Innovating and Iterating for Growth with Hubspot Co-Founder Brian Halligan | Revenue Builders Ep. 83

Welcome to the Revenue Builders Podcast, a weekly show featuring B2B sales leaders and executives. Hosted by five time CRO John McMahon and Force Management co founder John Kaplan, the show goes behind the scenes with the people who have been there, done that, and seen the results. If you enjoy our content, please subscribe, rate and review the show to help us reach more people. Revenue Builders is brought to you by Force Management. We help companies improve sales performance, executing the growth strategy at the point of sale. Find us@force management.com Enjoy today's episode.

Welcome, Brian. How are you today, buddy?

Fantastic. How are you, John?

Yeah, you're looking good. You got a lot of formulas on the board behind you.

I got it all figured out. I trying to get ready for. I always get nervous before my meetings with John McMahon, so I got to get my formulas ready for my meeting.

That can't possibly be true anymore.

It's still true filtered two or three people on earth that I get nervous to meet with, you and a couple others. And I'm just ready for you to ask me, how's the forecast?

Some people said that they still turn sideways, you know, when they see me to make sure that I don't call on them for the forecast.

Exactly.

Hey, Brian, so let's start. You know, you've told the story probably a million times, but to ground the audience, tell us the story about how you came up with the idea of inbound marketing. And then also second part of that, like how has it evolved over time to remain so effective?

Sure. But let's. I think we should start out with how we know each other.

All right, let's talk about that.

So I've known John McMahon for about 173 years now. And when I was a young pup, I worked for a company called ptc, the CAD software company. Still around, doing great. And they sent me when I was very young over to Japan and they gave me a new boss, a guy named John McMahon who actually lived in the Netherlands. So I worked for John on and off for like eight years. So John was my boss and my mentor and taught me pretty much everything I know. So it's an honor to be on John on your podcast today.

Thanks. I taught you everything except trying to get on a train in Japan because we've had, we had some stories about that. Do you remember the time, like we were late and I was still trying to get the token out of the machine and you were already on.

I'm going to tell it. So John, we're going into. I forgot the name of the Station in Japan. And in Japan, you don't use bills back then. It's coin. You had a coin that was like, worth $20. And so I had had like $100 worth of change. And he's getting, getting it out, getting ready. We're getting ready to get on the train. We're running a little late, and he drops all the change. It was like $100 worth of change. Like, dude picking up all the change and then he puts the things in and then we're late. And so we're running to catch the train. And I'm a little bit ahead of him. And I'm on the train and John's just behind me. And the doors start beeping like it's going to close. The doors are going to close. And John jumps to catch it. And he's up high and the door's right here. Whammy. I don't know. And it stumbled in.

That was one of my many concussions.

And everybody, all the Japanese people that.

Trade are watching like, Japanese people were like, faceless. And you. And you were laughing your ass off.

Really, really racked its head on that one. Anyway, we have some good times traveling around Asia together.

We did. On that subject, do you think that in all your experience at at HubSpot, that sales and sales leadership helped you in any way, shape or form?

Absolutely. Absolutely. One thing I think that really helped was it at ptc. They did send me the Asia when I was really young. I met with the former CEO of PTC recently, this guy Steve Walsy. I was like, why the heck did you do that? And he informed me that I was the second choice to go. There was another guy named Frank Gasolina who was the first choice, and at the last minute, he decided not to go. So I was called the writing in from the bullpen. And what was kind of nice about it was I had a lot of independence. And so I communicated with John via fax. And the faxes would follow us around to different cities and would handwrite on the fax and faxing back and forth. And I had a fax room and fax machine in my bedroom to crank all night. You'd hear it, keep me up at night, but you end up with a lot of independence. You end up making a lot of mistakes, learning from those mistakes. But that experience in PTC was invaluable. The sales experience. PTC was kind of a sales leadership machine, thanks to you, John. And I learned so much about building, hiring sales reps, hiring sales manager, promoting sales reps. All the metrics around it, productivity of reps, everything. The marketing around it, the channels, the channel conflict. All of that learning has come into play as we built HubSpot. There's a lot of PTC inside of HubSpot.

Yeah. And what about the international experience? Because you spent a lot of time in not just Japan, but all of a. You ran all of Asia and then you live in Hong Kong for a while. Do you think that the international experience helped you as you were like growing the HubSpot company?

Huge. And HubSpot now is half. About half. Our revenue is international. Amazing. At HubSpot we had a big discussion about what we had some international customers that were buying and when should we go international. And we were going to go. We were deciding between the UK and Ireland, back and forth and back and forth, and we decided Ireland. We had a whole team teed up to go to Ireland. This must have been like 2009 all ready to go. And it was a week before and we had a whole bunch of problems. In North America, just when you're scaling like startup, you got problems. You mean even now in hut we got problems. You've always got problems. But it's like sometimes the problems really build up and we pulled the plug on it. I remember a week before we were going international, we waited a year, really disappointed some people who were on that team. And then we went to Ireland. We sent 10Americans to Ireland with the goal of set the machine up, get the customer machine going, get the, get the, get the culture machine built up, and then replace all your cells within two years. And that pretty much worked. Like all 10 of them came back. One of the people in Ireland actually stayed and married a guy in Ireland. So she stayed over there, but the rest of them came back and they replaced themselves with local leaders. So that worked out great. And I think my experience in international at PTC helped time.

But why do you think so many companies don't do what you do did where you took a whole team of 10 people, shipped them over there so that they could train people in the best practices, know who to recruit, know how to enable people. All those things that come when you have a team that's already got the expertise that they're bringing from, from HubSpot into international.

