SaaStr 784: What Really Works When Hiring VPs and Executive Teams with HubSpot Co-Founder and Chairman Brian Halligan and SaaStr CEO and Founder Jason Lemkin

Summary

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SaaStr 784: What Really Works When Hiring VPs and Executive Teams with HubSpot Co-Founder and Chairman Brian Halligan and SaaStr CEO and Founder Jason Lemkin

Podcast: The Official SaaStr Podcast
Host: Jason Lemkin
Guests: Brian Halligan (Co-Founder and Chairman, HubSpot), Dharmesh Shah (Co-Founder, HubSpot - occasional interjections)
Date: January 3, 2025

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Episode Overview

This insightful episode dives deep into the challenges and best practices of hiring executive teams and VPs, drawing on Brian Halligan’s extensive experience growing HubSpot from startup to SaaS powerhouse. Jason Lemkin pushes for actionable insights, focusing on how to improve executive hiring, the pitfalls of bringing in high-profile veterans, the underestimated value of homegrown talent, and the evolving dynamics of work in SaaS startups. The duo also discusses executive retention, cultural fit, the myths surrounding M&A, and the relentless intensity required of today’s founders.

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Key Discussion Points & Insights

1. The Importance of Knowing the Product

[00:01–00:28; 17:51–22:12]

• Jason Lemkin’s Opening Rant: Many executives join growth-stage startups without truly learning the product, leading to poor outcomes.
  • Quote (Jason Lemkin, 00:01):
    “I’m obsessed about executives not joining startups today that don’t know the product... If you don’t know the product, how can you survive? It’s just brutal.”
• HubSpot Practice: New hires, especially reps, are required to actually use the HubSpot platform—building a website, syncing LinkedIn, importing contacts, running campaigns—and present their business as a test.
  • Quote (Brian Halligan, 00:28):
    “All the reps really viscerally understood the value and really knew the product. I think that helped a lot.”
• Industry Drift: During high-growth times (e.g., 2020), the rigor of “demo” hiring and deep product onboarding faded industry-wide, which both agree has had negative consequences.

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2. Hit Rate of Executive Hires: A Grim Reality

[02:31–03:43]

• The Panelist Trap: Consensus hires often lead to mediocrity. Too many “safe” selections result in lack of standout talent.
  • Quote (Brian Halligan, 04:12):
    “We picked the guy who got all threes and he didn’t work out... We hired for lowest common denominator. I think you should hire for somebody spiky.”
• Success Rate Benchmark: Even with careful process, only 50–60% of executives pan out.
  • Quote (Brian Halligan, 02:57):
    “If you’re hiring people and 18 months later 60% of them are gone—misery loves company. I think it’s pretty typical.”

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3. “Spiky” Candidates & Smaller Panels

[04:07–05:18]

• Shift in Approach: Halligan advocates hiring “spiky” candidates (those with standout strengths), not just consensus-safe picks.
• Smaller Interview Panels: Reducing the number of interviewers (to around four trusted people) and ensuring at least one true champion is a better strategy than gathering broad but shallow approval.

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4. Avoiding Mis-Hires from “Big Tech” Backgrounds

[05:18–06:29]

• Poor Fit with Corporate Veterans: Halligan argues that hires directly from giants like Google or Microsoft tend not to adapt well to high-growth SaaS environments due to different abstraction levels and support structures.
  • Quote (Brian Halligan, 05:18):
    “We just don’t hire anyone from Microsoft or a giant company... It’s like a different level of abstraction from where we’re at.”

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5. Cultural Fit, Motivation, and Reference Checks

[08:04–09:03]

• Why Are They Leaving?: The motivation for a candidate’s move—were they passed over, fired, or genuinely seeking new challenges—is crucial.
  • Quote (Brian Halligan, 08:09):
    “We really try to avoid it... We almost never hire somebody where we don’t know somebody on the inside that we can really check it.”

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6. Homegrown Talent is Underrated

[10:16–14:42]

• Venture Capitalists Push for Upgrades: Each funding round often brings pressure to "upgrade the team," but Halligan believes in developing talent from within.
  • Quote (Brian Halligan, 10:16):
    “Homegrown talent is dramatically underrated... You look across HubSpot’s management, everyone’s been there at least 10 years. Grew up in their career.”
• SMB at Bats: Lemkin notes, especially for SMB-focused SaaS, homegrown sales talent thrive due to high volume and learning opportunities.
  • Quote (Jason Lemkin, 12:40):
    “The more SMB you are, the better it works because you get so many at bats.”

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7. The 50/50 Internal vs External Hiring Rule: Rethinking It

[13:47–15:38]

• Lemkin’s Rule: 50% of execs should be sourced externally to bring in fresh DNA, and 50% promoted internally.
• Halligan’s View: Now questions this dogma; suggests possibly leaning 75% internal “if you get somebody who’s killing it, lean in.”
  • Quote (Brian Halligan, 14:39):
    “If you get somebody who’s killing it, lean in.”

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8. Real-World Failure Stories: The Cost of Hire Misfit

[16:08–19:49]

• Failed Big-Company Hires: Lemkin shares how Adobe’s hire of an Intuit VP never panned out because they didn’t learn the product, leading to massive market share losses.
  • Quote (Jason Lemkin, 17:51):
    “They never learned the product. They didn’t even try. They ran the playbook... but never learned the product.”
  • Example: CTO’s lack of understanding mobile needs led to unhappy customers like Groupon.

