Andrew: Hey all, I am Andrew Warner, I’m the founder of Mixergy.com, home of the ambitious Upstar and by the way, what I mean by that is that I do these interviews for select few, I mean people who know that they can watch professional TV shows. Not just my little operation over here, but instead, are picking and choosing to listen to this time after time because they’re so hungry to build a successful business that they’re going to spend an hour with an entrepreneur, an hour with an investor to find out what they know about building a company. And today, by the way, I’ve got a guy who’s both. So, on the phone with me today, not video, but on the phone with me today, I’ve got a man who according to his website, sold his company for millions of dollars, and I’m going to ask him to clarify that, he invests in startups, and according to my research, it’s 11 startups that he’s invested in up until now. He’s also the founder of HubSpot and HubSpot offers inbound marketing software. His name is Dharmesh Shah, and Dharmesh that’s kind of a small version of the full bio but how did I do there?

Interviewee: That was exceptional actually to carry around with me when I need intro that means.

Andrew: I didn’t even get into the blog that you write, that’s really popular, on Startups.com and the question and answer site that you have for entrepreneurs called Answers.onstartups.com and how you’re just tearing it up with that site already, even though the question and answer site is so new.

Interviewee: Yeah it’s doing exceptionally well. I’m very pleased, the community has really stepped up.

Andrew: Alright, well let’s go back in time before we talk about, we’re going to be talking about how you decide what companies to invest in and what entrepreneurs can learn about from the way that you invest in, what they can learn about how they can get funding from the way that you invest. We’re going to find out what you’ve learned about building successful companies but first I want to go back in time and find out about that company that you built in 1994 and sold in 2005 which is called Pyramid Digital Solutions. What did Pyramid do?

Interviewee: Pyramid provided CRM software for the financial services industry so it was a very boring business in terms of we sold to essentially high end software that helped people connect with their retirement accounts over the web and over the phone, touch tone response and those kind of things.

Andrew: And you weren’t selling to individuals right, you were selling to enterprise?

Interviewee: Correct, yeah.

Andrew: Alright, can you tell us a little bit about how you built that up, what was it like, what was the original vision for the business? Let’s spend a little bit of time going over that company because it seems like that’s where you really established yourself and that’s given you lot of credibility in this base. So, what was the original idea for Pyramid?

Interviewee: That was interesting, there was no really big grand master vision. So, I was 24 at the time, I was working for a large technology and software company called SunGuard Data Systems. Large publicly held company and I wasn’t there for very long but one thing that occurred to me is that despite the fact that they were a successful software company, it wasn’t a particularly productive place for programmers and as I was working there I felt that this doesn’t seem like a particularly efficient way to solve customer problems that we had lots of big customers at SunGuard obviously as they’d been around for a while and I had a small idea which was around doing this kind of data conversion application that would help customers essentially move from one financial system to another. In this particular case, SunGuard. So I actually approached management there and said I got this idea for a small data conversion application which I think will help to get more customers onto the SunGuard platform and so they asked me,”Well, what do you think Dharmesh, you could sell this application?” for I was an employee at that time and I said,”Well, I am not really sure, I’ve not sold software before but let’s say 5000 dollars.” And they came back and said,”Well, you know we’re really not in the 5000 dollar software business, we’re in the million dollar software business, it’s just not our focus, we don’t think it really makes sense for us to pursue that particular product”, which I think was the right thing for them to respond with. It really didn’t make sense for them. So the idea wasn’t that big but I just wanted to do something independent and build it and so I left SunGuard and started that company and that was the first ??? that I built and we did end it up selling it for 5000 dollars but the price grew every time. So no big grand vision, I just thought that it might be more productive and I hired all my buddies from college and every great programmer that I needed for the co

mpany and grew it. ??? I didn’t even know what adventure capital was at the time.

Andrew: Really? And how’re you going to pay the people who you brought onboard with you from the start?

Interviewee: The way I had thought about businesses which I have never done before, I was a programmer least likely to start a company amongst the people that knew me. So, my simplistic thinking was while we relate to actually run a company is you go get revenue from customers and then use those revenues to buy what you need including recruiting people.

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Interviewee: then use those revenues to buy what you need, including recruiting people! So in the early days we had no employees, right, it was just the two co-founders, and we kind of cranked out code, and we had some early sales kick in and the good news about software businesses is that, if done correctly they should be capital efficient, so they don’t take a lot of money, and once some small revenue started to trickle in we actually started bringing people on to the team, and the way we ran that company, essentially, for the entire duration of the company, was, you know, we kind of had a limit at how much we would take on in terms of monthly expenses based on how much cash was in the bank. So essentially took all the profits of the business, all the revenues and threw it back in, and just grew as revenues grew, and it turned out we had, eight straight years of triple digits growth and the revenues… we did well, so it was good, was a fun ride.

Andrew: Alright, i got to dig deeper into the eight straight years of revenue growth. My experience doing interviews here on mixergy with engineers is that they don’t like selling, they’re not good sales-people, and here you build a business, yes dependent a lot on software, but it seems equally dependent on sales. Who sold and where did this skills come from?

Interviewee: Yeah, that’s a great question actually. So, the way i fell into it that camp was, i was not particularly good at selling things, i don’t enjoy it, and the two, i think, are correlated, but.. is.. so when i kicked off the company, and approached Sunguard, as i said earlier, and said “hey i want to build this product”, and then i went back to them “i can’t get this out of my head, I’m going to start this company”, well i still believe that, this product can actually help you make more sales of your million dollar product. And so.. In the early days of the business, i said “OK, well, let me go off and build this thing. I like working here, but since i can’t get this idea out of my head, and why don’t you sell the product? And what we’ll do is we’ll split the revenue fifty-fifty”. And obviously the money made no sense to them, they didn’t care about the 50% of the five thousand dollars they were going to get. What they did care about was in the event that i pulled it off, if it just added one more sale to their roster that they wouldn’t have gotten otherwise because we made the migration process to their platform easier, it was a win for them! So they, agreed. They were like “OK”, it was a flier and what was interesting. So that kind of started a, essentially, a distribution partnership, which i didn’t know what those were either, but i was like “OK, I’ll build the product, you guys sell it because you are good at selling software”, and they did that! So that drove a lot of the early revenue, and obviously we renegotiated that partnership deal over time, but, that, it endured! And we added more products on and it was a, probably around maybe year two or three, where we started, essentially, building out our own kind of distribution capability and didn’t sell it completely for the Sunguard anymore.

Andrew: OK, I, that’s a really clever way to get sales early on. You have a big company with established customers going out and selling for you. Where did that idea come from?

Interviewee: That idea came out of ignorance. I thought.. I just didn’t.. I mean.. It seemed kind of relatively obvious that I wasn’t going to be able to sell things. I was, we were a two-person start up trying to sell to these kind of fortune 100 financial institutions, and I kind of had a sense that we had no chance in hell of actually convincing people.. to do it, to do that. We didn’t know anything about sales. So i think, part of it was just, we didn’t know any better, we asked, we weren’t really hung up on the terms of the deal, we just kept it simple, in terms of.. “Here’s what it would take”.. So, to Sunguard’s credit they hadn’t done anything like that before either. Particularly with a small rickety start-up.. But they knew me, it was not that big of a risk. It was one of those things where just luck played in. I was at the right place, at the right time, and, i guess, caught them in the right mindset.

