Dharmesh Shah joins Shaan and Sam for a wide-ranging conversation covering startup hiring, talent philosophy, the Milk Road launch during crypto winter, Dharmesh’s Wordplay.com side project, his angel investing approach, HubSpot’s stock purchase logic, and the “trillion dollar Venn diagram” — his framework for combining rare skills to build extraordinary companies. They also discuss the marshmallow challenge, iteration vs. quality, and whether Sam’s “build the next Pixar” tweet is crazy or not.
Speakers: Shaan Puri (co-host), Sam Parr (co-host), Dharmesh Shah (guest, co-founder and CTO of HubSpot)
Introduction: Renting vs. Owning [00:00:00]
Shaan: Dharmesh, you do not rent, right?
Dharmesh: Not anymore. I did for a long long time. I’m a big believer in rentals as it turns out. But I’m staying in Brooklyn for the summer and renting a furnished apartment. It is so much better.
Sam: I’m about on the renting train. I actually love it more now. Every time something breaks I have joy — “Let me call somebody else. It’s their problem, their cost to fix.”
Shaan: I owned a place in San Francisco for four years and now I rent again. Way better. And in California, property taxes are insane because the house prices are so high. You’re paying out every year and it’s very hard to beat renting.
Dharmesh: If it were up to me, yes — I’d be a renter. The decrease in maintenance and wear and tear on your psyche and soul that ownership bestows upon you is just not worth it. I want to get as close to living in the matrix as I possibly can. Renting is a step closer. “Atoms and things — that’s somebody else’s problem.”
Shaan: How many people in your socioeconomic ballpark — founders of multi-billion dollar companies — do you think also rent?
Dharmesh: People who are similar to me would prefer renting and I’ve talked to them about it. But once you have a family, things change. One thing someone told me — he’s probably got a $10 to $20 million house — he said, “Renting is amazing until your wife wants a specific house. And once she wants a specific house in a specific neighborhood, higher-end neighborhoods have no rentals. So you’re forced into a different path.” A version of good problems to have.
Starting in a Bad Economy [00:02:30]
Shaan: You know Paul Graham?
Dharmesh: I know of him. I’ve met him. He’s from Cambridge.
Shaan: He wrote a blog post in October 2008 — right after the crash — called “Bad Economy.” He makes the case that a recession may not be such a bad time to start a startup. But then he says the more interesting part: “The truth is more boring — the economy doesn’t matter much either way for a startup founder.”
I hear this so much. Founders listen to Twitter and podcasts and suddenly start adjusting their plans based on macro commentary. But if you’re a startup, you’re like an ant. Does the ant care about the presidential election? No. You just need to build a product, get a customer, get ten customers. If you can’t get ten customers in a bad economy, it’s not going to work anyway.
Dharmesh, any thoughts?
Dharmesh: I lean toward Paul Graham on this. I think a down economy is either neutral or slightly positive for startups. Talent comes on the market that wouldn’t otherwise. People sitting at Meta or Google reevaluate their lives. Venture-backed companies fold, releasing good people. And marketing costs go down — a glut of VC money drove up AdWords and other channels, and as that dries up, costs fall.
Shaan: That’s exactly the situation I’m in right now. I launched the Milk Road in January — a crypto company, right when crypto crashes 78%. Even my co-founder Ben was like, “The one thing that could go wrong is if crypto goes into a bear market.” I was like, “That’s one of the few certainties of crypto.” It’s going to go up and down, the only question is do we make it through?
But on talent — I just hired this guy who quit a well-funded venture-backed startup. He emailed me with the subject line: “I have made an irreversible decision.” I opened it. He said he quit his job and thought I should hire him. I was already sold on the boldness. I made him a job offer that was basically a 50% pay cut from his Silicon Valley salary.
Dharmesh: I’ve always thought about the Warren Buffett story — Buffett goes to Ben Graham and says he’ll work for him for free. Ben Graham says, “Your price is too high, sir.” Because what you’re getting from working side by side with Buffett’s mentor every day — that has a price. If I’m taking someone under my wing and you’re sitting by me learning every day, like you’re actually in my house, I’m providing more value to you than you’re providing to me. The salary is not the value you’re getting.
Sam: People over-index on compensation and under-index on learning, network, and the raw emotional value of “do you like being around the people you’re around?”
