by Dan Lyons
Sure, this bubble will pop one day, but before that happens a bunch of people are going to make a lot of money. That’s what happened last time—Netscape, which made the first web browser, never really succeeded as a company, yet its co-founder, Jim Clark, reportedly managed to put $2 billion into his pocket—and the same thing is happening now. Zynga and Groupon are losing hundreds of millions of dollars, yet their founders have become billionaires.
Finally I have a sort of epiphany. This takes place on a rainy Friday evening in November 2012, in Anchor & Hope, a fancy restaurant on Minna Street, a block away from Market Street, in the part of San Francisco where the financial district and start-up land converge—a spot that is, quite literally, ground zero for the revolution.
I’m on my way to the airport. Tonight I’ll be taking a redeye back to Boston, but before I do I’m meeting a friend for a drink. Anchor & Hope is packed with techies and bankers who are spending some of their easily raised money on $200 bottles of Napa Valley Cabernet Sauvignon and oysters sold at $50 per dozen.
Tad is an investment banker. He’s sitting at the bar, way in back. He wears black glasses and a gray bespoke suit that probably costs more than I make in a week. Back in the 1990s he made a fortune managing IPOs for tech companies. For the past decade he’s been on the beach, but now he’s back, because the opportunity is so huge that he can’t ignore it.
“Do you have any idea how big this is going to be?” he says. “This is going to be huge. It’s going to be way bigger than the last bubble.”
Imagine there’s a giant tsunami, way out at sea, he says. Right now you can barely see it, but soon that wave is going to arrive. Some people are going to get wiped out, but some are going to ride the wave and get rich.
I ask him if he thinks that start-up valuations are too high. Based on traditional metrics, it seems to me that some of these companies seem way too expensive.
“You think these valuations are high today? Wait until you see them a year from now, or two years, or three years. We’re not even near the peak. Before this is over there’s going to be a trillion-dollar transfer of wealth in Silicon Valley.”
His bank will make money by helping people move that money around and carving off a little slice as it flows through the pipe. Tad will arrange mergers and acquisitions. He’ll advise start-ups that are raising money, either from private investors or through IPOs.
Once again I bring up the issue of valuations and my fear that this can’t be sustained, that we’re going to have another crash.
“There’s an old expression on Wall Street,” Tad tells me. “‘When the ducks quack, feed them.’ Have you heard that? Back in the nineties investors wanted to buy anything with the word dotcom at the end of its name. So that’s what we gave them. Our job isn’t to talk people out of buying. Our job is to make what people want. Our job is to feed the ducks. And right now, the ducks are hungry.”
Nearby, a cheer goes up as a waiter delivers an enormous, two-tiered tower of seafood, a few hundred dollars’ worth of lobster, oysters, and other shellfish, to a table of twenty-something techies wearing jeans and sneakers and Warby Parker glasses.
Tad tells me again about the trillion dollars that is going to change hands. A trillion dollars! It’s the biggest transfer of wealth that has ever occurred.
“And I’m here writing about it, instead of getting in on it.”
He sips his cabernet sauvignon, and shrugs. “Right.”
“I’m in the wrong business,” I say.
“That’s true,” he says, in a matter-of-fact voice.
It’s time for me to go. There’s an Uber outside, waiting to take me to the airport. We say our goodbyes. Out in the car, driving to the airport, gazing into the dark and watching rain lashing against the windshield, I keep thinking about that trillion dollars. That joke I made about being in the wrong business wasn’t really a joke. It’s the truth. I’m in the wrong business. I’m working in a bad industry where things are only going to get worse. But why? What law says that I have to keep doing what I’m doing, just because this is the only job I’ve ever done?
By the time I get to the airport I have made up my mind. The tech market is going crazy again, and this time I’m not going to sit on the sidelines and write about it. I’m going to work at a start-up. I am going to feed the ducks, or surf the tsunami, and maybe I will fall off my surfboard and drown, or maybe, I don’t know, I’ll get eaten by ducks, but to hell with it—I’m going to try.
