Startups Reverse engineering Hubspot's success |
- Reverse engineering Hubspot's success
- Are you a start-up leader or a boss?
- When to go full on pitching
- Basic accounting question for a new business
- Toxic founder - Seeking advice
- Have you been moving to USA? Startup visa question
- CoFounder Ghosting
- HELP! I'd like your advice on an interesting situation... (vesting, equity, co-founder drama)
| Reverse engineering Hubspot's success Posted: 01 Aug 2021 10:28 AM PDT Hey everyone, I find it extremely valuable to study successful companies (and some failed companies) to reverse engineer their success. I want to know how long it took a company to get from idea to the first customer, to scale from 100k to 1MM, etc. It's nice to have a solid benchmark to compare progress against. You can get a good idea of if you're growing fast enough, if you need to pivot or persist or if you're running into the same problems a past failed startup hit. I figured it might be fun and valuable for you all to convert my notes into a readable piece of content! Here is my analysis of Hubspot. What's cool about Hubspot is that it was a smooth road from zero to a billion dollar company. Several factors make it so smooth. Creating a unicorn isn't always hard; you just need to be brilliant with 15 years of experience and be in the right place at the right time ;). Initial Ideation August 2004 - Dharmesh Shah (34) and Brian Halligan (37) meet at MIT doing their MBA. At this point, Brian is an experienced VP of sales. Had grown a global business from 0-100 million and ran sales for Groove networks which Microsoft acquired. Dharmesh had spent 11.5 years as the founder and CEO of Pyramid Digital Solutions, an enterprise software startup in the financial services sector. Pyramid was acquired by SunGard Business Systems, an $11 billion technology company, in August, 2005. Dharmesh and Brian were interested in helping SMBs with technology and began discussing the idea. 2005 At the time, Brian was working as an entrepreneur in residence for Longworth Ventures and was helping their portfolio startups with sales and marketing. Dharmesh was blogging his way through the MBA (https://www.onstartups.com/) Unique Insights - Brian saw all these VC backed companies had the same playbook: cold calling, PR and tradeshows - Dharmesh's startup blog was getting way more traffic then all the venture backed startups - There was a change in human behavior, humans were learning to filter out ads, spam blockers, do not call lists etc. Instead, people were searching for what they wanted. - When trying to implement inbound strategies it was a mess of open source CMS tools, complicated CRMs, email marketing tools, and then SEO consultants In summary, they saw inbound as the future and wanted to build a platform for SMBs to take advantage of it. 2006 By 2006 they had formalized their business plan, were semi-finalists in MIT's business plan competition and decided they'd pursue it full time after graduation. At this point, they had basically invented inbound marketing (or at least the term). They began telling everyone about it and started a blog to share their ideas. In June of 2006, Hubspot was officially founded with a $500,000 seed round funded by Dharmesh. Traction timeline 2006 - 3 customers / 3 employees It took them around nine months after building the business plan and their insights to get a solution together. It wasn't a great solution, but they were providing value. The gaps in their software were filled with Brian and Dharmesh consulting with their customers. 2007 - $255k in revenue / 48 customers / 15 employees The platform was maturing, and they saw a lot of demand for their services. Early case studies proved there was clear ROI for businesses investing with them. In September of 2007, they raised a five million dollar venture capital round. Brian and Dharmesh were well connected and this round came from a Boston based VC firm, a number of local businessman and MIT academics. Hubspot's pitch at this point: "HubSpot offers the first integrated Internet marketing platform to help businesses get found by more prospects and convert higher percentages of them to paying customers." Pretty compelling in my opinion. 2008 - $2.2M in revenue / 317 customers / 42 employees They are still doing some consulting, but their platform is growing more and more mature. They are scaling fast and have more demand than they can handle. At this point the business is made and they go on to keep rapidly scaling. Just 8.5 months after their series A, they take a B round, raising 12mm. Here's a TechCrunch article outlining it as well. 2009 - $6.6M in Revenue / 1,150 customers / 96 Employees October 19th 2009 - Series C for 16 million 2010 - $15.6M in Revenue / 3,855 customers / 176 Employees 2011 - $28.8M in Revenue / 5,961 customers / 304 Employees March 8th 2011 - Series D for 32 million. This round is interesting to me because it's when all the big players jump in (Sequoia, Google Ventures And Salesforce). Before this it seems they were at an early stage (even when generating millions