Strategies for Building Great Companies | Dharmesh Shah | BoS USA 2012

Dharmesh Shah, introvert, CTO at Hubspot, founder of OnStartups, lover of startups and code offers some great insights into what strategy means, how you can apply it to growing big businesses and more than a few brilliant ideas for strategies and tactics for making your software business meaningful, profitable and valuable.

Dharmesh is a BoS regular but this was probably one of the talks of his life – a very practical guide to what strategy means for a software business.

Video & Transcript below

Video

http://businessofsoftware.wistia.com/medias/7xbe05icsx?embedType=async&videoFoam=true&videoWidth=640

Transcript

Dharmesh Shah: Hello everyone!

Crowd: Hello!

Dharmesh Shah: So this is my 5th year at the Business of Software conference, and my goal for today is to make it the best presentation I’ve ever given here at the Business of Software, let’s see how that plays out.

or those of you that are watching the live stream, welcome, and tweet this. Tweet this session, tweet all the sessions, because the more noise you make, the more likely it is that they’ll repeat this kind of live-streaming thing next year. It worked last year: we asked for this, people did it, so we’re spreading the word, and that’s the hashtag right there.

Alright, a couple of words of warning here.I’m not going to apologize for my presentation skills like usual, but I am going to apologize… we’re going to talk a lot about strategy, and I’m not really a strategist, I’m a developer, and I work on technology stuff, so bear with me. But I have very, very strong opinions and I’m going to be around essentially all the conference, so if you want to debate any of these topics, feel free. You can debate it here if you want, raise your hand, we’ll try and accommodate you, but we’ll kind of run through this.

So I’m the co-founder and CTO of HubSpot. I’m not going to talk actually at all about HubSpot much. The thing I do want to say, though, this is what HubSpot does, which is essentially, we’re trying to create marketing superheroes. And I chose… This is a slide from a deck that I had just a month ago, we had our first user conference with 2,800 people and it’s tribute to Kathy Sierra, because… the reason I chose Batman, by the way, because he’s a mere mortal, there’s no genetic mutations involved, he’s like a technology-powered superhero, which is awesome, right?

And earlier this morning, I had this email from my co-founder that said… he’s watching the live-stream, watching Kathy Sierra because I’ve talked about her so much, and then one of our, well, head of UX at HubSpot, so this is like this morning essentially. Yeah! So we approved it, so now we have a room named after Clay Christensen, a room named after Seth Godin, a room named after Guy Kawasaki, all three prior BOS speakers and now we will have a room named after Kathy Sierra, which is awesome. She did a great job, by the way. I was watching the live-stream because I’m too nervous to actually be down here as I’m preparing for my slides. Alright, so this is the one gratuitous HubSpot slide that I put in there, essentially every year, to share just overall growth. This is the customer growth at HubSpot, and I do it for two reasons, as always: one is to brag a little bit, and the other is at least you have one data point in terms of companies doing reasonably well. We have about 8,000 customers. I’ll share just a couple numbers with you because you guys, a lot of you are curious about numbers. We did about $28 million in revenue last year, scheduled to grow about 80% this year, so it will be somewhere over $50 million about. 375 employees. The company is doing well, and this is… I should have actually plotted this on this particular graph, like when I started speaking at Business of Software and then there’s a high correlation between speaking here and company success, so I have to be… fill out your survey forms and invite me back, essentially. Otherwise you will be responsible for the inevitable cliff that follows this particular curve… no pressure. Alright, so the one thing I want to kind of open with, and this is the creating meaning part.

So there’s three parts to this particular talk:

• One is what I’ll call the squishy stuff, creating meaning and things like that
• Then we’re going to get into hardcore strategy stuff
• Then we’ll close with some Q&A and stuff like that.

But this particular one, I’m going to actually explain it by way of… because someone else did it really better, let me go back here. So this is from a guy named Nir, who’s one of the best guest bloggers on TechCrunch, I’m going to walk you through this. So what he does is tries to measure the overall level of evil in a given manipulation when you’re building software. And I’m going to fast-forward and I’m going to focus on the bottom left quadrant, essentially where you don’t want to be. Where you don’t want to be is you’re essentially not creating… you’re not making people’s lives better with your technology, and you wouldn’t use it yourself. And the best kind of outside technology example of that is drug dealers, right? They sell the product, the product does not make people’s lives better, and they wouldn’t use it themselves, essentially. So the idea here is that… and if it’s not really harming people, whatever, but you’re still selling it… Anyway, you want to be towards the upper right, you definitely don’t want to be towards the bottom left. And this is, I think, one of the… I don’t hate the company, I don’t actually hate that many companies, and this particular quote actually talks about their business practices, which is: find a game that’s really successful, replicate and copy it. That actually I don’t have a strong moral dilemma against. What I have a strong moral dilemma against is Farmville, essentially. And I have an addictive personality, I haven’t played Farmville, by the way, because I know I have an addictive personality, but having looked at Farmville and seen other people play, it is no World of Warcraft, I will say that. It’s a good game, but it’s not… there’s not enough there in my mind, so you don’t want to do that. I don’t wish ill upon any companies, generally speaking, I’m not short on Zynga stock, but that’s the stock price for Zynga over the last 12 months, so the market’s catching up.

So my message here is you have choices, whether it’s this company and you’re thinking about the next product segment you’re going after, the next market you’re going after, the next company… if you start a company right now, the odds are you’re going to start more. Entrepreneurs rarely ever stop at one, so you do have choices, and my call to action is do good things, essentially, and don’t… and even now, even in the company you’re working in right now, you’re going to hear gamifications, like, “Oh, that would be awesome, I could get more users, more engagement, more revenue, more something…” It doesn’t really work that way. It’s nice and fun to talk about, and there are elements of gamification that you should apply to your business, but not in the way that most people actually tend to think about, so it’s better to just kind of decrap-ify first. So the message here, one of the things that makes… by the way I do…for those of you… how many people have heard me before BOS, just I’m curious? Ok, about two-thirds-ish of you. And one of the things that makes Business of Software hard for me to speak at is it’s a bi-modal audience: you’ve got lots of software entrepreneurs, which are near and dear to my heart, and you’ve got people scaling in slightly larger companies, there’s two kinds of people, and I’m trying to make it useful for both, we’ll see how that goes