As I see it I have nothing to lose. I hate my job at ReadWrite anyway. Sure, I am fifty-two years old and past the age when you’re supposed to start a new career or go on any adventures. But if I don’t do this now, I might never have the chance again. I might always wonder how things would have turned out if I had just sucked up the courage to make the leap.
The trick is to find the right company. Ideally I’d like to join the next Google or Facebook—a rocket ship. Realistically, I just hope to find a company that won’t fizzle out, one that is likely to pull off a successfull initial public stock offering and put a few bucks in my pocket. Pretty soon, I find one.
Three
What’s a HubSpot?
There’s a post on LinkedIn—a software start-up in Cambridge is looking for a “content creator.” The company is called HubSpot. Its offices are six miles from my house in Winchester, Massachusetts, yet I have never heard of the company and have no idea what they make. I pore through their website, which talks about something called inbound marketing, which I’ve also never heard of. All I can tell is that they make software used by marketing departments.
I call around to friends who work in venture capital, who tell me that HubSpot is the real deal. The company is a bit of a sleeper. It’s not as well known as companies like Snapchat or Instagram, but it is run by a bunch of guys from MIT and headed for an IPO. Over the past seven years HubSpot has raised $100 million in venture capital, and its investors include some of the best firms in the business. Its business is booming. “Those guys,” one of my VC buddies says, “are going to make a shit ton of money.”
I write to the woman who posted the content creator job opening on LinkedIn. She’s anxious to meet. Her name is Sharon. She’s married, in her forties, and has two kids. In January 2013 we meet for lunch at a Thai restaurant in Cambridge, and she brings along Wingman, who runs the company’s content group. Wingman is about thirty years old, has been at HubSpot for just over two years, and before that worked at public relations agencies. He says the job I applied for isn’t right for me, but he has something bigger and more interesting in mind. He’s also concerned about culture fit, which he says is a big deal at HubSpot. They like people who can get along well with others, “the kind of people that I’d like to go have a beer with after work.” I’m not sure I’d want to hang out with Wingman after work, but he seems nice enough. Apparently he feels the same way about me, because a few weeks later they invite me back to meet Cranium, HubSpot’s chief marketing officer.
Cranium is a big, affable guy in his late thirties. We meet at HubSpot’s offices and talk over coffee. He has an MBA from the MIT Sloan school and uses the word awesome a lot. We talk about HubSpot’s business model, its path to profitability, and the “stickiness” of its product, meaning how well HubSpot is able to keep customers from switching to a rival software product. Right away, I like Cranium. I can imagine myself working for him and learning from him. The position he has in mind for me, he says, is something called a marketing fellow, which seems to imply that I’m being brought in as a kind of special adviser to the company. The bad part is that it’s not an actual title, like director or vice president, which are the titles you get if you are actually part of the management team. In fact the title marketing fellow implies that you are not really a part of the company; you’re a visitor, a temporary hire, someone who is being kept at arm’s length. I’m too clueless about corporate life to understand that. In my mind, marketing fellow sounds like a cool title. I like it.
In the days leading up to this interview with Cranium I have started thinking that HubSpot could be a really good fit for me. I’d be working in the marketing department of a company that makes software for marketing people. Where better to learn about marketing? And marketing seems like a natural next step for me. I could spend two or three years here, become a marketing expert, and then go work for a smaller start-up in a bigger role. HubSpot is small enough that I’ll probably get to wear a lot of different hats. Who knows what I might end up doing? In the next year or two HubSpot will probably have a really hot IPO, and while I won’t get rich on that, I will at least get a little something, and it will be cool to be on the inside of one of those events.
