← My First Million
My First Million
A Billionaire Guide To Going From $4/hour to $1 Billion Net Worth - Dharmesh Shah
01:17:44
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- [00:00]
Sam Parr
You've had a good quarter. HubSpot stock, I think, hit an all time high. You sold a domain to OpenAI. You came with a pod. You know, I don't care what they say about you, Dharmesh, you're doing okay.
- [00:10]
Dharmesh Shah
I'm doing okay. I'm doing okay. Thank you.
- [00:13]
Sean Puri
All right. It's my first million. How do we use the hour so that it's your first million?
- [00:19]
Dharmesh Shah
If all you do is spend 100% of your time converting your labor into value and do not increase your leverage, you're not going to get anywhere.
- [00:25]
Sean Puri
Okay, so what were the things you invested in that had maybe the highest return for you that did actually make you more high leverage?
- [00:33]
Dharmesh Shah
Never in my mind has it been easier to get to that first million than right now. There was no good way to squeeze this. And I can't not say it. I'm going to. I know I'm going to regret. Okay. I feel like I could rule the world. I know I could be what I want to.
- [00:48]
Sam Parr
I put my all in it.
- [00:49]
Dharmesh Shah
Like days off on the road. Let's travel.
- [00:52]
Sean Puri
Let's start with opening remarks.
- [00:53]
Dharmesh Shah
The first is what I'll call an unhidden agenda and my unhidden agenda. So I have a picture of Venn diagram. I love Venn diagrams. Circle number one. I want to talk about things that I think I have useful things to say and some expertise. So we'll definitely talk about AI and agents and things like that. But the other circle is things that I think are borderline guaranteed to increase the probability of you, the audience, making your first million. Thing number two is that in order to do that, you know, we have at HubSpot, we have a culture of humility. That's one of the core five values at HubSpot. And I've said this particular line to employees at HubSpot. I don't think I've ever said it outside of HubSpot. But I'm going to solve for utility over humility. So if there's a way to say something that's going to be more useful as a result of. But in order to do that, I'm going to have to say something that's non humble. I'm going to go and say it even though it's not humble because it increases the utility of it. And there will be a couple of moments that are completely non utility and non humble as well. So that's a couple of twists in there.
- [01:54]
Sean Puri
Okay, so we have to start with this, which is you're coming on as a Guest, but you're coming on as the most prepared guest we've ever had. We did a pre call, we discussed a bunch of things. Then you. Then I sent you some notes and I try to make it light. I'm like, just maybe one or two things to think about before the episode because I never know how much work somebody wants to put in. You then send back a whole another doc that's like, hey, here's a bunch of stories, ideas, I have some opening remarks. You have a whole bunch of stuff there. You went back and you watched your old episodes, which are some of the most popular episodes we've had. You read all the comments, you incorporated the feedback. Is this just how you do everything?
- [02:29]
Dharmesh Shah
Not. Not everything. So confession on this particular. In this particular case, not only did I watch my prior episodes read through the comments, but in the process of that, I saw the leaderboard on the my first million YouTube channel. And I'm number five. And you don't know this about me yet, but you will. It's like I've never met a leaderboard that I didn't want to get on top of. Right. It's like, okay, what happened here, by the way, Sam?
- [02:51]
Sean Puri
That's what. When we. I was like, so are you coming on? What do you want to talk about? AI. That's obviously an area you know a lot about. And he was like, yes, but through the frame of all right, it's my first million. That's the name of the podcast. How do we use the hour so that you. It's. It's your first million. So if you're listening to this that I. He's like, I can't guarantee you're going to do it, but I can increase whatever that probability was. Can I in one hour tell you things that will increase your probability? That's a promise to me.
- [03:16]
Sam Parr
So good. Someone in the YouTube comments on a recent episode, we. We had someone on and Sean and I both sat like this for like 8 minutes and someone was like, dude, Sean, just flirting. They're just stared. They're at awe. I have a feeling we're going to be getting a lot of. A lot of these.
- [03:30]
Sean Puri
Yeah, I'm going to just get my hands ready. All right.
- [03:37]
Sam Parr
So when I ran my company, the Hustle, I think we had something like 2 million subscribers. And we made money through advertising. We didn't actually make that much money per person reading the newsletter because advert in general is kind of a crappy business model. And so I remember sitting down and I'm like, what are all the different ways that I can make money off the hustle that aren't advertising. And so to make sure that you don't make this mistake, Sean, me and the HubSpot team, we went and looked at a bunch of different ways to monetize your business. And we put it all together in a really cool document where we lay it all out along with our research. And we call it, very appropriately, we call it the Business Monetization Playbook. Go to the description of this episode and you're going to see a link to that Business Monetization Playbook. It's completely free. You just click the link and you can see it back to the episode.
- [04:28]
Sean Puri
All right, so where should we start, Dharmesh?
- [04:30]
Dharmesh Shah
So let's. And I'm not going to give you an autobiography. What I'm going to do, though, is I'm going to take us back in time a little bit because in order to kind of understand some of the lessons that I thought now in hindsight, were sort of the most valuable for me, I didn't know this at the time. I was living it, because we often can't pick that up, but I think will be useful. So I'm going to go back to when I first integrated the U.S. i was in my early 20s and I was here just on a visit to my parents who were living there. And I was in Indiana and applied for a job at Pizza Hut. Rejected. Applied for a job at Big Lots. Rejected. Applied for a job at Red Roof Inn. And because I was Indian and my parents were actually running like, they automatically assumed that I, like, I'd known things. I'd only been in the country for like three and a half years because.
- [05:14]
Sam Parr
Indians are famous, not hoteliers, but, like motel ears.
- [05:19]
Dharmesh Shah
Yes, motel. And that's exactly what we had. We had a motel, like. Yes. And it was not even like a franchise motel. It was one of those anyway. And so this was for the night shift. Right. So that might be partly why I got it. So it was like 11pm to 7am and that's the only thing that would work for me because I was taking classes during the day. And so a couple things out of that particular experience, and this, I think will relate for a lot of folks. So in the early parts of most people's career, you're working retail, you're working some sort of job, and you have a. What I call your currency. And your currency is what's the kind of time value of your time? It's like, oh, you're making $3.65 an hour, which is what I was making, the kind of early, early periods. And you're taking that kind of currency value, multiplying it by how much time you, how much labor you expend, how much time you spend doing whatever it is that people are paying you money for. And that's pretty much the production value. That's how you create, you know, create some money in the, in those early years. So mathematically, in that particular equation, there's only two ways to make more money. One is work more hours, and the other one is to raise the currency, raise the price that people are willing to pay for your time. Okay, great. And that time, I was looking for all the hours I could get. It's like, I want to work more hours, and if someone cancels someone, like, I will be there. Just give me the hours. Like, put me in, coach. I can't believe I made a sports reference. I don't do sportsball. But anyway, it worked. So here's sort of the kind of the lessons, like, you start there, and you're going to end up spending a large part of the early part of your life, let's call it the first half, converting time into money in various shapes and flavors. That's effectively what you're going to be doing. And then you're going to spend the latter half of your life, approximately, desperately trying to convert money back into time. That's. That's what happens. That's. That's life. And so we go back to the, okay, I'm converting time into money, expanding the currency. There's going to be this automatic increase that happens in your currency simply as a result of tenure. As it turns out, companies pay more for experience than they were. So even if you're the same job doing roughly the same thing, you're going to get some marginal increase. Not much, but it's going to go up. Now, my argument here is that in order to really kind of break into, like, you're going to start to have to kind of accrue money. If you're in debt, you're going to have to get out of that first. But you're going to need to get some sort of leverage. Leverage that says, okay, what can I. And not leverage in the kind of leverage buyout, but leverage in the kind of Archimedes sense. The guy that's quote Archimedes quote is the give me a lever long enough and a fulcrum out of which to place it, and I will move the world or I shall move the world. And what's interesting about that, that quote particularly, and that's a physics thing, I love math and physics things. Is that okay? So that fulcrum is actually very, very necessary. You need a point on which the lever is going to pivot and the degree of kind of amplification you get for your force, that's what leverage creates, is how far you are from the fulcrum. So the kind of. The lesson is, as you're spending your time, if all you do is spend 100% of your time converting your labor into value and do not increase your leverage, you're not going to get anywhere. So what you have to do is you have to allocate some percentage of your time to say, even though someone's not paying for this particular time, I'm going to go read a book, I'm going to go do this. I'm going to do a seminar, I'm going to meet a friend. Whatever it happens to be, you have to kind of make that investment. You have to carve it out. Otherwise you never get the leverage necessary in order to make it to that first million. That's like the number one lesson and the thing that I did that was very, very useful that I still carry to this day, is that you sort of have to carve out literally some amount of dollars for yourself. And time and money are equal to me back then. It's like. And what I mean by that is like, I'm willing to take 10% of all the money that's coming in right now. I'm going to spend it on books, on things or whatever that's going to kind of improve my value. And it's funny because even in my first job, and we'll talk about this in a little bit, is like, they wouldn't get me, like a fast enough computer wouldn't get a computer. It's like, I don't care. I'm not looking for approval from anyone or whatever. Like, if something's in the way that I think will improve who I am and increase my currency, I will spend that money. I won't expense it. I don't. I don't care.
