Auren Hoffman (00:30.462)
Hello, fellow data nerds. My guest today is Brian Halligan. Brian is the co-founder, longtime CO, now executive chair of HubSpot, which is a full service CRM. They went, they founded in 2006. They went public in 2014 and today they have a market cap of around $23 billion. Brian's also the author of books, inbound marketing and marketing lessons from the Grateful Dead. And he kind of coined the term inbound marketing as well.
Um, and help give rise to one of the biggest shifts in marketing over the last 20 years, Brian, welcome to world of deaths.
Brian Halligan (01:10.173)
It's a pleasure to be here. Thank you for inviting me.
Auren Hoffman (01:12.786)
A pleasure. And I'm a huge fan of yours. I'm really excited to dive in. Now I, you, I got a lot of things I want to talk to you about, but one of the things since it's kind of top of mind is just boards and outside boards where we're kind of taping this podcast a few weeks after the whole open AI thing, which really kind of brought out a lot of different board dynamics and stuff. And you've been tweeting a little bit about some of these boards as well. So first from like the board, like
One of your top things about board members is to try to find board members who have been operators. Why is that so important?
Brian Halligan (01:48.117)
I think that's important. In Sam and OpenAI's case is a little bit different because it really was a nonprofit board. But even as a nonprofit board, it was really funky. They didn't have a bunch of seasoned nonprofit operators on there. If they had one person who had been an operator in a nonprofit who had some experience who had been on boards before, I think she could have.
I mean, I can't imagine that somebody couldn't have found a middle ground or calm, calm things down when there was some palace intrigue. I think they were missing sort of a, and whether it's a nonprofit operator or a, you know, a software operator, somebody who had a bunch of experience who was calm headed, low ego that could have sort of found a middle ground between all these folks.
Auren Hoffman (02:36.494)
But why do operators have like a low ego? You could think of a lot of, you know, maybe a finance person or maybe a academic or what, why is it like, why is it the operator that's so important?
Brian Halligan (02:48.765)
I think in this case, they, well, they had someone who's from academia. Um, they had three insiders. Uh, they had, um, someone, uh, someone I can't quite figure out, sort of a startup person, and then they had sort of a software scale person, I think if they had even just kept Reid Hoffman on the board, if he hadn't dropped off, I think, I can't imagine Reid would have been like, Hey, let's all settle down here. We don't hire Sam.
Auren Hoffman (03:11.33)
Brian Halligan (03:17.969)
Fire Helen, like, let's just have some calmer minds. And it could have been a VC. Even if Thrive were on the board, I think it would have been fine. Or Microsoft, I think, I mean, I just can't imagine they couldn't have calmed that situation down. And like, I have thought about, and I look at a lot of different boards, and like, what works and what doesn't. And I have a little, I don't know if you want to hear, but I have a little rubric on the board. So.
Auren Hoffman (03:41.646)
Yeah, I love to hear it. Yeah. Yeah, let's hear it. Let's go for it. What makes a good board, essentially? Yeah.
Brian Halligan (03:48.349)
Okay, so I'll tell you what makes a bad board. What is the failure condition for a board? And I'm gonna go through a little mnemonic here. F is for friends and family. You don't want any friends or family on your board. A is all late career or all early career. I think a lot of people in tech feel like you should just hire the smartest person you can find, their first principal thinkers.
and they can reason their way through everything. And that has worked really well for HubSpot when we hire management team members. But a little bit of experience sort of helps on a board, I think, and I think it would have helped with OpenAI. I, insider overload. There were three insiders, three independents. That was a lot of insiders. L, large boards, greater than 10, I think is a red flag. It's just hard to manage a board more than 10, let's say. U,
under the VC's thumb. When you've got all your independence under the VC's thumb, that does not end well for the CEO oftentimes. Or I'm going to throw in rock stars, politicians, athletes, anyone like that that's a press release board hire that you're really bragging about to your parents but doesn't add any actual value to the board. E, large egos, no place for large egos at
Small boards, five or less, I think it's a bit of a red flag because you can have factions sort of overtake it. That sort of, if I look at a board, that's the failure conditions kind of a board.
Auren Hoffman (05:21.166)
Okay, let's dive into some of these because some of these, you know, are, are maybe more well known and people probably agree with you, let's say boards being too large or something like that. But some of these other things that you talked about are things that are, you know, like, you know, the rock stars kind of some ways make sense, but then
Brian Halligan (05:32.321)
Auren Hoffman (05:42.954)
You know, um, you know, there's certainly, you know, Al Gore was on the Apple board and was, was probably, I don't know, was he, was he, you think that was a bad board member for Apple? Okay. Oh, sure. Okay.
Brian Halligan (05:52.953)
I sort of think stay away from politicians because politicians are always going to be running again. You're going to lose them generally. In our worst case, maybe not. I like to avoid secretary of anything. Okay? Now, I understand why they're very smart.
Auren Hoffman (06:02.894)
Okay. Yeah. You know, obviously like Henry Kissinger was on the American Express board for many years and right. Yeah.
Brian Halligan (06:09.769)
The third customer was on Theranos' board and they had three former secretaries of something on that Theranos board. So they don't have a lot of value unless your biggest customer is the government. Okay, then you can have, or you've got regulatory issues.
Auren Hoffman (06:23.914)
Right, like Raytheon probably has a lot of former secretaries or something like that.
Brian Halligan (06:26.709)
Yes, I think that's a good idea. But for 99% of companies, they were for politicians, athletes, rock stars, secretaries of anything, former senators, they just don't have the relevant experience. And I don't know, I see a lot of companies do it. I think it's a bad call. You're kind of wasting a board seat.
Auren Hoffman (06:44.222)
And insider overload, like there's a lot of, there's a lot of companies where the founders kind of, they have a controlling share of the company and they get a control, they might not, it's not, maybe the founders themselves aren't on, on the board, but they at least get to appoint the board members. They've got, they've got a right to appoint you think, is that a good thing or a bad thing?
