Dharmesh Shah: Mistakes Made & Lessons Learned Building HubSpot

In this captivating talk, Dharmesh Shah, co-founder of HubSpot, takes you on a transformative journey through the highs and lows of building one of the most successful inbound marketing and sales software companies. Dharmesh shares the mistakes made and valuable lessons learned along the way, offering a unique insight into the challenges faced by entrepreneurs in the tech industry.

Dharmesh begins by highlighting the early days of HubSpot, where he and his co-founder made many initial missteps and misconceptions during the company’s formative stages, providing an intimate glimpse into the obstacles that entrepreneurs often face.

Throughout the talk, Dharmesh delves into some of the key mistakes that proved to be pivotal learning experiences. By sharing personal anecdotes and real-world examples, you will learn the significance of learning from failures and embracing a culture of continuous improvement.

Slides

Transcript

Dharmesh
Thank you. So speaking of the shirt, in case you’re wondering, 95% of my wardrobe consists of HubSpot logo T shirts, and the other 5% look like this. My hope is that this shirt is basically an indication that I’m going through a midlife crisis, which will mean that I will live to like 108. That’s the hope!

Welcome. Good to see everyone. I’m Dharmesh. For those of you that know me, this is not my natural habitat; I live online. I live in the internet, originally from India. And my mission here for the next 55 odd minutes is to try and increase the probability of breakthrough success for all of you software businesses out there are those helping software businesses? I know that’s an ambitious goal. But I’m hoping that there’s something either a question someone asks or you ask or something I say that kind of increases even if it’s on the margin a little bit. So that’s, that’s the goal. Here’s the Venn diagram. By the way, I love Venn diagrams. For those that don’t know me. I love business generally. And I love software. So it is not that surprising that I love this event. I’ve loved it ever since I’ve started speaking here, and we’ll talk a little bit about that. By the way, if my voice sounds nervous, it’s because I’m nervous, I do get better, it’ll be easier to listen to me.

For those that have heard me speak before you know, this, I will get, I’ll get a little bit smoother. So here’s a slide that kind of edited, because I was too lazy to like create it from scratch. These are all the times that I’ve spoken at this event. So what you’ll notice, I’m big on patterns; so 2008/2009/2010/2011/2012 and then 2013 consecutive six years, then skip three years went 2016, skip three years when 2019 Skipped three years. And here we are in 2022. So my sense is we’re trying to find the optimum equilibrium curves, like how long does it take for them to recover from having heard me and I think it’s about three years. So if you don’t like it this time, you’ll I’ll try again harder in 2025. O

A couple of words of caution. I have strong opinions on just about everything. So if you ask me a question, I will do my best to answer it. But recognise that I’m extrapolating from a very small sample size, right. So it’s not like I have all the answers. In some cases, I have data, but you should feel free to push back. Feel free to ask questions, please, this will that will make it much more useful, I think to all of you. Because we have a mixed group, I’m not exactly sure what you’re interested in. So if a particular topic happens to catch your fancy, or you want to push back, if you want have a mini debate, I’m happy to have that; I enjoy those. And, but no pressure, if you don’t want to do that, I think I have enough content to kind of get us through and emerge on the other side. And when Mark originally reached out to me to invite me to speak here, I’m like, Okay, this is this will be my ninth time. And I’m not sure like I have anything left to say that I haven’t already said over the prior sessions.

This is the email from Mark. No editing involved. It’s like, Oh, how about this, you know, three things that you kind of knew turned out to be wrong, but you’re wrong about so and so forth. And my issue with like, coming up with three things, I’ve had 30 years in the business to make a tonne of mistakes. Like I have so many mistakes, I’m trying to, like rank them as are which ones are the most likely for other people to make? Because you think you know, but you don’t know anyway, so I’m gonna, I’m not gonna reduce it to three, I’ll just talk faster basically, is what it is. And so a lot of what I’m going to talk about will be you know, from HubSpot, that’s my most recent experience. And probably the most widely known, but I got my kind of start in software startups back at the age of 24, when I’m 54. Now, so that’s 30 years ago. And it was a enterprise software company in the thick of it as a kind of vertical CRM or adjacent to a vertical CRM in the financial services space. So not interesting, you will never have heard of it. But a lot of the lessons I kind of carry now I think, are still relevant that I learned from that first startup. Lots of things have happened since then. But some of the answers I might come back.

One of them and I’m not sure how, how typical this is, anecdotally, but one of the big lessons I learned from that first one, so we were partnered with a really big, really big software company. And it’s enough years it has to pass a statute of limitations. I can say things now. So it’s called SunGard data systems. A big financial services software company. And I used to work there as an employee. And I left to go start my first software company at the age of 24. My co founder was 17. And neither of us had ever started a company ever had any, like real jobs, didn’t have never used an ATM. Never heard of venture capital. Like nothing, we knew absolutely nothing about what it takes to actually run a business. You know, never balanced a checking account. Anyway, lots of things we just didn’t know, walked in and completely, completely ignorant. And so this is roughly a good story, I’m going to share it. It’s like I hadn’t planned to leave. But I was doing relatively well, at that company, I only worked there for like a year and a half, it was at SunGard. I’m like, hey, you know, I’ve got this idea for this application that’ll help people convert data from other third party systems that compete with SunGard and move them to the SunGard system. Because the way it works right now is every time you guys sign up a customer, which they sold for hundreds of 1000s and millions of dollars. They like put engineers literally had engineers in the basement of a building that would write custom code to port whatever data was in that format and bring it over anyway. So I reached the management’s like, Hey, I have this idea for an application that I think will help your customers move more quickly, and you’ll make more sales. And they’re like, What do you think you can sell the application for?

I don’t know, I’ve never sold anything in my life. I have no idea what this costs. The only thing I bought a bunch of Infocomm games and other video games. It’s like, like the most expensive thing I think I’ve ever bought that random computer was probably like $200. And so I said $5,000. And I could pause for them to kind of fall on the floor. Later, like, that’s not our business. Like if it’s less than $500,000. That’s not a business we want to be in. And so I left I said, Hey, why don’t I leave? Because I can’t get it out of my head. I’ll go build the thing. It’ll still help you because you’ll make more sales. And I will give you half the revenue. We’ll just split it. And they said, Yes, shockingly. And so that went for a while. So we went out there and sold the product. And they were just basically so I was not to disparage what we built the floor mats for the car, right? They just kind of gave them away as part of the thing. It’s like, oh, you’re buying? Here’s the product from pyramid that will help you convert your data, go forth and prosper. And so that was great.