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9. The Changing Nature of Work and the “Intensity Gap”

[22:12–26:24]

• Expectations & Burnout: Startups now contend with new generational attitudes, remote work expectations, and less willingness for “old school” hustle.
• Founders Are Working Harder Than Ever: Both agree founders are more obsessed and work longer hours.
  • Quote (Brian Halligan, 24:16):
    “The founders today are tireless... I think obsession is a good feature in a founder.”
• Challenge in Building Teams: Lemkin laments the difficulty of finding non-founder team members willing to match founder intensity.
  • Quote (Jason Lemkin, 25:57):
    “I think it’s hard to find more than 10 people on your team that want to work at that intensity.”

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10. Myth vs Reality of M&A (Acquisition Offers)

[26:26–36:54]

• Real Offers Are Rare: Despite VC and social media hype, meaningful acquisition offers above $1B are uncommon.

  • Quote (Brian Halligan, 26:36):
    “We didn’t... Salesforce never made a serious acquisition offer. All this rumors... but no, we didn’t.”

• One Acquirer Risk: Beware when only one logical acquirer exists; if they buy a competitor, the window closes and you may lose your best “out.”

• M&A is Inbound, Not Outbound: “Waking up to sell” rarely works; acquisition interest must come unprompted from potential buyers.

  • Quote (Brian Halligan, 30:40):
    “If you want to sell your company, no one’s going to want to buy it... It has to be inbound.”

• People Drive Deals: In all HubSpot’s acquisitions, there was always “someone on the exec team who is like the champion... It helps if it’s the CEO.”

  • Quote (Brian Halligan, 35:51):
    “In the case of these three acquisitions... the CEO, the founder and the CEO mattered and we wanted to keep our that founder/CEO. It’s like interviewing a VP.”

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Notable Quotes & Memorable Moments

• On panel interviews and “spiky” hires:
  “We hired for lowest common denominator, not someone who’s spiky. Should hire for somebody spiky.”
  — Brian Halligan (04:12)

• On the real measure of hiring:
  “Even with careful process, only 50–60% of executives pan out.”
  — Brian Halligan (02:57)

• On big company veterans:
  “We’ve had bad luck with the Microsoft signals. Not that they're amazing. Just, like, just didn’t fit.”
  — Brian Halligan (05:18)

• On reference checks:
  “Everyone got very lazy on reference checks.”
  — Jason Lemkin (21:38)

• On homegrown talent:
  “If you get somebody who’s killing it, lean in.”
  — Brian Halligan (14:39)

• On acquisition offers:
  “If you want to sell your company, no one’s going to want to buy it. It has to be inbound.”
  — Brian Halligan (30:40)

• On what kills teams:
  “They never learned the product. They didn’t even try. ... How can you survive today if you don’t know the product?”
  — Jason Lemkin (17:51)

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Key Timestamps

• 00:01 – Executive hires must know the product
• 02:31 – Only 50–60% of execs make it; consensus hiring vs. “spiky” strengths
• 05:18 – Avoiding hires from too-large companies
• 10:16 – The Homegrown Talent case
• 12:40 – The “at bats” for SMB sales teams
• 14:13 – Rethinking the 50/50 internal/external hire split
• 17:51 – Product knowledge failures and team decay
• 22:12 – Generational shift in work ethic and SaaS company building
• 26:36 – M&A offers: myth vs. reality; importance of relationships
• 30:40 – M&A almost always has to be inbound
• 35:51 – Acquisitions and the importance of founder/CEO fit

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Conclusion

This episode is a masterclass on the “real talk” of executive hiring in SaaS, filled with hard-won lessons, cautionary tales, and tactical advice. Halligan and Lemkin pull back the curtain on strategies they actually use, the failures they’ve seen, and where the tech industry still needs to rethink conventional wisdom. If you’re hiring VPs or building a SaaS executive bench, this is a can’t-miss episode.

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Transcript

[Jason Lemkin]

Welcome to the official Saster podcast where you can hear some of the best Saster speakers. This is where the cloud meets up today on the Saster podcast. I'm obsessed about executives not joining startups today that don't know the product. This is the problem I see today. All so many veterans that work 10 years wherever they don't really learn the product before they start. If you don't know the product, how can you survive? It's just brutal, right? One of the things we did at.

[Brian Halligan]

HubSpot is we hired a new rep. They're training. Once it's sales training and training wise, you've got to learn HubSpot pick, start your own small business, buy a domain, build a website, your contacts in there, sync your LinkedIn and do an email marketing campaign. And then the test was after the three weeks of training I would test was in front of me. They have to present their business to me and show me their website. Show me all that. Yeah, all the reps really viscerally understood the value and really knew the product. I think that helped a lot.

[Jason Lemkin]

Hey everybody. Thanks to the 10,000 of you who came out to Saster Annual this year. We had a blast and big news. We'll be back in May of 2025 or in May of next year. That's right, SAS training will be a bit earlier next year. The 13th to 15th of May 2025. We'll still be back at the same venue in the SFB on our 40 acre San Mateo county event center campus. And tickets are never cheaper than right now. So grab your tickets@saster annual.com with my code Jason50 for an extra discount on our very, very best pricing. That's Jason50asteraster annual dot com. See you next May at Saster 2025. Okay, we've dug into a lot of things. Do you have time for three questions on the journey? So Brian did a LinkedIn post and a Twitter that got a lot of engagement on YouTube and others. I'll link to it. It was on the Journey at first I thought some of it might be looking backwards too much, but actually it's all pretty, pretty darn good. I'd encourage everybody to read it. A couple of things that stood out, a lot of things that stood out to me. Let me pick two out of order. One was something you said that I just think is so helpful and it was something that Dev from Mongo said years ago at Saster that I missed. I just refound it, he said and he's a great operator, right? VC the whole thing. He said, you're lucky if 60 of your management team really works out. This was in a conversation with Jody Bonsall you said something pretty similar like half.

