Big news being announced this afternoon at HubSpot, the digital marketing startup widely regarded to be on the verge of an initial public offering: David Cancel, the Cambridge company’s chief product officer, plans to leave in September, along with Elias Torres, an engineering vice president. The duo joined HubSpot in 2011, when HubSpot paid $20 million for their 20-person startup, Performable, in its biggest acquisition to date.
Cancel and Torres planned to announce the news to the company’s tech team this afternoon. They’ll stay at HubSpot until the company’s big user conference in September, known as Inbound. After that, they plan to work on a new startup together.
Cancel says that the conference this fall is “a natural milestone” since there are some new products and features that he and Torres have committed to finishing by then. But he says that after three years working within HubSpot and building up the engineering team, “it felt like it was time for us to do the next thing.” Making that decision was “a long, slow process. But it felt like a good time now since we’re in a super-upswing as a company.” HubSpot had about 20 engineers at the time of the Performable acquisition; it now has about 100, according to media relations manager Katie Burke.
HubSpot isn’t looking for a replacement for Cancel, says co-founder and chief technology officer Dharmesh Shah.
When Cancel and Torres arrived, “we had a product that was good but not great,” Shah says. The Performable team basically rebuilt HubSpot’s product, which helps companies communicate better online and turn interested prospects into customers, from the ground up. Shah also credits Cancel with attracting top-notch engineering talent to the company. “When someone from the team is graduating and moving on, I always have that ‘holy crap’ moment,” says Shah. “But we don’t go in with the expectation of lifetime employment. We fully expect that some people will go off and do something else. And that helps with recruiting entrepreneurs to HubSpot.”
Now, the big question is: What impact will these two senior-level engineering departures have on a potential HubSpot IPO? The company has never been shy in talking about its plans to go public, and told me in May that it booked $77 million in revenue last year.
But the date may be drawing closer, especially given the reluctance on the part of Shah, Cancel, and other company execs to even utter the words “initial public offering” lately. (There may even have been plans to go public earlier this year — before other software-as-a-service companies like Box and Globoforce delayed their own IPOs.)
“We run the business the same as we normally would, regardless of financing rounds [like venture capital or an IPO],” Shah says.
Several people who know Cancel say it isn’t surprising that he wants to go off and start a new business. And given that three years have elapsed since the acquisition of Performable, it’s likely that a substantial chunk of his HubSpot stock has already vested. “It was very clear to everyone he would want to do his own thing at some point,” says Izhar Armony of the venture capital firm CRV, which backed Performable. “Brian [Halligan, HubSpot's CEO] and Dharmesh gave David and his team a lot of responsibility and ownership when they brought them on, but ultimately, David is not a founder of HubSpot,” Armony observes.
The departure of two senior product development and engineering leaders is definitely not great news for HubSpot as it skips down the yellow brick road toward an IPO. (And it’s not totally off-base to wonder whether the company is pushing off an offering by three or six months — which might make it less appealing for Cancel and Torres to hold their breath and hang around.) But if you have a choice of announcing this sort of news before you’ve filed IPO paperwork… after you’ve filed and as you’re romancing potential investors… or in your first year of being a public company, I think the best choice is clearly before.
Cancel tells me that his new venture doesn’t have a name yet, or an office. It will be “focused on how we think about creating teams, managing people, providing feedback, and helping people work together,” he says.
Earlier today, Cancel tweeted this quote from the 1949 William Reilly book “How to Avoid Work”:
…Life can be a succession of glorious adventures. Or it can be a monotonous bore. Take your choice!