But in terms of the “Go big or go home”: I’m all about scaling, and at HubSpot, “Go big or go home” is a phrase we use often, but the reality is it’s not that important to go big, not really, especially if this is your first one, but it is important to be a great company. I would rather have, you know, one more Balsamiq, one more WPN, more Jason Cohens and more Peldis than I would more Zyngas, essentially, right? So it’s not about size, it’s about greatness, it’s about awesomeness, it’s about doing something useful. So I’m going to close that one around, in terms of just picking markets and things like that… software entrepreneurs particularly are tending to… because it’s a relatively easy path, creating like an advertising-oriented business, where you’re going to get a bunch of users, you’re going to get a bunch of attention, and you’re going to essentially rent that attention to advertisers. The reason I don’t like those particular… not that you can’t build great businesses that way, a few companies have, but fundamentally there’s a finite amount of attention that any given human has, physically, unless you defy the laws of time and space… but there are an infinite number of problems out there to be solved, and most of us grew up in, like, “Oh, user has this particular problem, I can write software to do that,” essentially make people’s lives better, save them time, do those kinds of things, so I encourage you to continue to focus on those kinds of things and not get lured in by this kind of lure of the attention economy, market, or whatever label you want to apply to it. So that’s the squishy stuff, I’m going to close on that particular note.

This is my thought on competition: the perfect idea, and you may or may not have this one yet, in terms of this as an ongoing aspirational thing, I happen to have found it this third time around, but work an idea that even if someone actually… someone else happens to solve it better than you do, and wins, you’re still, like, inside you’re really kind of happy that the problem got solved, because you will have other ideas, you’ll move on or whatever. So you want to work on problems that yes, you would like to be that one who solves it, but even if you’re not the one, just the fact the problem got solved creates joy for you and makes the world better. Those are the kinds of ideas that are really the ones that kind of capture people’s imaginations and move forward. So that’s the squishy stuff.

We’re going to move into strategy now, and so this is a chart, it’s going to be hard from where you’re reading right now, but it essentially tracks publicly-held software companies, which I believe is the orange, not the orange line but the reddish line between yellow… all those lines are essentially the tech market: there’s the NASDAQ in there, publicly-traded software companies in the general sense, and then the orange line that’s moving up and to the right – I didn’t pick that color, by the way, it’s not a HubSpot branding thing, it just was – but that’s SAAS companies. So that’s the overall growth for SAAS companies over the last, let’s say, year-ish. So the good news is there’s still lots of growth happening in SaaS, and we’re going to talk about this in terms of creating value, but it’s a great time to be a software entrepreneur, it’s a great time to build a software business. I don’t know that there’s been… maybe except for like the early ‘90’s, I don’t think there’s been a better time to build a software… and there was lots of ugliness in the early ‘90’s that we’ve kind of worked around now, so it’s actually a really good time. Now one of the things I want to talk about is this notion of valuation of your company versus value. And valuation basically is what someone was willing to pay for some portion of the company or all of the company at a particular point in time. Value is what the thing is actually worth: did you build something of value? And somewhat depressingly, those two are not always the same thing. The optimist in me wants to believe that those two lines converge over time that valuation is essentially a function of value, but in the short- to mid-run it can be somewhat depressing. So we’re going to talk about valuation a lot in order to be less depressed. How do you make those lines converge? What kinds of things can you do to drive valuation? And this is a reductionist approach, because that’s all we have time for, but one way to think about valuation for your company… and the reason you would think about valuation – a few reasons, one is if you’re ever looking to sell the company, if you’re ever looking to raise a round of funding, if you’re ever looking to go public, this kind of stuff is going to matter.

Even if those things are not on your radar right now, the things we’re going to talk about I’m going to argue are important to know and have in your head, because as you’re making decisions around your business, these kinds of things should factor in – things that actually take the same product, the same user base, the same passion that you have, and then still do some smart things around strategy that essentially maximize your odds of your valuation matching your value, that’s what you want, and that’s stuff we’re going to talk about. So valuation simplistically can be seen, and this is actually a relatively common way to look at it, even in public markets, is take your revenue, whatever it is – so let’s say you have a $3 million revenue company – and multiply it by some number to create what the valuation of the company happens to be. It’s a very, very common metric, and one of the common things that comes back from people is, “Well Dharmesh, that’s kind of stupid… What does revenue have to do with building a real business? What about profitability?” And my response to you is, “I didn’t make up the rules, I’m just telling you how VCs and the public markets value companies.” So don’t hold me personally responsible, I actually tend to like profits, as it turns out. This one, the row you want to focus on is the very top row, and this looks at enterprise value, essentially valuation, based on trailing 12 months of revenue, it shows you that multiple number. So the number we’re going to take a look at is the last one, right, and it’s a nice even number right now, so in Q2 of 2012, across the publicly-held SaaS companies, which I believe there’s about 17 of them that are tracked in this index, the median multiple essentially was 5.0. So if you had a company worth… I mean a revenue of roughly $10 million in the last 12 months, and you were a median kind of company, your valuation would be $50 million, 5 times whatever that trailing 12 month revenue is. What’s interesting, though, is that the number has moved around. This same number, if I looked back five, ten years ago, it was actually hard to have a company that was over 3, 3.5 x. The multiples have kind of gotten better, especially in SaaS, because the economics actually are better.

Anyways, so that’s the number we’re going to talk about, and so the question you might be asking yourself is, “Well, that’s awesome. How do I make my multiple be more than…” – either more than the median, the top decile, whatever your target happens to be. So that’s what we’re going to spend some time talking about. The strongest correlations in terms of the revenue multiple – this is a weird, kind of recursive thing – is how fast your revenue is growing is likely the number one indicator for what kind of multiple you get. And that’s actually not counterintuitive, it’s a roughly intuitive thing that says, “Oh! In theory, investors are going to pay money based on future discounted cash flows, how much profits are you going to spin off over the next five, ten, fifty years,” and they kind of discount it back for present things, you know, adjusting for risk and those kinds of things, and if you’re growing really, really fast and they kind of pull out that line, it’s like “Oh, this is a really fast-growing company, we can expect it to deliver more revenues and hopefully someday profits.” So what this chart is telling us essentially is there’s a strong impact on the revenue multiple based on the revenue growth, that’s all this thing is saying. So the growth hugely important. As it turns out, and I could have put this slide up there, take my word for it, it’s true: profitability is actually, in public markets, for early-stage, early public companies or about to go public, profitability is actually negatively correlated with that multiple. And the reason I think that is – this is pure conjecture on my part, well not quite pure, I’ve talked to a few people – is that the market’s rewarding growth, they’re rewarding companies that are investing in growth, they don’t want dividends, they don’t want the profits, and if you are profitable that means you’re signaling to the market that you’re not necessarily hitting the gas hard looking for growth essentially, so there’s this weird negative on profitability versus growth, so if you’re looking to create something massive and you’re completely focused on valuation, which I’m not saying you should be, focus on growth, that’s the best way to get that… and that’s actually a dual value, right, the revenue is going up, which is half the equation, and the multiple’s going up, you get this exponential-style effect.

