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Staying in the Neighborhood

Dharmesh Shah, SM ’06, and Brian Halligan, MBA ’05, bucked the trend of heading to Silicon Valley and founded their startup in Kendall Square.
August 18, 2015

“When we first started, it was kinda lame.”

Brian Halligan, cofounder and CEO of the Internet marketing company HubSpot, laughs at the memory of what Kendall Square was like when he and Dharmesh Shah founded their startup at the Cambridge Innovation Center in 2006. “If you wanted to go to dinner, there was one option—Legal Sea Foods. Now there are 30 restaurants and coffee shops and burrito places,” he says. “It’s come a long way.”

So has HubSpot. Any startup growing pains are a distant memory when you walk into company headquarters on First Street, which features standing desks, more than 60 conference rooms, a candy wall in the kitchen, and plenty of orange furniture, including beanbag and Adirondack chairs. What may not be immediately obvious behind this relaxed vibe is the success of the company; today, it is worth $1.6 billion.

Halligan and Shah started HubSpot because they felt conventional marketing was tone-deaf and desperately out of touch. “It was too focused on the marketer and not the person being marketed to,” says Shah, who is HubSpot’s CTO. “Back in the ’60s and ’70s, you could get away with that. Now consumers have choice, much more transparency, much more power over the things we buy and how we buy them.” Tactics like e-mail blasts, commercials, and cold-calling were being thwarted by such innovations as spam filters, TiVo, the Do Not Call Registry, and caller ID. Something had to change.

Shah worked with Halligan to create a new category of marketing they call “inbound.” It’s based on the idea that being found online is a more powerful means of acquiring customers than making midmorning phone calls to strangers. But how does a company get discovered? HubSpot’s software tools help marketing professionals—tech savvy or not—create useful content and compelling landing pages, and then attract people to them through search engine optimization, blogging, and strategic use of social media. The idea is to get them to “stop doing the crappy things like sending out e-mails,” says Shah. “Simultaneous with newspaper and radio growth going down, we’re going to see a lift in the value of other types of content creators,” he says. The more useful information that is offered to prospective customers, the more likely they are to stay on a company’s website and eventually become customers.

Beyond HubSpot’s front desk are gadget vending machines and a nap room (with hammock).

Today, HubSpot has more than 15,000 customers in 90 countries and employs 958 people in three offices—in Cambridge, Sydney, and Dublin. The First Street office is continuously growing, which almost pushed the company into a more affordable space across the river. But although HubSpot’s own name is a nod to Boston, leaving Cambridge didn’t feel right. “We like what … Kendall Square says about us—it’s part of our brand, and that’s a big reason we didn’t move,” says ­Halligan. “I like the neighborhood—you run into friends who are in tech companies or starting tech companies multiple times on the way to and from lunch.” The thought of basing their company in Silicon Valley held little appeal either. “Unless you are an out-of-the-park success like Google, you are always going to be a small fish in a gigantic ocean in San Francisco,” Halligan says. “It is more like a pond or a lake in Boston.” Shah says in the small but crowded pond that is Kendall, “you feel like you’re in the center of the [startup] ecosystem.”

HubSpot is a product of that ecosystem—the cofounders met at MIT. At a cocktail party for new students in 2004, Shah, a self-proclaimed introvert, stayed in a corner while his wife circulated in search of interesting people he should talk to. She encountered Halligan and reported back, “He is sort of a jock, sales guy, but at least he’s in software. You should chat with him.”

Halligan, too, points to MIT as the reason the company even exists. “It’s an ideal place to find a cofounder,” he says. “And all of our early employees and interns were Sloanies we knew from our network and the MIT network.” Yet it wasn’t just the brainpower that helped—it was the money, too. When HubSpot needed to raise a million dollars, friends and mentors stepped in. “One of our professors was the original angel, and he put in $100,000 and all of our classmates put the rest of the money in,” says Halligan, who is now a senior lecturer at Sloan.

HubSpot’s signature orange abounds in its lounge area and throughout the office.

Throughout their collaboration, ­Halligan and Shah have been able to exploit each other’s strengths and supplement each other’s weaknesses. “I hate management,” says Shah, who had cofounded the software company Pyramid Digital Solutions (later acquired by ­SunGard Data Systems) and promised his wife he wouldn’t get involved with another startup after Sloan. “It was a lifestyle decision,” he says. “I’ve done that. The plan was to go to grad school, get a PhD, and teach. That plan lasted all of three months.” In some of their first meetings together, Shah told Halligan that he would be “completely committed to the business” but would never agree to manage people. “Some could argue that instead of being halfway good at a bunch of things, it’s better to be really good at fewer things,” Shah says. “It makes for a happier life when you do things you enjoy.” And one of the things that make him happiest? Programming. In his spare time, he wrote software to generate his now four-year-old son’s name. “I treated it as a branding exercise,” he says. “I wanted the name to be short and pronounceable across cultures, so I started out with some basic constraints.” He had noticed that five-letter names with the pattern of consonant, vowel, consonant, vowel, consonant were usually simpler and easier to pronounce. He wrote code to generate possible names following that pattern, tested the names it produced with his wife, incorporated her feedback into the program, and finally pinged Facebook to make sure the finalists weren’t too obscure. (If someone in the world had a name, it stayed on the list.) Shah’s wife ultimately chose the name Sohan. “She picked it—I just generated it,” he says with a smile.

If Shah is the tinkerer, Halligan is an outgoing, exuberant executive who generally owns the room. He had a paper route growing up in Westwood, Massachusetts, and then ran a painting business in college. But he always thought he’d play a supporting role and help someone else start a company. “I’m an accidental entrepreneur,” he says. “I was always around startups but I never thought I’d have a good idea.”

Being in Kendall Square gives ­Halligan and Shah access to a strong pool of potential employees who can add their own good ideas to the mix; the company has recently been hiring dozens of people each month. “MIT and other schools attract and graduate tons of talented folks for us to hire,” Halligan says. “There is less competition in Boston than San Francisco for that talent.” Company culture helps get résumés in the door too. The “HubSpot Culture Code,” a 100-plus-page presentation shepherded by Shah and readily shared online, is “part manifesto, part employee handbook.” But it’s not just a cool office environment that lures talent; it’s Cambridge. “I tell people there is life beyond the startup and life beyond tech,” says Shah. “When you look at Palo Alto versus Cambridge, we have a much more diverse group of people from various backgrounds … We have art and theater and all these things to do.” Halligan pipes up, “And the weather is fantastic!”

Despite the record snows of 2015, HubSpot is loyal to its Kendall roots. “At some point there will be a HubSpot West,” says Halligan, “but headquarters will always be here.” With his cofounder across the conference room table, he smiles. “We live here; we like it here,” he says. “We’re not going anywhere.”

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