Andrew: And if I’m understanding you right, the deal for them, the benefit that they had in doing this was that, this would be just another product that they sold to their current customers and if there was a customer who just wanted this, but wasn’t ready for any other products this would be a gateway solution. One that would get them into the Sunguard fold.

Interviewee: That is correct, yeah.

Andrew: OK, all right, yeah. So, I said earlier that on your website, and used the word millions, i used that because that draws attention, and i’m hoping that it gets more people to listen in to the rest of the interview, but I’m going to ask you for a little bit of clarity on that, how much really did you sell for?

Interviewee: So, I can’t reveal the terms of the deal, what I can tell you is that the revenue at the time that we sold was 15 million dollars, first offer company, and it sold, you know, in the range of what an enterprise software company multiple would be.

Andrew: Can you give me a.. What was the range for an enterprise software company in 2005, the year that you sold.

Interviewee: At the time, the average range, the mean would probably be around 2x revenue.

Andrew: Two times revenue. And how, What percentage of the company did you own?

Interviewee: That is interesting. My co-founder was my brother. Which is another… Actually a different story. But i owned 70% at the time of the sale?

Andrew: Wow, and how did the responsibility break down?

Interviewee: It was interesting, he was, in the early days he was a programmer as well.

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Interviewee: In the early days, he was a programmer as well. Because that’s how we used to need to print out code. And eventually, we kind of split roles where I was doing all the engineering and product development stuff, and he was doing kind of opps and sales and basically everything else.

Andrew: I see. OK. And you said that there was an interesting story behind that dynamic. I worked with my brother, and I loved it.

Interviewee: Yup.

Andrew: I know a lot of people have trouble working with family. What was the dynamic like for you?

Interviewee: It was interesting. So we had a very long run. One of the things that was interesting is that there’s a relatively large age difference between us. He was 17 at the time, at the time that the company started, so just out of high school. And, well, I’ll have to you the story because it’s, I think, interesting. So at the time, I was working at Sunguard. He was 17. He had just graduated from high school. And I was working as a developer, and had only been there, at Sunguard, for about three months, I think at the time. So I wasn’t there at Sunguard for very long. But, so we had this consultant that we had hired to do these kind of GUI screens. We were, you know, Sunguard was building this kind of client server front end to their big mainframe system. And then I remember the numbers vividly, is that we were paying the consultant $75 an hour. He essentially would take like these paper kind of mock-ups and things like that and translate them into this kind of [4GL] language, and just drag and drop and build these screens. And I went through my manager at the time. I’m like, well, this stuff is actually relatively trivial, and you know we shouldn’t be paying $75 an hour to this person to do this stuff. And then I went on to say well, it’s so simple my brother, who just graduated high school who I don’t think is all that bright, you know just…

Andrew: [Laughs]

Interviewee: kind of sibling jest there, could probably do it. And so, my manager said, well OK, bring him in. Right? So he was working for a grocery store at the time, just out of high school. And so I brought him in, and we weren’t really sure, now in retrospect weren’t sure it was even legal to hire him, but and we hired him $5 an hour. Right? So essentially within two weeks he displaced that $75 an hour consultant and had a really good run within Sunguard as well. He was a natural at that particular, at the programming stuff, having never taken a computer science class in his life. So it was just one of those things. So when I left the company, you know I kind of left first, and then brought my brother [Ricko] with me. And so it was interesting. I think the challenge there, in terms of, you know, should you do it again, is that it’s really hard to have, you know, in the long, long term, hard to have objectivity. And that’s, I think, the big issue. That, as you know, the company grew. And we’re like, OK, well, how do we decide roles and responsibilities? And yes, so it’s, I can argue both sides, but I think it’s a challenge, so.

Andrew: Did you guys get into actual arguments, or are we talking about friction? What was it like?

Interviewee: Actual arguments. I think those are…

Andrew: Uh-hmm.

Interviewee: So that particular set of arguments, I think, are similar to what co-founders would often have, in terms of just, you know, debate and discussion. But so then we had, sometimes smart people have differing opinions, and those are the kind of rich topic areas for discussion anyway. But where it becomes interesting, though, is that, you know, one of the things that you have with a, I’ll call it anonimously, a co-founder, is that, you know, the discussions essentially would come down to, hopefully some degree of objectivity that says, OK, here’s my opinion. Here’s your opinion. And you’re behaving this way because you think this. And what happens in a family, whether it’s family or friends, now, or very close friends, same thing. But then you have the issue of well, you know, how much are you doing this because you’re my older brother? And are you kind of, do you swing more power around than you normally do if, you know, if I were a different co-founder. Right? That would be one argument from his perspective, let’s say. And from my perspective, I’m like, OK, well, you’re 17. If I had hired another 17 year old co-founder that wasn’t my brother, you know, what would I, you know, how would I behave? So it’s that kind of dynamic, I think, that’s, uh, it gets tricky sometimes. So, and we were both so young. It was our first start-up, first anything, actually so.

Andrew: And we should say that the company that you sold it to was Sungard, this very company that you worked for, that you made that initial deal with, they were the ones who came in and who bought the business.

Interviewee: Yeah, there’s very some, some good poetic symmetry there, in terms of, we left we had acquistion offers, you know, starting probably like in the year four or fivish. And then it continued every couple years, and we turned them down several times. Then just finally the numbers made sense, and yeah.

Andrew: OK. Do you think that if you weren’t working for Sungard, and you came up with this idea, that you could have brought that deal to them and said, guys can you please sell my software for me? And then let them handle it while you were working on software development?

Interviewee: No way. Yeah. So, one of the things, you know, when I talk to entrepreneurs that are just getting started, there’s this kind of temptation to strike this kind of a big partnership. The distribution, or I’m going to, form to do something, and that’s going to help me try to market or position the product. In, I would say, in most cases, that’s a bad idea for entrepreneurs for a couple of reasons. One is the likelihood of striking that kind of deal, unless you have some inside track, is really, really low. Like one of the things that’s exceptionally hard in the early stages of a start-up is, you know, enterprise software is really hard to sell.

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Interviewee: The start up. You know, enterprise software is really hard to sell. The only thing that’s harder to do is some sort of large enterprise partnership. So, my advice to entrepreneur is don’t get overly caught up on trying to strike those big deals. They sound awfully tempting, but they just rarely come to ??? in the way the entrepreneur is thinking. If I go, well, I’m going to strike this partnership and they are going to sale on my behalf and then I can go to the back in the back room and just rack coat, and not have to worry about all that ugly sales business. That normally doesn’t work out that way. It usually ended up exercising frustration and a lot of time wasted. I’m not hung out for those parts.

Andrew: I see.

Interviewee: In fact, I’m lucky, It just so happened ???

