Building HubSpot to a Unicorn: Dharmesh Shah’s Amazing Entrepreneurial Journey (Part 5)

Sramana Mitra: It’s not a bad thing to have a tough time raising Series A. Most likely, you’re doing something new. The market is not crawling with 27 other competitors. The problem with that 27 competitors trying to raise money for the same idea is that it’s very noisy. A noisy market is very difficult to penetrate.

Dharmesh Shah: And very expensive. 

Sramana Mitra: What are the highlights of the HubSpot journey that you want to underscore and discuss?

Dharmesh Shah: When people look at HubSpot, it’s this success story. I’d remind viewers and entrepreneurs out there that HubSpot didn’t start with a particularly brilliant idea. Most of our success is attributed to two things. One is a maniacal focus on the customer problem. Everyone would ask us, “It’s great that you started with small businesses. What is your plan to build enterprise?” We resisted that. We focused on our customers.

The second thing is just raw execution. We were fortunate to bring great people onto the team. The culture of the company was strong. Most entrepreneurs don’t spend enough time thinking about the culture they want to create. I understand that hesitation. Some may say, “We have products to build. Culture is something bigger companies worry about.”

There is some truth to that. You don’t have to write a 100-page document on what your culture is going to be. Whatever company you want to build, get that out on your website. As people are looking at your company as a possible place to join, they’ll self-select. If they’re not a good fit, they’ll self-select out. If you end up hiring people that are not a culture fit, you incur culture debt. We understand technology debt. We understand financial debt.

When you incur a culture debt, the interest rate is super high. It’s very hard to pay off completely. Let’s say you hire a complete jerk as employee six. It signals what kind of behavior you’re willing to tolerate. Even if you let that person go, some of that toxicity has seeped in. Spend a weekend with your co-founders and have that conversation. It makes life much easier. 

Sramana Mitra: You have hired a lot from MIT. I was in the Ph.D. program in the ECS and left with a Masters to spend time with my company. The head of the department said to me, “Just because you got in doesn’t mean you should go.” His point was MIT was a cut-throat environment and I might not enjoy it.

My experience was completely different. I found MIT people humble, intellectually honest. The level of intellectual exchange and dialogue was stimulating and I just grew so much. I felt so comfortable in that environment. I didn’t have to be politically correct. I didn’t have to worry about hurting other people’s feelings.

The combination of humility and intellectual honesty was very unique. I think what you’re describing in your cultural choices is a bit of translating that culture into HubSpot. 

Dharmesh Shah: The first few years of HubSpot were an extension of grad school. Let’s get on the whiteboard. Let’s debate this. That worked. We documented that culture. We have this 128-slide deck called the Culture Code. It shares with the world how HubSpot works. That was impactful. We’re in a very competitive space. It’s hard to build a sustainable competitive advantage in software these days. The advantage these days is a combination of a business model change and a focus on culture and people. If you look at the leadership at the tech now, these are all much humbler leaders. 

This segment is part 5 in the series : Building HubSpot to a Unicorn: Dharmesh Shah’s Amazing Entrepreneurial Journey
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