- [09:22]
Sean Puri
What were the things you invest in that had maybe the highest return for you, that did actually make you more. More high leverage, that did make you more valuable, increase your rate. What were the top investments you made?
- [09:33]
Dharmesh Shah
Books were the highest, candidly, and I read which book roughly. So there was. There was an author called Harvey McKay who wrote some very kind of pedestrian business books. Now, by today's standards, not sophisticated. All but realized, like, at that age, for me, it's like, this is brilliant. It makes so much sense. One of the books was titled how to Swim With Sharks without being Eaten Alive. I think that was one of his.
- [09:56]
Sean Puri
Swim with the Sharks without being eaten Alive.
- [09:58]
Dharmesh Shah
Yes, exactly. There was another one that was less about business, but still, it's like everything I need to know, I learned in kindergarten. And these are basic, very, very basic, basic things. But it's one of those that. It's like if you're an alien from another planet, which is what I felt like a large part of my life. It's like, oh, so this is how the world works kind of thing. It's like, you know, it seems shockingly obvious right now. It just wasn't shockingly obvious to me at the time. All right, so that's kind of lesson number one. You need to kind of get leveraged. Lesson number two. So after my red Roof instant where I was night shifting, they had a computer there, which was one of the nice things to do their accounting and had to close the books. That was part of my job. So that was some of my early exposure to computers. But then I was able to get a job at US Steel.
- [10:43]
Sam Parr
No shit. That's pretty cool. That's pretty cool.
- [10:45]
Dharmesh Shah
And that was my first real programming job. And they would hire. They hired me as an actual software developer at US Steel. I was still going through school, working on my undergrad, and it was great. I loved, you know, loved the work. But the. Because I was in Indiana. The U.S. steel plant that I was working at was in Gary, Indiana. And I don't know, things may have changed now. I don't know. Gary, Indiana, was at the, like, top of the list of places you did not want to live. Right? Like, that was like the, like the place you did not want to be. As it turns out, Indiana overall was in a fine state, but it's like very northish and very cold. And I had just come over from India and so I did a very me thing to do, which was it's like, okay, well, I have a job at US Steel. It doesn't really matter. You know, I'm talking to a mainframe, I'm writing my code or whatever. Do they have other places? Like, it's a big company. As it turns out, US Steel has a plant in Birmingham, Alabama. Did not know where it was. Never been to Alabama. But one thing I did know was like, oh, it's more south than here. Thing number one. And number two is like, it's not Gary Indiana. So the mathematical odds of it being a worse place because I looked this up, it's like are slim to none. So Birmingham, Alabama still not necessarily at the time, best places to be. But I'm like, so I requested a transfer. It's like, hey, I'm working at software. I know I'm new, but I see that you have a plant down in Birmingham, Alabama. Can I go work down there? And they said, sure, lock yourself out. So I get down to Alabama, I'm working for US Steel and I'm an impatient person, but I was working, it's like, okay, well. And I was making, I think it was like around $27,000 a year, which was a lot better than I used to be making at Red Roof Inn. And it was a full time job, like. Cause I didn't have to like crown for hours or anything like that. It was an actual salary which was awesome. The thing I learned though is like okay, so how do I like progress? Like how do I kind of grow? And the thing I figured out, and this was said to me by kind of my manager, he almost said it in these kind of words, which is dharmesh, look, if you're not making steel, shipping steel, transporting steel, moving steel or selling steel, you're overhead. And that's the time that the epiphany sort of hit me. It's like, well, I don't want to be overhead, I don't want to do that. And so then this is once again, I'm a very, very simplistic guy. It's like, okay, well my thing is software development. Where do I need to work where I'm not overhead? And so then the extrapolation is oh well, I need to work at a company where software is the actual product, just like steel is the actual product for USD to get closer to kind of what the actual value is. So I opened the Sunday paper, which is what we did back then. This is pre Internet days. And I'm like, look for jobs at companies that are software companies. And so I applied for a job at a software company that happened to have a job ad in the paper in Birmingham. And it was a place called Sungar Data Systems. It was a software bona fide software company. Apply for a job there, got that job, which is awesome. And that was life changing in of itself. It's like, okay, software companies when it comes to software developers are much better at treating developers than non software companies as it turns out as a rule. So like this is awesome. And so the kind of the file away Lesson here would be your value is kind of inversely proportional to the distance from the actual value creation, whatever it happens to be. So if you're not in there, find a way to get there, whatever. I'm not saying you have to be in software development, but like the guy, like my manager had said, you have to be making steel, selling steel or shipping steel, whatever. Everything else is sort of meta and just overhead. And once again, this was the 90s, right? I think people have a more nuanced approach to how value gets created. But if you have a chance to get closer to the actual customer, closer to the actual product, you should take that. That will increase your leverage, increase your currency. So I'm working at Sunguard as a software developer and this is a good story I'll share. There's high utility in this story. So I'm working there and I. I'm making. I think it's around $40,000 a year at that time, which this is 90, early 90s, give or take. And Birmingham Mama, that was actually pretty good money. So they paid me. And the thing I was doing is that Sunguard's software product was like a mainframe product. So they had the character mode terminals that you guys see in the movies now. Well, there's still mainframes out there, but most normal people don't have to interact with them, but anyway. But they were in the process of trying to build a graphical user interface, which is the latest thing back then that interacted with their mainframe. They wanted offer like a Windows kind of GUI on top of their mainframe. So my job was to take this character mode screen and create using this drag and drop tool, a GUI equivalent of that particular screen. There were hundreds of screens in the Sunguard product. It was a big kind of multimillion dollar product. And I'm like, well, this is stupid easy. And we had consultants on there because they were trying to kind of accelerate the development. And the consultant, I remember this vividly, was making $125 an hour to do this. What I thought of as being relatively rote work, right? I'm like two months into the job, so I go to my boss and I'm like, you know, we're paying these guys $125 an hour, and all they're really doing is dragging, dropping based on this character mode screen or whatever. This is not software development. And by the way, this is so trivial. My brother, who has not graduated high school yet, he works at the Piggly Wiggly, which is a Grocery chain down the south, even he could do this, like, in a day. That's how. Why are we paying these people $125 an hour? Does not make any sense. And so my boss said, bring him in. So I brought my brother in. He's 17, still hasn't graduated high school, showed him what we're doing. It's like, okay, look at the screen over here. Do this over here. You drag and drop in here, and I'll review your work. At the end of the day, we didn't know what to pay him, so we paid him $5 an hour. So my brother starts working there. I'm there, and we're cranking along, kind of building this new product. I hired all my classmates from undergrad because that team is growing. We're doing this new product at Sunguard, and I continually kind of get impatient. I'm like, okay, well, now I'm at a software company. Now I know the value that I'm creating. It's like, okay, like, what gives? And I'm so. I'm like, constantly kind of going back to them. It's like, what do I have to do? And I'm still individual contributor, by the way. I'm not managing anybody, but I'm like, I get the way this stuff is working. And so they were actually super nice and generous. And so they kind of bumped me and kept bumping me. And it was only there for, I think it was 14 months or something like that. And so eventually, they were paying me a quarter of a million dollars a year in Birmingham, Alabama, in the early 90s. And I've only been there a year and a half because I was able to connect the dots on the value being created. And then I sort of got tired of. Because I think it was just kind of wrong of me to constantly go back to them because they were paying me really well, right? It's like, okay, well, a guy sort of hit my ceiling of what's reasonable now for me to ask of this software company to pay me. It's like, okay, well, what do I have to do? It's like, well, I have to get closer to value creation or whatever is like. Like, start my own software company. That was the kind of. I had no product idea. That's like, oh, this is the thing I need to do. Like. Like, I thought that went into my head is like, oh, in order for me to, like, do better and kind of get more leverage on my time, I'm going to now have to leave some guard and go do my own Thing and figure out, like, software to build and go do this. And the one thing I do know, like, how to do is make developers happy because I'd hired, you know, I hired all my friends. I like, I know what makes a developer click. And that was the genesis of my first startup. And the lesson here is that I'm gonna have to share this. This one story. I'm gonna regret this because I'm gonna share it. It's a good story. So in one of those kind of discussions with my manager when I'm going back, it's like, okay, like, what else do I have to do? I didn't have any particular numbers in mind.
- [18:39]
Sam Parr
What are you, like, 27 at this point? 25.