Andrew: All right. It’s, it’s luck, but it’s also intelligence. To think about the idea, to not give it up when the company didn’t want to,to pick it up, to not say that maybe it’s worthless because they’re not jumping in on it, t o go out and take a risk and build the business yourself. And then to have the ??? to go to them and ask them to sell for you and work out after you.

Interviewee: Sure. I’ll take some credit. Yeah. Absolutely.

Andrew: You know what, I feel like sometimes part of my responsibility in these interviews is to make sure that the entrepreneur takes credit for their work. A lot of time we can’t take credit for our own work because, or we don’t want to publicly take credit because there’s a lot of other people who really contributed a lot to this. Because we don’t want to seem arrogant Because we don’t want to become arrogant.

Interviewee: Right.

Andrew: But, really the people who are listening to this need to understand that this is not a way of Forrest Gumping your way to success. There’s some intelligence, there’s planning, there’s a lot of hard work that goes into it. And, I want to make sure they can acknowledge that.

Interviewee: ???

Andrew: All right. By the way can I, for the record, can I say over 25 million is what you sold for?

Interviewee: No. We can’t. I’m sorry.

Andrew: Oh. Is there some number I can say over publicly?

Interviewee: No. I’m sorry. This is one of the things that, yeah, I’ve been really good about this. It’s been tempting to publish. But, I’m a roughly transparent guy. That’s one thing I’m not out of favor with what the terms of the actual deal were.

Andrew: Okay. Excuse me, I was just sneezing there.

Interviewee: That’s okay.

Andrew: Fair enough. Let’s see, got a few people here who are watching or listening to us live guide. This is, I usually would have a video of the person who I’m interviewing. I want to know from you how is this sounding. To me it’s sounding great and I’m getting just as much value as if we had video. But, I’ll like to hear from you guys. I see Johnny Gary is out there, tell me what you think. Copre Singh, tell me what you think. Will Lamb, you’ve been watching a lot of these interviews what’s it like to just listen. And Ing Thomas, UK, tell me what you think to. It sounds like you’re in the UK and I’ll love to hear how’s it’s coming across to you over there.

All right, so, you mentioned giving advice to entrepreneurs And that’s something that I knew you for before I knew any of your business background. And something that I keep seeing about you. You’re blogging for entrepreneurs You must be blogging non-stop. I did research for this interview and I realized that you’re blogging for venture hex, venture B, your own site which is on stardom.com. I think you might have even blogged on my website neither one of us ever knew it because you’re out there just tearing it up. Why do you do it? Why you’re giving advise in writing so much?

Interviewee: Well, it’s interesting. The story behind the blog is actually a rather decent one. So, when I sold pyramid. My promise to my wife was okay, well I had been . . . she knows me before I actually start my first start up. Before she knew I was going to be an entrepreneur. Once I kind of had that transaction in the works. I said, “well, I’ve been going at it hard and long with pyramid. It’s been a fun but, long and somewhat tiresome ride. I’m going to go back to grad school”. So, which had been on my list of things I wanted to do.

And so I went back to MIT to get my masters. And, I’ll go find myself and figure out what I want to do next. And on my list of things was possibly like I could ____l and become a professor or something some day. So that was insight. And then within a month ish or so of starting grad school, I’m like, well I kind of miss the whole start up thing. And what I’ll do, I’ll start like living ____through other entrepreneurs And, part of my list of requirements at MIT is I had to write a graduate thesis. And so what I thought to do, is okay well, I’ll write a thesis and I’ll call it On Start Ups. Because I want to kind of study how the software industry had essentially changed for start ups. And talk to entrepreneurs and figure out what they had learned and how my experience may or may not have been different from what people are going through now.

So, now was the title of my thesis was on Start Ups. The patterns and practices of contemporary software entrepreneurs So, the blogg actually was a by product of that. So, my thesis adviser, Ed Roberts, who is the ____ at my entrepreneur center, said : “well you know the thesis is going well reasonably well. This is reasonable good stuff. But, the reality is you have no real kind of research. You need to actually talk to people and get back from folks”. And so I started the blogg essential as a way, as a lazy person’s way to collect that feedback. Because I’m an anti-social kind of guy. I’m like, oh, may be I can just put stuff out there, put opinions and let people kind of give me feedback and agree or disagree.

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Interviewee: And so that was the kind of motivation.I had no plans to write a blog, it was essentially for thesis feedback. And so being the creative guy that I was, I called it the same thing the thesis was called, I called it onstartups.com. The domain happened to be available. Anyway, so that was the original kind of motivation. So what I found was that it was actually kind of fun to be able to just write about experiences. Pyramid was basically the only experience I had at the time. And then to share the kind of story that you experience was ten times more than I do in terms of the gratification of being able to connect stories together, to say “Oh, well I talked to

Michael McDerment, hes the CEO of FreshBooks. He was one of the early people that I interviewed for my thesis. And Jason Fried from 37Signals. I had lots of you know, these great people learning from online for a little while and agreed to do an interview and it was just kinda wonderful to just kinda connect, connect entrepreneurs and connect tell my story and both other peoples stories

and just bring people together. And the traffic did well so it was gratifying to see the numbers to grow over time. And its been a lot of fun, so I’ve been keeping it up ever since.

Andrew: And you’re right, I experience this as i do my interviews here

and I urge people all the time to go and do this themselves, to find a reason to interview other entrepreneurs, if they want to be entrepreneurs. To interview other designers if they want to be designers. To find a way and excuse to interview other people who are in the space they want to be in because you’re going to make connections, you’re going to learn from them and you’re going to get an understanding that you could just not get as an outsider, that you couldn’t even get if you were working for a single company here.

Its going to give you, if you interview lots of people you’re going to get a breath that you couldn’t match anywhere else. Even books couldn’t give it to you. And im always happy to if anyones listening to us right now who wants to do interviews like the ones I’m doing here, I don’t fell threatened by it, i don’t want to fight against you as i do this. I want to support you and I want to help you, and I’ll even show you everything that I do here. So reach out to me and ill help you guys out. OK, so it was fun, but you’re also spending a lot of time on this. Is there– are there business benefits to teaching publicly on your blog,

or on other peoples blogs?