[Dharmesh Shah]

Right.

[Jason Lemkin]

And I'll find the exact quote. But it was pretty interesting. And this is. I actually think once you even have 2 million in revenue, all that matters is the management team. Nothing else matters. You think competition matters but a great head of engineering and product will outpace the competition.

[Dharmesh Shah]

Right.

[Jason Lemkin]

A great growth marketer will max. A great sales team can punch above their weight class. Is that what you think? 50% of them. What's that?

[Brian Halligan]

I would push back on that, but I would say 50, 60%. So I. One of the things I do at SCO, I run something called the kids table and the adults table. The kids table is a company between 5 and 50 million growing infinitely fast. The adult stable is companies between 50 and 500 growing at least 70%. And I just saw with HubSpot like we've hired a lot of ex, many haven't worked out and then they just started asking around. The kids table and the adult stable is similar. So if you are. If you're hiring people and 18 months later 60% of them are gone, misery less company. I think it's pretty typical. Now it might be a little bit. There is a couple of things at least that we're trying in HubSpot to try to get better.

[Jason Lemkin]

Better at it. I'll give you an example.

[Brian Halligan]

Like we were hiring a head of revenue at one point and we had eight people on the panel to interview the head of revenue and all eight people gave him a three out of four. So good solid. Everyone's solid on them. And we had somebody else that got four fours and four twos on a.

[Jason Lemkin]

Scale of one to four. Yeah, I picked the latter. But I want to hear the story anyway.

[Brian Halligan]

We picked the guy who got all threes and he didn't work out. And my lesson is and he didn't work out for a lot of reasons. But one of the reasons is we hired for a lack of strength. Not for we hired for lowest common denote we didn't hire for someone who's spiky. And I think you should hire for somebody spiky. I also think the per the person you're hiring.

[Jason Lemkin]

Yeah.

[Brian Halligan]

There needs to be at least one person. It's like a venture deal. It's Sequoia. Needs to be at least one person around the table. That is I put. I gave this person a four by four by crook. I'm going to make this person successful. And if it's all threes, everyone's got somebody else will worry about them. So that. That's one thing. That's one thing we changed. Yamini, Dharmesh and I have changed that. And it's. Unless it's two other three of us or four, this is the thing we change is the size of the panel. Like, the more people you have on there. I don't know. We just said we're gonna have four people interview these folks, and we trust these four. It's our mash. Yamini, myself, maybe one other person.

[Jason Lemkin]

Yeah.

[Brian Halligan]

And if it's. If we got a couple fours on there, as long as we don't have a bunch of ones, like, we're gonna go with it. So we go for Spike here we go for smaller panels. That's. I don't know. I feel like our last two hires were excellent. Still honeymoon period, but everyone's really good about them. Those two little hacks helped us. The other hack that's helped us is we just don't hire anyone from Google or Microsoft or a giant company that it's like a different level of abstraction from where we're at and is used to having, you know, a lot of staff and a lot of help around it. Maybe we're still earlier in our journey, but we like to hire people. Call it ServiceNow or Atlassian or companies like that. They're a little ahead of us on the journey who have seen the movie recently. We've had bad luck with the Microsoft signals. Not that they're amazing. Just, like, just didn't fit.

[Jason Lemkin]

Yeah. Let me ask you two questions about that. So with these refinements, what percent of the VPs, not putting the last two on the spot or anything that you just hired, but what percent do you think can you make successful? Is it higher than 60? Is it 70? Where. What's. What's a yardstick? Where it's you, not them. What percent could you expect to work out?

[Brian Halligan]

These learnings are relatively recent. Like the last, we had a bunch of turnover, and it was like, man, we got to rethink how we're doing this. And those are two of the changes we made. And frankly, Jerry's very much out on this, but we're all feeling pretty good about it. And I do think, like, when they fail, that 60%, part of it is HubSpot's got a unique culture. It runs pretty heavy on the tracks. It's very much a culture, like a first principle thinking type of culture. So if you come in with like your playbook of how you did [e-mail] and we're going to do it here. The immune system will push that pretty hard on you. And so part of it is, I think it's not the easiest place to join. I think it's an amazing place. But I think, yeah, half of it is the person we hire and how we hire them. And part of it is our culture is unique and it's special.

[Jason Lemkin]

Yes. All right, one other question. Maybe this one's a slightly tough one. So, but. So this has nothing to do with HubSpot. This is my life experience. When you hire the folks to stage ahead, you're like, listen, we want it lasting in service now. So there's nothing to do with the last at HubSpot. This is what I saw at my tenure at Adobe. The problem with some of those folks is they're often the ones that got fired. Like, they're not like is HubSpot is more dynamic than Atlassian. I get it. But Atlassian is still. It's not like this had. When you're what these almost peer executives. Right. How do you make sure they're jumping for the right reason?

[Brian Halligan]

I. We really try to figure that out.

[Jason Lemkin]

It's complicated.

[Dharmesh Shah]

Right.

[Brian Halligan]

But we, okay. We almost never hire somebody where we don't know somebody on the inside that we can really check it. Like, anyway, we have. Yeah, we, it. We really try to avoid it. What happens a lot.

[Jason Lemkin]

Yeah.

