🔑 Key Takeaways
- Darmesh prioritized culture over products, embraced strengths, and measured success unconventionally to build HubSpot's unique company culture.
- Dharmesh Shah, despite starting in a village, became a billionaire by focusing on acquirable skills like copywriting, comedy, and keynote preparation to overcome his fear of public speaking and engage audiences.
- Two practical tips: ensure funny bits end segments and use multiple punchlines in stories for more laughs per minute
- Building things for yourself can lead to simplified UI, quick decision-making, and the ability to easily discontinue projects. It also allows individuals to avoid management and direct reports, leading to continued engagement and happiness.
- Founders can benefit from unique company practices and trust the market to reflect their value as a public company
- Staying true to core values through transparency and inclusivity can lead to a more engaged workforce and supportive investor base.
- High conviction, low consensus beliefs are essential for business success. They help make unpopular but necessary decisions and maintain them for the long term, but it's important to strike a balance and reevaluate beliefs as needed.
- HubSpot's flat organization, transparency, and simple office seating assignments helped them make quick decisions, maintain a lean team, and focus on customers, contributing to their early success.
- Leaders must actively fight for simplicity to counteract the natural trend towards complexity in businesses, resulting in improved chemistry, better decision-making, and increased efficiency.
- When expanding, consider first, second, and third-order costs. Impose early constraints and create systems with guardrails to limit complexity.
- Startups can benefit from shorter feedback loops, control over product roadmap, and a large customer base in the SMB market. Despite challenges, persistence and flexibility can lead to success.
- Successful startups make unconventional decisions to address unique customer challenges, providing integrated solutions instead of leading in individual product categories.
- Identify root causes, leverage effective tools, and manage expectations with 'flash tags' for clear communication.
- HubSpot encourages autonomy and trust in employees through the use of hashtag pleas, prioritizes data-informed decisions, designates a decision-maker, ensures alignment, and values debating and uniting as a team.
- Identify key factors, rank importance, allocate resources, consider trade-offs, prioritize commitments
- Consider outcome, probability, passion, and prowess when evaluating ideas. The potential outcome multiplied by probability of success (expected value) is important, but don't ignore passion or unique assets.
- Passion for business can develop over time through immersion and opportunity recognition. Company culture is essential and can be defined and articulated to attract and retain top talent.
- Treat company culture like a product, gather regular feedback, iterate, and improve to meet team needs, and avoid becoming too rigid.
- Core values are essential, but flexibility to adapt practices for specific teams is crucial for a healthy company culture.
- Being authentic and transparent in creating a company culture can lead to self-fulfilling prophecies, shaping it into a reality. Aspire for truthful values but distinguish them from current realities.
- Explore problem-solving with new declarative tech, as it's intuitive, user-friendly, and proven successful with chatbots and AI tools.
- Be open to learning in public, use AI tools to achieve goals, and make those who believed in you look brilliant for a successful career.
📝 Podcast Summary
Entrepreneurship, Leadership, and Unique Strengths
Darmesh shares how he and his co-founder intentionally decided to prioritize culture over focusing on one specific product or service, despite not having a background in management or direct reports. He also discusses his unconventional approach to creating and scaling HubSpot's culture, which involves embracing his strengths and interests, such as comedy and keynote preparation. Throughout the conversation, Darmesh also touches on the importance of measuring success in unconventional ways, such as laughs per minute for comedians, and the value of staying true to your values and strengths, even when faced with challenges or pressure to conform. Overall, this episode offers a unique perspective on entrepreneurship, leadership, and the importance of staying true to your unique strengths and values.
From Village to Billionaire: Dharmesh Shah's Journey to Effective Keynote Speaking
Dharmesh Shah, the founder and CTO of HubSpot, used his talent and acquired skills to overcome his fear of public speaking and become an effective keynote speaker. Despite starting his career in a village in India with no modern amenities, he promised his wife he wouldn't start another company, but ended up founding HubSpot. He's now a billionaire. Shah's unique approach to preparing for a talk involves a deep obsession with copywriting, comedy, and keynote prep. He believes that while talent sets the foundation, most things are acquirable skills. He functionally decomposes public speaking skills, focusing on humor as the most impactful area. Through practice, data analysis, and refinement, Shah has become a successful and engaging speaker.
