Hubspot Will Stay in Boston
We recently brought you an interview with HubSpot CEO Brian Halligan detailing the company culture at the Cambridge-based startup. During the same interview, I had a chance to pick Halligan’s brain about why HubSpot is and ever will be a Boston company.
HubSpot seems to be in the midst of finding truly explosive interest from consumers and Internet influencers. This growth has “enticed” other Boston-born companies like HubSpot — ones with a pair of legs and a beating heart — to Silicon Valley in recent years.
Halligan assured me that HubSpot is going to stay in the Boston area, but he also admitted to taking solace in one key difference between S.V. and Boston: California has put stops in place on non-compete agreements, but Boston has not. Companies are free to spin off and compete in the Valley, but in Beantown, internal collaboration seems to be the focus.
“We’re a super hot company around here,” said Halligan candidly back on Feb. 19. “You might say we’re one of the hottest, if not the hottest company in Boston. We’d be pretty hot in California, but Twitter is going to be hotter. Facebook is going to be hotter. I feel like we get the pick of the litter in terms of talent.
“We can pluck the best people out of this market and keep them — One thing that I think is unique to Boston relative to the West Coast is that people are far more loyal.”
Halligan admits that the loyalty he sees in Bostonians is as much a result of the culture here as it is an effect of the way contracts can be structured in Massachusetts. Given that Mass. allows non-compete agreements and Calif. renders them unenforceable, there has been much conversation of late about where that puts Boston-based companies like HubSpot.
Halligan says he's conflicted. We think that's probably just agita from the Sammys.
“I don’t actually think that’s good in the long run, but it’s a benefit to HubSpot at this point,” he said.
Halligan listed a number of reasons why Boston makes sense for HubSpot, including citing good connections to MIT (where he and Shah attended Sloan School) and Harvard for talented employees, HubSpot’s local network, and a genuine attachment to the area.
So with all that going for him, it makes sense that keeping the talented workers he employs at HubSpot would be a priority.
Non-competes are good because they make loyalty contractual, and CEOs like Halligan can involve everyone in the company on solving problems if they choose to, right?
Some say no.
A few years ago, a Harvard Business School paper concluded that a select group of rockstar innovators and inventors may need to look outside a state that enforces non-competes if they wish to explore the best career opportunities. A few years earlier, a paper titled Job-Hopping in Silicon Valley, assembled by economists at the Federal Reserve, argued that California’s attitude toward non-competes has supported innovation in Silicon Valley.
I hit Halligan with an Email this weekend asking him to clarify his statements from a few weeks earlier.
“We have all HubSpotters, including myself, sign a non-compete and non-disclosure agreements,” he wrote yesterday.
“I am personally conflicted about this topic. On the macro-level, I think the California economy has benefited relative to Massachusetts from the non-compete’s not having teeth out there as it has led to a lot more company formation and innovation. On the micro-level, now that we are up and running at HubSpot, I kind of like the idea that non-competes have teeth [here].”
Perhaps these company-soothing documents are just part of the way Boston rolls? Maybe we don’t need the spin-off companies here to compete globally in innovative markets. If we want companies to scale in Boston and take over global markets, we may have to remind ourselves as employees that if we want to work for the best and we want to know as much as possible about the way our offices operate, agreeing not to Benedict Arnold our company’s founders is just part of the play.
What do you think are the positives and negatives of Boston’s non-compete and non-disclosure agreements? Is the creation of raw, local competition important for building companies that can compete globally? Do you think non-competes are just plain stupid? Please share your thoughts in the comments section. .
