Scaling HubSpot: Conversation with CEO Brian Halligan

Ques­tion­ing con­ven­tional wis­dom, along with a will­ing­ness to shift gears, has helped fuel HubSpot’s rapid growthBy Lisa Beets

Brian Hal­li­gan and Dharmesh Shah are co-founders of Hub­Spot, Inc., Cam­bridge, MA. Brian serves as CEO and Dharmesh as CTO. They founded the com­pany in 2006 after meet­ing at MIT two years ear­lier. The com­pany received $5 mil­lion in VC fund­ing in 2007, $12 mil­lion in 2008, and $16 mil­lion in 2009. Hub­Spot announced on March 8, 2011 that it had accepted a fourth round of financ­ing – an addi­tional $32 mil­lion from Sequoia Cap­i­tal, Google Ven­tures, and This was the first time these three com­pa­nies had ever invested together in one company.

Hub­Spot, which has trans­formed the mar­ket­ing world by empha­siz­ing the shift away from out­bound mar­ket­ing to inbound mar­ket­ing, offers an all-in-one mar­ket­ing soft­ware plat­form for small– and medium-sized busi­nesses. More than 4,000 com­pa­nies in 31 coun­tries use Hub­Spot soft­ware to increase the num­ber of vis­i­tors to their web­sites and con­vert more of those vis­i­tors to leads and cus­tomers. Appli­ca­tions in the soft­ware plat­form include web­site man­age­ment, blog­ging, search engine opti­miza­tion, lead man­age­ment, mar­ket­ing ana­lyt­ics, e-mail mar­ket­ing, land­ing pages, and social media mon­i­tor­ing. Hub­Spot also devel­oped and offers the free web­site analy­sis tool,, which has over 3 mil­lion users.

Brian and Dharmesh wrote the book Inbound Mar­ket­ing: Get Found Using Google, Social Media and Blogs, and Brian co-authored the book, Mar­ket­ing Lessons From the Grate­ful Dead. Hub­Spot team mem­bers reg­u­larly speak at indus­try con­fer­ences and events and have been fea­tured in var­i­ous media and pub­li­ca­tions. Hub­Spot has won numer­ous awards and has been rec­og­nized by orga­ni­za­tions such as NEDMA, Boston Busi­ness Jour­nal, Mass High Tech, MassTLC, AlwaysOn, Ernst & Young, Red Her­ring, MITX, ad:Tech, and others.

We recently asked Brian how Hub­Spot is far­ing while it scales.

How did you and Dharmesh real­ize that you would make a great team?

When we met at MIT, I wasn’t really look­ing to start a com­pany. How­ever, the more we got to know one another, the more we real­ized that we had a lot of com­mon inter­ests. We worked well together and kept pulling strings on ideas. With us, one plus one equals three. I’m the mar­ket­ing guy and he’s the tech­nol­ogy vision­ary. I don’t think it’s a good idea to not have a co-founder. For one thing, it’s lonely at the top. I also think it’s harder to raise financ­ing. On the other hand, it’s a bad idea to have a lot of co-founders, say four or five. By the end, if you raise a lot of money, there will be a lot of dilu­tion and you won’t own enough. A group of four or five also tends to make more con­ser­v­a­tive deci­sions due to the group-think fac­tor. If you’re going to win, you need to be aggres­sive, coun­ter­in­tu­itive, and fight con­ven­tional wis­dom. A co-founder should be some­one very dif­fer­ent from your­self – some­one who will com­ple­ment your skill set.

Please illus­trate HubSpot’s rapid growth in terms of numbers.

In 2009, we had 600 cus­tomers. By early 2010, we had 1,700 cus­tomers and 12 months later, we had 4,000 cus­tomers. We’ve grown to 200 employ­ees – 80 of whom we added in 2010.

Are you and Dharmesh still very hands-on? What role does your senior man­age­ment team play?

We got lucky in that we had a good early team. We hired peo­ple we knew through MIT and our net­works. Our cur­rent senior team mem­bers were among our first 20 employ­ees. We picked well, and they’ve scaled well. I am very hands-on in cer­tain areas, for exam­ple in rais­ing money and key met­rics. In the early days I sold a great deal. There are months now when I don’t sell. It changes a lot over time.

What are the top three fac­tors you attribute to your rapid growth and success?

1) Before we set­tled in to scale, we zig-zagged twice. We had one idea that we ended up chang­ing. Then we changed the sec­ond idea. Then we found the right idea, the right team, and the right ball­park. The key here was that we stayed open minded.

2) Our posi­tion­ing is focused on inbound mar­ket­ing ver­sus out­bound. That ten­sion we cre­ated early on gar­nered us a lot of atten­tion. We were snarky and polar­iz­ing and it cap­tured the essence of what was hap­pen­ing in the marketplace.

3) We cre­ated a ton of con­tent – blogs, eBooks, videos … we wrote a book … each piece became a mag­net for cus­tomers. Blog­gers and cus­tomers started talk­ing about us, links mul­ti­plied, we came up through the Google rank­ings. We began to scale in a very inter­est­ing way.

In the midst of rapid growth and change, how do you stay close to your cus­tomers and employ­ees? How do you keep your team aligned?