Interviewee: Yeah, its interesting, so this was actually a decent segway into my current startup which I think has some kind of lessons in it as well. So when i was at grad school, I said OK, well I’m going to live vicariously through other entrepreneurs and i’ll start making age old investments and do that kind of thing. But evidently the pain of living vicariously through other entrepreneurs wasn’t high enough, so the notion of huffspot actually started when I was at MIT. And i have to stray a little bit. So one of my classmates at MIT Ryan Hallagan, he actually graduated a year ahead of me and he went to work for a venture firm. he sent me a DIR to find out when his next gig was going to begin and we began noodling on the huffstop idea and one thing that was interesting, his job was to go around to the portfolio companies of the CC firms that he was working with and help them with sales and distribution, because hes a sales and distribution guy. Hes been doing that for software companies his entire professional career. And for one thing he learned,

he sat down with these folks and said OK, well what are you doing to kind of reach customers? how are you going to get those early customers from the start up and go from a rinky dinky little to a big publicly successful company? and they all came back with kind of similar tactics. They said OK, well we’re doing these trade shows, we’re buying advertising in these local trade journals,

we’re doing email blasts, we’re doing all these classic kind of marketing things. Ryan was like OK that’s great. I’ve done this for my entire professional career, That playbook works. Well as it turned out, it wasn’t working. At the same time he was providing this advice to all these start ups

in terms of how they can kind of you know, stretch the top of their tunnel and get more customers, onstartups blog had kicked off, and Ryan and I would meet every week, we would talk about doing business together anyway. And one of the things that kinda hit us was, so he kinda looked at the traffic from startup and he looked at the traffic for these venture backed software companies trying to grow traffic to their websites, trying to get customers. and there was a big, like onstartup was getting five times the traffic of these companies that were spending literally hundreds of thousands of millions of dollars

trying to market their product and so that’s when the epiphany hit. We were like , well there’s something that’s changed here. why is it that these companies are having such a hard time getting traffic on their websites, a lot of times even consumer websites, whereas onstartups is succeeding. So our thesis was that how the old-school marketing of “OK I’ve got this message I’m going to take my marketing budget, and im going to spread the message as far and wide as possible” just doesn’t work anymore. We kind of walk around with these little bubbles around us now. We don’t answer our phones anymore, we don’t open junk mail, we only open spam. We just don’t do that, and so our thesis was what onstartups was essentially doing right was just pulling users in by saying something that was interesting. So we took that kind if insight and

said OK what can we do to actually replicate the success that onstartups had for small businesses. Why cant small businesses do essentially the exact same thing ?

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Interviewee: …small businesses do essentially the exact same thing. OK, they all have a story. They hopefully have some differentiation to put interesting youthful content out there and use it to draw customers in organically, versus pushing the message out. So we call this “inbound marketing”.

That was the original, kind of premise and hub-spot, what’s helping the small businesses essentially draw customers into their sales file. So, the answer is, yes, we took all the early lessons from young start-ups, and then did a bunch of experimentation around social media. Part of my motivation, obviously, is the personal gratification of growing the blog. But then I had a very, very kind of precise business value, which is, I wanted to kind of test the experiments and say, “look, here’s what works to build traffic to a web site”, and treat young start-ups as essentially a small business. Although it wasn’t revenue generating, the issues were the same.

Andrew: OK, um, they’re a couple of ideas in there I want to dig into. The first one keeps coming up when I ask entrepreneurs about how they started their business. The word “thesis”. That they say, I had a thesis, and then I built a business around it. Am I picking up on something that’s valuable, or is it a happenstance that you’re all using the same word?

Interviewee: Um, I think part of my use of the word “thesis” is probably because I’ve been to grad school recently, and I had the word “thesis” on my brain for so long, and it was painful. Ah, but, in this particular case, I think, [Anec Doli], an entrepreneur that I talked to, the original idea wasn’t necessarily the one that accompanying on both rounds. And the same case exists with HubSpot. The original idea, when I was sitting in grad school, was doing essentially ERP software for small businesses. I wanted to do like a [light, weak] Oracle. And the idea was to go one vertical at a time. And what was happening, kind of simultaneously, is that the young start-ups left and then that intersected with, “oh, wait a second, this kind of marketing problem seemed like a more interesting problem to solve that more people have”, and then so there was, essentially, we kind of switched, or I switched the idea, and so, let’s do this marketing software thing instead. But it does help to have some theory about what you think about the market and how you think things are going to progress. Because, that way you know whether you’re right or not, and kind of iterate on that. So, it’s kind of the agile approach to start up development.

Andrew: OK, so, if you were going to, in one sentence say what the original thesis behind HubSpot was, what would you say it was?

Interviewee: The original HubSpot thesis was, enterprise software start-ups are very painful. Don’t do that again. Um, and it’s very hard to build an enterprise software start-up. So my original thesis was that a lot more money was going to get made in the small-business sector. So that was the thesis, essentially, like I want to serve small businesses, and my thesis then was, OK, and this was in the MIT thesis, was. Well, enterprise software is really hard for software start-ups because it’s so hard to break in, they’re very sophisticated buyers now, the hey day in was the late ’80s and ’90s, which I got to enjoy a little bit. And now an enterprise software start-up is really hard. On the flip side of the spectrum, consumer internet, consumer software start-ups are hard in their own way, because there would be

binary business models. There, you know, approaching lottery tickets. Like OK, you do this consumer web start-up, and if it’s successful, you make, you know, tens of millions and hundreds of millions of dollars, or you make nothing at all. Right? It’s a very binary outcome. The thing I like about small business and just doing the research, is like, OK. I have the elements of enterprise software, in which you can actually charge people money, which is kind of old-fashioned, but coming back into style. And you then have, but you still have the same scale essentially. You have a consumer web spot. There’s millions of small businesses out there, and so you can build big interesting businesses, as folks like Salesforce.com and Constantcontact. And a bunch of successful, kind of fast-paced companies have done recently. So that would be, the original thesis is, money will get made in small business, and we should know how. So the original thing was, oh, we’ll go after small law firms and do ERP software. And eventually we kind of pivoted and said well, marketing software is a more interesting problem. And seems more people have it. And it was more fun.

Andrew: All right. I don’t want to get side-tracked, but I’ve got to ask you about that, because it’s an interesting observation that the consumer side of the business really is competitive. And people are throwing lots of money at it. And there are lots of voices screaming for attention, and not that much money coming in from consumers. On the high end, the businesses are tough to create products for. They’re tough to satisfy. They’re tough to get in the door to sell to. Somewhere in between is the smaller business that 37 Signals targets, that Pubspot targets. That’s more accessible. That’s plentiful. That’s willing to pay if you could get them results. But how do you reach them? Because I know with Facebook and with consumer facing businesses, with consumers, you can reach them because consumers will spread the word to each other because consumers all day long will send links to each other, and invite each other out. And borrow marketing is very effective. And they’ll pimp out their Myspace pages with your widget if you’ve got a widget. But how do you reach those smaller businesses that aren’t so willing to engage in viral marketing, or to engage you on social networks? And are too busy.

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Andrew: …on social networks, and are too busy?

Interviewee: Yeah. I think that’s actually, that might be a myth in terms of that…. You know, small businesses don’t engage on the web or don’t spread a marketing message. What we’ve found with our work at HubSpot, and with lots of small business customers, even boring businesses are actually succeeding at attracting customers through things like blogging and social media.

It’s actually working for a bunch of our customers. But for HubSpot specifically, we’ve had phenomenal success in kind of organically reaching these small businesses. That are spreading the word…and I think, in a way, 37 Signals is not really selling to consumers. It’s a solo launch firm, and people running the quote, original market was design firms. Freelance designers and things like that.

So I think the small businesses are now increasingly online. They’re reading blogs, they’re trying to learn. They’re trying to learn about marketing and sales. And how to run a better management consulting firm. And all those things. And I think they’re much easier to reach now.

