The Future According to HubSpot: Why They Win Even When You Delete Their EmailsMay 21, 2012
by Walter Frick
At HubSpot‘s Analyst Day last week, CTO and co-founder Dharmesh Shah characterized the traditional email marketing approach as “I’m going to email you until you die.” In other words, he continued, “There’s a fine line between outright spamming and marketing automation.” But where is that line, and how do you find it?
Shah was the day’s final speaker, immediately following a demo of HubSpot’s new email marketing offering which is the company’s latest step down the “sales funnel,” from content marketing and lead generation giant towards its goal of becoming a one stop shop for all things marketing.
So how does HubSpot find the line between automation and spam? The short answer is data. Specifically, HubSpot uses itself as a case study for its product by putting that product in the hands of a world class sales and marketing team. When HubSpot makes a sale, it wins. When it doesn’t, it learns a little something about how to make HubSpot even better.
A Brief History of HubSpot
HubSpot is a company that needs no introduction, but here’s one anyway. If you’ve been reading about it for the past few years, feel free to skip this section.
HubSpot is synonymous with “inbound marketing” which means, basically, blogging and related forms of “content marketing”, social media, and anything else where the customer finds you rather than vice versa. Founded in 2006 by Shah and CEO Brian Halligan while at MIT, the company has raised $65 million, including a $32 million round in March of 2011.
Its core product has combined a content management system for blogging and website management with web analytics and lead capture and management. In other words, it offered a single tool to get people to your website and then sell to them.
A slide from Shah’s Analyst Day presentation
Last year, HubSpot’s revenue grew by 81% to $29 million and along the way it has snatched up talent in the form of individuals and companies, one of which deserves to be called out specifically.
Last June, in what Halligan told me was “possibly the best decision we made” in the history of the company, HubSpot acquired Performable, a marketing automation and analytics company that has effectively become HubSpot’s R&D engine, led by Chief Product Officer and Performable and Compete.com co-founder David Cancel.
“David Cancel has got a little Steve Jobs gene in him,” said Halligan, as do the people he hires. Led by Cancel, HubSpot is trying to apply an “Apple easy” philosophy to its software, while staying true to Shah’s data driven approach. In that sense, they’re trying to merge the core philosophies behind Apple and Google into one comprehensive product offering.
The Secret is Sales
When I get an email from HubSpot (as I often do) and I don’t open it (as I often don’t) HubSpot learns something about what works and what doesn’t. When I click, so much the better. For a lot of startups there’s a tension between investing in sales and investing in product. Sure, the sales process can be a key learning process for any startup. But the fact that HubSpot is trying to sell me something that will help me sell something means that conflict is less acute. And yes, that’s true of anyone selling marketing software, but what separates HubSpot from others is both its commitment to pressing this advantage and its reliance on data.
HubSpot CEO Brian Halligan
“We’ve been very very good at building something for ourselves,” said Halligan. HubSpot employees claim that when developers need feedback they go down the hall to talk to Sales and when Sales needs a feature they talk to development.
And as the company has grown, the customers they build for and sell to have changed in parallel, moving from small to midsize companies and now into enterprise.
Of course, the key to really unlocking this powerful positive feedback loop is data. For HubSpot even more than most data driven companies, investing in sales means investing in data to make the product better.
The Future According to HubSpot
It has become hard to write about HubSpot without speculating about an IPO, so naturally I put the question to Halligan when we spoke.
“We want to be around forever,” he responded. “We don’t want to build this company and flip it.” So when, then? Halligan said most likely the company will go public next year but added, “[our] hair’s not on fire. We’ll do it when we do it.”
Even as the company winds its way to that IPO, there remains an urgency, embodied by Shah in particular, and seemingly driven by the mere fact that marketing as it exists today just isn’t good enough. It’s not personal enough, not easy enough, not rooted firmly enough in data on what actually works.
“I’d like to try to turn Boston into the next generation Madison Ave.,” Halligan told me. If HubSpot is to become the anchor of a Boston marketing powerhouse, it will happen with sales in the lead. If you haven’t been contacted by HubSpot to try the product, that’s probably by design, because you’ve not been deemed a likely customer. But there may come a time when your activity trips the right wires and you get hit with an email from Sales. And even if you say no, HubSpot will get smarter.