Maximizing laughs in speaking engagements
Improving the laughs per minute (LPM) ratio in speaking engagements, whether for business or comedy, can be achieved by adding more laughs or decreasing the number of words between laughs. This concept, used by stand-up comedians, can be applied to anyone aiming to be funnier. Two practical tips include ensuring the funny bit is the last thing said in a segment to allow the audience time to react and laugh, and structuring stories with multiple punchlines to maximize humor after investing in context and setup. Aiming for two or more laughs per minute is a good goal, but for non-professionals, even reaching 1.225 LPM places you in the top decile. After each talk, using software to analyze the transcript and audio can provide valuable feedback for improvement.
Focusing on your strengths and building solo or small
Focusing on your strengths and keeping things solo or small can lead to personal and professional growth. Dharmesh Thakker, co-founder of HubSpot, shared how he's been building things for himself for the past 30 years, and the benefits of doing so include having a simplified UI, quick decision-making, and the ability to easily discontinue projects if they no longer provide utility. Thakker also discussed his aversion to management and having direct reports, which he attributed to his strengths and enjoyments lying elsewhere. By making this decision early on at HubSpot, Thakker was able to avoid the downsides of management at a larger scale while still reaping the benefits. This approach has led to his continued engagement and happiness at the company.
Embracing unconventional practices for company success
Building a company according to your unique vision and values can lead to unexpected benefits and success. For instance, founding team UpSpot made the unconventional decision to ban meetings before 11 a.m., accommodating their natural work rhythms. This experience carries over to HubSpot's journey as a public company, where founder Dharmesh Shah advises founders not to fear the IPO process. Despite the added responsibilities and regulations, there are benefits, such as knowing the market valuation and allowing a larger pool of investors to participate in the company's growth. Shah encourages founders to focus on creating value and trust the market to eventually reflect that value in the stock price.
Transparency and inclusivity in business
Transparency and inclusivity are key to engaging customers, employees, and investors, even for publicly traded companies. Amazon's approach to public transparency, exemplified by Bezos' annual shareholder letters, sets the tone for running a business with authenticity and conviction. HubSpot's radical decision to make every employee a designated insider during their IPO process further illustrates the importance of transparency and inclusivity. While there may be legal and practical limitations to this approach, the overall message is that staying true to a company's core values, even in the face of challenges, can lead to a more engaged and motivated workforce and a more supportive investor base. This contrarian approach to corporate governance can lead to unique advantages in a competitive market.
The power of high conviction, low consensus beliefs
Having high conviction, low consensus beliefs is crucial for success in business. First principles, according to Elon Musk, are the fundamental truths of the universe, not just what a company believes. These high conviction, low consensus beliefs help companies make unpopular but necessary decisions and maintain them for a long time. For instance, HubSpot's decision to focus on SMB as their target market despite opposition was a high conviction, low consensus bet that paid off. However, it's essential to have a balance and not be overly contrarian. The use of titles in a company is an example of a decision where HubSpot initially had a high conviction, no titles policy, but later realized the value of titles as a signaling device and changed their stance. This demonstrates the importance of reevaluating and adapting beliefs while maintaining a strong conviction in core principles.
HubSpot's early success fueled by simplicity
Simplicity was a key factor in HubSpot's early success. The company started with no titles and a flat organization structure, which made decision-making simpler. They also adopted a policy of transparency, which eliminated the need for binary decisions about who gets access to what information. Even in small details, such as office seating, HubSpot prioritized simplicity over complexity. They used a lottery system to determine seating assignments, which worked well for the company's size but needed to be updated as it grew. This approach allowed HubSpot to focus on solving customer problems rather than getting bogged down in internal bureaucracy. Another interesting fact is that HubSpot paid all employees, including founders, a flat salary of $5,000 per month in the early years. This simplicity extended to compensation as well. These practices, while not applicable to every company, illustrate the importance of keeping things simple in the early stages of a startup. HubSpot's decision to prioritize simplicity over complexity allowed them to make quick decisions, maintain a flat organization, and focus on their customers, which contributed to their early success.
The importance of simplicity in business
Simplicity is a valuable asset in business, and fighting against the natural increase of complexity is essential for long-term success. The second law of thermodynamics, which states that entropy (disorder) increases over time in a closed system, can be applied to businesses. In the early stages, companies focus on survival. In the growth phase, they aim to avoid stagnation. But in the later stages, they face the challenge of managing complexity, which can lead to slower death. Leaders must actively fight for simplicity to counteract the natural trend towards complexity. This can be seen in product development, where adding features requires removing existing ones to maintain simplicity. Apple's approach to simplicity has been an inspiration for many businesses. The fight for simplicity is ongoing and requires effort, but the benefits, such as improved chemistry, better decision-making, and increased efficiency, are worth it.