I don't know what a lot of other companies do, honestly John, but I can say what did work for us is like we went over there and what you kind of want to do is you want to send someone over there that you know is good, that you has worked in your system that understands it, that can really sell and recruit and gets the culture because you want to take the risk away. That. Okay, I started in Europe and I hired a local person to run Europe and it didn't go well. Well, did it not go well because something about our business didn't fit over there, or did it not go well because we had the wrong person in the job? We wanted to kind of take that risk off the table. So we had a guy named G2 still with up Spot run services, moved him over to.

I remember that decision. I remember speaking to him about, you know, going international and what he should, because.

Yeah, and he had never done international, but he moved over to Dublin. We sent nine other people with them to run all the functions. And I think that worked. Another thing that worked was the mission was get the customer flywheel cranking. He knew how to do that. We have a second flywheel at HubSpot, which is the recruiting flywheel. How do we create a great product that pulls in customers and retains them? How do we create a great culture that pulls in employees and retains them? It's like, how do we get those flywheels going? And then I think a really key thing we did was we said, you're not going over there forever and we're not replacing you with another American. You've got to find a terrific person from Ireland or wherever that can backfill you over here. And all of the functional leads have that mission. That worked really well because as you're recruiting people in, you're recruiting them to be the managing director or whatever the fancy title would be to run all of Europe. And you were able to attract. We were able to attract better candidates by doing it that way.

Yeah. You know, you've also talked about, like, there's no magic moments. There's no ten step forward moments in a company. You know, everything's a grind. So you went public in what, 2014, I think, think at a valuation of 900 million, today HubSpot's worth around 25, 26 billion. And you've spoken about, you know, grinding it out with two steps forward and one step back. So, I mean, everybody thinks that there's going to be some magic moment, but the ones I've been in, it's always been a freaking grind.

Every moment's been a. I assumed there was going to be. I actually was like, well, one of these days we're going to have that one hire, that one partnership, that one customer, that one something that's going to. Inflect every curve. It's going to change everything. Still waiting, John. Maybe it's this podcast. This podcast could be the moment.

The podcast will be the moment, Brian. It will be the moment.

So that has surprised me. The other thing that surprised me is how many setbacks we've had. Definitely we make progress, we move up the curves, things are going well. But man, lots of setbacks on the road to success between 0 and 900, whatever million when we went public and 900 million to today. So many setbacks along the way, so many unforced errors along the way. In fact, I remember doing a presentation at HubSpot called the Pothole Report and I did a whole study on how potholes form. So the way you don't have pothole holes down there in Naples, Florida, the reason you have potholes is water gets in between in the little cracks in the tariff and then it freezes and it expands and then unfreezes and then it freezes and expands. The next thing you know, you have a little hole there and we don't watch that hole swallow a whole car. I would have like a pothole report. Here's all the darn potholes we have. Here's how many we caused almost all of them. And here's how many, like the competition costs almost none by the way. And it's like, well, what are we doing to fix these potholes? And then every time we fix the pothole would be like, what did we not look at? What report didn't we have? What piece of data? What thing didn't we look at that could have predicted that pothole? And then we started building what was called our pothole report, which turned out to be like 100 page slide deck on every metric we should have been looking at to avoid that coming pothole. Let me give you an example. At one point in 100 years ago, we started, we pride ourselves on terrific support, like very short wait time, if any. We keep people on as long as they want. And we started falling behind in those metrics, started blowing up. And it was a very simple thing of we were promoting too many people out of support into like CSM roles. And everyone wanted to get promoted and we wanted to promote people and we had a lot of open CSM roles but we eviscerated the support organization. So just we just didn't have people in there and it kind of blew up on us. The support times went up to 20 minutes. 20 minutes is absolutely unacceptable. And it was like, we just need to watch that. We need to look at like two graphs to predict whether this could happen. So from then on in, we looked at those two graphs once a month just to keep ourselves honest that we didn't hit that pothole again. So the steps back, John, were almost always self inflicted. We've made a lot of unforced errors along the road.

And was that because of the people? Did you didn't have the foresight or your leadership team that you put in charge? Didn't have the foresight? Was it, was it the leader themselves? Was it a combination of those things?

Honestly, I don't know. I think a lot of us came up. We didn't have. We had a team with very little outside experience. We were largely homegrown, you know, a lot of the people.

Yeah, sure, sure.

And that might have been part of it. It's also, you're in hypergrowth mode. I think you're in hypergrowth mode. Things break, nothing scales. Nothing. Your people don't scale. Your system don't scale. Your nothing scales. Everything breaks. I talked to a guy named George Hu.

What from Salesforce?

Yes. And he had good expression. He said every time we put in and then he went to work for Twilio. He's had a great career. Every time at any company he's in, they put in a new system, let's say a new HR system. He's like, I start my watch the day we make the decision on whatever system or process we put in. Because within three years is going to break.

Yeah.

Nothing lasts longer than no person lasts longer than three years. No system, no process, no nothing. Thought that was really interesting.

Yeah. Now when one of the things you decided to do though was to go long, you know, you decided like many other companies like Pardo, Eloqua, Marketo, they all sold out early. And you, I'm sure, and the rumors had it that you had many opportunities to sell HubSpot along the way, but you decided to go to long.

Long.

You know what, what made you persist.

