20VC: Hubspot Co-Founder Dharmesh Shah on The 3 Risks All Startups Face, Angel Investing Rules; No Founder Meetings and No Due Diligence, SMB vs Enterprise; Lessons on Pricing, Distribution and Why You Should Resist Going Enterprise

Dharmesh Shah is the Founder and CTO @ Hubspot, a full CRM platform with marketing, sales, service, and CMS software. Dharmesh started Hubspot in 2006 and today it is a publicly-traded company (NYSE: HUBS) with over 3,500+ people and a market capitalization of $16.9 billion. Prior to founding HubSpot, Dharmesh founded Pyramid Digital Solutions, which he bootstrapped with less than $10,000 and after 11 years of CEOship, Dharmesh helped the company get acquired in 2005 by SunGard Business Systems. In addition to co-authoring “Inbound Marketing” Dharmesh founded and writes for OnStartups.com — a top-ranking startup blog and community with more than 1,000,000 members. Finally, if all of this was not enough, he is an angel investor in over 90 startups, including Coinbase, AngelList, Gusto, Okta and many more. and a frequent speaker on startups, growth, and the business of technology.

In Today’s Episode with Dharmesh Shah We Discuss:

1.) The Founding of Hubspot:

• How did Dharmesh’s wife help Dharmesh find his co-founder in Brian?

• What about SMB did both Dharmesh and Brian find a shared passion for?

• What is the single biggest mistake Dharmesh made in the early days of Hubspot?

2.) The Culture Code:

• What is Dharmesh’s single biggest advice to founders when it comes to culture?

• What does Dharmesh mean when he says “you have to treat culture like a product”?

• What does Dharmesh mean when he says he looks for a “low ego to accomplishment ratio”? How does he test for this when hiring new hires?

• How do the best people approach both responsibility and accountability? How does this show in their work and behaviour?

3.) The 3 Kinds of Risk in Startups:

• What does Dharmesh believe are the 3 core risks all startups face in the early days?

• How does Dharmesh advise founders when it comes to “testing for a market”? What is the right way to do customer discovery? What are the biggest mistakes founders make in the discovery process?

• How does Dharmesh advise founders on when to release their second product? What is the right framework for this decision? Where do so many founders make mistakes here?

• How does Dharmesh approach market timing risk? What have been his biggest lessons here?

4.) SMB vs Enterprise:

• Why does Dharmesh believe that SMB is the single best market for founders to choose?

• What are the single biggest challenges with enterprise? How do the long sales cycles and contracts in enterprise hide both customer satisfaction and prevent product development?

• What are some of Dharmesh’s biggest lessons on pricing? Does Dharmesh agree you should always “raise your prices”?

• How does Dharmesh advise founders on when is the right time to go into enterprise from SMB?

• What are the single biggest changes founders need to know when making the move from SMB to enterprise?

5.) Angel Investing 101:

• What are Dharmesh’s rules when it comes to angel investing?

• What have been some of Dharmesh’s biggest lessons from analysing thousands of emails to founders pre-investing? What are the biggest signs in emails of future founder success?

• Why does Dharmesh not have calls with founders before investing?

• What are some of the biggest mistakes Dharmesh has made when angel investing?

Items Mentioned in Today’s Episode with Dharmesh Shah:

The Hubspot Culture Code

Dharmesh’s Favourite Book: Les Miserables