By the way, if you’re wondering why so many companies invest so much in growth, that’s why. If you’re a VC-backed company, the story is growth, it’s a growth story, it’s not when are you going to become cash-flow break even or profitability, they really don’t care about that that much. So let’s talk about… so we’ve talked about the first one, which is growth, and other factors affecting that revenue multiple. So growth is kind of revenue-oriented one, and we’re going to run through a few of these based on how much time we have and how many people are falling asleep in the room, and I’ll do almost like a spot-survey every now and then. So in terms of growing revenue, this is the obvious stuff, we’re not going to talk that much about this: get more customers, increase your price, improve your retention so the customer’s around longer. Nice and simple, that’s how you grow revenue, we’re not going to talk about those things.

The thing we’re going to talk about is how you drive growth and things that impact that revenue multiplier that are kind of growth-related. Number one is just the overall engine, and the way we think about this, the way I think about this, is around kind of the unit economics or the efficiency of your overall machine, of the engine itself, how much horsepower can I get based on the amount of fuel or calories that I’m putting inside the engine? And as you might expect, this is not counterintuitive, the better your engine, all things being equal, the faster you can go – the more horsepower, the more thrust you can put against the overall friction. So that’s number one, that’s relatively intuitive. This is intuitive too, but more subtle, which is the further you can see out, the faster you can go. So extending that car metaphor, if your visibility’s only like 5 feet in front of you, I don’t care how good your engine is, and it’s not a matter of… the car can go much much faster, you’re not going to hit the gas as hard because you can’t see more than 5 feet in front of your face. The opposite of that is if you have long visibility, essentially, then essentially your growth constraint becomes your engine, how fast will the actual machine go? So the way to kind of… the take away from this, the so-what, is that as you’re thinking about the business, as you’re thinking about metrics, try and buy your way – I’m using this in an informal sense – try and achieve more visibility. What kinds of things can you look at that will give you visibility into the business, that says, “Oh, the economy’s going down” – this market, that market, whatever it is – “what impact is that likely to have on my business?” So that way, if you need to slow down you can, because you kind of see “Oh my god, there’s a cliff coming… I can actually do something about it.” And the more you have visibility, the more you will allow yourself to go faster, essentially. So work on that visibility, that’s where the metric’s going to actually really help. By the way, investors like this too – if you can show them that you have this kind of visibility, it’s like “Oh, if something bad were to happen, here’s what we can do about it,” that helps.

And the last thing, stretching that metaphor about as far as I could possibly stretch it, is how good your brakes are. So let’s say you have a car that can go infinitely fast, you have lots and lots of visibility, the visibility does not matter if you have really crappy brakes, because you couldn’t stop anyway, despite the fact that you saw the cliff coming, right? So the moral of the story here is: install brakes. As you’re thinking about the strategy of the business, whether it’s… so, things you wouldn’t do, because this is the opposite of installing brakes, if you can avoid it, is signing a 5-year lease on 25,000 square feet when all you really need right now is 10,000 but you think you’re going to grow into it. The kinds of things you can’t easily get your way out of even when you need to, when you can’t slow the business down, or stop the business when it’s necessary, those kinds of things will impact – should impact – how fast you go. You can’t go that fast, despite visibility, if you just can’t stop the car. And all these things, by the way, if you’re having conversations with investors, potential acquirers, they like to see this stuff, and it’s still good healthy business, so this is… even if you weren’t raising capital, even if you weren’t looking to get acquired or whatever, this is just good clean hygiene, good clean business. I’m going to pause, I’m going to look for an empty chair, because I always make eye contact with an empty chair because then it looks like I’m making eye contact with the audience, which I don’t do. I found one… it’s awesome. I need to find one over on this side of the room, but I’ll do that in a little bit.

The other one, one of the strongest things in terms of that revenue multiple – realize the revenue multiple, they’re trying to figure out a proxy for risk. What is the likelihood that this thing will actually deliver revenues and profits in the future, right? That’s what investors are essentially trying to solve for. Sometimes they do it well, sometimes they don’t, but one of the most important things in terms of mitigating that risk is to have what Warren Buffet calls building a moat around your castle, around your business. The idea here is to kind of… if you happen to fall into a very, very lucrative category and your business is doing really, really well, it, just from a raw economic theory perspective, it attracts competitors. It just does. If it’s an interesting enough opportunity, people will see… it’s like “Oh, well that seems like a pretty good business to be in.” You’ve kind of validated the market, and people will come attack the castle, essentially. And this has borne itself out over the mid- to long-term, this will happen. And so Buffet’s theory, essentially, is that you want to make it harder for people to attack your castle. So you want this moat around and you want to put piranha in there, you want flames, you want it to be as deep and as wide as possible, and this is what investors will often call the barrier to entry to the business – what keeps those would-be competitors out? So the overall concept is relatively intuitive: the more… the higher the barrier to entry, the harder it is for people to enter the business, the more likely you are to continue to reap the revenues and profits in that business over time. So that one’s relatively intuitive. We’re going to dig in a little bit. One of the things that’s a great… actually I’ll say a good barrier to entry is having customers, because most of our businesses there is — we’re going to talk a little bit about switching costs in a bit – but all things being equal, having more customers is a stronger barrier to entry because that’s customers your competitors don’t have yet, and those are usually the ones that everybody’s trying to get early on, the early adopters and those kinds of things. But that’s not good enough – just having a customer base is not sufficient. If you really want to make that barrier to entry even higher, you want maniacal, loyal fans – maniacal, loyal fans. There’s a couple reasons you want this.

