. I think that's good quality. I like the chip on the shoulder. I had a bit of a chip on my shoulder. I think Darmesh did too. And I like founders who have a chip. Like if it's an Epo baby, I'm kind of skeptical whether they're going to stick through the ups and downs. And then are they deeply knowledgeable? Do they have founder market fit? Do they know everything about this industry?

16:54Or are they kind of a tourist in the industry? So I call it flock. And if you have all of those money, talent, partners, customers will kind of flock to you. And nobody's a 10 out of 10 on all of them, but that's kind of my rubric I use. Today's episode is brought to you by HubSpot. Did you know that most businesses only use 20 % of their data? That's like reading a book, but then tearing out four fifths of the pages. Point is, you miss a lot. And unless you're using HubSpot, the customer platform that gives you access to the data you need to grow your business, the insights that are trapped in emails, call logs, transcripts, all that unstructured data makes all the difference.

17:25Because when you know more, you grow more. And so if you want to read the whole book instead of just reading part of it, visit HubSpot.com. If you were young and getting after it at a new company, you're this 26-year-old kid with flock, what interests you right now based off everything you're seeing? One of the things I'm seeing in Sequoia is like, you know, the hardware companies are kind of set. The model companies are kind of set. All that infrastructure layer is set. The app level is really starting, is now starting to really fly. You know, Cursor is the really obvious one. But like Harvey and Legal, Rogo for Investment Banking, like every kind of job now has an app company that's doing pretty well.

18:12And so I think that's the area I would be interested in. I'm kind of an app guy. I don't really like infrastructure software that much. I don't think it's that exciting. But I like software that people use and can change their lives, improve organizations. I think that's where I would live. I like this company, Rogo, which is like, think ChatGPT, but for an investment banker. And it's doing very well. I like Harvey, which is like lawyers. I like Profound, which is, it's AEO, like instead of SEO, how do you get found in these search engines. I like Delphi. I built a clone on Delphi. And I think people are going to have clones, more and more clones.

18:48What I really want as a consumer, it's not here yet, and I'm waiting for it, is I built this clone. People can talk to my clone all they want. It's pretty good. It's getting better every day. I want to train that clone not just on what's out there in the internet with me, but train it on my email and my Slack and all my calls. And I want them to train and really know a lot about me. And instead of sending a listener to a meeting, I send my clone to a meeting that listens. And, you know, the first six months, it just listens. But then people can start to ask my clone a question. Hey, Brian, what do you think about this?

19:21And Brian will answer. And then eventually, it's just like, I don't need to go to that meeting. I'm going to send my clone to that meeting. And, you know, I have a lot of meetings every week. I don't really have time for more meetings. It's just like, send the clone out. I think that's the future of office work. And for some reason, I don't see anyone really doing that. I want the opposite of that. I don't want a clone of me. I want the better version of me to do all the work. Or like, you know, I don't want another mediocre me. I want the best version of me to be answering all the emails. I ask my clone questions and it answers them much better than I would.

19:58Because it's sitting on top of Chat2BT. It's sitting on top of all kinds of knowledge. It's very, very smart already. And as the models underneath get much better and as more content goes in there, is going to be very, very smart. Of course, you're still going to have your copia. Like I think of ChatGPT and now I use Gemini mostly as like an even better coworker than a lot of my coworkers. So you definitely have that. But I think knowledge work is going to change. And I think my vision of the future, I don't know if it's five years out, I think something like that happens. Can you tell me how you're using Gemini right now on a daily basis?

20:32The weird thing is I've been using ChatGPT for so long. It really knows me. It knows everything about me, all my health stuff, like all the projects I'm working on, like everything. And so it's tricky for me because I trained it so much. But man, Gemini is so much better than I'm starting to use Gemini. Kind of irritating that I'm going to have to train it on myself. But the thing I use that I really like are the project's functionality. So for example, on my pod, I have all these different guests. And I have the CEO of Goldman Sachs coming on. Give me a bio of the CEO of Goldman Sachs. Listen to all my podcasts I've done already.

21:11Create me a list of 20 good questions or topics to ask him. And then kind of go back and forth on it. I do that for every pod. It's super, super, super useful use case. I went to Function Health and I got all my blood work. I got up soul. They took like gallons of blood out of me, but I know everything about it. uploaded all that, collaborated on that, stuff like that. It's incredibly valuable. These days, I think I just came out with a new book, my marketing lesson, The Grateful Dead. We created a very, very cool set of videos around it that are AI generated, that are super, super cool, that I like a lot.

21:50So I've been busy with it. And it's given me a massive productivity boost. I feel like there's two of me already. I find it to be very helpful as like a daily coach of therapists of like, how should I react? Or how should I, why do I feel this way about this particular situation? But when it comes to creative stuff, I find it to be a helper, but it's not even close to being hands-off. But think about it like two years ago, it was 50%. And the year ago, it was 65. And now it's 80. Like keep drawing that curve. Like two years from now, it's gonna be really much, much better than it is today. Yeah, and it makes me think that I'm not going to be investing in an entrepreneur anymore.

22:30I'm going to be investing in a machine that can just do all this stuff. I think Sam Altman said, if OpenAI isn't the first company that has an AI as the CEO, then I'd be pretty upset. I do think that that's going to happen. I think that the haves and the have-nots in terms of money is going to separate further. I asked Dharmesh when he came on because Dharmesh is heavily involved with or he's an investor of OpenAI and is deep on this stuff, I was like, how is this going to turn out? And he was like, it's probably not going to be as good or bad as you think. And I was like, okay, that makes me feel better.

23:04But I don't know if I believe his assessment yet, even though he's probably the person I know best who has the best judgment on this topic. I kind of think the way it plays out is people who are very high agency motivated, it unleashes their creativity and potential. People who aren't might be unemployed. Are you happy that you've made it already? No, I think if I were 26 and an entrepreneur, I'd make it again. Yeah, this is a very good time to be an entrepreneur and like an outstanding, it's like never been a better time. Never been a better time in the history of homo sapiens to start a company, it might be.

23:42Yeah, I think I agree. Dude, some of these young kids, though, seem crazy. Like I don't remember, when I was in San Francisco back in 12, it was a much calmer environment than what it seems like now. Do you think that's an accurate assessment? Yes. Everyone's hair is on fire. I think that's going to make a lot of unhappy people. I think it's a bubble. And every time there's a bubble, like tourist entrepreneurs come in. They're all coming into San Francisco, which kind of bums me out. And it kind of makes sense because Google's there and OpenAI's there and they're right downtown. But man, are people moving in.

24:15And there's a lot of tourists in there. Similar happened in 2001. Similar is what happened in the late 90s. And I think it's peak bubble. I don't know where it pops. It pops at some point. A lot of those tours just get washed out. So my advice to entrepreneurs is like, if it's a bubble, what should you do? I'm not sure maximizing valuation is the right call, but let's say you want to do that because you like the headline. Almost every entrepreneur, even starting Series A, is taking money off the table. They're selling some of their own shares, which is way earlier than used to happen, and selling a lot.