Brian Halligan (07:06.165)
I think we're just coming out of a phase where like the supply and demand of the supply of money relative to the quality companies got a little out of whack and founders were able to really dictate terms through like 2000, 2001 and whatnot. And a lot of founders were able to get away with what Zuckerberg got away with. They had special common shares and they had control of the board. I think today that's starting to balance out and I think founders are going to have a hard time.
Auren Hoffman (07:24.875)
Brian Halligan (07:36.181)
wrestling control from their board getting those terms. And I think for the vast, vast majority of founders, 99%, you know, Sam Altman's really an exception, Zuckerberg's an exception, that once you take venture, you're going down a path that the board can fire you. It's the deal you're making with the devil. And so if you don't want that, don't take venture dollars, would be my advice to most founders.
Auren Hoffman (07:59.446)
But the, you know, sometimes if you really couldn't be fired and you could think, again, playing devil's eye with it, and you could think long-term, certainly in the Zuckerberg analogy, he can think long-term or, you know, I'm not sure if Bezos could have been fired or not by the board, but you know, because he had so many shares, he could really think long-term in this scenario. It's like, you kind of want people who can think.
long-term and sometimes the VCs have different competing interests and they've got funds and they're on their seventh fund. They're trying to raise their ninth fund and they're trying to get some DPI going on there and they might want to sell when it's not the right time. I could see all these competing interests would happen.
Brian Halligan (08:44.669)
Yeah, I would argue that, first of all, I just think it's really hard to pull this off in 2023. And if you can't pull it off, which I suspect the vast majority, I would say what you really want are high quality independent board members. Like Brett Taylor, I think, was a very good pick for Sam. And I have a little rubric for picking great independent board members. Not good ones, great ones. And Brett sort of hits all of them. You wanna go through them? Okay.
Auren Hoffman (09:12.862)
Yeah, okay. Yeah, let's do it.
Brian Halligan (09:14.465)
These are my six S's of great independent board members. One, you want stage expertise. A lot of people want domain expertise, and that's super helpful, but you have a lot of domain expertise around the table with the founders and whatnot, and the VCs typically. You want stage expertise. So what you don't want is, let's say you're on your series B round of capital. You don't want to hire somebody that's spent their entire career at Google or Microsoft.
Auren Hoffman (09:18.398)
Okay, this is amazing. Okay.
Brian Halligan (09:43.257)
I think of the game of a CEO is like you're an ice climber going up an ice cliff. And when you're picking a board member, you want to pick somebody who's been up that same crevice, crevasse, I don't know how to say that word, within the last few years. What you don't want is a board member that started their career on top of the mountain and is still on the top of the mountain and has never been up that path before. So you want somebody a little ahead of you on that path.
Auren Hoffman (10:09.922)
Now, how's it like, let's say you have five board members or something or six board members. You know, you, is it, you want everyone to have the, in that stage? Cause certainly probably some of, I assume the founders may have not been there yet. And maybe they have, maybe they haven't. The VCs probably have, if you have venture capital that they've, they've had it. They've seen that stage multiple times. Um, now you're bringing in one or two people who are more independent. Is important that those independents also have that?
Brian Halligan (10:36.265)
Yeah, and I just, I look at HubSpot back in our Series B. We had two founder seats, our Series A investor had a seat, our Series B investor had a seat. And then we had an independent, a woman named Gail Goodman, who was CEO of HubSpot. Yeah, she was three or four years ahead of us on that ice cliff. She wasn't up to the top, she actually probably kind of slipped on her way up there a little bit, but she was ahead of us, and she had terrific domain expertise and stage expertise. I think of HubSpot today.
Auren Hoffman (10:49.282)
Constant contact. Yeah, yeah, amazing. Yeah.
Auren Hoffman (10:55.543)
Brian Halligan (11:05.569)
We actually have three insiders in seven independents. When we pick those independents, we're very careful to pick stage expertise. So recently we picked the CEO of Autodesk, who's just terrific. Autodesk is, you know, we're at two billion, they're probably at five billion. He's sort of seen the movie before us. He grew up in here, super, super helpful. So we've had for a long time, Jay Simons, who's the CEO of Atlassian. Atlassian's, you know, 60 billion.
Auren Hoffman (11:23.839)
Auren Hoffman (11:32.842)
Yeah, amazing. Amazing company. Yep.
Brian Halligan (11:35.835)
He's seen that movie recently. Incredibly effective relative, for example, to someone that's always been a Google or Microsoft. I think you want to avoid those folks.
Auren Hoffman (11:43.822)
Because a lot of times you'll pick like the CMO of a big consumer package goods company or something like that. Okay.
Brian Halligan (11:51.748)
They just don't want that much. They can't. It's like there's a stage mismatch. And I think that's the case for executives when you're hiring them too. That's.
Auren Hoffman (11:58.346)
And even like, even for like, let's say your public company, you need like the head of the audit chair or something, even that type of person.
Brian Halligan (12:04.877)
Yes, so if like HubSpot is, so HubSpot's head of its audit chair is the, was the CFO at NetSuite. NetSuite was a classic company for us. They were three or four years ahead of us. So he's got really good stage expertise in seeing that movie. So that's the first S. Okay, the second S is smart. And I'm going to give you one of my favorite quotes. It's from a guy named Tommy Hineson, who was the
Auren Hoffman (12:13.867)
Auren Hoffman (12:18.578)
Okay. Okay, first S got it.
Brian Halligan (12:31.365)
one of the winningest basketball coaches in history, Coach of the Boston Celtics in many championships. And he had a great line. He said, you can't teach seven feet tall. So like if you're Bill Walton and you're seven feet or Robert Parrish or whoever, you just can't teach that. You can't teach smart. Either someone's smart or they're not. They can learn things, but you see new stuff on a board and being smart is actually an underrated thing on a board. So I like his point.
Auren Hoffman (12:40.717)
Auren Hoffman (12:47.021)
Auren Hoffman (12:58.922)
And you think just because someone is successful, that's not a, those aren't correlated.
Brian Halligan (13:01.657)
It doesn't mean they're smart. No. They are correlated, but the r squared on it isn't 1.
