How To Come Up With Billion Dollar Business Ideas | Hubspot Co-Founder Dharmesh Shah

Wordplay, Recessions, Startups, and Trillion Dollar Skills - July 12, 2022 (over 2 years ago) • 01:28:25

This My First Million podcast episode features Sam and Shaan interviewing Dharmesh Shah, the founder and CTO of Hubspot. They discuss a range of topics, from the impact of economic downturns on startups to Dharmesh's personal investment strategies and side projects. Dharmesh shares insights into his approach to building and scaling a successful business, emphasizing the importance of talent acquisition and continuous iteration.

Recessions and Startups: Dharmesh and Shaan agree with Paul Graham's assertion that the economy has a neutral or even positive effect on new startups. They highlight increased talent availability and reduced marketing costs as key advantages during downturns.
Talent Acquisition: Dharmesh emphasizes attracting talent by offering unique learning opportunities and equity, rather than competing with inflated salaries. Shaan shares a recent hiring experience that underscores this philosophy. Dharmesh also explains Hubspot's early strategy of offering below-market salaries to ensure employees were motivated by the mission, not just money. He stresses the importance of hiring for "remarkability" and "high wattage." Shaan shares his similar "degeneracy" hiring principle at Bebo.
Dharmesh's Approach to Time and Investment: Dharmesh reveals he values his time at $10,000/hour and avoids tasks he can delegate or forgo if the cost is less than that. He explains his angel investing strategy, driven by vicarious enjoyment and bragging rights rather than financial returns. He makes quick investment decisions, often without meeting founders, and focuses on long-term potential.
Wordplay: Dharmesh discusses his Wordle-inspired side project, Wordplay. He explains its origin as a fun project with his son and a learning opportunity for himself. He shares its impressive user statistics and potential revenue, along with future development ideas.
Hubspot Stock Purchase: Sam asks Dharmesh about his recent purchase of Hubspot shares. Dharmesh explains it was motivated by his belief that the company is undervalued. He discusses his general investment philosophy and long-term outlook on Hubspot's value.
The Billion-Dollar Venn Diagram: Dharmesh introduces his "billion-dollar Venn diagram of success," which emphasizes acquiring rare and reinforcing skills. He uses this framework to explain his interest in copywriting and its synergy with his software engineering background.
Skills vs. Talent: Dharmesh argues that most skills are learnable and that "talent" is simply the rate at which one acquires a skill. He uses public speaking as an example of how he developed a skill he initially lacked. Shaan describes the Marshmallow Challenge and how it illustrates the importance of iteration and quick feedback loops.
Selling The Hustle: Sam asks Dharmesh about his experience acquiring The Hustle. Dharmesh acknowledges The Hustle's potential and expresses satisfaction with the acquisition despite its potential to have grown much larger independently.

Transcript:

Start Time	Speaker	Text
00:00	Dharmesh Shah	This is what I call the $1,000,000,000,000 Venn diagram of success. Right? I just made that up. So, you draw both circles of your skills and say, "Okay, well, I am now not like 1 in a billion, I'm 1 in a billion," or "1 in 5 billion," whatever that is. If you can convert that into some kind of monetizable business thing or whatever, that's when the magic sort of happens. So, that's kind of thing number one. It's like, what's your thing? What are your skills? What drives the value? And how much value will that intersection create? There are two things: one is how rare that intersection is, whether it's two circles, three circles, or whatever. How rare is it? And then the other one is...
00:43	Sam Parr	So, on the pod right now, we've got Dharmesh. Dharmesh is the founder of HubSpot. His technical title is CTO, right?
00:51	Dharmesh Shah	that is correct
00:52	Sam Parr	I see more
00:53	Shaan Puri	Means that you have to do the ad reads for your own company today. Why are we talking about HubSpot? You do the ad reads. You tell people why to buy.
01:01	Dharmesh Shah	You're talking about HubSpot because you guys do a much better job. I am terrible at that. I'm terrible at the promotion side of things, but...
01:07	Sam Parr	The Sean, do you... you're renting a house right now? Yeah. And Dharmesh, you do not rent though, right?
01:14	Dharmesh Shah	not anymore I did for a long long time I'm a big believer in rentals as it turns out but
01:19	Sam Parr	I'm staying in Brooklyn for the summer and I rent a furnished house, or an apartment, and it is so much better than owning a place and having to worry about stuff all the time. It is so much better! I think I'm on the renting train now. I've kind of been there before, but I actually love it more. Do you like it? Because Sean, you owned a place in San Francisco for like 4 years and then now you rent again.
01:43	Shaan Puri	Way better! In fact, every time something breaks, I now just have joy to be like, "Let me call somebody else." It's their problem, it's their cost to fix. They have to arrange it, they have to do whatever, and I don't have to think about it. Plus, also in California, property taxes are like insane. Or like in San Francisco, because the house prices are so high. So, you know, even if you try to do the calculation, it's so hard to beat just this annual property tax every single time on rent.
02:10	Sam Parr	Wait, so Dharmesh, if you had the choice again... I mean, I think maybe perhaps you bought because your wife wanted to or your kids wanted to, but if it was up to you, even with the family, would you be a renter?
02:25	Dharmesh Shah	If it was up to me, yes. Because just the decrease in maintenance and wear and tear on one's psyche and soul that ownership, you know, bestows upon you is just not worth it. That's my thing. It's just like, I don't want to worry about those things. I want to get as close to living in the matrix as I possibly can. Renting is a step closer to being in the matrix. We don't have to worry about physical things and atoms and things like that. It's like, "Ah, that's somebody else's problem. I just show up."
02:52	Sam Parr	How many people in your socio-economic ballpark, like founders of multibillion-dollar companies or people like you, do you think also rent? I think that if it were a fair amount, that would be fairly shocking to a lot of people. But do you know a bunch of people that are similar to you that still rent?
03:10	Dharmesh Shah	I know people that are similar to me in terms of preferring renting because I've talked to them about this. But almost everyone I know, once you get a family and once you have other things you're trying to factor in... For instance, one of the things my wife loves is gardening and having a yard. That's kind of hard to do in a rental. Not that you can't do it, but it's...
03:30	Shaan Puri	Right. One thing that a guy told me, who's similarly... you know, I think he's probably got like a $10 or $20 million house. He said, "Renting is amazing until your wife wants a specific house." Once your wife wants a specific house or a specific neighborhood, that neighborhood—like higher-end neighborhoods—have no rentals. So, you just can't get into that neighborhood, which means you can't have whatever. Then, you're forced into a different path.
03:55	Dharmesh Shah	and so
03:56	Shaan Puri	I thought, you know, it's a version of "good problems to have," so we'll count it that way. Alright, what are we talking about? Where should we start?
04:05	Dharmesh Shah	Well, you have a few things left over from the last episode, Sean. I don't know if we want to jump into some of those. Let's do one of the last ones.
04:12	Shaan Puri	Let's do one because I think you will have a take on this. So, have you ever read... I don't know, do you know Paul Grant, by the way?
04:19	Dharmesh Shah	I do no I have we're not best buddies or anything but I do know of him I've met him yeah
04:24	Sam Parr	so he's from boston right or cambridge
04:27	Dharmesh Shah	cambridge yep
04:28	Sam Parr	yeah so you guys know one another
04:30	Shaan Puri	He wrote a blog post back in October 2008, right after the crash. If you go to paulgram.com/badeconomy, you'll find the name of the blog post. He makes the case that the economic situation is apparently so grim that some experts fear we may be in for a stretch as bad as the mid-seventies, which is when Microsoft and Apple were founded. As those examples suggest, a recession may not be such a bad time to start a startup. You've heard that before, but there's one interesting part where he says, "I'm not saying it's a good time either. The truth is more boring: the economy doesn't matter much either way for a founder starting a startup." I actually thought that was a really good point. Many people on Twitter and those who listen to podcasts often hear from VCs who are also pandemic experts and macroeconomists. They start to adjust their plans and mental models based on what they hear. But if you're a startup, you're like an ant in this world. Does the ant care what's going on with the presidential election? No. You basically just need to build a product. You need to carry your little piece of dirt. It's about building a product, getting a customer, and then getting 10 customers. It doesn't matter if the economy is bad; if you can't get 10 customers, it's not going to work anyway. So, I thought it was a great little blog post talking about starting a startup during downtime, which is where I think we're about to enter or have just officially entered a recession again. Yep.
06:02	Dharmesh Shah	I
06:02	Shaan Puri	was curious dharmesh do you have any thoughts on that
06:05	Dharmesh Shah	Yeah, so my position is I lean more towards the kind of Paul Graham end of the spectrum. I think it's either neutral, that it doesn't matter, or it's one of the things you're suggesting towards positive. The positive elements of being in a downturning economy or recession are that things become available that would not have been available to a startup before, like talent. It's like, "Oh, well, there are people sitting at Meta, Facebook, or sitting at Google right now that may be reevaluating their lives, or they may have just been let go from a venture-backed company that raised $200 million or more." So now you've got this talent that's coming on the market that might not have come on the market before. Things that were super expensive, like buying Google AdWords or certain marketing channels, become more accessible because you have this glut of money and a glut of venture capital. I think of venture capital as a very efficient machine of turning money from limited partners (LPs) into Google AdWords revenue. They're just a conduit between the two. In a downward economy, you're going to get less of that kind of glut of money flowing in, which drives the cost overall down for certain things that I think are important to entrepreneurs. So, I'm generally net positive that a down economy is actually a relatively good time to start a startup.
07:09	Sam Parr	For like the last 18 months, or you know, whenever... like the last 24 months, whenever things have been booming, my wife works at Airbnb. I have a lot of friends that work at HubSpot, obviously, and Sean was at Twitch. So we have some perspective on the salaries of big companies. I've seen some of these salaries, and they are crazy, crazy, crazy, crazy, crazy. As the leader and the biggest shareholder of HubSpot, when you see these numbers, are you thinking to yourself, "We can't afford to pay someone like an entry-level person $250,000 a year"? I don't know how this is going to work. What's your perspective on that when these salaries are going so high? Now it's like a little bit more normal.
07:51	Shaan Puri	yeah but as a as
07:52	Dharmesh Shah	A startup... I mean, you can't afford those salaries anyway, right? Unless you're one of those rare exceptions that has $50 million going out of the gate, which is very, very rare. So, one of the things a founder has to get good at is convincing really smart people to do this irrational thing, which is to join you and your startup. If you can't make that sale—which is the most important sale you'll make, being able to attract people—then it's not going to work. You have to do one of two things: either recognize superstar talent and give them something they can't get elsewhere. It's beyond competence; it's like, "Oh, you'll learn more here," or "You're going to do your own startup someday. This is a place to get your startup MBA because you'll be exposed to a bunch of things. You'll meet your future co-founder of the company." Those kinds of things... Either you have to do that, or you have to say, "I'm going to be really good at identifying diamonds in the rough." These are people who have not yet made it to the $200,000 or $300,000 salary, but they will someday. I caught them early in their evolution, and so I can get them. So, it has to be one or the other form of arbitrage. Otherwise, you can't play the game. That's just not viable.