in revenue). At this point, they have over 25 million in annual recurring revenue. November 5 2012 - Series E for 35 million Not much more to say here. This is their last round, they are a juggernaut at this point on the way to IPO October 8 2014 - IPO A little over ten years after Brian and Dharmesh met, Hubspot raised 125 million with their public offering. Near Deaths "We've never had to walk through the valley of death. Ours has been a rather smooth ride. Sure, we have weeks where we're putting in 60 hours – but there have been no near-death experiences. It doesn't have to be awful like that! If you have a great idea, a great co-founder, great people, and a good market that's changing, you have a shot. It's really hard if you're in a crappy, crowded market — and even harder if your product is not remarkable. It's very tempting to follow the herd, but in the age of the Internet, you need to be remarkable in every way, shape, and form. And the nice thing is that if you are remarkable, the Internet will put wind through your sales. But you have to radically differentiate yourself. Watch your competition, but never follow it." - Brian Halligan on ScaleFinance Thanks for reading! This is a great example of a startup going perfectly. They were an experienced team that found an amazing solution in a hot market. I had a lot of fun putting this together and will do another one soon. I'm going to be taking a look at a company that didn't have such a clean ascension into millions in ARR. Also, if you have any suggestions of companies I should reverse engineer or any missing information you'd like to see, please let me know! edited [link] [comments]  |
| Are you a start-up leader or a boss? Posted: 02 Aug 2021 02:18 AM PDT I knew this woman that joined a large company about a decade ago before it got really big. When she joined, it was a small, profitable business. She is uninspiring, and very few people like her. She has a lot to prove and image is more important than making friends. She is more cold than warm, and someone you would never miss when gone. The media, however, glorified her as being this incredible leader because she managed the company's strong growth. It's true, she did, but she was not a leader. She is a boss. When the company got sold, another CEO replaced her with ease and the company is still on a trajectory to being one of the most valuable in the industry. A few years have gone by, and it's almost as if she was never there at all. There was no legacy left behind, and no one will ever follow her on the next stage of her journey. In contrast, I have another friend that is a hugely successful CEO of a large company, and left to lead a very small team in a start-up. He is one of those leaders that inspires you to do good, to do your best, and makes you feel as if you truly matter. Because of this, you end up giving your all, because you feel as if you matter. He has led armies, and no matter where he goes, people will always follow him. I personally believe that leaving behind a good legacy is one of the most important things you can in your life. Many of us working for or in start-ups get these rare, incredible chances, to make a huge difference in the world. We're supported by dedicated teams that believe in our vision - people that actually quit their comfortable jobs to work in tough, uncertain conditions. I have heard nightmare stories of horrible investors squeezing founders dry, and equally as bad tales of start-up CEOs that create very toxic environments that no one wants to work in. For them, it's all business and money now – there is no eternal legacy. I hope that if you're reading this today, and you're a boss, maybe you can do something better from now on to leave a legacy, so the army you lead, will follow you no matter where you go. I hope that if you (like me and us all), have made mistakes trying to lead an army, to go back and give it another shot at leaving the best legacy you can. Start-ups are really hard to lead, but if done right, you'll always be a leader even when you're gone. [link] [comments]  |
| Posted: 01 Aug 2021 02:49 PM PDT I am a cofounder of a start up in the UK and have just completed our MVP. Before we had our MVP and when we spoke to investors every one said come back when you move beyond idea stage and have something to show. Now when we have something to show I feel it might be better Ben worse to show it to anyone let alone investors because the MVP could never be a true representation of the final product. I know this is an age old question but would love to hear experiences on when did you pitch and when are you ready to go out and pitch ? Ps: we are building an AI/ML platform to make driving safe on city roads [link] [comments]  |