[Brian Halligan]

So right now we're looking for a VP or SVP of FP and A. For example, the woman who left HubSpot, I got a CFO job. She's terrific. We're looking for a replacement. And the person we're talking to, I'm not saying the company she's coming from got passed over for the CFO job at her company. The company in question is talking about going public. The one somebody who'd been there, done that in the public company and she passed over, she wants to be a cfo, blah, blah, blah, blah. And so we're getting here. I like that. I'm, I'm cool with that. I'm not cool with somebody who got pushed out. And we try to suss that out.

[Jason Lemkin]

Yeah, it was tough. It was. I, I think a lot has changed. But when I was Adobe, the hiring criteria for a vp, it was. It was to hire a VP to give them that title.

[Dharmesh Shah]

Right.

[Jason Lemkin]

At whatever level of VP it was, they had to have been a VP at a peer company.

[Brian Halligan]

We don't say that, but.

[Jason Lemkin]

So what was Crazy was you could only hire from Intuit Microsoft and so they were always people that got pushed out or fired. Because I'm going to go from VP of, of SVP of whatever at Microsoft to SVP or whatever at Adobe. It just, there are instances but it's tough. You got to hire the ask the director or something for to have a reason to go to. So everyone I met for through the recruiting was just fired from one of the peer companies. I'm like, I can't do that, man. All the VPs of engineering candidates they brought in, they were all.

[Brian Halligan]

They must have. Don't you think they would.

[Jason Lemkin]

They did, they did. And, and I, I thought it was crazy, but I get it. It's just too tight.

[Dharmesh Shah]

Right?

[Jason Lemkin]

It's we have to have a standard so you could come in but otherwise you'd have to come in as a director or something. No. 1 Demotions are tough too at big, bigger companies. Right. People don't vibe the demotion.

[Dharmesh Shah]

Yeah.

[Brian Halligan]

The other thing I would say about all this stuff is I see it. I saw in every round HubSpot raise, the new venture capital comes on board. First thing we need to do is upgrade the team. And I just think homegrown talent is dramatically underrated. Like you look across HubSpot's management. You like you go to HubSpot's management team now different. Everybody's been there at least 10 years, grew up in their career. That's our head of product or head of engineering. Like pretty much everybody, a bunch of them we hire at a business school out of engineering school. It came up through our farm system and I think VCs are too quick to discount that and they get all the context. They bleed orange like it's. And if you look at Apple and Microsoft like there's a lot of that and so I think that's a best practice for particularly for new venture capitalists. That may be. I think that's an overrated best practice.

[Jason Lemkin]

Yeah. I think this is. I just got two more questions for you. But this is one of the follow up on this. Was the home your theme in the post on homegrown talent, right. I, I, I, it's the least risky bet you have, right? Is backing your winners that you have in house.

[Dharmesh Shah]

Right.

[Jason Lemkin]

Bringing in outsiders until you have to is so risky.

[Brian Halligan]

Super risky.

[Jason Lemkin]

So risky.

[Dharmesh Shah]

Right.

[Brian Halligan]

The other thing I would say is okay, you have this director and you want them to become a VP or whatever and put them on a development plan and all that I make. I'm against conventionalism but There's a lot of conventionalism. Others like you need to develop them and the boss needs to develop them and they need the internal mentors. And I never really no one ever, I never, no one was ever like I'm your mentor, he's my mentor, she's my mentor. I never went through like a training program. I just was self motivated and I like to learn and I tried to get better and yeah, I would ask my boss for advice and most of my boss was like leaning on my head and so I under underrate organizations ability to develop the up and comer.

[Jason Lemkin]

Yeah. Another subtle thing that I suspect worked well at HubSpot that sometimes people miss is the more SMB you are, the better it works because you get so many at bats.

[Dharmesh Shah]

Right.

[Jason Lemkin]

When I look at our old sales team, the first salesperson in at gong ended up running sales for years. The first guy at Rippling is the CRO today. And they were great, but they didn't cut. They came in as the first rep. And there's many reasons, but one reason is if you're closing 500 deals a year, you get a lot of reps. If you're closing three $10 million deals, it's very hard to be homegrown talent.

[Dharmesh Shah]

Right.

[Jason Lemkin]

And so I think the more SMB you are, the more you should lean on your bench because my God, they know so much in 24 months, right? They know they get so many at bats.

[Brian Halligan]

A lot of at bats rep wise, but engineering wise, product wise, CFO wise.

[Jason Lemkin]

There'S no benefit there. No benefit outside. You're right. No benefit outside of sales. Really?

[Brian Halligan]

Yeah. I've been super impressed with how well our homegrown talent has been and they carried us a long way. And I look at Apple and it's pretty similar. We model ourselves. The one company we model after is Apple. We're no Apple. They'd be like we are and we try to copy them. It gives me a good feeling in my heart when Ferling Getty gets up there and does a presentation because he's been there since he was like 14.

[Jason Lemkin]

And then one last question on this and I want to hit at least one more and then we'll break. I made, I try to speak with data, but there's one rule I've made up and I can't find any data to support it. But I think it's a good one. Which is the 5050 rule for your executives. Promote 50% from within and source 50% from without to get new DNA. If you go too far, if you're all from within. It's great. But eventually the group thing can set in.

[Dharmesh Shah]

Right.

[Jason Lemkin]

If it's all from outside, it's so risk. It's so you lose all the DNA.

[Dharmesh Shah]

Right.

[Jason Lemkin]

Did you have any targets like that at HubSpot or have you thought are there any goals in terms of internal versus external for leadership?

[Brian Halligan]

I always had that exact same thing. Maybe I stole it from you for years, but now. Now I'm questioning it.

[Jason Lemkin]

Cross Gina, what do you think the ratio should be?

[Brian Halligan]

I think internal. I like the internals.

