Zigging vs. zagging: How HubSpot built a $30B company | Dharmesh Shah (co-founder/CTO)
Dharmesh Shah is the co-founder and CTO of HubSpot (currently valued at $30 billion) and one of the most fascinating founders I’ve ever met. Dharmesh is the keeper of HubSpot’s Culture Code, built ChatSpot (an AI chatbot built on top of HubSpot CRM) and a game called WordPlay (which grew to 16 million users), and also founded and writes for OnStartups, a top-ranking startup blog and community with more than 1M members. He’s also invested in 100+ startups including OpenAI, AngelList, Coinbase, and Dropbox. In our conversation, we discuss:
• The biggest lessons he has learned from building HubSpot
• The importance of leaning into your strengths
• Dharmesh’s data-oriented approach to public speaking
• How he developed HubSpot’s culture code
• The decision-making process at HubSpot
• His contrarian approach to building products
• Why founders and product teams are all fighting the second law of thermodynamics
• How “flash tags” can save your teams time
• How to decide what ideas are worth investing in
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Find the full transcript at: www.lennysnewsletter.com/p/le...
Where to find Dharmesh Shah:
• X: / dharmesh
• LinkedIn: / dharmesh
• Website: dharmesh.com/
Where to find Lenny:
• Newsletter: www.lennysnewsletter.com
• X: / lennysan
• LinkedIn: / lennyrachitsky
In this episode, we cover:
(00:00) Dharmesh’s background
(04:20) Fun facts about Dharmesh
(06:31) His data-oriented approach to public speaking
(11:45) Advice for adding humor to your presentations
(15:28) Why he has no direct reports
(18:46) You can shape the universe to your liking
(20:02) Lessons from building HubSpot
(23:43) Contrarian ways of running a company
(37:26) Fighting the second law of thermodynamics
(40:29) The importance of simplicity in running a business
(45:22) Succeeding in the SMB market
(50:29) Zigging when others are zagging
(54:17) When it makes sense to go “wide and deep”
(57:33) Using flashtags to communicate opinions
(01:02:44) HubSpot’s decision-making process
(01:09:41) Deciding what ideas to invest in
(01:15:26) Defining and maintaining company culture
(01:30:46) The potential of AI
(01:37:03) Practical advice for learning AI
(01:40:07) Where to find Dharmesh
Production and marketing by penname.co/. For inquiries about sponsoring the podcast, email podcast@lennyrachitsky.com.
Lenny may be an investor in the companies discussed.
Dharmesh seems to be an amazing human being and even better communicator. This podcast is gold.
I'm in the middle of this episode and am loving it so far!! Dharmesh is such a fantastic guest - love all the insights and opinionated dialogue! 🔥
😮danggg Chloe also listens to my fav pm podcast
@@krosshqbeats8943 I mean this is such a famous podcast in the product world!!
I am not merely watching this episode, I am actually studying it and taking notes on the side.
Love to hear that. Let me know what your favorite part was.
@@DharmeshSpot loved all the advice. Have been a follower from the early HubSpot days. Happy to see all the growth!
‘fall in love with the problem that you are trying to solve for vs the solution’ is my favorite!
Pro Tip: Copy the transcript into NotebookLM :)
Lenny, I've listened to this podcast three times this week, unbelievable. This is your best interview yet 👍
Thanks so much for the kind words. Glad you got value out of the episode.
Dharmesh is such an amazing and humble leader. His transparency shines throughout. Hats off !!! Ram
19yo founder building a martech platform for law firms. You're always a gem!
Dharmesh's insights on building a culture code are spot on. For entrepreneurs, remember that your company's culture isn't just about perks; it's the shared values and practices that guide your team's behavior and decision-making. A strong culture can be a strategic asset, attracting talent and customers who resonate with your mission.
Those lessons on culture are something it took me years to learn. And yes, a strong but agile culture can be a valuable strategic asset.
Culture is a product! This podcast was such a great learning session.
Thanks. Glad you enjoyed it.
My favourite take away from this podcast was the thought about culture as a product for employees. It ties up really well to the fact also that often the companies who have great products ( Apple, Amazon, Hubspot etc) have really good culture but again its the product leaders who have a really big role to play in developing the culture and this is a great example. Thanks for sharing such amazing thoughts.
Thanks, glad you liked it.
@@DharmeshSpot I really enjoyed this talk! I share a lot of the same feelings but for the longest time I thought it was just me! Would you please dive a bit more into "It is not that I don't like people, but I don't like being around them a whole lot" I feel the same way but can't pin it down exactly.
What do you think Dharmesh meant "It is not that I don't like people, but I don't like being around them a whole lot" ?
That was a bit of an attempt at humor. But what I meant was that as an introvert, I often find it difficult to be around people for too much time at once. Need to be alone to recharge my batteries.
