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Happy Birthday HubSpot! 9 Lessons From Our First 9 Years

Posted by Dharmesh Shah on June 9, 2015 43 Comments

9 years ago today, on June 9th 2006, HubSpot was officially started. I remember the day, because it was also the day I graduated.  (I had promised myself I'd enjoy my 2 years in grad school without too much distraction, so deliberately picked graduation day as the official start-date for HubSpot.)

So far, we've had a pretty good run.  HubSpot is now public [NYSE:HUBS] and still growing fast.  More importantly (at least to me), I'm still having a great time.

Rather than bring out the party hats and cake, I thought I'd reflect a bit on some of the hard-won lessons we've learned across our 9 hear history in the hopes that it will be helpful to some of you.  (Note: The below picture of a cake is from our 2nd birthday party.  Now, we'd need a bigger cake)

Warning: Some parts of this article are a bit immodest.  I usually try to avoid that, but sometimes I fail.  Also, some parts of this article are a bit touchy-feely.  The reason for that is that despite popular perception, I'm kind of touchy-feely sometimes.  

On with the lessons and stories...

1. Don't defer the hard co-founder questions for later. They only get harder.

Have the important conversation(s) with your co-founder early.  Topics might include long-term goals, fund-raising, equity allocation, vesting, etc. I've written an entire article with some of the questions co-founders should ask each other. In our case, one of the reasons my relationship with Brian Halligan (co-founder/CEO of HubSpot) has worked out so well is that we talked through these things early and made sure we had agreement and alignment.  One of the top reasons for startup failure is co-founder conflict.  You can't mitigate that risk completely, but you can reduce it significantly simply by some candid and direct conversations just as things are getting started.

Oh, and no, the best way to avoid co-founder conflict is not to not have any co-founders.  I think that's sub-optimal.  Your odds of success go up if you have a co-founder.  

2. An imperfect decision today is better than a perfect decision some day.

Some decisions will be impossiblly hard to make and you'll debate them for months (and in our case years).  Most decisions you'll need to make in a startup are based on imprecise and incomplete data. Get used to it.  Make the decision and move on.  Sometimes, you'll need to cycle back and "course-correct" decisions that are wrong and significant (the wrong, insignificant ones you should learn to ignore).

Let me give you an example of how not to do it.  In the early years of HubSpot we were trying to make the (very hard) decision about whether to focus on the very small business market or the mid-market (larger businesses with 10-2,000 employees).  We debated this one for years.  There were good, strong arguments on both sides.  We spent many days locked up in a conference room, promising ourselves we wouldn't leave the room until we had made a decision.  But, the decision still didn't get made.  We should have made the decision sooner, because regardless of which path we picked, we likely would have made it work.  

3. Don't be distracted by the "Press Release Hire".

When building the early team, don't get hung-up on how people look on "paper" (i.e. how experienced someone is).  Brian (my co-founder) calls these kind of hires the "Press Release Hire".  Litmus test:  Imagine you hired this person.  Would you issue a press release to let the world know that you brought this awesome person on board?  If so, you're probably more focused on what they've done instead of what they will do for you.  Don't get me wrong, if you can get someone that's a great fit and they've accomplished something in the past, and you think that'll translate to doing great things at your company, go for it -- and may the force be with you. But remember, that past successes at really big companies doesn't guarantee future success at your company.  The context is very different.  Also don't ignore talented future stars because they lack experience and nobody has heard of them.  At HubSpot, in those early years, we were all relatively unqualified for the roles we were in.  Some might argue I'm still unqualiifed for the role I'm in.  But, we were hungry, willing to learn and most importantly -- we cared

4. If you don't love your customers, you're more likely to lose.

You better really love your customers.  If not, pick a different idea or industry.  Life is short.  Startup success is both about solving a problem you care about and solving them for people you care about (or at least don't hate).  If you find yourself making fun of or disparaging your customers when they're not around, something's wrong.  It's not impossible to build a business this way (there are entire industries where it seems that every company hates their customers).  It's not impossible, but it's harder -- and less fun.  On the flip side, there's something immensely gratifying about genuinely helping people and caring.  If you love your customers, several good things happen.  One, they'll know it, and will stay longer (yay,lifetime value!).  They'll refer other customers.  You'll be able to recruit and retain better people onto the team.  So, overall, your odds of success go up.

