Dharmesh Shah from HubSpot: I Told My Wife No More Startups, But Fate Had Other Plans

Hi, I’m Dharmesh Shah, one of the co-founders of HubSpot. Let me tell you a story about promises, unexpected encounters, and the power of fate.

A long time ago, after successfully selling my first startup, I made a solemn promise to my wife. I promised her that I was done with startups. The world of entrepreneurship had taken its toll, and I wanted to take a step back and enjoy a more peaceful life.

But, as it turns out, life has a way of surprising us when we least expect it. Fate had something else in mind for me, something I could never have predicted.

One fateful day, I had the pleasure of meeting a remarkable individual named Brian. Little did I know, this chance encounter would change my life and ultimately lead to the creation of HubSpot.

You see, Brian had a vision. A vision of transforming the way businesses attract and engage with customers. It was a vision that resonated deeply with me, stirring a fire within me that I thought had long been extinguished.

Despite my earlier promise to my wife, I couldn’t ignore the undeniable chemistry between Brian and me. Our shared passion for revolutionizing the marketing world was palpable, and it was impossible to resist the pull of this incredible opportunity.

So, I broke my promise, not because I wanted to go back on my word, but because I knew deep down that this was a chance I couldn’t pass up. Sometimes, life presents us with unexpected paths, and we have to trust our instincts and follow where they lead.

Together, Brian and I embarked on a new venture, pouring our hearts and souls into creating something extraordinary. And thus, HubSpot was born.

Looking back, I realize that sometimes the most meaningful experiences in life come when we least expect them. It’s essential to stay open to new possibilities and embrace the unknown, even if it means straying from the path we had originally planned.

So, to all of you out there, I encourage you to be open to the unexpected. Trust your instincts, follow your passions, and never be afraid to break a promise if it means pursuing a newfound calling.

I am forever grateful for that serendipitous encounter with Brian and the incredible journey we undertook together. And I have come to realize that sometimes, the greatest adventures in life begin with the words, I promised, but…

Let me tell you about my long-time connection with the co-founders of HubSpot, Brian Halligan and Dharmesh Shah. We go way back to July 2006. It’s been quite a journey watching them take the company public and expand their team from just the two of them to nearly 4000 employees.

Now, you might think I know their story inside and out, having spoken with them many times over the years. The last time I caught up with Dharmesh was four years ago at the incredible Inbound conference they host. But let me tell you, every time I talk to them, I uncover something new and exciting about their journey.

Just the other day, I had the opportunity to chat with Dharmesh on LinkedIn Live. And boy, did I learn some amazing insights! It’s incredible how they’ve accomplished what they have and the unique way they’ve gone about it.

So, Dharmesh isn’t really big on these types of things, which is why I was super excited when he decided to join me and share a bunch of awesome stuff during our chat. I’ve taken a part of our conversation and edited it for you to read below. In this snippet, Dharmesh talks about the early days of building the company, why his partnership with Brian has been so successful, and what made him, a self-proclaimed introverted tech geek, write a culture code that’s become one of the company’s greatest contributions.

If you want to listen to the entire conversation, just click on the SoundCloud player below!

My Thoughts on the 14 Year Journey of Building HubSpot

Dharmesh Shah: Well, I guess I’ll use a couple of words to describe HubSpot’s journey so far. One word that comes to mind is smoothly. We’ve had our ups and downs, like any startup, but overall, things have been going pretty well.

You can think of HubSpot as a book with multiple chapters. The first chapter focused on being a marketing software company. We were known for our expertise in inbound marketing and we really championed that movement. It was an exciting time.

But then we decided to expand our horizons and get into sales and CRM. That was the start of chapter two. We wanted to offer a more comprehensive platform. And I have to say, it’s been going really well. We’re now at the end of chapter two, and it’s been a fulfilling journey so far.

Hey there, let me tell you, it’s been quite the adventure. I’ve always considered myself a startup kind of person, and let me tell you, I truly am. People often ask me, Dharmesh, HubSpot is growing so fast, how have you managed to stick around for so long? And let me tell you the real deal. HubSpot is now a big company, with thousands of employees and it’s even publicly traded. But guess what? Brian Halligan and I are actually having more fun now than ever before. We’ve talked about this and wondered, why is that? How can we, as startup guys, be having more fun now than we did in the early years?

So here’s the deal: now, to some extent, I get to sit at the grownups’ table. I have the opportunity to take risks. It’s like this: I have this idea or vision, and I actually have the ability to bring those ideas to life and make things happen. I can even place bets on things that will pay off in the long run. I mean, sure, I still worry about money and stuff like that, but it’s great to have those early years of growth and development behind me, allowing me to take on bigger challenges.