[Jason Lemkin]

Oh, lean in even higher. 75, 25 or something.

[Dharmesh Shah]

Right?

[Brian Halligan]

Yeah. If you get somebody who's killing you, lean in.

[Jason Lemkin]

Yeah. Yeah. I was at a board meeting this week at a company called Mango Mint which is. Sounds like a hard one. It's. It's S B SAS for beauties and salons. It's the worst of the worst on the two by two small tam and super competitive. Nothing harder, right? Nothing harder. But they're coming up on 20 million growing over 100 with 110 NRR and I sat with the head of sales but I didn't really know her background. She was the first person in. She actually had volunteered to join. No. She didn't even take any money when she started and she came out of the industry she was like a hairdresser or something. She had no classical. But this is seven years later and she has an incredible team and knows it cold. And we're. She's talking about how to. She hasn't done this phase before and I'm like my bet's on you.

[Brian Halligan]

Yeah.

[Jason Lemkin]

Hire two great VPs under you as you scale two great leaders. Go hire the.

[Brian Halligan]

She went. Ran a hair. Hair salon.

[Jason Lemkin]

Yeah. She worked in one. Yeah. So it's. But this so much. You'll never. You want to bet on those people until they say they can't sk. But she has all the energy all the wants to build the team did. It's you want to. That's the 7525. You want to bet on those folks as far as they can humanly go rather than have the. The stuffed shirt. Bring in someone that from I love Service Titan but bring someone in from Service Titan at 700 million AR that just got fired. I don't know if they're going to crush it.

[Brian Halligan]

And how do you think you did. I'll ask you a question. Back at Adobe when you hired that person into it who was a VP and you kept the person at a VP level and they were fired from there and QuickBooks, blah, blah, blah.

[Jason Lemkin]

Yeah.

[Brian Halligan]

Did it work ever here?

[Jason Lemkin]

The market share went from 28% to 11%. So what do you think the answer is?

[Brian Halligan]

Market share?

[Jason Lemkin]

What E Signature space. When we sold, this is why it was stupid to sell. We had 28% market share by revenue and maybe 40% by transactions because we were cheaper than DocuSign. It was 11 within two years of me leaving.

[Brian Halligan]

Wow.

[Jason Lemkin]

It's hard to go from 28 to 11, isn't it?

[Brian Halligan]

In a. This is the.

[Jason Lemkin]

Yeah, it stayed for a while. When my sales team stayed, they stayed a while, but as soon as they were left and it was those. And it's. It sounds critical and it is critical, but it's also just a learning.

[Dharmesh Shah]

Right.

[Jason Lemkin]

The market share rapidly decayed after the team was gone. It rapidly. And now I suspect it's in single digits and it retreated. Some of it's for logical. They retreated to verticals they liked by government and education. But the problem is we were good in tech and like sales and so they retreated to areas we were. So if you retreat to areas you're weak, you can push it through the channel. But it's like a double whammy, isn't it? Like, and. But that's what happened. Going from 28 to 11 in SAS is hard with renewals and stuff. It's hard.

[Brian Halligan]

Make sure you answer the question I asked.

[Jason Lemkin]

Sorry, I thought the number might, but maybe I misunderstood the question.

[Brian Halligan]

Yeah, answer my. But you're in Adobe, you're hiring people. You hire that Intuit person. Yes, they got fired, but they're not a chump that they're repeating into it.

[Jason Lemkin]

Not a chump.

[Brian Halligan]

Did they ever work out? Were they ever great?

[Jason Lemkin]

No. And listen, the real reason is. And this is what I obsess about now, I obsess about this. They never learned the product. They didn't even try. They ran the playbook and the strategy meetings and did the raw with the team. Probably better than I could. I'm a Raw guy, but I'm a little intense. Probably more Kumbaya. But never, never learned the product. And I remember once, for example, as I was coming out, one of our biggest customers back in the day was Groupon. It was a million a year.

[Dharmesh Shah]

Okay.

[Jason Lemkin]

And we were super early in mobile. Like, we launched everything mobile. The day came out. But by that time happened, DocuSign's mobile app was much better than ours. Okay. So we had this tough meeting with group on there. Like, we love you, but like, we need mobile to be better. And one of the Executives stood up and we had this really limited integration in Acrobat Reader. Okay, that barely worked. And he put it up on the phone. He said it works great. This is like not the right answer to the. Like what this person wants this elegant workflow to sign the contract on the phone. Not native, but in an app. Like we, we have it. But this. Just check the box answer. Like just showing that a really clunky thing that doesn't work. Like that's when you don't know the product. And he wasn't technically wrong, but that's where you see decay. And so no one. And I'm obsessed about executives not joining startups today that don't know the product. This is the problem I see today all so many veterans that work 10 years wherever, they don't really learn the product before they start. I'm just, I just, I'm just gonna use the HubSpot playbook. I'm just gonna use the whatever playbook and people are tired and they just want a job and they don't learn the product and they just all fail. And that's what I saw. It wasn't that you're right, they didn't have. They had good management skills.

[Dharmesh Shah]

Right.

[Jason Lemkin]

They had good leadership skills. But never. How can you survive today if you don't know the product? How can you survive? Maybe you can sell these core products. Right, the core. But that's the part. It's just brutal.

[Dharmesh Shah]

Right?

[Jason Lemkin]

It's just brutal. So that was what kind of. I knew it. But that's just never knowing the product.

[Brian Halligan]

One of the things we did. I don't even know if we still did it. HubSpot is when we hired a new rep. They're training what's in sales. Training and training wise. Okay, you've got to learn HubSpot Pick. Start your own small business. Buy a domain, build a website.