And then Lesson number one is, so we had no contract it was this this kind of handshake agreement. And they had salespeople that would sell and then it’s like, okay, well, over time, they’re like, oh, yeah, well, we started giving the software away, we’re not really charging for it. So we don’t really owe you anything. Well, then that didn’t seem quite fair. And like, you know, we talked about it like, Okay, well, you know, I’ve got a business to run here. So that’s when I learned sales. It’s like, okay, if I’m going to turn this into a real thing, and the story, so state partnered with them, it’s like, okay, well, I’m going to reduce the revenue I give you, I took the price from 5000, to 10,000 20,000, to 50,000, to roughly on average, 70 to 80,000, over the subsequent four or five years. So we’ll talk a lot about pricing coming up. But the big lesson is that if you ever find yourself in this situation, almost invariably, this is how those partnerships go. When they’re going well, they’re going just fine. Until they don’t go fine. And then you get called into a meeting. And it’s like, hey, like, I know, you guys were selling $5,000 applicant. By the way, we built more applications over time, including one for the web that let people access their retirement crowns over this thing called a web browser. And, and there was one deal that happened where my startup – pyramid – made more money from a new customer than SunGard itself data as a result of our products. added together just simply were and so being the person that I am get called into the CEOs office, he says, Yeah, I saw this deal where you guys made like, $800,000. And we only made like, $600,000, what’s going on? Is this some isolators? There’s something special? I’m like, No, I think every deal from here on it is pretty much going to look like this. Because people want these things much more than they want this thing I didn’t go didn’t take economics in school. But that’s sort of, you know, I don’t define what the market wants. That was not a good idea.

And so we went from the, we love you, because you’re adding value to our products to our customers. We hate you because you’re taking food off our plates and things like that. It’s like, we love you because now we’re able to compete with other people because we have all these adjacent products. We hate you. We want to buy you. No, we don’t want to be sold because we’re growing. But we really want to buy you Okay, but how much will you offer me it’s like, Okay, we’re gonna offer you this. I’m like, that’s only like, two times revenue. That doesn’t even make any sense. It’s like, and so it’s like, Okay, we’re gonna come kill you. And eventually, I got tired of fighting because I knew based on the market that I was in, there was no way for me to break out of their national pool my company was kind of orbiting around, no pun intended – SunGard – and so I ended up selling the company. So the moral of the story is as you’re getting into a business or a product line, kind of be mindful about whether you’re going into someone else’s orbit or creating your own solar system or some combination thereof and be prepared for that particular outcome. It’s almost, and I won’t say 100%, but it’s very, very likely that the story proceeds in that way. And there are lots of reasons we can talk over beers. As to why that is.

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Founder Market Fit

The other big lesson from that first one is, you know, we talk as an industry a lot about product market fit, I think even before then you need some semblance of founder market fit. And what I mean by that is, you have to be in love with either the way you’re solving the problem, it’s like, I’ve always wanted to build a machine learning software company completely fine. I’ve always wanted to work in this industry, I’ve always wanted to work with small businesses, whatever it happens to be, there has to be something that draws you to that, to that group of people or that problem. Otherwise, you just won’t have the courage of your conviction to kind of stay the course the whole way through. So I think it’s important when you’re starting to make sure you’re doing something that the software business, like the real leverage doesn’t really start to show up. Until roughly the years 6-9. That’s the time where you finally figure out you’ve got some semblance of a platform, you get more and more code reuse, as you’re launching additional products, the marginal cost of developing those products goes down, lots of good things start to happen after year five. And if you don’t have some sort of founder market fit, you won’t ever live to see those days of high leverage. So that’s my advice.

I put this here, this was my second startup, which I never talked about. In fact, this is the first time this slides ever been shown. Well, not ever, but back when the company obviously was real, anyway. But he was basically the same thing as HubSpot is just to say that said in more cringy ways, right? He uses terms like E business. By the way, I still don’t know why like E commerce became a huge thing. And now but when it comes to like digital transformation, we use a phrase digital transformation. So I’m just saying e business, which is really what we mean. Anyway, super cringy by the way, so if April were to read this, I know she’s out there.

What happens if one of us becomes disenchanted with the business?

Like this is the worst possible way to describe business, right? It’s like okay, a provider of integrated e business software, okay. No one developed disconnected software unintentionally. Anyway, I’m not gonna I’m not gonna bore you with it was bad. Alright, so let’s go to HubSpot. HubSpot is 16 years old now started in 2006. And I started with a co founder, Brian Halligan, who you and I met in grad school, here at MIT. And one of the big things that we did, this is something we got right. So I’m gonna talk a lot about things we got wrong. This is one thing we got right, which is strong, strong alignment before we even launched the company. So we have this really hard, really deep meeting, where he went through the series of questions that the founders asked each other. And if you’re an early stage, if you have not had this yet, with your founders, you should. What happens if one of us becomes disenchanted with the business? What happens if one of us needs to work a side job? What happens if someone offers us $100 million? And one of us wants to take it and the other one doesn’t like all these questions, most of which are hard questions. What do we paid all this stuff? Like? How do we figure all this out? How do we divide the equity, all those things? And we kind of resolved all those questions at time t=0 before we even officially launched the company. Like we need to be in alignment on these things. And that helped a lot. So I’m we’re big believers in alignment at HubSpot

Fortune favours the focus

So one of the things we aligned around was the fact that both he and I had some modest successes before. And we had like a chip on our shoulder left that we had, like one company left in us that we wanted to do is like this is our last step up to bat. Anytime there’s a fork in the road, we’re going to take the more aggressive option. So either we’re gonna succeed, hopefully, well and sustainably or go down and crashing, burning flames, there was no hedging, so and that’s been helpful. All right. So here’s one piece of advice I’ve heard for pretty much all 30 years, and I’ve given it for most of those 30 years, which is if you’re a startup like pick one thing and be really really good at it makes positioning easier. You can tell the story better, you can differentiate more, all those things. And that is completely all true. And the reason it’s true is because this is the HubSpot ism is Fortune favours the focus, like the narrower your aperture, the higher your odds of success doing whatever you’re doing, it’s relatively intuitive. And so it’s not. And so here’s what we did.

