dharmesh shah, what i learned in a decade at hubspot, bos usa 2016

LESSONS LEARNEDFrom 10 YearsOf

@dharmesh v:00.08

Hi, I’m@dharmesh

This is #bos2016

All-in-one inbound marketingand sales software.

I’m co-founder/CTO

I love software businesses.

2008 Insights From In And Around MIT

My History With Business of Software

2008 Insights From In And Around MIT

2009 Ideas For Building Better Software Businesses

2010 Building Great Software Businesses

My History With Business of Software

2008 Insights From In And Around MIT

2009 Ideas For Building Better Software Businesses

2010 Building Great Software Businesses

2011 Building Big-Ass Software Businesses

2012 Strategies For Building Great Companies

2013 Lessons From The Trenches On Scaling Culture

My History With Business of Software

$HUBS IPO: OCT 2014

2008 Insights From In And Around MIT

2009 Ideas For Building Better Software Businesses

2010 Building Great Software Businesses

2011 Building Big-Ass Software Businesses

2012 Strategies For Building Great Companies

2013 Lessons From The Trenches On Scaling Culture

2014 <absent> Time for a break / HubSpot IPO

My History With Business of Software

2015: 14,000 people

2008 Insights From In And Around MIT

2009 Ideas For Building Better Software Businesses

2010 Building Great Software Businesses

2011 Building Big-Ass Software Businesses

2012 Strategies For Building Great Companies

2013 Lessons From The Trenches On Scaling Culture

2014 <absent> Time for a break / HubSpot IPO

2015 <absent> INBOUND event

My History With Business of Software

2008 Insights From In And Around MIT

2009 Ideas For Building Better Software Businesses

2010 Building Great Software Businesses

2011 Building Big-Ass Software Businesses

2012 Strategies For Building Great Companies

2013 Lessons From The Trenches On Scaling Culture

2014 <absent> Time for a break / HubSpot IPO

2015 <absent> INBOUND event

2016 I’m Back! Did you miss me?

My History With Business of Software

$15,387

$28,553

$51,604

$77,634

$115,876

$181,943

$0

$25,000

$50,000

$75,000

$100,000

$125,000

$150,000

$175,000

$200,000

2010 2011 2012 2013 2014 2015

HubSpot Revenue (mn)

$HUBS (Q2 2016)• Revenue: $64M+• Growth: 50%+• Customers: 20,000+• Employees: 1,300+• Founders: 2 J J

http://growthbot.org

LESSONS LEARNEDFrom 10 YearsOf (Likely) MistakesAt

This presentation includes certain “forward-looking statements" within the meaning of the Private Securities Litigation Reform Actof 1995, including statements concerning our position to execute on our growth strategy in the mid-market, and our ability toexpand our leadership position and market opportunity for our inbound platform. These forward-looking statements include, butare not limited to, plans, objectives, expectations and intentions and other statements contained in this press release that are nothistorical facts and statements identified by words such as "expects," "anticipates," "intends," "plans," "believes," "seeks,""estimates" or words of similar meaning. These forward-looking statements reflect our current views about our plans, intentions,expectations, strategies and prospects, which are based on the information currently available to us and on assumptions we havemade. Although we believe that our plans, intentions, expectations, strategies and prospects as reflected in or suggested bythose forward-looking statements are reasonable, we can give no assurance that the plans, intentions, expectations or strategieswill be attained or achieved. Furthermore, actual results may differ materially from those described in the forward-lookingstatements and will be affected by a variety of risks and factors that are beyond our control including, without limitation, ourhistory of losses, our ability to retain existing customers and add new customers, the continued growth of the market for aninbound platform; our ability to differentiate our platform from competing products and technologies; our ability to manage ourgrowth effectively to maintain our high level of service; our ability to maintain and expand relationships with our marketing agencypartners; our ability to successfully recruit and retain highly-qualified personnel; the price volatility of our common stock, andother risks set forth under the caption "Risk Factors" in our Quarterly Report on Form 10-Q and our other SEC filings. We assumeno obligation to update any forward-looking statements contained in this document as a result of new information, future eventsor otherwise.

Safe Harbor

Just because we’ve done well in the past doesn’t necessarily

mean we’ll do well in the future.

Your mileage will vary.

OPPOSITE ALSO TRUE:Just because we’ve made

some sub-optimal decisions in the past doesn’t mean we’ll do

so in the future.

You’ve got questions?I’ve got opinions.

(some of them are even well informed)

The Early Days

2727

30

A dozen years ago, I met this super-cluefulguy at MIT.

31

A dozen years ago, I met this super-cluefulguy, Brian Halligan.

Just one problem:He’s in business school.