[Jason Lemkin]

Yes.

[Brian Halligan]

Put your contacts in there, sync your LinkedIn and do an email marketing campaign. And then the test was after the three weeks of training I would. The test was in front of me. They had to present their business to me and show me their website. Show me all that. Yeah, all the reps really viscerally understood the value, also understood where the bugs were back then and really knew the product. I think that helped a lot.

[Jason Lemkin]

I think the problem is that. And listen that honestly, in today's world, any rep that could pass that test, I would hire a hundred percent. I think the problem is we stopped doing that around May 2020. There was so much hiring and so much demand. Literally across the industry having the sell me the pen died, the demo died. It's just. I've got four offers. I've got offers from. From Gusto HubSpot rippling deal gong. Brian. Lorraine has 11 offers. Okay. If I make her do three weeks in the demo on a case study and a she's gone. I gotta hire her today to hit the plan. And we lost this. We stopped do and we stopped doing reference checks too. Reference checks. And the demo died after we hired them.

[Brian Halligan]

So one thing.

[Jason Lemkin]

Oh, this is after.

[Brian Halligan]

It's too much to do it before. Yeah, I agree on the reference checks. Everyone get very lazy on reference checks.

[Jason Lemkin]

It just ended. Yeah. I guess if you do it after, it's okay. It is. I think I. I still find instead.

[Brian Halligan]

Of like classic sales training, we did HubSpot product. Like you got to learn how to set it up.

[Jason Lemkin]

Got to do it. You got to be an. An expert. And yeah, I would say 90%. Every time I have an interaction with sales or customer success, I use it as a lab too. I just find over 90 have no idea how their product works today. No. And I, I really think it's a legacy of this. These crazy times in 2020 when maybe didn't matter.

[Brian Halligan]

I think it's coming back.

[Jason Lemkin]

On, you know, the Met. I think this is one of the meta issues for the future. I think we figured out a lot of stuff. I don't honestly think we figured out the people issues. I don't think it's coming back. And I tell you what I'm worried is this is a conversation so many CEOs and CROs have behind quiet doors they'll never have in public or on LinkedIn because they're going to get fried for it. Which is how do we do with folks that just honestly want to work 10 or 15 hours a week from home and you can criticize them. But I get. On the other hand, I almost get it right. I almost. If this is. I'm working from home today. You're. I think you're working from home. It's. It could be worse.

[Dharmesh Shah]

Right?

[Jason Lemkin]

So I'm critical and yet I have to also get it. I. I don't think we have the answers. And one of the answers folks tried is, okay, listen, we'll just try kids. We'll just try the kids. Don't you know what I'm speaking will be ageist. Will hire folks that are 21 or 22. It's worse. I think it's worse. The expectations from TikTok and everything are Worse. And. And so I don't think that's the solution. I can't hire anyone that started in 2021 but that's not working either. So I don't. I think AI has to bail us out. I think AI isn't just. I think it's the solution we have to get especially on the. We have to get sales and marketing and support so good from AI that we're not reliant on the 50 hour work person that spends two months learning HubSpot and deploying their. This is. You just asked my view. I. More on yours. I don't. I think this is a great unanswered question. Going into the future in B2B we do not have enough people that want to run the old playbooks.

[Brian Halligan]

I don't actually know this whole generation, this new generation that well. I knew millennials when I was. I'm actually a big millennial fan. I will say something about the founders. I need mostly true Sequoia, but also true Propeller. I worked very hard when we were starting HubSpot. The founders today are Tyrus. There are a hundred. A lot of them are like well, 120 hours a week. I know I don't have any life like they. And it's. And I, I think it's a lot of D line and he's like a new template for how you do this kind of thing. But I have noticed like a change in the intensity of the work. I'm not sure exactly how I think about it. I think that's what it takes. And almost all of them coming through these days have that. I've always thought obsession is a good feature in a founder like that obsession taken to a bunch of them I Talked to are 120 hours a week. It wasn't that way before. And so on the founder side, there's an intensity that is to me new in the last few years.

[Jason Lemkin]

Yeah, I think it's. I. I do think. I think that's the weird thing. If you just meet with founders, you'll think they're harder working than ever. And they are. I think founders today work even harder. I thought about work every minute of every day. Saturday, Sunday, in the shower, on a run. But I didn't work as hard as Adam from owner or other folks do. I didn't work six and a half days a week and do nothing but work and lift weights. Nothing else.

[Brian Halligan]

I was like you. I'm constantly thinking about it. I probably put in okay, maybe six. But most of the people I know are Seven days. There's. They're just breaking and they see a window of opportunity and they're like, I'm gonna march hard.

[Jason Lemkin]

So it's a weird world where the founders are working harder. For real, working harder than ever. But then I just don't think all the folks we need to help us build these companies and I. This sounds critical. I'm no longer critical. I think it's hard to find more than 10 people on your team that want to work at that intensity.

[Dharmesh Shah]

Right.

[Jason Lemkin]

And you can build this Elon thing and there are cultures that do it. The owners and others have 50, 100, 200 people doing this. But it's. I just don't even know. I honestly don't know where they find them. Because it's a needle in a haystack today. Because when we started in startups, you were crazy to do a startup, either as a founder or as an entry level. Everyone was crazy in startups. Everyone was crazy.

[Dharmesh Shah]

Right.

[Jason Lemkin]

And it's very mainstream, so it's tough.

[Dharmesh Shah]

Right.

[Jason Lemkin]

You can't expect normal people to be crazy.