5. Even micro-investments in culture can yield mega returns.

If you know me or know HubSpot, you probably know that we are obsessed  with culture.  As many people likely know HubSpot for it's culture as it's product (I could argue that the culture you create is part of the product).  But, it wasn't always that way.  In our early years, we didn't talk about culture much.  We hadn't documented it all.  We just built a business that we wanted to work in.  And, that was great.  But the real return on culture happened when we started getting more deliberate about it.  By writing it down.  By debating it.  By taking it apart, polishing the pieces and putting it back together. Iterating. Again. And again. And again. If you're interested in learning more about how we think about people and culture at HubSpot, you should check out our Culture Code deck -- embedded below for your convenience.

 

Now, I'm not suggesting you drop everything and go create a 128-slide treatise on culture for your company.  But make some small investments.  For starters, have some conversations about the who.  What kind of people do you want on the team? Try to avoid platitudes.  Make a list of attributes and traits that other companies avoid, but tend to work for you.  And vice versa.  Write this list down, even if it's just a simple email to the team.  Once you start writing your culture down, a couple of surprising things will happen:  1) You'll realize you got parts of it wrong (because people will tell you).  2) You'll increase the chances of hiring for "culture fit" without falling into the trap of toxic homogeneity where you just hire people like yourself under the guise of "culture fit".  Short rant on that topic:  No company should be able to skip over candidates for lack of "culture fit" unless it has at least a minimal clue of what that culture is.  

One of my regrets about culture at HubSpot is that we didn't wake up to the value of diversity until much later in our evolution.  And, though I'm in good company, that doesn't make me feel that much better.  If you're just getting started, take my advice:  Be mindful of diversity super-early and beware the homogenity traps.

6. Don't just think bigger -- think better.

Since time t=0, one of the decisions Brian and I made early on was that we were going to take our best shot at building a big, successful company. We specifically talked about not building a company that was "built to sell".  In fact, many of our early decisions and actions reduced our chances of being acquired.  That was OK, because it's not what we were after.  Instead, we made sure that we pushed each other to think about scale.  To keep thinking bigger. 

Here's my theory:  Most big, spectacularly successful companies (which I hope HubSpot will become some day) did not get that way by accident.  Rarely does an entrepreneur, wake up one morning, drink her morning coffee and exclaim: "Hey look!  I accidentally built this super-successful company!  Yay me!"  Yes, that happens every now and then, but it's super-rare.  99.9999% of the time, success is built through deliberately deciding to build something big -- and then working super-hard, taking risks and persevering through the hard times.  

But, what worked for us wasn't just making the numbers go up and to the right.  It was about thinking about every part of the business and trying to figure out what would make it better.  Yes, we're a software company, and I'm proud of our product team.  But, it's not just about the product.  We try to be equally maniacal about making every part of the business better.  Every. Single. Part. 

Fun, inside story:  We do NPS (Net Promoter Style) surveys on a crazy number of things.  You might know NPS as a way to measure customer happiness.  The standard two questions are:  1) On a scale of 0-10, how likely are you to recommend this product/service? 2) Why that score? Like many other companies, we've been sending NPS surveys to our customers regularly for years.  But, unlike many other companies, we also send out NPS-style surveys to all of our employees every quarter.  The question is slightly tweaked to: "On a scale of 0-10, how likely are you to recommend HubSpot as a place to work?".  We also do NPS for our alumni.  We're working on doing it for job candidates that interview with us ("How likely are you to recommend HubSpot as a place to interview?").  We've done it for our company meeting.  After the meeting, we ask: "How likely are you to recommend this meeting?" (Learned lots of interesting things on that one).  OK, so that might be a bit OCD.  But in our experience, once you can start measuring something and getting qualitative feedback it's much easier to make that thing better. No big revelation there, I think the business world has known that for years.