One is because pure economics would say, “Oh, the more loyal they are, the longer they’re going to stay with the business, even though competitors enter, because they’re loyal to me, they’re going to continue to pay me instead of going to this competitor that’s coming out.” The other value to having a visibly loyal, maniacal customer base is it dissuades competition, right? For instance, the thing that’s most attractive to would-be competitors is when you suck and when your customers are unhappy. And it’s like, “You know what? Those people… that company, yes, they’re successful, but it’s a big market and everybody… their customers hate them. The only reason the customers are there is they have a semi-monopoly, and they just happen to be around for a while, and no one’s disrupted them yet, that’s why people get into start-ups and things like that is to kind of disrupt the people that don’t deserve their customers, essentially, so don’t be that company. Get this maniacal customer base that sends a signal out and you are going to have less competition simply by virtue of you’re awesome and the customers love you, outside of the fact that they stay longer.

This one is related. I am the absolute non-believer in lock-in of customers, in terms of data lock-in, technical lock-in, things like that. I am open, and not because I’m an altruistic kind of guy, I’m not, it’s because as a red-blooded capitalist, I think that’s more profitable in the long-term, I just do. But what you should have, you should have emotional switching costs that are really high. Not the technical switching costs – and the switching costs are, “Oh, a competitor comes along, I can go to that competitor instead of using this company” or whatever, and you want a customer base that deep down in their soul, not just that they love you, they love being part of what you represent, essentially they love being part of that community, and by leaving you, it’s not just that they’re leaving the product by the wayside, they’re leaving their friends, their peer group, the people they respect, and hopefully part of their identity with them. That’s the degree of the kind of maniacal, loyal fan-base that you want to create, you want the emotional barrier to exit to be so high that customers wouldn’t leave because they identify with what you’re doing. It’s not just about the product, it’s about that community, and that’s an awesome way to create a barrier to entry. Whatever customer base you have right now, ask yourself, “If this customer were to leave, in the ensuing 6-12 months would they go into depression? Would they regret it? Would they be like, ‘You know what, yeah there were some more features,’ or ‘Yeah, this other things was cheaper but I really liked being part of that community’?” That’s what you want to really try and foster and encourage, this works really, really well. Alright, so we’re going to dig in a little bit more into strategy.

So there’s a framework called Porter’s Five Forces – a Harvard business school professor. The book came out – it’s a tough read, called, I think it’s Competitive Strategy by Michael Porter – back in ’79. He wrote an update in the form of a Harvard Business Review article essentially, which is much shorter and it kind of captures… and it’s updated. But I’m going to walk you through some of the key… we’re not going to talk through all of this, but what he’s talking about in Competitive Strategy is how to measure the attractiveness of a market based on certain factors. We’re going to walk through even some of the obvious ones because we’re only going to dig into a couple of them.

So supplier power – essentially the more power your suppliers have, whatever it is you’re using to deliver your goods – now realize this is in ’79, before the heyday of software, but I think it still applies – the more power your supplier has, the less attractive that industry is, because your supplier can kind of squeeze you, right, if you’re making iPhones or whatever and your major component happens to be over here and you don’t have… and they have lots of power for whatever reason, that’s a bad thing, that’s a bad industry sign. If the buyer has a lot of power, that’s an unattractive industry, right, because the buyer can essentially ask for whatever price they want and whatever they want because they’ve got so much leverage over you. So that’s another thing that makes an industry unattractive. The threat of entrants, we talked about this, kind of a competitive barrier to entry. Substitutes, not direct competitors, but alternatives outside of competitive products – could they just use something else? For instance the substitute for Coke would not be Pepsi, the substitute would be water, right? Like the actual need is to kind of hydrate, so that’s the substitute. So how many substitutes are available for what you’re selling?

Now the one I want to talk about – and there’s actually a couple I want to dig into – is the barrier to exit versus the barrier to entry. You want markets and industries as you’re going through and plotting out your businesses, either this one or the next one, what you want to do is you want to look at categories where the barrier to exit is actually relatively low. And here’s why: just from a raw competition perspective we’re thinking about this, you know, how do I retain revenues and profits over time, if the barrier to exit is high, the competition is going to get fiercer and everything is going to normalize towards nobody makes any profits, just raw economic theory there. So I’m going to give you an example: let’s say you were getting into the airline industry. Once you’ve invested in the planes and you have all the infrastructure, the barrier to exit in the airline industry is very, very high. So competitors are not just going to walk away from that investment, essentially. And if it’s very, very easy… and moving down, let’s say, just a few notches, if you go after an industry where there’s strong venture-backed competitors – I’m not saying you shouldn’t do that, because it’s awesome to beat venture-backed companies, we can talk about that, it’s how I did my first start-up – is, if they’ve raised a ton of capital, it’s going to take time for their non-awesomeness to show up. They’re just not going to walk away, they have investors that have paid them money, and they have cash to essentially be non-awesome for a while. In the meantime, it makes your life painful, right? And so what you want to do is you want to enter categories, all things being equal, categories where the barrier to exit is very low means, ok, as soon as there’s some competition, as soon as you show some awesomeness, they’re like “Ahh, yeah, this was interesting, but I’m just going to go do this over here.” If they can walk away, essentially, because they don’t have that big of an investment, emotional, capital, whatever, it is, that’s a better industry to be in, better category to be in, than otherwise. How’re we doing so far? Are we okay?

