Wall Street not worried about HubSpot executive shakeup as questions swirl

HubSpot employees and executives celebrated its IPO in 2014.
HubSpot employees and executives celebrated its IPO in 2014.

An executive shakeup at software company HubSpot didn’t seem to worry investors, who left the company’s stock largely unchanged Thursday after the company disclosed that HubSpot’s marketing chief was fired for trying to obtain an unpublished book manuscript about the company.

But the episode prompted plenty of discussion in the Boston-area technology sector, where HubSpot has become a marquee company, making local executives and investors rich and churning out former employees who have founded their own companies.

HubSpot, which sells marketing and sales software, said Wednesday night that it had fired chief marketing officer Mike Volpe for violating the company’s ethics code. An investigation overseen by HubSpot’s board found that Volpe improperly tried to obtain a manuscript of a book being written about the company, HubSpot said.

Chief executive and co-founder Brian Halligan was sanctioned in the incident for not reporting Volpe’s actions to the board quickly enough, HubSpot said. A third employee, vice president of content Joe Chernov, quit before HubSpot could determine whether he should also be fired.

Neither Volpe nor Chernov could be reached for comment. Earlier this month, Volpe said on Twitter that he was “on sabbatical” during July.

Jay Acunzo, a former HubSpot marketing employee, said Volpe was known as a fierce advocate of the workers in his department.

“For Mike to do something that would lead to this result, I feel like there were probably rumors swirling around this book that were focused on not just him,” Acunzo said. “Mike’s a very driven, bulldog executive. The thing that really fires him up is the team.”

HubSpot’s stock only dropped by about 1 percent in Thursday’s trading, showing that investors weren’t terribly worried about the company’s internal problems.

The explanation of Volpe’s firing certainly was odd, said Brent Thill, an analyst who covers HubSpot for UBS AG. “Covering software for 20 years, I’ve never seen a book thief get fired from a company,” Thill said.

Although Volpe had been at the company for years and was a high-profile executive, the reality for investors is that the marketing chief “doesn’t really touch the cash register,” Thill said. “I didn’t have one single call from an investor on it.”

“It’s a human interest story. It’s not really a stock-market story,” said Richard Davis, an analyst who covers HubSpot for Canaccord Genuity Inc.

HubSpot is scheduled to report its latest quarterly earnings on Aug. 6.

The book in question is being written by Dan Lyons, an author and writer who once worked under Volpe at HubSpot. A blurb promoting his book said that “Disrupted: My Misadventure in the Start-Up Bubble” would follow Lyons’s life after losing a job at Newsweek:

“One tech company, flush with $100 million, offered a pile of stock options. What could go wrong? His new employer made the world a better place … by selling email spam. The office vibe was frat house meets cult compound: Shower pods became hook-up dens; Nerf gun fights broke out at lunch; and absent bosses specialized in cryptic, jargon-filled emails.”

Lyons is well-known for a bombastic, free-wheeling writing style — he gained fame as the author of Fake Steve Jobs, a blog that parodied the late Apple co-founder’s famously hard-driving persona. Lyons also has worked as a writer on HBO’s “Silicon Valley,” which lampoons the excesses of tech-industry culture. He also had short stints as an editor at tech publications ReadWrite and Valleywag.

Acunzo said the kind of freewheeling company culture described in Lyons’ book blurb wouldn’t surprise most people in the tech world, where workers tend to be young and offices are stocked with beer taps.

“Anybody who’s in tech would read that description and say ‘Yeah, obviously,'” Acunzo said. “One of the things that Dan was always amazed by, working with him, was how much authority and responsibility 20-somethings had internally. He would always comment about that to me.”

Michelle Aielli, a spokeswoman for Lyons’s publisher, Hachette, said the company was unaware of what had happened at HubSpot. “We have no further knowledge of the events reported this week and have nothing to add to the story,” she said in an e-mail.

HubSpot said that its investigation into Volpe’s and Chernov’s actions was conducted by its board, the company’s in-house legal counsel, and an outside legal firm.

It declined to reveal the details of that investigation, and said that knowledge of “the circumstances under which Mike and Joe sought to obtain the manuscript” is limited to a small number of HubSpot employees, spokeswoman Laura Moran said in an e-mailed statement.

Keith Frankel, who was formerly HubSpot’s creative director, said Lyons’ hiring was likely a bad combination from the beginning. As a writer and cultural critic, Lyons’ personality didn’t fit with the enthusiastic company culture that Volpe was key in developing, said Frankel, who now works at Boston startup Firecracker.

“HubSpot is a very polarizing environment. To some, it’s the greatest place they’ve ever worked. They view their time there with the utmost fondness and they’re very close with the people they worked with,” Frankel said. “To others, it more closely resembles Jonestown. I think the truth is likely somewhere in the middle.”

Updated 4:50 p.m. with additional detail and quotes.