One of the most common startup advice given to founders is to focus on one thing and do that really well. Hubspot did the exact opposite and in the process, ended up building a $32 billion company.
According to Reuters, Alphabet - the parent company of Google has been talking to its advisers about making an offer for HubSpot.
Hubspot was founded in 2006 by Brian Halligan & Dharmesh Shah after they met at MIT. In 8 years, they grew from zero to $100 million+ revenue with an IPO in 2014. As of 2023, Hubspot generated an annual revenue of $2.17 billion & has grown by 25.38% since 2022.
Both Brian and Dharmesh had successful backgrounds in tech before launching HubSpot. Brian was VP of Sales at Groove Networks, which was acquired by Microsoft, and Dharmesh was founder and CEO of Pyramid Digital Solutions, which was acquired by SunGuard Data Systems.
The problem
Before Hubspot came along, traditional marketing was broken. Rather than wasting dollars on outbound efforts like advertising, cold calling, trade shows, Dharmesh and Brian believed that companies should focus their effort on developing content like blogs, e-books etc - which of course we now know as inbound marketing.
This tied nicely into Dharmesh's narrative because he himself had been successfully running a blog aimed at startup founders called On Startups. Their goal with Hubspot was to build an inbound marketing software that helps businesses “market to humans.”
Early traction & MVP
Hubspot was initially a simple tool - it had blogging, social media management, email marketing, and lead nurturing as its features, all designed to create inbound demand and build lasting relationships.
The first version of Hubspot enabled people to build powerful, customized information portals, collaborate via intranet & extranet, manage websites & communicate with clients.
Hubspot began in 2006 with just 3 customers. They got these early customers via their network. At MIT, Brian & Dharmesh built a name for themselves as the go-to-guys for web marketing & website development. They created content around the themes of inbound marketing and got their first 100 customers just from doing that. Brian & Dharmesh started blogging twice a week while they were building the product for the whole 9 months until they launched their first version.
Blogging-led growth
This blogging approach did two things for Hubspot. One - it helped them understand their customers´ problems and understand nuances around communication & messaging that would resonate with their customers.
Secondly, it helped them build credibility on Google when they launched. By the time they launched their product, they ranked number one on Google for many terms that had a decent amount of traffic relevant to the customers pain points. They had around 1,000 followers in the blog that were interested. They got tons of free trials via this blogging-led growth approach.
Besides hiring engineers, one of their early hires was a reporter from New York Times back in 2008. Adding a proven writer with journalism experience created a solid foundation for their inbound marketing efforts.
They also hired someone to build out the partner channel program back in 2007. They partnered with marketing departments of SMBs, small marketing shops, web designers and SEO consultants to get deal flow through to Hubspot.
In 2009, Halligan and Shah wrote the book on inbound marketing—Inbound Marketing: Get Found Using Google, Social Media and Blogs. These content writing efforts compounded over time creating a flywheel effect for what was to become.
Building a media company
Hubspot is a tech company operating like a media company. It has a newsletter, a publication, blogs, it has videos, livestreams and everything you could imagine from a traditional media company.
HubSpot started publishing before they even had a product to sell.
Content & blogging
They started their blog in 2005. As of February 2024, they had 10.4 million people landing each month on the blog - 80% of them coming organically. They rank for 18.8k keywords.
Blogging has been central to HubSpot’s content marketing plan, but with time they have diversified to include several other forms of content in their strategy too, mimicking that of a media company. HubSpot content is categorized across – Blogs, Newsletters, Videos, Podcasts, Resources, Social Media.
Hubspot has a different set of posts for its blogs - Marketing, Sales, Service, Website, Industry News. Every blog post has a personalized and relevant Call to Action at the bottom - this tripled the number of leads they were getting from the blog.
This segregation ties into its marketing KPIs too - its MQLs. By separating their sales and marketing content, HubSpot was able to capture leads from different segments of their audience & trigger relevant email sequences, and show them create personalized onboarding that was tailored to that persona.
They have about 14 writers across these different blog themes. They have an editor who oversees each blog theme and there is a manager that oversees them.
They have analysts who build quarterly editorial calendars across all blogs. They include a mix of 2 kinds of content (a) blogs optimized for search intent and (b) blogs focused on garnering influence.
They have split their content vertically across 7 themes: lists, how-tos, guides, e-books, infographics, videos & webinars.
They have a team that focuses on the conversion of blog traffic into MQLs for Hubspot. They look at which blog posts generate the most traffic and leads, decode what content should be created for more MQLs, document the impact, and strategize for future blog posts.
Videos & Podcasts
Youtube is their best performing distribution channel with 28.81% of people coming to the Hubspot blog via Youtube.
HubSpot launched their Marketing YouTube channel as early as 2007. They have added more channels to their brand - the Hubspot Academy & HubSpot’s software products. HubSpot Academy is the company’s educational hub for inbound marketing, sales, and service, offering both free courses and certification.