08:55	Shaan Puri	I’m doing... when you’re saying that, it’s resonating so much because it’s basically all the three things we just talked about. I started The Milk Road in January this year, and it’s been about six months. It’s like, "Here, let me start a crypto company right when crypto crashes," you know, like 70-80%. At the beginning, even my co-founder Ben was like, "The only thing I can see going wrong is if crypto goes into a bear market." I said, "Well, crypto's gonna go into a bear market. That's one of the few certainties of crypto: it goes up and down." And when it does, it is dramatic in both ways. So, it’s just a question of: do you think that kills it, or do we just make it through? That’s really all we have to think about here. So that was the first part of starting in a bad economy. The second one on talent was I recently hired this guy. He quit a pretty well-known venture-backed company that I think had just raised maybe $50 or $100 million. He joined, and I talked to him a little bit before he joined. He was thinking about doing his own startup. We had traded a couple of emails, nothing serious. He was wanting me to use his product, then he took a job at this place. Alright, whatever, I forgot about him. Then he emails me. I shared this on Twitter. He emails me with the subject line, "I have made an irreversible decision." I was like, "Okay, I gotta click this. What’s inside?" He’s like, "I just quit my job, and I think you should hire me." I was like, "Okay."
10:23	Shaan Puri	And he tells me why, blah blah blah, and so I was like, "Alright, boom, I'm sold." Very bold approach! I already liked your hustle before this because when you were hustling to try to get me as your customer, I was like, "This guy's good." So, okay, let's do this. I made him a job offer, which was not like, you know, a Silicon Valley job offer. But the guy lives in San Francisco and he was working for a Silicon Valley startup. So he was like, "Dude, that's like a 50% pay cut." And I didn't say this out loud, but in my head, what I felt was, "That's what I can afford to pay right now." And like, "Look, you come crush it, the sky's the limit, but that's what I could pay you right now, sight unseen." I was about to tell him the line that I had heard from Warren Buffett. You guys probably heard the story, but when Warren Buffett goes and tries to work for his, you know, kind of hero or whatever, Ben Graham, he's like, "You know, I'll work for you for free." And Ben Graham goes, "Your price is too high, sir." Which is the truth! The idea is that you got to shadow Ben Graham and work side by side with him every day. You should be paying for that if you really want to be a successful investor. That's how I felt, and I didn't want to say it because it's kind of arrogant, but it's like, "Dude, yeah."
11:32	Dharmesh Shah	if I take
11:32	Shaan Puri	You’re under my wing. My team is like three people. If you become one of those three and you're working out of my place... He came over to my house yesterday. You're sitting by me, working side by side every day. Really, I'm providing more value to you than you are providing to me at that point. And like, there's still a... you know, I appreciate the value you bring, but let's be clear: the dollar amount, the salary dollar amount, is not the value you're getting. I think he knows that intuitively, and that's why he said yes. But like that Ben Graham story always stands out.
12:04	Sam Parr	out family
12:05	Shaan Puri	no no he's a young young guy just graduated from college
12:08	Dharmesh Shah	But here's the thing: I think people have a couple of thoughts on that. One is that salary or compensation is just one vector of value that you get from a company that you join. Another value you gain is the learning experience, whatever it is that they expose you to. Additionally, you build a network while you're there. So, there are all these other things that, in aggregate, matter. I think it's common for people to over-index on the compensation or the current compensation and under-index on other things. Then there's just the raw emotional value. Do you like being around the people that you're with? Do you enjoy the idea of the work you're doing? Those things matter, as it turns out. Now, regarding the HubSpot story: when we started on this compensation thing, Brian and I had to pick salaries for ourselves—something more than $0. So, we picked $5,000 a month. It was a number, and obviously below market value. We had been out in the market for a while and had worked in our lives. When we hired employee number 3, we had to decide what we were going to pay them: $5,000. When we hired employee number 4, it was also $5,000. We built it on the premise that if you're here for the salary, you're here for the wrong reason. That's not why you're going to join this motley crew of folks. That lasted for a while, and then it kind of had this inertia built in. All of us sitting in the room chatting with you, trying to get you to join the company, were all paying each other $5,000 a month. Now, what do you think you should be able to get when all of us are making $5,000? Of course, that doesn't last forever, and you have to... you get what...
13:33	Shaan Puri	What was the pitch at that time? It's not like, you know, no offense to HubSpot, but it's not the sexiest idea. You're not saying, "We're building the electric car" here, you know? You didn't have that going for you. You might have had your own magnetism, which is like, you know, for me, I get this cheat code because this guy listens to the podcast. This podcast is a great talent pipeline for us because people will listen to it, and over time, they just decide for themselves. Either they think, "This guy's a dummy and he annoys me," or "I think this guy's smart. I really like him. I'd love to hang out with these guys. I think I could learn a bunch from them." So it becomes an unfair advantage, but you didn't have that back in the day. So what was your strategy? How did you convince people to do this $5,000, you know, Lego block of salary building?
14:15	Dharmesh Shah	So, we cheated a little bit, right? Because of the first eight people in the company, seven of them came out of MIT Sloan, the same school that Brian and I went to when we met in class. So, it was kind of an in-network thing. It's like, "Okay, well, it's just a bunch of friends that sort of know each other in the network or whatever. Let's go do this thing." And they were kind of far enough along in their careers that they were not missing meals or anything like that. They had just gone to a relatively good business school. And then the other thing—and this is the part—there's equity, but there's also the idea that this is not that risky, dude. Let's say this doesn't work out and we end up being chumps because the idea is really bad. Three to six months from now, you will basically be able to pick up where you left off. There's no loss other than the opportunity cost of those three to six months. This is not like an irreversible lifetime decision that I've made. This call is not going to dictate what I have to do for the next five or ten years. And that was enough. It's... yeah.
15:08	Sam Parr	Well, did things change? How many people do you think at HubSpot have made like 8 figures because of their equity? Once you work with those people for a long time, you're like, "Oh shit, the company went public, and like, you don't need to work anymore." Does that change the dynamic?
15:31	Dharmesh Shah	It hasn't. So, to answer your question, I always have to... there's this little process that only takes like a second and a half for me to translate 8 figures into what that actually is. So, that's $10,000,000+.
15:41	Sam Parr	yeah like may
15:41	Dharmesh Shah	it maybe that for a long time
15:43	Sam Parr	maybe 5 or 10,000,000 is like the number where you're like
15:46	Dharmesh Shah	fuck this I don't need this job probably somewhere in the 20 to 30 range if I had to guess of people that have made that much you know over 50 maybe even a 100 like millionaires in the 7 figure range but even when that was happening right like well a couple of things one is it distorts it a little bit because as a private company even though the valuation from the last round or whatever is x the shares are not liquid right so they're worth it but they're worth it on paper they can't go out and actually sell their shares so that's kind of thing number 1 and so it doesn't even if they wanted to it doesn't we can't really change behavior you can't go off and you know buy something with with with your shares so that's thing number 1 but thing number 2 is that we did have like this kind of esprit de corps right it wasn't really about the money it was about winning it was about kind of building something together and I I'd like to believe that it wasn't even really the idea that if we had taken that same early group of 2025 people and parachute them into some other company into some other industry there's still software in saas that we would have likely done reasonably well as well I think it came down to the people had good chemistry they were focused on the right thing I think we our early hiring policy was to hire kinda smart people that get shit done that was kind of the the thing right we want people that have high what we call high wattage they were like measurably smart if you had to go have them take an iq test we didn't do that but measurably smart but there's lots of very very smart people in the world but they have this kind of predilection to action like they could not help but like if they found a problem they're gonna go try and start to solve it they're gonna jump in you know feet first and they're just gonna do it or head first whatever the the phrase is and that was enough so we made a deliberate decision not to hire what we call press release hires press release hires when you hire someone and then you feel compelled to issue a press release say oh hubspot just hired the vp of sales from such and such company whatever that is a 30 year background in doing x if we felt like we ever hired someone that was worthy of a press release we did it wrong right that's not the kind of person we were looking for because they may have done amazing things at Google Microsoft facebook pick your company of choice but the startup is such a different context and you're you're paying for these kinda specialized set of skills that may or may not be relevant arbitrage is really really hard so we're bigger on the identify diamonds in the rough people that are going to be big you know it it's like you're buying a stock early versus going after the folks that already were press press release worthy so yeah
18:09	Sam Parr	I think that's been my skill, Sean. You've kind of seen my journey. I think my skill has been finding the diamonds in the rough. So, we've had, like, well, Sean and I kind of discovered one another. But then there's Steph Smith, who's now at a16z. We had Trung, who's popular. We had a bunch of people who went on and founded different companies. What I've always looked for—like, I purposely have looked for these diamonds in the rough—because I was like, "I can't afford to pay X, Y, and Z." So, I gotta hire this 24-year-old who I know will be a boss in like 5 or 10 years.
18:40	Shaan Puri	Wait, Sam... Sam, it's not just that you can't afford them. I remember once the Hustle got to the point where you could afford them, you were just kind of disgusted by the concept of somebody making that much money. I remember you were just like: "How much do you... how much does this kid over here work? That's like an engineer at my office." And I'd be like, "I don't know, like whatever... what, he's $150k, $170k?" You're like, "$170k? Oh my god! Like, this is... you know what, if this person left, would the company fail?" "No, no, not at all."
19:06	Sam Parr	well it
19:06	Shaan Puri	was like this is crazy
19:08	Sam Parr	that was 10 year or that was the year
19:10	Shaan Puri	a few years ago
19:10	Sam Parr	So, like, yeah, things have changed a little bit. But also, your people would show up to work at like noon, and I'd be like, "What the hell, man?" This guy just waltzed in right when they're serving lunch. But we've discovered some cool people. I always look for a couple of things. The first thing is actually from Paul Graham. He says, "I look to hire animals," like people who you're a little bit afraid of. They're just like freaks who work a lot. I also look for people who are weird. I always want weird people who have fairly extreme opinions, even if I totally disagree with their opinions. I really like that someone is well thought-out, well-researched, and has a strong opinion on something. But I love weirdos and eccentric people. I have found that at our startup, at The Hustle, we did a really good job of accepting weirdos and letting them be odd. We embraced it. I always found that to be kind of like... we used to say, "Let your freak flag fly." We had all types of different people working at our company, and they liked that we embraced their oddness and their differences.