Considering the long-term costs of added complexity
When expanding a product or business, it's crucial to consider the long-term costs of added complexity. First-order thinking focuses on the cost of implementation, second-order thinking considers maintenance, and third-order thinking encompasses other hidden costs. Each new product adds dimensional complexity, requiring decisions to be made with the new product in mind. To keep things simple, impose early constraints and create systems with guardrails that limit complexity. This approach is more effective than relying on culture or meetings alone. However, focusing on small businesses comes with unique challenges, such as limited resources and slower growth, making simplicity even more essential.
Focusing on SMBs offers advantages for startups
Choosing to focus on Small and Medium Businesses (SMB) for a startup can offer the best of both worlds between enterprise and consumer markets. The speaker shares his personal experience of co-founding a business software company and the advantages they encountered, such as shorter feedback loops, control over product roadmap, and a large customer base. However, it's important to note that SMB can be harder to succeed in compared to other models due to the lack of historical success stories. But, the market's reverse gravity can eventually pull a company up as it grows and becomes more successful. The speaker encourages startups to consider SMB as a starting point and to persist through the challenges until it becomes too painful. Additionally, the ability to zig when others zag and vice versa can be a valuable asset in this market.
Zigging when others zag to solve real customer problems
Successful startups often make unconventional decisions, or "zig when others zag," to solve real customer problems. HubSpot, for example, went against the advice of focusing on one thing and being exceptionally good at it, instead choosing to build an all-in-one marketing software with SEO tools, web analytics, blogging, and content management. This decision was based on the understanding that small businesses faced challenges in integrating multiple tools, and HubSpot wanted to provide a solution that addressed this issue. However, this approach meant that HubSpot was not a leader in each individual product category, but rather, excelled in how well all the products worked together. Founders should consider their unique customer problems and make decisions that may go against common advice, but ultimately, solve the underlying issue. Additionally, it's important for founders to understand the problem they're trying to solve and put constraints on themselves to ensure they stay focused on the solution rather than falling in love with the product itself.
Focus on solving specific customer problems with discipline and self-imposed constraints.
When addressing customer problems, it's crucial to identify the root cause and focus on solving it with discipline and self-imposed constraints. Marketers, for instance, can leverage platforms like LinkedIn for B2B marketing, which offers access to decision-makers and effective targeting tools. However, it's essential not to spread resources too thin by trying to excel in every area. Instead, focus on solving specific problems the best way possible. Another valuable insight shared was the concept of "flash tags" for communication, particularly for founders or leaders. This system, which can be used in emails or other media, allows the sender to indicate the level of commitment and expected response. From "FYI" (no response expected) to "plea" (urgent request for action), this method can help manage expectations and reduce misunderstandings.
HubSpot's unique approach to decision making
At HubSpot, the use of hashtag pleas is a soft way of making a suggestion without imposing a mandate. This approach is rooted in the company's culture of autonomy and trust in its employees. Decision making is a crucial aspect of any organization, and HubSpot has learned to improve its decision-making process over the years. They prioritize being data-informed, designating a decision-maker, and ensuring alignment once a decision has been made. The importance of debating, deciding, and uniting as a team is emphasized, even when individuals may not agree with the final decision. The use of hashtag pleas is just one example of HubSpot's unique approach to fostering autonomy and effective decision-making within their team.
Systematic approach to decision-making
Making effective decisions involves identifying the factors that matter most and prioritizing the resources spent on those decisions based on their potential impact. The speaker advocates for a systematic approach to decision-making, where one identifies the key factors, ranks their importance, and allocates resources accordingly. This approach helps ensure that time and energy are not wasted on trivial decisions, and that major decisions receive the attention they deserve. Additionally, the speaker emphasizes the importance of being mindful of the trade-offs involved in saying "yes" to new opportunities, and making deliberate choices about what to prioritize in order to make room for new commitments.
Evaluating Ideas: Outcome, Probability, Passion, and Prowess
When evaluating potential ideas for a startup or new product, it's essential to consider the potential outcome, probability of success, passion or proximity to the idea, and prowess or unique assets that make you uniquely positioned. These factors, when taken together, can help determine which ideas are worth pursuing. It's crucial not to focus solely on probability, as a low probability of success doesn't necessarily mean an idea isn't worth considering if the potential outcome is significant. The expected value, calculated by multiplying the potential outcome by the probability of success, can help in decision-making. Additionally, passion or proximity to the idea and prowess or unique assets can impact the probability of success. Ultimately, a well-rounded evaluation of an idea requires considering all these factors together, rather than focusing on just one or two.