A couple. But first of all, you'd be surprised how few opportunities we had to sell the company. Definitely less than five fingers. Yeah. We've been at it 18 years. Less than five fingers. I don't know if that's because signal to the world we weren't interested in it, but we had very little. I always thought, you know, start a company, it's hyper growth, you're cranking, your phone's ringing off the hook that people wanted to buy you phone was quiet. Was very quiet. Okay. I was listening to Marc Andreessen's Podcast of his was Alex Friedman. A week ago, he said something really interesting that I think it's exactly right. He, he said his, his problem with, with funding companies outside of Silicon Valley is they optimize for what he called a local maxim that the founders of those companies want to be the biggest company in the history of that city.

Yes, yes, I heard that.

I thought that's not true of us. Wait, that's exactly, exactly us. Like Dharmesh and I, when we founded the company, we were bound and determined to make HubSpot the biggest tech company in Boston, which it is, and an anchor company in Boston. We didn't anchor ourselves next to Google or Apple or Microsoft. We anchored ourselves against PTC and Acoma and the other good companies in Boston.

Right.

I think that's a mistake, by the way. Now we're trying to re anchor against the really, really big companies. But Dharmesh and I were very much anchored on, you know, we wanted to build a company that our grandkids would be proud of. That's always been sort of our mantra. But we also wanted to build a company that was an anchor in Boston that could rival a Silicon Valley company. And to that end, we were just always focused on the long haul. Maybe one other thing that was a little different than Dharmesh about Dharmesh and I is we were probably 38 when we started HubSpot. You know, we were mid career, call it, and we had both had some success. He had a lot of success. He started another company and really hit it. And so we had a, you know, we had both decided there's a set of founding conversations that people should have. And one of ours was about Horizon. You know, are we swinging for the fences? Are we swinging for a double? What's going to happen when we have a acquisition offer? We talked about that before we started the company and both of us were like, we made some money. Let's swing hard and see if we can build a very, very legit company here. And so that was our mindset and we just kind of stuck with it. That's still the mindset.

I want to go back to something that you said earlier about the grind and about things breaking. I remember that you were, especially in the early days, and you probably still are. You were like what I might call a churn maniac. So when Churn got up above a certain level, I remember you literally taking all the leaders in the company, locking them in a room, and they were not coming out until you figured out why did the churn go up.

Yeah, I still am.

Yeah. But a lot of people don't do that. They see the churn rate go up and they sit and they kind of say, yeah, it's high and maybe it'll go down. But I don't see many CEOs that really dig in really deep quickly to figure out what the problem is and why, what they can do to fix it.

I can walk through the. The numbers are interesting. So let's say we were four years in. These are all approximate numbers. If you're a Wall street person, these are approximate. These are exact numbers. But let's say in 2010, four years in our customer dollar retention, which is close. Close to what a logo retention would be, was around 60%. And then our upsell was probably 2%, and so our revenue retention was 62%, which is not good. And we would go pitch venture capital firms, and the first pitch would be great. It was a very high level on what HubSpot is and inbound marketing. But the second conversation was a deep dive into the spreadsheet. And the spreadsheet told a terrible story, actually. And so those numbers weren't too bad when we were small. So let's say you've got a thousand customers, you know, the beginning of the year, you've got a million dollars in revenue, and you lose 38, $380,000 worth of revenue. You can kind of hustle and get back to a million and then still grow 80% by just pure sales and marketing. But if you're 10 million or you're 100 million and you're losing 38% of your revenue right out of the gate, it just. There's no way you can overcome that. And so we were like, we got to get to 100% at some point in time. We got to march over. How are we going to do it? And that was a methodical march. And also one step, two steps forward, one step back. The thing that really worked was every department in HubSpot could make changes to impact those numbers marketing. The big change they made was just the Persona we were going after. We were arguing about who was our Persona and who is our ideal customer profile. For years, we argued about it, and one of them had much better churn characteristics. So at some point, they just convinced the organization, we're going with the customer profile with the better churn characteristics, and we're going to stop rotating leads to reps for accounts that don't look like that. And so that really squeezed the lead flow and really slowed revenue down. But Worked the sales organization. Somebody you know well, Mark Robert did this. We changed the commission plan. So we commission reps, not just on number of new customers or revenue, we commissioned them on the retention rate. So if you weren't over a certain retention rate, you couldn't get into your accelerators, you couldn't get promoted, all that kind of stuff. That worked incredibly well. The service Org, we added a CSM function so they would support our customers better. And then the product Org, the interesting thing about HubSpot is it's got a very big footprint. We do everything from search engine optimization to blogging to social media to marketing automation, all this different stuff. It turns out there were certain features in HubSpot that were causal in their relationship of strong retention, not just correlated. And we just doubled down on the features that were sticky basically and built those out to be fantastic. It took a long time to do that.

That's the reason, because you kept refining and looking at your ideal customer profile and what Persona you were selling to. And I think a lot of companies, especially startups that I deal with, they'll do that one time in the beginning and then they don't constantly do that as their product evolves, as the market evolves, as customers start to evolve in the way in which they make decisions and then, and then it kind of gets away from them.

I think that's right. What are those things? It's like our pricing model. Can you see that, John?

Yeah, I see it. Pricing model on, on the X axis.

Yeah. We have one product, 250. And we had a product at $500 and that was our pricing for years and very few people moved up. And that's what we call one axis pricing. And I remember we pitched Pat Grady at Sequoia and he spent so much time, you know, thinking about our pricing model and he said, you need a two axis pricing model. And I remember seeing, it's like, hello, is a two axis pricing model. He drew that. He's like this. So you have. And he said, you need a second axis. And he said, y axis.

Yeah, yeah.