| Basic accounting question for a new business Posted: 02 Aug 2021 12:54 AM PDT Hi there, So this is definitely not a challenge to you guys, but for a fella like myself it is pretty new for me. I would like to understand how do I use the breakeven formula for a business I'm planning, and since it's considered a retail business (selling toys), my products will vary and thus the prices will be different for each product. How do I determine what is the price I use for the formula? As far as I have learned, the basic formula is BEP=FC/(Price-VC). Is that correct? If so, how do I plug in the price when I offer items costing and priced as follows for example: Item 1 - costs $3 price $6 Item 2 - costs $1 price $3 Item 3 - costs $7 price $13 Your help is much appreciated. Thanks! [link] [comments]  |
| Toxic founder - Seeking advice Posted: 01 Aug 2021 10:25 AM PDT Hi all, So i worked at a small company based in Boston. I was the first full time employee and i finally left a couple of weeks ago. The founder was incredibly toxic but I think I also didn't act right out of frustration maybe. I want to present everything to you guys with the hope of improving myself for my next job which I'm starting in a week. Here are some events:
That's all. Do I have bad work ethics? My prior jobs were awesome and I accomplished great things. So my next job offers me a lot more, equity, 55% salary increase (but again i was underpaid by a lot), fully remote, and a YC company. Thanks in advance [link] [comments]  |
| Have you been moving to USA? Startup visa question Posted: 01 Aug 2021 10:06 AM PDT We run a SaaS B2B business. Our investor has a beautiful office for us next to the beach. Problem? We are not in US but Poland @ EU. I want to physically move the business to US because honestly Poland is quite a hostile country for startups and they are not as many opportunities. The registration part is easy, stripe atlas or similar and we are good to go with a Delaware C-Corp. The physically moving is another part though. The first issue is the VISA. What visas should I consider? Most of the information I see around point to E-2. How long it takes to make one for just the owner and his spouse for now? How much does it cost? Are there any alternatives? I would be really happy to know anything you could share from your own experiences. Assuming that the startup is a very small entity and while we have a product and earn revenue, we are just a few people with little over a $10k of monthly revenue. And yes, I will also visit a lawyer but before I even consult the lawyer, i'd like to first ask the opinion of other startup founders around here. Real stories that is. [link] [comments]  |
| Posted: 01 Aug 2021 11:36 AM PDT I think my cofounder is ghosting me. He worked an internship over the summer and hasn't got back to me since he came back. I haven't heard from him in over a week. We had a hard deadline on one of our deliverables a month ago where he said he would get it done but no response now. I'm not sure what to do and what the next course of action should be. We had also discussed a deal where I pay him a certain amount until our first version of our app is released. The deal was that he had to finish the first version then he would get his stake. Now, he has some of the money too and isn't responding to any of my messages. [link] [comments]  |
| HELP! I'd like your advice on an interesting situation... (vesting, equity, co-founder drama) Posted: 01 Aug 2021 11:13 AM PDT Well, how did we end up here? The CEO of a startup negotiating his own equity and vesting, help! Long story short, two friends of mine had a hobby project which they built into a startup. Equity split, 50-50 between them. Whilst they were occupied with other projects, the startup grew without much interference from them to around 3k in sales/year. Almost a year and a half ago, they approached me to recruit me in running the startup. My original agreement was designated me to be a seller for the company and working together with the 2 other founders, it gave me 15% with 1 year cliff, and 4 year vesting. At this point, we all worked together. I slowly got involved until about a year ago when I began to essentially run the startup on my own in a full-time capacity in the role of the CEO and the other 2 cofounders work at most 3 hours a week. I recruited a team, met with investors, was in charge of growth, etc. At the beginning of this year, one of the OG cofounder's work began to deteriorate until he decided to exit. We are now in a position where we are negotiating his exit as well as my equity share. He is proposing that he will keep 100% of his original equity shares even after exiting and that it will be de-vested in proportion with the growth of the company. Meanwhile, my cliff will be pushed up by a year as they cite underwhelming results during my tenure (entirely due to COVID, physical touch is a necessary component of our product which has meant that I have spent more time developing our product, growing a team, etc, anything besides sales basically). I feel like his proposal is outrageous as I am taking on most of the risk if the startup through allocating my time, whilst he maintains 100% of his shares even after exiting. Is it really outrageous? What do y'all think? What do you think is the most appropriate exit for him in terms of equity? [link] [comments]  |
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