Discovering Passion for Business Through Immersion
While passion can be a driving force for success in starting a business, it's not necessary to have that initial fire for an industry or specific venture. Passion can develop over time as one becomes immersed in the work. For instance, the founders of Zip, a procurement platform, didn't initially have a strong passion for procurement but saw a significant opportunity and grew passionate about it as they worked on the product. However, not everyone may have the opportunity to discover their true calling, and it's essential to be open to new experiences and opportunities. Another key takeaway from the discussion is the importance of company culture. Brian Halligan, the co-founder of HubSpot, recognized the significance of culture late in the company's development, and Dharmesh Shah was tasked with defining and articulating the existing culture. The process involved identifying the factors that contribute to a successful new hire, such as values, work ethic, and communication skills, and using those factors to measure potential new hires. However, the initial reaction to the idea of defining the culture was met with negativity due to negative experiences with poorly executed culture initiatives in other companies. Despite the initial challenges, the process of defining and articulating the culture proved valuable for HubSpot.
Culture as a Product for Employees
Culture in a company is not just an intangible concept, but a product that is built for the team, just like a product is built for customers. According to the speaker, culture is the product a company builds for its employees. Therefore, it should be treated with the same care and attention as a product, with regular feedback, iteration, and improvement. The speaker also emphasized the importance of listening to employees, just as a product team should listen to customers. By conducting regular surveys and addressing feedback, companies can continuously improve their culture and ensure that it is meeting the needs of their team. Additionally, the speaker warned against becoming too attached to a specific culture and failing to adapt to changing needs. Just as a product's code should not be frozen, a company's culture should not be set in stone. Instead, it should be iterated on and adjusted as needed to help the team do great things for the company. Overall, the speaker's perspective offers a unique way to think about culture as a product and emphasizes the importance of regularly gathering feedback and making improvements to ensure a positive and productive work environment.
Understanding the Evolution of Company Culture
Culture in a company is a product that evolves and requires active effort from everyone involved, not just the founders. It's important to distinguish between core values that should remain constant and aspects that can be optimized for specific groups or teams. Using the metaphor of federal and state laws, there are core beliefs that apply to the entire organization, while individual groups may have the flexibility to adapt certain practices to better serve their specific needs. For instance, HubSpot's early policy of not tracking work hours was a core value, but as the company grew and customer support became crucial, the need for coverage hours necessitated a change. However, it's essential to balance the preservation of core values with the flexibility to adapt to changing circumstances. Transparency is another core value that has endured at HubSpot, but there have been instances where access to certain information was deemed inefficient or distracting for specific teams. Ultimately, the key is to maintain a high level of conviction in core values while being open to reevaluating and adapting practices as needed.
The power of authenticity and self-fulfilling prophecies in shaping a company culture
It's important to be authentic and transparent when creating a company culture. The founder of HubSpot shared how they initially put aspirational values in their culture code, but over time, these values became true due to the team's commitment to them. This demonstrates the power of self-fulfilling prophecies in shaping a company culture. However, it's crucial to differentiate between what is currently true and what is an aspiration. Airbnb is an example of a company that learned the hard way by keeping a core value that wasn't aligned with their reality, which led them to remove it. In the context of AI, the founder expressed their excitement about its potential to provide cognition at scale, amplifying human capabilities, making it a game-changer in the industry.
Shifting from imperative to declarative software development
We are on the brink of a new era in software development, where we're moving from an imperative model to a declarative one. This shift means that instead of giving step-by-step instructions to software, we'll be able to describe the desired outcome and let the software figure out how to achieve it. This is a game-changer for product builders and software companies, as it will make interfaces more intuitive and user-friendly. This technology has already been proven with the success of chatbots and AI-powered tools. To get ahead of this trend, it's recommended to find a problem you care about and try to solve it using the new technology, rather than learning for the sake of learning. As the speaker mentioned, he built a chatbot six and a half years ago that didn't work due to the lack of advanced AI technology, but now the technology exists and it's an exciting time for innovation.
Lessons from Stand-Up Comedy and Founding HubSpot
Having a clear goal in mind and being open to learning in public, even in the face of criticism, can lead to success. Darmesh Shaw, the founder of HubSpot, shared his experiences with humor and stand-up comedy, and how these experiences have shaped his professional life. He emphasized the importance of using available AI tools to help achieve goals, no matter the industry or profession. Shaw also emphasized the value of making those who believed in you look brilliant as a definition of success. He encouraged listeners to engage with him on social media, share their favorite Lenny episodes, and visit his website for more content. Overall, Shaw's message was one of resilience, innovation, and the power of community in achieving success.