Dharmesh: When we started HubSpot, Ron and I picked salaries of $5,000 a month. And then we hired employee number three at $5,000 a month. Employee number four — $5,000 a month. If you’re here for the salary, you’re here for the wrong reason. That inertia built in its own dynamic. When you’re trying to hire and everyone in the room is paying themselves $5,000 a month — what do you think you should get?
That doesn’t last forever. But what was the pitch? HubSpot is not the sexiest idea. You’re not building an electric car. Our pitch was: we’re doing something that’s never been done before. Nobody had built a $10 to $20 billion global household name in marketing software. The reason nobody did it is marketing was always an arts-and-crafts discipline — your logo’s shade of color, outsourced creative work. Our belief was that marketing was turning into a data-driven, software-solvable problem. So we said: someday someone will build a $500 billion marketing software company. It might as well be us.
Press Release Hires vs. Diamonds in the Rough [00:08:30]
Dharmesh: We made a deliberate decision not to hire what we call press release hires. A press release hire is when you hire someone and feel compelled to issue a press release about it: “HubSpot just hired the VP of Sales from Company X with a 30-year background in Y.” That’s not who we were looking for. They may have done amazing things at Google or Microsoft, but the startup is a completely different context.
We were bigger on identifying diamonds in the rough — people that aren’t press-release-worthy yet, but will be.
Shaan: I’ve done the same thing. I can’t afford the press release hires, but also I’ve always found that when The Hustle had gotten big enough to afford them, I was just kind of disgusted by the concept. If this person left, would the company fail? No. Well, then why are we paying this?
Sam: Our people would show up at noon and you’d be like… He arrived right when lunch was being served.
Shaan: We’ve discovered some cool people — Steph Smith who’s now at a16z, Trung, a bunch of people who went on and founded companies. What I always looked for: I purposely went for diamonds in the rough. I can’t afford the known person, so I hire the 24-year-old who I know will be a boss in five or ten years.
What do you look for?
Dharmesh: Two things. One is what Paul Graham calls “animals” — people you’re a little bit afraid of, who are like freaks. They work a lot, but it’s more than that. They have a predilection to action. If they find a problem they just jump in and start solving it, whatever direction that takes them.
The other thing: remarkability. There’s something noteworthy they’ve done in their past, or something quirky, something that’s an outlier about them. Not specifically business-related — it’s just that they’re kind of off the main beat.
Shaan: At Bebo we called them degenerates. We’d ask: have you gone through phases in your life where you got really obsessed with something that didn’t have a clear payoff? Something that wasn’t the popular thing to be obsessed with? Mer Khan was a top-100 ranked player in some video game for a period of time. I had done the same thing with poker. We identified each other that way — have you gone through these periods of three years of deep obsession around something competitive?
At some point it stopped being about winning and it was just about getting to the next level. You immerse yourself with other players, you study the game, you look for the loopholes. All we need to do is point that degeneracy in the right direction and we’ll win.
The Creator-Completer-Collaborator Framework [00:12:00]
Dharmesh: I’ve got a little framework that works at multiple levels. Three vectors: creatives, completers, and collaborators.
Creatives start things. They have ideas, 180 ideas an hour. Completers make a list of things that need to get done and ship the product. And those two are often at odds — the idea person is frustrated that the completer is just checking boxes, and the completer is frustrated the idea person won’t stop adding things. The collaborator bridges them — good at communicating across departments and individuals.
Usually you’re looking for someone who’s a nine or ten on one of those dimensions, a seven or eight on another, and very low on the third.
Shaan: Where do you fall?
Dharmesh: I’m on the creative side.
Shaan: But you lead a 20 billion dollar public company. As CTO. For 20 years. That seems like the opposite of creativity.
Dharmesh: I’ve done everything in my power to reduce the time I spend on things I’m not good at. I don’t have any direct reports — which is unheard of for a founder with 7,000 people in the company. The only meetings I go to are where there’s some creativity involved. I don’t like status updates — I can read an email. But there are non-delegatable things: earnings calls, keynotes at Inbound. I’ve been giving that keynote for over ten years and I hate it. But as a founder, that has weight by virtue of the title.
$10,000 an Hour and the Wordplay Side Project [00:15:00]
Dharmesh: I have a personal number — I use $10,000 an hour just because the math is easier. If I’m on the open market, I think I could make that.
