[Transcript] Brian Halligan, CEO and co-founder of HubSpot

Shane: Brian, welcome to the show. We’re delighted to feature you as part of this new ongoing series of Scale by Intercom. You’ve had a remarkable career to date, culminating with your role as CEO and co-founder of HubSpot, authoring Inbound Marketing, and even finding time to lecture at MIT, nonetheless. Why don’t you kick us off by telling us a little bit about that journey?

Brian: It’s been a good journey so far, kind of had three chapters in it. My first chapter was I worked for a software company called Parametric technology PTC. We sold enterprise CAD software, I did that for quite a while. And I was in the sales and marketing org, and really most of it in sales org, and I learned a lot about building sales organizations, about how to sell, how to hire, how to really scale a modern sales organization, at that company. Then I went to work for a company called Groove Networks, which is a little bit like Slack plus Dropbox. It was a really interesting technology that wasn’t totally baked, it was a little before it’s time. There, I learned a lot about how to build products and how to think about the changing nature of human behavior and how to build applications to take advantage of that.

And then I went back to business school and studied a bunch and learned a lot about strategy and finance, and things like that. I’m a combination of this hardcore sales machine PTC, this product innovation machine at Groove – the founder of Groove was the father of Lotus Notes, he’s a really good product person. And then, learning some of the nuts and bolts of finance and accounting at MIT. I’m a blend of those influences, and I think, for better or worse, all companies are a reflection of their founders. So I think those three things really bleed through HubSpot.

Shane: That’s interesting. It definitely comes down to some of the things that I want to talk to you about. But hearing you talk about your experiences, as I think about HubSpot, I very much think about you creating two things. One is obviously the software of HubSpot and the company, but the second is this concept of inbound marketing. It has been 14 years, I think, since you and Dharmesh Shah founded HubSpot, and a ton has happened in that intervening period. I would imagine that most people listening today know what HubSpot are and what you do, particularly given our audience, but I would love to hear a little bit more about what was the thing you saw in the market that made you think, “Yeah, there’s a great opportunity here” that led to HubSpot.

Brian: That’s a great question. There were basically two light bulb “aha” moments that led to HubSpot. I had one, and Dharmesh, my still co-founder and partner, had the other. Mine was I was spending time at a venture capital firm in business school, helping them think about growth. How do we grow our little startups into big companies? And they all have the same playbook, they were going to buy a list and they were going to cold call and they were going to email, they were going to hire the big PR firm and do the big trade show. They all had the same playbook and they all ran the same plays. And my “aha” was that holy crap, those plays just don’t seem to work anymore.

At the time there were some new technologies out there that are very old technologies now – there was a new technology called caller ID, there was spam protection software, there was a new national “do not call list” software that was coming up, there was ad blocker software, there were DVRs. My “aha” was that it was impossible to market to a modern human, they were getting good at blocking it out. That was my “aha”, a negative one.

On the flip side, Dharmesh, he blogged his way through business school. He’d write a blog article or two a week, and any time he hit an interesting lecture, he’d put it on this thing called onstartups.com. I was comparing, using the old school Alexa, his traffic versus my wealthy venture-backed startups with their playbooks. Sure enough, he had thousands of times more interest in his crappy little blog than any of my wealthy venture-backed startups. And I grew interested in that.

He was clever at marketing through the blogosphere, through search engines, and through social media. He was matching the way he marketed with the way humans actually lived and shopped and bought. That first led to this idea that there’s an old school way of marketing that we call outbound, and a new school way that we call inbound, where you match your go-to-market with the way people buy.

That wasn’t what led to HubSpot, it’s what led to this idea of inbound. Then, we tried to implement it, and holy crap, was it hard. You had to put in a website and a blog and a CRM, and you had to put in social media tools and SEO tools and analytics tools. Before you knew it, you had 20 different applications that didn’t talk to each other. So then, we built HubSpot, we built a marketing platform to help people grow. That’s how it all came together.

Shane: I absolutely love that. As I mentioned, as a marketer, I can hear so much of my own career journey, struggling with a lot of changing tactics in marketing, in that story. You mentioned that the concept of inbound marketing came first, you then founded HubSpot, and then, at a certain point, you obviously recognized that this concept of inbound marketing was a great movement that you could leverage. And so you coined it. What has changed since then, 14 years ago, when you really had this “aha” moment? What are the biggest things that have changed, in your mind?