- [18:42]
Dharmesh Shah
Yeah, roughly. Yeah, roughly, 27. Somewhere in my. Yep, 25 or 30. And so after play, it was starting to get ridiculous. So he came back like, Dharmesh. Do you really think you're going to find that many companies that are going to pay you X amount of like, $200,000 or whatever it was that would have taken in that conversation? And this kind of came to me in the moment. And the line I came back with was, well, as it turns out, and this is the very kind of mathematical side of me, it's like, I really don't need to find that many companies that will pay me $200,000 a year. I just need to find one. And I think there's one out there. That's all. And it wasn't on a threat. It was a very. Just a very measured, like, logical, like a Spock like, response. Right? Like, like that's not the function we're solving for. We're not solving for, you know, what is the local maxima in terms of how many companies are out there that will pay, you know, and what's the standard distribution? None of that matters. Like, I don't need to find like a hundred of them. Like, I'm. I'm mobile. I'm willing to go anywhere. It's like, I'm willing to bet money that if I looked, I could find one. Right? Like, that's like the most agreed with.
- [19:45]
Sean Puri
Him in a way, right? He's like, do you think you find a hundred companies out here that are willing to pay you this? Like, no. But the good news is I didn't need a hundred. I need one. And I believe that there's one out there and that, you know, that applies to dating, that applies to being successful at one bit. You know, making one business work will do enough to change your life.
- [20:06]
Sam Parr
All right? So a while back we had Gary Tan, he's the president of Y Combinator, which is the most successful incubator of all time. We had him on the podcast and he said that the future of businesses is creator led. And that's why I'm interested in the podcast. Creators Are Brands. Creators are Brands explores how storytellers are building brands online. They're going to cover the entire creative process. They're going to talk about navigating brand partnerships. They're going to talk about what you need to know about growing your social media platforms. Everything you need to know on this topic. Creators Are Brands is the pod. So check it out wherever you get your podcasts. Again, it's called Creators are Brands with Tom Boyd. All right, back to the episode.
- [20:46]
Dharmesh Shah
And so there's two lessons to draw from that. One is the Power of Negotiation, which is one of my other, like one of my favorite books, most recommended books is Getting to Yes, which from the Harvard Negotiation Project. And that's the one book I think I've read like four times now. I reread it like every few years.
- [21:05]
Sean Puri
Can you give us a quick insights for anybody who hasn't read the book, like me? What's an insight from there that would make me a better negotiator?
- [21:14]
Dharmesh Shah
Most people, when they think of negotiation, they think about this kind of adversarial. It's me, it's a zero sum game. This is what's happening. And as it turns out, most negotiations both in life and in business are actually not like that. And that first order thinking in terms of like, oh, like, you know, my objective is to get the lowest price and their objective is to get the highest price for the thing I'm trying to buy for them, whether it's a house or whatever. And that's not the way to think about it. The way to think about it is to identify what your actual needs are, what's truly the thing. If you're solving for price, fine. But recognize that and do your best to identify what the other party's needs are. Because there is often, very, very often a path that actually will optimize for both of you. And that's actually a better path than just trying to divide the pie and fighting over price or whatever. There might be something else that's actually more important. Right. And so this applies to so many different situations and we like, I'll give you like a tangible example of I think a mistake companies make. Building their operating system in terms of how they run it was something that HubSpot has taken to heart is that we automatically think that what people are solving for is like compensation, number one, and autonomy and discretion and scope. And those are all important. As it turns out, the number one on the feature list of what people want is actually flexibility. Like, they would trade a lot of other things in exchange for flexibility. Right. If you can just get to the bottom of that, if you understand that, then you can sort of treat off other things that might actually have a higher price to you. But flexibility is like, okay, like we can do that. Yeah, there's a cost to it. But the cost of not providing enough flexibility is actually much higher because the talent density is going to be lower. We're going to have to pay more, all things being equal. So anyway, that's the big lesson from getting to. Yes, there's a bunch of other ones. It's an easy read too, by the way. It's not a particularly like, dense, heavy read. I. Even if you're not in business, if you're just in life, it's a book worth reading.
- [23:07]
Sean Puri
When Jeremy Giffin came on the podcast, he said it. He said the same idea differently. He goes, we asked him, what did he learn about negotiating from Chris Sparling, who is one of the guys at Tiny? And he said, I used to think negotiating is like this, two people sitting across from each other at the table. Sort of, I want this. No, I want this. The adversarial thing. He goes, chris just told me, imagine you're both sitting on the same side of the table and you're looking at the other side of the table and there's the problem. And you both are looking at the problem and saying, oh, okay. So the problem is that you're looking for this and I'm looking for this. And then there's this other thing we haven't even discussed yet. How can we just. How can we together figure out this problem? And fundamentally, just taking a different. Taking that lens will allow you to be more successful in negotiation.
- [23:43]
Dharmesh Shah
Let's say you're negotiating something that I think is a. What I would call a non commoditized thing. It's hard to figure out the price. It's a unique property. It could be a house somewhere where there's not 100,000 streets. Just something that's unique and hard to find comparables on. Whether it's wheels, doesn't matter what it is. The temptation is to go in as a buyer and say, well, you know, it's got this wrong with it, this is wrong with it, that's wrong with It. I'm going to have to fix that. And it's like, it's, you know, and to try to kind of drive the buyer's expectations down, that's actually not the optimal approach in this situation. These kinds of situations. And the reason is the visceral reaction most people have. They're sitting on a unique property like that is, oh, he doesn't actually understand the value. He's poking at holes all. But he doesn't get the fact that this, this, this and the other thing. What I need to do is find someone that actually appreciates the value of this thing and then I'll do better on the price. Right? And there's no objective value because there's no comparables. Like, no one really knows what the actual fair value is. Now. Flipped out of his head. Let's say I went to that same property and this place is fantastic. I love it. Let me tell you the things I love about it. Let me tell you why, Like, I am like all in love with this thing that you're selling right now. And you go through that and it has to be authentic, has to be genuine. I'm not making this up. And then I put my price out there. It's like, you know, here's what it is. Now the seller has to say, okay, well, am I really going to find, like, I don't know what the price is? This person seems relatively clueful. He loves this place. Am I going to find someone else that loves it more than Dharmesh loves it? Probably not. Like he sold it, gets this thing or whatever. So maybe his price is probably what the fair price should be. Right? Like that he seemed like a reasonable guy. So that's a. It takes people's guards out. And this only works, by the way, when you have one of those kind of rare. Is hard to find comps or whatever. The price is not really objectively known. It's hard to kind of triangulate to a, like a quote unquote true price. Anyway, that's my.
- [25:36]
Sean Puri
That's great.
- [25:37]
Dharmesh Shah
Our negotiating tip of the day. So.
- [25:39]
Sean Puri
Okay, great. And so you, you told me something when we were talking before about this first company and you said, okay, so I did this company and actually, maybe there's more in that first company, but you told me something great that I want to bring up, which is then you did a second company and this was one that I don't even know if it's on your LinkedIn. You're like, this is my embarrassing company. It's my things didn't go, well. And Sam, the story he told was, he was like, I did the first company when I just didn't know. I didn't know anything about anything. So I'm clueless. Blah, blah, blah. We just making up as we go, super scrappy. And it, and it kind of worked. It worked. Then he's like, I'm gonna do the second one. But now I'm so much smarter. Now I actually know what I'm doing. I have some experience, I'm gonna do things the right way this time. I'm gonna go raise money, I'm gonna hire better people and I'm gonna get a better off. I'm gonna do these other. I'm gonna do it proper. And then I guess that, that business, I. You can tell the story here, but it didn't work. But you said some. A great line. You go, just because you were. Just because I was ignorant doesn't mean I was wrong. Meaning that first time I did that first business, I was ignorant. I didn't know anything. But it doesn't mean I was wrong. Can you, can you unpack that idea?
- [26:41]
Dharmesh Shah
Let's say there was an objective truth function that says, okay, this was, in this particular situation, the right decision to make in whatever situation you're in right now. That objective truth function. If we had run against all the decisions I made in that first startup, I think my hit rate was actually pretty high and the hit rate of lots of founders, because our natural instincts in that situation actually turned out to be good instincts, like being like resourceful and not kind of spending too quickly or whatever, taking your time, doing all the things that kind of came as natural instinct. And I was not a natural born entrepreneur. That's probably likely why I have the insecurity. But in something like a startup or entrepreneurship, there's a bunch of decisions you're going to make. A lot of them maybe may or may not be optimal. But what was definitely suboptimal in hindsight was second guessing myself on the second one. It's like I'm going to do the opposite of what I did my first one because it's like, what a chump I was back then. So I'm going to go, I'm going to do a speed run, I'm going to do it faster. I'm going to write a $500,000 check to myself on day one to fund the thing or whatever. Who has time? We don't have time to go through those cycles or whatever really quick.
- [27:44]
Sam Parr
I remember a time in high school I had this hillbilly friend that had a huge chest because he was so strong at bench pressing. And we went to like an exercise class and the teacher was like, the best way to get strong in your chest is to do incline bench press at a 30 degree angle. A 30 degree angle. So much better than a 45 degree and so much better than a 10 degree. And my redneck friend who didn't know anything, he just would go down and lift weights. He was like, I must have been doing them at 30 degrees because I'm strong as shit. Like.
- [28:12]
Dharmesh Shah
It'S like the same thing.