What's your second axis? And I said, I, I don't know, we should think about it. And most people do seats, but at the time we only sold the marketers. There's not a lot of marketers in an organization. And back then it was pretty easy to share passwords, so seats wouldn't work. And we wanted to pick an axis that would align our incentives with the customers. Like the better the customer did, the more money we would make. And so we picked at the time, contacts. So you start at 250 with a thousand contacts, and then two years later you get 10,000 contacts and you're at the $500 product. That was huge. And so we went from 60% customer attention to I don't know what the Exact number is. High 80s customer retention now. And that's mostly just the product got better. Massive investments already. We moved our percentage of money in our P and L from sales and marketing, R and D in a big way. But then our revenue retention went to 100 and I forget what it is, four or five, something like that. And so our upsell also get much better. So we went from 60 to 62 to, let's call it 88 to 104, something like that. Those are all rough numbers. And yeah, that took a good 10 years to get that right. And it was. And the thing about it was I think a lot of, and my guess is a lot of CEOs just say, hey, product people, why don't you get that retention up? Or hey, service people. The marketing people had a big play in that. The salespeople had a huge, huge play. Just signing up the right type of customers and incenting your reps to set the right expectations are really key to improving our metrics.

Well, also, building it into the comp plan didn't hurt either.

Huge.

Yeah. Now, I also want to go back to what you said about, you know, things are breaking all the time and even people sometimes break as you're growing really fast. As fast as HubSpot grew. And I've heard you say, as we grew, we look to hire adults versus children. You know, talk to us about what you meant by that.

I would. This may surprise people, but HubSpot is on its basically its fourth generation senior leadership team. And when we started, we had a terrific senior leadership team. You knew all these folks and they were whip smart. They were mostly people we went to Sloan with. And I think a real thing about that crew is they lacked experience. But man, were they smart. And they had a real disdain for dimensional wisdom. Just because the VCs were telling us to do something or just because everyone else did something didn't mean we had to do it. We were very comfortable rewriting a playbook and that was a terrific team. They were startup people and for one reason or another, many of them left. Some we kind of massaged out and then we had another group of people come in, left. Some we kind of massaged out and then we had another group of people Come in and then where we're on are really our fourth team. And a couple of thoughts on that. The failure case for people who didn't scale largely was they're, they're a first time VP and they have a couple levels of leadership. There's and I'll use the board again. And they, they're terrific and they were great director and they get promoted to VP and they want to make everyone happy as VP and they've got a choice when they make decisions. They can solve for the enterprise value or they can solve for their team value or they can solve, I call it the mebi, their own value. And interestingly when people fail in HubSpot leaders on their way up in their career, it's not because they oversold for themselves. They over rotate to their team and they over rotate to their team so much that they suboptimize their peers team. And so what I really like are people who solve above all enterprise value make every decision to approve the overall metrics of the company, the overall company, even if it means suboptimizing their team value. And so when people turned over it was largely that problem.

Yeah, you see that a lot, especially in sales. You'll see that some sales CROs will optimize only for the salesforce and nothing else and then that becomes detrimental to the company in, in some way shape or form. So it speaks to what you're saying. There's the ME value, you know, team value and then enterprise value. And it's a maturity level that some people have to get to where they actually look at the entire company and the effect that things are going to have on the entire company.

Yep.

And what about how does, how does skill set factor in that? Because what you're really talking about and stage of the company because every time you go through different stages of the company that puts more demands on the skill set of the people that are in those leadership positions. And it also then changes, needs to change the mindset that they have from me value, team value, all the way up to enterprise value.

Yeah. Okay. One other thing I noticed, one of the big things I've learned over time, my analogy for being CEO of a fast growing startup is you're like an ice climber. You're going up a steep, very rocky hill with tons of ice in it. You get your ice pick shoes, you've got your ice pick in your hand and it's treacherous and you could fall and slip and you know, bad things can happen to your sharp very easily. And I think A mistake that a lot of people make is they go and hire somebody who is at the top of the mountain. They're at Google, they're at Microsoft, they're at Amazon, they're at some huge company in their industry, Symantec, whatever it would be. And their resume looks great and they know a lot. But either they didn't go through that trail you're trying to go up for a long, long. They went through it a long time ago or they never did. They joined company when it was already at the top of the hill. And so what I've learned, and I made this mistake over and over, like hiring people from Google or Microsoft, whatever, it's. There's just an impedance mismatch on what they've been working on and thinking about versus the challenges we're facing. So I like to think of, like, I'm going up that icy, you know, craggy, dangerous hill. I like to see someone who's like 10ft ahead of me, who's already gone up the path and maybe went up the wrong path, came back, then went up the right path and can help me. And I like that for each of my functions in not getting too far ahead of ourselves, where. Where we've done very well is we hire somebody of a company that we admire that's like a few years ahead of us. Like, we do this with our board. We just hired the CEO of Autodesk to be on our board. Their 50 billion market cap. We're 25. A lot of the same issues. He's been great. Really, really, really great and helpful to us. And I like that for all of my management team members. Yeah.

So climbing that treacherous, you know, ice space really kind of speaks to. And the reason you were hiring people just a couple years ahead of you is that they now had the experience of going through that treacherous ice piece, and they also had the skill set to do that, too. So that kind of speaks a little bit to when some of your people, you know, tap out at a certain stage, they either choose consciously not to go adapt and learn new skills, or unconsciously choose not to adapt and learn new skills, because that's what it really takes as companies go through these different transitions.