Cranium apparently likes me too, so next I get passed up the ladder. Toward the end of February 2012 I go back again and meet HubSpot’s co-founders, Brian Halligan, the CEO, and Dharmesh Shah, the chief technology officer, or CTO. Before the meeting I watch some of their keynote speeches from HubSpot’s annual customer conference, called Inbound. I read Inbound Marketing, the book they co-authored a few years ago, and pore through Shah’s blog and the articles he has published on LinkedIn.
We meet in a conference room at HubSpot. They’re both in their forties, which is a relief to me. I don’t want to work at some company run by a twenty-five-year-old boy-king brogrammer and his frat brothers from college. Halligan and Shah met while they were both in grad school at MIT, but I cannot understand how they ever became a team. They could not be more different. Halligan is an extreme extrovert, a classic sales guy. He once sold software for a company in Boston and later worked as a venture capitalist. He is in his late forties and still single, a blustery, hard-partying Boston Irish guy who lives in a luxury condo in the South End, drives a BMW, and has a reputation as a ladies’ man. Shah is married, has kids, and is an extreme introvert who claims he can go weeks without talking to anyone on the phone. He begins his speeches by saying how much he dreads giving speeches, and how he’d much rather stay home and write code. But once on stage he seems to enjoy playing the role of inspirational speaker—a kind of nerd Tony Robbins, overly fond of touchy-feely rhetoric and vapid aphorisms. “Success,” Shah says, striding back and forth across a stage, with his head down, stroking his beard, as if impersonating a professor, “is making those who believed in you look brilliant.” Then he will pause, as if he has just said something incredibly profound and wants to give you a moment to let it sink in. Then he repeats the line, and a ballroom full of marketing people cheer.
But when I meet them together it occurs to me that their different personalities are probably why their partnership works. There’s a yin-and-yang quality, like the one between Steve Jobs and Steve Wozniak, the co-founders of Apple. Halligan is the Jobs figure, the corporate visionary, the guy who thinks about sales and marketing. Shah is like Woz, the nerdy software programmer. Shah is wearing scruffy jeans and a rumpled T-shirt, his usual attire. He has dark hair and a dark beard, flecked with gray. Halligan wears jeans, and a sports jacket over a button-down oxford shirt. His hair is gray, as gray as my own, in fact, and he wears the same kind of chunky horn-rimmed glasses that I do. I take this as a good sign.
As with Cranium, I like these guys right away. They’re easy to talk to. It doesn’t feel like an interview. It feels like we’re just having a conversation. Shah, as it turns out, saw me give a speech at a conference a few months ago and really liked it. He says he’d like me to give the same talk at HubSpot’s Inbound conference this year. I tell him I’d be glad to do that. We talk about some of the things that Shah has been writing about on his blog. They ask me about ReadWrite, and I tell them how we are struggling to sell advertising, and how I’ve come to believe that the problem is not our content—the problem is advertising itself. Ads no longer work. But this means the business model upon which the media business is built—create content, put ads next to it—no longer makes sense. The media business now needs to figure out a new way to produce journalism and make money from it, but so far nobody has any good ideas.
I mention a new documentary, The Naked Brand, made by a renegade advertising guy in New York, Jeff Rosenblum, who believes the entire advertising business is about to get blown to hell. Halligan’s jaw drops. He just saw the movie and loved it. Everything the guy says in that movie is what he’s been saying for years. It’s why HubSpot exists, he tells me. In their book, Inbound Marketing, Halligan and Shah argue that instead of spending money on traditional marketing, things like buying advertising and cold-calling customers, companies should publish blogs and websites and videos, and use online content to draw customers toward them. The old marketing was outbound, meaning it involved sending messages out into the world. The new marketing is inbound. It’s less expensive and more effective. That’s what HubSpot’s software does. That’s its sales pitch, in a nutshell.
Halligan turns to Shah. “Have you seen this movie we’re talking about?”
Shah says he hasn’t heard of it.
“You gotta see it,” Halligan says.
