by Dan Lyons
“Basically I’m making a bet,” I say to Sasha, after we’ve put the kids to bed and we’re talking about which job I should take. “The only way the HubSpot job is worth taking is if they’re going to go public and have a big IPO.”
The deal at a start-up is that you get a lower salary, but you also get a pile of options, which vest over four years. The strike price on my HubSpot options is set at a level that reflects the valuation put on the company’s last private round of funding. If HubSpot goes public at a valuation higher than that, my options will be worth money. If the IPO is a dud, or if the market crashes and HubSpot can’t go public, or if HubSpot fizzles out altogether, then my options will be worthless.
To pull off a successful IPO, HubSpot needs to reach $100 million in annual sales. That’s about double what the company did in 2012. What are the odds that they can do it? How savvy are Halligan and Shah? What will investors on Wall Street think of these guys? My sense is that things will go well. Halligan used to work as a venture capitalist, so he thinks like an investor. Shah, before going to grad school at MIT, built a different software company and sold it.
Also, from the perspective of Wall Street, HubSpot ticks all the right boxes. It sells to businesses, rather than to consumers. It’s a cloud computing company and uses a business model called software as a service, or SaaS, which means customers don’t install the software on their own computers but instead connect to it over the Internet and pay a monthly subscription fee. Cloud computing is hot right now. The whole tech industry is moving to this model. Investors love it.
Over the years Halligan and Shah have come up with a creation myth about the company, which is that while they were in grad school they had a vision for how companies could transform their marketing departments. They came up with the concept that they call inbound marketing, then Dharmesh and a team of engineers wrote a set of software programs based on that concept. Companies that use HubSpot software are able to find new customers, boost their sales, and save money. That’s the pitch.
In fact the early days were not quite so tidy. People who were around in those days later tell me that Halligan and Shah considered other things before deciding to make marketing automation software. What’s more, I’ve been told, for the first five years, HubSpot’s product wasn’t very good. It was so bad, in fact, that according to one former engineer HubSpot’s own marketing department couldn’t depend on it and instead used marketing software made by one of HubSpot’s rivals. “The fucking product was a disaster,” the engineer recalls. “You’d try to do something, like run a query, and the system would just blow to shit. Every day there was an outage.”
But Halligan knew how to sell. Among his first hires were a head of marketing and a head of sales. Those guys assembled an old-fashioned phone sales operation, with an army of low-paid telemarketers who would badger companies into signing up for a one-year subscription. The salespeople targeted small business owners, whose needs were relatively simple and who were, typically, not very tech savvy. Eventually some customers would become disenchanted with the software and refuse to renew for a second year. By then HubSpot’s telemarketers would have found new customers to replace the ones who were leaving. By 2011, HubSpot had about five thousand customers.
That year, the company raised a new round of funding and used the money to acquire a company with good engineers. The new team threw out the old coders and began rewriting the software from scratch.
By 2013, when I arrive, HubSpot is selling a much better product. The software is still not perfect, and one program in particular, the content management system, needs a lot of improvement. The code is not based on cutting-edge computer science or sophisticated artificial intelligence algorithms. These are just fairly simple programs that automate basic marketing chores, like sending email to a list of contacts. But friends of mine who use HubSpot tell me the software can more than hold its own against other marketing software products. One market research website, which rates software based on customer reviews, ranks HubSpot in first place among marketing automation programs.
Better yet, all those years of selling a weak product have forced HubSpot to get really good at generating hype. The vast majority of HubSpot’s employees work not in engineering or software development, but in sales and marketing. They spend their days cold-calling customers, cranking out blog posts, posting automated email campaigns, flooding Twitter and Facebook with promotional messages, running webinars and podcasts, talking to user groups, and preparing for HubSpot’s big annual customer conference, an extravaganza with musical acts, comedians, and inspirational speakers. Over the course of seven years, Halligan and Shah have built a hype machine that goes beyond anything I’ve ever encountered.
There seems to be nothing HubSpot will not do to get publicity. In 2011, the company took advantage of a service that Guinness World Records offers in which anyone can suggest a new category, set a record, and get an official Guinness World Records title. A spokesperson for Guinness says HubSpot came to Guinness with an idea to hold the “world’s largest webinar,” and then won the honor by holding a webinar that drew 10,899 participants. The spokesperson says HubSpot paid Guinness $8,700 for the service. HubSpot’s record still stands, though more than a dozen others have tried and failed to do better, according to Guinness.
So far, HubSpot has devoted all of its energy to selling software. But in 2013 Halligan and Shah are getting ready to point their hype cannon at a new customer, with a new product. The product they will sell is HubSpot’s stock, and the customers will be investors on Wall Street. Wall Street, I’m pretty sure, is going to eat this up.
I take the job.
Four
The Happy!! Awesome!! Start-Up Cult
One month later I’m driving home from my first day on the new job and telling myself that everything will be okay. Sure, my boss is half my age. Sure, I have no idea what I’m supposed to do. But it’s only been one day.