What was a revelation (at least to me) was how all the parts of a company are so inter-connected.  It's impossible to build something really great by just focusing on one part of the system.  You need to simultaneously work on every part of the system -- and make it better.  

7. Don't obsess over competitors.  Obsess over customers. 

I'll confess.  I'm likely more guilty of watching our competitors too closely than anyone at HubSpot.  But, the good news is that though I watch them closely, I try not to follow them.  Knowing what your competitors are up to is good.  Doing what your competitors are up to is bad.

Take the calories you would have spent worrying about your competitors, and spend them on your customers.  You'll be better off (and will sleep better too).  

8. Don't minimize dilution, maximize impact.

This one might come off as controversial.

If you go out and raise outside funding, resist the temptation to worry too much about valuation (and minimizing dilution).  In the grand scheme of things, as long as you're getting a fair deal, marginal differences in dilution won't matter.  What will matter more is the degree to which you can have an impact (however you measure that).  You're probably going to be happier owning 5% of something great than 25% of something not-so-great.  

Now, don't get me wrong, I'm not suggesting that every company should go out and raise funding.  I advise entrepreneurs (especially first-time founders) to defer fund-raising. The reason is that once you start raising funding, you're often shifting your focus from solving customer problems to solving investor problems.  You're better off working on the former -- because that makes the latter much easier.

In any case, if you're going to raise funding, raise funding.  Pick a great partner, get fair terms and don't sweat the dilution too much.

One more thing:  The other way you dilute is by sharing equity with your team.  Here too, don't worry too much about minimizing dilution, get the best people and try to maximize impact.

9. Don't be satisfied with sales, seek LOVE.

This one might come off as a bit weird.

If you're reading this, there's a decent chance that you're human.  (If you're a robot, and you actually understood this article so far, I submit to your kind's superior intellect and ask that you forgive us humans our foibles).  Anyways...let's just assume you're human.  And, because you're human, you probably seek love. It's natural.  We spend a fair amount of time and energy looking for love (hopefully in some of the right places).  I'm going to posit to you that you need to carry that sentiment to your startup. I'm not talking about the crazy, desperate call at 3am kind of "love", but the hope to find someone that "gets you" and "likes you for who you are and what you believe".

Yes, I know that  sounds a bit strange.  But it's not that strange.  Chances are, there are some companies or brands that you love. All I'm saying is that as a startup, you need to seek that love.  

Let me explain by telling you how we do this at HubSpot.  Like most growing companies, we want to get people to buy from us and become customers.  But, unlike most companies, for us, deep-down inside, that's not enough.  We don't just want people to buy from us.  We want people to love us.  We want them to love what we love and respect what we do, even if they don't buy from us.  Even if they are unlikely to ever buy from us. Because what we believe is that the more people that love us, and want us to succeed, the more likely we are to do so.

Thanks for all the love and support over the years.  

-Dharmesh

p.s. It usually feels weird to "sign" a blog article like a letter, but in this case, it felt right.

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How Emotion Helped Grow Our Startup to 2.8M Users in 20 Months

Posted by Dharmesh Shah on June 1, 2015 in marketing growth 33 Comments

This is a guest post by Melanie Perkins, co-founder and CEO of Canva. We are launching Canva For Work that will help you and your team create original stunning visuals faster than ever. Register your interest to win free accounts.

I want to start with a question. A question which I think plagues a lot of startups. Should you listen to your users or not?

Most people would answer with a simple yes or no. On one side of the argument are people who believe you should test everything. They say you should trial Google AdWords and see if people click on your ad. If they don’t, you might not have a viable business. On the other side of the argument people point to Henry Ford’s great quote - "If I had asked people what they wanted, they would have said faster horses."

To grow Canva to 2.8 million users in 20 months, we did both. I’m going to share my experience about whether or not you should listen to your users. Above all, the timing for each is incredibly important.