In v1, v1 of HubSpot year one, it’s like okay, well, like what are we doing? Well, we’re gonna build a content management system and search tools and a blogging, application, landing pages, social media, we’re gonna do all the things. And we are two people in a house plant, right. So it’s like, it was crazy. There was no like, and the only reason we did this, we knew we had heard the advice we had given the advice in terms of focus. But it was kind of overruled by this one notion, which is when we’ve had this since year one of HubSpot, which is “solve for the customer”. So in talking to customers, the issue they had was that yes, there were great products in each of those categories. But that’s not what they needed. They didn’t need a better content management system or better Social media, but that’s not what was keeping them in the sidelines. This is probably the last time I’m gonna talk about HubSpot, but just to give you some context. So the reason we did is because that’s what the customers needed. If they needed something else, we would have built something else. But that’s all right.

You should be able to describe what your company does in a tweet. The only reason I picked tweet is because everyone knows roughly how long the tweet is. Elon hasn’t bought the company yet. They’re working on it. But we know how long the tweet is for now. And I would say that, if you can’t do this, you should at least be able to do that. Like just be able to describe what your company does, in something less than two hours and three drinks. Both Brian my co founder, I failed at this test for years. I am not exaggerating. We could not explain HubSpot crisply. I didn’t know April existed at the time, it would have been awesome. Had you written your book? I would have read it multiple times. So you should watch anybody. Right? So this was my response when people asked me, like, what is HubSpot? Well, it depends, you know, depends on your perspective. And what you’re, NO! just answer the question.

So, here’s a contrast, Riedel forget, hi, well done on the webpage well done. So they have multiple products, but you go to their homepage. And it’s like, it’s a PDF editor. And it’s for professionals. And the screenshot told me three different use cases that I can use a PDF editor. And if I want a PDF editor, that’s one that thinks like, will fill the thing that I need is it runs on iPhone, it’s like, it’s brilliant, right? And like 30 seconds that you didn’t have to say a word. And I sort of know. And if you contrast this to pretty much every web page HubSpot did in the first five years, you could spend 30 minutes on it, then you didn’t even have a fighting chance of figuring out what it is we actually did. Not even a fighting chance. So my advice. April’s already given a talk, go watch it, it’s brilliant. Just do the search if you haven’t already, but here’s how April defines it. It’s I’m not going to reread it to you. But watch the video. Watch the video.

Alright, so here’s, I’m gonna skip through this, you don’t need to know. But we did solve that eventually. And this is what we think of ourselves is now as the number one CRM platform for what we define as scaling companies. It’s not about HubSpot. We’ve grown 500 to 1.7 billion ish. So it’s, it’s worked out, okay. Despite the mistakes, okay, so now let’s talk about some hard stuff, pricing and packaging.

If you are in a company, fewer than 200 people lets say, if you’re a founder, even if you’re an executive, doesn’t matter what you’re going to spend inordinate amounts of your time talking about pricing and packaging. You just are like, I have never met a founder that this has not been an issue, you walk into a room with your co founders, or your marketing person, you’re a salesperson. And you promised yourself as we did, like, we are not leaving this room until we all decide that this is what we’re going to do. And we’re gonna sign our names in blood and then 3am I’m sending a message to my co founder. Yeah, but did we think about this? You know, it’s, it’s hard. And we’ll talk about why. And we completely got it wrong at HubSpot. Which, should be surprising, because we had just gotten done and we went to a business school, took a pricing class, right around really, really smart people from people that written PhDs on pricing. And I will tell you the extent and it was not the school’s fault, by the way, this is no dig on MIT at all. And this is the conversation my co founder and I had on pricing.

So number one, we need a price. Because we want to start charging early, we want to start getting customers to see if there’s evidence of a market. And so like, Okay, well, yeah, we need a price. How much do you think we should charge? I don’t know, how much do you think we should charge? I don’t know, how much do you think we should charge? How about $250 a month? Done? That was our price. And that was the entirety of the conversation. I’m not paraphrasing. That is what it was. And so we picked $250 a month.

Now the astute amongst you may notice the absence of a not 250 per server per user per something per gigabyte of storage per million content, nothing. It was by God it was $250 a month, not a penny more, not a penny less. That’s what the price was. And we had massive customers come through and buy HubSpot. And they were not capable. They couldn’t pay us more than 250 that was our price. Boy, was that dumb? That was just so so stupid. There’s no other like word for it that I can use.

There were some tiny rationalisations that we had after the fact that I can, I’m going to spare you but don’t do this. Don’t do this. So there’s a few things to worry about as you’re thinking about pricing. And I see a bunch of startups getting caught in this trap, where there’s this kind of no man’s land of pricing where the price could be so high, and we can argue around what that number is, and whether it’s trending upwards or not, it is but it’s so expensive that it can’t just be sold on the website, people are not going to whip out their credit cards and pay X dollars a month. That way and or it’s too cheap to afford, you can’t afford having salespeople sell the thing because you’re not making enough money on the thing in order for that price. And you’re kind of caught in between that that trap, which is exactly where HubSpot was with our 250 a month price. So if you’re doing that revisit I’m gonna posit to you the most even more important than the actual number that you pick for your price is the model, like, how do you charge for it? How does it scale as your number of users grows, as the company grows, whatever it is, there has to be some variable access to your pricing, in order to get to what economists might call like price discrimination in a positive way that says, oh, customers are getting more value will pay more customers are getting less value, pay less. And you can kind of try to fill in this supply demand curve. To compress.

Pick your poison

Right, good so far, this is the hard one, you sort of have to pick your poison. If you’re going to have a higher price tag, you’re going to have a longer sales cycle as it stands, or you’re gonna have a lower average price, if you make it simple, we’re past that.

Here’s a big one. took us a while to learn this is that if you sell a tool, and I don’t mean this in a disparaging way at all, if you sell a tool in a known category, it solves a known problem that customers know they have, you can put it up on the website, it might even be somewhat expensive. But people understand it. If you’re selling a transformation, by the way, the way you did X is all wrong. You need to rethink how you do sales, how you do marketing, how you do finance, how you do auditing how you if you’re trying to change the religion of the company, and the way they approach something, or the religion of that role. That has to be sold, you’re not going to convince someone with even if a really well written website, great videos, great customer testimonials, odds are you’re going to need some carbon based life form to kind of communicate the motivation for that transformation. And so it’s important for you to know which bucket you’re in, are you selling a tool? Are you selling the transformation? And based on that get your go to market to kind of align around that.