[Brian Halligan]

I agree. All right, what else you got?

[Jason Lemkin]

Okay, last one. This one's just one to pick out, but I am. I just. I never heard anyone say this before. At scale, we didn't get any acquisition offers.

[Brian Halligan]

We didn't. Salesforce never made it serious. Never acquisition offer. And there was all this rumors Google was acquiring HubSpot. No, we didn't.

[Jason Lemkin]

Never in 18 years or whatever it is. 18 years.

[Brian Halligan]

Have a couple snips. But no. By the way, it surprised me. I thought there'd be a lot of acquisition. So the little bit I wary when you say Your company is 25 million in revenue, growing 300% and getting a billion dollar acquisition offer. The acquirer. Let's take Salesforce and HubSpot. I'm an interesting example. Salesforce invested in HubSpot, knew us quite well.

[Jason Lemkin]

Yeah.

[Brian Halligan]

A Salesforce automation company at a time when HubSpot was still a marketing software company. We pivoted and we got into CRM ourselves. But at the time, and then salesforce.com woke up one day and said, we want to be in the marketing. We like the sales software. And the marketing was pretty attractive. And at the time, there was exact target, there was responses. There's HubSpot. Pardon? There was 10 of us.

[Jason Lemkin]

Yeah.

[Brian Halligan]

And there was like the email marketing ones and the marketing automation ones. And they weren't going to buy. They weren't going to buy two. They weren't going to buy. They were going to buy one. And they bought Exactorian. And then once they bought Exact Target, it just so happened Exact Target had recently bought Par Dot, so they actually got a freebie. But for your company, if there is one obvious acquirer, and for us back then it was Salesforce and they buy something else. First of all, Salesforce went from being like our best friend to we. They were a formidable competitor in the hardening software space, so it slowed our growth down. And second of all, like our natural inquirer is gone. So be careful on the advice you get, though.

[Jason Lemkin]

Yeah, I do. I am very. I don't know the right answers.

[Dharmesh Shah]

Right.

[Brian Halligan]

There's one natural acquirer and they're coming now. And then there's. And you say no, and they buy your competitor or they build it, then the window closes and then not only does the window close for the acquirer, but you're competing with that big company.

[Jason Lemkin]

Yeah, it's always stressful when a big company says to you, you'll get a call, we're thinking about build by our partner. That's like the corp dev language, which I hate, but you should take it. And I got freaked out when Adobe said it to us. But your point is you should take it seriously. It may be language, but it can be maybe very build buyer partner is serious language.

[Brian Halligan]

HubSpot's made a few acquisitions recently, started Cash Flow in the CPQ place. There's a bunch of CPQ companies out there. We picked one.

[Jason Lemkin]

You won't buy another. Would you have. It obviously wouldn't make sense if you open up Yahoo Finance today, but if Salesforce had offered you a billion dollars pre ipo, would you guys have taken it?

[Brian Halligan]

I don't think so. We were pretty committed to building a standalone company. The line we always use, we still use. We want to build a company our grandkids would be proud of and build an anchor company in Boston and all that kind of stuff. So I don't think we would have. It would have been nice if someone offered, though. It'd be nice to be wanted.

[Jason Lemkin]

Jason, I. I think the reason I brought this up, not only is these stories great, I do think. I do think this is such good advice. I think when you read social media, especially what VCs say, it seems like there's a lot more M and A offers than there are and there's tire kicking and there's emails, but one it's. Acquiring a company is a much bigger deal for a tech company than you think. Maybe not for a pca, but it's a big deal For Salesforce or HubSpot to buy someone, it's a big. The soft costs are much, much more than the cash or stock. The soft costs are huge. The business process, it's a big deal.

[Dharmesh Shah]

Right.

[Jason Lemkin]

And VCs act like this happens all the time. But I don't think real offers happen all the time that are good. Real offers are rare.

[Dharmesh Shah]

Right.

[Brian Halligan]

One company that I'm involved with just got acquired by Stripe for a good number.

[Jason Lemkin]

Yeah.

[Brian Halligan]

And it's an early stage startup and I asked him about the process.

[Jason Lemkin]

Yeah.

[Brian Halligan]

And he didn't give me a lot of detail on it. But it basically likes if you want to sell your company, no one's going to want to buy it by the way.

[Jason Lemkin]

It has to be completely another issue. Yeah. They have to want it for tap.

[Brian Halligan]

Of a deal, wake up one day and be like, oh, I want to sell my company, hire a banker. It never works. It's inbound. It has to be inbound. And I would take the calls like we always would engage with Salesforce. We kept them close, we let them invest, we partnered with them in the field and we would always keep in touch with the big folks around us because we always wanted the option to say no Google or Amazon or Salesforce, anyone. We want to get in CRM, we want to at least get the call and have it be our option. Be like, you know what, it's going great. We think we're 35 billion mark gap and we're marching to 350 and good luck and we'll see out of the field or let's partner.

[Jason Lemkin]

Yeah. People say a lot of VCs say go sell your company or you should think about it just doesn't work. The only way it ever works is if you've already gotten a reach out. Then it's somewhere between inbound and outbound.

[Dharmesh Shah]

Right.

[Brian Halligan]

Keep in loose touch. And one of the things I did with Salesforce is we met them after our series B. Yeah. And we were deep partners with them, like really deeply integrated with them at the time. And after we met Denny Hoffman, everybody in there, once a quarter I put together a back then a PowerPoint deck of what's going on. HubSpot, four or five slides, unit economics, pod, stick. And I'd send it to him, just keep in touch. Things are going well. Here's the partnership. No one does that to me. It's surprising like we did. I lead nurtured Marc Benioff and John Samor, Jai and Brett Queener and all those people back then for years and Even after they invested and then once and once they acquired and became competitors I ended the elite nurturing campaign. But I would keep in touch with them and nurtured the relationship.