#1 We didn’t ask our users what to build

When I was studying at university I was also teaching design programs. Students from many different faculties came to learn to design as part of their Professional Communications units. However, it took a very long time for them to the learn  the basics of the programs and by the end of the semester they could hardly operate the tools let alone actually ‘communicate’ through their design.

I don’t believe you can ask your users what you should build. If I had asked these students (or professional designers) what they wanted, they would have asked for incremental improvements to the design software they were using and people who had no design experience certainly wouldn’t have even known that they would have the ability to design.

However, it was the particular insight I gained from watching people who knew nothing about design, trying to use the design tools that became the foundation for Canva. It became apparent that they were complex and tedious and beyond the scope of most people’s expertise. But being able to use the tools myself I knew the capabilities of using design tools to communicate and it became apparent that in the future that everyone would have these same capabilities and they would be a lot easier to use.

So, when finding the initial problem we wanted to solve - it was important to have a deep understanding of the problem, even though user surveys would have given little support to our mission. Paul Graham wrote an excellent article on a similar subject, explaining “The very best startup ideas tend to have three things in common: they're something the founders themselves want, that they themselves can build, and that few others realize are worth doing.”

#2:  We delayed our product launch by more than a year

After about a year of development we had the basic building blocks of our design platform built. So we decided it was time to do some usertesting and see how people actually used it.

It was extremely insightful. Users were scared to click much and when they did they wandered around aimlessly, struggled with a few things, created something that looked pretty average and then left feeling dejected. Not quite the fun journey we were hoping for users to experience.

It became quickly apparent that it was not just the tools themselves that were preventing people from creating great designs, but also people’s own belief that they can’t design.

We didn’t just need to create an easy-to-use graphic design program, we needed to empower people who weren't graphic designers to believe they could design. During our initial user tests, the feedback was synonymous. “I’m not creative enough, it’s too hard.”

Furthermore, people using Canva for the first time inevitably didn’t have a ‘design need’, meaning that they had no reason to actually use Canva, so clicking around aimlessly was going to be a pretty uninspiring experience.

In order for Canva to take off - we had to get every person who came into our product to have a great experience in a couple of minutes. We needed to change their own self belief about their design abilities, we needed to give them design needs and we needed to make them feel happy and confident clicking around. We needed to get them to explore and play in Canva. No short order! So we spent months perfecting the onboarding experience paying particular attention to users’ emotional journey.

#3: We Optimised Our Onboarding Experience For Our User’s Emotional Journey

The goal behind our onboarding process was to debunk two key thoughts.

1. People thought it took too long to learn a new skill

Regardless of how simple and intuitive we made our design program, people had preconceived ideas (not wrongly so) that design programs were difficult to learn and use. Again, not a great time to listen to your users.

To address this concern, we created a short introductory animation – 23 seconds – to visualize the simple functionality of Canva. The animation actually uses Canva itself to point out where the tools are and how to use them in three simple steps.

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2. People didn’t believe they had the talent or skills to design

Most people think they’re either “creative” or “non-creative”. I disagree. I believe there’s creativity in all of us, and with the right tools it can be unleashed.

In an ambitious bid to prove this belief wrong, we created a series of interactive challenge tasks. Our objective was to give people very simple challenges that would get increasingly complex, and for them to build their confidence with each step of the process. It was imperative users could experience small wins.

Our first challenge seemed simple enough – to change the color of a circle to your favorite color. We watched a user tester struggle for almost a full minute, he said “Can someone tell me how, cos I really don’t know, ummm… How am I going to change that? Am I missing something?” Eventually he figured out how to change the color of the circle and gave us a really interesting insight in the process.

It was difficult to spot the color picker when it was the color grey, when we changed it to red it was very obvious. This tiny tweak has saved hundreds of thousands of people from struggling with this step and boosted our user’s self-confidence in the process. Watch the two videos below and see the huge difference in the emotional reaction.