Auren Hoffman (13:08.17)
Isn't that high. So he showed you, but is it kind of like, you know, it, when you see it, like after you've met with that person in the end, like if you're like, okay, I just spent an hour, this person, this person's clearly smart and we've all had these conversations where you meet with other people that they have this impressive resume, but they didn't give off like the smart vibes to me, like don't bring that person in.
Brian Halligan (13:25.813)
More often than not, more often than not, I would say. Wouldn't you?
Auren Hoffman (13:31.734)
Um, yeah. Yeah. But maybe, maybe I have a high bar for smart. So it's always hard to say, because definitely there's things where other people say they're smart. I'm like, really? So yeah.
Brian Halligan (13:33.845)
I'm surprised on the downside a lot.
Brian Halligan (13:44.769)
That happens a lot. And I'm not saying I'm smart. This is like, I listen to your podcast, you have a lot more smart people on. Third one is strong backbone. And this is key. Like when we had two independent, when we had two insiders, two VCs, and Gail as the independent, Gail was tough and she was truly independent. She didn't give a whoop what we thought. She didn't give a whoop what the VCs thought. She was her own person and she was making her decisions based on what she thought was right for the company.
And at times, VCs will push. I was the first time CEO, and both VCs were CEOs before. They would push quite hard on me in different things. If they pushed too hard, Gail would kind of gently push them back, and they listened to her. So having a VC, having an independent that's. Yes.
Auren Hoffman (14:30.803)
Hmm. She had the credibility to, you might, because you were first time, she didn't really have your own credibility to push back on them, but she could then, okay, that's interesting. Okay. And because she was truly independent, if she was in your pocket, they wouldn't have listened to her. So the fact that she was truly independent really helped that, helped your case.
Brian Halligan (14:37.986)
You need to go to bed.
Brian Halligan (14:48.641)
I think what usually happens is you're the founder, you just signed up with XYZ VC, and you're looking for an independent. The VCs have a better network to you, and they tee you up with a bunch of terrific people who are actually in the VC's pocket. You need to be a little bit careful there because you want someone truly independent, and they have to be smart and independent because you're exactly right. The Series A investors in at a very low price, the Series D investors in at a high price. You get an acquisition offer six months after the Series D.
Auren Hoffman (15:01.036)
Brian Halligan (15:17.709)
Series A investors like, let's sell, this is great. Let's sell. Series A investors like, what are you talking about? We're just getting started. That independent director needs to be independent in that case, in many other cases. Okay, my third issue should speak one over end time. In other words, if there are, my dad used to say this, if there are eight people around the table, you should try to speak about one eighth the time. You shouldn't be speaking four eighths the time, you should be speaking one eighth the time.
Auren Hoffman (15:20.766)
Yeah, totally. Yeah.
Auren Hoffman (15:29.011)
Okay, yep, that makes sense.
Brian Halligan (15:46.609)
And some people just talk a lot. And some people have huge egos. And oftentimes when you're looking at people for board seats, ego is a problem. It was probably a problem for OpenAI. Some of those board members probably had huge egos. And I think that will mess a board up. And so they're hard to find, but you need very smart people with strong background, with stage expertise, that have a relatively low ego.
Auren Hoffman (15:56.322)
Auren Hoffman (16:11.446)
It's just because I have a, I love doing dinner parties, you know, where you have like eight people get together and have a discussion about something. And I always say like, you never want one person speaking more than two N. Two over N, the amount of time that would be like the maximum. So you ate like, you don't want someone speaking more than 25% of the time is kind of, and that would be a good dinner party. That means everyone had a chance to contribute and everything.
Brian Halligan (16:21.949)
Brian Halligan (16:32.365)
I think you got it. Stay calm in a crisis. So OpenAI just had a huge crisis. HubSpot's had its share of crises. Every company has this crisis. And if things are really calm right now, you're going to have a crisis. It just happens. And some people are very calm and focused during a crisis. And some people lose their shit. And a lot of them don't.
Auren Hoffman (16:48.62)
Auren Hoffman (16:53.918)
I, how do you create the smart one makes it like that. I feel like I can interview and like at the end of the hour have some sort of sense. How do you know? Like, is this just like tons of reference checks? Like, how do you know this one?
Brian Halligan (17:05.197)
You reference check, this was hard, this is hard. I will say we've had some venture folks that kind of freaked out. But generally our independents have been quite calm. I think you can kind of tell if someone's volatile and you know if somebody's volatile. But I would just say as you're looking at your board, calmness is something very important because crises happen, disagreements happen, calm is really, really important. My wife-
Auren Hoffman (17:32.782)
Because sometimes calm and successful entrepreneurs don't always go together. And so you're saying, OK, because you've got, if you think of Atlassian, you don't have the CEO, who actually is a pretty calm guy. I know him. But generally, I could see that person might not be as calm or something.
Brian Halligan (17:39.481)
Brian Halligan (17:56.833)
Yep, you don't want a bunch of Alpha Dog founder CEOs around the table probably. And my last one is it's very nice to have a sitting CEO. For me, I was a first time CEO. It's a very lonely job at the top. And I tried to surround myself with sitting CEO. So my series A VC was a former CEO, series B VC was a former CEO. My co-founder was actually a CEO in a previous life. And then Gail was the CEO. That was just very, very helpful.
Auren Hoffman (18:02.742)
Brian Halligan (18:24.829)
And I say sitting, which is hard to get because they stayed current was what's going on. There were CEO of a fast growing company 10 years ago. It's kind of tough to stay current and things change very fast. So I like that sitting CEO.
Auren Hoffman (18:37.842)
Yeah, there's something about where, like, if you think of maybe the very big things don't change, finding product market fit, managing, you know, people or something, but like all the medium things seem like they change dramatically every five years.
Brian Halligan (18:52.117)
Yeah, well, even like recently, all of the unrest in the Middle East, like, bam, that's thrust upon the CEO. And are you going to comment and how are you going to comment? What are you going to say? And how do you manage all your constituents?