In the trend line…we’re swimming with the tide. The trend line is positive. And the other thing we have to remember here is that lots of these small business owners and practitioners, they grew up with the web, right?

So, even if it’s not what let’s say only…. Let’s say, 30 percent happen to be online and are going to participate in Facebook and those kinds of things. In the next two years, we’re going to have a world where most of the people that are starting business and doing this kind of stuff don’t know of a pre-Internet world.

That’s not that foreign of a concept to them to pick both business and personal stuff sitting inside of Facebook. Or, to write both a personal blog and to talk about their business. It’s relatively common. Yeah.

Andrew: OK. And I mentioned earlier that there were two things that you said that I’ve been seeing over and over in my interviews. The first is the idea of a thesis behind the formation of a business.

The second is the importance of having an audience before you launch a business. I’ve talked to multiple entrepreneurs and asked them, “Where did you get your original customers?” and basically they said….

Well, I keep going back to 37 Signals.

But [PHONETIC] Jason Freed said here that he had an audience because of his blog. And his first customers came from that audience.

And I’ve talked to others who said that they’ve had audiences because of their blogs, because of email newsletters, because of a community that they built. And so that’s where their first customers came from. Can you talk about the importance of having an audience? Or am I wrong? Am I picking up on, again, just a coincidence that they all have audiences?

Interviewee: No, you’re absolutely right on that one. So, what’s happening now is that—and this is one of the pieces of advice I give entrepreneurs as well—is that…. If you’re going to spend writing a business plan, stop and write a blog instead. And the idea here is that if you can build that early community of people that just care, right?

Like, if you’ve been in business for a while, whatever your passion happens to be, if you can get hat online community built, that is the perfect early audience to reach into. Because the odds are you’re going to hopefully build a business around something you’re passionate about anyway. So why not have a community that you can sell into? But even once you start…. I think before you write your first line of code, if you’re a software entrepreneur, you should be writing a blog, right?

That says, “OK. Can I get market feedback early?” and this is a tangent. But a different topic we can talk about possibly later is around the lunacy of stealth mode. In terms of trying to keep your idea a secret and not write about it. Because you think someone’s going to go steal that idea. But I’m an absolute believer in, “build a community.”

Because that is critical in terms of being able to get early market traction. And it’s worked for so many entrepreneurs, including me; I can’t recommend it more highly. That’s a definite pattern I’m seeing now.

Andrew: OK. Can you give me an explicit…I know we talked about it earlier in the conversation here. But let’s be even more explicit about the cause and effect of how you built an audience, and how that affected the launch of HubSpot.

And just, I know that we only have about 20, 25 minutes left, and there’s so much more to cover. But if we could just do a quick cause and effect that would embed itself in people’s minds, they’ll understand why they need to built an audience.

Interviewee: Yeah. So the cause and effect was, in the early days, we actually started a HubSpot blog as well. Before the product was even launched or written. And we said, “OK. Here’s our, essentially, our thesis.” We put it out there, and said, “Oh, well we think outbound marketing grinds of sucks. Outbound marketing kills kittens. And inbound marketing, pulling people in organically, is the path to truth and justice.”

And I think one of the things that worked is basically kind of taking a stand. Is having a vision. And—even if it polarizes people. So we had a bunch of marketers come back who said, “Well, you’re telling us tradeshows are dead! You’re telling us advertising is dead.”

That’s just simply not true. And so what happened from, let’s just say, cause and effect perspective is, once we start getting those…. For every one person that completely, violently disagreed with us, we had a counterbalancing person that says, “My God, you guys are right. That is the path to truth and justice,” is pulling customers in organically. I want more of that.”

And then essentially what we did is we translated that web visitor traffic into leads, right? And we said, “OK. Well, if you’re interested in that, would you be interested in buying software that actually helped you do that?” and that’s been immensely successful. And so even to…

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Interviewee: …and that’s been immensely successful. So even to this day, the HubSpot blog drives in the top 5 legions forces a hotspot. That’s how we generate 18,000 lead last month and the blog is in the top 5.

Andrew: Ok, next we’re going to talk about inbound marketing and then we’re going to talk about how to work with Angel Industries and get them to see your business but before I move on to both those things, I’ve got to tell you something that I love about this interview so far and this is something that I love about writers in general. You’re so clear about your ideas. I just so admire that. People who watch me do these interviews have heard me stumble though my words at times and have heard me rephrase questions three times before I get out there and of course when I interview entrepreneurs, their job all day long is to build out their business. They’re not thinking about how to articulate the way to build out their business. What I admire about you is you’re not just an entrepreneur who’s building his business and has the knowledge in his head but because you’re a writer, I can see the ideas come out clearly through you. The ideas are expressed in a way that people can understand, can take them home and as a person who is doing an interview and I know as people who are listening our interview, that’s something that we really appreciate. So, I just got to point that out. I love when I get interviewees like you who have the experience and also have the ability to articulate it. See, if you were saying that, you would’ve gotten that message out in one sentence. To me it took a few sentences and a lot of ‘uhms’ and ‘ahs’.

Interviewee: Well, thank you.

Andrew: Alright, thank you. Let’s go next to inbound marketing. I’ve heard and I think it was in one of your speeches or an online video you say that most companies know how to build the thing that they’re building, they know how to build their software, they know how to build their product, they know how to build whatever is it they want to sell. What they have trouble with is getting that audience, getting the customer base, marketing it. So, let’s spend about 10 minutes going through few questions about how to market it. And I’ll start up by asking you what’s the most effective way? If there is an 80-20 rule where 20% of my efforts are going to give me 80% of the results, what’s the 20% here?

Interviewee: Yes, what I would suggest would be, I’ll put this kind of more broadly, is creating content that is useful for your potential customers that you hope to sell things some day. And it can be in any number of forms. One thing we had success with, and especially I think this would work very well for software companies, is free tools. Hopefully programmers or developers, in software companies are good at writing software, and this goes towards the premiumish models, so we had a free tool that we launched early in our history called Website Grator. And by the way Andrew I think you’re off-screen or shifted away or the camera moved away or something.

Andrew: I can believe you’re actually watching the interview, honestly I just had to blow my nose.

Interviewee: Ah, that’s fine. Don’t worry, it’s ok.

Andrew: [Laughs] I love that you’re watching too.

Interviewee: But anyway, so what’s interesting is that if you can build either content or tools that will essentially be useful. And one thing’s ok. Take a step back, when you’re developing this content, let’s say it is a blog or doing videos or whatever, it’s extremely important to not sell in the blog in the early days. The mistake people make is like, “Oh well, I got this product and I am going to try and convince people to buy.” People are not going to be convinced to buy through that particular mechanism. What you want to do is you want to convince them of the idea essentially, that’s what you’re selling. You’re not selling the product, you’re not trying to get into their wallet and pull dollars out. That’s not going to be effective. Let’s say if I’m in the marketing business, the marketing software business, I‘m not going to talk about HubSpot, which we actually have a rule not to do on the blog, or make reference to the product itself. What we say is, “Here are 14 ways for a small business to get leads online.” We’ll talk about blogging. There are ‘how-to’ articles, there are things that are helpful and the way we’re going to picture this is, imagine that someone inadvertedly stumbles across this piece of content that you developed, maximize the probability that they’ll actually send it to a friend, that they’ll bookmark it and come back to it later. They’re not going to take brochure-ware type stuff that says “Here’re the 14 reasons my product is so cool” and so either write a blog, develop a video, write a software tool, do something that helps your future customers out essentially and that’s valuable to them. Anytime you can do that, even in this kind of short to mid term, it works. We’ve seen it work for, at this point, hundreds of companies now, it’s magical.

