Zigging vs. zagging: How HubSpot built a $30B company | Dharmesh Shah (co-founder/CTO)
06 Apr 2024 (6 months ago)
- Focuses on one thing and becomes exceptionally world-class at it.
- Opts not to have direct reports and avoids management responsibilities.
- Dislikes being around people for extended periods.
- Obsessed with comedy and keynote preparation.
- Uses a custom software to measure laughs per minute (LPM) in his presentations.
- Believes in zigging while others zag, going against conventional wisdom.
- Leans into his strengths and avoids areas where he is weak.
- Never had a single direct report in his 18 years at HubSpot.
- Focuses on creating a strong company culture and empowering employees.
- HubSpot's culture is based on transparency, autonomy, and a sense of ownership.
- Encourages employees to take risks and learn from their mistakes.
- Believes in hiring people who are passionate about the company's mission and values.
- Uses a "culture code" to define and communicate the company's values and expectations.
- Dharmesh Shah, co-founder and CTO of HubSpot, has no direct reports and has never had any throughout HubSpot's history, despite the company having over 7,000 employees.
- He doesn't conduct one-on-one meetings as a result of not having any direct reports.
- Dharmesh built several website projects at HubSpot, including a product called WordPlay, which generated $90,000 per month and had 16 million users.
- He purchased chad.com for $10 million and sold it two months later for over $15 million, making a profit.
- Dharmesh donated some of the proceeds from the sale of chad.com to charity, fulfilling promises he made on LinkedIn.
- He is a billionaire.
- Dharmesh was born in a village in India without paved streets, traffic lights, or hospitals.
- Before HubSpot, he founded two companies.
- Despite promising his wife not to start another company, he co-founded HubSpot after meeting his co-founder in graduate school.
- Dharmesh Shah, co-founder and CTO of HubSpot, believes that public speaking is a skill that can be acquired through practice and measurement.
- He identified humor as a key subskill and developed custom software to measure the effectiveness of his humor by calculating laughs per minute (LPM).
- HubSpot focused on improving the LPM ratio in their marketing content to increase audience engagement.
- Shah emphasizes that anyone can learn just about anything through practice, measurement, and incremental improvement.
- When telling a story, the funny parts should be the last words of that segment.
- Pause after delivering the punchline to give the audience time to react and laugh.
- Have multiple funny bits or punchlines in a story to leverage the investment made in setting up the context.
- Aim for a Laughs Per Minute (LPM) rate of above 1.25 to be in the top percentile of non-professional talks.
- Solo Weare is software built for exactly one person, in this case, Dharmesh Shah himself.
- The UI is designed for a single user, eliminating the need for extensive testing.
- If the software stops providing utility, it can be easily turned off without disappointing users.
- The decision to make software solo Weare or not depends on whether it is useful enough to enough people to justify the effort of making it non-solo Weare.
- Dharmesh Shah, co-founder and CTO of HubSpot, has never had any direct reports.
- He realized that he is not good at managing people and does not want to spend time becoming passively okay at it.
- He prefers to focus on his strengths and the things he enjoys, which are highly correlated.
- His co-founder, Brian, agreed to this arrangement and promised not to make him manage people even temporarily.
- This decision has been beneficial for both Dharmesh and HubSpot, allowing him to enjoy the benefits of scale without the downsides of managing people.
- Dharmesh Shah discusses the concept of "zigging vs. zagging" in business.
- Zigging refers to following the conventional wisdom or industry trends, while zagging refers to taking a different approach.
- HubSpot has often taken the zagging approach, which has led to its success.
- Examples of HubSpot's zagging include:
- Focusing on inbound marketing when everyone else was focused on outbound marketing.
- Creating a free CRM when everyone else was charging for CRM software.
- Building a company culture that values happiness and autonomy.
- HubSpot's zagging approach has allowed it to differentiate itself from its competitors and achieve rapid growth.
- Founders can design their companies the way they want, rather than following conventional methods.
- HubSpot co-founders, being night people, implemented a rule of no meetings before 11:00 a.m. to accommodate their work preferences.
- This rule allowed them to create deep work time in the mornings.
- Dharmesh Shah, co-founder and CTO of HubSpot, shares his experience and advice on building a successful company.
- He believes that founders should not be apprehensive about going public as it provides several benefits, including a clear market valuation and the opportunity for a wider range of investors to participate in the company's growth.
- Founders should not overthink the IPO process and should focus on creating value for their company.
- The market valuation of a publicly traded company will oscillate around its actual value over time.
- Going public allows more people, including customers, partners, and well-wishers, to participate in the company's growth.
- HubSpot's success is attributed to its ability to embrace new challenges and maintain excitement and motivation.
- Transparency is a core value at HubSpot, with all information shared equally among employees, except for legally restricted data and individual salaries.
- HubSpot challenged the norm by designating all employees as Insiders upon going public, ensuring transparency without legal limitations.