“It’s great,” I say, when I get home and find Sasha and the kids waiting for me, anxious to hear about Dad’s big new job. I tell the kids about the beanbag chairs and the Nerf gun fights and the kitchen with the giant wall of candy dispensers, with every kind of candy you can possibly imagine. The kids are seven years old now, and of course this sounds exciting to them. They can’t wait to come to the office with me. They’re going to bring their Nerf guns.
“I’m sure we can do that,” I tell them.
After dinner I pull Sasha out onto the porch and tell her what I’m really thinking.
“This might be a mistake,” I say.
“That’s what you said last time.”
“Yeah, and last time I was right.”
It’s galling to think that I may have leapt from one bad situation to another that’s even worse. What the hell is happening to me? After years of steadily climbing up some imaginary corporate ladder, I’m now turning into a serial screw-up.
I glance through the window of the sliding doors. The kids are in the living room, fighting. They fight all the time, and with such passion that sometimes I think we should find an exorcist. They have been through a lot over the past couple of years. They’ve seen Sasha going in and out of the hospital, and then leaving her job. They’ve seen me lose my job at Newsweek, then take a new job in San Francisco and disappear for weeks at a time. They’ve seen me exhausted, burnt out, and depressed. They’ve heard us talking about moving to California. They’re frazzled. We all are. Whatever happens at HubSpot, the best course of action is to hunker down, pretend to be happy, and let our lives regain some stability.
That doesn’t mean I can’t bitch to my wife about it. I tell Sasha about Cranium and Wingman not being there. I tell her about the guy who I thought was someone’s administrative assistant and who turned out to be my boss, and how I’m sitting in a room called the content factory, crammed in with two dozen people.
Inside, something has happened. My daughter is screaming. She sounds like she has been set on fire.
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“Want a paper bag to breathe into?” Sasha says.
“No, I want a plastic bag, and you can put it over my head and tie it around my neck.”
“That’s the spirit,” Sasha says, and we open the door and head inside to face the mayhem.
Every new HubSpot employee has to go through training to learn how to use the software. That’s a good idea, and it also keeps me from having to worry about what I’m supposed to be doing here, or why Cranium, who hired me, still has never come by to say hello or talk about what he wants me to work on.
Training takes place in a tiny room, where for two weeks I sit shoulder to shoulder with twenty other new recruits, listening to pep talks that start to sound like the brainwashing you get when you join a cult. It’s amazing, and hilarious. It’s everything I ever imagined might take place inside a tech company, only even better.
Our head trainer is Dave, a wiry, energetic guy in his forties with a shaved head and a gray goatee. On the first day we all go around and introduce ourselves, and tell everyone about something that makes us special. Dave’s thing is that he plays in a heavy metal cover band on weekends.
Dave is part teacher and part preacher. Every two weeks he gets a batch of new recruits, and he goes through the same spiel, showing the same slides, telling the same jokes. He’s good at it. He loves HubSpot, he tells us, unabashedly. He’s had lots of jobs, and this is by far the best place he’s ever worked. This company has changed his life. He hopes it will change ours as well.
“We’re not just selling a product here,” Dave tells us. “HubSpot is leading a revolution. A movement. HubSpot is changing the world. This software doesn’t just help companies sell products. This product changes people’s lives. We are changing people’s lives.”
He tells a story about a guy named Brandon, a pool installer in Virginia. His business was struggling. He could barely get by. But then he started using HubSpot software, and his business took off. Soon, his company was installing pools all around the country. He was rich! Eventually he was doing so well that he hired someone else to run his pool company so that he could become a motivational speaker. He travels the world spreading the gospel of inbound marketing, transforming the lives of thousands of other people.
“This guy has become a superstar,” Dave says. “He’s a rock star. And it all started with HubSpot. That’s what we’re doing here. That’s what you are part of.”
The truth is that we’re selling software that lets companies, most of them small businesses, sell more stuff. The world of online marketing, where HubSpot operates, has a reputation for being kind of grubby. In addition to pool installers and flower shops, our customers include people who make a living bombarding people with email offers, or gaming Google’s search algorithm, or figuring out which kind of misleading subject line is most likely to trick someone into opening a message. Online marketing is not quite as sleazy as Internet porn, but it’s not much better, either.
Nevertheless, Dave is laying it on thick, and the new recruits are nodding their heads and seem to be eating it up. Most of them are right out of college, clean-cut and well scrubbed. The guys wear khakis and button-down shirts. The women wear jeans and boots, and lots of makeup, and they have paid attention to their hair. The guy next to me has a buzz cut and just graduated from some college in New Hampshire. He tells me that he lives with his parents and commutes an hour to get here, but he’s thinking about moving closer to Boston and getting his own place.