I agree. And let's just think like our head of go to market. We have a terrific guy now who came from DocuSign and Adobe. And back when you were involved with HubSpot, let's say in 2010, we had a guy, Mark Robert, now Mark Roberts, his career path's been interesting. He. He ran Sales for us. And when he left he became a professor of sales at Harvard Business School which by the way I didn't see that coming. And then he started a venture fund stage two that invests in kind of sales startups and that worked for him and that made sense. He didn't go and say hey I'm done with HubSpot, I want to go work for Adobe or something at a different scale. And I noticed that with all the people who left, like if they're startup people, they left and went to another startup, they didn't go to a big scale up. And I don't think the current person we have would, would have done as good a job as Mark did in those early days. Mark was a totally different skill set and I don't think Mark would do well now like he does. I think it's a very, very different skill set and I don't value that startup scale up skill set. I think it's very valuable on the knowledge and things that are in there. And I'm also a big fan of like everyone's got strengths and weaknesses. Certainly I do. I don't try with, with folks on my team to necessarily develop their weaknesses so much. I feel like people really struggle, I really struggle with that and I feel like if you're going to put a hundred calories into developing your strengths, you're going to get a bigger return on that than a hundred calories to develop your weaknesses. Like there's a reason it's a weakness, you're not that interested in it. And so I tend to encourage people to hire around their weaknesses and that has served, that has been a good call over time. People just don't want to fix their weaknesses. It's a very, very rare person, particularly a mid career person, early career, anything that really wants to dig in and improve. What's a clear weakness like on the margins? Yes, but generally they don't. People are stuck in their ways, including myself.

So when you think about that from maybe the biggest lesson you've learned in recruiting these new people into into HubSpot. Can you think back as far as you know what is the biggest lesson you learned in recruiting?

I think it's the recently I've learned this, I've learned this lesson over and over is don't hire too far ahead in their career. Don't hire. Well I don't like to hire from like the Googles and the Amazons and the Microsoft's, they're just too far ahead. It's impedance mismatch I like to hire for experience. But what I worry a lot about when I hire for experience and what's bit me is I, in my mind there's like two sides of the spectrum. There's people who invest, embrace best practices and conventional wisdom and they're very good at that. And there's people who are like, I'm pretty skeptical of conventional wisdom and I think conventional wisdom is wrong in a lot of cases. And I want to rethink that. And so I want to have people who are a few years ahead on that journey, but not too wedded to conventional wisdom, to that old way of doing it that they've been doing it since the 1990s and it just works. I want people who are a little bit open minded to rethinking that process, to rethinking the job, they're smart enough to figure that kind of thing out.

And when you are recruiting, since you talked about enterprise value, team value and me value, are you testing for that in the interview?

Yes, I'll actually draw that on the board and ask them, you know, where do you lie on there? And now that I've said this, people will probably hear that and they'll know I'll do that and answer it right, which is important.

That's funny because I was interviewing a guy for a company and then and I started asking some questions and he picked up my book and he held it on the camera and he said, you know, John, I already have the answers to that.

I, I literally draw that spectrum and I say, where do you lie? And I think by the way, some places you work and in some phases of your company, you just want to embrace best practices like you just want to get better at what everyone else is doing. We're just genetically built this way. We just have always had a very healthy disregard for conventional wisdom in every way. And we tend to rethink everything, sometimes to a fault. Like the existing way people are doing is just fine, you should just do it. But oftentimes those bets against conventional wisdom have paid off. And if you have no tolerance for that sort of thinking, you're going to get uncomfortable inside. Pub spot.

Yeah. I remember working in the early days with you and Mark and everything that I would bring up, it would be tested by, isn't there a different way of doing it? So it forced me to sit back and actually think, well, maybe there is humble, let's talk about it. And you might find that there's a little twist to something that is a little different.

It can be irritating to New folks who come in who have built their whole career 30 years doing X and then we come in and we say, are you sure exes? Right.

But I really do believe that nothing is cookie cutter. You go into different companies, you can't take your cookie cutter ways and just expect that it's going to work because the new company has a different product, different Personas, you know, messaging to different pains, different people, different cost justifications. All those types of things add up to. I'm going to have to do this a little different than the way I did it in the past. And I've always found that the people that only want to do it their cookie cutter way, they usually don't last that long.

Yeah. Yep. Yeah, I agree with that.

Now, as a leader, what's the biggest lesson you had to learn as a leader?

I think I'm similar to a lot of entrepreneurs in that I. One of my real strengths is I'd like to make decisions, control things, be involved in the details. And that strength really turned into my greatest weakness as we went from startup to scale up.

Yeah.

Because disempowered the people I work who work for me and it just didn't scale. I remember I used to brag that I could do anybody's job better than they could inside of HubSpot. And we had like 50 people, which by the way definitely wasn't true. And, and at one point I was like, you know what? That's exactly the opposite. Everyone should be much better at their job than I could ever do. And now, yes, certainly the case.

And so that's when you recruited the best. When you can say that.