- [28:13]
Sam Parr
It's like, dude, it doesn't matter like if you know what you're doing or not, as long as you get the end result. What was your, what was the second company? I had no idea that you had a failure under your belt.
- [28:21]
Dharmesh Shah
Yeah, yeah. Well, I've. Yeah. Yes, I had. So it was a kind of Facebook before Facebook for small business. It was effectively a CRM. So I've been working in CRM now for a long, long time, built for small businesses. And this was right like the 2000 timeframe. So right as the bubble was bursting and the first company was not an Internet company. This was. It was a web based information management tool for small businesses around customer.
- [28:47]
Sam Parr
What was it called?
- [28:48]
Dharmesh Shah
It was called Captivo. C A P T I V O.
- [28:51]
Sam Parr
How much did you raise and how long did it last before you shuttered it?
- [28:54]
Dharmesh Shah
So once again, because I was going to do things differently this time, I wrote the first $500,000 check and I kept writing checks. I'm like, I have money. Why would I not like just fund myself?
- [29:05]
Sean Puri
Can you say how much did you have and how much of that did you put into the second one? Can you say that?
- [29:12]
Dharmesh Shah
I think I probably put in about 2 million. I'll say, give or take.
- [29:16]
Sam Parr
I found, I googled Captivo Dharmesh and I found a PDF that has a lot of handwriting on it and it looks like it's a case study for Sloan and you're trying to make a point. And you said in 99 I founded my second startup called Captivo. This is what it was. It was in many aspects similar to salesforce.com and about two years in of the product development and over a million dollars of capital invested, mostly of my own, Captivo could still not gain any significant traction. And ultimately it was sold in the product and it didn't work out. And so this is like the only thing that I can find about Captivo on the Internet is a case study. That you helped write, by the way.
- [29:51]
Dharmesh Shah
And it's like we sort of take it for granted now, partly why. And it's not like, you know, I'm not trying to hide things, but the Internet wasn't as big a deal back then. So, yeah, I wasn't blogging or no one was blogging. So it was like, okay, well, why would you just say things like, where are you going to say them to? But so one of the kind of interesting things as far as kind of closing out that particular chapter, what ended up happening, I'm going to make my third sports ball reference, and this one's a golf one. It was a long put to par. What happened was I took that company, Captivo, merged it into my first startup, which I had not sold yet. So I was doing two startups at the same time, which is not something one should do, and then ended up selling the kind of merged entity. So I ended up making my money back, for all intents and purposes. So I didn't really lose anything, but it was a very, very long bhaktapar. I just. Yeah.
- [30:39]
Sean Puri
So the big idea so far were at the beginning, you're going to trade time for money, and then at some point in your life, you're going to desperately start trying to trade money back for time. That's life. I think that's. That's a golden nugget. The second one is cool. You can either get more hours or increase the value per hour. And that's where you started taking budget and investing it in books and training and seminar, whatever. Whatever you can try to do to increase your own value. You get the job at U.S. steel. That's where you realize you're either an asset or a liability to this company. You're either overhead or you're the one actually creating value. If you want to be higher leverage, you got to be closer to where the actual value is created. So then you switch. You do a software company, you do that. The lesson around negotiation, so go back and ask for more. And specifically not just ask for more, but what would it take for me to be making more? Was more like the question you asked your boss. Is that right?
- [31:28]
Dharmesh Shah
The actual lesson I drew from that is the power of being able to reduce and frame something in a very simple, like, inarguable way. Right? Like the fact that it was so punchy. Right? Like it was just that one sentence. I don't need to find a bunch of companies. I just need to find one. And I think I can. Right? Like, had that been like a Five minute long conversation, me going back and forth or whatever and trying to make an argument. I don't think it would have worked. What made it work was the fact. And this, I think is a very, very like anything else, it's a developable skill. And you are actually, Sean, are the master of this is being able to what I call insight compression. And I just made that up. It says, can you take some big idea and kind of boil it down? Boil it down to the essence is still captured, and it's just a dense distillation, for lack of a better term, of that idea, of that concept down to something really simple. Because the simpler you can make it, the more likely it is to be transmissible, to be communicated, to be whatever. And this applies to so many, obviously applies to copywriting and marketing and things like that applies to venture pitches, applies to so many things.
- [32:36]
Sean Puri
By the way, I think one good point to make in this is this isn't just a mindset you had when you were young and broke. Like, you took my power writing course a few years ago. It's like, dude, this guy's a. You're a founder of a 20, $30 billion public company. He's sitting here in the course, learning and seeing, can I learn something about writing? Can I get a little bit better at this one skill? You were still doing that now, not just when you were, you know, 20 years old. It's like, oh, I'm a beginner. I got to like, you know, start to level up. It seemed like you continued doing it. A guy came on the podcast the other day, Mike Posner. He's a musical artist. He talked about. He had had his first song go huge. So he thought, oh, that's what I do. I make songs. They blow up.
- [33:15]
Dharmesh Shah
It's.
- [33:15]
Sean Puri
That's. That's me. I guess it's hard for these other people. It's not hard for me. And, you know, so the first song is like, you know, whatever, five times platinum. His second song actually was still like double platinum, but felt like a huge failure. Third song, single platinum. He's like, I'm going downhill. And then the studio shelves them, and for years, they. They are, they're like, it's too expensive for you to even produce the music. So we're just going to keep you, you know, you're on the shelf in the music industry. I was like, what were you doing during that time? And I thought he would just say he was depressed eating Cheetos on the couch. He's like, yeah, I was depressed eating Cheetos on the couch. And then I dusted off the Cheeto dust for a minute. He's like. And I enrolled in at Berkeley College for Music. And he's like, I was learning to improve my singing. My. He's my ability to play instruments. I couldn't play the guitar before that, so I learned to play the guitar. And he's like, yeah, I just figured, okay, this period of my life, I'll just sharpen up my skill, I'll become a better artist. And he's like, I would go to these classes with a bunch of college kids and here I am, you know, Grammy award winning, I've been on the charts, I've made millions of dollars as an artist, and there's better singers in here than me. And he's like, I. It was a, a real mind. But what I took from that whole story was, damn, that's kind of inspiring. Like, this guy use that time to sharpen his skills. I think a lot of adults just stop. I think they just, oh, that's stuff you do when you're young and you just don't need to invest in learning anymore after that.
- [34:31]
Dharmesh Shah
So talking about the power writing course that you have and then just kind of writing and copywriting generally, is that the return on time for developing writing? I have not found the ceiling yet. Is that it is just so high. I cannot describe to people. Like, if you could do nothing else, let's say you, you had five hours to invest in the next month or something like that. You could spend it all on learning how to write well. And future you will look back on those five hours and say, boy, that was a great use of five hours. Right? Or 10 hour, whatever the number is. Because that's what I consider to be a. Just an amplifier of things, right? It will make you a better thinker, better communicator, better pitcher, better salesperson, better everything.
- [35:13]
Sam Parr
We were talking about being close to the action. I don't remember if you talked about this on the pod or if you talked about it just privately, but I had known that you bought chat.com and we have known that you've been about agents. I think last podcast we talked about vectors and things like that. I think we mentioned agents. And it seems like that's like a big thing to you right now. And speaking of being close to the action, you bought this thing, chat.com. i think you said on the podcast it was something like $10 million or maybe you said eight figures. I forget. And then it comes out like two weeks ago that you sold the domain chat.com to OpenAI for around eight figures. And I think it said it was.
- [35:55]
Sean Puri
Like all, well, we should add one thing. When it came on the pod, you had just bought it and we were like, what are you going to do with it? You're like, not super sure? Yeah, I'm going to try some things, but I just think it's a great domain, I think it's a great investment. And you just, you had made a bet, but you didn't have the. It's not like you had it all figured out and it was all de risked. Yep, you made that bet then. Now here's the update. What happened?
- [36:19]
Dharmesh Shah
Okay, so a couple things just kind of. So I, I think the time I went on the pod was like within like 72 hours of when that kind of purchase that happened. So it was just, it was just done. It was not distilled in my head. I actually had a plan for it. I was going to build a chat application on top of the GPT algorithm, similar to ChatGPT and the Thesis. And there have been two times where I accidentally competed with OpenAI, which I don't advise anyone to ever do. He's literally on the top of my list of people I'd ever want to compete with. Is Sam Altman just too smart and even a more red blood capitalist than I am, actually. And I mean that in the most positive way. So my original thought was it's like, okay, they put this chat GPT thing out there. It's a demo app, right? It's like it's there to demonstrate the power of large language models and the underlying GPT algorith them. But OpenAI is a platform company, the only. And there have been stories about these kinds of things, which is, oh, someone invents a cool new technology. I think PayPal started that way. They had some payment transfer thing and they had an app that says, oh, here's our encryption technology demonstrated by me sending you money over a Palm Pilot or something like that. And they're like, oh, well, that encryption we don't care about. We care about the actual transfer of money part.
- [37:28]
Sam Parr
Is it the story with OpenAI? Like they were doing this thing to sell to software companies and then someone's like, dude, can you just make this thing so we could show people what we're working on?