Shaan: I would have thought higher — like $50,000 or $100,000 an hour.
Dharmesh: Let me make it real. If you book a plane ticket and it doesn’t work out and you’d have to chase a refund — do you have someone chase it, or do you just eat the loss?
Sam: What do you do?
Dharmesh: I don’t chase it. Because even delegating requires follow-up. They’re going to come back and say they could only get half of it as credit. I just don’t care. I don’t do it. Back to investing — if I spent five hours doing due diligence on an investment, I’ve basically doubled the cost to me from my time alone. It makes no mathematical sense unless you believe spending that time will meaningfully improve your investment decisions. For early-stage startups, there’s just not that much diligence to do.
Sam: That brings up Wordplay.com.
Dharmesh: So in November and December 2021 Wordle took off, and then January is when the New York Times acquired it. A couple things were bothering me about the game’s limitations, and once the Times acquired it, nothing would change for years if ever. So I decided to just build something.
Also, my son was taking a Python programming class — he’s 11. It was still abstract to him. So on a Saturday night I started with a deadline: I’m going to launch something with him tomorrow. We’re going to have Google Analytics on it and launch it by tweeting it. So he can see users actually coming in — something that didn’t exist yesterday, that I coded overnight in Python.
We launched on that Sunday. Since then, 45 million games have been played. At any given moment right now there are two or three thousand people playing.
Shaan: How did you get traffic?
Dharmesh: I have a social following — about a million on LinkedIn, 300,000 on Twitter. But that was only enough to seed it. The key was the viral loop. In the original Wordle, you played once a day — single player. We made two changes: unlimited play, and you could challenge your friends by sharing a link. Someone plays, they’re proud of their score, and they send it to their WhatsApp group. That happens tens of thousands of times. As the user base grows, it compounds.
I turned on Google AdSense to understand what the traffic was worth. If I were solving for monetization, it was generating about $90,000 a month.
Sam: I thought you were going to say $500.
Dharmesh: Yeah. Turns out traffic is actually worth something. But I turned it off because people were asking, “Why do you have ads?”
Our buddy tried to buy it. He tweeted that he’d like to buy it. I do think it could sell for $2 to $10 million right now. If you ran Google AdSense, maybe $50,000 a month, apply a 5x multiple — somewhere in that range.
The average time a user spends on Wordplay has gone from four minutes in the early weeks to fourteen minutes now. And the feature I’m building next is multi-round tournaments — that’s the big one coming.
Sam: Some feature ideas: leaderboards that actually work. The problem with leaderboards is they’re cool for the top ten people and meaningless for everyone else. Chess.com solves this with a rating system — bronze to silver to gold to platinum to master to grandmaster. You’re competing to get your own level up, not ranked against the world. The karate belt method.
Dharmesh: That’s exactly the direction I’m thinking. There’s also the proximity-based hack — your social rank matters more when it’s against people you know, your school, your city. And the “stars, they’re just like us” angle — if I knew that some famous person plays Wordplay every day, that’s interesting. A little leaderboard where verified accounts could opt in and just show “I solved it” or “I failed today.” Something that makes the community more human.
The Milk Road and Crypto in a Bear Market [00:22:00]
Shaan: Speaking of things that launched in a bad economy — I started the Milk Road in January. Crypto company, right when crypto crashes. My co-founder Ben said the one thing that could go wrong is if crypto enters a bear market. I said, “That’s one of the few certainties of crypto.” You just have to decide: does this kill us, or do we just ride through it?
On talent: the guy I just hired quit a 50- or 100-million-dollar-funded startup. Emailed me with the subject line “I have made an irreversible decision.” I clicked it. He said he quit his job and thought I should hire him. I made him an offer that was basically a 50% pay cut.
He said, “That’s a 50% pay cut.” I thought about the Warren Buffett / Ben Graham story — I almost said, “Your price is too high, sir.” The value isn’t in the salary. If you come work with my team of three people and we’re working out of my house, what you’re learning every day is worth more than whatever you’re giving up in salary. He knew that intuitively and said yes.
Angel Investing: Bragging Rights and Vicarious Living [00:25:00]
Dharmesh: I’ve made a little over 100 angel investments. Eighty to ninety percent of them — I’ve never talked to the founders or met with them. I make the decision within 24 hours.
Sam: I’ve seen you do this two or three times. Introduced you to a founder, within five minutes you replied: “Looked at the deck. I’m in.”