Yeah. And letting go is, has been very, very hard over time. And now I'm in a very interesting spot here, John, where I no longer the CEO. We've got Yamini Rangan running it. She's doing a terrific job. And I'm chairman and as chairperson, I think one of my biggest jobs is to support her and to coach her, but to keep my hands off that steering wheel. And I think the failure goes for people who are founders, CEOs and then let that go and let somebody else in. Like you look at Howard Schultz at, at, at Starbucks like he back in I think three times as CEO. That's the failure case. The, the winning case is that person is like Satya Nadella who does a terrific job and they're embraced. And I had a call with John Thompson who was chairman of Microsoft for a long time, is the guy who brought Satya in and asked him about that and that was exactly their approach at Microsoft. And I think Satya, by the way, he's in the Mount Rushmore CEO is what he's done over there. It's just remarkable. And they empowered him, they allowed him to really go and they let him take his time doing it. And I think Ballmer and Gates also let him go. And that really worked for Microsoft and worked for him. And a guy when I'm so impressed with him. He worked at Microsoft for 30 something years and he transformed the culture first. He transformed their attitudes towards open and close. Completely transformed the company's product lines. Not easy to do if you grew up inside that company and you would think like if you're Microsoft and you want to transform it, you want to bring someone in from the outside, they actually took someone in the inside and pulled that off. My hat's off to those folks.

Yeah, I think you're talking about, you know, positional power like you had early on with command and control versus persuasive power, where you're trying to coach people, develop them, use persuasion on how you can get them to do the types of things that you believe that they need to do. It's a big difference and it's usually comes with maturity as you, as you scale up as a leader. That's what I found.

Yeah. I will say one hack we have that has made me much better is we have a very good way of doing a 360 review for the CEO. And my co founder, Dharmesh runs it. And it's really simple. He does a net promoter survey of all the board members, all my execs, and a few frontline people, maybe even a few customers. And he says, on a scale of 1 to 10, how likely are you to refer Brian as CEO of HubSpot? And so they fill that in. And then Dharmesh would just. The second question is why? And people were bringing novels. Dharmesh would spend a couple weeks, read through all this stuff and had put together kind of a book for me on my performance in the first ten, it was two chapters. The first chapter was features. And these are developers who thinks like that. In each page 10 page is a feature Brian has. So Brian's a good storyteller, whatever it would be. And then he would put the feature at the top and then put quotes that reinforce that feature. And so I read through a job and I'm 10 pages in and I'm pretty convinced I'm the best CEO that's ever like in the history of Mickey, no doubt.

But Here come the next ten pages.

Extend pages is the bug report bugs. Like three scotches in.

And now you think you're a complete failure, failure.

And it's very, very good because there's a theme and then, you know, quotes for the theme. And by the way, every company, any, any person who's listening to this, who's a frontline manager, anyone, they can run their own, you know, they can do this on their own, they can have a friend do it or whatever. And, and my attitudes towards that was I would pick a couple of the strengths and try to really lean into them and get better. Like, okay, that you're. He's right. That's just. I do think that's a strength. Let me try to make that even a more powerful strength. And then the weaknesses, some of the weaknesses, some of the bugs, I actually consider features like, yes, works as design. You know, that's actually not a bug. I'm built that way. But a couple of them like, okay, I can work on that. And I'll give you an example of that. I used to lose my temper. Really unhelpful, it turns out. Losing your temper?

Yes, for sure.

And I wouldn't do it a lot, but like two or three times a year I just, my fucking head would come off and I would lose. And man, that would stick with people. That would stick with people for years and year after year that would be a bug. And finally I was like, all right, this is the year I'm not gonna lose my temper. And this must have been like 2015 a long time ago. And I haven't lost my temper since. But that would be an example of a bug that is fixable. And yeah, it doesn't, that, that doesn't show up anymore. But that showed up every year for like eight years. But that thing, that one report Dharmesh puts together for me is gold. And then the other thing I do is I post it on HubSpot's wiki and so the whole company can see all my features and all my bugs.

Wow.

And then I post like, you know, most companies have like an OKR thing or like some sort of. We have a thing called M Spot, which is our strategic planning doc, some up page document. So I put together a strategic plan for myself on. Here are the bugs I'm going to work on. Here's the features I'm going to lean into. Here's the things I'm just going to ignore. And I posted that in the wiki and so everyone in the company could kind of see That I took the feedback seriously and I was trying to get better myself. I don't know if this is the case, but my senses, in the culture of HubSpot is everyone else kind of said, well, our CEO is trying to get better. I can certainly try to get better and I can take this stuff seriously and I can have my own OKR about my own leadership skills. That was super, super helpful. And now we've can. Dharmesh does that for Yamini, our CEO now, she does the same thing, post it on the wiki. She's super transparent about it. And I think it trickles down. I think people follow the leader in a big way on that kind of stuff.

Yeah, that's really interesting because sometimes when people have had a issue that worked for me, I'd sometimes take them in a room and ask them if they understand the book on them. Like if we were to open up, let's say, the Brian Halligan book right now about what people say about them, what would they say? And sometimes you find when people are stuck, they have no idea how other people perceive them and it's their biggest hindrance to going to the next level. So I think that's really powerful.

I remember back in the day, actually your boss, Dick Harrison, when I was back in headquarters, he sat me down just like that in his office and he rarely invited me to his office, closed the door and he, he said exactly those words, here's the book on you, Elliot. And he laid it out, here's good stuff and people are fucking complaining about you. And here's what they. 1, 2, 3. I was like, okay, I got it. And so that's an expression I don't use, but that's pretty, that was pretty effective. And it sticks with me, whatever. That was 20 years ago. I remember him getting the book on me speech.

Yeah. Now, throughout that whole thing, Brian, what do you think is the number one lesson you had to learn about you, about Brian?

I would say I'm surprised I was able to pull off what I've been able to pull off. Very surprised. Like we drew it on the whiteboard. We wanted to be a billion dollar company, one of the biggest company in Boston, all that stuff. I would have put the odds of it exceptionally low. And I'm super pleased we've been able to pull off what we pull off. And I think the company is just getting started. It's got real legs going from here. So I've been surprised how well it's gone, given what I know about myself and my strengths and My ample weaknesses.