@@DharmeshSpot Thank you, Dharmesh! My social capacitor is very small indeed. I used to think introversion was incompatible with leadership but you have clearly disproven that hypothesis! I guess this is related to the difference between management and leadership. Can you help me understand a bit more by digging a little deeper into where the difficulties arise? For example, I find it extremely mentally taxing to make smalltalk and often get bored by what most people find enjoyable (and vice versa). Also, I have a hard time converting my thoughts into words and group brainstorming often just slows me down. I am also terrible at delegation because I always give tasks that are too open ended and have difficulty seeing where others can get stuck. My thought process is Socratic and scientific (maybe mildly autistic?) which tends to annoy people. God bless my wife for dealing with this :) Perhaps you were able to overcome these somehow? I wish I could get better at it but I think it may just be going against the grain of my personality. Imposter syndrome does not help either. I am a physician who never practiced and a software engineer who no longer engineers lol. By the way, my company, innolitics.com, is using Hubspot and it really helping us get out of founder led sales. Thank you! Yujan Shrestha, MD
you can split this into 100 shorts each being immensely valuable.
This is an awesome idea. Hope that happens
being an entrepreneur his insights where eye opening. I took many notes and loved the fresh view with wit and wisdom.
Amazing founder I love his approach how he think and how consequent in not doing things ❤
Thanks! Glad you're finding the episode useful.
Love this podcast! Dharmesh drops so much wisdom about business and life. 🙌
Watching / Listening to any of Dharmesh's video/podcast > > >Traditional MBA degree. He doesn't talk academics; offers super tactical advice on literally everything business, marketing and leadership.
Dharmesh is such a fantastic storyteller. The numerous number of examples and stories he is able to quickly point to when explaining a concept, makes this podcast so great and engaging. Learnt so much.
Thanks. Glad you learned some useful things.
Great insights on targeting SMBs and love his detached yet intensely involved approach to issues and problem solving.
one of the best advantages of being a programmer myself is building soloware, love it!
First principles thinking exemplified. Blown away by the structured thinking as well. Doesn’t matter what the popular take is. What matters is whether it makes sense in your context - between the lines takeaway for me. Now this is a learning that’s applicable anywhere. But it does require deep understanding and structured thinking.
This kept me hooked for so long. Dharmesh gave a bunch of really fresh ideas!
Thanks. Glad you found it useful.
Dharmesh dropping startup & scaleup truth bombs 💣 that'll make your head spin faster than a cat chasing a laser pointer🐈Lenny killing it with this podcast format especially with contrarian corner🔥🔥
Simply amazing
Thanks Lenny & Dharmesh - Amazing episode
Thanks. Glad you liked it.
dharmesh, you are a genius role model for some of us...thank you for sharing your wisdom
Thanks. I'm glad I've been helpful.
This was beyond great! Dharmesh, you are a great storyteller. I am taking the humor/LPM (interested in the software BTW) approach with me for any speaking event. The flashcards thing is something I've been using albeit for categorizing things. Lenny, your content/production/editing quality is something to strive for.
Thanks. You are the second person to request access to the software. Will keep a tally. :)
dang..... high class learning right here!!
This is gold!
Ok, so now I want to work at Hubspot!
Dharmesh - you are an inspiration to many including myself because you are very authentic and can explain your theories and thoughts through brilliant examples. I have learnt a lot of things after i started following you a few years ago. Being an immigrant from disadvantaged area of western Nepal, I wished I had a guide and mentor to connect and learn from to build my career. After 20 years now, I spoked to hundreds of people who face similar problem. And I am somehow obsessed with the idea of creating a platform. Like you mentioned in the video, I am starting with this and use AI to discover these people, orgs, programs, events and resources for these users. I would love to share some of the work I have done with you for feedback in some forum. Thank you for these valuable tips.
Hi Dharmesh, in this episode, we’ve heard “keep it simple at first” and “building a broad product on early days”. How do two doesn’t clash in decision making?
Awesome pod!
Dharmesh's first order thinking - Very relevant to our Enterprise AI platform.
What an episode!
Love it!
great and practical insights
This is gold
Amazing episode!
Thanks. Glad you liked it.
Most think in their first language. Dharmesh thinks in Python scripts! 😅 Favourite Lenny episode to suggest Dharmesh -> Product Vision with Ebi Atawodi!
It's actually true. I do think in Python. :) Thanks for the suggestions.
I like how he relates everything to 'calories' spent
Yeah, I know it's kind of odd, but it's the way my brain works. Goes back to physics and first principles. I think of calories as "units of energy".
@@DharmeshSpot Makes sense and is definitely something I'll adopt. Thank you!
37:20 the urge to correcting 2nd law of thermodynamics 😂
I think he and Quentin Tarantino could be friends. :) Amazing personality, energy and company.
Wow. That's really high praise. Thanks.
Awesome episode ✨ And I would love to use the LPM software!!
Glad you liked the episode. Your interest in the LPM software is noted. Let's see how many there are out there.
@@DharmeshSpot Have you thought about open sourcing it? Then you wouldn't have the hassle of keeping the project going or doing testing etc
@@lennimikuszewski2644 I have thought about that, but shied away from it as the code is kind of hacky and I'd need to clean it up first.
@@DharmeshSpot Count me in!
Crazy timing - long $hubs 🚀
haha yes
can you do a podcast with David Lieb, please?
