INBOUND 2016: Brian Halligan & Dharmesh Shah Keynote

You probably all noticed from the video, it's HubSpot's 10th anniversary, and it's also the 10th anniversary of the inbound movement. And what I want to kick today off with is the unusual story of how we came up with this inbound idea in the very first place. You see, we first started HubSpot 10 years ago as young startup founders. We got a lot of advice. We got advice from our investors, we got advice from our advisors, we got advice from my parents, from Dharmesh's parents, from my dog Romeo, and Dharmesh's cats, Larry and Sergey. Now, the good thing about all that advice was it was very consistent. Everyone said at the time we were focused on marketers. Now it's marketers and sellers. But back then it was marketers. Focus on the marketer, focus on the marketer, focus on the marketer. So we're good students of entrepreneurship and we listened very carefully and we did exactly the opposite of what everyone told us to do. What we did was instead of listening to the marketer at the time, we studied the marketees, the people on the other side of the market. We studied how humans actually shopped and found products, evaluated products and purchased products. We really geeked out about this. And it was that studying of the way humans were changing back in 2006 that led us to come up with the inbound methodology in the HubSpot platform and to really start evangelizing this idea that marketers needed to transform the way they market to match the way humans actually bought stuff today. So that was a good time for us at HubSpot. And when we did our research, we did a lot of research. It's a big project for me. It took six months of my life. When we founded the company, I was very much inspired by one person, a world class researcher that I really love and have followed my whole career. Sir David Attenborough. Now, Sir David Attenborough. What I like about Sir David Attenborough, he's a world class anthropologist and he likes to get up close and personal out in the natural habitat with this subject. Really gets up close and personal. And as we went on this journey, we said, we really want to copy him. And we really like Sir David Attenborough. I'm no Sir David Attenborough. I'm not even a sir, but I fancy myself kind of a social anthropologist. And I like to get up close and personal with my subjects in their natural habitat as well. Instead of studying iguana behavior, I like to study human behavior. Ten years ago, I really geeked out about this subject. I'm a real geek at heart and I'm especially geeked out about how humans shop and buy stuff. Now we're 10 years in and what I wanted to do was go back into the jungle and start from scratch and study how modern 2016 shoppers and buyers evaluated your companies and your products and really learn what had changed. And I took it as basically a second founding moment for HubSpot, a second founding moment for the inbound movement. And what I want to lay out today are all the things I learned about the 2016 buying process. And my goodness, 10 years have gone by. It might as well have been a 100. It's amazing how many changes have happened in the way your prospects evaluate and buy your products. I'm really excited about what I learned. Let's get started. First thing I wanted to look at was choice. What choices do your prospects have today? And it's very interesting how many choices they have. Back in 2006, when I was out in the jungle evaluating your prospects, your prospect had between four and five vendors to choose from for any given product and service on average. Today I noticed that your prospects have between 14 and 15 different choices of different vendors for any given product or service. Fascinating. It turns out that in every industry I studied, and I studied most of your industries, supply is up. Way up. Big time change in supply in every industry. And I have a thesis as to why that is. I want to share with you my thesis. Let's take that razor blade industry. There's been a revolution in manufacturing, a maker movement, CAD tools, contract manufacturing, rapid prototyping. It has become so much easier for companies to use atoms to build useful stuff for humans. The barrier to entry is much lower than it was 10 years ago or even two years ago. My industry software, same type of thing is going on. Much lower barriers to entry. Amazon Web services, agile methodologies, open APIs, open source software. Much easier for companies to build very useful products out of bits. Supply is up in all of our industries at the same time. Demand is flat. I didn't notice any big change between.06 and 16. Same amount of demand pretty much in every given industry. Some couple industries have taken off, but the most part pretty similar. Now that's very good news for your prospects. It's very bad news for all of us because competition is up. Way up. Who else feels like it's getting hard? Clap if you feel this like I saw, clap for me. Okay, here's how I think about it. Back in 2006, you battled for inches on a four foot shelf in 2016. You battled for millimeters on the infinite shelf of the Internet. Things have really changed. It's gotten harder and harder. As sellers and marketers, life