Brent Leary: But is there anything you miss about the early days, specifically when it comes to being an entrepreneur and running a startup?

When I first started working with my early team, it felt like we were a group of people united with a common goal. We may not have had the same level of purpose and mission that we have now, but there was something special about collaborating with just a few individuals and a houseplant.

Embarking on this journey with a small team was an amazing experience. However, I’ve come to realize that scaling up our company has its own unique pleasures.

Discovering the Key to Maintaining a Strong Partnership with my Fellow Co-founder, Brian Halligan

Brent Leary: It was just you and Halligan, just two regular guys. Now, here we are, 14 years into the HubSpot journey, and you’re closing in on 4,000 employees. How has your relationship with Halligan changed from when it was just the two of you to now? I mean, you’re a big, publicly-traded company with almost 4,000 employees, but you two are still going strong. Can you tell us how your relationship has evolved over time and how you’ve managed to stay successful and together? Because, you know, a lot of people who start businesses like this end up moving on after a while.

Dharmesh Shah: You know, I think the reason HubSpot has been somewhat successful up until now is because Brian and I have a really good relationship. We’ve always had that from the very beginning, way back in year one. Actually, I wasn’t really planning on starting another company. I had promised my wife that I wouldn’t after selling my first one. But Brian and I clicked so well, and we both had this strong passion for small businesses. We wanted to start a software company together.

I personally believe that the key to our long-lasting success lies in treating our partnership like any other relationship – with mutual respect and understanding. It’s important to acknowledge that we share a common purpose, which has been the foundation of our bond since the early days. In fact, I think our willingness to have those tough conversations early on has been instrumental in our journey, and I highly recommend this approach to other co-founders in the early stages of a startup.

Imagine this: what if someone offers us a whopping $50 million or even $100 million to acquire our company? Or what if one of us decides to leave because our goals no longer align? These are the kind of challenging situations we need to foresee and discuss in advance. By doing so, we can establish a solid framework for making decisions and navigating these circumstances.

Even though I don’t really do sports, let me use a sports analogy to explain something…

But our relationship hasn’t really changed much. The way we operate the company now is pretty similar to how we did it in the beginning. We have a good understanding of each other’s strengths and weaknesses. We come from different backgrounds but share the same values, and I think that’s beneficial. He’s more into sales and marketing, while I’m more focused on technology, and that has been helpful. It’s been a positive experience overall.

When it comes to working with another person, there are two vital things: mutual respect and genuine enjoyment. These are the key ingredients to a successful partnership. It may sound simple, but it’s essential. If you don’t have a deep connection and truly enjoy spending time with your co-founder, then the startup is bound to fail. If you’re only in it for the money or the success, and you don’t actually like being around that person, it’s not going to work out. In fact, conflicts between co-founders are one of the leading causes of startup failure.

From Startups to Culture Codes

Brent Leary: So you’re a technologist and an introvert, but you started thinking about corporate culture very early on in your journey. Can you tell me about when you realized the importance of formalizing culture for our organization and why it was so important for you to dive deep into that?

Dharmesh Shah: Oh, I have an interesting story about that. Initially, culture wasn’t something we talked about much at HubSpot during our early years. As a startup, our main focus was building and selling our product. We always thought culture was something big companies dealt with when they reached a certain size, like 100 or 500 people.

So, here’s what happened. I went to this CEO group, where I would meet with a bunch of big-shot CEOs whose names you’d probably recognize. The theme for this meeting was all about culture. And let me tell you, my response at the time was basically like, Okay. Yeah, you guys are way ahead of us on this one, you know? Because they were asking me, What are you doing about culture? And my honest answer was, Well, we’re not really doing anything yet. It’s still too early for us to be thinking about that.

Well, let me tell you, those CEOs did not hold back. They really laid into me. It was like they were saying, You just don’t get it, Brian. Culture is everything. Nothing else matters if you mess that up. And let me just say, that message really stuck with me. I was like, Okay, okay, got it, and I listened.

So I give him a funny look. It’s like, huh, I don’t really understand what he’s talking about. Out of all the people in the company, I’m the one who dislikes people the most. Why would I be the one to dive into the company culture? But he was much busier than me. I’m thinking, well, how difficult could this be? There were less than a hundred people at that time.

I approached it like an engineer, you know? I was like, okay, if I had to create a function to predict the chances of any given HubSpot person succeeding and becoming one of our top performers, I don’t know the exact factors, but what would the important ones be? What sort of things would likely have an impact? Can I figure that out, at least to some extent?

