Brian Halligan and Dharmesh Shah: How They Built HubSpot
Author, radio personality and journalist Guy Raz sat down with HubSpot co-founders Brian Halligan and Dharmesh Shah on the final day of INBOUND23 to discuss their nonlinear journey of building and scaling HubSpot.
Read on for key takeaways for future founders and business owners.
How did two self-described introverts first meet? They had some outside help. Shah’s wife acted as a networking mediator of sorts during an MIT business school event. It turns out they had many personal differences — from sports to music interests. But after spending more time together during classes, they discovered many similarities that were advantageous to starting a business.
“We both had a passion for small business. We were both intellectually curious. We were both seeing the internet develop. We had this common set of interests which I think is very, very useful for co-founders to have.” — Dharmesh Shah
And although it helps to have shared enthusiasm for startups, scaleups, growth, and learning, equally important in setting up the framework for their partnership was identifying the skill sets that each brought to the table. “He came from a sales and marketing and growth background. I came from a product and engineering kind of geeky background,” Shah says of their divergent experiences. “And that, now in hindsight, actually worked out really well.”
As you seek out business partners, look for individuals with a common set of values, but also embrace diverse backgrounds and skill sets, to create a foundation for success.
FROM “AHA MOMENT” TO BUSINESS IDEA
Talking about the inception of HubSpot, Halligan points to a pivotal moment that brought the term “inbound marketing” to life. After Halligan graduated, he worked for a venture capital firm, assisting their portfolio companies with growth. He noticed that the standard marketing procedures of the era (ie. cold calling, list buying, mass emailing) didn’t seem to be working. At the same time, Shah was blogging his way through the end of business school — without a staff, without a budget, he was able to garner huge interest and a following by creating valuable content.
“We just started describing the world as the old school outbound marketing that was the traditional way, and the new school inbound marketing. And that's sort of how the idea of HubSpot sort of started.” — Brian Halligan
They flipped the idea of marketing on its head, helping customers instead of soliciting them — using whatever marketing budget on hand to produce something of value to pull in potential customers instead of blasting a message out to the world. Although it was a divisive idea at the time, Halligan notes, it’s exactly the kind of idea that founders should pursue. “You're onto a good idea if it's a little bit polarizing,” he added.
Challenge traditional approaches and focus on creating value and solutions for your customers.
ZIG WHEN OTHERS ZAG
A hallmark trait of many successful founders is the ability to do things that are counterintuitive — zig when others zag. “We have not been afraid to fight conventional wisdom,” Halligan noted. “In several cases, it’s really worked out.” What were HubSpot’s three big zigs?
1. Not selling to Fortune 500 companies, and instead focusing on helping startups and scale-ups.
2. Pivoting from a marketing company to become a full CRM company.
3. Building a CRM company from the bottom up instead of acquiring points solutions.
All three pivotal moments in the company had a common thread: everyone else (including investors) thought they were terrible ideas.
“We had a professor in business school who used to always say, ‘Watch the competition, but never follow them.’ So we were never afraid to zig whenever they were zagging.” — Brian Halligan
Don’t be afraid to question established business norms and make decisions that differentiate your startup from the competition.
TREAT CULTURE AS A PRODUCT
In the first 5 years of HubSpot as a company, the word “culture” was never used — they were entirely focused on growing, building and selling the product. After joining a CEO group where the conversation centered on company culture, Halligan realized it was a missing element and Shah was appointed to lead the initiative.
“I treated it like an engineering project… if I could write an operating system to run the company, what would that operating system look like? And that's why the deck is called the culture code,” Shah added.
How exactly does that work? In addition to HubSpot’s actual product — an exceptional CRM that attracts and pulls in more customers and partners to retain them. Culture as a product provides exceptional value to employees that in turn pulls them in and retains them. Along with that employee culture comes a sense of transparency — from a company financial perspective to public performance reviews of the founders.
“We treat culture as a product and that has been game changing for us internally.” — Dharmesh Shah
As you grow and scale your company, don’t leave culture behind. Invest in it and involve employees in its development.
Embrace innovation by challenging traditional approaches and consistently create value and solutions for your customers. Be bold in questioning established norms and make decisions that set your startup apart from competitors. As your company grows, remember the importance of nurturing and investing in its culture.
Starting and growing a business requires hard work, skill, intelligence, and in most cases, some luck. Shah’s tip? Acquire and build up the necessary skills so that when those moments of luck come along, you’ll be able to fully leverage those opportunities.
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