is more difficult. My goal for you today with HubSpot, with the inbound conference, with the inbound Movement, with our whole lives, is to arm all of you, all of us together, with the knowledge and the skills and the platform to not just survive in an environment where supply is dramatically outstripping demand, but. But to thrive here in 2016. This is what gets me up early in the morning, keeps me up late at night. This is our mission. This is why Dharmesh and I started HubSpot. This is why we're doubling down on the modern buyer in 2016. Okay, so how do your buyers learn today? How do they learn? How do they live their lives? Back in 2006, your buyers mainly read stuff all day, right? Today they mostly watch videos all day. Big shift in what's going on in how they consume content. And the way I like to think about it is back in 2006, we were all about text. Creating blog articles and text wrap Google in text. That was like pigs in a blanket. Just a delicious combination, Google and text. And I think of 2016 as another delicious combination. And that's video and social. That's like scallops and bacon. Just a delicious combination in 2016. I love that combination. But videos have gone back in time in many ways. We used to enjoy videos and listen to the sound at the same time. But we've returned, it turns out, to the silent movie era. Okay, Most of the videos we watch today, we don't listen to the audio on it. 85% of the videos that tip online are watched without the audio. We used to really like video. Your prospects used to really like videos that were long. And more and more, your prospects like to watch videos that are short. I'm just going to leave that up there for a while. Your prospects used to like highly produced videos you spend hours on. And more and more they like live videos. Facebook Live is revolutionizing the video game. Much deeper engagement, much easier to spread this content across the Internet. Your buyers used to focus on your piece of content one piece of content at a time. Today your buyers are very different. They're looking at your piece of content. They're looking at your competitor's piece of content. They're posting on Twitter. They're looking at Instagram. They're painting the bathroom ceiling. They're cooking breakfast. Welcome to your prospects the add generation. Things have really changed. Okay, video. Video is really taking off. I'm also interested in how your buyers collaborate. And I've got a prop for this one. Okay, how do your buyers collaborate? Now, back in 2006. Hold on one sec. Back in 2006, your buyers were using social media. They were definitely using social media. They used it like a Dunkin Donuts drive through very quickly, go into the social media site, in and out in a couple of minutes, onto the next site. Your buyers today, boy, has that changed. They treat social media sites like their favorite coffee shop. Got just right music in there, all their friends are in there. They've got their favorite almond milk latte ready as soon as you walk in the door. People live inside these social media sites. I live inside these social media sites. Things have really changed when it comes to social media. Whenever I think about that Dunkin Donuts story, whenever I think about my Dunkin Donuts, I think about this one. That's my mom, Eileen. And every time I go visit my mom down on Cape Cod, I always like to go to the Dunkin Donuts with her. We do the drive through. We're going shopping like, mom, let's go to the Dunkin Donuts. We go through, pull into the Dunkin Donuts, and I roll down the window and I order my coffee. And my mom leans over and she says, I'll take a large coffee, no milk, no sugar. And we drive up to the thing, and the gal comes out of the window and she brings her coffee and we drive up. My mother's happy as a clam. She loves the Dunkin Donuts Run. Now, I talked to my mom a couple weeks ago, and she said, I have big news for you, Brian. And I said, well, what's that? She said, I went to the Dunkin Donuts all by myself. Nice. How'd it go? She said, well, I pulled up to the thing and I rolled down the window and I looked over. I'm going to look this way this time. And I said, I'll take my large coffee, no milk, no sugar. And then I drove up to the thing in the window, and I looked up to the window. No coffee there at the drive through. So I got out of my car and I walked up to the window and I knocked on the window and the woman came down. And the woman came down, she looked at me and I looked at her. I said, where's my large coffee, no milk, no sugar. And just then, my mom and the lady from the Dunkin Donuts, they turned this way to look. And my mom thought she ordered out of this thing, but she actually ordered out of the trash can. Now, why do I tell a long, rambling story about my mother on stage at Inbound? Two reasons. First, if you're not marketing in social media, you might as well be marketing inside a trash can. Second, my mom's here tonight and I really wanted to weave a spot for her into Inbound. Can you say hello to my mom? Okay. Thanks, Mom. So how do they find you? You know, how do prospects find you these days? They've got lots of choice. Supply is higher than demand. How do you get found? Big