So I did some digging. I asked the team for their thoughts. I wanted to know if they were happy working at HubSpot and why. And if they weren’t happy, I wanted to know why not. That’s how it all started, just a small internal thing.

I wrote this slide deck called The Culture Code. It had 16 slides at the time. A fun fact about The Culture Code slide, which has now become pretty popular since we made it public, is that some people think it’s like a set of rules for behavior, like a code of conduct. But in my mind, the word code refers to actual coding – writing computer instructions. The Culture Code is like the set of principles I would use if I could write code to make all the decisions for our company. It’s like the operating system that guides how we work.

Yeah, so ever since that time, things got kind of strange because, you see, I don’t have any employees reporting directly to me at HubSpot. It’s actually one of the core principles we established when starting HubSpot. I realized that I’m not great at managing people, so we decided to structure things differently. It’s been an interesting experience, though. Even though I’m not officially in charge of managing, I somehow became the unofficial guardian of HubSpot’s culture.

But you know what? It’s actually turned out pretty well. I think part of the reason is that I’m not directly involved in any specific team. I can take more of an objective and analytical approach to things, like an engineer or a scientist. I kind of observe and absorb what’s happening in the company and figure things out from there.

The Journey of CRM

In my opinion, let’s dive into the world of CRM and explore its evolution. It all started with marketing, and then gradually expanded to include CRM, sales, and service. As the co-founder of HubSpot, I’ve witnessed firsthand how CRM has transformed over time.

Some individuals argue that the core principles of CRM have remained unchanged. However, the way it is implemented and the technology utilized have evolved significantly. So, while the foundational aspects remain consistent, people’s approach to CRM and their utilization of technology have shifted.

So, how do I perceive the changes in CRM? I believe that although the fundamental principles have endured, the methods and strategies employed have become more innovative, allowing for greater leveraging of technology.

I think, you know, it’s true. Customers are customers. We’re all a bit more skeptical of the companies we buy from and people we do business with these days. Things have changed, you know? The relationship between buyers and sellers has shifted.

But when it comes to CRM as an industry, let me tell you what I’ve noticed. Back in the day, there were those first-generation CRM systems like Siebel, paving the way. And now we have Salesforce, which we all see as generation two. But here’s the thing, you know, I’ve always wondered why there aren’t more CRM software companies out there. I mean, seriously, there should be tons, right? We’ve got hundreds of marketing software apps, and let’s be real, CRM is way more important.

I believe the difficult part about CRM is that it has become more challenging over time. In the past, CRM was simply seen as a database to keep track of customers. It served as a basic tool to store customer data. However, things have changed. CRM now involves not only individual contacts but also includes companies and deals. The underlying structure has become more complex.

So here’s the thing: to really compete in the CRM industry these days, you can’t just settle for being a mere ol’ database. Nope, you gotta become a platform. Now, when most people hear the word platform, they think of something that other folks can build on top of. And that’s true, ya know? You got APIs and all that jazz for extending it. But there’s another aspect to it: how much is the company itself taking full advantage of the platform? Are they using all these different software services seamlessly? Ya know, making it all work together like it’s supposed to?

Deep down inside, it’s all the same thing. It’s all about automating tasks. We’re taking manual processes and turning them into software code. I believe that the CRM players have taken this idea and expanded it in a broader sense. It’s like they’re saying, Yes, automation is the key.

HubSpot has definitely embraced this perspective. Once you understand how automation works in HubSpot, you can apply that knowledge to other areas too. It’s like a domino effect, where the same principles apply because it’s the same software. I find that really helpful.

So here’s the thing, I’ve noticed a major change in the way we communicate with customers over the past few decades. It’s like there are so many different ways we can connect with them now. It’s pretty mind-blowing, actually. But you know what’s even more interesting? The way customers used to expect things from us about 20 years ago when it came to managing relationships with them, like using CRM software. Back then, people mostly thought of CRM as something that happened behind the scenes, in the office. It was like a fancy database that the sales team and customer service folks used, but customers didn’t really have much direct involvement with it. It wasn’t like they had any real connection to it, if you know what I mean.

The pandemic has really pushed people to realize the importance of going digital. It’s like a wake-up call. If you were unsure before, now you know that being online is essential. There’s no way around it.

At HubSpot, we’ve noticed a surge in demand. People are eager to get their online presence up and running. They want their websites to seamlessly connect with their customer relationship management system and everything else. Everything needs to work together smoothly. Despite the challenging times, we’ve had our best quarter ever because there’s a sense of urgency like never before.