Another mistake we made and so part of it was fine. The other part was not fine. So when we saw we figured out that the 250 a month maybe wasn’t optimal. So like, Oh, I know, we will double the price. So we will have a 250 a month kind of product. And we’ll have a pro product for $500 a month. This was years in did we add a variable pricing axis? No. So now we just moved the problem from Okay, well, we’re getting some $500 deal, and we’re getting some two $250. But if Dunkin Donuts by which they did back then they still cannot pay us a penny more than $500. That’s how slow we were to pick up on the variable axis. So then we continue to increase the price continued, then we added a variable access, so pricing got better over time. But one of the mistakes we made is that we said hey, customers, if you’ve already bought HubSpot, whatever the price was at the time that you bought, we’re going to lock that in didn’t qualify it. Didn’t say it’s like, that’s your price. And so and we raise prices at least once a year, every year and a half. And all existing customers continue to pay and our rationalisation which is I think noble and right, which is we’re rewarding those early customers with that locked in price because they believe in us early. And that’s great.

What’s not great is the fact that now you’ve got this kind of baggage of a bunch of customers sitting around to this old price, they’re gonna have to track forever. And it’s okay to kind of credit those customers but like, five? Seven? Ten years, at least put some date on it. So you have a date that you can say, Oh, we can kind of clean house with those set of customers and we can move on with our lives. So if you have this now, great that you’re providing some benefit to those early customers by giving them a quote unquote fixed price, but put some time limit on it. And then that we don’t have to kind of revisit it all the time.

This one’s a tricky one. It’s and for all those that work in product management, product marketing, or even sales. Based on the size the company. Packaging is this really weird thing. So we’ll simplify down. So let’s say you have a free version of your product; starter, Pro, and Enterprise which happens to be our tears, making a decision around which features go were fiercely debated. Right? And everyone’s got an opinion, everyone’s got a side. It’s like, oh, well, if we give those features away, we’ll never sell enterprise because you’re putting it in pro what incentive do they have to buy the enterprise version? If we took this feature and put it in the free version? What incentive do people have to actually pay us money? And we can try and test things and we do. But here’s what we’ve learned. And this is a little bit inside baseball, we’re in the inside room with a camera hi, internet.

Here’s what we do. So what we say is, so we’ve got these tiers doesn’t matter what they are. And we add functionality to the enterprise tier. So when we when we do fancy new functionality, it goes into enterprise tier to start out. And over time we pull that same functionality down and make the lower tiers better, all the way down to free over time. Right. So originally, like our marketing automation feature was only available in the kind of Pro and Enterprise tier, brought it down to starter and brought email marketing down to free. The reason that works so well, is that you’re basically subsidising the cost of your kind of lower tiers with those enterprise sales so you can see get to enjoy the benefit. And then you kind of protect yourself from disruption From below because that product is getting better and better every year. And that’s hard for new market entrants to really compete with. So as you start pulling out features, I know it’s subtle, but it’s one of the hard won lessons. It works by the way, so don’t be locked into your packaging. It’s like, oh, well, our enterprise is this and therefore, those are the features. And that’s what it’s going to be no. When Moses came down, there was no 11th commandment that says, Thou packaging shall stay exactly as it is, it is etched in stone, change it.

Another subtle one is around lifetime value. How many companies are SaaS companies like subscription based pricing models? Most of you okay, I’m not surprised. So if you’re in the SaaS business, you’ve used the term LTV or some variation thereof. And the way most of us put HubSpot in this camp until relatively recently, the way we think of LTV is like, Oh, we know what our cancellation rate is, based on that we can mathematically calculate the lifetime of a customer, how long will they stay with the business, right? If they’re cancelling at a monthly churn rate of 3%, you can, you can factor that out. So they’re gonna stay with us for years. And then you know, what the average price a customer pays. So you multiply those two numbers together, and you get basically what I call a first order approximation for LTV. And now you can get a little bit fancier with the math on that in terms of discount rates. And it’s like, well, even if the turn rates really low, they’re not gonna stay for 87 years, you know, we’re going to cap the future value. But here’s the thing we get wrong is that we assume the lifetime of that customer and the value that they bring is based on the lifetime that they’re a customer at the company they’re working on right now. And paying us. Well, as it turns out, people leave companies, but they often don’t leave products and platforms. So Suzy might be working in Company X, right? Now, she goes to Company Y, you might think of it as a churn because maybe she was the kind of the primary sponsor, but she will likely take your product with her. And you need to kind of recognise as Suzy moves through. And we’ll talk a little bit about this and in terms of community and in tracking that. So that’s thing number one that we get wrong think number two that we get wrong, is that our average revenue that we assume that customer is going to pay us is based on the average revenue we get right now. Which within let’s say 1-3 years is probably correct, right. But if you had done that calculation for HubSpot 10 years ago, 15 years ago, you would have gotten, we would have gotten it completely wrong. And we did, Wait a second, we’re going to have more products, pricing is going to go up over time. We don’t know exactly how it’s going to shape but I will bet you money, the average revenue per customer does not look the same five years from now as it does today. And that’s the number we’re using to figure out how much to invest in growth and things like that. So it’s it’s useful to go back and look at your LTV to CAC ratios, make LTV better, that’s where you get the most leverage trying to drive CAC down, you can do it to a degree, much more leverage and taking that lifetime value up and make sure you’re calculating it correctly so you can properly rationalise the investment you’re making in growth.

I’m gonna take a breath now and see if anyone has questions. If there’s more to come, so don’t get me wrong, it’s I can keep I’m gonna keep going. Yes.

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Audience Member
It’s lovely to see you again, Dharmesh. I have a question on the tiers. So you sort of started off with a very simple price on the website, $250 for everyone. And then you’ve moved more towards custom, almost bespoke, pricing model for clients. So wondered what your years of experience had shed light on whether we should be going towards the simple clear three tier prices or whether it’s, you need to speak to our reps, and it’s a custom price for everyone view.

Dharmesh
Yeah, it’s. And this was controversial within the halls of HubSpot. So we don’t technically do custom pricing. Candidly, so we have our price. What we do do, and I know and this is what my salespeople tell me, they do custom discounting, which I hate, because the net result is the same, right? So two things as we raised our pricing, we added a per user variable access, as we call it. So we could have the same customer on the same tier, let’s say on the pro version of the product. And as they add more users and more seats, we get more money. So the price goes naturally up as they add more people using the software that was the biggest good change that we made, and that was noncontroversial inside and outside of HubSpot. But my personal position on discounting is that it should die 1000 deaths. Custom discounting, the only discounting that should exist, the only discounting that should exist is what I think of as programmatic discounting. So if you want to provide a discount because someone is buying more than one product if you want to give them a discount because they’re making a longer term commitment if you want to give them a discount because you’re doing a seasonal promotional upgrade. And here’s the litmus test. The discount is only fair if everyone in that same situation would pay the exact same price not based on which sales rep they talked to how big of a negotiator they were, that should not determine the price that you pay the price that you should you should pay the same price everyone else that looks like you essentially should pay so that’s that’s my position. We’re not there yet – stays between us friends. But we have been known sometimes to do custom discounting at the higher tiers So, but if you can avoid it, avoid it. And we are moving in the direction of reducing discounts we track it maniacally, I give people a hard time about it based on the discount rate of a given rep or a given team. But don’t do that.