Brian: A metric ton of stuff has changed since then. The way I liked to think about it back then was that the only way you could really market was – if someone had a newspaper, you could rent an ad in that newspaper. The only way you could market on video was to rent space in someone’s TV show or the only way you could do it was if you rent some space on someone’s radio show. If you wanted to create your own newspaper, your own TV show, that was expensive.

The thing that was shifting under our feet at the time was that the cost to create your own newspaper – a blog – dropped dramatically. Your own TV show – a YouTube channel; your own radio show – a podcast. We basically taught people how to create content and use that content to pull people in and generate leads in a new way. And it still works incredibly well, HubSpot gets almost 10 million visitors a month from Google organic search through those methods.

Another thing shifted since then. When I was in business school, I had a professor that taught a class on entrepreneurship. He used to say all the time, “If you want to build a big company, you’ve got to build a product that’s 10 times better than the competition. It’s got to be 10 times better.” Of course, yes, you have to build a better product, but I think, today, you need to build a customer experience that’s 10 times better than the competition.

And I just think of it myself. I woke up this morning at 7:30, I put on my Warby Parker glasses, I picked up my phone, I put on the Grateful Dead on Spotify. I ran downstairs, I fed my dog, Romeo, with some food I got from Chewy, and then I rode on my Peloton and got a workout. I shaved with my shaver from the Dollar Shave Club. And then, I’m on Zoom and Slack all day. What I think is interesting about all those products is that they’re all relatively new companies. I’ve swapped out encumbrance for these new products, and all of them have better products, of course, but they all have much better end-to-end experiences, relative to the incumbents that they disrupted.

They’re all easy, they’re all light, they all match their go-to-market experience with the way people actually want to shop and buy. So, I think arbitrage opportunity one that opened up the internet for marketers was creating content and pulling leads, and arbitrage opportunity number two, which came on a little later, is that people buy from companies who create incredible end-to-end experiences, not just incredible products.

In fact, I would posit to you that building a better product today, the barriers to entry on any product today have dramatically dropped. Building a competitor is easier than ever because you’ve got AWS, you’ve got all this open-source software. You can rent everything, you don’t have to buy anything. You don’t need that much money. The barriers to entry on the product side tend to be short-lived. It’s that end-to-end experience and the brand that’s turning out to be the core competitive advantage for so many companies today. By the way, I think you guys are very, very good at this.

Shane: I appreciate the shout out there. There was actually some that came to mind, as you were speaking there, that I wonder is also happening here. You spoke about how, traditionally, in marketing, the marketer had to go through a number of layers of intermediaries to actually execute marketing. You had to call the TV ad salesperson or whatever. What HubSpot and tools like HubSpot did was actually give the marketer direct control, which is very similar to what you were talking about there, the likes of Chewy.

In the past, I had to go to a big store and buy the products that they chose for me. Whereas now, I’m empowered as a consumer to go directly to those brands. I wonder if there’s a macro thing happening that, as businesses, we can leverage, which is that people want that control. People want to actually feel empowered to have a hands-on experience.

Brian: I couldn’t agree more. The direct-to-consumer brands I mentioned, like Spotify, Chewy, Peloton, and Dollar Shave Club, what’s interesting about them is that everyone follows Amazon, you just got to go through Amazon, you can’t build a business without it. But Warby Parker, Away Suitcases, so many of these big companies that have emerged over the last few years have done a direct-to-consumer around Amazon.

People would say capitalism is the invisible hand behind the economy. It’s not the invisible hand – it’s the iron fist, these days. If there is an arbitrage opportunity out there, companies and forward-thinking entrepreneurs will take advantage of them. I think the arbitrage opportunity these days is you can actually build the direct-to-consumer business, a direct B2B business, you don’t have to go through middlemen. The internet itself, the business story of the internet is about making things more convenient, about cutting out the middlemen and building the businesses directly.

Shane: That’s fascinating. One of those areas of evolution has been the way that people communicate. Email was actually invented back in 1971, and I’d argue that there’s been relatively little innovation since then. There are companies, like Superhuman, who are trying to innovate around email, but the core product itself hasn’t changed that much. Having said that, in our daily lives, the way that people communicate has changed quite a lot. Can you talk a little bit about how HubSpot has evolved to meet that change in the way customers are communicating?

Brian: One of the things that we’ve always rooted HubSpot in – some people think it’s really smart and some people think is really dumb – is that, particularly in the early days of HubSpot, we would talk to marketers, and marketers would want to more efficiently spam their customers or more efficiently cold call their customers, or more efficiently try to interrupt them at a trade show. Well, we were saying, “No, there is a revolution that needs to happen. Your buyers are changing. They’re using Google now, you need to get found in Google. They live in social media now, they’re ignoring all this stuff, you need to transform.” We pushed our customers to transform, to match the way their customers were changing. We’ve always rooted HubSpot in that.