Andrew: Absolutely I have. I didn’t realize you had a rule not to talk about you’re business on your blog. I actually was supposed, at one point, to introduce Jason Calacanis on his show at a conference and I said, “So Jason, I’ll be saying this and this and this and the founder of Mahao.com”, and he said, “No no, don’t even say Mahao. They know Mahao.” So, it’s not just that he didn’t want to promote Mahao himself, he didn’t even want me to promote it for him because he wanted to keep it pure.

Interviewee: Right.

Andrew: I see what you’re saying. What you want to do is just make sure that everyone understands, no confusion about it, you’re just adding value and then later on the sale will come.

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Andrew: Confusion about it, you’re just adding value and then, later on, the sale will come.

Interviewee: Yeah. And, and expect that we’ve, and its interesting so early.

Andrew: But that’s. that takes a long time though. I mean, people who are building businesses, especially startups…Paul Graham has talked about this. While, I, um, it takes a lot, it’s all about survival. He had a long blog post about that. Now, in the early days it’s, you feel like you only have days, months maybe, to, to survive. Not years to build up a following and build up an audience. Ands here you’re telling us, “Take your time. Build up your audience. Don’t market to them.” But I’m, I’m saying that, that entrepreneurs, that people who are building businesses today are desperate. They want to make the sale now.

Interviewee: I, I agree, so I’ll, I’ll, I’ll kind of, I’ll push back a little bit. And I’ll say, and your right, it’s, it does take time and, and there is a limited amount of timespan, but I, my, I will posit to you that entrepreneurs are better off. So, let’s, let’s say, I think you would agree that’s it’s actually harder to sell something than sell an idea. So, let’s say you’re creating this value. And let’s say you’re planning exceptionally hard. You’re four months into, you’re writing this blog, you’re creating great content, or whatever. And you still can’t build any kind of traction. It’s just hard. Well, that might be a problem with the underlying startup itself. And I would rather learn that through, kind of, a marketing effort than go off and build a product or whatever and try and sell it. Because that going to be even harder. If I can’t convince people, that like in HubSpot’s case, that inbound marketing is a good idea. That it’s gonna, you know, get some traction. Well, my odds of selling software based on that idea are even slimmer. Right, now I’m asking, not just asking for their attention, I’m asking for their money. And, so, I would much rather, you know, see what these early, kind of, feedback is from the market or whatever and if it comes, and if it’s way harder. Like, you’re getting almost nobody and nothing’s spreading at all, that should be some early warning sign. And I would rather have those signs. I would rather try that path and learn that lesson early, so I can start and tweak the idea. It’s like, oh, maybe it’s not this, maybe it’s that. And learn it through the, kind of, feedback mechanism of putting content out there and letting the market say, “Oh, well, I find that interesting or useful or potentially something I would pay for.”

Andrew: I see. How many hours a, how many hours a week would you say that you spend writing? I see you online all the time.

Interviewee: Yeah, I don’t really write that much anymore. So, you know, the Young Startups Blog, you know I’ll post maybe once every two or three weeks now. So it’s not that common. This year I spent a bunch of time writing because I put the, wrote my first book. But, I’d say maybe two hours a week on average within a normal week.

Andrew: Wow, it seems like a lot more. And maybe part of the reason it seems like a lot more is because you seem much more engaged with, with what’s going on in other people’s blogs, for example. I think it was Nivi on Venture Hacks said that he, he wanted to have a list of Angel Investors and he allowed all you Angel Investors to go in and, and add yourself to this directory. And you just popped right in there. I think you one of, you were there the first day. So, if it’s not just writing, how much, how many hours a week do you spend being engaged in those ways.

Interviewee: Lots of hours. So, so I spend most of my business hours, which is most of my hours sort of waking hours period, doing two things. Writing code and engaging the online community. So it used to be that I spent more time on the blog and, and putting content out there. But now I find myself more in Twitter, more in, just kind of, engaging with blogs and commenting and reading and just consuming to see what’s out there. A; because I enjoy it and B; because I think it’s useful.

Andrew: Okay. Let’s go through maybe another practical way the people can generate inbound marketing, in, inbound leads. Can do inbound marketing.

Interviewee: Yeah, so one of the things I think what’s interesting is, and it’s one of the, kind of, push back I get from lots of entrepreneurs and, and small business folks as well, is, well I’m not a good writer. Or I can’t, that’s not one of my talents. I can’t do that. So my advice there is that, even if you’re not a good writer, odds are you’re probably a pretty good curator. In terms of finding good content related to your industry, whatever happens to be. And you can build a community around that, right. So start a Facebook fan page, or a LinkedIn group, or something based on whatever market you happen to be in. So, you know, the common misconception is that, “Oh, all those little things have already been taken. There’s already someone sitting in those spots.” But, for most startups and, and, ’cause we always talk about the, kind of, very popular, kind of mainstream kinds of things and, and markets. But most startups, like, you know, Pyramid. Let’s say Pyramid were starting today. There’s a very confined little market that even if there were one or two bloggers or one or two discussion forums, or whatever. I could play start. One, it would probably be reasonably successful, because I think people want to talk about their industry regardless to what industry it happens to be. So that would be my second piece of advice is to find, let’s say, we’ll start with LinkedIn, ’cause I think it’s a red-headed stepchild of social media. Is, is figure out what kind of LinkedIn groups exist for your industry and either start participating in those, in terms of building credibility. If there’s one that’s already so big that your not going to be able to overcome it or if there isn’t one that’s that big, doesn’t have at least, let’s say, 500 members. Start your own and, and build that up. So, that’s, yeah.

Andrew: I see. So, I see that Kirstin Winkler is watching us live. She’s really into online education and new forms of education. Let’s suppose that she wasn’t a good writer. And I think she happens to be a good writer, now.

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Andrew Warner: But let us suppose she wasn’t a good writer she still wanted to build a community and eventually convert them into customers of a future product, what she would do is she would create an online forum on Linkedin where other writers can talk to each other. She might create a question and answer site the way you did with Answersdot on Startups.com and let online teachers and other instructors go on there and ask each other questions and answer each others questions. That’s the kind of curation that you could do you are saying if you are not a writer.

Dharmesh Shah: Yeah the idea here is that you have some expertise and passion about whatever your business happens to be and the idea is how do you channel that passion. Right, so one way is to write it. That’s what you enjoy and you are good at, and you can do a video, you can do any number of things, you can build out a community, you can curate, you can do all those things, but the idea is to essentially share that expertise and build that community. It doesn’t have to be through writing. It can be through any kind of mechanism that basically allows you channel what you know and share with others that you found useful.