They have a Youtube Strategist who looks at the channel as a whole and figures out how to optimize the channel, what type of content to create etc. They also have a scriptwriter who writes scripts and they have a whole production team to nail their Youtube game.
And it's working. Across all their combined channels, Hubpost has more than 600k followers.
They repurpose a lot of their content - from blog posts to Youtube. They embed YouTube videos on the original blog posts. This gets more views on YouTube videos. And by embedding the video on the blog posts, Hubspot increases its SERP rankings on Google. (Videos are more likely to rank in the video carousel on the Google search results pages)
They also have a podcast - Marketing Against the Grain, which focuses on creating brand awareness and positioning Hubspot as a thought leader in the space. Their goal is to use the podcast to grow traffic on the blog, convert leads from the podcast, increase the number of downloads, boost views on Youtube, and more.
Social Media
HubSpot’s social media game is also on point. It has a widespread presence on almost all the popular social media channels, from X to LinkedIn. The social media accounts are very active, making sure that they don’t just have a presence but are seen often by their followers.
Their social media content offers tons of value with lots of quick tips and valuable information for marketers, business leaders, and other prospects.
Apart from the occasional event promotions and company news, they mostly share content that their audience would be drawn to because of its relevance and value. For instance, a common theme was sharing tidbits and quotes from HubSpot’s leadership. Dharmesh is incredibly active in X and LI and his own thought leadership content brought visibility into Hubspot the company.
HubSpot’s Facebook strategy is off-the-charts. They have close to 2.1 million Facebook followers. Their native videos have insane views, likes, comments & they provide HubSpot with valuable leads by offering free tools related to their videos in the video comments. They have thousands of videos with more than 100k views.
Hubspot also uses FB ads to promote their e-books as lead magnets. The users sign up, are directed to a group where they answer a few questions and are then redirected to the download page. At the bottom of the page they have a CTA to try out Hubspot.
HubSpot’s second largest social network is LinkedIn where they have over 1 million followers. Hubspot follows a proven 3-step format each time: Short 1-2 sentence description, feature image & link it to one of Hubspot's Facebook videos (which brings them more traffic to Facebook).
To generate leads from LinkedIn, HubSpot uses LinkedIn Sponsored Content and promotes templates, e-books in exchange for their email.
Newsletter
In 2021, Hubspot acquired Hustle for $25-30 million - a newsletter started by Sam Parr which shares business and tech news to get you updated in just 5 minutes.
They even have a paid revenue stream within Hustle called Trends - it provides premium content as a subscription to its readers.
Engineering as Marketing
Free tools are a key component of Hubspot growth. They have an in-house R&D department within Hubspot called Hubspot Labs, which ships all these free tools. And to say it has been a resounding success would be a massive understatement.
Between 2006 and 2011, HubSpot’s free Website Grader graded more than 4 million websites. It was launched in 2007 via Hubspot Labs. Any user could enter a URL and see how strong their website is out of 100. They were even offered suggestions on what could be improved, across performance, mobile readiness, SEO, Security. This was not only a super useful tool for small businesses, it drove millions of TOFU (top of funnel) leads to Hubspot. Dharmesh himself posted on how a simple tool was pivotal to Hubspot's early success.
"A simple little tool that helped millions of people improve their websites — and in the process, helped HubSpot become a publicly-traded company [NYSE:HUBS] with over 15,000 customers and a market value of over $1.6 billion.” - Dharmesh Shah
In 2008, Hubspot held a webinar on the subject of “Using Twitter for Marketing and PR.” They got 3,000 registrations for it and got tons of new followers. They were the first company to use Twitter for discussion during webinars allowing people to chat and ask questions. Because of this, many of the hashtags for the webinars have become trending topics on Twitter – more than 5 of their webinars have been global top ten trending topics since 2008. One of their most popular webinars, Volpe reports, had 13,000 signups.
In 2009, based on the success of the webinar, Hubspot launched Twitter Grader - another free tool that created diagnostic reports of Twitter users and measured their influence based on factors like follower ratio, update frequency, and level of community engagement.
When Twitter Grader first launched it set off a wave of viral growth loops, with people sharing their Twitter scores with their followers who came back to check their improved score, and sharing that again with people, resulting in a compounding viral growth loop. As you can guess, it drove leads and tons of awareness for Hubspot.
Education-led growth
Hubspot condensed its learnings on inbound marketing and started sharing those with customers via the Hubspot Academy, which started way back in 2012. They held on-demand webinars to teach customers how to use Hubspot and how to be good at marketing.
In 2013, they released the first inbound certification. This course taught them everything on how to leverage inbound marketing in the digital world. People would take the 4-hour course and would want to speak to the salespeople asking how they could use Hubspot to apply what they had just learned.
They then built HubSpot Academy into the HubSpot product as a learning management system.