I think Intercom has done a nice job at that, too. I think one of the things you guys recognized early, and we’re a fast follower of yours in this world, humans have really changed the way they can want to communicate. People don’t want to email anymore. People live in Slack, they live in SMS, they live in messenger. Email is on a very slow death march. It’s still a very useful tool, but the modern worker doesn’t enjoy that medium and doesn’t want to communicate that way. I think one of the things Intercom did and now HubSpot is doing a little bit as well is harnessing that.

The thing about email is it’s asynchronous, and I think that the story of customer experience these days is synchronous. Everyone wants real-time, self-serve, 24/7, and I think companies that are stuck in a 2010 mindset where humans are involved in every transaction, where it’s email-based, where it’s nine to five, where it’s not self-serve; moving to this modern experience where people have been spoiled by consumer brands and the B2B side, I think people are going to want to do chat. And by the way, it’s not that they just want to do chat. We have chat enabled in our app, chat enabled on our website – it is definitely the way people want to communicate. At this very moment, I’m sure a thousand chats are going on our website and on our app. It is just the way it happens today.

Shane: I think that’s exactly right. Obviously, at Intercom, we believe it all the way down into our product and we call this conversational experiences. The term conversational marketing has obviously become synonymous with using messenger to talk to the leads on your website. But, to your point, our belief certainly is that these experiences will go far beyond just talking to leads on your website, whether it’s supporting existing customers or even engaging existing customers that you’re trying to help onboard, showing them around your product, and that sort of thing.

I think one of the big things that we’re seeing is that it’s certainly the asynchronous versus synchronous piece, but there’s also the in context. Email is not in your app, whereas a messenger is sitting in the app and it has that context and is obviously in real-time. But because it’s in the app, it’s really powerful. I often use the story of email as going to the store and asking the sales representative, “Do you have this in a size medium?” And, they say, “Yeah, I’ve sent a letter to your home. Check it out, come back.” Rather than actually a messenger being able to, then and there, answer the problem. The expansion of this, beyond conversational marketing, is really interesting to us.o

Brian: I could not agree more. I think that end-to-end experience needs to be super modern, super streamlined. If people come to your website or use your products or want support and you don’t have chat, you’re at a disadvantage today, because that’s just the way people want to talk.

Shane: Exactly. Bringing it on to 2020 and the crazy world that we’re living in today, at Inbound ’19, you talked a little bit about this idea of the species of disruptor and argued that big market disrupters of the past leveraged technology to rewrite the rules of business. How do you think 2020 and the covert environment that we’re sitting in is either solidifying this or accelerating those types of disruptions?

Brian: I think it’s just pulled the future in for businesses like HubSpot and Intercom. Most companies knew they needed to transform and move from outside sales to inside sales, from offline marketing to online marketing, from outbound marketing to inbound marketing. Companies knew they had to do it, but they were procrastinating. People are just moving that up and moving faster today. With all the bad things that have happened in 2020, I think this is a good thing for businesses to really modernize this motion and really match the way they go to market with the way people buy.

I kind of have this thing in my head where I’m trying to move down the food chain on my diet. I used to have a pretty heavy animal-based diet. At the other end of the spectrum, you’ve got people who are totally vegetarian. But in between, you’ve got people who eat a fair amount of animal-based products with some vegetables on the side. Slide further down and you get people who eat mostly vegetables and grains and seeds with just a tiny bit of animal product. I’m trying to slide my way down, and I think businesses are the same way.

There are businesses on one end of the spectrum, all human-to-human, where you have to talk to a human on the phone to do anything; to companies that are completely computer-driven, that you can’t talk to a human no matter how hard you try. In between, you’ve got companies who are largely human-based with computers helping them. Down the spectrum, a little bit further, you have companies largely computer-based, with some humans helping. I think people are sliding down the food chain during this pandemic. 2020, on the go-to-market side, will look much more like 2022.

Shane: Fascinating to hear your movement along that food chain. I think I’ve moved mostly into a cake and cocktail part of the food chain, since COVID. A lot of people have. One of the things I definitely want to chat with you about is the actual creation of the category of inbound marketing. We touched on it a little bit before when you were talking about how you were essentially educating your customers about a new way of working. There’s this constant tension, certainly, that we’re flexing between at Intercom around the degree to which we should communicate our vision of where the world was going, while also meeting our customers where they are today.