Audience Member
It’s great to see you again. You dropped the tools are bought, transformations are sold as an aphorism that makes a lot of sense; I was wondering if you could just spend 60 seconds on story about how that affected you at HubSpot?

Dharmesh
So when we launched, once we figured out what it was that HubSpot was back in the day. It was a essentially an inbound marketing platform. So the first thing was like, What the heck is inbound marketing? And that was a reasonable question to ask because we had made the term up, right. So it’s not like some existing category that had been around for decades. And so then we had to tell them, what inbound marketing was, why it was the better way to do marketing. That’s the transformational sales like, Okay, what everything you thought you knew about marketing, likely isn’t working as well anymore, right? So then if if they don’t agree with that position is like, oh, when you go to, when you buy email lists, your response rates probably gone down. When you buy a list of phone numbers and call them, the number of times people pick up the phone is likely lower than it was two years ago, five years ago, 10 years ago. If they don’t agree with that, that fundamental fact and premise, then it’s like, okay, well, let’s move on. Because we’re not going to convince them. If they do buy into that, then we say, Okay, here’s what you need to do, what you need to do is now be much more customer focused, you know, stop the outbound marketing, kind of beating people up over the head with your message, and just add value before you try to take value from your customer. So create content, do something be helpful, the sales rep should be more of a coach should be less about sales and negotiation, things like that. So that was the big lesson is that once we recognise that it was about telling that inbound marketing story, which was really hard, because the product didn’t really get to the point it needed to be, but the story was getting picked up really, really well, like the movement had started. So that’s one thing we learned together.

As long as we’re talking about sales, I have lots of really, how many people in the room have salespeople in their company, people that have the word sales or an equivalent in the title? Roughly half of you, okay, my apologies. No, I’m kidding. I love salespeople. So awesome. They’re hard. They are hard. And so one things we learned in the kind of tools versus transformation is that historically, in our head of sales, Mark at the time, did this brilliant internal survey to figure out which sales reps did research that because we were hiring lots of sales reps, and we’ll talk about that. And what he figured out was that historically, what companies used to solve for was like, Oh, you want people that are closers. You want people that are good at negotiate, you want people that are good at convincing, and that’s the attribute that’s going to correlate most with hitting quota and having great numbers. And what we discovered through research of our actual sales reps, and what they actually sold, was the exact opposite was that the more kind of quote unquote, convincing you are, the more salesy you were, the less likely you were to get deals. And that’s partly because we were selling eight kind of transformational sales. So we have to convince them the problem exists. But we have to kind of be on their side in terms of helping them think through it. And that was game changing for us at HubSpot, recognising that we needed a different type of salesperson in order for the model to work. That was helpful.

The other thing we got wrong. And this is probably our most expensive mistake on the list of mistakes we’ve made. Yeah, up there with pricing. So in culture, so I think the ideal time to talk about culture is time t=0 when you’re starting the company, what kind of company do we want to build? What kind of people do we want here? What’s accepted and not accepted behaviour? How hard do you push a customer what happens the last week of the quarter what all these things sort of define the culture and I think of culture as the operating system for HubSpot, and so roughly five ish years in. And I’m not going to bore you with the story of how I ended up being the responsible party for culture at HubSpot, given that I’m antisocial. And I don’t like people all that much is, I create a slide deck. And the idea behind the deck was to codify the things we knew about culture, and it kind of somewhat data driven way. So I talked to a bunch of people. And the reason it’s called culture code is not because it’s like a code of conduct. And here’s how we behave like the navy or something like that. I meant code literally, like if I could write Python code that would make every single decision at HubSpot. What would that look like sort of that was the idea behind the code.

And so one, I’ve said this before, but I’ve had more nuance to my thinking, which is why I’m resharing it now which is I’ve been at this for 30 years. On the list of top insights that I’ve had, that are think are our share worthy is the fact that culture As a product, period, culture is a product, you build a product as a software company for your customers, you build a another product, which may suck for your employees. That’s all that culture is. And if you kind of, if you accept that premise, let me kind of walk you through A) why it’s right. And then if you accept that it’s right B) what you do about it, it’s like, okay, well, yeah, the employees are benefiting from this thing, or whatever. So things you wouldn’t do, you wouldn’t say, Oh, we’re going to build our culture, our product, and we’re never going to ask the customer whether they liked the product or not, we’re never going to ask the customer if there are bugs in the culture or not, we’re never going to ask them what features they hope we add the culture, well, you would not do those things in your main product, you should also not do them with culture. And the biggest mistake, companies make – both startups and even as you’re going into scale up mode – is the mindset we have had, as founders, I’m guilty as well, is that oh, culture is really about preserving that kind of startup, like were scrappy, and hungry and working hard and doing things. And it’s like, isn’t it great to be startupy? And as long as we can still stay startupy It’s gonna be awesome. It’s not awesome. And the reason it’s not awesome is because culture is a product. There is no product that’s ever been written in human history. That’s like, Oh, we got it completely. Right. If we can just maintain this product that we have right now. Everything’s going to be just fine. And the reality is, it’s not fine, because Mark has changed customers needs change. Same thing with your employees. Their needs change, but they prioritise changes.

So one of the big lessons we have is we do a most of you have likely heard of the net promoter score that you do for customers, you ask two questions on a scale of zero to 10, how likely are you to recommend this product, we do the exact literally the exact same two questions for all employees every quarter for 11 years. And we treat the response to those the same way we treat our product responses. At the next all hands meeting, we’ll say here’s what we heard, these are the bugs that you’ve reported back to us here, the ones that we think are really, really broken, and really impacting how you guys operate and how we run as a company. We’re going to fix them. And here’s why when we’re going to fix them by here things that yeah, they’re probably bugs. But they’re not priority. We’re not going to commit anything right now, let’s revisit in a year. And there are things like I know, you reported these things, but it works as designed. You know, we may not be the right, if you think those are bugs, I’m sorry, we’re just not gonna do anything about it. And then the most important part, are the feature requests, like what would they want a future culture of HubSpot to look like the V next thing we’ve learned post pandemic is that the number one which shows up on the highest priority of those customers or employees is flexibility. Used to be things like autonomy, which people still love, transparency, people still love their all these things that are still on the we like those features, but they wanted more flexibility. And so what we did try to make the decision, do we go back into the office? Do we say, Oh, everybody can work from home, we’re gonna close all the offices down. What we ended up doing, because that was such a high priority feature request is we let each individual employee decide for themselves, when they go back into the office, we’ll keep the offices open to whatever degree that is demand. If you want to work from home 100% of time, we’re from somewhere else other than the office completely fine. And if you want to come in two days a week and just have a floating spot at HubSpot somewhere. For whatever reason, that’s fine, too.