Alright, we’re going to talk about the supplier side of the problem, because this one… if you’re in the software business, at varying points in time, maybe even today, you’re going to deal with this particular issue, which is the… so for us, a lot of software entrepreneurs, the supplier often is the provider of the platform. I’m building on top of SAP or salesforce.com, I’m going to build this app that sits inside of Facebook, or a mobile app that is on the iPhone, whatever that is, basically you’re using someone else’s platform, for any number of reasons, usually the most common is just raw distribution, right? The reason people build on Facebook or build on Twitter or build on IoS is because they get access to all these users, they get distribution. And the challenge with this… it’s awesome, right, it’s like I get access to millions of people, this is great. The problem, though, is that if you pull that thread, in most cases, with very, very few exceptions, over time there’s a ceiling on your overall success. If you get big enough, threatening enough, or annoying enough, their motivation – whoever the platform provider is – is to buy you or kill you. That’s just the way it plays out, over the long haul that’s the way it plays out. The only time that doesn’t happen is when you have – and even then it sometimes happens, we’ll talk about this – is when the platform provider, the entire thing that they’re selling, is the platform, and the cost to them of actually alienating people that are building on the platform is way, way higher than any in individual company or individual market, even if that individual market is really big. A good example of this is Microsoft, actually. It may have been 15, 20 years since I’ve said that, actually… “this is a good example of…” Actually we should give Microsoft a lot of credit, they invented classical electronic management, a lot of the early stuff, and they did really good, really well at the software business. But anyway, so Microsoft has been good about supporting the developer community, making tools cheaply available, and for the most part allowing multi-billion dollar companies to be built that run on their platform, right? People build on Windows servers and Windows apps all the time. So the moral of this particular story is as you’re looking at making choices – platform choices, new company choice – you have to really ask yourself “As I kind of wind time forward, what is the likelihood that I will continue to enjoy the benefits without them wanting to buy or kill me, essentially?” And if you’re looking to buy or sell that’s an okay thing, although they have a lot of leverage at that point. So anyways, the moral of my story, like in the first start-up I had essentially that kind of situation, which is I was building on top of something that was similar to SAP, building a financial services CRM app, and the company ran for 10 years, we made money, and we had this love/hate relationship, because we built on the platform, we had access to their distribution, they sold the product for us, and it was great, but then it was not so great, because they’re like “Well, wait a second, why are you guys getting all…” and like they’re trying to grow as well, right? It’s like oh, they have these customers that are growing, we’re growing really, really fast. Over time what it wound up is “Let us buy you, or you’re going to make us kill you.” Like a year, year and a half later: “Let us buy you, or…” And over time, it was like “You know what? I’m a reasonably smart guy, but I kind of see the writing… life is short, I don’t want to do that.” Anyway, so I ended up selling to them, the cash was good, and happy to be out of that situation. Anyway, so be mindful of this, because it’s easy to kind of fall into the trap essentially. Alright, so start thinking about questions now, because I wanted to make this… because it’s so hard, and I have some questions that have come in from late-night bar chats last night, so I’m going to start weaving a couple of those in. But start thinking about them, because we have time, and that’s why we’re here.

One of them is around culture, so HubSpot has somewhere between 350 and 400 employees now, last I checked, and the funny thing is, we actually didn’t talk about culture for the first two or three years of the company – the word was never spoken, we didn’t have an HR person until… well we got to about 350 people, and still didn’t have an HR person because we have this moral aversion to the term ‘HR.’ But the answer… there’s a couple of things. One is, if I had to do it all over again, I would be much more deliberate about culture. Because it turns out, whether you like it or not, you’re building a culture – might as well be one you like. And one piece of kind of quick advice here, this is going to sound platitudinal because it is: build the company you want to work in, right? Because especially in the early days, you’re showing up, 12-18… and obviously hire people you like being around. But try to put some early hacks into the business when you have the opportunity to do so. I’ll give you a quick example at HubSpot: so when we were three people – it wasn’t a problem when we were two people because we had no office space – when we were three people we had like a tiny one-room office, and we had to decide where to sit. Common problem when you’re starting up, “Oh, we have to figure this out,” and there were just three of us, my co-founder and I and the developer, and the office was nice… well, nice, it had a window, that was nice, and three desks… four desks, actually, because we were aspirational, “Oh, we’re going to hire a fourth person someday… the day will come!” And so we had to decide, where do we put people? And this was a very easy hack to put in at the time, I’m going to fast-forward a little bit. So what we decided is that it’s kind of stupid for us to be spending any amount of time on where people are going to sit, and we’re all kind of geeky or whatever, so we just do a random lottery, right? And whoever’s name gets pulled gets to choose whichever spot they want, because we don’t know what optimal is for individual people, it’s like microeconomic theory for software utility kind of thing. So we did that, and that was awesome, it’s like, “Oh, there’s this entire body of conversations we avoided,” and we continued to do that when we got to 4 people, 8 people, 15 people, 25 people, kept doing this rack, so every quarter we would do this lottery essentially. And there were a couple of upsides to this, as humans are… they care about this stuff – they care about where they sit, they care about what… and the other thing that’s really interesting about humans, the really, really good humans, don’t even want to admit it, that they care – deep down inside, they care. Like if you could introduce randomness and no politics, because there were no politics, it works out really well. So we kept doing this, kept doing this, I’m trying to think… over 100 people, and we still do it for the entire product team, so everybody that works on the product, like engineers, UX, testing, all those guys, we still do this quarterly rotation. And it was random, we didn’t really give it that much… “Oh, yes, this is how we’re doing it. This is going to save us x number of hours over five years.” We had not thought about it for five seconds when we did it, but if I were to do it all over again, I would do exactly that, because it saves… So little hacks like that, you know this would be an interesting talk for next year, would be just culture hack, the little things that you can do that have impact down the long-term.

Alright, this is the last question I have, so I’m going to really put you on the spot here shortly, prepare yourselves. Otherwise you’re going to make me look really uncomfortable if there are no questions, not to put any more pressure on you, because that’s the worst thing you can do to a speaker… I’m kidding, it will be alright. So how do you maintain culture? The first one that’s really worked well for us and I’ve seen it work elsewhere is just raw transparency. Just transparency. And I’m going to dig in, double-click on this one, just to kind of talk through it a little bit. As it turns out, especially kind of next-generation workers and people, they overvalue transparency. At HubSpot we share… our default position is open, we share everything in the company: what our cash value is, what round of valuation we’re doing, how much cash… how long will the cash last. The only thing we don’t share, and we’ve talked about this a little before, the only thing we don’t share is compensation and equity because we don’t think that that’s the company’s information exclusively, it’s partly owned by the team member. And I haven’t actually done the data analysis on this, but I would bet you a significant amount of money – if I were a betting man, which I am – but a significant amount of money that if we did the analysis and gave people the choice of trading 10% of their salary in order for them to have access to the Wiki, which is where all this information gets posted, my guess is just about everyone would actually take the salary reduction for access to that data. They just love… I cannot tell you how much they love the transparency. So that’s really important. It works, and so the nice thing about that transparency, one of the byproducts of it is it’s really hard to do stupid things out in the open, right? It really is. In the bright light of day, it’s very hard to be exceptionally stupid, because people will call you on it. So we have long flaming threads on the Wiki, literally 100+ comments on “why Dharmesh is an idiot, this is the stupidest thing I’ve ever heard,” essentially, that kind of stuff, on certain topics. So this transparency really works. And it’s the kind of stuff that’s much easier to introduce earlier in the business’ history than later, but it works really well.