That’s when I play my ace. “You know, I know Jeff Rosenblum. I wrote a story about him for Newsweek. I went to the premiere of that movie in New York. We got to be friends. I can introduce you to him. I think you guys would love each other.”
Rosenblum is a hard-partying wild man who went to University of Vermont, the same college that Halligan attended, and competes in Tough Mudder events, the nutso races where people charge through ten-mile obstacle courses straight out of Navy SEAL basic training. Halligan says he’d love the introduction and that maybe we could get Rosenblum to come up to Boston and give a HubTalk, which is what HubSpot calls its speaker series, where interesting people come in and give a quick talk at lunchtime in the big conference room downstairs. I tell Halligan I’m sure that Rosenblum would give a talk. We could probably even set up a showing of The Naked Brand for everyone at HubSpot. Or better yet, we could arrange a big showing in Boston, at a theater, with HubSpot as a sponsor.
The ideas are flying. We’re hitting it off! This is going great. Then Halligan says he has another mission for me.
“It’s our blog,” he says. “It sucks.”
I’ve looked at the blog, and he’s right; it’s awful. But I figure it’s best to be diplomatic. I tell him that I think the blog is pretty good, as corporate blogs go—but Halligan cuts me off.
“No, it’s terrible. It used to be better. There were other people running it. But lately, I don’t know. It’s kind of embarrassing.” He turns to Shah. “Do you agree?”
Shah agrees. We talk about how a lot of companies, especially tech companies, are hiring journalists and actually producing high-quality news sites. Some of them are doing a really good job, better than what we can do at a place like ReadWrite, if only because they have more resources.
Halligan says he wants to produce material that raises awareness of HubSpot and establishes HubSpot as a “thought leader” in the world of marketing. I mention the idea of creating an independent site, sponsored by HubSpot but kept separate from the company. That’s what Adobe, a big software company in California, has done as a way to promote its marketing software. I know the guys who run the Adobe-sponsored site and have talked to them about how they launched it. Halligan and Shah are noncommittal. For now the deal is that I will come on board and find a way to produce better, smarter content that can be put out with the HubSpot brand attached to it. The work I’m doing will exist in a gray area—a mix of journalism, marketing, and propaganda. Halligan and Shah don’t know what this will look like, and neither do I. But it could be an interesting experiment. We shake hands, and I leave the meeting feeling pretty good. Two weeks later, in the middle of March, they make me an offer.
The problem is that by the time this happens I also have two other offers, because even while I’ve been talking to HubSpot, I’ve also been interviewing at other places. One offer comes from a media company in New York; I can stay in Boston and write a blog about technology. The other job in
volves working in the public relations department of a huge Internet company, which wants me to move to Silicon Valley and will pay me more money than I’ve ever imagined I would make.
Nevertheless, I’m still leaning toward HubSpot. The media job could be fun at first, but I won’t get to write interesting articles. I’ll be grinding out blog posts and trying to get traffic, just like at ReadWrite and at the Daily Beast, and I’ve had enough of that. The big company in Silicon Valley is tempting, but Sasha isn’t thrilled about moving to California, and a friend of mine who has worked at the company, and knows the people I would work with, has told me she had a less-than-great experience, and doesn’t recommend going there.
Then there’s HubSpot. It’s in Boston, so we don’t have to move, which makes Sasha happy. We don’t have to sell our house and buy a new one, or find a new school for the kids, or make new friends. I like that HubSpot is still a small company. I reckon that at HubSpot I’ll end up doing lots of different jobs. I’ll be more likely to have some influence than I would at some huge corporation with thousands of employees. Also, I like Halligan. He seems smart. I want to work with him.
HubSpot also potentially represents more upside, financially. The big company in Silicon Valley is already big. The people who got rich there were the ones who joined fifteen years ago. HubSpot is just starting out. If HubSpot goes public, and if its stock really takes off—if HubSpot becomes the next Microsoft, or Google—I might make some serious money, something I’ve managed to avoid doing over the course of my career as a journalist.