I try to talk to at least one cus­tomer per week – our cus­tomer group arranges the meet­ings. I also spend a lot of time in our cus­tomer forums. As for employ­ees, we have a no-door pol­icy – lit­er­ally, there are no doors on our offices. I sit among the employ­ees and this gives us oppor­tu­ni­ties to talk. Our inter­nal wiki is also very pop­u­lar – it’s very active and the con­ver­sa­tions are very transparent.

Trust is at the heart of the Hub­Spot cul­ture. We trust our employ­ees, and hope­fully they trust us too. Every­one here has incen­tives – every­one owns stock. There is no vaca­tion pol­icy – you take what you need when you need it. It is our thought that the basic nature of cor­po­ra­tions and work is chang­ing. GenY thinks very dif­fer­ently. They are con­stantly con­nected, gen­er­ally smarter, and much more self-sufficient than pre­vi­ous gen­er­a­tions. At Hub­Spot, we’re work­ing to cre­ate a cul­ture that will enable us to attract and retain stars who are well-versed in very mod­ern technologies.

What is one of the major chal­lenges you’ve faced as you’ve scaled?

Dif­fer­ent parts of the orga­ni­za­tion have grown faster than oth­ers. We had over­funded sales and mar­ket­ing and under­funded devel­op­ment – so now we’re invest­ing more on the R&D side. We found that we needed to hire faster. It’s hard even for us to attract the best soft­ware devel­op­ers. So we’re doing some rad­i­cal things. We recently launched an ini­tia­tive where if you refer some­one we hire, you get $10,000. Any­one who makes it through the first-round inter­views and those who get hired get incen­tives as well. We’ve been fairly cre­ative in attract­ing R&D tal­ent. That works for us. We fol­low all the best prac­tices that com­pa­nies like Google and Microsoft fol­low, and we use recruiters. How­ever, if you always do the same things other com­pa­nies are doing, you’ll get the same results – and that is not good enough for us.

I’ve also found that as you get big­ger, it gets harder to get away from con­ven­tional wis­dom. I am the enemy of con­ven­tional wis­dom. I ques­tion every­thing. A lot of con­ven­tional wis­dom doesn’t nec­es­sar­ily make sense any­more – a lot of it is bro­ken. But then again, some of it is right … some­times you find your­self spin­ning your wheels.

Please describe the role that ven­ture has played in your growth. Any words of advice for oth­ers seek­ing venture?

For us, ven­ture cap­i­tal has been fan­tas­tic. We’ve raised $65M so far and have added great exper­tise. The cash has fueled our growth. We’re using our lat­est rounds to invest more heav­ily in R&D – we’re try­ing to build a giant. For typ­i­cal indus­tries in the past, there have been oli­gop­o­lies – three or four cus­tomers hold­ing nearly a quar­ter per­cent­age each in the total mar­ket share. All of that has changed with the Inter­net – nowa­days, the win­ner takes all of the space (e.g., EBay, Ama­zon,, Groupon, Face­book) … there are no num­ber two’s. Hub­Spot has raised ven­ture to help us keep our lead and push out even fur­ther up front.

That said, my advice is to think long and hard before rais­ing money. You have to swing for the fences. A ven­ture cap­i­tal­ist is heav­ily vested to go for home runs, not sin­gles, dou­bles, or even triples. If you are not pre­pared, don’t do it. I’d also say not to do it if you have a bil­lion dol­lar idea. You also have to be care­ful about how much time you spend on the process. It can be a long and com­pli­cated endeavor, so you have to con­sider whether that time would be bet­ter spent with cus­tomers. Know, too, that even if you con­nect with one part­ner, his or her part­ners can be skep­ti­cal and hard to move. So it’s very impor­tant to find the right fit.

What advice do you have for other founders and senior man­agers of young tech­nol­ogy companies?

First of all, don’t waste your money on tra­di­tional out­bound mar­ket­ing. Pull peo­ple in with Google, Twit­ter, blogs, etc. This strat­egy scales bet­ter and costs less. Sec­ond, ques­tion con­ven­tional wis­dom – it’s often wrong. It is said that 80% of star­tups die. If you do what most of them do, you will prob­a­bly die too. We’ve never had to walk through the val­ley of death. Ours has been a rather smooth ride. Sure, we have weeks where we’re putting in 60 hours – but there have been no near-death expe­ri­ences. It doesn’t have to be awful like that! If you have a great idea, a great co-founder, great peo­ple, and a good mar­ket that’s chang­ing, you have a shot. It’s really hard if you’re in a crappy, crowded mar­ket — and even harder if your prod­uct is not remark­able. It’s very tempt­ing to fol­low the herd, but in the age of the Inter­net, you need to be remark­able in every way, shape, and form. And the nice thing is that if you are remark­able, the Inter­net will put wind through your sales. But you have to rad­i­cally dif­fer­en­ti­ate your­self. Watch your com­pe­ti­tion, but never fol­low it.

About Scale Finance

Scale Finance LLC (scalefinance.local) provides professional CFO services, Controller solutions, and support in raising capital, or executing other transactions, to growth companies. The firm specializes in cost-effective financial reporting, budgeting and forecasting, implementing controls, other financial management, etc, and provides strategic help for companies raising growth capital or considering M&A/recapitalization opportunities. Most of the firm’s clients are fast-growing technology, healthcare, business services, consumer, and industrial companies that are at various stages of development from start-up to tens of millions in annual revenue. Scale Finance LLC has offices in Charlotte, the Triangle, the Triad, and Wilmington, a team of more than 25 professionals, and serves more than 85 companies throughout the region.