The other one, and this is my personal secret, the first time actually… I think it might be the first time I’m officially sharing it. So most of us that are in the software business want to hire, want to recruit – you don’t hire, you recruit – entrepreneurial people. Because the best people… this is how you find your co-founder, the early team – you want to find entrepreneurial people. As it turns out entrepreneurial people like to be entrepreneurs. It’s just, it’s a weird that way, right? So one of the things you’re trying to talk… you’re not just competing with other start-ups, you’re competing with them doing their own thing, and so the secret here is that… and this is part of the recruitment process when I get pulled in, I often joke that I have the CTO title, but the ‘T’ actually stands for ‘talent,’ not ‘technology,’ because I spend more time thinking about talent than I do technology sometimes, on some weeks. But the closing thing is, if you can honestly, genuinely say, part of our motivation in bringing you on board, whether you stay… the mistake people make is they assume because it sounds good, “Oh, we want people to be here for a long time, because I don’t get leverage until year three, four, or five, I don’t want them to work just for a year.” In fact the people that are coming in with that mindset, you’re predestined to doom then, if every employee you hire is planning to only be there a year. So this is a controversial, counterintuitive thing. The reality, though, is that if you position it this way, which is, “We’re going to try it. We don’t know… you’re going to be in here. And our goal is to essentially, if you have a great idea right now, and you want to pursue it, we are not going to talk you out of it. We will not talk you out of it. I might write you a check, but we will not talk you out of it.” If you don’t have that life-changing, this is what I’m going to do for the next ten years, we want to make HubSpot the best possible place you can go for what you think of as a start-up MBA. We will help you become… increase your odds, when you do go off and eventually start your company – because we know you’re going to do it, whether it’s one year, two years, three years, we know every entrepreneur we’ve hired is going to start a company, that’s just destiny, essentially. And if you can kind of put that out front – this goes to the transparency thing – your close rate goes up a lot. I think you have to be honest about it. So we do a lot to help try and build out the entrepreneurs within the team. You know what, Red Gate, by the way, is kind of the canonical example of building out entrepreneurs, they give up space and they’re very good at it, so talk to him about entrepreneurial hacks. Alright, this is the plug for “fill out your survey forms” if you liked… no, no, you should fill them out regardless of whether I did a good job or not. Let’s take questions – I’ll take a breath and… thank you. [Appluase]

Paul Kenny:  Hi, ok. Paul Kenny, Dharmesh…

Dharmesh Shah: Yes, hi Paul.

Paul Kenny: I’m just interested in the culture hacks. Can you give me some example of some of the kind of short-term tactical culture hacks that you’re applying right now?

Dharmesh Shah: Right now, let’s see, we have… one of them is around experimentation and innovation. One of the problems that we have, and I think all companies have this problem, and Clay Christensen talked about this in terms of the innovator’s dilemma, how do you do new things, because smart management – because they’re smart – are going to continue to maintain the profitable, revenue-generating business that’s already there. And so part of what we do… so we have this experimental lab thing, and the way it works is this: we have… so anyone in the company can have an idea. And the idea when first conjured up in their head is essentially what we call “alpha,” and they work on it nights and weekends. No resources from the company, whatever… they just do it. Then we have a meeting roughly every two months where all the people that are in the kind of experimental program will do pitches at varying stages, so people that are in alpha will pitch, they’re trying to get resources, people in beta will pitch… and then people will get promoted – or ideas get promoted – and so what happens from alpha to beta is, if it makes it to beta, you get fired from your day job, and now you’re the CEO of that idea essentially, and then when you actually go to production, it’s like now we’re going to be essentially VCs, investors in that idea, and we’re going to give you a budget, we’re going to let you hire people, both internally and externally. And it sounds kind of trivial, but it’s an important thing. And we haven’t mastered… there are kinks in that particular machine, which we’re trying to work through – it’s hard. But that’s one of them. I’ll tell you… there’s a long litany of mistakes I’ve made, so that would be a much longer talk, but one of the hacks we had early on that didn’t survive all six years – survived about three-ish, roughly – is in the early days of the company, we didn’t have titles. Zero titles in the company, no one had a title. For the same reasons, why do we need titles? We’re a software… we’re not out there doing field sales, nobody cares. And so then we had this… one of the longest debates in HubSpot history was this particular topic, and the winning argument – and we have titles now, and I’ll tell you why we were kind of swung towards it – the winning argument was, the person came up and said, “Ok, I love the company, I bleed HubSpot orange, I get it, I get why you don’t like titles. But the reality is…” she used the word arbitrage, which is the easiest way to my heart, right? She was like “Dharmesh, you have a… you’re basically playing negative arbitrage here, you’re asking us to give up something… so when I go to my holiday party with my family, and they ask me, ‘Oh, how are things going and what do you do?’ I have to go into this 15-minute story of why I don’t have a title, why there are no such things as title promotions at HubSpot, and as a result of me having to go through that pain, I’m going to extract utility or value from the company subconsciously because you’re going to have to pay me for it in order to make up for the lack of that title. Dharmesh, that’s just bad business. Why would you do that? That’s not you.” And that was the winning thing, it’s like, “You know what, I don’t…” Even though it’s not important internally, there’s as it turns out a world outside of HubSpot, we do expect people to leave someday, God forbid. But that was the winning argument, that’s one that just didn’t survive – it works great, I’m a big fan of it, but that’s… yeah. And it’s still unclear whether it would have worked, had we just kept that model. I don’t know, maybe I should have just doubled-down on it, I don’t know. Yes, Neil?

Neil Davidson: So you’re not an absolute dictator at HubSpot, but if you were, what would you do?

Dharmesh Shah: I’m not an absolute dictator at HubSpot, but I were, what would I do? It’s interesting you should ask this question. So we have a management team at HubSpot, it’s about nine-ish people, and we have a CEO – I’m not CEO. One thing that’s actually not widely known is that I don’t have any direct reports at HubSpot. The number of reports I have is exactly zero, and has been exactly zero since the company started. Which is awesome, by the way – I highly recommend it. But one thing that’s interesting though… my co-founder and I act essentially as partners in the business: we debate everything, we’re obviously open about it. But one of the things that we’re doing now, and I have the first one coming up a week from now, is a powerpoint presentation that I will kick off and others will do as “What I Would Do If I Were CEO.” Like if I were Grand Master Poohbah of the Universe at HubSpot, owned all the stock and it was completely up to me, what are the things that I would do, or do differently than what HubSpot’s doing right now? That’s going to be a hard, hard, hard presentation. So the kinds of things I would do would be: reduce the dependency on humans. I just would. I’m going to say probably the most controversial thing… I’ll regret this… I’m going to say it anyway: as an entrepreneur – and start-ups, small businesses are great for the economy – as an entrepreneur, your job is not to create jobs. Your job is to create value. Do not measure success by headcount, do not measure by how many jobs you created. Measure success by whether you solve the problem and for how many people. And if you can do that with five people, awesome. If you need 500 people, awesome. But your overall goal is not to create jobs. So given that, I would love HubSpot to be more efficient, solve the same amount of problems with less bodies at play, essentially. So the question… yeah. I love the people on the team, it’s a great team, but that’s the thing I was like, “Okay, what are we doing to essentially reduce the amount of friction in the process and the number of humans required,” and so that would be on my list. It’s a controversial one, actually, because the model’s working, we’re like “Oh, just add water and it will go.” Alright, question back there, yep? We’ll wait for the mic.