20:23	Dharmesh Shah	Yeah, we have something simple. We have, you know, five core values as part of our HubSpot culture. One of them is remarkability or being remarkable. What we mean by that is there's something noteworthy that they've done in their past, or there's something quirky, something different, something that's an outlier about them. It doesn't have to be specifically business-related or whatever role that they're in, but they're just kind of off the main beat. We've done well with those kinds of people. We give them a home, kind of let them do their thing, and it tends to work out.
20:52	Shaan Puri	So, Sam had weirdos and kind of like, "Let your freak flag fly." You have the remarkability. Have you done something remarkable? We had one at Bebo that was the same. We used to say, "We hired degenerates." It's intentionally a word that's usually negative, right? Like, we hired degenerates. What we noticed, me and Furcon, was that we went through these phases in our lives where we just got really obsessed with something that didn't have a clear payoff. It wasn't the popular thing to be obsessed with. It wasn't the cookie-cutter good thing to be obsessed with. It wasn't like grades in school. It would be like Furcon getting really into this video game. He became a top 100 ranked player of that game. And like, on one hand, I knew it was a waste of time, but I couldn't help it. I just loved it and I obsessed over it. I became the best at it, and I just wanted to win so badly.
21:47	Shaan Puri	I even stopped being about winning. It was just like I wanted to get to the next level and keep going. I had done the same thing with poker, and he had done it with poker also. So we kind of identified these periods. It's like, "Hey, do you go through these periods of like three years of deep obsession around some competitive thing?" And when you do, do you really try to study the game and figure out what the loopholes are? What are the rules of the game? You immerse yourself with other players in the game because, like, well, cool, our game now is just startups. We would try to find people who had some evidence of degeneracy. It's like, "Yeah, you come in at noon because you stay up till 4 in the morning building that SoundCloud player that works like TikTok for no reason." You're so annoyed that SoundCloud is too slow in the way that they develop things. Other people would look at that as, "Oh, you're not really reliable or very structured," or, "Why did you work on that? That wasn't even the task at hand." Whereas we would see that and we'd be like, "Oh, all we need to do is just..."
22:43	Shaan Puri	This guy's degeneracy at the right direction and then we'll win and that was like our mindset
22:48	Dharmesh Shah	Yeah, I think of that as a kind of borderline pathological obsession. Once you attach yourself to whatever it happens to be, our job is to bring it just shy of pathological, where it's like, kind of harming themselves. But it's like you can't help yourself; you're going to dig in. Whether it's video games or whatever it happens to be, people that have that trait tend to work out well in startups because you're trying to attach yourself to a particular thing, a particular problem. The other thing, just as it sits on the topic of talent, I've got this little mini framework that works at multiple levels of abstraction. There are three kinds of vectors for measuring people. 1. Creatives: These are people that start things. They have ideas; they have a 180-mile-an-hour kind of thinking. If you sit down in a room with them, you can see their energy. 2. Completers: These are the people that can make a list of what needs to get done in order for us to ship a product or do whatever. Often, those folks are at odds with the creatives. The idea folks are really frustrated with the completers, saying, "Oh, I'm just trying to check a box and make our product." The completers respond, "Yes, but I'm doing this thing, and it's not good enough yet." 3. Collaborators: The collaborator is really good at communicating, bridging gaps across departments and individual people, and pulling it all together. Usually, you're looking for someone that has at least a 9 or a 10 on one of those dimensions, a 7 or an 8 on another, and usually very low on the third. It's like, you can have someone who is super creative. "I'm on the creative side." "Yeah, for sure. But how's your execution?"
24:19	Sam Parr	Well, but how? That doesn't make sense to me because you lead a $20,000,000,000 software company, and you've been doing it for 20 years as a CTO. So, like, how on earth do you pull that off? And it's public; it's publicly traded, which means you have to go through all the bullshit that is the opposite of creativity.
24:38	Dharmesh Shah	yeah
24:38	Sam Parr	how do you how do you
24:39	Shaan Puri	Well, one thing you shared last time was about those little calculators or growth tools that you had built. It was just like, "Oh, I was just tinkering and I made this little page load speed test site," or whatever. I don't remember the exact example, but you had built like 3 or 4 of those that drove a substantial amount of traffic for HubSpot early on. And even now with Wordplay, you know, you're still creating stuff. Even now, that's...
25:03	Sam Parr	Like we were just talking... He's getting ready for the earnings call, and to me, that's the opposite of creativity. You know what I mean? That's like... you have such a narrow lane that you have to stay within. That seems so hard.
25:17	Dharmesh Shah	Yeah, so I'll say this: I have done everything in my power to reduce the time I have to spend on things that I'm not good at. These are the things that are kind of non-creative and not a part of my strengths. I don't have any direct reports, which is unheard of for a founder of a company that has 7,000 people, many of whom are on the product and engineering team. Presumably, the CTO would help manage that, but I don't do that. The only meetings I attend are those where there's some creativity involved. I don't like to go to status updates or whatever; I can read an email just as well as the next person. However, there are things that are non-delegatable that we should probably talk about since it's on my list of things. One is earnings calls, and another is getting on public stages. For instance, we have an annual conference called Inbound. The last time it was in person, it had about 25,000 people at the live event. It's big, and I have to give the keynote every year. I've been doing it for over 10 years now, which I hate and I'm bad at. But as the founder, that is one of those non-delegatable things. I couldn't say, "Oh, we're going to have someone else do that," because in my role as founder, I have a certain weight just by virtue of the title.
26:35	Sam Parr	Sean, listen to this Dharmesh story. Dharmesh, you could fill in the blanks as we go because you can decide how much you want to reveal. There have been a couple of different times—maybe three different times—I've introduced Dharmesh to a founder of a company who was raising money. Literally, within five minutes, he replied and said, "I looked at the deck, I'm in," or a blank amount. Dharmesh, you could reveal if you want to say some of the times how much it was, but he replied with, "I'm in." Just so you know, though, I've got one rule: I always side with the founder, and I'm always on your team. But the downside of that is, like, I'm going to make close to no time for you. You didn't say it this way, but it's like, "I'm going to make close to no time for you," or, you know, like I think you said it like, "I'm totally going to be a silent partner. I'm not going to bother you," which means if you want to bother me, I'm probably not going to talk to you that much. But that's the stipulation for taking my money. If you want to take it, great, do it. I've seen that happen three different times. Do you want to reveal how much it was or no?
27:37	Dharmesh Shah	I don't recall, but I will say this: I've made roughly a little over 100 investments now across my angel investment activities. I won't call it a career, but 80 to 90% of the time, I've never actually talked to the founders or ever met with them. Over a vast majority of my deals, I make the decision within 24 hours. It's like... I don't have time to go dig in to do due diligence on some industry or whatever. That's not the point. There are only two reasons I do angel investing, and neither of them is to make a return. One of them is about living vicariously through other entrepreneurs. I just like that process, and this predates even starting HubSpot. The other reason, quite modestly, is just bragging rights. Just to be able to say, "5, 10, 15 years from now..." Because no one cares how much you invested. I can say, "Oh yeah, I was in Okta back in the day. I was with Stack Overflow back in the day. I was the first money in this company, this company, this company." That feels nice. It's not such a magnanimous giving back to the community; it's purely like, "Oh, it'd be cool to have been part of these great founding teams that went off and built great companies."
28:46	Shaan Puri	I really respect that you said that part because I thought you were going to say something like, "You know, to support the causes I care about," or "Just to foster entrepreneurship," or "You know, use the D word, democratize something." Instead, you said a true thing that I think every angel investor feels: it's awesome to have a notch on your belt and be like, "Yeah, I either saw that or I backed that. I bet on that," and it worked out. It's an awesome feeling. It is a perk of the job, and it's a real one. So the fact that you said that to me shows me that you are a real one, Dharmesh.
29:21	Dharmesh Shah	I'm what I refer to myself as a warm-hearted, red-blooded capitalist. I have compassion; it's not that I don't like people. I'm not a sociopath, but I am a capitalist. For instance, and this is going to sound completely immodest, we opened this door in the last episode, so I might as well walk through it now. In the last episode, we talked about putting a value on your time, whatever it happens to be. Anything that falls below that line, in terms of things you can outsource or delegate for less, you don't do those things. For example, you don't mow your lawn. I haven't recalibrated, but my personal number, the one I use just because the math is easier, is $10,000 an hour. That's what I think I could make if I were on the open market. That's what I'll do.
30:03	Sam Parr	dude I would have thought higher I would have thought higher
30:06	Dharmesh Shah	than that that effect it's well what do you think
30:08	Shaan Puri	the fastest number number to use
30:10	Dharmesh Shah	it's it's higher
30:11	Sam Parr	no but I
30:11	Dharmesh Shah	think it I
30:12	Sam Parr	I think it would be like 50 or a 100000 an hour maybe like I mean way higher
30:17	Dharmesh Shah	one to make the case but I can make my. Without having to make that particular case
30:21	Shaan Puri	Well, okay, let me ask you a question to make it real: You buy something... you book a plane ticket, it's like, whatever, it didn't work out. Or you deserve a refund, but you'd have to go chase it down. Do you just have somebody who you're like, "This is my chief of staff, my EA," that you just say, "You do it"? Or are you like, "Hey, it was $2,000, but it's below my hourly rate. I'm not gonna do it, I just eat the loss and move on"?
30:42	Hubspot	I don't do it because even delegating requires some follow-up and explanation. Then they're going to apologize because they could only get back to me with a partial response or it was only a credit. It's like, I don't care. I just honestly don't care. So, back to the investment thing. Let's say, you know, when I started, my average investment rate was, we'll call it $100,000, give or take a little bit. It's grown considerably since then. But if I spent like 5 hours doing due diligence or having founder meetings or whatever, I basically doubled their valuation or halved my investment amount, right? Because not only did I put cash in for which I'm going to get shares, but then I put another $50,000 or $100,000 worth of time in just in the due diligence. It makes no mathematical sense why people would do that, right? It's like, okay, do you really feel like you're going to... The reason they rationalize this, and it makes sense, is that if you really believe that as a result of spending that time on the margin, you're going to make better investment decisions, you're going to pick better companies, you're going to do these things. Maybe for the first hour or two, as in an early-stage startup, there's just not that much diligence to do, right? Like, what are you going to dig into? It's like you either like the idea or you don't, you like the founders or you don't, move on. Our software is the worst. Have you heard of HubSpot? See, most CRMs are a cobbled-together mess, but HubSpot is easy to adopt and actually looks gorgeous. I think I love our new CRM. Our software is the best. HubSpot: grow better.
32:06	Shaan Puri	Or the other part that's obvious but worth saying out loud, just in case people are like, "Well then, why are you doing this podcast?" Well, you also just do things you like. Those are the things that you don't put a dollar amount on because you enjoy them, and therefore it is not a cost to you. It is like a benefit to you. So, yeah, if you love gardening, then you garden. You don't put a $10,000 an hour mark on it. Is that fair for you? That's how I think about it, at least.