- HubSpot embraces contrarian thinking and uses the concept of "first principles" based on universal truths to challenge conventional wisdom and find innovative solutions.
- HubSpot's decision to focus on the SMB market was a high conviction, low consensus bet that required strong conviction due to its low consensus.
- HubSpot initially had a flat organizational structure with no titles but later introduced classic titles to provide benchmarks for career progression and external recognition.
- HubSpot implemented a policy of providing all employees with access to all files from the beginning to ensure simplicity and transparency.
- HubSpot started with a small office with four tables and used a lottery system to assign seats, promoting fairness and a flat organizational structure.
- HubSpot's approach of starting with the simplest possible solutions and adding complexity as needed proved effective and scalable, even as the company grew to hundreds of employees.
- HubSpot implemented a seating algorithm that avoided politics and unnecessary conflicts by ensuring different groups, such as engineers and salespeople, were not placed next to each other, considering their preferences for quiet time.
- HubSpot co-founder Dharmesh Shah emphasizes the value of simplicity and the n+1 approach, which involves continuing until something goes wrong.
- The second law of thermodynamics states that within a closed system, entropy (disorder and randomness) increases over time.
- This law applies to companies as well, leading to complexity and eventual decline if not managed.
- In the early stages of a company, the focus is on survival, then avoiding stagnation, and finally fighting complexity.
- Complexity can manifest in various ways, such as increased management layers, headcount, and overall difficulty in operations, leading to slower decline.
- Simplicity is crucial for long-term success and should be ingrained in the company culture.
- Fighting for simplicity requires constant effort as the natural tendency is towards complexity.
- Simplicity is worth fighting for and requires continuous effort.
- The universe and well-intentioned people introduce complexity naturally, making it a constant battle.
- Examples of complexity include adding pricing tiers, unnecessary product features, and various knobs and dials.
- The second law of thermodynamics leads to entropy and disorder, which must be actively combatted to maintain simplicity.
- HubSpot's success is attributed to its focus on simplicity and avoiding unnecessary complexity.
- In the early stages of product development, HubSpot implemented a rule where for every new feature added, one had to be removed, ensuring a net decrease in complexity.
- The cost of a feature should consider implementation, maintenance, and the long-term impact on business complexity.
- HubSpot's early constraints, such as building for small businesses and offering a free product, forced them to keep things simple and avoid excessive complexity.
- Systematic ways and mechanisms, such as guardrails and constraints, are more effective than relying solely on cultural beliefs and meetings to instill values within a company.
- A well-designed system outperforms other mechanisms in promoting and sustaining desired behaviors and values within an organization.
- Small and medium-sized businesses (SMBs) are challenging to target due to their limited scalability, but they offer a balance between enterprise and consumer markets with measurable growth and control over product roadmap.
- Enterprise software companies face long sales cycles, feedback loops, and revenue concentration issues, while consumer startups have binary outcomes of either massive success or failure.
- HubSpot's initial success in the SMB market was difficult due to a lack of precedent and investment skepticism, but the company's focus on SMBs, rather than competing in the enterprise software space, ultimately led to its success.
- Targeting the SMB market is challenging but more sustainable and enjoyable in the long run, and successful SMB software companies often move towards the enterprise market over time.
- Focus on high conviction, low consensus bets.
- Consider alternative paths, even if they seem unconventional.
- Don't be afraid to go against the grain and challenge the status quo.
- HubSpot decided to build an all-in-one marketing platform, even though there were already great products in each of the categories they were entering.
- Their reasoning was that customers needed a solution that integrated all of these tools and solved their actual problem, rather than a bunch of disconnected tools.
- They measured each individual product category to ensure they were not over-investing in any one area and compromising their value proposition of an integrated platform.
- Founders often fall in love with the solution instead of the problem.
- It's important to understand and define the problem you're solving.
- HubSpot didn't immediately jump into building an all-in-one platform.
- They understood the problem deeply and realized they needed to do more than one thing.
- They forced themselves to have the discipline to go broad but not kill themselves.
- You can't have the best of both worlds and be the best at everything.
- HubSpot uses flash tags to communicate the importance or urgency of suggestions or requests.
- There are four levels of flash tags: #FYI (for information only), #suggestion, #recommendation, and #plea.
- Flash tags are self-descriptive, searchable, and widely accepted within the company.
- HubSpot values autonomy and trusts its employees to make decisions, so there are no mandates.
- The #plea tag is used to express a strong recommendation without issuing a mandate.
- HubSpot's success is attributed to its ability to take a different approach to problem-solving and innovation.
- Dharmesh Shah, co-founder and CTO of HubSpot, emphasizes the importance of considering whether a disagreement is worth fighting for and the potential consequences of imposing one's will.
- Shah recommends the blog post "flashtags.org" for more information on how to use flash tags.
- HubSpot's decision-making process has evolved to prioritize data-informed choices with a designated decision-maker.