- [37:36]
Dharmesh Shah
Yeah, that's what. And even Sam has kind of gone on record and said that. Right. They had not expected it to kind of go. It's like, this is a way for us to kind of Demonstrate the technology and kind of make it accessible so people can try it. And so it sort of caught them off guard as well, right? Which is like this was not, it was not expected they were going to get tens of millions and it was 100 million users within a couple of months. But in the back of my head I'm like, okay, well that's great, but they're going to go back to being a platform company. But someone should actually create something that is that end user application that sits on top of LLM like GPT3 at the time. And then it just so happens it's one of those the universe sort of configured itself and chatbot.com in a random event became available for sale for the first time in like 30 years. It's never been actually used before. And I'm like, I need to do this. That was kind of thing number one, it's like I could use it for that. Thing number two kind of rationalization to myself is that like this is the COVID charge to get into the AI party that people will take me seriously. It's like no one really knew me in that space because I'm not from that world, didn't go to machine learning school at Stanford or something like that. But that's sort of something that's sort of hard to ignore. Like deep down inside I'm part marketer, right? I think it's like, oh, this is a good story. It'll get people's attention. Did they reach out to you with.
- [38:56]
Sam Parr
The idea of acquiring it or did you, were you like at a conference with them and you're like, hey, I have this thing. If you want it, I'll tell you.
- [39:04]
Dharmesh Shah
Okay, so I'm going to draw the line in terms of, at the transaction beyond because my experience, I think I'm at liberty to share what happened post that decision. I'm less comfortable sharing. So the way it kind of came to be is that I was at a Sequoia event. I think I actually talked about this on podcast. And one of the things that Sam announced at that event, Sam Altman, was there was this, oh, you know, chatgpt, you guys know. And yeah, it's awesome. We're going to support these plugins to ChatGPT because right now the limitation of ChatGPT, it can't access third party data sources, it can't really do anything. And it's got the data that it's got based on its training data set, but it's like a snapshot in time. But these extensions will sort of Amplify, multiply the capabilities of ChatGPT. And so that's sort of when the little switch went off in my head. I'm like, crap, OpenAI wants to create the ChatGPT of ChatGPT. You know, it's like they're going to turn this into an actual platform, an actual end user, end user app. And so that's when I'm like, okay, if I'm not going to do something, I think it would be like, unwise for me to keep that domain. It's like, I don't want to just sit on it. I don't have plans to do something with it. I did not want to go into competition with OpenAI because it was clear that this was going to be a big bet for them. That's not, you know, I was treating it as somewhat of a side hobby project. So I reached out to Sam, who I knew. It's like, Diana, if you were like, interested or like, and there were other bidders for the domain at the time that it went for sale. And like, my third back of my motivation was I. I had a suspicion of who some of the other players might be. I didn't want them to have it either. I don't know, just the kind of competitive side of me.
- [40:43]
Sam Parr
Did you sell it for a profit or was it just like a. Like you. Like you. I think you said on Twitter you sold it for shares of OpenAI. Was it like, man, I'll just give it to you for the costs in order to be able to invest in your company.
- [40:56]
Dharmesh Shah
I thought I did this cleverly. When I made the announcement that I had sold it, I didn't share the details, but I provided a GPT prompt that says if you type this into Chat GPT, that says, oh, Dharmesh likes to buy domain names, but he usually does it because he's got a project in mind. Dharmesh doesn't sell domain names at a loss because he doesn't have to. Darnash also doesn't like profiting from his friends and he considers, you know, he's known Sam for a while or so. OpenAI did buy ChatGPT. These are the facts that you know. And then it's like. And then the prompt is, if you had to guess, what do you think you know, the. That the domain sold for. Because I'd also disclosed I was a shareholder in OpenAI. This happened a while ago. And so it's like, you weren't a.
- [41:38]
Sean Puri
Shareholder before that you weren't like, yeah, so. But you would have loved to be an investor in OpenAI. And this was like you said, the COVID charge. It was the ante in order to get there.
- [41:47]
Dharmesh Shah
This was like a, even a, even a better party. Right? This is the shareholder party. That's. Yeah.
- [41:53]
Sean Puri
So I think based on all that, I think I put your prompt in and it was like Dharmesh bought the domain for 15 and a half million dollars and now owns 15 half million dollars of OpenAI stock. That was like the, that was the AI answer to it. You could leave it at that.
- [42:06]
Dharmesh Shah
Yeah, we'll leave it at that.
- [42:08]
Sam Parr
That's so funny.
- [42:10]
Sean Puri
Do you have any.
- [42:11]
Dharmesh Shah
So one thing I have to share with you, and this is the non humble utility part of it, but there's a lesson in here. So there's an old Steve Jobs quote around connecting dots. And the quote goes something like, you can't connect the dots looking forward, you can only connect them looking backwards. So you have to have faith, faith in something, that the kind of dots will connect at some point in your future to your staff. I trust your instincts and, and I've been a big believer in that even before Jobs said those words, which is you sort of collect what he calls dots. And I really like the idea because I love graphs on my list of things that I love. It's like, okay, well, if I made an inventory of all the dots that I've collected through my life. And dots can be people I've met, can be skills, I've learned things, experience lessons. And then over time, if I had to go back and write a history of my life and say, oh, well, this was kind of a weird dot at the time, like, I could never have guessed that had it been not for that dot, this over here probably would never have happened. Right. We don't know in a parallel universe, like what was actually going to take. But I can tell you for a fact that the universe, as it exists right now, would not have happened had that particular dot not been collected, that I had not collected it. And so my big lesson here is that you have to spend some amount of your time. And this is the same kind of lesson just phrased differently around investing in those dots that may or may not make sense at the time that you're doing them, but they feel right, they feel like they could have something. And it doesn't have to all be kind of maniacally diabolical and capitalist sometimes. It's just like, I want to collect this dot because I love this. I believe in it. I have convicted whatever it is. Right. It's like it's you, it's your time on the planet, it's your money, whatever it is you're doing, you should be able to kind of collect those dots. But if you kind of trust your instincts and not all the dots are going to work out. And this is the beauty of these kinds of things is that you don't need for all of them to work. You just need one or two to work really well. And that's it. Like that's literally it. Right.
- [44:06]
Sean Puri
I'll use a sports reference. In basketball, there's people who you say have a nose for the ball. They just know where the ball is going to bounce. They know where to be. The ball just sort of always ends up in their hand. They end up in the right spot. You talked about your first job application was to Pizza Hut back when you're, you know, just moved to the country type of thing. But pretty quickly you found yourself in software development in the 90s, which is arguably the best place to be. Then you, you said in 2000 you started a web Internet company. Internet was the next best place to be after that. Then you create HubSpot, which was a cloud SaaS company, which is arguably the next best place to be for that next decade. And now you just sold chat chat.com to OpenAI. You own a bunch of OpenAI and you were talking about AI agents. And I would say that seems like in this decade the best place to be. And so I view you as somebody who has a nose for the ball. And what I mean by that is like the frontier that you're interested in seems to be the frontier where all of the action and the value and the trillion dollar companies are going to get created. Which means if the trillion dollar companies are created, that means the tens of billions of dollars companies are going to get created. The billion dollar, the a hundred million and the $10 million companies also. It just means it's the, it's the target rich environment. So I think that when you say this is the thing I'm most interested in, we should pay attention. All right, tell us why agents are the thing we should pay attention to.