So by the way, the number one, statistically, and it’s grown since last year is the work from home, not even hybrid, the completely work from home, just so you know, be prepared, all right.

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Softening sharp edges

The other useful thing that we’ve had, we’ve had lots of debate, this is the hierarchy of I’ll call it priorities at HubSpot. And the the bottom two layers are relatively straightforward. It’s like oh, you should always solve for the team over your individual needs. That makes sense. You can solve for the company over your individual team. So just because you work in marketing, or sales or product, the needs of that team don’t outweigh the needs of the company solve for the company over your own individual team. That also makes sense. But that’s usually where most people get tripped up, we’ll come back to that. And then solve for the customer over the long run over your company’s near term needs. Hard to do. And we have been imperfect about it. But that has been life changing. So like in when we get into those contentious debates. This is the thing it’s like, tell me again, now how this is solving for the customer. And over what time horizon do you think and we have a list of things where we have made mistakes and slipped up and not really, truly solve for the customer. And we call those sharp edges and sharp edges. Like it’s like, oh, it’s a little too hard to cancel or this thing doesn’t quite feel right. Or we have this policy in our sales, sales motion, whatever it is. And then over time, we inventory those and over time we try to fix the things. It’s like, okay, fine, we made that mistake. It’s not fine for us to recognise that it was a mistake and not find that we’re not going to commit to at least kind of smoothing out those sharp edges.

So that customer versus company, makes for great conversation. I stand by it, where we usually have the most issues operationally is in the solving for the company over team. And here’s what happens. Almost nobody almost nobody will solve for themselves over their team. Nobody, no reasonable humans gonna do that not at HubSpot, probably not in most of your companies. But when it comes to the company over team, then it starts to get different because the manager, if you’re the VP of marketing, or VP of sales, or director of whatever you feel that your moral obligation to take care of your team, you think of that’s your job is to kind of do the things for my people. And then to take it as it’s like, okay, well, we’re gonna take a hit here, I know that it’s going to make it harder to hit quota, it’s going to get harder to ship that’s progress, like this is going to make our team’s life harder. But it’s going to make the company better over the long term and getting people to absorb that, because we’re a nice kind, gentle company we are, that’s just our culture. That leap is like, Okay, I know, I know, that’s the inclination. But that’s not the right way to do it. Okay.

Another thing we discovered, others have written about this, but but they didn’t have a cool graph like I do. So I get points for that. That the energy you spend on a decision, and then we’re going through the process of trying to operationalize like a decision framework in terms of how, once again, back to, if we could write a heuristic or Python code, what we do is like, Okay, well, this is the mistake companies make all the time is that there seems to be no correlation between how much time you spend on an individual decision to the actual cost of reversing or changing that or undoing that decision that basis has written about this, as well.

Alright, so this one’s important. So if you look at the evolution of how we grow, most companies will start out with some form of sales lead growth, this is the one to one someone’s selling someone else. And the value being added there in that process is the salesperson access coach in an ideal world, and they’re providing essentially free consulting to a customer, obviously, there’s some bias there. But then you evolve to it’s like, Okay, that’s great. Now we’re going to do kind of marketing lead growth. And that usually involves content is being the kind of unit of value that’s being added. It’s like, oh, we’re going to create the world’s best research paper on X, we’re going to do a series of videos that teaches them Y. And it’s a done out of a sense of generosity, it actually has value. And in my mind, the only way content has value someone would have paid for it if they had to. It’s that valuable not just because you’re trying to lure them in with this kind of clickable headline. So then we went to product lead with and I say we not the world we HubSpot. And that’s relatively obvious. Like okay, well, we have people in the product right now we’ve got we can upsell them other products, we can move them up tiers, there’s a bunch of things we can do inside the product that help us drive growth. And that’s a growing team at HubSpot, as you might imagine. And it works by the way, they should have the kind of quotas just like salespeople do. It’s like, here’s how much we want to be driven. Through that touch list, no friction, don’t talk to a salesperson just buy the product, or upgrade the product inside the product.

And then this is a new one new generally even for the industry. But so we’ve had a community to HubSpot for ever, we started a community before we even started, you know, the product itself providing those lines of code. What I’m finding now is that works for software companies really, really well. So I want to dig into this for just a few minutes. So I tweeted this. I believe that the successful software companies over the next 5/10/15 years are the ones that built like the definitive community for their industry, whatever happens to be however you define your particular category. It works. So here’s what I think. And I stole this from HubSpot, but put your company logo here, which is instead of being a software as a service with software as a service, the only thing that really changes how we deploy software, it’s like I used to send you floppy disks. And now you can access it through a browser, Isn’t this awesome? What you really need to do is kind of shape how we think about what it is we’re providing customers and we actually need to be selling them success, what is the thing they’re trying to do? And how do we get them there?

And so if you accept that, that we want to become success as a service companies and that companies are better, customers are better off. So you start with software doesn’t get them there. You add content, videos, blogging, all that stuff. And I think the last portion is community. And the way the reason this works is that in most of the industries, as you get to scale, one of the constraints to growth is you’re trying to drive word of mouth, but not everybody’s heard of you. They kind of believe in your philosophy, they believe in your product, but they’re trying to go off and find someone that knows the product or as a consultant or an employee at least don’t know how to get their community help solve a lot of those things, you’re actually taking fans that you have existing users of your product, and you probably have a community now you probably have a support community, that most of the community value that you’re seeing if you have community at all, is around serving your existing customers. I think when you take that up a level and say what would happen if we said we want to build a community for all future potential customers of our company? What would that look like? What value do they want? It’s like, oh, maybe you want if you’re selling to the finance industry, it’s like our community brings together these masterclasses of you know, 20 CFOs at a time something they couldn’t get any other way, they’re not going to read a blog post not gonna do these things, but they will talk to a peer, if you can kind of make that happen. It’s relatively the tools are getting better. Now to do this HubSpot does not have a product in this space. So I’m not trying to sell you on a community hub or something like that, but it works.

