Everyone talks about wanting entrepreneurial employees. At HubSpot, a marketing software company based in Cambridge, Massachusetts, Brian Halligan and his co-founder, Dharmesh Shah, have put in place a formal system for encouraging employees to grow out of their jobs.
In 2008, one of our sales reps came to me with an idea that he believed could revolutionize HubSpot. At the time, we sold our software directly to consumers. But the rep, Pete Caputa, thought HubSpot should have a reseller channel in order to expand the business model. Basically, he wanted to sell our core product to third parties, who would then turn around and sell the product to their customers.
I didn't like the idea. It just wasn't our business model. But he was persistent. Caputa's a guy who's got start-ups running through his blood. In fact, prior to working at HubSpot, he ran his own start-up. We said to him, "If you want to do it so bad, start doing it nights and weekends and show us this will work."
He killed it. He blew the numbers out. I said, "OK, you're fired from your day job. Your nights-and-weekends job is now your new day job. Go get 'em." Today, Pete oversees about 30 employees, and his organization accounts for about 20 percent of the company's new business.
That's how the program started. Now, we have a three-step process: Alpha, Beta, and Version One. If you have an idea for some new thing, you can start working on it nights and weekends. You don't have to ask us for permission—just start cranking on it. There's no red tape. If you're a software developer, you can write software; if you're a businessperson, you can work on a business idea. That's Alpha.
To become a Beta, you present the project to us. If it's something that looks like it might have a return on investment, we'll give it a shot. We'll give you resources in the form of heads and access to developers. You get three months to gain some traction. But if it's going sideways, we try to kill it as soon possible and get you back in your day job. We don't want you eating up valuable company resources.
If it goes well, you graduate from Beta and it's no longer an experiment; it's just part of the way we do business. That's Version One, and we call the leaders "mini-CEOs." There's probably five or six Version Ones right now, and a few more in Beta. Pete's inspired a lot of people. Out of 260 employees, about 30 are working on projects. He's like the Grand Pooh-Bah of start-ups at HubSpot.
Frankly, most of them fail. It's sort of like the success rate of a venture fund. But the employees tend to just go back to their day job, think of something new, and pop up with another idea.
We try to attract employees who fight conventional wisdom. Gen-Y employees are different. They have an entrepreneurial zeal. They want to start new things, and they're not afraid to fail. Personally, I hate conventional wisdom. You could say I'm the enemy of conventional wisdom. I would even love it if one of these start-ups disrupted HubSpot's core model.
Part of creating this environment of innovation is making the organization decentralized and flat. We want to empower the edges of the organization, and we want to let the people who really understand our customers make decisions. Now they can.