- [45:24]
Dharmesh Shah
Yeah. And kind of bringing it back to the kind of early just as a thank you for the lead in. This is, that was great is that, you know, we talk about you, the audience making your first million or your next million if you're, you know, further along in the, in the journey is that, you know that make that first one is almost always harder than subsequent ones. And that, and that's not counterintuitive at all. I will say this though, is that never in my mind has it been easier to get to that first million that it's going to be here like as we're, as we're living our lives right now. And part of that is what agents unlock. So let's talk about agents, we'll talk about what they are, why such a massive opportunity and what you, the audience should do about it. Okay, so we'll take a step back to last year. Last year was all about chat. And it's like, and everyone's used ChatGPT. We all get it. We type in a prompt, something comes back, awesome. And that's what's a very kind of interactive approach to the use of AI, right? Like you type a plot, it's like, oh, give me a blog post or do this for me. And it comes back with a response and you may do a follow up. But it's effectively this kind of back and forth interaction model with AI. What Asians. And as a result of that kind of interactive model, the tasks that you assign AI are generally more discrete. That says, okay, do this for me. There's a single artifact. Produce a blog post, generate image, whatever it happens to be. What agents are kind of very simply are. It's AI software that can accomplish higher level goals requiring multiple tasks, I mean, multiple steps. So it's not just a one shot. Give me a blog post. And it comes back with a blog post. It's like, I want you to do this thing. And that thing may require 10 steps. And each of those things, like as we were just talking about earlier, it might need to functionally decompose everything in order to accomplish that higher order goal. And it has to have memory, it has to do all these things in order to kind of make that possible. But that's what an AI agent is. And right now we're going to talk about agents. As it currently stands, my expectation is that agents are the new apps. It's just software, right? So when mobile came along, it's like, oh, there's an app for that. There's an app. It's like not that far in the distant future, everything is going to be, there's going to be hundreds of thousands of millions of agents the same way that there's lots and lots of apps out there. So think about agent. If it's simpler to do that, it's like it's just an AI app that happens to do really high order or can do higher goals requiring multiple, multiple steps. So the thing I think without getting into agent AI too much, here's kind of my view of the world in terms of how this is going to shape out. There's lots of debate going around. Oh, in order for it to be an AI, a true AI agent, it has to be autonomous. You can't have, you know, it's like you just have to be able to give it a goal. I'm more pragmatic than that. I don't think that's a requirement in order for something to be called an agent. But here's the important part. So if you kind of pull out that thread, the way the world looks soon is that we will have hybrid teams that consist of humans and consist of AI agents. And the easiest, simplest, and therefore in my. I'm going to say this with some conviction because it's better to do it that way. The easiest way to pull that off and the simplest way to describe it is if you think of the digital agent as a digital team member. Because that's the easiest way to get there from here. Right. It's like, okay, if you just say, I'm just going to hand it over and the agent's going to create the, like just do all the things. There's going to be no humans. Yeah, that might happen someday, but it's probably not going to happen as a direct jump from where we are today. What's likely going to happen is that individual tasks will get automated and we will start injecting and having these hybrid teams in the same way we had hybrid teams before. We had like all full time employees. Like, oh, I'm going to hire a freelancer for three months to do this because we don't need them forever or whatever, for whatever reason you did that. And they're like, that's okay, they don't work in the office. Then we had hybrid from a geographic perspective and now we're going to have hybrid from a carbon based life form versus non carbon based life form perspective.
- [49:19]
Sean Puri
It's basically like this. It's like we've got guests coming over and now my wife decomposes that into, okay, we need to clean the kitchen, we need to clean this area and we need to get food, we need to order food. And so she tells me, load the dishwasher. I go load the dishwasher. Then I hand it over to my agent, my dishwasher agent, who then will wash those dishes. And so I'm kind of the. She's the she decomposes it. I'm a human in the loop. I'm doing one step that hope ideally that we could have another robot that loads the dishwasher. But for that for now I do that. But the dishwasher is better at doing the dishes than I even was and will do it well every single time I trust that agent to do it. That's what the inside of companies is going to look like.
- [49:59]
Dharmesh Shah
Yes. And it might be that, you know, and I think we will have humans doing the review and approval for a vast majority of tasks. Right. So I think the digital team members, for lack of a better term are going to be doing lower level tasks to start with because that's the things we can trust them with. It's like, okay, well the stakes are much, much lower. It's like okay, producer, 10 versions of this blog article is really like super important for my business. But then let me pick the one that's actually going to go out and then once I pick the one that's going to go out because I'm a step in the process, the human doing that then the post production maybe is all digital. We don't know. Right.
- [50:30]
Sean Puri
Give us an example of an agent you're using that like you actually use now because you know, on a day to day basis or week to week basis is actually, you know, live. It's working. It's not just a cool demo at.
- [50:39]
Dharmesh Shah
Least a good, nice, simple example is I have an agent that says so I really like this episode of let's say my First Million and I recall hearing something about X like some word stuck into my mind and I want to write a LinkedIn post based on that. But here's what I want to happen. I want to all I'm going to give it as input. This is the instructions kind of MPC model, right? It's like okay, here's what you get from me is a YouTube video. What I want is an output is a LinkedIn post that's going to do well. By some definition of do well. We have training data on that. Okay. What it's going to do is going to say, okay, first step one, pull the transcript from a YouTube video. Step two, figure out who the players are. Step three, highlight the things that are quote worthy, tweet worthy, remark worthy, whatever it was happens to be. Step four, figure out what the hell Darbysh was actually asking about. There was a snippet in there that you made reference to. Clip that as well. Put that all into thing. Now they'll say okay, like what style happens to work well on LinkedIn specifically? I was like write me a 200 word prompt that describes the language and the style, whether it's bullet points, whether it uses emojis, doesn't use them. What works? Have an agent that does that, like a style creator thing, whatever. Take all of that and now produce a LinkedIn post and just give it to me.
- [51:55]
Sean Puri
And so you do that. You have a thing that does that.
- [51:57]
Dharmesh Shah
I have a thing that does that. And by the way, the really fun part about this, it's like Lego bricks, right? So I have an agent that does a YouTube transcript. Relatively straightforward, but it's a better YouTube transcript than the one that you would just get copying off the web because there's an LLM involved. It's like I want a YouTube transcript that has chapter headings which not going to be in the transcript, that's going to bold things that are actual quotes or whatever. It's going to format it in a way that's human, consumable way better transcript than the regular transcript you get out of YouTube.
- [52:24]
Sean Puri
So like, check this out. Dharmesh, have you seen this? Go to mfmvault.com mfm vault. My friend Greg is building this and it's not, it's not ready for, you know, the big time, but here we are. Let's, let's do it. So mfmvault.com you land here. So what he built basically a site that kind of works like what you described, just for specifically my first million podcasts and fans. Okay. So he's like, all right. He was like, I don't just want summaries, I want. He's like, you know, I like MFM because he's got ideas, it's got frameworks, it's got stories, and those are like the big things that he really cared about. So if I just go like first, he's got just like a bunch of. And AI is basically extracting those from every episode. It's like searching for frameworks, searching for stories, et cetera. But like, let me just show you this. If I go to episodes, we'll try this live, see if this works. And I typed Dharmesh and this is our last episode we did in 2023. So it's got the, you know, the overall summary with chapter titles like you said here. But check this out. So if I go to stories, it's like chat spot's $1 sale, Pandora's Manual Musicians. It's like the 17 year evolution of chat. And if I click that, it'll take me to that moment, but it'll also summarize it there's also frameworks in here, like an AI immersion week. Basically the idea here was how I dedicated a full week to just hands on experimentation with AI tools only. And so it is extracting and categorizing and linking these ideas from the podcast this way. But to do it, he's like you said, he strung together five agents. There's the listen for when there's a new episode. Then that guy says, I found a new episode. Pass it to the transcriber. Transcriber's like, I transcribed it. Pass it to the summarizer. And the extractor passes it to those guys. He's like, great. Turn that into clips. Pass it to the clip guy. Right. And each one of those is their own agent. And I think that's, that's. And then like you said, it's composable Lego block. So if I want to use a summarizer for something else, well, that's. Once that agent exists, he can summarize anything. Not just MFM episodes.
- [54:20]
Dharmesh Shah
Yep. That is the future, Sean. So just like a quick one sentence description. This is the positioning. I'm going to test it out on you guys as well. Is Agent AI is the number one professional network for AI agents. It is also the only professional network for AI agents.
- [54:40]
Sean Puri
Is LinkedIn for agents?
- [54:41]
Dharmesh Shah
Yes. Then the question is, why do agents need their own professional network? That's a reasonable question to ask. And the answer is, if we imagine that I happen to be right, that we're going to have this hybrid world where we have both AI teammates and carbon based lifeform teammates, well, how are we going to find those people? We have fiver for humans that we can sell. I need a logo created for whatever. I can go to Upwork. I want to hire someone for the next four months to do whatever skill set or whatever. There needs to be an equivalent of that for AI agents. Right. I don't know what's out there. Like, I don't know. And here's where it starts to get really kind of super cool. So imagine a professional network and it has ratings and reviews. It's got their experience. Like, oh, I'm an agent that does this. I've been used 40,000 times. And here are the people that like me. Dharmesh follows me on agent AI, Right? Because humans can follow agents, agents can follow other agents. And what's going to happen over time is that agents will be able to hire other agents on the network because everyone knows what everyone else can do. They can try other agents out. It's like oh, I've been given a budget of $100 to try five different agents to figure out which one is the best for my particular use case. And it can go without human intervention. Just go try that. It's like, oh, network. Like, yeah, I'll pay you. This other agent can do this. So over 30 years, I built a lot of software that is what I call solo software. Right? Like, just like software for me, for my public speaking. Count the LPMs in a talk, that kind of stuff. And then I found that most of those things. Yeah. By the way, I did not invent that term. Stand up comedians use that. That's been around forever. But yeah, I stole that from Sam.
- [56:22]
Sean Puri
It's something that funny. People like us, we know we wouldn't expect you to understand that. Dharmesh, can I ask you. I'm gonna ask you a rude question and then I'm gonna ask you a thoughtful question. But I'm gonna start with the rude question. The rude question is this, dude, you're a billionaire and you're super smart and you love all this new tech. Like, why aren't you doing the Elon thing? Elon's like cool. I did my Zip2, then I did PayPal, then I did Tesla, SpaceX. I'm gonna keep kind of building new companies, but bigger badder bets. You've been at HubSpot for so long, you've been there for. You've been doing CRM for like 30 years. Don't you feel like you want to just spread those wings, baby, and just fly and just go build your rockets and like, what's your. Why aren't you doing like a next grand act? That's my rude question for you.