But over time, what ends up happening is that every software company at scale creates these little mini economies around it around partnerships and things. Others people adding value and getting value. Pretty slide here. Pretty slide there. Three! Okay, I’ll take questions. Let’s see how much we got a few minutes. Thank you.

Q&A

Mark Littlewood
Right! Questions.

Audience Member
Thanks. Hi. So you said that pricing was probably the most expensive mistake you made. So what in your position that you’re now makes you so sure, actually was a mistake. And then some alternative universe where you actually were more clever with your pricing, you will be better off right now.

Dharmesh
It’s a great question. And I provide this I’ll give you the same rationalisation I gave people in the company and gave our gave our board and such as like, oh, the reason we have such low fixed pricing with no variable access, because it’s the simplest possible price you could come up with. And as a result of which, like we can go get a bunch of data points and the data is more valuable to us than the actual pricing. And this is a little bit revisionist history, because that is not the thing that was actually in my head at the time. But the reason I think it was a mistake is that it almost there are very few things in the 16 years of HubSpot that almost killed us that literally like it had not just like we’ve taken a good turnover of fixed it when we did, because what ended up happening without that variable pricing axis, it was hard to get our what’s known as your kind of net dollar retention rate, high enough to kind of overcome the cancel customers. So once you get to 50,000 100,000, whatever number of customers, you have, a certain percentage of those customers are going to cancel. And so that means just to kind of keep the lights on the building, or just kind of maintain the growth rate based on what you’re solving for. You need to have other things to sell them are ways to get more money from existing customers. And price is the easiest way to do that, because we didn’t talk about this. But it’s a great conversation going from n equals one product to n equals to product. So hard, so expensive, so risky, because it’s you’re adding dimensional complexity, everything when you would go from having this over a single product company, here’s every graph, every decision, every conversation is like now we’ve got two products, when we hired an engineer, do they work on this product or that product? All of that’s really, really hard compared to let’s just fix our friggin pricing. And had we not done that. We were close to like it was not gonna work, we certainly would have been able to go public with the the business model we had without having fixed pricing. So that’s why I say that it was a mistake. Thanks.

Audience Member
Yeah, we just, I mean, then obviously was the right choice to change it. But maybe it was the right model for a time. Well, do you say you should have changed earlier?

Dharmesh
We should have changed it earlier. And we’re still, even now I spend inordinate amounts of time talking about pricing and packaging, right, because it does have leverage. So we still have, you know, have meetings every month, that are multilateral meetings to talk about it. And the hardest part is around kind of attaching price to value and making sure it’s fair, that at first glance, it’s easy to understand. And it’s fair, those are the top two criteria for a pricing model. And we’re still kind of in a multipack world trying to triangulate into like, how do we do that? But yeah, it’s we’ve hired fancy pricing consultants to come in and look at how we’ve done things. They to agree that we were stupid, by the way,

Audience Member
The stairstep chart that you showed us, from software to content to community to the big bar on the right, if the axis if the y axis is value to the customer? Is this how you cross the divide between selling tools and selling transformations? Is the orange bar the promise of transformation gotten there through the back door of software content community?

Dharmesh
So my honest answer is I had not thought about this in a Y axis sense this is like, oh, there’s a flag up here. There’s a goal that you’re trying to get customers to and it varies from customer to customer. But that does make sense. Because the larger message is that each of those components basically amplifies the value of customers getting across some let’s call y axis value. I think that’s actually uh, maybe I should just label the axes next time. That’s smart. I thank you but yeah, that makes sense to me just as even as I think about it, but I hadn’t thought about it before.

Audience Member
Yeah, really happy to hear you talk about pricing, because the thing that has surprised me is I keep thinking, why is this so hard? And it’s just always really hard? Do you have a particular recommendation for like, how to learn about pricing? A book, or a video? Like anything?

Dharmesh
yeah, so there’s much more content now on pricing than there ever has been before. So you do a YouTube search or a Google search, that will yield some and no particular book is jumping to mind that I’ve read recently. But one thing I want to make sure this doesn’t answer your question, I’m gonna say it anyway. Because otherwise, I won’t be able to sleep at night. Everything I’ve sort of indicated, like, Oh, if someone wakes you up in the middle of night, raise your pricing, because you’re probably under charging, that is not the message I want to repeat, that is not the message that you should raise your pricing. Because raising your pricing in a subscription model is very, very dangerous. And the reason it’s dangerous is that it’s a effectively a one way door, once you raise your pricing. So let’s say you have a pricing for $100 a month, or whatever it happens to be. And then you say, Oh, we’re going to take it to 200 ollars a month, because we think it’s better, you’re going to kind of have legacy customers that pay the $100. But you’re never going to be able to go back to like 150, or one, it’s gonna be really hard because you have revenue. And then once you have revenues, like, oh, in order for us to take our price down, we have to then give the new price because we’re not subscription model to all the existing customers. And in my experience, no company can ever truly rationalise that. So before you raise your pricing, be mindful of, okay, how much evidence do we have that the market will support this? Are we just doing it to make our numbers this quarter, which happens all the time, because an easy way to kind of get things rolling a little bit faster, especially in a down economy, at least in theory. But yeah, so be careful on pricing changes. So my advice would be a number one piece of advice is pick someone that’s in charge of pricing, someone super smart and analytical that will dig in that will hear all sides. And that can make a call because it’s going to be such a divided issue because everyone’s going to have their own opinions as to why pricing should be higher, lower, done differently. Pick someone you trust that is going to own that process for getting the data together and helping kind of make a decision. That’s that’s what we ended up having to do.

It’s just hard. Yeah, lots of moving parts. It’s, you know, people, like if you’re in the B2C space, you can sort of test things like, Oh, we’re gonna try this price on the thing or whatever, in the grocery lanes and, and we’ll figure out what the perfect equilibrium price is. It’s really hard to do that in SaaS, you, I mean, we say that we can run and we have the luxury now at scale, we can run pricing tests in certain geographies, like, Oh, we’re gonna try this price in Australia for a quarter and see what happens and see if there’s an increase in revenue, if we lowered the price. One of our big, weird lessons, I’ll just share this because the story is really good. When the pandemic started, we took the price of our starter tier, which was already low below $100, for basically every product that we built at that time with the starter tier. And we took it down. And I fought it so much like this makes no sense. Because no one nobody cares if they and it’s not going to be our customers. If we take the price down. Sure, maybe we’ll get a few more customers. But if you weren’t willing to buy it at why would you buy it at 50 Doesn’t make any logical sense for what you’re buying. It’s like it’s such a big transformational sale. So I was wrong about that.