changes in social. What about search? Well, back in 2006, when I interviewed your prospects, Google helped them find the answer to whatever question they had. Today, Google just gives them the answer to whatever question they have today. Google's changed a lot. In fact, what's so impressive about Google is they have mastered the Ask Jeeves playbook. Mastered it. They're very good at finding you the answer. About 35% of the queries I do in the Google search engine, I just get the answer today. So things are changing in organic search in a big way just over the last couple years. I bet that 35% blows up over the next couple years. Your search strategy needs to change, too. What about paid search? In 2006, AdWords took up about 50% of the screen above the fold when you did any given search. Today, AdWords takes up 100% of the screen above the fold on both a mobile device and a paid device. When I talked to your prospects and sort of looked at how they bought, increasingly they are clicking on AdWords. They're either clicking on your AdWords or they're clicking on your competition competitors, AdWords. And my thesis here is twofold. One, boy, it's 100% of the real estate, so of course they're clicking on it. But two, the ads are more expensive, therefore they're better. People spend more time crafting their ad. They don't want to waste their money on it. So AdWords has gone up in my mind in importance over time to your prospects. What else about ads? Ads are very interesting. I was at Gary Vee's talk last night. He talked a lot about. About ads, more than I expected. I found that there's a lot of ad clicking going on even with our prospects here in the room. In the ad industry, I think is at the precipice of a giant shift that your prospects and you, I think, really need to take advantage of back in 94, a little company called Yahoo turned the ad industry upside down by creating the pay per impression ad. Much more intent, better ROI in Google. Sorry. In 2002, Google invented Pay per click. Far better intent for the buyer, far better ROI for the marketer. We're at the very top of the first inning on pay per lead, a new type of lead unit and all new type of ad unit. All the vendors are playing with it. Facebook's in the lead. They have a product called lead ads. It is fire you just right in your Facebook stream. You go ahead and fill out the form. This, I think, is the next major shift that all of your buyers are going to be using over the next couple years. There is a big arbitrage opportunity right here. Now, this reminds me of a quote I really like. It's a quote by a guy named Marc Andreessen who invented the Netscape browser. He talks about how every industry, the real estate industry, the auto industry, the. The hotel, every industry is being transformed by software. Software is eating the universe. And I think he's mostly right. But when it comes to all of our worlds, it's actually Mark Zuckerberg is the one who's eating the world, right? Zuckerberg is on fire. Your prospects live inside of Zuckerberg's world for a couple of hours a day between Facebook, Instagram, Messenger, WhatsApp, you name it, your prospects are spending their life in there. If you are not marketing inside of Zuckerberg's world, you might as well be marketing inside a trash can. Okay, I used to scream from the high hills back in 2006. Your success with marketing is much more about the width of your brain than the width of your wallet. And I largely think that's still true. But today there's a marriage happening that's quite interesting between content marketing and paid marketing. So your success in marketing and content marketing is much more about the width of your brain to the wallet power. Get a good piece of content. You go to medium. You write a brilliant post on medium. It's spreading like wildfire. Take some of your paid dollars and pour it on there. Increase the viral coefficient and spread that content. Paid marketing and content marketing, those things go together like bacon and eggs, just delicious. So once they found you, okay, how do they. How do they research you? How do they kind of dig in and learn about you? Back in 2006, when I did my research, the website augmented your sales rep. In 2016, the sales rep augments the website. Everybody get that? Want me to say that again? Everyone got it. In 2006, the website augmented the sales rep's behavior. In 2016, the sales rep augments the website behavior. Big, big change going on in your prospect's expectations. Your prospects have been trained in every industry they're in. So to expect automation and self service. Things have really changed for your prospects. When I speak to them, they have a different level of expectation of what to expect from your website. Big shifts going on. And I kept hearing the same words over and over from your prospects in the buying process. They wanted it to feel like this. They want it to be highly personalized. Ads, the website, the mobile experience, social experience, everything super personalized. They want you to remember them and give you better service. Automated. They want things to be automated. Automation is better for you and for them. Self service. They don't want to have to wait around for your sales rep assigned to their territory to talk to them about your new product offering at five o' clock on a Monday afternoon. They're working on the weekend. They want to learn themselves now, end to end. They have been spoiled by Airbnb, by Uber, by all these great applications to expect killer end to end experience from your website. It's the Uberization or Uber Ification. I'm not sure how to say it, but it's sort of like Uber has spoiled all of your prospects to expect an awesome experience. So big, big changes going on on the top of the funnel. How your prospects live, how they shop, how they find you. I want to wrap this section up with a little advice for my my brethren, marketers. First, stop looking for that blogger. Start looking for that videographer. 