Is it your persistent, Is it your persistence and your ability to grind as you spoke about before, just keep going. I know you're going to grind it out. You know, there's going to be problems, people are going to fail, processes are going to fail, things are going to change. But it's that ability to persist. Because anybody looking from the outside has to say Halligan, you know, could constantly persist and grow throughout many years where he was a CEO of the company.

I, I don't know, I would say the even behind that it's, I'm very motivated. I'm not sure why I'm as motivated. I'm very, very motivated individual and I'm motivated to succeed. And I, I think that's just built into me from my parents early on. I also think a secret to my success was I had a terrific co founder. Like I picked the right person to partner with. And Dharmesh had been a CEO before and was the perfect Ying to my Yang. Like if we drew a Venn diagram, there's a little bit of overlap, but we kind of think with one mind. He understands me very well, understand it very well. And people may look on the outside, say, oh, Halligan, CEO, whatever. It was sort of like a partnership, like at the top. And I never made a big decision without, still don't. Without him being very much involved with that decision. So I picked a good partner and I think he helped me evolve. Like every couple years I would look at that 20 page report and say, I need to change. I need to totally change my operating system, change the way I work. And so I kind of came in with a, I would come in with a yearly plan. I still kind of do this quarterly plan, yearly plan. Be like, I need to be a different type of leader that the company needs to scale to the next level. And so it was more like I was willing to reinvent a little bit. And most of that reinvention was just trying to get the heck out of the weeds, get out of the weeds and hire people and delegate and hopefully they did a good job.

And last, like as you would call a couch question, but what's the biggest lesson you had to learn about other people?

And everybody is so different. Like, yeah, Ermesh is a different guy. He is brilliant and massively introverted. And I had to learn what that really meant. I didn't really get what that meant. And I need to figure out how to work with him and get the most out of our relationship. And I went to school on it and really Learned what introverts are all about. And over years, I was like, I really. This guy. The other thing about Dharmesh is he never. He still has not had a direct report in the history of HubSpot. And he wields all his power through influence and through ideas, not through people. And a lot of people get confused about that. Like, well, I need the biggest organization to be the most powerful. He's never had a direct report and is incredibly powerful inside of HubSpot. But learning to work with him and everybody else and just everybody's different. Everyone's got strengths, and everyone's got weaknesses. We hired one terrific guy in HubSpot in a senior role, and he had terrific strengths, and he was just the right distance up the mountain from us, and he brought so much to the table. But, man, he just was not into the details. And it drove me crazy because I need to stay on top of the details. And I was trying to always try to get him, hey, pay attention to this. Are you looking at this report? This is a red flag here. He's seeing all these red flags. You just wouldn't see him. Like, you just wouldn't see him. And I was like, we just need to hire folks in his org that are obsessed with the details and make sure that makes up for his weaknesses. So one of the things I learned is just push people on their strengths. Get better at your strengths. Don't push them that hard on their weaknesses. Pushing them to hire people. If you tend to want to hire people just like you. And I think people have to hire people who fix their weakness, not people like themselves.

Yeah. You've also said that as a leader, you're being watched 10 times more closely than you think. Like, how. How have you experienced that? I mean, in some ways, you're very transparent with what you did with the Dharmesh report, But I think as a. What you're saying, there is a lot of leaders really need to understand how closely they're being watched and. And very careful with the words they choose because people remember them.

I've been surprised. I was surprised about that. And this five, six years in, I remember as a woman who caught me in the hallway and she said, remember what you said at that company meeting back in 2007? And I didn't remember what I had said, but she, like, quoted me, and she was like, you said this, but you're doing that. Oh, you know, you're pro. You're right about it. I'm sure you're right about that. Let me think about that. And I remember it was that. And then there were a bunch of more cases like that where people would be like, wait, you know, seven years ago you've been a company meeting, you'd said this, but now we're doing that. What's up? And so in the weird juxtaposition is people with me act quite casually typically, and there's a lot of joking around. HubSpot's pretty light hearted place. We have a lot of fun, a lot of kind of laughs and they give me shit. People give me a hearty amount of. They don't let me get a swell head. Put it best. My mother would say, he'll never get a swelled head around here.

With a little bit of the Boston accent.

Yes. And so they definitely keep you like heaven forbid you ever said anything the least bit braggy. People just cut you with the knees up spot, which I love that about it. But at the same time they're hanging on your every word. And so it doesn't, it seems like they don't give a crap what you're saying. Like they play that off but at the same time they are very, very carefully listening to what you say as a CEO.

The other thing, when you're accepting their feedback, I mean you've said that you really have two products. You got the product that you build at HubSpot and you also have the culture that you build and that type of culture where they're able to stop you in the hallway and, and feel comfortable enough to say, hey, you know, seven years ago he said this and now we're doing that. What's going on?

Exhausting, by the way.

Yeah.