- [57:10]
Dharmesh Shah
Yeah, no, it's not rude at all. And the answer is actually quite simple and has the added value of being true, is that this sort of is my next big act. So the problem is, okay, so let's say you're playing a video game. Pick up your video game of choice and you've kind of ground it out. You've built the things, you've got the weapons. You're there. Like you're now in kind of power mode you can do. Now let's say it's Zelda or something like that, which I love, one of my favorite games. And now you can just go out exploring and try things and do stuff because you've got all of that. If you're going to play a new game, there's a bunch of stuff you still have, even though, because you have to sort of get right, you're going to have to build a team. I'd have to go find a co founder. By the way, I've won the co founder lottery. Right. Like, I didn't, like no one knew it at the time, but that has a massive impact on your outcome. It's like there's so many things I'd have to get right just to be able to kind of do the next thing. I think my odds are doing the next, like, even something like agent AI, my odds are higher. Pulling that off with the infrastructure I already have beneath me in the form of HubSpot. And sometimes I have to squint a little in order to kind of squeeze the thing and make it fit in the HubSpot shake box. And I have mechanisms for which I can kind of do that. But I don't feel like I've ever been kept from doing the thing that would have been my big, bold idea as a result of being a CTO at HubSpot. If that were the case, yes, I would go. You know what, it's been a great ride. I wish the company well and will continue to be a cheerleader.
- [58:35]
Sean Puri
But I don't accept your answer. But I.
- [58:38]
Sam Parr
Wait, why don't you accept.
- [58:39]
Sean Puri
Why don't you accept it? Well, let's break it down. He's a logical guy. Let's break it down. So let's say he has a. Has things he's excited about. New technologies, new ideas, just potential. Potential to create cool shit in the world. All right, so there's two ways of looking at this. Either HubSpot. HubSpot is the best place to do that, which I would just view like. I'm not saying the infrastructure, I'm just saying like the company, HubSpot, which has like a specific mission and set of customers it needs to serve and like existing business model and all those things. The odds that your creative brain would latch onto an idea that also was like, should be on HubSpot's roadmap just seems like unlikely to me or just like an unnecessary limit that I wouldn't put on. Okay, so then let's say there is an idea that you, you get excited about your version of SpaceX or whatever it is, your neural link, whatever. The idea is either, well, HubSpot's not limiting me and I'm getting these benefits. Okay, cool. There's that trade. So it's kind of like, what would you gain if you actually were out on your own? You would, like, there's like all these things, like when people have their job and then they try to have a side hustle. There's one great thing when you go and you quit your job to do a startup, which is that you've now quit your job to do a startup. You've now told the world, you've told yourself, you've told everybody that, like, I'm gonna make a thing because I just gave up a thing and that means I gotta have a new thing now. And I think that the burn the boats thing is like, probably one of the only assets or advantages a startup in general has or an entrepreneur has is that they, they just go all in on something. They don't have any meetings about anything else, they don't have any distractions. And they've told the world, I'm going to do this. And I think there's something very powerful about that. And I think the. If I really wanted to turn the knob and be like, what would be the. And by the way, you don't have to do this. I'm not saying one needs to do this in life, but it's like, let me see what I can. Let me see how fast this car can go. Let me see what I'm capable of. I just view that you're more likely to see the highest potential version of you outside of HubSpot versus doing side projects while using HubSpot and then doing talking at Inbound and then taking these meetings. It's got to be the unblended version. The concentrated version had to be more potent than the blended version. So that's my case, Sean, trying to.
- [60:46]
Sam Parr
Convince a billionaire of a founder of a $35 billion company. Like, hey, what are you going to.
- [60:52]
Sean Puri
It's the, the ant telling the elephant how, how he should be walking.
- [60:55]
Sam Parr
What, are you going to quit your job and actually do something with your life and go in on your side project?
- [61:00]
Sean Puri
No, but take it as a compliment. It means I view you as a Elon level character. You know, that's very high praise.
- [61:07]
Dharmesh Shah
Thank you. I'll say this, I think it needs to be said. I am a big, big believer in kind of taking that leap of faith, right? And going out and doing the thing. And that's great. And I'll say it's going to sound offensive and I don't mean it to be, but as I kind of write the next chapters of my life, as I'm looking out, one of the questions I've asked myself is like, okay, it's like, what does success look like? Right? Like, okay, so what do I want to reflect back on of the things that I did right, and there's a couple of things that have kind of emerged from that reflection is I like to build things. And that is like the truest thing that there is. I like to build things right. And so one thing I've kind of managed to do, which doesn't happen often, so I don't have any direct reports because that would keep me from building things right? I if ever there was a time where it's like, oh, I can no longer build things as a result of X, whatever X happens to be, I will break down that wall, whatever it is, HubSpot or otherwise. So that's one thing. And I will say this. I think your point's really well taken, which is most of the time we have these kind of externally imposed rules on us. For instance, if you're an engineer, it's like, well, you're a cto, you shouldn't be writing code anymore. And I do not accept that thesis because software is a creative discipline. It's a very hits driven business. You have to be right a very few number of times. It's like we don't tell a musician that's really, really good. Oh, you can just stop like writing music and doing music and go hire somebody. We don't tell exceptional writers to stop writing and manage a team of writers. Like keep writing. Let the others do your best to minimize the stuff that's not writing time. And that's what I feel like I'm doing. I'm maximizing my build time. And to me it's in my personal mission statement is to help millions grow better. Like that's the simple, like I want to be able to look back on it and say I had a positive impact on the most number of people. Like that that multiply as like X amount of impact, whatever that impact is on y number of people. That's my truth function. And this is why I don't do one on one meeting. Because it doesn't scale, right? This is one of the reasons I'm here and not elsewhere. It's not just because I like you guys. It's because I can have an impact. And the reason I chose the topic, it's like, oh, this is what I want to talk about. It's like, oh, you know, what's the best way for me to use this time that if I look back on it or the people that are spending an hour and a half ish listening to this, was that a good use of my time? Did it actually Did Dharmesh Deliver on the promise of at least marginally increasing my probability of making my first or next million. Right. That's the.
- [63:39]
Sam Parr
You do this a lot. You kind of are telling a story and you have these little bits that are wildly fascinating. One of them being that you have a personal mission. Do you have personal values like a company does that you, you and your family or just you operate against.
- [63:52]
Dharmesh Shah
We've talked about it, we haven't done it. We have. So the, the HubSpot values are effectively the founders values. Right? That's where the original kind of company values came from. And there. And most companies are actually a reflection of their founders.
- [64:06]
Sean Puri
What, what is the most controversial or value that has the biggest trade off? Like not everybody would choose this, but we choose this. What, what's. What is that for you guys, right? Like not like integrity or you know, like whatever, things like that.
- [64:19]
Dharmesh Shah
Yeah. One of ones that almost didn't make the cut. Not because we don't agree with the value, but there were others is humility, like humbleness. Right. And like the common argument that comes back is like we're supposed to be a winning team, we're aggressive, which we are. Right. And so people often confuse humility with a lack of confidence or a lack of aggression, assertiveness or all these things. That's not it at all. Right. The humility is being self aware, is being able to recognize and not being a know it all. It's like I'm here to learn, having that kind of. And that is a large part of what drives HubSpot. And so I kind of, I fought for that value for a long, long time. The second most controversial one is empathy, which is our second value and that it didn't always used to be empathy. We changed along the way.
- [65:02]
Sean Puri
Sam, what's our values on the pod?
- [65:04]
Sam Parr
Yeah, that's a good question. The reason I've been asking this is like, well I've been like thinking about like, do I have values? Like what, what are my values? Like it's kind of cool.
- [65:14]
Sean Puri
Is denim a value or a jack?
- [65:16]
Sam Parr
Like it's kind of cool to like codify it. But no, like we don't mfm well, like we kind of have values. Like we said the. We've had people in the pod who are like, have done like bad stuff and they're like, are you gonna like crucify me? And we're like, well like our default is not to like criticize. It's like to build people up. But sometimes that might happen. But anyway we like. So we have a Couple. But it's interesting to kind of explicitly say these are the values of X, Y and Z. And Mark Zuckerberg, I read this cool thing about him, or maybe he even told me in the pod, Sean, where he was like, a value means you have to sacrifice something. So move fast and break things means we are going to move fast. And because of that, I am okay with breaking stuff. Like it, like too many people, their values are things that are just obvious, that don't involve a sacrifice, that are just platitudes.
- [66:04]
Sean Puri
And by the way, there's not many of these. So for example, move fast and break things I think is the pantheon, the hall of fame of like, you know, values. Another one is like Ray Dalio's Bridgewater thing. They have like radical honesty or radical candor, which is like, we are going to uncomfortably be honest with each other and we just think that that maximizes in the long run. But in the short run, this is not going to be like anywhere else you've worked because we take that, we take that seriously, we take the trade off, which is discomfort for the upside of, you know, being radically honest. So I think that's one thing I.