- To ensure alignment, HubSpot follows the "debate, decide, unite" principle, emphasizing open debate, commitment, and unity around decisions.
- Dharmesh Shah, HubSpot's co-founder and CTO, takes a systematic approach to decisions, identifying and prioritizing relevant factors without assigning exact weights.
- The default position on most matters should be "no" to avoid indiscriminate acceptance.
- When considering saying yes, evaluate what must be removed from one's schedule or life to accommodate the new commitment.
- When evaluating startup ideas, consider the potential outcome, probability of success, and unique advantages.
- Potential outcome should be considered first to avoid filtering out valuable ideas with lower chances of success.
- Passion is often ambiguous and not a reliable indicator of success.
- Many successful companies were founded on identified opportunities rather than initial passions.
- Founders, especially first-time founders, may not yet know their true passions due to limited life experiences.
- HubSpot's co-founder and CTO, Dharmesh Shah, initially focused on articulating the existing company culture rather than creating a new one.
- To gauge the success of new hires, Shah conducted an internal survey, which initially faced resistance due to negative perceptions of culture from previous experiences.
- HubSpot's culture is viewed as a product that evolves based on changing customer and employee needs, similar to how a product is iterated on.
- Regular NPS surveys are conducted to assess the health of the culture, identify issues, and commit to addressing them transparently.
- While not all issues can be immediately resolved, HubSpot acknowledges feedback and explains why certain aspects of the culture may need to remain unchanged.
- Prioritizing customers and treating culture as a product has led to positive outcomes for HubSpot.
- Core values are important, but not everything in a culture or product is a core value.
- HubSpot's success can be attributed to strategic choices like prioritizing transparency, despite potential inefficiencies.
- The company's culture has evolved over time, with aspirations stated in the culture code eventually becoming true due to their influence on new hires.
- It's crucial to distinguish between aspirational statements and outright falsehoods when defining a company's culture, as exemplified by Airbnb's experience with their core values.
- AI has the potential to revolutionize industries by amplifying human capabilities and enabling new possibilities and business models.
- There is a mismatch between users' mental models and the actions they need to take in software products, creating an "impedance mismatch."
- AI presents an opportunity to shift from imperative models to declarative models, making software more intuitive and user-friendly.
- Dharmesh Shah, co-founder and CTO of HubSpot, discusses the evolution of user interfaces and how technology has enabled more intuitive software.
- Newer interfaces allow users to express their desired actions in natural language, making software more user-friendly.
- The technology to support natural language interfaces did not exist six and a half years ago when Shah built a chatbot called Growth Bot, which had limited functionality due to technological constraints.
- There are opportunities to improve user experience by eliminating unnecessary translation layers and making software more intuitive.
- Don't try to learn AI just because it's trendy.
- Find a real problem you care about and try to solve it using AI.
- Use the tools and APIs that are already available.
- Iterate and learn in public.
- Define success as making the people who believed in you look brilliant.
- This includes employees, customers, investors, and anyone else who has supported you.
- Do what you can to make them proud and reflect positively on their decision to believe in you.
- Dharmesh Shah can be found online by searching for "daresh d h r m".
- He is active on social media and encourages people to tell him where he can improve.
- He also has a website (dar.com) that links to his other content.
- He is most frequently found on LinkedIn.
- Dharmesh Shah, co-founder and CTO of HubSpot, shares his insights on how the company grew from a small startup to a $30 billion business.
- He discusses the importance of zigging when others are zagging, and how HubSpot has consistently challenged conventional wisdom to achieve success.
- HubSpot's success is largely attributed to their ability to identify and capitalize on market opportunities that others overlooked.
- For example, when everyone else was focused on building social media platforms, HubSpot focused on inbound marketing and content creation.
- This contrarian approach allowed HubSpot to differentiate itself from competitors and establish a strong market position.
- Dharmesh emphasizes the significance of company culture and values in driving HubSpot's growth.
- He believes that a strong culture attracts and retains top talent, fosters innovation, and creates a sense of purpose and belonging among employees.
- HubSpot's culture is centered around values such as transparency, authenticity, and customer-centricity.
- Dharmesh highlights the effectiveness of inbound marketing as a key growth driver for HubSpot.
- Inbound marketing focuses on creating valuable content that attracts and engages customers, rather than relying on traditional advertising methods.
- By providing helpful resources and building relationships with customers, HubSpot has been able to generate leads and drive revenue.
- Dharmesh discusses the importance of technology and data in HubSpot's success.
- HubSpot leverages technology to automate processes, personalize customer experiences, and gain insights from data.
- This data-driven approach enables HubSpot to make informed decisions and continuously improve its products and services.
- Dharmesh shares his vision for the future of HubSpot.
- He believes that HubSpot will continue to grow and evolve, driven by its strong culture, focus on inbound marketing, and use of technology and data.
- HubSpot aims to empower businesses of all sizes to grow better and achieve success.