Auren Hoffman (19:00.798)
Yeah. Or even just like having to comment about political things is relatively new. That's like a, that's like a last five year type of thing that didn't, that wasn't really true 15 years ago.
Brian Halligan (19:11.833)
So having a sitting CEO who's feeling the pain at the same time, even if they haven't solved it, is actually quite useful. Let's just hear it.
Auren Hoffman (19:17.746)
Yeah, okay. I love these. Okay. I love. I love the see this is why you're such a great marketer. You have like you've got the failure rubric. You've got the six XS is like the fact that you could just tell you're like a great marketer for coming up with all these things. This is amazing.
Brian Halligan (19:34.298)
You know, thank you. I think, honestly, I knew we were gonna be talking about this, so for the last hour, I just sat down and like, I know what I'm looking for. I need to figure out a way to describe it. So thank you for having me on to force me to do it.
Auren Hoffman (19:47.402)
Now is, is the, is in some ways, like if you had a, if you're thinking of, is it avoid the mistakes or avoid the failures? Or is it like, is it really looking for this like amazing gem of a person with these six S's?
Brian Halligan (20:02.261)
I think the failures is like you're an investor or you're Henry Ellen Bogan from Durable Capital and you're looking at a board and you're like, oh, friends and family, X. All people who are very early in their career, X. Too many insiders, X. Wow, there's other people who are more X. They're on a VC some X. They've got two politicians on their X. Biggie goes X. You know, and you're just you're grading the board. That's like.
somebody should build a little app, boardgrader.com. And the S's is more for, like in HubSpot, we've added a lot of independence over the last few years. Like we've come up with like kind of a little rubric on what we're looking for. And those S's have been very useful to us. We've had good luck so far.
Auren Hoffman (20:48.666)
Okay, interesting. Now you also mentioned that you made this analogy that board members should be parents and not grandparents. Like, can you elaborate on that?
Brian Halligan (20:56.001)
Yeah, no, we're members should be grandparents, not parents.
Auren Hoffman (20:59.814)
Oh, I'm sorry. My grandparents are not parents. Okay, all right, okay. Cause I thought like the grandparents are the ones that kind of spoil you a bit and the parents are thinking in your long-term interests.
Brian Halligan (21:09.021)
Yes. I think they should be like grandparents. I think that's a very important thing. And they should act in all the ways we just kind of talked about. I think it's very... The problem with a lot of people who are candidates for board seats that are founders is...
their greatest strength as a founder turns into their greatest weakness as a board member. And the greatest strength is they're good at making decisions, they're good at controlling stuff, they're good at being very hands on the steering wheel, and they're good at being parents. And...
That kind of backfires on a board. If you get a bunch of parents on the board, the board gets very dysfunctional very, very quickly. So we want them to be more like grandparents, keep their hand off the steering wheel and only stick your hand on the steering wheel if things are going very, very sideways.
Auren Hoffman (22:04.567)
Auren Hoffman (22:15.698)
Interesting. Now, do you think you based on where I like, is that something you, you like, do you think your personality is more of a good, like outside board person? Because you know, you could, you could see how like a successful entrepreneur, successful CEO could go both ways.
Brian Halligan (22:32.381)
I would say my tendency is the same as I just described. My tendency would be to want to control things and grab the steering wheel and make decisions. And I have to really fight that. And I will say now I'm chairperson of HubSpot's board. Before I took on this role, I called a bunch of other chairpeople.
Auren Hoffman (22:41.94)
Brian Halligan (22:55.693)
and like Brad Smith from Intuit and a whole bunch of other good ones that gave me some good advice. And they all pretty much said the same thing, like be careful, don't get too involved, don't grab that steering wheel because you'll screw the company up. And as the founder, you'll undermine the credibility of the new CEO that you brought in. So you have to be super, super careful.
Auren Hoffman (23:15.338)
Yeah. Now, your transition was really interesting because you had somewhat of an unplanned initially transition because you had this very bad snowmobile accident. So you kind of needed someone to step in. And then they happened to do a really good job. So is it just like if you're advising somebody else to, you know, to,
to do a CEO transition, would you just be like, uh, get into like some serious accident or something? Or like, how would you, how would you advise them to, because I don't know what the lesson is to learn. Like your two years, this seems like worked really well, but I'm not sure like what lessons the rest of us go learn from it.
Brian Halligan (23:46.605)
Brian Halligan (23:56.141)
Well, it's kind of an interesting story. So in January of 2021, we had a board meeting and on the agenda of that board meeting was an agenda item, Brian gets hit by a bus. Like what would happen if Brian gets hit by a bus? Which turns out was a very useful thing to have. So we were together, we're all chatting about it. And Dharmesh, my co-founder and I had talked about it before and I was like, I think Yamini, who's the currency, should take over, should something bad happen to me. And Dharmesh said, I agree. And the board said, okay, great. We moved on to the next item.
Literally two weeks later, snowmobile off a cliff, nearly died at the bottom of that cliff, broke 13 bones, I was in a hospital for a long time. I really nearly killed myself, not with a bus but by a snowmobile. And so it's like, okay, we know what to do. Yamini takes over. And so I was out of pocket, you know, unconscious for a long time, and she took over. And honestly, it was an interesting moment for me,
Auren Hoffman (24:34.434)
Brian Halligan (24:56.946)
When I King 2.
Brian Halligan (25:01.357)
I was like, I'm going to rethink a lot of things in my life. A lot of things. One of the things I'm going to rethink if I live through this is I've done, I think a pretty good job running this company from zero to 20 billion market capital, whatever it was at the time. It's time for someone else to do it. I don't enjoy it. The stage isn't right for me. And so as I started getting back on my feet, in my head I was like, Yamini's doing great.
I'm not going to come back. I'm not going back. And then when I finally was ready, when everyone was ready for me to come back, I was like, I'm not coming back. I think you're doing great. And I told my co-founder, I told one of the board members and they're like, well, when are you going to talk to Yamini? And so I pinged Yamini and I said, I want to tell you about, I want to talk to you about something. And I said, let's talk on the phone. And we never talked.