32:30	Dharmesh Shah	That is fair. So what I solve for is... I like to solve for - it's going to be a little bit of a squishy term - it's just raw impact. I like scale. So if you folks were a much smaller blog, let's just say it's like, "Oh, I'm gonna reach 50 people as a result of this," and I have ideas that I think are worth sharing, and it was smaller, I'm like... and it's not like, "Oh, I don't get out of bed in the morning unless there's at least 10,000 people." If this is Morning Brew... [Note: The sentence seems to be cut off at the end, so I've left it as is with an ellipsis to indicate the incomplete thought.]
32:53	Shaan Puri	podcast then then we would not do it
32:55	Dharmesh Shah	Amplify, amplify my time, right? To what little time I have left on the planet. What things do I know? I'm always looking for ways to do things at scale. Like, how can I find a way?
33:06	Sam Parr	Speaking of things at scale, let's talk about this thing because... on the surface, this thing that you recently did, like a year ago, is incredibly silly and not worth your time. But basically, I think a year and a half ago, Wordle, which is like an online word game, went viral. You built a thing called Wordplay. Is it Wordplay.com? It's Wordplay.com, right?
33:29	Shaan Puri	yeah.com yeah
33:31	Sam Parr	By the way, you buy domain names. So, you bought TheHustle.com for us and you bought me CopyThat.com. Thank you for that! I forgot to say thank you in person. You buy a lot of amazing domains, but you have Wordplay.com. Did you tweet that it was getting 7,000,000 users a week or 3...? What was the number?
33:49	Dharmesh Shah	it was so the I just went and checked with the numbers okay so just to kind of place the timeline in in frame so november december of last year 2021 is when wordle took off and january is when it really kind of hit its I think close to its peak and that's roughly when the new york times acquired wordle and couple things kind of I mean it was fine I think it was you know great outcome for josh wordle but there were things that were kind of bothering me that were limitations in the game and I was an avid player of the game and now it's like okay well the new york times has bought it there's no way that anything's gonna happen for like years if ever so that was kind of thing number 1 thing number 2 like it was it had been a while since I had launched like some simple free thing publicly I hadn't gone through the process and there were other things I wanted to learn it's like oh I wanna learn more about vercel and next js and typescript and things like that so I was like okay well this is a excuse and then that intersected with the third thing which was like the dominant variable in the equation is my son was taking a python programming class he's 11 right he's going through this process and for him it's still very abstract he's learning programs he enjoys everything involving technology and screens but it was abstract so on a saturday night I said okay well let me build something when python happens to be my language build something so he can see because he plays wirtle he knows the game and so I started on saturday night with a deadline for sunday that I'm going to launch something with him tomorrow we're going to have Google analytics on it so we're going to launch it I'm going to launch it by tweeting it and so he knows what social media is right he's you know so I'm like oh we've got this thing that didn't exist yesterday I wrote the code over the course of last night in python the language that you're learning and we're gonna launch it and now you can see users coming in right you can see this and so now what I want him to have in his head is that when he as through the course of his life as he encounters problems that are solvable with software which is a lot like it's actually tactile for him it's like oh I don't know I don't have the skills right now to do what you know dad just did but I know it's possible I know it's possible because he did it in the span of 24 hours right so if I wanna go off and build a video game I wanna go off and build some tool for my school I wanna build some social network for my whatever it is it feels like now it's more approachable for him he's got years to go before he'll get to that level anyway so those three things sort of came together and so we launched it on that sunday this is I think in february or so give or take and since then it's had like 45,000,000 games have been played 9 a half 1000000 people have come through it any given moment in time right now if I were to look at the Google analytics it'd be 2 3,000 people playing like right now which
36:30	Shaan Puri	how did it get so much traffic where did the traffic come from
36:33	Dharmesh Shah	Well, it helps that I have a social media following. I've got 1,000,000 followers on LinkedIn and 300,000 on Twitter. So, there's that. There are some file openings.
36:41	Sam Parr	that that's that's a lot but that's not I I wouldn't have thought
36:45	Dharmesh Shah	that yeah
36:45	Sam Parr	yeah it's not enough for that is it how many users do you think got from that
36:51	Dharmesh Shah	in the early days
36:51	Shaan Puri	"All of the right people..." Was it big right off the bat? Like the first week, was it big? I know the first day probably a bunch of people checked it out, but I'm sure you posted it and that was the big surge. So what was like the first week roughly? Do you remember?
37:02	Dharmesh Shah	The first week was probably maybe $50,000 to $100,000, so it wasn't a lot, but it was something. However, once you kind of get into it, this is the power of iteration. One of the things that I found missing in the original Wordle was that it was a single-player game. You played once a day, and that was it. So, two big changes that we made in Wordplay were: 1. It was unlimited play; you didn't have to play just once a day. 2. It allowed you to challenge your friends. You could say, "Oh, I just played this word. I solved it in 4 turns. Here's my score," and send literally a simple link to anyone or a group. This happens tens of thousands of times. Someone will take a link that they just played, they're really proud of their score, and then their family can post it to their WhatsApp group or wherever they want and say, "I invite you to beat my score," kind of thing. That's the viral element. As more people play, you can track that as you might have with a Google Analytics event and see how many times people are clicking that share button and issuing challenges to others. Once you get into something where there's a compounding effect on the user base, as the user base grows, the thing I'm fighting now is that while that's happening and going well, the interest in Wordle and related games is waning. Everything has its peak and its ebb. It's been an interesting exercise. On the learning path, one of the things I hadn't done in a while was to consider, "Okay, what's traffic actually worth?" Let's say I had to make a living on this thing or make the company, quote unquote, the project profitable. So, I put Google AdSense on it, which is the easiest thing to do, and discovered that if I weren't bothered by the fact that there would be two ads on the main game board page, if I were solving for monetization, it was like $90,000 a month in Google AdWords. Wow, facing the traffic! Yep, wow.
38:49	Shaan Puri	I thought you were gonna say way less
38:51	Dharmesh Shah	yeah I thought
38:51	Sam Parr	He was going to say like $5 a month, but it's actually $90 a month. And your only costs are hosting, right?
38:58	Dharmesh Shah	yeah and and my time right and yeah
39:02	Sam Parr	First of all, Sean, go to wordplay.com and then go to the About page. His About page is incredibly well-written. It's wonderful copywriting, it's wonderful. You've got a wonderful voice. It says... I'll just read the first sentence: > "Why would you do this? Or better yet, why would I do this? That's a really good question. My wife asked me the same question." And then you go on to explain... It's just... you're quite a good writer for also being like this amazing engineer. Typically, those [skills] I would have...
39:28	Dharmesh Shah	tar writing course that sean put on you know that right it was like I'm
39:31	Shaan Puri	not right
39:31	Dharmesh Shah	I don't around here with my
39:33	Shaan Puri	Fellow lies! I like to say I taught Dharmesh everything he knows. Even before he met me, I had somehow taught him all that good stuff before he built HubSpot.
39:42	Sam Parr	what what do you so this is making $90 a month maybe or about what do you is
39:47	Dharmesh Shah	this him
39:47	Shaan Puri	it could it's not right there's no add on
39:49	Dharmesh Shah	I turned the ads off because that's surrounding the... and people were asking me, "Dharmesh, why do you have ads on this thing?" I'm like, "To learn." It's like I've learned what I needed to learn so I can...
40:00	Sam Parr	Was tweeting and posting this on LinkedIn. The only way you got users... What do you think this could sell for right now? And is this the biggest side project you've ever created?
40:10	Shaan Puri	our our buddy tried to buy it from sully tried to buy it off you
40:13	Sam Parr	did he really
40:13	Shaan Puri	He tweeted out, "I'd like to buy this off you. I've built mobile games before." You know, he was like semi-serious at least. I don't know if you talked to him or not, but...
40:22	Dharmesh Shah	I did not what do you think you could sell what do
40:24	Sam Parr	you think like if you cared what do you think you could sell it for $2,000,000 or $3,000 maybe
40:28	Dharmesh Shah	Feel right now that let's say the ad revenue would go down to like $50,000 or something like that because I haven't turned Google AdSense in a while. That's $600,000 a year. Apply a 5x multiple, so somewhere between $2 million to $10 million would be my guess if I like, if that's what I was solving for. So it's...
40:46	Sam Parr	And is this the only way that you got users? Was posting it on LinkedIn and Twitter, or did you do some other weird hacks?
40:53	Dharmesh Shah	I had my blog. I'm a big believer in what folks call the flywheel. There are all these little things that are attached to the flywheel, right? It's like, "Oh, well, LinkedIn helps a little bit, puts a little energy in. Twitter does a little bit." Then there's the blog and the email that goes out. There are things that I sort of do. So, it helps, but the hardest part is that cold start problem. How do you get your first 100 to 1,000 people? Then it's a matter of tracking the retention rate on those users until they come back. The other thing that's been interesting about Wordplay, as far as lessons learned, is that when it started, the average time a user spent, according to Google, was roughly 4 minutes on the game in the early weeks. Now that number is at 14 minutes as the average time a user spends, you know, across however many thousands of users come in a given day.
41:42	Sam Parr	right and is this the biggest side project you ever created
41:46	Dharmesh Shah	Depends on how you measure it. So technically, no, not in terms of just raw traffic. I've built graders and things like that before that have done better, but...
41:55	Sam Parr	What have you built? What side project have you created outside of HubSpot that gets more traffic?
42:00	Dharmesh Shah	Than 2 or 3 people really did side projects. This is my first one that was clearly a game. Had it been anything other than a game, I would have rationalized some way to bring it into the HubSpot umbrella because I like to have all my eggs in that basket. But just given the circumstances here, it didn't really make sense. Even now, I'm thinking about doing a kind of marketing and sales-related edition of Wordplay. It's like, "Oh, the entire list of words," or do it based on MarTech companies. Like, "Okay, do you know the players in the space?" kind of thing. Then you can get sponsorships or whatever. Anyway, the website Greater was this kind of project where it was like a free... I'm really into low-friction things that people can come to the website. This is why [my colleague] Son and I were chatting yesterday. We were looking at Flutter, this new development environment and language. Well, that's the language, but Flutter is the app framework for building mobile apps across iOS and Android. It's what the cool new kids are learning. And he's like, "No, why would I ever want to build a mobile app? That's like something people have to download. I have to get approval from, you know, Apple to post my app." He wants to just do it immediately. He's got a point. Anyway, that's the Wordplay story. It's been a lot of fun. It's hard to know with these things where the road leads. Wordplay itself may or may not connect back to other things, but the things I've learned through it, I think will. It's like, "Okay, well, here's what it takes to build this kind of thing." It's like, "Okay, well then I'm using it to play around with community." It's like, "Okay, can I take the Wordplay user base? What are the things they care about?" and build a community around Wordplay using one of the existing community platforms and see if that's a thing. It's like, "Okay, if you could aggregate people with like interests, that in and of itself has value." I want it to be something that kind of self-runs, but we'll see.