Andrew Warner: The first goal is to just be a magnet, it doesn’t have to mean be a magnet as a writer, or be a magnet as a community organizer or host, just be magnet for your community.

Dharmesh Shah: One thing I will tack onto that, lets say you do have a little bit of money, a little bit of budget, you are going to build a [] or whatever, one of those people I think should be a freelance writer, because I think the ROI on that, because there are a lot of journalists out on the market now, and the publishing industry is going through a massive transformation and these people are professionally trained to write, so if you can kind of intersect yourself for the same reason, design is extremely important for web based applications, well not all developers are entrepreneurs, what they do is they partner up with people that understand the importance. This is along the same lines. Essentially you are marketing your business or whatever, if you are not that good at writing, that’s okay, you are good something, go find a writer. They are not that expensive. Experiment with that, and if you could someone that can help you craft that content, once again its magical. Try and pick this up in your

brain and get into other people’s brain in whatever form you kind of do that essentially.

Andrew Warner: You are right. It is really easy today to find good writers on the cheap, relatively cheap. Lets see. Before we go onto the next segment of this conversation, boy we have got a lot of different segments here, I feel like every segment here could become a whole interview in itself. But before we move on to the next one, IC monocat, his real name is Moses but he goes by monocat on Twitter, that is all it gives you, he is saying that he has participated in many webinars hosted by Hubspot, your company, says you are very informative, and then he comes in with a request at the end and he says is there any chance to get a longer free trial for Mixergy fans, and they he made sure to include you in that message so you sign.

Dharmesh Shah: Nice, no right now. But I say no for this reason, it is that not because I don’t want to give a longer trial out, it is because the complexity [] to the product and convince my team is non trivial. But I will say this, is that I am in the process of, this is one of the healthy areas of debate with an up spot, is around, should we have much longer trials, should we have indefinite trials, if it is actually a free version of the product, and that is something we are experimenting with.

Andrew Warner: If you are looking for a guinea pig to experiment on that, I am sure Moses will

Dharmesh Shah: I will track him down.

Andrew Warner: How do you do with that question Moses, let me know. Finally angel investing. Do I have the account right? Have you invested in eleven companies?

Dharmesh Shah: Yeah, I have got eleven investments so far past the last three years.

Andrew Warner: I see here a company called 140, which is like an app store for Twitter, I see shareaholic in my list here which makes sharing online easy, I think they a Firefox plug-in, we have got Visible Measures which does video metrics, and here this a company that I love, I haven’t used them yet, I discovered just through you in my research today, Backupify, what a great idea, lets you back up all the stuff that you put on different web sites, if they go out of business, if you forget about them, if you forget to pay your bill on one of these photo sites, Backupify apparently lets you have a back up of all the data that you left on those sites so you never lose it, do I have a good understanding what they do by the way?

Dharmesh Shah: Yeah, that is exactly it.

Andrew Warner: So those are just four out of eleven and I am sorry to the people who’s companies I have left off of this list, but what are you looking for, what kind of companies are you investing in?

Dharmesh Shah: To me, we see say this all the time but I actually mean it, it is really more about the person and the individual and so there is, I have some broad kind of category, I like internet software, I like capitalization businesses that don’t do non-tech business, and software companies, all of them are web-based software companies, and what I like are essentially kind of practical but passionate entrepreneurs, people that I like, from an angel investor perspective you invest as an angel for a different reason than a professional investor like a VC might do, yes the return would be nice, but I want to do things that I am actually interested and I can get excited about.

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Interviewee: [50:00] … get excited about to some degree, so the idea has to have some appeal. But most importantly I. I’d like to, like. I’d like to see entrepreneurs succeed. And in my mind, you know, the ones that kind of have an objective, practical view on the world but are still passionate about what they’re doing kind of fits that profile better. And obviously I haven’t, you know, been added too, too soon, to actually have exits or anything. But as I’ve been having a great time with it. In terms of, yeah. So one thing to remember in terms of those looking for angel investments is to rem, remember that in most angel investors are probably more like me in terms of their living vicariously through other entrepreneurs. It’s not just about the money. And, you know, find out what they’re, what they’re passionate about. And, yeah.

Andrew: [50:40] And from the conversations I’ve said from other angel investors. They, they don’t end up doing that well. I mean, it, it’s, well. What do you think of that? I’ll. I’ll hold off my judgment. I want to hear it from you.

Interviewee: [50:50] Yeah. I think that’s true. Because what ends up happening is that. There’s a couple of reasons that contribute to that. One is, you know, there’s like. You drew the Venn Diagram in terms of, or the, the kind of decision tree, let’s say. So you make an angel investment in that company. Let’s say the idea is really good. And then it goes off to, like, raise in appreciative rounds of capital, you know. By the time all is said and done, you’re gonna have a roughly small fraction of the, of the original.

So, although yes, you’ll get, you know a, you know, decent returns from the rob a, the numbers are not big enough to move the dial. And, and the other thing is that it’s. You don’t have the time to spend. Right? So like live due dilligence for probably like ten of the eleven deals was less than twenty-four hours. Right? And due dilligence consisted of. I either viewed the entrepreneur a little bit before and had dinner with them and said. OK, well. Yeah. This sounds like an interesting thing.

Cause even though I spent more time with you, I’m not gonna learn anything more than I do right now. Anyway, and my decisions aren’t going to be any better. So, I either. I make a binary choice. I’m gonna do it or not do it. But it’s. That’s not necessarily the best way to invest. It’s the best way for me. Because I’m an angel investor. And I have, you know, more money than time. Essentially since I don’t have the time to go through the due dilligence process. And, but yeah. It’s a. It’s the angel investments. So it’s a hard business. Right? It’s like a wine industry. They say that, you know, the best way to make millions of dollars is to start with tens of millions of dollars. It’s. Yeah. So.

Andrew: [52:06] So, you do it for the love of the entrepreneur. You do it for the love of the, of the business. You do it cause you’re passionate about this area.

Interviewee: [52:13] Yeah. I do it, because I have a genetic flaw that causes me to continue to like repeatedly inflict upon myself and live with the pain of others when it comes to entrepreneurship.

Andrew: [52:21] Will Lam who’s watching us live is asking. Are there certain personality attributes that you’re looking for?

Interviewee: [52:28] Yeah. The biggest one I think is just objectivity. So I like. You know, I like optimists. I think optimists tend to endure in terms of a, because it’s gonna be, you know, a rollercoaster ride. I know that’s a cliché which I think is true. But in it. It’s interesting, so that. I like to interact with folks over email or, you know, see what they’ve written, if they have a blog or something like that. And objectivity kind of shows through. It’s like, OK. Will this person be able to look reality in the face and say, OK? You know, The world, the world doesn’t owe me anything. Yes, this is going to be hard. I’ve got, you know, 95 percent probability of failing. But I’m going to do it anyway. And, and those are the entrepreneurs I like and I think tend to succeed are the ones that are, are, you know, a mix of optimism and, and realism. That says, yes. I, am I gonna be an optimist but says I want to see this idea go through. But I realize that things are not always gonna go as, as, as designed, as planned.