And then it’s like, oh, well, those customers that we signed up, and I was like, okay, yeah, we signed up a bunch of customers, but a year from now, you know, when it comes to kind of renew the contract or whatever, there’s no way they’re gonna stay at the same rate that our regular customers that would have bought it at 80 no change like No, so they were just as good customers, we just got more of them. As a result of lower price I was I’ve been shocked and wrong by many things at HubSpot, that was one of them. Maybe it was the time in towards the pandemic, and people were worried.

Mark Littlewood
Bad news is your pricing is probably wrong at some place. But the good news is that Patrick’s gonna talk tomorrow about how everybody who’s done it wrong in every SaaS business across the whole space has. You’ve been tracking people’s pricing and all sorts of stuff. So something you’re going to be talking about tomorrow.

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Audience Member
Really quick. We have the same. Same problem. Keep staying home. I just wanted to early have any thoughts about how that’s gonna affect how you deal with a cultural problem right now?

Dharmesh
We pick the hardest possible choice. So if you went all remote, let’s say, as we all I had to do for two plus years, every company everywhere had to basically shut down so we know what that feels like. And we got used to it. For the most part, I think most software companies on average fared pretty well. HubSpot fared pretty well. It’s not like productivity dropped. All the numbers we look at, we’re good. The hard thing is now doing it in a hybrid world where some people are remote. Some people are there in person, and then you have the kind of haves and have nots happening now. It’s like okay, well, there’s six people in a room that are all having this kind of group dynamic because they’re all in the same room. And we used to have This is not new, right? Like up until pre pandemic, which feels like 47 years ago. But that’s the thing we’re struggling with now is how do we equalise in a hybrid world and we thought about, and there’s some technology emerging, like, even if you’re in an office and the person, whatever we want you to all be connected via your own individual zoom or whatever technology you’re using. So everyone’s still, like a boxing, we can still use Slack chat and things like that. So the dynamic of the meeting works similarly, because maybe the value of being in the office is not for that one hour meeting, they are trying to collaborate for you all to kind of be together and or half of you to be together in a room, maybe it’s just the idea of being in an office that you can kind of walk the halls and you get away from home. There are other benefits to coming into the office. We haven’t figured it out yet. But it’s going to be hard. It’s going to be hard. It’s one thing that keeps me up at night.

Audience Member
You talked about how it’s important to solve for the company above the individual team. And sometimes that can be really hard. Can you talk about an example or two in which those things have been in conflict, and maybe a time when something that a leader did or that a team did made it better for the individual team, but either worse for the company or didn’t contribute to the health of the company?

Dharmesh
Yeah. So part of it is, this is partly What’s hard is that you have when you see it, you have to call it out that says, hey, it feels like and we have the vocabulary to talk about. It’s like, it sort of feels like you’re solving for your team and not for the company. You can explain to me why this is in the company’s interests, right. So we can actually have the discussion, a concrete example. So it’s a few years ago, so it’s easier to talk about now. But there was a time where HubSpot did not run on HubSpot. We have a CRM system, and we use a third party CRM system because when we started, we didn’t have a CRM system. And then we built one. And then we built one, the company had far exceeded in terms of its needs of what the product itself could do. And we were above that kind of target market range. And so the sales team comes back and says, Okay, well, I know we have a CRM, and I sort of know that we sell CRM, and I sort of know that’s inherent business. But we want to continue using this third party product because it helps us with productivity hears it’s like, it’s like, yeah, but like, how do we tell our customers that we sell a CRM that we don’t use, like I get it, but like it’s and so that’s one of those where, yes, the sales team was more productive. And it was even more painful than they thought it was going to be switching from a third party system hours, not because of lack of functionality, it’s just because change is hard. But that was one where we had to make a company level decision. And it wasn’t wasn’t just a sales team. By the way, life was harder for pretty much everyone, including the product team right now. Because now they’ve got the lead customer not paying us anything. But in theory they’re paying, asking for all these features, right? It’s like, okay, well, it doesn’t do this, and this and this. And this, my old system used to do that. And that and that, and that why, like, and so it was hard all around. But it’s, I think the the message, the lesson I’ve learned is that this is where transparency, I think needs to be woven into every culture. Because if those debates and those discussions don’t happen, that’s like, almost all kind of bias bad decisions happen in closed room with wood panelling, and people smoking cigars and stuff, right? You want it to come out in the open, in broad daylight, have the discussion and say, here’s why we’re doing this. I know it’s painful. And then they’ll it’s going to be a little bit of a give and take. So in that example is like Yeah, but it’s going to have impact our quarters and our productivity per rep, all these metrics that we track. They’re all going to go down at least in the short run. And then we’re like we know, and then kind of move on. Yeah.

Mark Littlewood
And one last question.

Audience Member
Thanks for the talk. Yeah, as you moved from selling a tool to transformation, it’s kind of a two part question here. Did you have to sell services? Did you get the bundle services along with the tool that kind of make it a complete package? And then the second piece is, is what did that do for your ACV? Were you able to move from like a five figure to like seven figure kind of deals, as far as impact?

Dharmesh
The deals did get bigger as we went from tool to transformation? The big kind of one of the big lessons in that kind of transition from oh, we’re selling a tool. By the way, there’s nothing wrong with having tools. So the thing we did I think that worked well, is that oh, we’re gonna use tools as a way to kind of bring people into the fold. So we’re gonna take a we had a free tool called website grater, that kind of help you analyse your website, but it wasn’t the product, right? So we had tools, and then helped us with the transformational sale. But the reason I do the transformational kind of shift is not necessarily to raise ACV went up, but not that much. So you can our numbers are public now. So at least the last six years. Being a publicly traded company, our ACV is up. But not that much. The big difference is that the LTV is much much longer than it used to be because once you make the bad news about transformational sales, it’s really hard to convince people to change the good news about transformational sales. It’s really hard for people to change so they’re not gonna win. Have you as often as they did when they just bought a tool if you bought a tool, it’s like, oh, here’s this other tool that does mostly the same things or whatever. I like these things versus those things. And I’ll switch tools in a weekend or over a couple of weeks. Transformational sales, by definition, the retention is higher. So the LTV is higher, but not necessarily ACV. A little bit surprised by that, but not a lot. That may be idiosyncratic to HubSpot. I’m not sure.

Mark Littlewood
Cool. We probably could go on all afternoon. Thank you.

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