43:49	Shaan Puri	If you were... I'm going to ask Dharmesh: if Sam had built this as a side project and he was at the same point you're at right now, what would you advise him to do? If it was Sam's project and you were just kind of an outsider who said, "Oh that's really cool you did that," and it sounds like you've kind of reached this point where you don't really have a direction of where it's going to go next, what would you tell Sam?
44:10	Dharmesh Shah	Decide what you want to do. Is it okay to take this to the next level and turn it into a $100 billion business? Or do you want to decide that it's just going to be a personal project? I made that decision with my personal blog. I'm not going to try and monetize it or hire employees. I'm not going to do any of those things. It's just going to be a personal project. My son will continue to act as head of product because he's the one that tests the thing every morning. We play tournaments every evening. That's the big new feature that's coming out: the multi-round tournaments. By the way, in terms of what I know, Sean, I think half of it I learned from you and the other half from MFM. One of the things is around chess.com, which I've been a member and player on for over 10 years. I knew of the site, but then you think about Wordplay as, "Okay, this is chess.com but for word game enthusiasts versus chess enthusiasts." And then where are all the other enthusiasts?
45:03	Sam Parr	As a reminder to people, Chess.com is like a huge business with a multibillion-dollar valuation.
45:09	Shaan Puri	We talked about this when we discussed chess as well. We considered what other things are like chess. We mentioned Sudoku, and I think we also said something like Scrabble or whatever word games.
45:19	Sam Parr	word is word names yeah
45:21	Shaan Puri	I think they're almost as big, if not bigger. I wouldn't be shocked if it was larger than chess. I would be more shocked if it was only a tenth the size of the chess enthusiast audience.
45:32	Dharmesh Shah	I
45:32	Shaan Puri	I would guess it's like in the range, and there are very few games that are in that range. So that alone makes it an interesting comparison in that sense.
45:40	Dharmesh Shah	So, the lessons you draw from Chess.com, which is relatively straightforward, are: 1. You have a rating system 2. You have leaderboards and scores 3. You have challenges 4. You have social connections where you make friends on Chess.com, so you can invite [others to play] It's all these things, right? These are very easily translatable into other games like Wordplay. So anyway, we'll pick and choose as far as [implementing these features].
46:01	Shaan Puri	I'll give you one little feature I think would be cool. Leaderboards are always this problem in general. Where like, leaderboards are cool for the top 10 people, and then for everybody else on earth, it's like, "Oh great, I'm player number 39,000. Fantastic!"
46:15	Dharmesh Shah	yeah
46:15	Shaan Puri	And so, there are all these... If you kind of studied this once, I was like, "Who solved this problem?" There are really three models that work. One is more like chess and games do this. They create a rank system. So, it's not your number 80,000 in the world because that doesn't mean anything. Instead, you go from bronze to silver to gold to platinum to master to grandmaster. You just compete to get your own level up within that to earn your next badge. That's the karate belt method, let's call it. Then there's the next one, which is your social rank. Your rank matters when it's with people you know, like your friends, your school, or your city. You can kind of hack a proximity-based thing. The third one, which I think is somewhat interesting, is that it doesn't even matter what my rank is. There's something cool about feeling like if I go to the workplace right now, I feel alone in this experience. I don't know that there are 3,000 other people solving this right now. Also, I bet you there's like some celebrity that plays Wordplay every day, right? Like, I bet you Mila Kunis plays this every day. I think there's something really cool about that "stars, they're just like us" vibe. If I kind of knew that known people have solved it for today, that's just kind of interesting. It makes them more approachable. So, I almost wonder if there was like a little feature where if you're a blue-checked tech person, you could kind of log in and say, "I either solved it or failed today," and you could just have that as a little board. Anyways, those are my three random features.
47:37	Dharmesh Shah	that's a
47:38	Sam Parr	good idea
47:38	Dharmesh Shah	The one thing, and I don't... it's not surfaced on the... probably this is a really good idea, but one of the things I do have is in the comment section, there's commentary. So as you're playing, the software will kind of give you little, sometimes snarky, sometimes fun messages. Sometimes it's data, like, "Oh, you're one of the few people that's ever guessed this particular word. That's not a very common word to use. Congrats, good for you!" Or, "This is the thousandth time you've used this particular word. You know, points for consistency." So there's this kind of running commentary, but I like the idea of just kind of front-loading. It's like, "Here are a number of people that have solved this game." I give you stats at the end of the game, like, "Oh, only 14% of the players solved this particular word, and it took them on average 4.7 guesses." So yeah.
48:16	Shaan Puri	Can I throw two more at you? This is now my future brainstorm for you if you ever click here.
48:22	Sam Parr	Crush! There's nothing more... There's nothing more than like an entrepreneur... There's nothing more than like a person who has no stake saying: "Hey, have you thought of... Have you thought about... Have you thought about this? Why haven't you done this yet?"
48:33	Shaan Puri	There's nothing less entertaining at a podcast than me telling you features for Wordplay, but fuck it, it's our podcast. We can do it a lot.
48:39	Dharmesh Shah	have you
48:40	Shaan Puri	Ever played Candy Crush? They do this thing where they make... Stakes matter a lot in stories or any kind of adventure, right? And so, you know, if you open up a pack of Warheads and then you see a black one, you think, "Oh, that's the really crazy one!" Candy Crush does this in their games where if you start a level, it says "This is nightmarishly hard" or "This is medium hard" or whatever. So I'd like to see that in the Wordplay [game]. When I come in every day, I'd like to know if this is a nightmarishly hard puzzle or if this is just okay. It gets me amped up for my play.
49:09	Dharmesh Shah	That's a really good idea! Then, combining that with your tiering idea, we can move on. Imagine we had a tiering mechanism where you can go from bronze to silver to whatever, to ninja level. Right now, when you start the game, you get a random word, and other people get random words as well. There's a daily word that everybody plays together. But imagine that as you move up the ranks, it gets harder. It's like, now you're at a level that few have achieved, let alone solved. It's like no one even gets here, but you're here! Then, you could do things for streaks, like, "Okay, well, you're the first person to have solved 50 games in a row at this tier," or something like that. I think that'd be fun!
49:42	Shaan Puri	One last idea I think you'll like is that you are a fan of crypto. I believe you would appreciate the crypto ethos, and if you could advance the cause of crypto, that would be a win for you personally. So, we gave out this "milk money" grant, which was like a fund where we distributed a bunch of money to people just to build whatever they wanted. One guy, Dave, built a game that was similar to Wordle but incorporated crypto. You play Wordle as usual, but if you solve it, you could win 1 MATIC, which is a tiny amount. He was also experimenting with different ideas, like having a 100 MATIC jackpot for the day, where only winners are eligible for the jackpot. You might get it, or you might not. This approach got a bunch of people connecting their wallets. I think what you could do is add something similar into Wordplay. By the way, there's a $100 a day prize paid out in MATIC or whatever. All you have to do is create a little wallet here, and you might win. I believe many of your avid players would create a crypto wallet where they might not have otherwise. You could onboard new people into the world of crypto. You could create a very simple method, either by funneling them to MetaMask or creating an easy-to-use crypto wallet that could become the play-to-earn crypto wallet for the future. Anyways, that's my idea. I will now...
50:50	Dharmesh Shah	Stop talking about idea... Yep. By the way, I just think... So I actually added the ability to connect your Diesel wallet to your Ethereum wallet to Wordplay. My idea at the time was instead of turning ads off, I'm gonna make that a pot. So as ad revenue accumulates until the next payout, whatever it happens to be, and then it's like, "Oh, the top ten winners are gonna get this distribution," and let's start over again. Not to make money, but we'll have money coming in through AdSense and then we'll kinda...
51:15	Shaan Puri	right a sustainable play to earn game that's awesome yeah that would be amazing
51:20	Dharmesh Shah	yeah so let
51:20	Sam Parr	Me: Sean, this is an interesting topic, but I understand there are laws and SEC regulations around what you can and cannot say. Dharmesh, just tell me if you can't answer, but basically... I think it was in late May - I'm looking at it now, around May 25th or something like that. Sean, I don't know if you saw this, but there were headlines that said something like "Dharmesh Shah, CTO and Co-founder of HubSpot, buys HubSpot shares." And I think it was... was it $10 million? It was a pretty substantial amount.
51:50	Dharmesh Shah	it was over 3 forgot the exact amount is but
51:54	Sam Parr	It was $1,000,000 and then suddenly, the stock went up the next day because it was like, "Oh man, [the CEO] like this insider bought it. He has faith in the company." That was a pretty cool move. When you're doing something like that, what is your thinking? Are you thinking like, "I just want to prove to the world that I'm brave"? Is it part of you like, "Oh no, this is just undervalued... they're foolish"? I mean, what's your motivation there?
52:25	Dharmesh Shah	It's exactly what you said, which is: I just thought the company was undervalued given the long-term potential. I've done this before; I did it a couple of years ago and I bought a bunch of shares. I think even more at that time, like at $125 a share. Right? I'm like, "Okay, well..." and this is when HubSpot stock had dipped over the ensuing, I mean, the prior 2 or 3 months. I'm like, "I understand the market's more like this, but this doesn't make any sense." You know, HubSpot stock to me was worth more than, at the time, $125. Turns out I was right. So it's a similar thing. It's like, and it does signal belief in the company, right? But it's what I believe, and there are regulations around it. You know, people ask, "Well, why did you buy at that time?" As it turns out, it was the exact window of time that I had to wait a certain period since my last transaction to when I could buy. The day that I was eligible to buy, I bought. And it's like, "Oh, the price is low enough. I still have conviction that over the long term..."
53:18	Shaan Puri	You need to buy with money that... like, where does $3,000,000 come from? Let's say, isn't that just stock you previously sold that you now are buying? Or like, it's not like you have some other huge side...
53:27	Dharmesh Shah	back to back to
53:28	Shaan Puri	back to back
53:29	Dharmesh Shah	yes yes yes yes
53:30	Sam Parr	or can you can you take a loan against your hubspot shares to buy more
53:34	Dharmesh Shah	there there are like a hundred things you cannot do that's one of them it's yeah
53:38	Sam Parr	Wow, no. I think I saw that the other day. You've made a few decisions. Every once in a while, you do something, and I'm like, "Oh, this guy is nutty in a cool way." That's not exactly nutty, but it's a pretty bold move. I thought it was a pretty cool move. I saw that, and I was wondering what was going through your head when you did that.