50% of your content next year shouldn't be text. It should be video. We need to make the shift. Your prospects want to live inside a video social. Everybody in the room is in LinkedIn and they're proud that they're in LinkedIn. They may even be in Twitter. You're not B2B marketers. You're B to H marketers. H is humans. Humans live in Snapchat. They live in Instagram. Their behavior is changing. If you're not marketing in all these sites, you might as well be marketing into a trash can. Accelerate your content. Combine your paid marketing and your content marketing. Get a great medium post. Repurpose it for Twitter. Repurpose it with a picture for Instagram, Repurpose it for your podcast. Repurpose it for every everything. Repurpose your content. That's the power. Content marketing. Move and automate the buying process. Users are expecting you to automate their processes Users have automation all over their lives. They want a self service experience with your company. Okay. So that's kind of the marketing side. I wanted to talk about that. I want to talk a little bit about how they want to engage with your company and your sales reps. I get very serious about my research. Okay. Phone calls. Back in 2006, CallerID was making a real dent in the cold calling industry. I was really happy about it. As I walked around your prospects offices today, more and more people don't have a darn phone on their desk in the first place. So car caller ID has turned to. No phone on the desk has turned to. Boy, cold calling has really become a big waste of time for people. In fact, your prospects hate cold calling. Okay. I've done extensive forensic analysis on hundreds of purchases. I start at the purchase and I work backward onto every interaction that happens on what started it. I couldn't find a single damn buy that happened that started with a cold call. So I'm going to go on record today at inbound in front of 19,000 of my best friends here that the cold call is dead. The cold call is dead. Okay, how about email while we're at it? Now, in 2006, I was walking around your prospects offices and I look at all the screens. The email's on everyone's screen, right? In 2006, what about today? Gosh, slacks on everyone's screen everywhere I looked. Big change going on in how people communicate in our lives. So what's that mean? Is email dead too? I thought it was going to be dead when I was doing my research, but it wasn't. Email is still alive and well, but it's alive and well in a way that was a little different than I thought. When I went and I looked at the purchase and I tied it all the way back to the original nugget a fair amount of time. It started with an email from a sales rep, but. But the email from the sales rep was good. They had spent time and energy on it. They didn't just put the right name on there, but they had done their research and sent a great email. And it was from a rep who had sent 10 emails a day, not a rep who sent 100 emails a day. Email still works. And I've come to the conclusion that if content is king in the marketing industry context is king in the sales industry. What I couldn't find was a single sale that started with one of those crappy emails we all get in InMail or in our email box. That is no context, no research in it. So email, I think is still alive and well. I didn't expect to say that here at Inbound. After doing all this research, I thought I was gonna hail the end of email marketing and sales. Email selling, it is very much alive and well. People check it. If it's well thought out and researched, it can work. It can start a sale. Okay, trials. Back in 2006, people expected to get value after they purchased your product. In 2016, they expect to get value before they purchase your product. I have a shift here that surprised me. I just think of my glasses. I got a pack of five glasses from Warby Parker and I picked the one I like and I bought it. I got a lot of. I really like these glasses, by the way. I got a lot of value from Warby Parker. Dropbox HubSpot had hundreds of users of Dropbox getting tons of value from the products before we spent a nickel. Casper, the mattress company, you can use the darn mattress for 100 days before spending any money on it. Things have changed. In an era where supply outstrips demand, you have to change your behavior. You, you need to give your prospects a little taste before they buy. Now, anytime I talk about this subject, I can't help but think of