This idea of building that category is critically important if we want to get to where we’re going, and we’ve recently done a lot of work around naming it – this conversational relationship platform category, which essentially is taking the likes of conversational marketing and expanding it across the customer experience. And so, as a marketer, I’m really just keen to understand how you went off and created this incredible category that trips off the tongue of people like me.

Brian: I’ll give you a few thoughts on it. One of the early arguments we had at HubSpot was we came up with this inbound marketing term. Then we hired a marketer, and that marketer was saying, “You know what? It’s going to be really hard to create an inbound marketing category. No one knows what the heck you’re talking about. Let’s just call HubSpot internet marketing, because it’s internet marketing.” So, we debated that for a long, long time, and decided to go with inbound marketing.

A couple things about creating the category. It ended up working, but it’s not for the faint of heart. Some things that worked to our advantage was there was a “us versus them.” We used inbound versus outbound, and everyone knows that the internet likes a battle. We tried to create a battle between good and evil, and no one really liked outbound spam, cold calls, stuff like that. Then we poured energy into it – we have an inbound conference, we wrote a book, which, by the way, is a huge amount of work, we wrote a billion blog articles about it. So we really put our backs into it. And then we created a community around it who supported it. It was a large concerted effort that went into creating and we’re still working on it.

Now, here’s what I’ll say, We did very well in creating that. As HubSpot’s evolved from a company that helps you generate leads to a company that helps you create a gorgeous end-to-end experience, we tried to repurpose the inbound marketing and create a category called inbound sales, inbound service. Totally failed. It just did not stick, and we poured a bunch of energy into it. It just didn’t pour over like we thought. I still go to Google, you probably do the same thing, I go to Google trends all the time and I look at inbound marketing and inbound sales. Inbound sales just didn’t go, and we stopped pouring money into it. It’s very, very, very hard to create one of these categories. It takes a lot of work, and it takes a village. It can’t just be you shouting from the treetops about a customer relationship platform, you’ve got to have everybody, all your partners, everyone talking about it for it to catch fire.

Shane: It’s fascinating. Hearing you talk there, it’s like you were having some of the debates 10 years ago that we’re continuing to have today. A good example of that would be as we were naming our overarching category conversational relationship platform, we were then talking about what should we name the solutions underneath it. Conversational marketing, right now, is the industry term for how you generate leads on your website using a messenger. In reality, that’s not really marketing, it’s actually sales, you have salespeople talking.

I’m like, “If we want this to really actually make sense, we should call it conversational sales.” But the counter-argument is like, “Well, there’s already momentum behind conversational marketing. So, are we going to go and try and re-educate the market and what that is, or should we just lean into it?” We ended up making the decision, and I’d be interested to hear your opinion on this decision, to lean into the existing momentum and call our solution conversational marketing, to align with the industry.

Brian: So, before the call, I did some Google Trend searching. You don’t have any momentum yet, you’re just starting it. Conversational marketing has a lot more momentum, but conversational marketing is kind of flattened out, it’s not moving up into the right. And It’s not that big, even compared to inbound marketing and content marketing, it’s a lot lower and it has a lot fewer searches on it. It’s definitely a meme, but within marketing circles. My takeaway is you’ve got a tone of work to do, but there’s room for something else in there, and my advice would be, you’re in for the long haul and you have take half of your marketing budget, and by budget, I mean your people and your energy, and pour it into your meme as opposed to your product. Get ready for a big investment.

Shane: Fully agree there. To be fair, it was only three months ago that we really landed on the naming and everything, so we are very much trying to move up our messaging hierarchy, to try and start building this as opposed to being down in the product messaging.

Brian: Have you been thinking about a three-letter acronym, CRP? I’m sure you’re thinking about that, getting a three-letter acronym can be huge.

Shane: In a perfect world, once people understand what it is, we can shorten it up. But I’ll just say, there’s just so much work that we need to do. Hearing you tell the story of how you’ve done inbound marketing was fantastic.

Brian: Now, if I were you, I would be tempted to say the enemy is email marketing. Email marketing is still very much alive and well, it still works when done properly, when you segment properly, and you write good email copy. But it’s very helpful to have an “us versus them”. I noticed you haven’t done that.

Shane: That has been a big debate, and we’ve done it in smaller places, but we don’t tell that story, for example, on our homepage. Our plan is to lean into it more. I think the tension has been that there’s a trade-off around leaning into the messenger and that being the future, but not making people feel that we don’t have email capabilities. We’ve been, as a result, way too cautious in the past. I think that there is a way that we can both set email up as the old way of doing things and also communicate that, “Hey, of course you can do with us, but that’s not what you should be doing with us. You should be doing this other thing.”