And I tell you this because I heard this from her side of the story two weeks ago. I had dinner with she and her husband. Her husband's a guy named Cash who's at Goldman Sachs. He's in Elm and Goldman Sachs. And Yamini went to Cash and she said, oh, Brian wants to talk to me. And Cash said, oh no, he's about to come back. Right. She said, yep. He said, you're probably getting fired. She said, you're probably right. And she went upstairs. Yeah. The phone call.
And she's coming down the stairs and she's crying when she's coming down the stairs because I just had offered the CEO job and she's so excited and Catholic series like I knew it. He fired you didn't he? Anyway, she did a terrific job when I was out and she was an obvious candidate and it was it was it was perfect in that we had a six-minute trial run with it with a interim CEO. But I don't recommend people do it that way. I do recommend CEOs ask themselves and boards ask CEOs if they're still happy doing what they're doing.
Auren Hoffman (26:56.535)
Brian Halligan (26:56.957)
Because I don't think all CEOs are happy or motivated, they're tired, and sometimes you need somebody who's a better stage market fit than you. And I think those conversations probably should happen more often.
Auren Hoffman (27:09.002)
Yeah, there's a point, even, you know, someone's been doing this in your case a really long time, but even like 10 years is like, there's a point where it maybe just makes sense for the organization to have like a fresh person, a fresh perspective. So I'm interested in this call that you had with Amany, where she thought it was going to be about one thing. Cause I think we've all gotten these like pink, people ping us and they're like, I want to have this call. And I think, or we often like think it's the worst thing, like, oh,
Brian Halligan (27:21.846)
Auren Hoffman (27:37.558)
Like maybe it's employee who reaches out to you. Oh, they're going to quit on me. Like I get it right. You're like, is there a way to like somehow like in retrospect, should you just like send them a text like this is good news or just something like just like they don't like, cause like I often get these things I'm like freaking out and they're like, oh, it's fine. Like the call is like totally fine.
Brian Halligan (27:54.465)
I don't know that I have a good solution to that, but I totally agree with you. When someone pings you out of the blue, you haven't talked to them in two months, like, hey, we need to talk, like, oh crap.
Auren Hoffman (28:02.294)
Totally. Like, what is it? Like what else is like they have to talk on the phone like, or, you know, could you just spend like, hey, like we're going to offer you the CEO job just, you know, like don't go crazy. I don't know. I don't know what the people, what you should do. Yeah. Yeah, that's true. It's a good point.
Brian Halligan (28:06.561)
Brian Halligan (28:13.121)
You don't have to have a lot of text either.
Brian Halligan (28:19.033)
I will say, hey, before we get into something else, there's a couple things that have worked well for me in the chair role at Upspot that I think is totally replicable. One is we do 360 reviews of all the board members every year. We basically send a net promoter survey out and what do you think of Lori Norrington as our lead director on a scale of one to 10? How much would you recommend her and why? And people write novels.
I get all that, I collate it, and then I give them feedback once a year. That is a very healthy dynamic to have. And somebody does it for me, which is super, super helpful. People want feedback in terms of, even board members even get feeds. As a chairperson, you wanna give that feedback. You're also responsible for adding and subtracting. Based on that feedback, if someone's not scaling up with you, as happens.
Auren Hoffman (28:50.814)
Okay. And obviously you get it on yourself too. Yeah.
Of course, yeah.
Brian Halligan (29:12.437)
you know, sometimes you have to let them go. People think, oh, I've got the same board forever. You don't have the same board forever. You can upgrade folks as you move along. And we've done a little.
Auren Hoffman (29:19.326)
And so I know for like public boards are often for a term, like a three year term or something, but you still think it's okay to like go to them and say, like midterm and say, you know, it's, it's time for you to step down or something.
Brian Halligan (29:31.733)
Yeah, and oftentimes it's their idea. You know, they've gotten weird feedback in the review or, you know, the conversations that the board just don't match their background. They feel it. I do a check-in before board meetings. I think everyone probably does that. And we have a lead director that's really good. This woman, Lori Norrington, is our lead director. And she's a professional board member. We don't have a lot of those, but she was an exec at Intuit and exec at eBay for a long time. But she's been a professional board member for a long time. She's a NOM and Gov expert. She has been awesome.
pre-IPO through the IPO. She's been with us for a long time right now and she's been a rock for us. So having someone who's really got a lot of, one person who's got a ton of board experience is super helpful.
Auren Hoffman (30:10.986)
It doesn't cause like some, you have a chair, a chairperson on the board and a lead director. Often they're kind of like, in some ways to think of them in a similar way. It's like usually when the CEO and chairman is the chairman, then they'll have like a lead director. But even when you became chairman, you decided to keep them kind of separate in a way.
Brian Halligan (30:29.049)
They want you to. The investors and the regulators want those to be separate, it turns out. And there's a lot of things regulators want that seem smart but are kind of counterintuitive. That's one of them. But there's a whole bunch of rules out there and unsaid rules that if you want to get your proxy statement through and not have any trouble, you want to be thoughtful about.
Auren Hoffman (30:30.167)
Auren Hoffman (30:41.687)
Auren Hoffman (30:50.41)
Yeah. Okay. Interesting. Um, now I mean, you and your co-founder, Dermesh, um, to me from the outside seemed to be kind of a perfect pair because you, you've got very different strengths and you can kind of appreciate each other's strengths. Um, and, and then you've also, you got, until you, you left day to day, you were, you guys were with each other for a really long time, which is very rare for co-founders to stick together for so long, like what do you attribute?
some of the staying power too.
Brian Halligan (31:22.145)
Is that true? I thought co-founders stuck together for a long time generally.
Auren Hoffman (31:25.662)
I don't think that's the case. If you think of other super successful companies, there are some for sure. Sometimes they're brothers like in Stripe or something, you know, and, and they're definitely in cases where, but I think a lot of times, even if you think like, okay, Paul Allen eventually leaving Microsoft after six years, and you just see these, these types of things that, that happened over time.