Yeah, we definitely have that kind of culture. People definitely are not afraid to give me. The juxtaposition of it confused me because people would treat me in such a way. They kind of give me a lot of crap and, and they definitely keep my ego. There's no egos at HubSpot and but at the same time they're pretending like, oh, you don't know what you're talking about. But at the same time they're really listening quite carefully and they're quoting what you say in their meetings with their people. And so I'm just surprised how much people listen. The other thing I would say is like as a founder CEO, you've got like a battery of like, it's like a battery that kind of goes up and down of like calls you can make that maybe people disagree with and maybe you've got two or three in your pocket that you can say, hey, I'm just making this call. I think it's the right thing for the company. And maybe people disagree, but they're like, okay, you're the founder. Bunk, your battery just went down 33% and you know, another 33%. Now if you were right about one of those, your battery goes up to 200%. And so kind of conscious of my CEO founder battery and I didn't want to wear my, you know, I didn't want to use the CEO founder car. I use it very, very, very frequently. And if I used it, you better be right. And if you're wrong on a couple in a row, that's a pro. You know, being right is underrated. And people talk a lot in startup world about failing fast and all that. Being right is really underrated. And I like people who are right a lot. And a CEO, if you're wrong all the time, that's troublesome. That's troublesome. Yeah.

Let's switch gears a little bit. So now you're, you're in the VC business.

Yeah.

You started your own fund named Propeller, and it's in partnership with the Woods Hole Oceanographic Institution located down in Woods Hole, Massachusetts. Tell us about Propeller and its mission. You know why you started it?

Yep. It all kind of started two years ago. Two and a half years ago. I had a bad snowmobile accident and very, very, very nearly died. And lying on the side of the mountain, I was like, if I live, I'm going to change some stuff. So I changed a bunch of stuff in my personal life or the professional side said, I don't, I really don't want to be CEO of HubSpot anymore. It's, it's 8,000 people. This phase is, somebody's going to be better at this phase than I am. It's not my passion and I want to get into climate. I feel like climate. I'm a, I'm a mission driven. HubSpot is very mission oriented company. And I wanted to get to climate. And when I got healthy again, took a long time, I went around John to lots of startups and academics and venture capital firms and everyone I talked to about climate, the more they knew about it, the more depressing they were. I mean, really depressing. No one was optimistic. And then one day I visited on Cape Cod, the Woods Hole Oceanographic Institute. I had a tour of it and met the president. It was terrific. And to a person, the oceanographers are optimistic about climate change. Climate had gotten us out of the last ice age. The ocean had Got us out of the last ice age. The ocean absorbed a lot of our carbon dioxide already, a lot of the heat, and it's the only thing of scale that could get us out of it. That optimism captured my attention. I said, well, let's start a fund. Let's spin it out of Woods Hole, and let's invest at the intersection of climate and ocean. And that became propeller. It's $120 million fund. I hired a team to run it. We got 13 investments. We're off to the races. And so far, so good. And, yeah, I think you're an investor. I appreciate that.

I am, I am, yeah. Hope it does well.

That's what we're up to so far. It's going really well.

Yeah. Hey, one last question. You're a salesperson that started a company. I know you co founded it with Dharmesh, and he's more of the technical person, but these days, you just don't see a lot of salespeople that go and try to start their own company. And the VCs, from what I can tell, have a tendency to only want to back tech founders and make them the CEOs. Do you have any feelings on that or thoughts about that, or would you give anybody some advice if they were a salesperson and they thought they could start their own company?

First of all, I think you're right. And I think there was a big shift that happened when Steve Jobs came back to Apple. It's like, okay, he's back. And then he rebuilt it, and he was the quirky founder they pushed out. And man, did it go sideways after they pushed him out. And then he came back and he fixed it. Jobs wasn't the technical genius. He was the marketing guy. But he, you know, prior to Jobs coming back and being so successful, the venture capital playbook, I believe, was pair a technical founder with someone like John McMahon, who can be CEO of the company and scale it. And that's what happened in our company, ptc. Sam Geisberg was the technical founder. They paired him with Steve Wolski, who was the business guy. And I think when Jobs came back, everything kind of changed. And they said, okay, maybe we ought to stick with those technical founders and try to surround them with other people versus replace them with the bend There, done that. You know, go to market person. And John, I think it's worked. I hate to say it, but I think that's kind of work for the industry. The technical founders have done really, really well. I mean, they definitely made their mistakes, and there's some really hairy stuff that's happened in our industry. But yeah, they, that's worked. And so I, it may change now that the economy is not as good. But I, I, I see it in all my VC friends. They, they're kind of sticking with the technical founders. Now. One interesting thing I've seen John is in the climate space, they tend to look for the John McMahon to come in and be the CEO of the company. And so I'm actually on the opposite side of that. Like that's a quirky founder. You know, we can back that quirky founder. We have this guy, Alan Adams, he's a physics professor at MIT who started an amazing company that we backed. And everybody else said, oh, he can't be the CEO. And I said, not bad. He's awesome. I would go to work for him. And so he's the CEO. He's scaling it like crazy. And so I think that trend is kind of here to stay. And so what I think worked for me is I got paired with that quirky founder and my quirky founder didn't want to be the CEO and I did want to be a CEO and that was a very early conversation we had that really worked out. Or if you look at like Carl Eisenbach, Carl Eichenbach's co CEO of Workday spent a lot of time at Sequoia but was, he wasn't a co founder at VMware, but man, he was there pretty darn early and was the sales guy, may have been the seventh employee that was a good model there. And so I think you can get in early and be a co founder and if the technical person, oftentimes technical person, doesn't want to be the CEO, that formula can work for you.

Yeah. Good.

Yeah.

Ryan Halligan, always a big pleasure to see you, man.

Pleasure to see you. You're looking good, feeling good. Great to see you and thank you for all your leadership and mentorship and all your help to HubSpot over the years. Been a big, big.

Yeah, yeah, sure. Thank you, buddy.

Thank you.

And thanks to everyone for listening to another episode of the Revenue Builders podcast.

Thanks for listening to today's episode. Be sure to check us out@force management.com.