- [66:36]
Dharmesh Shah
Have just because it jumped to my end and I think it's a useful thing. So we talk about maximizing, right? And that's. I love that word. And many of you have likely heard of this notion of like finding the maximum. And then the trap that people fall into is finding the local maximum versus the global maximum. And just from a layperson's perspective, it's like, imagine that you're kind of looking at a graph like a normal. Imagine a bell curve for those listening. And it's like, oh, there's a point at which that value is the highest, right? Top of the hill, so to speak. In mathematical terms, the kind of local versus global max is like, okay, well that's the highest point. But let's say you were to zoom out on that same graph and then there's this other bell curve right next to it, which is an even higher maxima. It's like, okay, well if you were just solving based on that chart that you were looking at, because you were zoomed in, you didn't actually find a maximum, you found the local maximum, not the global maximum. That's the and so here's the and so that one. That part of it is obvious. The non obvious part is that often in order to even see the global maximum, you actually have to climb the local maximum hill. It can't be an abstract sit on the sidelines. It's like, oh, I'm going to go wander around. What you have to do sometimes is you have to make the effort to climb the smaller hill. You get to the top of the spot, it's like, oh, now I see the landscape. And there's that massive mountain over there, which is the thing that I'm actually meant to go do. And so part of it, and this goes back to the kind of connecting dots thesis as well. It's like sometimes you have to do the thing that does not seem like the big bet in order to have the perspective to see what the big bet's going to be. Right.
- [68:05]
Sean Puri
Sam, have you heard this concept of RAs, like, instead of SaaS companies. RAs companies.
- [68:09]
Sam Parr
Know what this is? I put that on there and I was like, is that like a different word? Like, riz. What does. I was like, does this like ras?
- [68:17]
Dharmesh Shah
Is that.
- [68:18]
Sam Parr
Is it gonna, like, make fun of? Is. Is RAS meaning, like, you're gonna make fun of me? Like, I'm gonna harass you?
- [68:23]
Sean Puri
No, this is a big idea. Dharmesh, could you do the do?
- [68:25]
Dharmesh Shah
Yeah. Well, I'll be honest. So we all know SaaS, which is software as a service. And we contrast software as a service to software as it used to exist back in, like, back in my day, I can say that now. And back in my day, software was shipped in boxes on CDs and things like that. And you kind of plugged it into your computer and loaded the software up to do whatever you wanted to do. And software as a service was, oh, you don't actually buy the box, you don't buy the CD or whatever. We just provide the value of the software to you as a service over. Over the Internet, over the cloud. Results as a service is like, actually, you don't even access the software. You tell us what it is that you actually want to do, what's the outcome that you're looking for? And we'll just sell you that you.
- [69:06]
Sean Puri
Want the LinkedIn blog post at the end.
- [69:09]
Dharmesh Shah
A good example would be like, oh, I could sell you, like, legal software to kind of analyze a contract in the real estate space. That will give you commentary on whether this matches benchmarks or even, in the VC world, a term sheet or something like that. It's like, oh, your software that will help you, like, power write a real estate contract and do the editing.
- [69:26]
Sam Parr
It's like HubSpot. Here's software that you can write blog posts to capture emails and get more customers.
- [69:31]
Dharmesh Shah
Yes. But this thing is like, okay, well, what if you could just skip the intermediate steps, like, oh, you want more customers? What are you willing to pay for customers? And this idea is almost as old as time, right? Which is because we've had like, in that particular example, we've had lead gen companies forever, right? Which is effectively results as a service. Like, don't worry about phone numbers, don't worry about this thing called the Internet or whatever. Pay us X amount of dollars every time your phone rings.
- [69:55]
Sam Parr
Well, and it's also a sales technique which is like, do you want guests to feel great at your home and to be popular? Okay, buy our vacuum to keep your carpet clean.
- [70:03]
Dharmesh Shah
Yes, that's exactly. Yeah, well, we've had that. Yeah. The copyright people don't buy. Don't want drills, they want holes. Right? Like, that's the drill, is a tool hole, is the actual outcome desired. So RAS is kind of the next kind of wave of software, which there will still be software being used by whoever's providing the results of the service. That's how the thing gets accomplished. But the way it might be packaged and sold might end up being RAs. One thing just closing out on the agent front as far as the call to action. So I forget the name of the guy that built the MFM vault. Greg. Greg. So what Greg did in terms of sequencing these things together, so he effectively built an agent. It has multi steps. Each individual step may call other AI tools Agent AI not only is a professional network for distributing agents and finding agents, discovering agents, reviewing and rating agents and talking about agents. It also has what's called an agent builder, which is a platform for building agents without writing code.
- [71:07]
Sam Parr
You've had a good quarter HubSpot stock, I think almost hit an all time high. You sold a business or you sold a domain to OpenAI came on the podcast, you came on the pod. I don't care what they say about you, Dharmesh, you're doing okay.
- [71:22]
Dharmesh Shah
I'm doing okay. I'm doing okay. Thank you.
- [71:24]
Sam Parr
I don't care what they say. You're all right.
- [71:26]
Sean Puri
What I love about you is you have a bunch of things that sound like paradoxes. Like you're extremely gentle and kind. You're also, I would say, competitive and aggressive in other ways. I think you are humble. But then you're also a marketer and you're like, oh, I could see the marketing value of this and the practical value of this. But I also, you know, I'd rather be, you know, quiet, low key, I don't need to brag. And so you have all these like, contradictory things. Which I think makes you interesting.
- [71:54]
Sam Parr
Hey, by the way, is this. You said there's. You go, as soon as I get on a leaderboard, I want to be number one.
- [71:58]
Dharmesh Shah
Yeah.
- [71:59]
Sean Puri
You're like, but then I don't want.
- [71:59]
Dharmesh Shah
To be on the bottom of this leaderboard.
- [72:01]
Sam Parr
Is this a leaderboard where you're like, I would like to be richer because it would be like, like, like, I think you might try to be cool and be like, no, I'm happy. But like, I think with every level you are on, whether you were worth 1 billion, you want to get 10. Whether you have 10, you want to get to 50. Just like, no matter how ripped you get, you want to get a little bit more ripped. Like, is it.
- [72:22]
Dharmesh Shah
Is it.
- [72:22]
Sam Parr
How much of a motivator is like, you know, it says one on Forbes now. How do I make it say 10? 10 billion?
- [72:28]
Dharmesh Shah
Yeah, yeah, yeah. Well, it's. It's a really good question. I tend not to have explicit goals. Like, goal setting is not something. And I'm not discounting it. I'm not disparaging it at all. Some of the smartest people have goals that have those kind of really concrete things that they're shooting for. It's not that I don't do it now. I never really did that. It's like, okay, I want to get better. I want to have money. I want to be able to have freedom, make choices. I want to have the things. This is. I've said this before. I like to configure the universe to my liking to the best of my ability. And whatever resources I can kind of accrue to help make that possible, I will go try to find a way to make that possible. Right? So deep down inside my soul, I'm a math and physics guy that's not smart enough to be a math and physics guy, right? And my truth function is like I said before, it's like, okay, I'm trying to create, based on that mission statement, positive impact for the most number of people. Multiply X by Y. And the marketing is part of that. It's like, okay, well, I'm not going to be able to impact people if I'm not doing some marketing. It's like, I can say the most brilliant things in the world if only 17 people look at them. Then the value of x is 17 for that particular unit of work. And that's just not how I operate. I will make sacrifices and other funds in order to solve the true, like, truth function to solve for the mission. For me personally, that's sort of. That was the. The balance there.
- [73:54]
Sean Puri
We talked about a bunch of stuff. You had opening remarks. Do you have a closing remark? Is there. Is there a way you want to end it? Did you achieve your mission of saying what you thought would help somebody increase their odds?
- [74:06]
Dharmesh Shah
My ask, my favor is leave a comment and let me know what you thought. That's where I keep scoring. That's the leaderboard I'm after right now, Sam. It's like I'm number five on the YouTube list. I know. Comments and engagement actually help the algorithm. Probably more than likes do, by the way, for the record.
- [74:22]
Sam Parr
So, dude, you're the man. We appreciate you doing this. I have a notebook here where I take notes. I'm not going to turn it. I don't want people to see it. But I have filled three pages of notes, so. You're the man.
- [74:36]
Dharmesh Shah
It's always a pleasure to be on. Thanks. Thanks for having me. Thanks for indulging my quirks, dude.
- [74:41]
Sean Puri
You're great, man. You're fun to hang out with. You are fun to hang out with. You're fun to talk to. I feel energized when I talk to you.
- [74:46]
Dharmesh Shah
It's good to see you guys.
- [74:47]
Sam Parr
We appreciate you. That's a podcast.
- [74:49]
Dharmesh Shah
I feel like I could rule the world I know I could be what I want to I put my all in it like days off on a.
- [74:57]
Sam Parr
Road let's travel never looking back.