Brian Halligan (31:33.901)
Right. Thank you.
Brian Halligan (31:49.269)
Yeah, I think that we've always had from the very beginning, a pretty good Venn diagram where, you know, I grew up in sales and marketing, um, and had some depth there and he grew up on the technology side and we were both really excited about startups and scale ups. So sort of in the middle is strategy startups and scale ups, things in marketing and stuff like that. But he was pretty deep on the tech side and I was pretty deep on the go-to-market side and I think we both respect each other's from lanes there and, uh,
Auren Hoffman (32:10.143)
Brian Halligan (32:18.293)
It was one plus one equals three. I see a lot of founding teams where the founders are almost identical in background. That's certainly worked for a lot of companies, but for us, it was more like more of the apple type model with jobs and was the act and I'm no jobs. And he was like, we are always like, if we could ever grow up, we'd want to be those guys.
Auren Hoffman (32:33.386)
Auren Hoffman (32:38.946)
He's also has kind of like an interesting job because I don't even know if he has like that many direct reports or something like he's got this kind of like, kind of very strategic role in the organization is zero. Yeah.
Brian Halligan (32:45.625)
Brian Halligan (32:51.041)
Zero. I remember when we were starting, so we went to school together, so we knew each other pretty well. And when we decided to start the company together, he said, yeah, no, by the way, I don't want to have any direct reports. I was like, cool, that sounds good. Thinking, no way, you know, pretty soon he's going to have a team and whatnot. And then, you know, a couple months in, I was like, okay, we're hiring this developer to be on your team. He's like, no,
Brian Halligan (33:20.873)
Nope. And he stuck to that. And he's never had a direct report, I don't know, 17 years in. And he's got a lot of authority and power in the company. And the reason he has it isn't based on the size of his org chart. It's on the size of his brain. And I think that's kind of how UpSpot works is it's, it's your influence is much more about the width of your brain than the width of your brain.
Auren Hoffman (33:43.474)
Interesting. Now, a couple of words on marketing. Marketing has changed like massively in the last 15 years. You talk about like being current as a current CEO. If you're in marketing 15 years ago, and you left, like I don't think you can even recognize a lot of things today. How do you expect it to change in the next 15?
Brian Halligan (34:03.573)
I think it will change as much in the next 15 as the last. Um, it's like Google democratized, democratized the access to information. I think AI will democratize the creation of information. We're going to move from search engine optimization to AI optimization. And I think it's going to be like, if I, if you think of things as a funnel, the top of your funnel will probably happen inside of chat to BT and its competitors. Whereas if you think of the top of funnel now, it kind of happens.
Auren Hoffman (34:16.205)
Brian Halligan (34:33.377)
People go to Google and then they go to your website to find any detailed information out. But really if you think about what ChatGPT is doing versus Google, Google's trying to get you off their site and over to your site and convert a click. ChatGPT knows everything that's on your site and more, and so you'll probably stay on there a lot longer and just have a conversation with ChatGPT about your business or any other business. So the top of the funnel's sort of there. Then someone goes to your website.
And your website is really about the chat functionality on the website. Now people kind of cringe when they get a chat bot on a website, but those are going to get really, really good and really useful. You're going to have real time to wait to talk to a sales rep. And then the website itself is sort of, you know, I sort of think of chat GPT is the top of the funnel. Your website is the middle of the funnel. Chat is the bottom of the funnel. And that whole experience, I think will change a lot in the coming years. And we're just at the beginning of that.
Auren Hoffman (35:09.25)
Brian Halligan (35:28.573)
And the in-chat GBT is really good. It's going to get a lot better. As it gets better, that will be good. The, the chat on your website is good. It's going to get really good. So all that's going to improve it. It's going to totally turn the thing on its head over the next few years.
Auren Hoffman (35:41.91)
Yeah. I think not only for marketing, but then like actually getting benefit from the product, I think we'll see in a, maybe, maybe a reverse funnel or something like that.
Brian Halligan (35:51.397)
I think you're right. I think things are going to change more in the next 15 than the last 15. It's going to be really interesting. I think it would be really, it's a great time to be in tech. It's a great time to be innovating in tech.
Auren Hoffman (36:01.514)
Now, one of the things I really appreciate about like as a HubSpot user is the UI. Like it's really easy to use. It's you can do things quickly. You know, if you think of like the main kind of company that you get compared to a lot would be Salesforce and by contrast, like they have, I don't want to put words in your mouth, but in my mouth, I'll say they have terrible UI. And it's not even something that really seems like ever really invested in. Um, like
But in some ways, like they're still super amazing company, like, and they've, and they've not invested and they have this glaring weakness. Like, do you think it's important to like jump on your weaknesses and make your weaknesses better? Or should you just like focus on your strengths as a company?
Brian Halligan (36:42.921)
I think they're well, I think it's great company, by the way. I think it's hard for them to create a great user experience because they kind of followed the old CRM playbook, which is build an app and then acquire a bunch of other apps. All the apps have their own data model database. They all have their own UI. And man, when you get all those acquisitions of big hairy applications, trying to rationalize all that is really, really hard. And the juice probably isn't worth the squeeze for them to do that.
Auren Hoffman (36:45.548)
Auren Hoffman (36:56.917)
Brian Halligan (37:12.541)
And so they're in a tough spot if they want to become like the Apple of the CRM industry, we, we're big fans of zigging instead of, uh, when everyone else is zagging, so we went the opposite way and we built everything and we, you know, we're trying to make an Apple like UI, Apple, like buying experience, Apple, like everything and be, and be sort of the opposite of Salesforce in some ways. We've really succeeded in some ways we have worked to do, but I think it's hard for somebody like Salesforce to do that. We knew that Salesforce was hard to use, hard to set up.
And so when we were building our CRM, we said, let's make it really easy to use and really easy to set up. Yeah. We tried to go as differentiated as possible for them. So big investment in user experience, big investment in all the things that really matter when it comes to that stuff.