all of our new best friend who's speaking here on Friday, Alec Baldwin. ALEC spoke in 1992 very eloquently about the state of the sales call back in 1992. Always be closing coffees for closers. And I think Alex, if he were to redo Glengarry or Glen Ross today, he might shift the positioning. It shifted because the sales rep has lost some of the power. They've lost some of that information. Advantage. The buyer has got some advantage. Supply outstrips demand. I think Alex, if he had a do over, would say you should always be helping. In a world where supply outstrips demand, you have to change the way you sell. You're going to have to change your hiring profile. Coffee is for helpers. Okay, I got some advice from my friends in sales. A couple nuggets for my very practical advice for my friends in sales. Email. Less is more. Cold calls. None is more. Trials. Try that again. Trials. A taste is more. Let them eat cake by the ocean. I thought that was funny too. Okay, My last thing I learned about your prospects and my favorite thing I learned about your prospects is about how they actually make the decision at the end of the day. Back in 2006, your buyer spent most of. The. Most of the process, most of the convincing time Most of the engagement time with your sales rep. It was a sales driven B2B process. The sales rep had the information and had the power and they used that power to their advantage. When I dissected your prospects experience with you today, I found two things that surprised me. The first, sales reps still had a lot of influence and a lot of power. It came much later in the process. The marketer had grown in influence in the decision making process. And what I found was your prospect spend about half of their time in your content, the marketer's content, and half of their time talking to the sales rep. So it's been an era where marketing has come up and really gained more importance. That's the first change I saw. That's probably not surprising to you or a lot of you are marketers. But the bigger surprise I got from your prospects was how much power your customers had on the sale. Okay, a lot of change going on here. So, so many of your prospects, they have these informal networks of peers that they talk to all the time and they talk to their peers about you talk to them about your products and your services and who's good, who's on the way up and who's on the way down. It's a constant conversation with them. And when I dissect those purchases and I dissect them and I go all the way back to when they the nugget that started it, more often than not, it was your prospect talking to one of your customers. This, the potency of your customers as your third and more powerful channel to market than your marketers and sellers really took me by surprise. And it's really influenced how I'm running my own company. I was so surprised by this that I had my team go and survey a a few thousand people and find out more about it. Is it really true or did I have a strange set of data and I was fascinated by the results. The potency of your customers is much higher than I ever would have expected. 2 out of the top 3 most trusted sources for decision makers, guess what? Aren't your salespeople or your marketing materials. It's your existing customers. Holy crap. Little motherhood and apple pie. But holy motherhood and apple pie, is it true you've got a third incredibly powerful channel in 2016 that can be harnessed? Now as I looked at this, I thought about all of you and I thought, well, some of you, some of you may be not have happy, you may not have happy customers, maybe a startup and you haven't got through product market fit. Or maybe some of you just don't have kind of that customer centric gene. And so I thought of a couple of ideas that could apply to all of us. All of us, and I say myself, that might help us in harnessing this third channel to really accelerate, help us grow our businesses. The first is around commissions, your sales commission plan and your customer success. They should go together like pork chops and applesauce. Just a delicious combination, the two of them. Don't commission your reps purely on revenue like everyone else does. Commission them on your customer success or a strong proxy for that success. That will work for you two, your pricing model and your customer success. Those things go together like corned beef and cabbage. Delicious combination. Make sure your pricing model as your customers do better, you do better. Align your incentives with your customers. It will serve you very well. The third hint I have is your business model, your revenue model and your customer success. They should go together like quinoa and kale. Not that delicious, but very healthy. You need to move to a recurring revenue model if you haven't done it already. Recurring revenue models defer a bunch of revenue, which it's not tasty, but boy, it's healthy and it puts you in business. You're partners with your customer over the long haul. It's a very healthy move. Okay, I have a bit of I have something I want to get off my chest today that I've been a little pissed off about for the last couple months. Okay. One thing I like about my job is I'm like a shrink for