He's on the list! What would you want us to dig into?
Dharmesh's Hashtag System: #Plee - I beg of you to do this. I've thought about it so much and believe in my soul that it is the right thing to do. If you choose not to, I would appreciate a thorough response as to why and your research behind your decision. #Recommendation - I've thought about this a lot and have researched, dug through, and soul-searched around it. I would do this if I were you. You don't have to, but if you decide not to, I would appreciate a response as to why not and your thinking behind it. #Suggestion - This thought came into my head, and it could be a good thing to explore. No response is expected. You don't have to do anything, but I would consider it if I were you. #FYI - I came across this thing and am just letting you know. No response is expected.
IN LAY PERSONS TERMS.
That’s not why they don’t share salaries.
This mf said he aint flowing he ebbing 😂
I can only think about "Disrupted: My Misadventure in the Start-Up Bubble" 🙂
🎯 Key Takeaways for quick navigation: 🎯 HubSpot's unconventional approach: Initially decided to focus on multiple areas instead of specializing in one, going against common startup advice. 🤔 Culture creation: Co-founder assigned Dharmesh to define HubSpot's culture, despite his initial reluctance due to his preference for autonomy. 😄 Unique approach to public speaking: Dharmesh uses a data-driven method, measuring laughs per minute, to refine his keynote speeches. 🚀 Scaling culture: Dharmesh shares insights on how HubSpot's culture evolved and scaled over the years. 💡 Leaning into strengths: Dharmesh emphasizes the importance of focusing on strengths and avoiding tasks one isn't passionate about or skilled in. 💰 Entrepreneurial journey: From starting companies to becoming a billionaire, Dharmesh reflects on his entrepreneurial path. 🎤 SoloWare concept: Dharmesh discusses his personal approach to developing software tailored solely to his needs. 📈 Importance of self-awareness: Dharmesh's decision to avoid management roles stems from recognizing his limitations and prioritizing areas where he excels and enjoys. 🌱 Enjoyment and proficiency: Dharmesh emphasizes the correlation between enjoying tasks and being good at them, a principle he applied to himself and HubSpot. 💼 Managing scale: Dharmesh discusses his decision to avoid direct reports at HubSpot, enabling him to thrive in a larger company without the burdens of traditional management. 💡 Building a company your way: He advocates for building a company based on personal principles rather than conforming to traditional norms, citing HubSpot's unconventional approaches. 💰 Benefits of going public: Dharmesh highlights the advantages of being a publicly traded company, including market valuation transparency and wider participation in growth. 📈 Long-term conviction: He stresses the importance of maintaining high conviction in core principles, even when they go against prevailing opinions, using HubSpot's SMB focus as an example. 🔄 Iterative decision-making: Dharmesh discusses the importance of trying different approaches, adapting to challenges, and iterating on decisions as the company evolves. 🏷️ Titles and transparency: He shares the journey of HubSpot's approach to titles, from having none to adopting classic titles, balancing transparency and organizational clarity. 💡 Simplify for success: Dharmesh advocates for simplicity in early-stage companies, citing HubSpot's initial $5,000 monthly salary for all employees as an example of solving for simplicity. 🪴 Simplify decisions: Binary decisions are often easier and more scalable than complex ones, making them a foundational principle at HubSpot. 💺 Seating lottery: HubSpot's approach to seating arrangements, using a lottery system to avoid office politics, scaled successfully as the company grew. 🔄 Continuous optimization: Even after initial success, HubSpot continually optimized its processes, like refining the seating lottery algorithm over time. 🛠️ Product simplicity: HubSpot's product development philosophy involved adding features only if others were removed, prioritizing simplicity and usability. 💡 Cost of complexity: Complexity in products and operations can be detrimental over time, leading to slower growth and increased challenges. 🎯 Guardrails for simplicity: Implementing systematic constraints helps maintain simplicity as a cultural value within the organization. 📈 SMB focus: Despite challenges, focusing on SMB (small and medium-sized businesses) allowed HubSpot to find a balance between enterprise and consumer markets. 🧭 High-conviction bets: Success often comes from making high-conviction, low-consensus decisions, which can involve zagging when others are zigging. 🔄 Consider alternatives: Even if you don't deviate from your chosen path, it's crucial to explore alternative strategies and understand their implications. 🚀 Broad approach: HubSpot's early decision to offer a suite of tools contradicted conventional startup advice to focus on one thing, aiming to address the comprehensive needs of SMBs. 🛠️ Solve customer problems: HubSpot's broad product offering aimed to solve the actual customer problem of integrating multiple tools, which was challenging for SMBs despite existing individual solutions. 📊 Measure depth: Despite being broad, HubSpot assessed the depth of its product categories and aimed not to be in the top three in any single category, focusing instead on the value of integration. 🎯 Strategic heuristics: Over-indexing on any individual product category indicated a deviation from HubSpot's value proposition of seamless integration, prompting reevaluation. 😄 Counterintuitive success: Being in the top three in individual categories wasn't necessarily HubSpot's goal, highlighting the unconventional yet effective nature of their approach. Made with HARPA AI