53:59	Shaan Puri	Because what's the psychology like when I don't know? HubSpot sucks. I'm just rounding; I think it's down like 40, maybe 50%, something like that from the all-time high during the peak of the peak last year or whatever. So, you know, we come on here sometimes and I'll be like, "Alright guys," and Sam will be like, "Dude, how are you? You lost a bunch of money today." I'm like, "Yeah, yeah, I lost like $1,000,000 today." And, you know, ETH is down, and I'm down $1,000,000. I'll share my psychology of dealing with this travesty of a loss or whatever, and I'll be like, "Yeah, you know, here's how I think about it." You play that game at like 1,000x higher stakes, where, you know, or more.
54:41	Sam Parr	like he lost 500,000,000
54:43	Shaan Puri	Yeah, exactly. I'm losing $500,000. You're losing $500,000,000 or whatever, you know, something crazy like that. What's your psychology like? I don't know, like I think you know what question I'm trying to ask even though I don't have the words.
54:55	Dharmesh Shah	how does it feel to put half a $1,000,000,000 is what you're asking me or yeah and how
54:58	Shaan Puri	do you deal with that and like yeah go go for it
55:00	Sam Parr	is that how much you lost do you think
55:02	Dharmesh Shah	it's more than that but yeah who's counting
55:07	Shaan Puri	he's like this podcast was more fun when we were talking about wordplay
55:12	Dharmesh Shah	Actually, it's fine. I'm not really... and I'm not just saying this, but it's true. It does not faze me one bit because the reality is it does not change my life one iota, right? Other than, like, okay, it impacts HubSpot employees and children, and I get that. But in terms of me individually, nothing changes, right? I wasn't off planning to buy small islands or take over governments or something like that, or buy Twitter. I did not have any of those kinds of plans. So, absent those kinds of plans, I feel sorry for the nonprofits that I would have invested in. But, you know, my wife continues to invest. We have plans to do the philanthropy we want to do. So it's like, okay, well, I still wake up every day and do the same things I did before. I'll look at the Wordplay things and respond to user emails, or it looks like I can do my HubSpot stuff. It's like, okay, what's... so you don't even have...
56:06	Shaan Puri	You don't even have the self-talk in your head where you kind of need to... because for me, when it happens, I have an instant reaction as I go look at a chart or a price or whatever. Then I give myself a little self-talk and I'm good. It lasts 17 seconds, but I do have those 17 seconds. It sounds like you don't even have those 17 seconds because you're like, "Well, I've already been over this before in my head at some point in my life, and I'm just excited. It doesn't matter."
56:29	Sam Parr	Let alone the self-talk. The self-talk is one thing, but then there's also this other thing that you and I have seen, which is that if the markets are bad for a year or two, we will change our day-to-day actions. You know, we may not buy X, Y, and Z, or like we might... you know, we're not to that. Where it's like...
56:46	Dharmesh Shah	it doesn't matter
56:46	Shaan Puri	major cutbacks at the puri household right now major cutbacks
56:50	Sam Parr	yes like we'll we'll we'll we'll well maybe change behavior but you don't even change
56:55	Shaan Puri	I laid off
56:56	Dharmesh Shah	My son, yeah, I think they change in the other direction. Right? So as the market has dipped, my kind of average check size has actually gone up. I've made bigger bets on things because I think valuations are starting to adjust slowly. I think there are better deals now with good entrepreneurs starting companies. But overall, the psychology of it just does not have any impact. And like over the long term, you know, I didn't make this up, but the valuation of a company, which is like the market price, will oscillate around the value. Right? Value is like the revenues you have, the products that you build, or what you are actually doing for your customers. So, you know, if our revenues had dropped off before something like that had happened, that'd be a different story. But it's like, okay, well that hasn't changed. We are the same business today, if not better than we were 3 months ago or 6 months ago. And the valuation over time will kind of self-correct. So one of the things I like about the market is that, yeah, I think things will kind of wash out and we'll see.
57:57	Shaan Puri	And a lot of HubSpot's customers are kind of like, you know, medium-sized businesses. So, do you spend much energy thinking about, "Okay, where is the economy going? What's going to happen to my customers?" This will have some knock-on effect on what's going to happen to our business. Do you care? Do you spend energy there? The reason I ask is that I find myself sometimes going down these rabbit holes of, "Okay, what do I think is going to happen?" Then part of me is like, "Well, does any of that really matter or affect me?" Is this energy useful, or is this just sort of nervous energy that I'm wasting thinking about this stuff? Do you know what I mean?
58:29	Sam Parr	Is HubSpot's customer base even... how many customers does HubSpot have? Like, 130,000?
58:35	Dharmesh Shah	yeah somewhere over that yeah
58:37	Sam Parr	Yeah, and when I think about it, when I sold it was at 100,000 or just across 100,000 [customers]. In the grand scheme of things, one of the reasons I sold was like, "Well, 100,000 customers... that's kind of a lot, but that's not that much." I was thinking the market's way bigger than 100,000 people who would want to buy this. So is 100,000 or 150,000, whatever it is... is that number even big enough to have the needle move significantly when the economy is shit?
59:04	Dharmesh Shah	On a percentage basis, I'll answer it this way: I'll address the first question, then we'll kind of move to the second one, which is, do I spend time thinking about this? Do I do anything about it? The answer is yes. At HubSpot, we try to model out the impact we think it could have on our business. There are two sides to it. There's the defensive side, where we want to ensure that we have enough cash in the bank to weather the storm. We don't know how long the storm is going to last, and we have models for how long it could last and how deep it might be in terms of impact. But then there's the other part, which is, to me, much more exciting. Given what we know, what can we do to capitalize on this crisis? This is what's happening right now. What can we do to make this net positive for HubSpot? We had something similar happen in 2008. At that time, HubSpot was much earlier in its journey. Even when the pandemic started, one of the things we did was recognize that there was a lot of uncertainty. Businesses were struggling, and everyone was kind of battening down the hatches. So we said, "Okay, we're going to give even more value." For our partners, we decided to front them the cash for the revenue we knew was coming over time because cash was an issue. We had a bunch of cash in the balance, so we did things that made us stronger and helped our customers. We're looking for those same kinds of opportunities. It was like, "Okay, now that everyone is looking at the P&L and examining all their line items, can we benefit from this?" Because HubSpot, in some ways, is countercyclical. Instead of buying the big incumbent and spending $100,000, maybe now people who might not have considered HubSpot a year ago would now consider it because they're a bit more value-conscious than they were historically.
01:00:38	Sam Parr	When you were starting the company, did you have a number in your head? Like, there's a world where HubSpot in the next 5 or 10 years (or who knows how long) can be worth $100 billion, which is, you know, one of the biggest top 200 or so companies in the world. When you were starting the company, did you have a number in your head where you're like: - "Man, I think this could make $100 million a year" - "I think this might be a $1 billion company" Or was it as big as: - "Man, I think this could be worth tens of billions"
01:01:06	Dharmesh Shah	We didn't have a specific number in our head, but we had, I'll say, comparables for lack of a better term. There are successful software companies that have done similar or related things. Either they're in the same market or in the same target customer base that had achieved it. It's like, okay, well... this is what we told to VCs in our pitch. We're like, "Okay, we're not... we think at the time we were just in marketing software." So here, I'll give you the first 30 seconds of the pitch: > In the history of software, no one has ever really built a $10 billion household name global brand marketing software company. It had never been done. Omniture was the greatest one at the time with a $1.5 billion price tag. And we're like, "The reason people... you know, companies have not been built in the marketing tech space is because marketing is an arts and crafts kind of discipline. It's about the shade of your logo, and you're outsourcing a bunch of creative stuff or whatever. But it's not the kind of problem software solves." Our belief was that marketing was increasingly turning into the kind of thing software does solve. Lots of data coming in, you're trying to make decisions around all this stuff. It looks exactly like an industry that software can help with. So our thesis was that someday someone will build a $100 million, $200 million, or $500 million software company that's doing the thing we're trying to do. We said, "It might as well be us. We're relatively nice people, and we're kind of committed to this and seeing it through." So, do we think the odds were relatively high that we would pull it off? No. But did we think there was an opportunity to do the kind of thing that you're talking about? Yeah, I'd like to think so. Others have done it. We were not putting someone on Mars, right? It's like, okay, well, people have done this before, and this is just a different time. Maybe now the time is right for a new company to do something that has been done, but better. This goes a little bit to your Pixar kind of vision, Sean. It's like, okay, well, you know, people sometimes give you just like, "Okay, well, you know, what are you gonna do that's different? Why is this... you know, what does the world need more of?" The answer is, the world does need more Pixars. So, you know, saying to you like, "Oh, you don't really need to do that," is like telling Elon Musk, "Does the world really need another car company?" They kind of downplay the fact that it's like, "Yeah, it's got four wheels, I guess."
01:03:06	Dharmesh Shah	A to B, but it's all like there's just one interesting element about it that makes it completely different, right? It's like it's the same thing. Most ideas that have been super successful are not completely new from whole cloth, right? They're like... and I don't like the cliché "building on the shoulders of giants," but it's like just about everything that's ever been done is derivative to some degree. It's just based on your level of abstraction and how many steps back you're willing to go. So it's like, okay, yeah, I can see someone building something massive here. I'll get off my rant. It's like we had Facebook, which did awesomely well. Then Twitter comes along, and people said, "Oh, well that's just Facebook with shorter messages" or something like that. It's like Facebook with constraints.
01:03:46	Shaan Puri	with less
01:03:47	Dharmesh Shah	Yeah, Facebook comes along and it's like, "Well, you can post photos on Facebook. Why would anyone ever use Instagram?" That's like Facebook without all the other cool things that I like as well, right? No Messenger, none of that stuff. Then TikTok comes along and it's like, "Well, that's just kind of videos that you can do on Facebook, you can do on Instagram, you can do on Twitter." But it's just different enough in a compelling way where it's still a video-based social app. It lit the world on fire, right? So even something as old as video or photos, it's still not over. It's just not over; it's just part of the human condition right now. Anyway, it's...
01:04:22	Shaan Puri	if I
01:04:23	Dharmesh Shah	If I'm with you, Sean, if you go off and want to do another Pixar, and if you're ever looking for an investor that will make a decision in 24 hours, I'm your guy.