startup founders. They all come and see me and they lie on my couch and they talk about their thoughts and feelings and I like that part about my job and come to the talk sometimes it goes really well. What really pisses me off about the startup founders I miss I talk to is all they want to talk about is how do I extract value from my customers? How do I extract every square inch of value out of my customers? They spend their whole damn management team meeting talking about how do I extract value from my customers. I think they should be talking about is adding value to their customers. Spend your board meeting management team, tell them how do I add value to my customers? In an era where supply is outstripping demand, you can't grow out of the phase where you're adding value. These founders think the early days, I'm going to work on it. I'm going to get the product market fit, I'm going to add value and then I'm going to flip over and extract value in a world where supply outstrips demand, you never outgrow adding value to their customers. Who's with me on that? I just don't think we have a choice anymore. I have some advice for my fellow CEOs and founders out there. Take it or leave it. Your customers are your third and most powerful channel. This is going to be very unusual advice from a guy who runs a sales and marketing software company. But take dollars from sales and marketing, put it in products and services, and customer delight. Get violent. Alignment. I like that word violent here. Between your commission plan, your business model, everything. How do you align your incentives with your customers in a violent way? Don't grow out of the ad value phase of your business. The add value phase is the fun phase. In an era where supply outstrips demand, you just don't have a choice anymore. You need to keep adding value, adding value, adding value or you will be disrupted. Okay, one final thought for you all. This is a list. This is a list of the 500 largest companies in the United States in 2006. And what I want, I'm going to give you a little exercise. I want you all to think in your head, of the 500 largest from 2006, how many are left in 2016? Think a little bit about that for a second sec. If you guess, let me hear it. If you guess. 298. Nobody. It's. This is my personal opinion here. I think it's a terrible time to be a big company. Terrible time to be a huge company. Terrible time to be an incumbent. The Internet software is disrupting every industry out there. The Internet has completely changed the way people buy products, the way they're delighted by their vendors. It is a terrible, terrible time, frankly, to be one of these large companies. My opinion though, is on the flip side of that 298, there's 202 new companies who have entered the Fortune 500 over the last 10 years. Big churns, very slippery at the top of the US and the global economy. I think it's a terrific time to be one of you guys. To be a founder, to be a startup, to be a growth hacker, to be a growth company, to be a small business. It's a great time. Change is the enemy to big companies. Change is the friend to all of us. Those of you in the crowd who are listening carefully, who accept the changes that are going on in the way people buy and embrace them and change, you are the ones that will be on this list in 10 years. This is why we started HubSpot. This is why we have this event. This is what gets us up in the morning and keeps us up late at night. We love this stuff. We started this company and this movement for you, the underdogs, the little guys, take advantage of it. Now we're going to move on to a nice video and then got a special treat. My co founder Dharmesh is coming out. He's the smartest, humblest human I've ever met. He's absolutely brilliant. Thank you all for coming. Really appreciate it. Sa.

Okay, so that's what's going on with me. Would love to hear what's going on with you. Call me. Greetings, everyone. Sorry about that. I was just leaving my friend Brian a voicemail. He loves those things. Absolutely loves them. So Brian talked a lot about change and how it's time to embrace change and fall in love with change. And Brian plays. Brian is the social anthropologist. He loves to observe human behavior. He likes to get up close and personal with his subjects. I'd like to get up close and personal with my subjects too. But where Brian plays a social anthropologist, I might be better characterized as an antisocial technologist. Otherwise known as a technologist. Now, it's not that I don't like people, I just don't like being around them a lot, especially in large groups. Now, before we geek out, which we're absolutely going to do, so prepare yourselves. Before we geek out, I'd like to share a personal milestone with you and ask you a question. Have you ever had that chance encounter, you know, sparks fly, your heart races and you become like a smitten kitten. Applaud if you've ever had that moment, you've fallen in love. Now, some of you are not going to applaud because you think of that as like a public display of affection. It's not. It's just an audience survey. So I've had that happen to me too. And I'm celebrating a 25 year anniversary. Thank you. Thank you. 25 years ago.