As more businesses across the U.S. moved online and expanded their use of cloud-based software during the Covid-19 pandemic, software firms such as HubSpot—which helps companies manage digital marketing, sales and customer service on the cloud—have reaped the rewards. Shares of the Cambridge, Massachusetts-based company, which went public on the New York Stock Exchange in 2014, have skyrocketed by 73% since the beginning of the year, pushing the net worth of its cofounder and chief technological officer Dharmesh Shah above the billion-dollar mark.
With HubSpot’s share price reaching $671.83 as of Tuesday market close, Shah’s 3.4% stake in the company is worth more than $1 billion; he also owns $43 million in options, putting his estimated net worth at about $1.1 billion. Still, the shrewd entrepreneur is likely wealthier than that: In a 2018 post on Medium, he revealed he had bought Facebook shares on the day of the social media giant’s 2012 IPO and had never bought or sold any shares since. (Facebook shares are up by nearly 885% since its IPO, compared to 2,211% for HubSpot). Shah also sold a previous startup to software firm SunGard for around $15 million in 2005. A spokesperson for HubSpot declined to comment on Shah’s net worth.
HubSpot has more than 120,000 customers that span from SoundCloud and the NHL’s Vancouver Canucks to Suzuki and the nonprofit Minnesota Freedom Fund. The firm has been growing its subscription revenues—reaching $300 million in the second quarter of 2021, up 53% from the same period last year—and building on its banner 2020, when it posted $883 million in revenues and a $7.6 million net loss. HubSpot says it expects to achieve profitability in 2021, with expected net income of $108 million on sales of nearly $1.3 billion for the year.
Shah, 53, has come a long way from his upbringing. He was born in Ankleshwar in western India—at the time, Shah says the town had no traffic lights and few paved roads—where he was delivered by a midwife in his parents’ home with no doctor present. His family immigrated to the United States and later to Canada when he was a child, before returning to India when Shah was in high school to care for his grandmother. He enrolled in college in India to study mechanical engineering, but his parents shortly returned to the U.S. and settled in Indiana, and he followed suit.
Shah had never used a computer before taking an Introduction to Computers class at Purdue University. “This was the proverbial love-at-first-sight moment. Even though I had not packed any of my things, I didn’t go back,” he told the One Million by One Million blog in 2021. “I was fortunate to find that love early on. I’ve been in computer software for most of my professional life.”
He eventually transferred to the University of Alabama at Birmingham, where he graduated with a computer science degree before joining software firm SunGard as a software developer. Two years into that gig, in 1994, he quit to launch his own company, Pyramid Digital Solutions, at age 24, alongside his brother, who was then 17—all while reportedly bootstrapping it himself with less than $10,000.
The two siblings built Pyramid over more than ten years before selling it to their former employer, Sungard, in 2005. That’s when Shah decamped for Cambridge, Massachusetts to attend MIT’s business school, where he met future HubSpot cofounder Brian Halligan. The day after graduating from the program, Shah joined ranks with Halligan to launch HubSpot.
“I’d promised my wife that I wasn’t going to start another company after I sold my first one,” Shah told the Small Business Trends podcast in March. “Part of the motivation was the fact that Brian and I got along so well and we had a shared passion for small business. We wanted to do a software company together.”
The pair launched HubSpot in 2006 in a bright orange workspace in Cambridge, a mile away from MIT. The software startup focused on “inbound marketing,” which uses tools like blogging, marketing events and paid ads to help companies attract, retain and expand their customer base. Today, HubSpot offers software subscriptions that help firms manage customer relationships, marketing, content and sales for prices ranging from $45 per month for its starter service to $3,200 per month for its full-fledged marketing suite. Those subscriptions brought in 97% of HubSpot’s total revenues in the second quarter of 2021.
Halligan, the 54-year-old cofounder who served as HubSpot’s CEO since its creation, stepped down in September and is now the firm’s executive chairman. The news, announced in August, came five months after Halligan was injured in a snowmobile accident in March. Halligan owns a 1.4% stake in HubSpot worth $441 million, plus another $213 million worth of stock options. He was replaced by HubSpot’s chief customer officer Yamini Rangan, who joined the firm from Dropbox in January 2020.
For Shah, the success of HubSpot is proof that entrepreneurs shouldn’t get discouraged if their first startup isn’t as groundbreaking as they may have hoped. “Your first idea does not have to be world-changing,” he told the One Million by One Million blog. “Not once have I met an entrepreneur who only had a single idea in their entire life. Sometimes, it’s time to start the second chapter.”