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 Salesforce.com. 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, WebsiteGrader.com, 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, Salesforce.com, 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.

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