01:04:30	Sam Parr	what was that tweet about sean that was out of left field what do what are you saying
01:04:36	Shaan Puri	Okay, so all my tweets are out of left field. That's just Twitter; that's what Twitter is supposed to be, right? Just a bunch of left field stuff that all gets put in a feed. I was watching... I don't know what I was watching. I think my nieces were over, and they were watching Toy Story. I was like, "Toy Story is amazing. Pixar is amazing." And I thought, "Why is it?" I was like, "I want to do something amazing." This is literally how my brain works. It's like, "Oh, that looks so awesome! That's like an awesome end output. I would be so proud if I had made something like that. I bet I could." It's this combination of seeing something that is really appealing and then having the delusional belief that, of course, I could do it if I just tried. So I thought to myself, "You know, that would be a fun company to build if you could just make great stories, great movies, and put them out there into the world." That would be so fun as a thing, if that's like the thing you did. And like, I want hundreds of millions of people to not just use your product. It's one thing to use your product; it's another thing to love it, grow up on it, and have this extreme nostalgic emotion around these movies. For everybody, it's a little bit different, but for me, it's like... I don't know, Home Alone, Mighty Ducks, and then The Lion King. There are a couple of movies that just meant a lot at the time, and they still mean a lot even though I don't interact with them.
01:05:54	Dharmesh Shah	So, I have... I have to say one thing on this particular episode because otherwise, it'll keep me up at night. I have a handful of frameworks and ways I think about the world, and this ties back to Sean's next $1,000,000,000 company thing—Pixar, which I think it can be, by the way, Sean, just so you know. Okay, so imagine, let's take a step back. I'm on a whiteboard, and the whiteboard represents the universe of all possible people—everyone on the planet. You draw a circle with one of your skills. In Sean's case, let's say we put copywriting as one of the skills that he's in the top 1% or top 5%, whatever number you want to associate with it. So that's the circle. It's like, okay, X number of people are at Sean's level or better at copywriting. Awesome. Now, let's say we draw another circle. We'll call it "crypto knowledge," which is just how crypto works. That's a group of people—awesome. It's a rarer skill because it's newer, and there are fewer people that know how to do that versus copywriting. We can accept that it'll be a smaller circle. What happens, though, is if you intersect those two circles and turn it into a Venn diagram, the number of people that know copywriting really well and also know crypto really well is a hundred times smaller than either of those circles combined. We see the same effect in standardized tests. If you took the SAT, GRE, or GMAT, there are people that are really good at the English portion of the test, and there are people that are really good at the math portion. But the ones that score really well are the ones that are good at both. They don't have to be the best at both because that's something that's actually rare—the combination of English and quantitative skills. So now imagine... this is why I call it the $1,000,000,000 Venn diagram of success. I just made that up. But you draw those circles of your skills and say, "Okay, well, I am now not like 1 in a billion; I'm 1 in a billion," or "1 in 5 billion," whatever that is. If you can convert that into some kind of monetizable business or whatever, that's when magic sort of happens. So that's kind of thing number one: What's your thing? What are your skills? And what...
01:07:48	Shaan Puri	drives the circle
01:07:49	Dharmesh Shah	How much value will that intersection create? It's two things. One is how rare is that intersection, whether it's two circles, three circles, or whatever. How rare is it? The other one is how much does it kind of reinforce the other skills that you already have. For instance, I'm a software developer. That's my core skill. I've been programming for like 30 years now. That's my thing, deep down inside my core. If I combine that with, I'm going to go off and, which I could never do, become an Olympic-level swimmer, let's say. That's also very rare. The intersection of that is like, okay, well, the opportunity that it reveals, because the two things are so unrelated, it looks like... I don't know how I would take my ability to build a web app and intersect it with my... like, yeah, there are some things I could do, but I don't know if that would be that huge. But software development is applicable to lots of things. If I was going to be an academic researcher, if I was going into music, or other things, there's a lot more overlap. To the degree that, in fact, those two... they reinforce each other. So software helps me do this, and that helps me do this. This is one of the reasons my advice here was, as you're picking skills to acquire, acquire skills that are both rare but also reinforce things that you're already exceptional at. That will kind of drive that rarity, and that's what drives the overall value. Which kind of brings me to... when I think of things that I want to learn, it's like, okay, well, this is why I got into copywriting. Copywriting is another form of this; it's communicating at scale, which is what copywriting is, right? It's usually in textual form. It's like, okay, well, I don't know that many software engineers that can copywrite really well, like literally other than those that have not started companies, right? They don't exist. But very rarely do you get really, really good engineers that went off and read six books on copywriting and took Sean's class. Not a common occurrence.
01:09:34	Sam Parr	Advice, Sean. You are a good writer. Before you got into this... no, no. I mean, your writing is great. And by the way, Sean, let's... you gotta pimp it out: maven.com/powerwriting or just go to maven.com and you'll see it.
01:09:48	Shaan Puri	Yeah, yeah, yeah. Just go to maven.com. I'm on the homepage. It starts in 2 weeks. Alright, so what you said is great. I would add one more circle to that.
01:09:57	Dharmesh Shah	To your Pixar thing, by the way, the reason you might pull it off is because you have a very weird and unique and related level of skill. So yes, there are people that are better - maybe better creatives, better animators, better entertainers, whatever - but they don't know crypto. And maybe that's the thing that unlocks the next trillion-dollar company: entertainment intersected with crypto. It's the Netflix for the blockchain, whatever it is, right? Something like that where two things combined that never had been put together in that way before.
01:10:22	Shaan Puri	the the the other circle that I would add that I think people underestimated so I tweeted this out right so people I didn't explain what the tweet is the tweet was I said the next company I build is gonna be like a new new age pixar like the like the next pixar and I think I I think I would work on that project for 30 + like 30 30 + years I'd I'd just keep going with that company I wouldn't be trying to sell it or flip it or get out of it or whatever so that was the tweet and then a bunch of I basically had 2 reactions one reaction was awesome like where can I sign up how do I work for this company that's that sounds awesome I love pixar you could do it and those are like fans of that mfm type of thing or people who themselves had been thinking god that would be awesome to create another like pixar type of company you know because I love pixar then there's the other half of people that were like what makes you think you could do this you know like you know how hard it is to make a movie you know how expensive it is you know how the how unique you know steve jobs and you know whatever lasseter and catmull like how how rare those talents were when they came together that's a once in a generation company and then other people were like one guy had this amazing burn he was like check aqua hire like green check mark aqua hired power writing like course podcast next pixar and I was like oh thanks that's that's pretty solid actually and so you know a bunch of people were sort of all in the same bucket of like this is so hard this won't work what you you can't do it there's some version of that and so the 3rd circle where one is like I'm really great at x I'm really great at y the third is just I have the courage to go do a thing and like tim ferriss once told this story he goes I went to a a business school class a harvard business school class I gave this talk at the end of the talk I go oh by the way guys I'm doing this challenge only for you guys you know whatever I wanna get in touch with either bill clinton jennifer lopez or you know some sports person you know michael jordan or whatever if anybody here can connect me over email with them like you know just reach out to them and if you get a hold of them connect me over email I will buy you 2 round the world plane tickets you know for you could fly business class for a year around the world anywhere on my dime alright guys thank you very much and he told that to one class and he's like you know you have 30 days to complete this challenge and then I think I forgot what it was it was like he did it to 2 classes but he gave a slightly different message in each the first one he just just said that 30 days go by nobody did it sorry nobody's completed the challenge he's like what happened to you turns out nobody even tried the challenge the perceived difficulty was so high that nobody did it so in the next one he told that story and I think he added a twist which was whoever gets the closest to it wins mhmm and all of a sudden like everybody tries and in fact I think somebody did get in touch and actually successfully completed the challenge and he was like he had this principle which was sort of like you know everybody wants to fish where everybody else is fishing because they think it's so easy to catch fish there he's like in actuality often it's easy to just go go catch a fish where the fish actually are and you you don't have to base it on how how many people how many other people you think have tried something or how what the perceived difficulty is and in fact sometimes the bigger you go the easier something can be because nobody else is even trying to do it and so I would say like you know this pixar thing who knows if I'm gonna go do this or something else I tweet things just almost to my prototype it's like let me say this out loud let me see how that feels if I sleep and to wake up tomorrow do I wanna tweet 5 more ideas about that or am I over it it was just a passing fleeting moment yeah but but the the core ingredient I think most people lack is courage to actually go and do the thing and I think that's the the the people put way more emphasis on what skill am I top 1% in they kind of they they under credit themselves one one skill you could just have for free you just gotta go it's like at the sand the the deli at the at the grocery store go pull the number is yeah I I have the courage to actually go do it like you know I'm I will go do pull the trigger on this thing and not wait for other people to kind of like reinforce that it's a good idea to me
01:14:29	Dharmesh Shah	yeah and this is and I could not agree more and so and I think people conflate sometimes skill versus talent and they believe they don't have the talent for entrepreneurship or for design for programming whatever it is in my mind so skill is something that's learnable that's an easy definition talent is the rate at which you could acquire a particular skill so if you have a talent for music that means you will acquire musical skills faster than someone that doesn't have a talent for music it doesn't mean that someone that doesn't have a talent for music can't learn it so they may have a ceiling as far as how far they can go fine I get that but this doesn't mean they can't do it and so one of the big lessons kind of in my life and my professional career is that most things are actually skills not talent mostly like it's like you can start with 0 like I was I would have been voted least likely to ever start a company in my entire like generations of family right that's not a talent I ever had like when I until I went off and did it like public speaking was not something it's like oh that that's a skill and you and then there's this thing from software engineering I think it's worth sharing I think some of the best ideas are when you take stuff from other industries and pull them into this thing and apply it here in a weird way but in software engineering there's this thing called functional decomposition which is take a problem be able to articulate well so a function that has a set of inputs and an output and what it's supposed to do and really all software problems are being able to the highest order of function is let's say you want to grade a possible investment based only on the website it's like oh I'm gonna give you a domain and you're gonna give me a score from 0 to 100 as to how good this is okay well that function is easy to define like domain goes in score from 0 to 100 comes out what other functions does that function need in order to pull that off it's like okay I want a function that looks at the domain and looks at the level of seo they have that's one layer down the person that's writing the seo function goes down levels like I'm gonna look at the on page seo and see how good they're doing at meta tags and h one titles and I'm gonna look at the off page seo and their link acquisition that kind of stuff that's it's like so if you roll it all down and you go down far enough individual functions at the atomic level are so simple as to be trivial what matters is the fact that you were able to abstract it down to that simple thing right and so most things can be broken down that way so if you look at oh I wanna become someone that can give a talk in front of 25,000 people on a stage that seems like an insurmountable task for someone like me that's never done that and that's not my thing it's like oh well what does that involve number 1 you have to have can overcome I didn't have like stage fright I had severe stage anxiety right stage fright is like oh there's a ship that's gonna come down from space and just suck you up because you you were so bad and stage anxiety is like man I wish a spaceship would come down and suck me off the stage right now when I get off so there's that like don't you know don't pass out on stage and then there's the oh you learn about storytelling you learn about writing you learn about slide design you learn about humor and I did all those things right read books took classes on all those components of public speaking and in aggregate I'm okay now right like I I can do that and you then again then it's practice and you do it over time so anyway my?