Dharmesh: I have one rule: I always side with the founder. I’m always on your team. The downside is I’ll be a silent partner. I’m probably not going to talk to you much. But if you want to take my money, that’s the deal.
I want to be honest about why I do angel investing. It’s not to make a return. One reason is living vicariously through other entrepreneurs — I just love that process. The other reason — quite immodestly — is bragging rights. Five, ten, fifteen years from now being able to say, “Yeah, I was in Okta back in the day. I was in Stack Overflow.” That feels nice. It’s purely ego and it’s real and I respect that you said it.
Shaan: I respect that you said the true thing.
Dharmesh: I call myself a warm-hearted red-blooded capitalist. I have compassion. But I’m a capitalist. The math on spending five hours doing diligence on an early stage investment is terrible — you’ve basically doubled your cost. My money goes in, I do maybe an hour total, and I see if the founders and idea pass a basic sanity check.
HubSpot Stock Purchase and Valuation Philosophy [00:28:00]
Sam: In late May there were headlines that Dharmesh bought HubSpot shares — a pretty substantial amount, millions of dollars. The stock went up the next day because everyone saw an insider buying. What’s your thinking there?
Dharmesh: Exactly what you’d expect — I thought the company was undervalued given the long-term potential. I’ve done this before. A couple years ago I bought a bunch of shares at $125 when the stock had dipped. I just thought HubSpot stock was worth more than $125. I was right.
The day I was eligible to buy — first day of my window after my last transaction — I bought. The price was low enough and I still have conviction. Where does three million dollars come from? Yes, it’s stock I’d previously sold.
Sam: How do you deal with — and I’m going to round — maybe $500 million of paper loss when stocks are down?
Dharmesh: I’m not going to pretend I’m above it. I will just tell you that it doesn’t phase me even one bit. It does not change my life one iota. I wasn’t planning to buy small islands or take over governments. I still wake up every morning and do the same things. I look at Wordplay and respond to user emails. I do my HubSpot stuff. What’s different?
Shaan: For me there’s a 17-second self-talk period. You seem to not even have those 17 seconds.
Dharmesh: I’ve been over this before in my head. And I’ve actually gone the other direction — as the market has dipped, my average check size has gone up. I think valuations are adjusting and the deals are better right now.
The Marshmallow Challenge and Iteration vs. Quality [00:32:00]
Dharmesh: The lesson I keep coming back to is iteration. There’s this thing called the marshmallow challenge: give teams a handful of sticks, string, tape, and one marshmallow. Build the tallest structure that can hold a marshmallow. Thirty minutes, whoever’s marshmallow is highest wins.
They ran this with consultants, doctors, engineers, ad agency creatives. Almost everyone fails — 80 to 90% of groups end their 30 minutes with the marshmallow on the ground. They spend the whole time planning, delegating roles, drawing the structure, and only at the very last moment try to stick the marshmallow on top. But the marshmallow is heavier than it looks and the whole thing collapses. They didn’t know their design was flawed until it was too late.
Kids, by contrast, crush this. They grab the marshmallow, stick it on immediately, watch it fall, adjust. Immediate feedback loop.
The quality output is almost always a function of the number of iterations, not the quality of the planning. There’s the famous experiment — one class submits a photo every day for 30 days for an A. The other class submits one photo at the end for their grade. The daily class produces better photos. Just by doing it, you get better.
The key is meaningful iteration with a tight feedback loop. If you’re not learning from each iteration, you’re just doing the same thing. But if you get immediate response — did I get better or worse? — and you compound that over time, it’s amazingly powerful.
I give the marshmallow challenge at basically every company I’ve started. Engineers and designers by nature want to spend more time perfecting before shipping. I always say: “Let’s ship it today, see how bad it sucks, remove some suck, and tomorrow it’ll suck a little less.” The only way I’ve found to drive that point home is to have them actually fail at the challenge.
Shaan: That’s one of the greatest leadership moves I’ve heard — make people do the challenge, then show them the TED talk.
Dharmesh: And it also connects to the bigger point about startups being a skill. Most things are actually learnable skills, not innate talents. Talent is the rate at which you acquire a skill, not whether you can acquire it. I would have been voted least likely to ever start a company in my family. Public speaking wasn’t something I ever had. But both of those are skills. You learn storytelling, slide design, humor, you practice — and you become acceptable at something you started with zero of.