Auren Hoffman (37:45.598)
Yeah, go the exact opposite route. Yeah.
Auren Hoffman (37:58.218)
Now we talked a lot about boards and you briefly mentioned these kind of like maybe long term investors. You mentioned Henry Ellenbogan and stuff like what makes a good long term investor in a company?
Brian Halligan (38:13.614)
on the VC side or the public side?
Auren Hoffman (38:15.589)
Let's start with public.
Brian Halligan (38:17.237)
Okay, I think public investors get a bad rap. And when people think of public investors, they think of hedge funds who take short positions or in stocks for a very short amount of time, agitate for CEO replacement and that. The vast, vast majority of public company investors in companies like HubSpot, Atlassian, Google, Facebook, you name it, they call them long-only investors. They're big investors. They put, you know.
hundreds of millions of dollars, they own hundreds of millions of dollars of HubSpot. And it's the only thing.
Auren Hoffman (38:51.434)
Yeah. And often it's a fairly large percentage of their fund. It could be, it could be 10% of their fund or something like that. No. Okay.
Brian Halligan (38:57.789)
Not really like T-Roy Price has a couple trillion dollars under management. I don't know. They maybe own a billion dollars with a spot. It's still round off error. It's not when it comes to Microsoft for Google, but these long only investors, you end up developing a relationship with them over time. You don't give them any information. You don't give them anyone else, but they start to understand you, understand your patterns, understand if you do what you say you're going to do.
Auren Hoffman (39:02.092)
Auren Hoffman (39:06.187)
Brian Halligan (39:21.993)
And so we've always kind of treated them like we treated the venture investors. Like here's our long-term vision. We're going to march, march towards it. And they've been relatively patient over time. And I throw T-Row, I throw Fidelity, Capital Group, Henry at Durable. There's a whole bunch of them. And, um, I think they generally get a bad rap. I think they're longer term and orientation than, than a lot of VCs actually.
Auren Hoffman (39:44.798)
Yeah, yeah, yeah. In some ways, like if you're just, even if you're investing in these very growth companies that, you know, they're, they're the payoff is potentially decades down the road or something like that, you have to have a long-term view.
Brian Halligan (39:59.001)
The vast majority of VCs will sell within six months of the IP. I mean, Sequoia's got this unusual model where they can hold, which is pretty sweet, actually. I know they get a lot of Christmas support, but I like it.
Auren Hoffman (40:08.394)
Why do you like this, that, that model where they can like move it, like, instead of just like, okay, we'll just distribute because they have enough information and the LPs don't, and then they can make a better decision as to when to just went to sell the shares.
Brian Halligan (40:21.377)
I think it's super founder friendly. Like if you're a CEO, you're about to take your company public within six, 12 months, all your venture capitalists who own most of your company are dumping all of those shares except for one who's going to hold on and maybe buy more. I think that's a very attractive thing for entrepreneurs. So I know they caught a lot of flack for it, but it's attractive. And I think of our relationship with Sequoia, they invested in a $250 million valuation.
Auren Hoffman (40:38.45)
Brian Halligan (40:49.973)
We went public at a billion, now it's worth 23 billion. Like with a company like HubSpot, that strategy really pays off.
Auren Hoffman (40:55.186)
Yeah, really pays off. Yeah. Or if you were like in Shopify or something like that, like that would've been amazing. Yeah. Okay. Interesting. But on the flip side, like, is it because they have more infor, because like when I, when I'm in LPs and funds and they go public, they don't sell, they distribute the shares. And then I can make a decision on my own what to do. And often I'm not going to sell because your tax basis is so high. Of course, maybe a foundation doesn't care about taxes and stuff. So then you're still become long-term holders.
Brian Halligan (40:58.573)
Brian Halligan (41:23.229)
I think the argument is really good there that Sequoia, when we went public, and you can argue many years later, doesn't know a lot about HubSpot, but within a year of going public, they certainly knew a lot more about HubSpot than, let's say, T. Rowe did, and they're able to capitalize on that. So I invest in Sequoia's fund. I sort of like that.
Auren Hoffman (41:38.442)
Yep, yep, it makes sense. Xerion, yeah.
Auren Hoffman (41:45.535)
Okay. Now you routinely call HubSpot a West coast company on the East coast. Like what does that really mean?
Brian Halligan (41:52.521)
Okay. Two things that kind of jumped them out on that. I think of West Coast company is very first principles in nature and skeptical of conventional wisdom. And really from the jump, Darmesh and I really thought that way. We were very, very skeptical of received wisdom and we're not afraid to rethink things from scratch. Like who's your target market? Um, it was a big one that we read.
Auren Hoffman (42:21.519)
Brian Halligan (42:22.317)
How's their culture work was a big one that we rethought many, many things we rethought. And it's worked out well for us. And when we go to the West Coast, we did an annual, we still do an annual field trip from headquarters, the whole management team, the West Coast. It was that first principles thinking that we always really respect it. It drove people crazy at times. It drove our investors crazy at times. It drove new execs you bring from the outside crazy from times. And sometimes commercial isn't just the right answer.
Auren Hoffman (42:48.139)
Brian Halligan (42:48.225)
But I like the way the West Coast sort of is skeptical of conventional wisdom.
Auren Hoffman (42:51.746)
So it's like kind of questioning like the what's already happened or something.
Brian Halligan (42:54.957)
Yeah, I'll give you an example. Like HubSpot started in SMB, small, medium businesses. Every venture capitalist in the world hated that idea, hated that idea. And getting through that objection was really, really painful. And there's a lot of scars around that. And our argument was really simple. Like, yes, we know everybody else goes to the enterprise. Yes, we know a lot of companies haven't been successful in small businesses.
Here's why it makes sense today. You can acquire companies much more easily. The business model is well known that you can upsell your way out of the hole if people churn. The internet sort of disproportionately was benefiting small businesses relative to large businesses. So we had a whole playbook in reasoning behind it. And, you know, some people just wanted to put us in the box. I'll again give credit to Sequoia. I remember we raised our ground for Sequoia series D.