Today Hubspot Academy has 165,000 members.
Pricing
At the start, Hubspot had three tiers - Basic, Professional, and Enterprise. Their annual customer retention rates were 65% and annual revenue retention rates were 70%. Upon speaking with Pat Grady from Sequoia, Brian realized that their pricing was all wrong.
Pat pointed out that most software companies had 2, 3, or 4 pricing axes to monetize their most successful customers. Salesforce.com had 4-axis pricing. Their first axis was basic, pro, enterprise, and unlimited. Their second axis was the number of seats. Their third axis was add-ons. The fourth axis was new clouds.
Brian decided to grandfather his existing customers at the old price so as not to screw them over. Then they had to figure out what their 2nd pricing axis was gonna be. They decided to use the number of contacts (or leads) in their marketing database. This leveraged value-based pricing which meant that customers could grow their lead generation efforts and use Hubspot to move further along in their growth journey. This move would be a win-win: It would make customers happy & it would bring in expansion revenue for Hubspot.
Post this shift, Hubspot saw a 5x return on investment to acquire a customer as opposed to a 2.5x return, which was the case before the experiment.
The main revenue stream for Hubspot is the subscription fees they charge for their software platform. Hubspot also offers professional services, such as consulting and implementation assistance to help customers get the most out of Hubspot.
Hubspot has also set up the Hubspot marketplace via which it allows third-party developers to create and sell integrations and plugins native to Hubspot. For every sale made through the marketplace, Hubspot takes a percentage as a commission.
Pivot to freemium & product-led sales
From 2008 to 2014, HubSpot’s sales motion was content-led inbound marketing that was optimized around MQLs. They built tons of quality content, enabled people to interact with it, and then had sales follow-up.
HubSpot moved to a hybrid sales motion via their first freemium product - the Hubspot CRM. The product growth team realized customers were using the marketing platform essentially like a CRM– a place where they can store contacts, create relationships, and engage with them over time.
They shifted from an MQL metric to a PQL metric. When they switched to a freemium model, they incentivized their customers to gain a ton of value upfront and then adding more licenses/seats over time. They hired entry-level Customer Success and Implementation people who Hubspot called “Inbound Success Coaches” were people who were entirely focused on customer satisfaction.
They helped customers get set up on the free tools in order to ensure they realize value. Hubspot also optimized its product-led onboarding strategy via multiple assets - it used self-serve resources, live chat, CR automated flows, product tours, tooltips, walkthroughs, in-app tutorials with one end goal in mind - to optimize for user onboarding.
When it launched, they experimented with Facebook ads and other paid acquisition channels.
Freemium products and paid advertising continue to be their main customer acquisition channels, with more than 70% of their customers coming in from self-serve.
They have 2 core motions in the PLS lever:
- Inbound sales: These are guided by a product-led approach: organic content, paid acquisition channels, and freemium products.
- Outbound sales efforts are used to build brand awareness.
To supplement their freemium sales-assisted motion, HubSpot has a BDR team doing outbound sales.
Two important signals from users that HubSpot’s GTM pays attention to are when (a) free users request to speak with sales via the app and (b) when they start in-app trials of premium features. These signals indicate that a user has become a Product Qualified Lead (PQL) and should be engaged further by sales.
They have set up email automation based on high-intent actions in the product (like the two described above). When someone takes that action or asks to talk to sales, an email is sent to help connect them to the sales team.
On the sales reps side, HubSpot’s PQL emails include a video showing what the lead does within the product, sales copy, a value prop, and information about the company. This eliminated decision fatigue for the sales reps who were going after hundreds of different types of PQLs.It also helped sales reps to leave feedback on how qualified they found that PQL to be and the level of quality overall.
They also identified behavioral actions that could determine whether the user would become a PQL. These actions were: (a) Number of contacts added (b) Number of messages sent, (c) In-app views of product comparison page (d) In-app views of the pricing page (e) Views and clicks of marketing emails.
Based on this data, another email automation is triggered with relevant product guides, offers, or invitations to events. These emails are also highly personalized depending on the persona - if it is a marketing persona, then marketing emails are sent. If it is a sales persona, then sales related emails are sent.
Hubspot also analyzes key data around customer activation and spend and frequency of such spend. With the help of this data, when someone buys a Hubspot product, they can predict the next product they will buy with 98% certainty. At Hubspot, one of the core activation steps is creating a deal in the CRM - that has become the North Star activation metric that their product & growth teams focus on when crafting the onboarding & product experience.
Conclusion
HubSpot's success isn't just about innovation; it's about execution. From their early days of category creation to their relentless focus on customer needs, HubSpot has consistently stayed ahead of the curve. They've not only attracted customers but created loyal advocates over the years.
HubSpot leveraged its human side by genuinely understanding its customer base and consistently coming up with solutions that could make its customers' lives easier. And its mission to build a media company is something to be admired as well.