Brian: I wish I were in the room when you’re having those conversations, they’re fascinating conversations. Here’s the problem with those conversations and the problem with marketing – I had a marketer join once and we were having this type of conversation, we were just trying to come up with an answer. I was like, “Isn’t there some science or some data behind this?” He looked at me and he said, “Welcome to marketing. Two drink minimum.”

Shane: I love it. Well, look, Brian, I’m absolutely happy to invite you to my next leadership team meeting. We can have a couple of drinks and get everyone debating it. But I’d probably spare you that.

Brian: It’s a gut feeling, a little bit. You can do some surveying, but it’s a bit of a gut feeling. And it’s about once you decide, getting everyone aligned behind it.

Shane: That’s exactly it. Last question: As you think about the future, what are the other trends that you see emerging that you think HubSpot will lean into or marketers should consider?

Brian: That idea of the food chain, I think offices are going to go through that. On one end of the spectrum, everyone’s in the office all the time. The next step down that spectrum is mostly in the office with a little bit of work from home. All the way on the other end of the spectrum is that you’re all the way remote. Obviously, people are at home now, but I don’t think we’re going all the way back to the way we were in 2019, I think most companies are going to be flex. You want to come into the office every day? Great. You want to be fully remote? Great. If you want to be in between, that’s fine as well.

And the reality of that, that I think is super interesting, is on culture and on that supply and demand and that relationship between an employer and an employee and a prospective employee. If I step way back, I think of HubSpot as having two products – we have a product that we sell to our customers and a product we sell to our employees. The product we sell to our employees is called our culture. Now, because the competition for our culture has traditionally been companies based around us in Boston, or a little bit in Dublin and a little bit in San Francisco, there’s a handful of tech companies we compete within Boston. That’s going to change entirely over the next couple of years, as we start competing with companies in Silicon Valley, who are all going to start hiring remotely and we’re going to start hiring remotely. The opportunities for smart employees, no matter where they are, are going to open up, and I think turnover is going to go up, and salaries are going to go up. I think it’s going to be very good for employees in the tech industries.

What I think needs to happen is that companies need to evolve their go-to-market, but also really evolve their cultures to match the way people want to work. And the way people want to work is changing. I think that’s going to be a huge trend. Supply and demand is going to get way out of whack in the tech industry.

The other side of that coin is that most people – whether they’re just joining the workforce now or they’ve been in the workforce for a long time like you and I – have personal brands. Maybe, it’s LinkedIn only, but maybe it’s LinkedIn, and Instagram, and Tik Tok. You’ve been spending time curating your own brand over the last 10 years. When people join your company, they want that to be a positive thing for their brand, an extension of their brand.

And society has heightened that today, so if your company and your brand don’t foot with the way perspectives employees are thinking about it, you’re going to struggle. I think companies need to take more stands whether they like it or not, and they need to pay attention to the branding a lot more if they want to grow their employee base, if they want to be in great employer and build a big company. There are huge changes in the way employees are deciding where to join. When we look back, I think it will be a very interesting time.

Shane: I love the idea of you having two products. As a marketer, I’ve always obviously considered the fact that you have an employer brand as well as your sort of customer-facing brand. But this idea that you also have these two products is really fascinating to me. As a famously engaged company like HubSpot, I can see how that’s worked in your favor.

This general idea of the knock-on impact of work from home is really interesting. In fact, before you joined, we’d been talking about the impact of working from home, even on the mouse I choose. Right now, I have an Apple mouse that just clicks. And when you’re on a lot of video calls, that’s an issue, whereas in the past it wasn’t at all. That’s a very minute example, but I think there’s a risk that some companies are sitting there thinking, “Oh, I make mice, this won’t impact my business.” When in reality, such an upheaval in the way that people communicate, the way they think about the world, the way that they operate in the world is going to have a knock-on impact on pretty much everything. Lastly, where can our listeners go to keep up with you and your work?

Brian: I think a good place is ye old Twitter. I’m @bhalligan. If folks like what I have to say, follow me on Twitter, I’d be honored to engage with you.

Shane: Well, thank you very much, Brian, for all of your time. This has been really insightful for me. I’m going to go back to my team and tell them that we need to kill email. I really massively appreciate your time. Hopefully, talk soon.

Brian: Thanks for having me.