Video 1:

Caption: The first user test

Video 2:

Caption: The simple change that moulded our onboarding process

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To give you another example, we added another ‘challenge’ which prompted users to place a hat on a monkey. Does this make for great design? Not necessarily. But it did convince people that Canva was easy to learn and that Canva was easy enough to explore.

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We spent a considerable period of time trialling different variations of ‘challenges’ - three challenges, ten challenges, double barrelled challenges, simpler challenges, more difficult challenges. Each of the variations gave our users a different emotional experience.

The ending result was great, within a few minutes of using Canva people feel confident with their abilities, understand how Canva works and then spread the word.

#3: Established World Class Customer Service To Empower Our Users

Understanding your users’ emotional needs when you’re getting your startup off the ground is only the first step. If you abandon them after you launch, your efforts will have been wasted.

Canva’s customer support is an integral part of our platform. Our amazing team don’t just answer technical queries, they pick up where we left off: they empower our users to believe they can design.

What does this process look like? Our customer service team operates on the following pillars:

  1. A 24-hour roster. Our users’ questions are a huge priority for Canva. A 24 hour roster ensures we can speak to our global community of users anywhere, at any time. By being online when our users are, we’re able to help during their working day. Obviously, when we were starting out 24-hour support would have been a stretch, however, responding in a timely manner when our users are most active has always been essential.

  1. An average response rate of less than two hours. That brings us to speed. Getting back to people quickly is one of the best ways to provide great support. Our users know that they can contact us when they’re having an issue and we’ll do our best to help them out. This also means we can keep on top of the impact of any new features and keep a finger on the pulse of our community.

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  1. A daily customer happiness report. To ensure full transparency, each day a report is sent to our entire team with a summary of the day’s tickets. This ensures that our users are always front of mind at Canva, and the relevant team knows when there are particular issues that they should be aware of.

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  1. Regular workshops. Recently we flew our team based in Manila to our HQ in Sydney. We conducted intensive workshops with our team where everyone had to opportunity to see what kind of tickets our users were submitting. All new team members also complete the same exercise during their first week at Canva. Why? There’s no better way to inspire your team to build an amazing product than to put yourself in the shoes of the people using it.

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After you launch, the conversations you have with your users should be as important as when you build your product.

This is the time to listen. In any case, the conversations your customer happiness team have with your users are critical to your success. Collate their feedback, listen to their suggestions, act quickly on any bugs or challenges they experience - quickly responding to your users and customer support team’s feedback is essential.

#4: Give Goodwill: Word of Mouth Trumps Any Marketing Tactic

I often get asked which tactics we used to propel Canva’s early stages of growth. My answer is always the same. We didn’t focus on engineering virality, SEO, SEM, content marketing or any other marketing.

We relied on the powerful momentum of word of mouth that was spurred by having a product that solved significant pain points for our users. Spending a year in development gave us the luxury of being able to deeply understand our user’s emotional needs, and build a product and solution that would cater for them.

Creating a product people would love wasn’t the only way we exerted our goodwill. When we launched our product, we created a series of free interactive design tutorials people could use to learn basic design skills. Despite strong advice to the contrary, we decided not to watermark user’s designs with our logo, we wanted our users to get so much value from Canva that they spread the word about it. Anything we believed would benefit our users, we did.

And it’s been one of the best decisions we made. Our community of 2.8 million users is proof of that.

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I’m not saying go out and make decisions based on your gut – but always be willing to invest in projects or resources that might not immediately return direct revenue. If they create goodwill amongst your users, they’ll yield an incredible amount of value.

At the end of the day, your users are your most valuable asset.

Why Your User’s Emotions Are The Key To Exponential Product Growth

When you’re launching a startup it can often feel like you’re walking in pitch black guided only by flickers of light.

That’s how I felt while receiving advice on whether or not to listen to users that thought they would never be able to design. But what I learned while growing Canva to 2.8 million users is that exercising the discretion to do both is what good business is all about. My advice – do both, but remember timing is everything.

Henry Ford also said: If everyone is moving forward together, then success takes care of itself.” Include your users in your product journey – they’re the only other people who will care about your vision as much as you do.

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