Audience: You mentioned choosing industries that are easy to exit, I believe you said, but could you give a couple examples maybe of ones that are easy to exit and ones that are not?

Dharmesh Shah: Service companies are relatively easy to exit, almost by definition, because you’re converting time to money and you don’t have to necessarily pick a particular sector. In my personal opinion, on the spectrum, most SAS companies, web-based companies, mobile-software companies are actually relatively easy to exit, because at a high level of abstraction, exit is a function of how long it took to build and how much investment you have into the thing. And so if you built a web app in three months, over nights and weekends and plenty of caffeine, chances are that you will be much more likely to exit the business versus if you had been working on it for a year and a half and you finally launched this awesome enterprise software encryption security device video codec thing – and nothing like that exists and should exist, by the way. Yeah, so I think it would be a function… examples would be web-based business, mobile, things that are really easy that are kind of features, not companies, and I don’t mean that in a disparaging way. Things that are relatively easy to replicate were relatively easy to build, almost by definition, and those are the things that are easier to exit. If someone comes along, you just make it not worth for them to compete. Alright, I’m going to take a question from Peldi and then I have one thing I’m going to share some HubSpot numbers with you that I think are intriguing that I’ve not shared before. Peldi? We’ll wait for the mic, sorry.

Peldi: Hi. Could you speak maybe a little bit about how much effort in your company historically has been dedicated toward product or the company itself?

Dharmesh Shah: How much money in product versus the company itself. So I’m going to give you… and this is one of the biggest lessons I’ve learned at HubSpot, I’m going to give you the story behind that lesson. So for the first, I’ll call it three and a half years of HubSpot’s history, we’re a software company, the product was… on a scale of 1 to 10, I would give it a 6.5. If I was feeling particularly generous, I would give it a 7 – good, but not awesome. And what we were known for, because we were really, really good at it, was sales and marketing, right? And there was a reason we were really, really good at sales and marketing, was because we decided to be really, really good at sales and marketing, since the day the company started. We were mitigating market risk, essentially. We thought, “We’re building business software for marketing or whatever, it’s not that hard to do, if we fail miserably it will not be because we couldn’t build the product, it will be because there wasn’t a market there, not enough people to pay enough money for it to be a business.” And so we said “Oh, let’s solve the sales and marketing problem, essentially, mitigate that market risk.” So we did that, and as it turns out, we got really good at it… “Oh, here’s the machine, we can put a…” I’m going to give you, this is actually a good segue into the numbers I wanted to share, the driving number in a lot of businesses, especially subscription-oriented businesses, is if you think of the business as a machine that you invest in, you put a dollar in the top of the machine, and some number of dollars come out the bottom over some period of time. If you put a dollar in and a dollar comes out, over two years or whatever, that’s not a business, right? You don’t want to do that. And so one of the things that we kind of had in HubSpot’s early history was we were able to put a dollar in and get about a dollar-fifty, two dollars out, like within the first six-ish months. It was a good business – not a great business, but a good business. But it was good enough for us, like “Wow, oh, we can put a dollar in and get like a dollar… that’s awesome! Let’s put more dollars in!” The machine is working, efficient enough, and so we did that, we essentially kept adding fuel to that particular machine, dollars kept pouring out. We hired one sales rep a month in the early days, to kind of meet the market demand, and then we hired two a month, kept hiring, kept hiring, kept hiring. And then we had – this is a long answer but it’s a good one, I promise – so my co-founder and I had this kind of epiphany one day, on one of our long, extended dinners, and we’re just like, “You know what? Business is doing well. It’ll be… with plenty of opportunity to screw it up, but we think it’ll be a billion dollar business, but we’re not out to build just a billion dollar business, we’re out to do this multi-billion dollar dent in the universe juggernaut, and we’re not going to get there with a product of 6.5 or 7, it’s just not going to happen.” So it’s like, “Ok, Brian, great that we agree on it right now. Let’s do this, let’s now become a product company, not a sales and marketing driven company. “Awesome, we believe, we’re software people, awesome awesome awesome.” Then we’re like, “Wait a second, there’s like 100 people back at the office that for years have been… we’ve hired marketing people, it’s woven into the culture of the company, how do we make that change? And so we had roughly $10 million in the bank at the time we made this decision, financial projections all planned out in terms of how fast we’re hiring, and we still had a good and growing R&D team, it just wasn’t growing as fast as the marketing. And so my co-founder and I looked at each other, and it’s like, “There is no way we have any credibility with this group, that says ‘Oh, you guys just drank too much that night, whatever it was, we don’t…’” It would have been hard. So the thing we did, the next company meeting the following week, we did an all-hands, and we put this statement out there: here’s our bank balance, which we share every company meeting, it’s on the Wiki, but we share, “Here’s where we are,” here’s how fast we’ve been hiring in sales and marketing, but as of this moment right now, we are not going to take a single dollar of the dollars left in the bank right now and spend them on sales and marketing. Not one, not a single dollar, not a single hire, even though we’re used to hiring every month, month after month, for three plus years we’ve been investing in sales and marketing. And that’s what we thought it would take to actually deliver that message. That went okay, actually, of all the things… The biggest mistake we’ve made in HubSpot history was not making that decision sooner, essentially. And the thing I’m most proud of is the thing I’m about to tell you now, or one of the biggest positive things we did, is last year we acquired a company called Performable. David Cancel spoke last year, I think he’s in the audience somewhere here. That turned out being awesome. So they had… they were like the bizarro version of HubSpot to some degree, they were completely about product, completely about product. Not that they couldn’t sell and market, because we could write code, too, but they were much skewed towards that, and so we acquired that company, injected it into kind of the fabric of HubSpot. Lots and lots of pain in the ensuing year, you can talk about that, but it has turned out to be the best possible decision HubSpot… now, and we just launched the kind of culmination of that work, I give the product 8 on an average day, 8.5 on a good day, essentially, and trending upwards, it’s becoming awesome. I’m a relatively modest guy, the product is now bang-on-tables good. It wasn’t bang-on-tables good before. Alright, what else do we have? Ok, yes? While the mic is coming up, by the way, so we had, in terms of sharing numbers, we had like a dollar to, like, a dollar fifty, two dollar conversion rate, of that kind of machine that I talked about, in the early years. In the course of the last year, we’ve taken that up to like 4.5, 4.7 I think last month, in terms of the efficiency of that particular machine. So that curve is actually… the slope of the curve has actually been relatively constant as you’ve seen in the graph, that’s actually getting steeper. We had the best month across any metric you measure August of this year.

