Market Revolution

Kicking his feet up and sprawling across the couch in the lobby of Ybor City's Don Vincente Inn, Brian Halligan pulls his keys out of his pocket, hanging them over the floor, mimicking Salvador Dali. He drops the keys, showing how the sound would quickly wake someone up who was drifting off.

It's how Dali would come up with his best ideas, Halligan explains. Halligan says he can relate to the famous surrealist painter because his best ideas also come to him when he's falling in and out of sleep.

Halligan, 46, is the CEO of online marketing software HubSpot, which boasts more than 10,595 customers from 56 different countries, who pay a minimum of $200 a month for a subscription.

Halligan and his cofounder, Dharmesh Shah, were inspired by the Grateful Dead, who flipped the music industry by encouraging concert goers to record the band's music to spread the word. So they built a marketing software that helps customers build, manage, share and track content on their website and social media accounts. It also coaches customers on how to offer content that generates and nurtures sales leads who visit the website, what Halligan and his coworkers have coined as “inbound marketing.”

The Cambridge, Mass.-based company saw revenues grow more than 50% in 2013 to $77.6 million, according to the company's blog. The company also opened a European headquarters in Dublin and added 239 employees in 2013, bringing total headcount to 668. HubSpot has more than 286,000 subscribers to its inbound marketing blog and 1.5 million monthly visits to its website.

Halligan spoke with the Business Observer during a recent HubSpot user group meeting in Tampa. Here's an edited transcript of the interview:

What's inbound marketing?
The success of your marketing today is more about the width of your brain and not the width of your wallet. In traditional marketing, you spend money on PR firms, on tradeshows, on buying lists and cold calling and spamming people. People are sick of it and blocking it out. The new kind of marketing (inbound marketing) is all about creating content. Writing blog articles, newsletters and e-books and using that content to pull people in from the blogosphere and all the different social media sites.

What should companies concentrate marketing efforts on first?
I think if they're smart they should come to HubSpot and we'll organize the whole thing for them. But really I think the core thing if they want to lower the cost of acquiring customers, if they want to spread the word about their company, if they want to get more leads, it's that content piece. You have to create interesting, remarkable content that will pull people in like blog content, e-books, webinars, you name it, videos. Those pieces of content are what pull people in from Google, from LinkedIn. Those are the things that get you the retweets and Facebook likes. It's not press releases; it's not product announcements.

What about curating content?
That's a great way to do it. Maybe you don't like creating content, but you like to read, and you read all about your industry. One way to curate content is to take the 10 best articles that you see on the Internet, and write an article about that. Or hey, I found an article this week and I really agree or disagree with it, and write a post about how you agree with or disagree with it.

What's the biggest challenge facing HubSpot?
We're growing fast. We started seven years ago, and we probably have 700 people now. We're still in the very early stages of this big shift in the way people behave. If you just think about how I behave versus my mom — it's very different. I live on my mobile phone, I live on Twitter and Facebook, I use email, I use Google. I have thousands of television stations and Netflix. I really don't get any mail or newspapers. My mom gets two newspapers a day, she watches regular television cable, she uses a regular phone, she reads her mail every day.
There's just a radical shift in behavior, in the way people live. Those behavior changes are happening faster and faster and marketers are just starting to wake up. It's in the early days of that. So our challenge is go fast and try not to break things. It's very hard to grow as fast as we're growing. But how do we get as many customers as we can while this shift is happening and making them as happy as we can and getting that word to spread? It's a nice challenge. Very few companies have done this right.

To what else would you like your company to expand?
We feel like the way people shop has changed, so marketers need to change. The way people buy has changed a lot, too, so salespeople need to change. Let's take an example of a typical sale: Five years ago if you're a salesman and you're showing to a CIO of a company, that salesman controlled the sales process. The rep had all the power and it was asymmetric information. Today it is very different, the rep and potential customer have the same amount of information. All that information is available on the Internet. The power has dramatically shifted from the rep to the CIO, the buyer. There needs to be a new way to think about sales and a sales system to enable that shift.

What's the best business decision you've ever made?
Going to business school and getting my M.B.A. at MIT. I learned a lot. I got my pedigree from MIT. I needed that because I didn't have any previously. And I got my network, which included my cofounder, five of my first 10 employees, my angel investor, and five of first 10 customers. They all came from Sloan.
What's one decision on which you'd like to have a mulligan?
In the early days of HubSpot, we hired people who did great in the early stage. But the skillset you need in different phases changes as the company changes. And some people just don't like it as much or aren't as good as it scales up. I should have moved more quickly on some of those. We ended up swamping a few folks. They weren't happy; they weren't in their element. They should have gone and done something else or started someone else's early stage startup. I don't think you should sweat it. I think you should find the best person you can find at the time.

Why let marketing agencies earn revenue for selling your product?
A lot of our revenue comes through partners. We didn't really imagine it. One of our employees talked us into it.

You say Sunday is your “reading and thinking day.” Explain that.
I have some radical ideas on thinking. I think people work too much and don't think enough. They spend too much time in email with their face in the screen, not enough time thinking. So I have a new initiative this year. I want to think more and work less. I have a couple of hacks to do that. Every Wednesday I work from home. I don't care if the Pope is coming in town, no meetings on Wednesday. That's my day to think and work on projects.

How do you find new ideas?
Almost all of my good ideas happen when I'm falling in and out of sleep. There's this Jack Johnson song, “Wake up Slow.” I like that song and basically I wake up very slowly in the morning and I have my iPhone next to me. It's when I'm in and out of this dream state, not thinking about anything; it's this fertile soil for good ideas to rush in.

When I'm thinking hard about a problem, I almost never have a good idea. It's when I'm not thinking about a problem, when my mind is free. So I take naps — about four or five naps a week.

So people who know you may be familiar with your love for your dog, Grateful Dead and the Red Sox. What don't they know?
I'm an introvert. I'm a fake extrovert. I'm faking it right now. People think I'm an extrovert because when I get on stage I'm very animated, but it takes a lot out of me to do that. I definitely need alone time to recharge my batteries and unwind. A lot of people time exhausts me.

What's next for you?
They are going to take me out of HubSpot either in a straight jacket or a stretcher.

What's next for HubSpot?
More growth. The marketing revolution is just starting, and there's a sales revolution that will be right behind it.