[Jason Lemkin]

Yeah. You got to. I know we got to break it a minute. When I was on the other side at Adobe and I they Adobe did M and A was just coming back when I got there it had gone on pause during the downturn and they had lists, they had target lists.

[Dharmesh Shah]

Right.

[Jason Lemkin]

I don't know And I Salesforce is there got leaked a couple years ago on business said it was really interesting because it's very methodic.

[Dharmesh Shah]

Right.

[Jason Lemkin]

They had a target list. And what I learned at Adobe is the target list in RBU and all the be like one or two of them made total sense to me this but the other ones I would never put them on the list. These are human driven. This is what Yamini and Brian and Dharmesh think There's got to be one person.

[Brian Halligan]

Yeah.

[Jason Lemkin]

And like their ideas may be tempered by where they live, who they've met with, who Sequoia knows, who Dharmesh is a seed invested in and it may sh as the company gets bigger their views of what is hot and is important is there's so many startups.

[Dharmesh Shah]

Right.

[Jason Lemkin]

And I was just. Some of the ideas on this list were obvious that it was. It was pre figma but some of them made. I'm like why is this is crazy. Like I've been a SaaS founder for a few years now. I got a couple better ideas.

[Brian Halligan]

Yeah. We just bought a company called we just made a couple acquisitions. We bought Clear Bit, we bought.

[Jason Lemkin]

Cash.

[Brian Halligan]

Flow for CPQ and we bought Frame AI. And in all the scenarios there's kind of one person on the exec team who is like the champion and I'm going to make this work. This is the idea. And they just push back and they're back. What about this company? I'm like whatever. And they're in. Gosh. It helps if it's the CEO.

[Jason Lemkin]

Yeah. CEO gets it gets the biggest chip, right?

[Brian Halligan]

Yes. I don't think or it buys anything without Mark Benioff being said.

[Jason Lemkin]

Yeah. It's funny. I'll tell you the last not to spend too much time in the earliest of Ecosign. We got this soft acquisition offer from Salesforce and John did it and we all did the pitch and it was for so little money I said I just can't afford it. But we did it anyway. And here's the interesting I could share the other interesting learning some of them probably don't matter because it was a long time ago. It was like a year one deal. But what was interesting is we failed the due diligence and the reason we failed the due diligence is they said our engineering team wasn't strong enough. And what's interesting from that story is they were not only is so good but my CTO is one of the chief senior scientists at Adobe today he's off the charts.

[Dharmesh Shah]

Good.

[Jason Lemkin]

But the. But that was so important. Like you just don't know what the goals are and that was a dumb reason. I get why they made the decision. He was cranky. Okay. And people matter in M and A too.

[Dharmesh Shah]

Right.

[Jason Lemkin]

Because you got to work with these people. And my CTO thought he came with his best outfit and best at but he was a little. He would always tell you why you were wrong. I love him. But it doesn't always work at big companies to tell there. But. But that was the. That's a weird reason to do it. And it was wrong but Right. So you just don't know what the motivations and goals and why they wanted to do exact target over HubSpot. To me it makes no sense. Right. But there was internal logic to it.

[Dharmesh Shah]

Right.

[Jason Lemkin]

That we might. We even today we might. You might know. You could ask Scott. But we might not even know what the logic was.

[Dharmesh Shah]

Right.

[Brian Halligan]

The only one say is in the cases these three acquisitions are decent sized acquisitions. That's what I did. The CEO, the founder and the CEO mattered and we wanted to keep in our that founder. CEO.

[Jason Lemkin]

Yeah.

[Brian Halligan]

It's like interviewing a vp.

[Jason Lemkin]

We need like interviewing a vp.

[Brian Halligan]

Yeah. Very similar that is it a culture of fit. We think we could see this person here in 10 years. Would we like to work on this person would that's how we looked at it.

[Jason Lemkin]

Yeah. People miss that. Like you're being interviewed and it's be. You don't even realize you're being interviewed. And the bet on the people and it's just. It's. It's so. It feels very transactional to a founder in some ways and they don't realize how much energy is going into it at the acquirer. It's clear bit big deal whatever it's but that's years of downstream impacts whether that deal works out or not. And just the human time the distraction the integration that all the meat the internal meetings about how to integrate it, where to integrate it, pricing. It's like that could be 10,000 hours of like expensive people's time. Forget it doesn't even matter what it costs to buy it in some ways, right?

[Brian Halligan]

Jason, this is lovely chatting with you.

[Jason Lemkin]

You're the best.

[Brian Halligan]

I need to run.

[Jason Lemkin]

Yeah, we're over. Brian Halligan, thank you for everything. Always.

[Dharmesh Shah]

Great.

[Jason Lemkin]

And we'll see you soon.

[Brian Halligan]

See you soon, buddy.

[Jason Lemkin]

Bye, man. Hey, everybody. Thanks to the 10,000 of you who came out to Saster Annual this year. We had a blast. And big news. We'll be back in May of 2025 or in May of next year. That's right. SAS train will be in earlier next year. The 13th to 15th of May, 2025. We'll still be back at the same venue in the SF barrier in our 40 acre San Mateo County Event center campus. And tickets are never cheaper than right now. So grab your tickets@saster annual.com with my code Jason50 for an extra discount on our very, very best pricing. That's jason50asterannual.com See you next May at Saster 2020.