I feel ridiculous. I definitely don’t belong here. When it’s my turn to tell a little something about myself, I make a joke about how I’m friends with all of their parents, who have sent me here to keep an eye on them. The joke falls flat, which it should, because it’s a shit joke. I’m nervous. I have to come up with something. What makes me a special snowflake? How am I different from everyone else here, other than the fact that my hair is gray, my cholesterol is too high, and I’m probably the only person in this room who has had a colonoscopy? I say something about being the parent of twins. The other recruits just look at me.
Dave ushers in a parade of executives who give us inspiring talks about what a great company we’ve joined. I’m not only older than all of the other trainees, I’m also older than all of the executives.
Assistant trainers lead various courses during the day and give us homework assignments. A woman named Patty does most of the training on how to use HubSpot’s software. What we’re selling is not one single product but actually a handful of separate programs that can be purchased individually or as a bundle.
The bad news is that some of the programs aren’t especially good. I’ve already been using the content management system, or CMS, which is software for writing and editing blog posts, and it’s awful—buggy, slow, prone to crashing, incredibly limited in its functionality. HubSpot’s CMS is a tinker toy compared to WordPress, the most popular blogging software, which also costs nothing to use. I can’t believe HubSpot charges people money to use its CMS, or that anyone is gullible enough to pay them. Then again, a lot of HubSpot’s customers are small-business owners, so maybe they don’t know any better. Or maybe they think using WordPress would be too much of a hassle. Maybe they would rather pay for HubSpot because then they can call a tech support line and get answers to their questions about how to use the software. They probably also figure that over time HubSpot will improve the software and add more features.
There’s a program for sending out email. It automates the process, so you can blast thousands of people with a sequence of email messages that will be sent out on a schedule. Another program lets you store a database of customer contacts. There are tools that analyze the traffic to your website, to see which pages are attracting the most visitors and how much time people spend on a particular page. There is a search engine optimization feature that helps you load up blog posts with keywords so that people are more likely to find your page when they do a search on Google.
One of our assignments involves inventing a fake company and fake product and then crafting an email campaign to sell the product. HubSpot’s software lets you set up a series of emails in a tree structure. You write one first-round email that goes out to everybody on the list. For the second-round email, you might create three versions—one for the people who deleted the first email without opening it, another for people who opened the email and looked at it before deleting it, and a third for people who went one step further, who clicked through on the link in the first email and looked at your website, but then left without buying anything. Then you create a third round of email messages based on the possible responses to the second email, and so on and so on. The goal is to keep pushing people toward your website until they buy something. Once they buy something, you set up a new campaign and try to get them to buy something else. You can set up a campaign with multiple steps, aim it at a list that contains thousands of names, then press SEND and let the software go to work.
At HubSpot this happens on an incredible scale. Every month, HubSpot’s customers send out, in aggregate, more than a billion email messages. And we’re just one of dozens of companies selling tools to automate the work of sending junk around the Internet. Now I’m a part of this. I’m working for the people who fill your email inbox with junk mail, the online equivalent of those pesky telemarketers who call you at dinnertime to sell you new windows or a set of solar panels for your roof.
I rationalize this by telling myself that while the work might be ignoble, it’s not necessarily evil. We’re not Hitler. We’re just annoying people. Sure, arguably we are making the world a little bit worse—but only a little bit. That’s what I tell myself.
Online marketers have invented euphemisms to make the work they do sound less awful. For example, we’re told that our email campaigns do not involve badgering people, or pestering them—rather, we’re “nurturing” them. “Lead nurturing” is a big thing in the world of online marketing. If someone doesn’t open our first email, we’ll nurture them again, an
d we’ll keep on nurturing them until they finally cave in and buy something.
HubSpot doesn’t just sell this software—it also teaches people how to use it and in general how to be more effective at selling stuff online. At the annual customer conference, Inbound, thousands of online marketers flock to Boston to learn new tricks. One involves using a misleading subject line in an email—something like, fwd: your holiday plans—to dupe people into opening the message. “Boosting your open rate,” they call it. At the conference HubSpot also shows off new features and products, like one that puts a tracking cookie on the computer of everyone who visits your website and keeps track of every page they visit. The software can even send you an alert when someone comes back to your website for a second visit—so you can call that person immediately and say, “Hey, I see you’re on our website! Is there something I can help you with?”
That’s the business we’re in: Buy our software, sell more stuff, make more money. There’s nothing wrong with that, but that’s not exactly how HubSpot bills itself or describes what it does. The motto of the Inbound conference is this: “Come together. Get inspired. Be remarkable.” In training we’re taught that the billions of emails that we blast into the world do not constitute email spam. Instead, those emails are what we call “lovable marketing content.” That is really what our trainers call it. That is the exact term they use. The convoluted logic behind this is that “spam” means unsolicited email, and we only send email to people who have handed over their contact information by filling out a form and giving us their permission to be contacted. Our emails might be unwanted, but they’re not, strictly speaking, unsolicited, and therefore they are not spam. And even though we and our customers send out literally billions of email messages, we’re not trying to annoy people—in fact we are trying to help them. Sending one message after another, each time with a different subject line, is how we discover what someone wants. We’re learning about them. We’re listening to them.