P(success) = 0.01 (1%)

P(success) = .01X * Y * Z

P(success) = .012n

P(success) = .012n

n = # of MBAs on early team

36

Wait…I’m in business

school too.

Title Degree P(success)

Founder/CEO MBA (MIT) 0.5%

Founder/CTO MBA (MIT) 0.25%

Title Degree P(success)

Founder/CEO MBA (MIT) 0.5%

Founder/CTO MBA (MIT) 0.25%

VP Marketing MBA (MIT) 0.125%

VP Sales MBA (MIT) 0.0625%

Title Degree P(success)

Founder/CEO MBA (MIT) 0.5%

Founder/CTO MBA (MIT) 0.25%

VP Marketing MBA (MIT) 0.125%

VP Sales MBA (MIT) 0.0625%

VP Customer MBA (MIT) 0.03125%

VP Engineering MBA (MIT) 0.015625%

KIDDING ASIDE:I am actually a fan of MBAs.

MBA density was not the problem.

THE PROBLEM: Early seeds of homogeneity.

Why People Are Perplexing

PEERS > BEERS

Rank Company Score#1 Google 4.5#13 Facebook 4.1#18 Adobe 4.1#22 Apple 4.0#23 LinkedIn 4.0

Top CompaniesTo Work For 2015

Rank Company

#1 AirB&B

#2 Bain and Company

#3 Guidewire

#4 HubSpot

#5 Facebook

#6 LinkedIn

#7 Boston Consulting Group

#8 Google

Top CompaniesTo Work For

2016

PROBLEM:

We should have started sooner.

Took too long to put someone awesome in leadership role.

Vision and Market

MISSION:

Help organizations grow with a more human-friendly approach

to marketing and sales.

““Internet marketing is too broad”

“Marketing automation doesn’t fit.

WE’LL CREATE OUR OWN CATEGORY!

WE CALLED IT:

INBOUND MARKETING

TOOLSARE BOUGHT

VSTRANSFORMATIONSARE SOLD

Couldn’t just build a brand, had to build a

movement.

Available in9 languages

14,000+Registered Attendees

3,000+Partners

125,000+Members

Trained and certified 17,000+ professionals

2.0+ millionMonthly Visits

BLOG

19

“Targeting small andmedium businesses is aVery Bad Idea.

- SAID ALMOST EVERYONE.

PROBLEM:

It is hard to make the unit economics (LTV:CAC)

work in SMB.

SMB

Small Business

Enterprise

Marketing

SMB

Very Small Business

Enterprise

SMB

Very Small Business

Enterprise

Marketing Sales/CRM

Product (Mis)management

Focus on doing one thing

exceptionally well.

We are a special little snowflake.

We make our own rules.

First 4 Years:Top Of The Funnel

All-In-One Platform

The problem was not trying to build an all-in-one system.

The problem was not making a proportional investment in

product.

LEVEL 1:Sales/Marketing

LEVEL 2:Product

LEVEL 3:Culture

“Our SEO tool is great!Easy story to tell.Time to value is super-short.

EPISODIC NEEDS VS ETERNAL NEEDS

“We’re in the inbound marketing business which means ToFu tools,not marketing automation.

Who made up that definition.

Um, we did. [pause] Oh…

Use machines to helpyou make decisionsthat are better for humans.

Perils Of Pricing and Packaging

“What should we charge for this crazy-ambitious,all-in-one platform for marketing?

QUESTION: If it takes6 MBAs 3 monthsto come up with pricing, how long does it take2 MBAs?

QUESTION: If it takes6 MBAs 3 monthsto come up with pricing, how long does it take2 MBAs?

ANSWER: About 3 min.

*Not starting at $250,

just $250.

“This is SaaS. Of course we’re going to do monthly payments and not require annual contracts.- ME.

“The data we gather is much more valuable than the dollars we’d collect.- ME.

HubSpotBasic:$250/month

MORE FEATURES VS DIFFERENT FEATURES

HubSpotBasic:$250/month

Bring up pricingone more time.I DARE YOU!

HubSpot Marketing Pricing

Upgrade based on contact

database size.

Upgrade based on features.

Cross sell new products into

both marketing and sales customers

83

Retention, Retention, Retention

Churn is not the quickest wayto kill a growingSaaS company.

But, it’s the most reliable.

CUSTOMERRETENTION

VSREVENUERETENTION

Absence of cancellationis not proof of thepresence of happiness.

Presence of upgrade sellsis not proof of the absence of unhappiness.

Winding down…

n=100 years

n=100 years VS n+10 years

BUILDON

Questions?

@dharmesh(or AskGrowthBot.com)