Andrew: [53:17] Let me throw this out there as a theory. Tell me if I’m right or wrong about, about angel investors. I see a lot of entrepreneurs who have great ideas don’t get any funding. They don’t get even an angel investor to come in, not a meaningful one who’s not, who’s not related to them. And then I see others whose ideas obviously evolve. The first business I. The first idea that you had very often evolved so much that it’s completely unrecognizable about a year later.

In fact, I’m gonna talk to Jason Cohen in a little bit. Who I know you partnered up with on a site and who says exactly that. Start somewhere. And you know you’re gonna evolve away. So it’s not the idea. And it’s not necessarily even the intelligence of the entrepreneur. It seems like it’s. If you’re in the club, you’re in the club. Like [inaudible], for example. I. What I’ve read about you. You’re, you’re not out there hunting for entrepreneurs. You’re not trying to figure out who’s the, who’s the most, who’s the entrepreneur who needs the money the most or deserves the money the most. You’re out there saying. Who do my friends like? Who’s in my world? Who do I get to know? Who do I like myself? And who’s ideas am I curious enough about to spend time with both the entrepreneur and the idea for the next, I don’t know, three, five, ten years. Is that? Is any of this true?

Interviewee: [54:23] Yeah. That’s a roughly accurate characterization. So it’s. It’s. Yeah. It’s a little bit more nuance than who’s in the club and who’s not. But it’s a matter of, you know, that relationship esseor whatever. That. I’m gonna. I’m much more likely to support them than I am someone that’s just completely. And I’ve never like appro, proactively approached them …

The transcript for minute 55 till minute 60 is BELOW this line.

Interviewee: and I’ve never like, proactively approached someone. Oh, I think your business is really cool. Will you let me invest? That’s never happened, at least for me. And I don’t think most angels do that, either.

Andrew: So basically, if you want to get an angel to invest in your business, you’re much better off spending time getting to know them, getting into their world, becoming friends with their friends, hearing their opinions and their friends’ opinions, than spending time in a room by yourself building out code.

Interviewee: Yeah, and especially for introverted angels like me, which I think we’re in a relatively decent percentage of the angel population, as were. You know, we actually like to read and consume stuff. So if you really want to get our attention or whatever, like, even if I do come across you, like randomly, for whatever reason. The first thing I’m going to do is, I’m going to do a Google search. I’m going to find everything you’ve ever said, written or shared, essentially. And it’s, like, that I think the mark of a great entrepreneur today is that someone is, kind of, in the game. It’s not just a matter of, oh, I woke up this morning and said, “this was a great idea. I’m going to go build a start-up”. You need to kind of put yourself out there a little bit. And give me evidence that you actually care. And that’s relatively easy to figure out. And if it’s not easy to figure out, there’s a problem anyway, in my mind. That’s a little opinionated, but.

Andrew: All right. You mentioned that you’re an investor in Venture Hacks. I thought I read that on Venture Hacks. I didn’t understand that, that Venture Hacks is a blog though. That’s why I didn’t, that’s why I assumed maybe I misread it. What is there really to invest in Venture Hacks? What are, first of all, it’s a great site. I think everybody who’s reading, listening, watching, anything on Mixergy, should go out and check out Venture Hacks. And Nivi’s a terrific friend. And I think his partner is Naval, right?

Interviewee: Yup, absolutely.

Andrew: What’s the business there that you’re investing in beyond the blog?

Interviewee: Yeah, it’s interesting. So I’m in the, I’m not sure how much I should share because I think Nivi’s, you should interview him, and ask him this question. But what I will tell you is that, you know, once again, anyone that’s ever come across Nivi, if you’ve read Venture Hacks, and said OK, well here’s a business site, you know, that is out to essentially help entrepreneurs. And that’s kind of the broad business angle. It was very, you know there’s specifics around it. They’re going to go through some iterations, as we all do, but that was initially it, which is OK. This is a brilliant guy. He cares. He shares. You know he satisfies all my criteria that essentially that I would want in an entrepreneur. And it happens to be a business that is actually trying to help entrepreneurs. So it made sense, essentially, and, I think, continues to make sense for me. So.

Andrew: All right. Finally, I often ask a couple of things of everyone who I interview. The first is, do you have feedback for me on my site, on Mixergy, on the interviews, as you’ve seen it from here? I always like to get that from the people who I interview, especially someone like you who’s really in the space.

Interviewee: Yeah, well I mean so, a couple of things. I’ve been watching the videos for a while. I think it’s, I like the long-form format. I think, one of the things that’s, it’s really hard to have a 10-minute interview, and dig into anything particularly interesting. So I enjoy that. So, I think what’s helped is, I’m not sure when you started it, but the transcriptions actually help a lot. Because it helps you, like, there’s so much content out there. You’re prolific, which is great. There’s lots of great entrepreneurs. But it helps to kind of scan transcripts, and say, OK, well, here’s something I think I’m going to want to really jump into and save for later. You don’t know me that well, it’s not like me to pander, and I wouldn’t say this if it weren’t true. You’re doing a fantastic job. These are, um, yep, bring the average down in terms of quality of entrepreneur, but I’m sure you’ll bring it up with Jason in future interviews.

Andrew: No, no, I’ve been following you, and I’m so glad that you’re on here. And the fact that you’ve been watching or even are aware of my work, is, uh, makes me really proud of the work that I do here. And, as you were saying that I said, well I better really make sure now that those transcripts are good. I keep testing out different ideas on Mechanical Turk. Now I got to make sure that, beyond testing price and efficiency, that I make sure to go back in and test quality assurance techniques. The last question is, who else should I be interviewing? Who in your network, in your world, is so smart, is so successful that the rest of us entrepreneurs need to be learning from?

Interviewee: Wow, I have a long list, so I’ll give you three, actually. Mike McDerment from FreshBooks, I think, is brilliant. Um, and has lots of good insight to share, even in the start-up world. I don’t know if you know the company. Drew Houston, from Dropbox. I’m not sure, I don’t think you’ve interviewed him yet. Great guy, great entrepreneur. Adam Smith, from Xobni, I think would be great.

Andrew: OK. All right. And it’s not too early to interview Adam and Drew?

Interviewee: No. I don’t think so. They’ve lived through a fair amount at this point. And sometimes it’s interesting to catch entrepreneurs while they’re going through that kind of maniacal growth, even though they’re rough, young entrepreneurs, and they’re first time entrepreneurs, they got lots of stuff to share, in my mind.

Andrew: Well, I’m going to hit you up for an introduction to Drew and Adam, and if they want to do an interview here, I’d love to have them on here, anytime. Mike McDerment, you just reminded me, I did an interview with him. But he actually said a few things in the interview that he would rather not have out publicly, and I offered to edit it out, so I got to send that over to him. Last thing I want to do here is to hurt the entrepreneur who’s coming and doing an interview with me. So, it there’s something they need me to edit out, I usually can do that pretty quickly. So, thank you very much for doing this interview.