The Trillion Dollar Venn Diagram [00:38:00]
Dharmesh: I have a framework I think about a lot and I want to share it, because it connects to Sam’s Pixar tweet.
Imagine a whiteboard with all possible people on Earth. You draw a circle with one of your skills — let’s say copywriting. That’s a circle of people at Sam’s level or better. Now draw another circle: crypto knowledge. Rarer, because it’s newer. The intersection of both — people who know both copywriting and crypto really well — is a hundred times smaller than either circle alone.
This is the same effect you see in standardized tests. People who score highest are not necessarily the best at English or best at math, but the rare ones who are good at both. The intersection creates rarity.
Now apply this to skills and careers. The value of the intersection is driven by two things: how rare is it, and how much do the skills reinforce each other? Software development plus becoming an Olympic swimmer — maybe not that reinforcing. Software development plus copywriting — very reinforcing. Those two skills strengthen each other.
As you’re picking skills to acquire, get skills that are both rare and reinforcing to what you’re already exceptional at. That drives the value of the intersection.
This is why, going back to Sam’s Pixar tweet — you said you want to build the next Pixar. People reacted two ways. One: “Where do I sign up? I love Pixar.” Two: “What makes you think you could do this? Do you know how hard it is? Steve Jobs and Lasseter and Catmull — how rare those talents were?”
But here’s the third circle people miss: courage. The courage to actually go do the thing. Tim Ferriss told this story — he gave a Harvard Business School class a challenge: get in touch with Bill Clinton, Jennifer Lopez, or Michael Jordan via email within 30 days. First class he told: nobody tried. The perceived difficulty was so high. Second time he told that story to a class — he also said whoever gets the closest wins — and someone actually completed it. The lesson is that nobody else is even fishing where the fish actually are. You don’t have to base your effort on how many other people have tried.
Sam: Paul Graham says: hire animals. People you’re a little bit afraid of. I look for weird people who have fairly extreme opinions — even if I totally disagree with those opinions. If they’re well-researched and have a strong opinion on something, I like that. We said at The Hustle: “Let your freak flag fly.” We embraced every type of person and they liked that we embraced their odd.
Dharmesh: And this is why I think you might pull off the Pixar thing. You have a very weird, unique, related combination of skills — you know crypto, you know storytelling, you know building audiences. The next Pixar might be entertainment intersected with crypto. Netflix for the blockchain. Two things combined that were never put together in that way before.
Sam: To be clear, the tweet was like, “What if I just told people I was going to do this?” I kind of prototype ideas publicly. Say it out loud, see how that feels. Wake up the next morning — do I still want to tweet five more ideas about it, or am I over it?
Dharmesh: The core ingredient most people lack is courage to go do it. People under-credit themselves on skill — they confuse skill with talent. Skill is something you learn. Talent is the rate at which you learn it. Someone without a talent for music can still learn music. They may have a lower ceiling, but they can do it. Most things in startups are learnable skills.
The Hustle Acquisition [00:44:00]
Sam: People ask me about selling to HubSpot. Has it been good from a creative perspective?
Shaan: It’s been awesome. We have not been told a single thing about what we can or can’t do. And it’s been crazy how productive this relationship has been. I genuinely did not think it would be like this.
Dharmesh: I’m glad. Your teams have been great for HubSpot. I know this keeps you up at night in terms of valuation — I’ve thought about that too. At the time it was a board-level discussion about whether it was worth it. I think it was fair for both sides. And I will say — I think there’s a world where in one to three years this podcast alone is worth more than the full deal.
Sam: Definitely I see that.
Dharmesh: The valuation is just one dimension of value. How happy are you, how happy is the team, did you meet people you’ll want to work with in future years? We know going into acquisitions that it’s not forever. But hopefully in aggregate HubSpot delivers a bunch of value. That’s my pitch for why it’s okay to join HubSpot.
Shaan: This was awesome. Dharmesh — last time you were on was about a year ago and I’ve been begging you to come back. You pulled the right move today: just messaged me, “How about today?” Any time between 2pm and midnight. And we were like, “Let’s do it.”
Dharmesh: I made it open. I knew when my last meeting ended and I said any time after that. No small window. Any time between 2pm and midnight. And if you get it, it’s a lot of fun.
Sam: Thank you. This is great.