20VC: Hubspot Co-Founder Dharmesh Shah on The 3 Risks All Startups Face, Angel Investing Rules; No Founder Meetings and No Due Diligence, SMB vs Enterprise; Lessons on Pricing, Distribution and Why You Should Resist Going Enterprise
Dharmesh Shah, co-founder and CTO of HubSpot, shares his journey from bootstrapping Pyramid Digital Solutions to building a billion-dollar CRM powerhouse. He discusses the three core risks every startup faces and stresses the importance of nurturing a strong company culture, treating it like a product. Dharmesh also reveals his unorthodox approach to angel investing, which avoids traditional meetings and due diligence. He emphasizes the need for market validation and strategic pricing for both SMBs and enterprises, ensuring startups stay focused on their core mission.
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question_answer ANECDOTE
Co-founder matchmaking
Dharmesh Shah's wife played matchmaker, introducing him to his HubSpot co-founder, Brian Halligan, despite thinking they wouldn't connect.
They bonded over their shared passion for SMBs, leading to HubSpot's creation, despite Shah's promise to avoid startups.
insights INSIGHT
Transparency and Humility in Leadership
Dharmesh Shah's leadership style emphasizes transparency and humility.
He believes in openly sharing thoughts while actively listening and acknowledging that he doesn't have all the answers.
volunteer_activism ADVICE
Identifying High Achievers with Low Egos
To identify individuals with low ego and high accomplishment, observe how they attribute credit.
High achievers with low egos share credit, shoulder responsibility for failures, and avoid blame-shifting.
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Les Misérables is a novel written by Victor Hugo, published in 1862. It explores themes of justice, morality, and the struggle between good and evil through the lives of its characters. The novel is set from 1815 to the 1832 June Rebellion in Paris and focuses on Jean Valjean, who transforms from a thief into an honest man while being pursued by the zealous police officer Javert. The story also involves the plight of Fantine, her daughter Cosette, and the young student Marius, all intertwined with broader social issues of the time, including poverty, social injustice, and the long-term effects of the French Revolution on French society.
Getting to yes
negotiating agreement without giving in
William Ury
Roger Drummer Fisher
Bruce Patton
Getting to Yes, written by Roger Fisher, William Ury, and Bruce Patton, introduces the concept of principled negotiation. This approach separates the people from the problem, focuses on interests rather than positions, invents options for mutual gain, and insists on using objective criteria. The book provides strategies to manage emotions, avoid common negotiation traps, and deal with 'dirty tricks' used by other parties. It emphasizes the importance of understanding the other side's perceptions, managing misperceptions, and creating a collaborative environment to reach agreements that satisfy both parties[1][4][5].
The Innovator's Dilemma
When New Technologies Cause Great Firms to Fail
Clayton M. Christensen
In this influential business book, Clayton Christensen shows how even the most outstanding companies can lose market leadership when they fail to adapt to disruptive innovations. Christensen explains why companies often miss new waves of innovation and provides a set of rules for capitalizing on disruptive technologies. The book uses examples from various industries, including the disk drive, mechanical excavator, steel, and computer industries, to illustrate trends that lead to success or failure in the face of disruptive technologies.
Inbound Marketing
Dierk Runne
Brian Halligan
Dharmesh Shah
Brian Halligan and Dharmesh Shah's "Inbound Marketing" is a comprehensive guide to attracting customers through valuable content and engaging experiences. It details the inbound methodology, which focuses on attracting, engaging, and delighting customers rather than interrupting them with traditional outbound marketing tactics. The book provides a framework for building a strong online presence, generating leads, and nurturing customer relationships. It emphasizes the importance of creating high-quality content, optimizing websites for search engines, and leveraging social media to reach target audiences. The book's practical advice and clear explanations have made it a valuable resource for businesses seeking to implement inbound marketing strategies.
Dharmesh Shah is the Founder and CTO @ Hubspot, a full CRM platform with marketing, sales, service, and CMS software. Dharmesh started Hubspot in 2006 and today it is a publicly-traded company (NYSE: HUBS) with over 3,500+ people and a market capitalization of $16.9 billion. Prior to founding HubSpot, Dharmesh founded Pyramid Digital Solutions, which he bootstrapped with less than $10,000 and after 11 years of CEOship, Dharmesh helped the company get acquired in 2005 by SunGard Business Systems. In addition to co-authoring “Inbound Marketing" Dharmesh founded and writes for OnStartups.com -- a top-ranking startup blog and community with more than 1,000,000 members. Finally, if all of this was not enough, he is an angel investor in over 90 startups, including Coinbase, AngelList, Gusto, Okta and many more. and a frequent speaker on startups, growth, and the business of technology.
In Today's Episode with Dharmesh Shah We Discuss:
1.) The Founding of Hubspot:
How did Dharmesh's wife help Dharmesh find his co-founder in Brian?
What about SMB did both Dharmesh and Brian find a shared passion for?
What is the single biggest mistake Dharmesh made in the early days of Hubspot?
2.) The Culture Code:
What is Dharmesh's single biggest advice to founders when it comes to culture?
What does Dharmesh mean when he says "you have to treat culture like a product"?
What does Dharmesh mean when he says he looks for a "low ego to accomplishment ratio"? How does he test for this when hiring new hires?
How do the best people approach both responsibility and accountability? How does this show in their work and behaviour?
3.) The 3 Kinds of Risk in Startups:
What does Dharmesh believe are the 3 core risks all startups face in the early days?
How does Dharmesh advise founders when it comes to "testing for a market"? What is the right way to do customer discovery? What are the biggest mistakes founders make in the discovery process?
How does Dharmesh advise founders on when to release their second product? What is the right framework for this decision? Where do so many founders make mistakes here?
How does Dharmesh approach market timing risk? What have been his biggest lessons here?
4.) SMB vs Enterprise:
Why does Dharmesh believe that SMB is the single best market for founders to choose?
What are the single biggest challenges with enterprise? How do the long sales cycles and contracts in enterprise hide both customer satisfaction and prevent product development?
What are some of Dharmesh's biggest lessons on pricing? Does Dharmesh agree you should always "raise your prices"?
How does Dharmesh advise founders on when is the right time to go into enterprise from SMB?
What are the single biggest changes founders need to know when making the move from SMB to enterprise?
5.) Angel Investing 101:
What are Dharmesh's rules when it comes to angel investing?
What have been some of Dharmesh's biggest lessons from analysing thousands of emails to founders pre-investing? What are the biggest signs in emails of future founder success?
Why does Dharmesh not have calls with founders before investing?
What are some of the biggest mistakes Dharmesh has made when angel investing?
Items Mentioned in Today's Episode with Dharmesh Shah:
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch 