01:17:29	Dharmesh Shah	Here is startups. Whatever skill in startups is a skill. Figure out what set of skills you need to acquire. Some you'll be good at acquiring because you have the talent. The other ones you're just going to have to grind it out more than others may, but it's doable. It's a doable thing.
01:17:42	Sam Parr	one question that I have if
01:17:43	Dharmesh Shah	I can do it anyone can do it that's my.
01:17:45	Shaan Puri	I love that so sean
01:17:48	Sam Parr	Sean kind of added this thing to your Venn diagram about people brave enough to get started. Would you add another element? With the hustle, we sold in year 4 or 5. I don't regret it; I'm very happy with that. But I actually looked at the numbers this year and I was like, "Oh wow, we would have made maybe..." It was close to the point where you could have potentially made more revenue next year than all the revenues combined from previous years. I'm like, "Whoa, that's kind of crazy." Again, I'm happy with it, but real value, I guess for me, was created in years 5, 6, 7, and 8. Of course, you could probably say that when you're in years 5, 6, 7, and 8, you're like, "Whoa, wow, it's really created in 10, 11, 12." But do you think that a portion of HubSpot's success has been because you're just willing to shut up and focus on this for 20 years, as opposed to you actually being amazing or good at product and marketing and things like that?
01:18:51	Dharmesh Shah	yeah here's how I think about it I think the outcome is a combination of like dreaming really big and like iterating really small and having tight feedback loops so the dream really big is you have to have something that can someday translate and it doesn't have to be as clear of vision as you know sean has kind of laid out as far as oh it's gonna be pixar for the new generation but you have to kind of have start with something roughly big in mind at least at some level but then it really comes down to the iteration right and I think the others have demonstrated this through data is that the quality output is almost I won't say always but frequently a function of the number of iterations not the quality of the you know the people for instance one of the common examples I throw out is and I've heard it with a pottery class or a photography class but it's like oh one set of students divided the class in half let's say it's a photography class one set of students is like okay every day you have to submit a photo for the next 30 days while this class is running the other one is like at the end of the 30 days you have to submit your best photo and then your grade is gonna be based on the quality of that best photo the first class is like as long as you submit a photo every day you're gonna get an a at the end of the 30 days the other one is like as long as you're is a quality material that photo is gonna win and what's been proven out across disciplines is that the class that did the multiple iterations had a better output than the one who was trying to solve for quality like the arguably the first one is like oh all they really had to do was like submit a photo it didn't have to be like world class quality it's not the best I could do but just by virtue of doing it they were gonna make it better and make it better at the end of 30 days they produced a better photo and they produced a better clay pot if it was a pottery class than the other one that was solving for quality and they were like too much in their heads trying to say oh I'm gonna do the best I can do like no just do it repeatedly but the key to that it has to be meaningful iteration if you're just iterating and doing the same thing you're not learning anything there's no feedback loop then the iterations have no value but if you have a tight feedback loop like I'm gonna do this thing and I immediately get response back that tells me whether I got better or got worse that is amazingly like powerful to be able to do that and compound it over time so so I think my I'm not that special candidly it's like I'm willing to grind it out more than people that are smarter and I'm a little bit smarter than people that are willing to grind it out that's my venn diagram
01:21:01	Shaan Puri	That's awesome! But have you... you've probably seen this, or maybe you guys have done this. There's this group of consultants that created this thing called the Marshmallow Challenge. They go to a company and they give you a bunch of sticks, one marshmallow, some tape, and like a string or something like that. Have you seen this, Dharmesh?
01:21:20	Dharmesh Shah	I think I have yeah
01:21:21	Shaan Puri	but I'll I'll kind of summarize what this
01:21:23	Dharmesh Shah	of course jared yeah
01:21:24	Shaan Puri	yeah those you have it base basically they give they give you this these set of tools and they say okay your goal the game is you need to get a marshmallow the winning team is gonna have a marshmallow like as high above this table as you can so build your tower as high as you can if you can whoever gets the highest marshmallow whoever's tower has the highest marshmallow at the end wins we're right we're gonna stop the clock after 30 minutes we're gonna say hands up and you know your marshmallow whoever's marshmallow is standing the highest wins okay good good so they go and they do this test with like a bunch of different types of people they do it with consultants they do it with like kind of doctors and they do it with you know engineers they do it with whoever creatives like ad agency types and they're trying to see okay which group is gonna perform the best at a challenge like this and basically across the board what they found is that they suspected maybe engineers are gonna do the best and the engineers do on average do a little bit better than than others but not by much they actually are all pretty horrible at it and I think like you know whatever eighty 90% of the groups at the end of the challenge their marshmallow is on the ground it has fallen over it never even you know got up at all like if you had just put it if you had just taken like you know 2 sticks and put up 1 marshmallow on top you would have won the challenge and the reason why is and and they they did this test with kids and kids actually are phenomenal at this kids on average will beat the adults at this game and why is that well because what would happen is that they would give the project to the adults and the adults would spend the first 5 minutes like delegating roles like okay you're gonna be the person who does the planning you're gonna be the one who you work on the sticks and the the bottom structure we're gonna do this over here then they would just like kind of draw out like okay let's do a teepee no let's do a a ladder let's do this cube shape or whatever and they would do all this and at the very end they would try to stick the marshmallow on and what they don't realize is the marshmallow is a lot heavier than it looks and it will outweigh the sticks and it'll all fall over and be but because they're doing that thing where they wait till the very end to like ship the final good product they don't even realize where the flaw in their plan until like it's too late essentially whereas what kids will do is kids will immediately grab the thing they'll stick the marshmallow on and it's like if the kids don't eat the marshmallow the marshmallow will like get into the structure very quickly and they'll see oh it falls over okay it falls over that means we need to iterate and we need to do things differently than we would have otherwise assumed and that like one lesson I've done at pretty much every company I've ever started because it's the only way I can get engineers and designers who by nature are often like sort of like perfectionist or quality and like they in their associate they in their mind associate the longer we work at this the better the quality will be before we ship it and I'm always like dude let's ship it today let's see how bad it sucks and then let's remove some suck from it and like tomorrow it'll suck a little less and then tomorrow it'll suck a little less again and the the best way I've been able to drive this.
01:24:07	Shaan Puri	Home is to give them the marshmallow challenge and not just watch the video or the TED talk. It's like, "No, go fail at this so that you taste defeat." Then, you will actually learn this lesson.
01:24:17	Sam Parr	Dude, that's like the greatest CEO thing that you've ever done. That's a good one. That's a really good one—to make people do this and then make them watch the TED Talk. That's like, that's a really good leadership tactic. I'm 100% gonna steal that one day.
01:24:28	Shaan Puri	Yeah, it's an awesome one. Alright, I don't know if we went kind of long. I don't know if we're good to keep going or not, but...
01:24:35	Sam Parr	ben's telling me wrap up
01:24:37	Shaan Puri	wrap it
01:24:38	Sam Parr	But, Dharmesh, this is awesome, man! I love having you around. Are you... you?
01:24:45	Dharmesh Shah	the last time you
01:24:45	Sam Parr	were on was like a year ago I think and I've been like yeah
01:24:49	Shaan Puri	probably get your take
01:24:49	Sam Parr	I've been like begging you. I'm like, "Man, just come on!" So we messaged him today, and he goes, "I'll just come on today." I was like, "Alright, cool." Actually, I have a quick question. People ask me about selling to HubSpot, and they're like, "Has it been good from a creative perspective?" It's been awesome! You guys haven't... we haven't been told a thing on what we can and cannot do. Of course, I don't think we'd do anything where anyone would ever tell us, "You can't do that."
01:25:15	Shaan Puri	it maybe dharmesh do you ever get complaints about anything we say or do you hear
01:25:19	Sam Parr	That's what I was going to ask. Is there anything that... like, so far I guess there's nothing that's crossed the line because we've not heard a thing. But it's been crazy how productive this relationship has been. I did not think that, because you know, people say one thing and the reality is different. But it's not been that way. That's been pretty cool.
01:25:41	Dharmesh Shah	Yeah, thank you. I'm glad that it's working out, and your team has been great for HubSpot. I know this keeps you up at night in terms of the valuation. I've thought about that a lot—maybe not as much as you have—but at the time, I would not beat yourself up over it. I think it was a fair deal. Just so you know, even at that price, and this has nothing to do with you, it was a board-level discussion. We had to ask ourselves, "Do we really want to?" Not that it wasn't worth that, but was it worth that to us at the time? Because it was a relatively new thing that we were doing. I think there's a play through both sides.
01:26:17	Sam Parr	Yeah, for sure. I think there's a world where, in 1 to 3 years, the podcast alone is worth more than the deal.
01:26:26	Dharmesh Shah	Yes, I definitely see that. Yep. But in the same way, to kind of... well, I mean, we can kind of wrap on this. When we were talking early in the beginning of the episode about compensation being just one of the dimensions of value in an acquisition, the valuation you get—the price tag—is just one dimension of value. The rest of it is: how happy are you? How happy is the team? Did you meet people that you will enjoy working with in your future years? Are they your future co-founders? That kind of thing. It's like we know that this is not forever. We know that going in, even with the people we hire, but especially with M&A. But yeah, hopefully in aggregate, you know, HubSpot delivers a bunch of value. That's my pitch for why it's okay to join HubSpot if you're ever out there looking.
01:27:08	Sam Parr	no it was awesome well thank you this is awesome phil what do you think
01:27:10	Shaan Puri	Yeah, great episode! I'm glad you used our line against us. He'd emailed us something, and I was like, "Oh, you should come back on sometime." But "sometime" is one of the most dangerous words. Sometimes it never comes. You think it's soon, and in reality, it’s never. You pulled a great move, which is what we talked about: forget scheduling stuff. Either I want to do it, and if I can do it right now, let's do it right now. If not, let's not schedule it for the future just because we didn't want to do it right now. You were like, "How about today?" and we were like, "Alright, let's do it. Let's do it. Perfect!"
01:27:44	Dharmesh Shah	I intentionally made it open. It's like, okay, I knew when my last meeting was. It's anytime after this. So it's not even like, "Oh, I could have made it work this afternoon," but I was only available for a small window. It's like, no, anytime between 2 PM and midnight. If you had said, if you had come back, I would have been, "Let's do it." It's... yeah.
01:28:02	Sam Parr	that's awesome this is awesome
01:28:03	Shaan Puri	well it's a lot of fun doing this
01:28:04	Dharmesh Shah	it's a
01:28:04	Shaan Puri	lot of fun thank you for coming on
01:28:06	Dharmesh Shah	alright thanks for having me yeah good

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How To Come Up With Billion Dollar Business Ideas | Hubspot Co-Founder Dharmesh Shah

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