Audience: Can you share any information or experience you have with regards to shares of the company? Let’s say if you own 100% of the shares and then you’re growing and you have staff and people and investors…

Dharmesh Shah: Sure. OK, so in terms of sharing equity and just… In the first start-up that I had, which I ran for ten years, did reasonably well, everybody made money, other than the two co-founders, nobody had any shares, any options at all. So it was at the far end of the spectrum over here. And the reason behind that was actually very simple, which is, I had no idea what that meant. I had no idea what an option plan was, I had no outside investors, I didn’t know what venture capital meant, so we had… nobody owned any equity. We paid people a bunch of money. Most of us were in our early twenties, in Birmingham, Alabama, which is where I was living at the time, where my first company started, and just about all the… of the first ten people, most were making – in their early twenties, mind you – in the six figures, by the… I mean we just paid them, we made a bunch of profits, we didn’t know what the company was going to be worth or equity, we weren’t solving for that, we didn’t understand it. Second company, I started learning about investors and venture capital, didn’t raise venture capital, but every employee in the company had equity, it grew to about 15 people, the prior one was about 75. And at HubSpot, every individual employee, up and down… So I’m a big believer in… because the mechanics around it are much simpler, like entrepreneurs often fear it, they don’t do it, not because of loss of control, it’s because they don’t understand it. There are definitely ways to kind of work out the control issues. So my belief is that – this is going to sound Draconian, I don’t mean it to be – is that people like owning a piece of the dream, regardless of how big or small. I think one of the challenges we have as an industry is educating employees on what it actually means to have 10,000 options in a business, it’s just not what we… we try to be transparent about it, but there’s like a… anyway, maybe I’ll talk about that next year, but… I’m already making the assumption, planting the seed with Mark, “He has to get invited, there’s all these topics that he can talk about…” So my advice would be two-fold. Even if you’re… so the binary decision that Noam’s going to talk about this binary decision in depth, later during… Noam Wasserman, he’s got an awesome book on the topic and he’s got hard data, but one of the binary decisions entrepreneurs face when they start is, are you looking for maximizing the probability of a modest outcome, and you want complete, total power, or are you trying to have, like, swing for the home run, even though that means giving up some equity, giving up some control, getting some investors and whatever. and neither choice is wrong. I’ve been on both sides of that equation. But you have to make that early choice. Once you make the choice that you’re swinging for the fences, going after whatever chance you have of this massive outcome, I think the way you maximize your probability of pulling that outcome off to me clearly is equity ownership for all or most employees. I would also say, though, even if you are in the entrepreneurial camp of “Oh, I just want to build a $25, $50 million business in a few years,” which is an awesome outcome, I would still recommend actually including as many people in the process, because it’s not that expensive, there are not really control issues. So investors are a whole different animal, but in terms of sharing stock with employees, it has very little downside on the company, very little downside, the upside is much higher, just emotionally and otherwise, I think it’s the right thing to do. Alright, we have a question back there?

Audience: Hi. If you’re interested in putting together an option plan, but you’re an entrepreneur, you’re not VC-backed or anything, you’re not sure exactly how to do it, and you don’t want to lose governance controls, what are some good resources for kind of understanding the right way to do it?

Dharmesh Shah: I don’t know them off the top of my head, and I’m not a lawyer, and don’t play one on TV, so I’m not… but never before have there been more pre-built resources, in terms of templates for option agreements, for early-stage capital raising, for convertible notes, for all those things. I would start with something like 500 Start Ups or Y Combinator or Angel List, they likely have something. Any of the accelerators that have solved this particular problem before have likely made their particular dock available at this point in time. And if not, if you ask them, they likely would give it to you essentially. It’s not something you should spend… you should spend energy on it, but not thousands of dollars, most of it’s a copy-and-paste kind of thing. Alright, question over here. I’ll just… yeah, this will be the last question. Yes?

Audience: What challenges do you anticipate for HubSpot when you open your European office as well?

Dharmesh Shah: Open our Dublin office? Yeah. So HubSpot just announced… So up until recently, and still today, we’ve had exactly one official office of HubSpot, so all… of the, let’s say, 375-odd employees, over 350 work out of Cambridge – the other Cambridge, not the real Cambridge, across the pond – they’ve all worked here, we’ve never had remote offices before. And the reason for that is, just culturally, we weren’t equipped, we didn’t know how to do that, essentially, it’s like “Oh, we can barely figure out how to get the stuff that’s in our heads into the team’s heads and we were big believers in this kind of co-located model. And for the first time we’re opening an office, we’ve chosen Dublin, Ireland, and the challenges are exactly what you’d think the challenges would be, which is, how do we take what we think is this kind of awesome culture and transfuse it into a location somewhere else? And we’re doing a bunch of things to mitigate that risk, we’re taking about eight people from the core team that bleed HubSpot orange, that kind of know the culture, know the company, and we’re sending them over there on tour of duty, essentially, to kind of genetically transplant that culture over there. We think that will help. The other thing, and I think this one’s important, is you need to treat every employee, regardless of what the location is, as if they were one of the… which they are, right? One of the mistakes people make when they do kind of satellite offices is, “Oh, they’re the ones that are working on maintenance,” or “they’re working on this product,” and we’re like “No, if you’re hiring, if that’s what you’re doing, they should be at the same level, the same kind of treatment as any other… It just happens that they are over there versus over here,” And that’s the big… we won’t make that mistake. This has been awesome, it’s always fun. I’m going to pass out after this, but I’ll be at the conference for the rest of the time. Thanks for your time.