We met with every big investor on Sand Hill Road and got nos in a Sequoia said, no, we didn't have a backup. We would have had a inside round. Those guys listened to it and were like, okay, let's do SMB, sounds good.
Auren Hoffman (44:08.692)
Why do you think they kind of took the Contraria in the Sandhill Road approach?
Brian Halligan (44:18.281)
I think, I don't know, but I suppose they do that a lot. And that's why we've got to take good care of it. Yeah.
Auren Hoffman (44:21.878)
That's why they're so successful. Okay. Interesting. All right. We have two questions that we ask all of our guests. First of all, what is a conspiracy theory that you believe?
Brian Halligan (44:28.62)
Brian Halligan (44:33.177)
I'm not a one or a zero in any of them, but I'm like a coin flip on all the murder ones. JFK, Lady Di. In all three of those cases, they were very powerful, deep-pocketed people who wanted to silence them. So if I were to believe any of them, it's that troika.
Auren Hoffman (44:39.762)
Uh, like GFKA, Jeffrey Epstein.
Auren Hoffman (44:57.19)
Okay, all right. Those are fun. I like those. Those are fun. Okay, last question we ask all four guests. What conventional wisdom or advice do you think is generally bad advice?
Brian Halligan (45:06.189)
Okay, you brought this up earlier. So everyone says like, work on your weaknesses. Like you have strengths. I think you shouldn't work on your weaknesses and you should advise people on your team not to work on your weaknesses. You should hire around your weaknesses and work on your strengths. If you've got a great strength around public speaking, you're gonna get a great strength around product development or product vision, like go very deep there because you're probably passionate about it and very good at it.
And there's more leverage in that than trying to fix your weaknesses. So I've sort of stayed away from my weaknesses and always tried to hire people around me that fill in my weaknesses. And I try to advise others of that.
Auren Hoffman (45:42.774)
You know, it's interesting. I have a, I have a friend who's an incredibly successful CEO and he, he not only thinks he's bad at public speaking, but he hates it. Um, so he basically doesn't do it. And which is pretty rare for, uh, you know, CEO and, and everyone's always, oh, you, you gotta take, go to this coach and he's, he's a great written communicator, he's great at communicating and many, many other fashion, you know, other ways, but he doesn't like to, and it's actually served him well by like being able to clearly say that this is something I'm not good at.
Brian Halligan (45:52.405)
Auren Hoffman (46:12.118)
and I'm not gonna go do. And it's actually, so it's been interesting instead of just like getting all the coaches that everyone else ends up doing.
Brian Halligan (46:19.905)
Yep, F the coaches. I also, I'll tell you another thing relative, learning how to write well in a convincing way is underrated, whether you're writing in Slack or you're writing on your Wiki or you're writing on Twitter or you're writing a thought piece like, Darmesh and I really rode our way to success and still write a lot. And so if you don't like public speaking, and I think a lot of people don't like public speaking, you can get away with that if you're a really good writer.
Auren Hoffman (46:32.639)
Auren Hoffman (46:47.83)
Yeah, communication is probably as a CEO, you probably do need to communicate somehow. That's probably a very important thing to have as CEO, but you could, there's probably many different mediums to enable you to do that.
Brian Halligan (46:58.537)
Yeah. Yeah, if you're introverted and you really hate the microphone, like, you really get good at writing.
Auren Hoffman (47:04.606)
Yep. That makes sense. Oh, this has been awesome. I'm a huge fan of yours. So I'm so excited that you're here. Thank you, Brian and Halligan for joining us. The world of death. I, by the way, I follow you on Twitter X or whatever at B Halligan. Um, I definitely encourage our listeners to engage you there. This has been a ton of fun.
Brian Halligan (47:21.098)
Thanks for having me.
Auren Hoffman (47:22.982)
Alright, amazing. Uh, thank you. This has been, this is great. I really, really appreciate it.
Brian Halligan is the co-founder, longtime CEO and now executive chair of Hubspot, a full service platform for marketing, sales and customer service. Hubspot was founded in 2006 and has a market cap of $23B today. Brian coined the term “inbound marketing” and helped give rise to one of the biggest shifts in marketing of the last 20 years.
In this episode of World of DaaS, Brian offers a deep dive into the intricacies of boardroom politics, effective leadership transitions, and the ever-evolving landscape of marketing in the AI age. He offers a candid perspective on what makes a bad board, and how to steer clear of individuals who are a “waste of a board seat.”
As the conversation unfolds, Brian forecasts the future of marketing, envisioning a landscape transformed by AI and the democratization of information. He highlights the unique model of renowned venture capital firm Sequoia and draws comparisons between the cultural dynamics of the tech scenes on the West and East coasts.
Peter Thiel was the co-founder and CEO of PayPal, the first investor in Facebook, and co-founder of Palantir Technologies. He’s the founder and managing partner of the venture capital firm Founders Fund, and the author of Zero to One, one of the best business books of all time.
In this episode, Auren and Peter dive deep on venture capital, scientific stagnation, AI, tech start-ups, and more. Peter shares his compelling theory for why scientific progress has slowed down dramatically in the last decades, and explains how that’s affected start-ups and investing.
Auren and Peter also survey the global economic landscape and discuss why the US and China have outperformed the rest of the world's economies by such a wide margin. Peter breaks down the conclusions from his book The Diversity Myth and explains why “competition is for losers.”
Keith Rabois is the CEO of Openstore and a general partner at Founders Fund. He’s had an amazing career as a founder and senior operator at some of the most innovative companies of the last 20 years, including Paypal, Square, Opendoor, and LinkedIn.
Auren and Keith take a deep dive into spotting talent— one of Keith’s strengths— and discuss how he’s managed to hire so many incredible people over the years. They break down what makes a successful founder, why sitting on “too many” boards is the right move for VCs, and how Keith has reverse engineered a tech scene in Miami.
Keith has a highly unique perspective and brings sharp insight to everything from fundraising to culture to personal health.
You can find Auren Hoffman on Twitter at @auren and Keith at @Rabois.