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HubSpot Review


HubSpot Company Viability

As of November 2012, the company counted over 8,000 customers in 56 countries, just over 400 employees and was generating revenue at a $60M run rate, up more than 80 percent year over year. HubSpot will finish 2012 at about $52M in recognized revenues. The company finished 2011 with $29M in revenue (an 81 percent year over year increase), 5,961 customers, 304 staff, 59 service providers.

HubSpot has fueled its growth with over $100M in venture financing over several rounds.

  • On November 5, 2012, the company announced receipt of an additional $35M mezzanine round from institutional investors. It would appear this may be the final round before a planned IPO.
  • On March 8, 2011 the company secured a Series D round for an additional $32M in venture funding from Google Ventures, Sequoia Capital and
  • In 2009 the company raised a C round of $16M led by Scale Venture Partners.
  • In 2008 the company gained a Series B round of $12M led by Matrix Partners.
  • In 2007 the company received a Series A round for $5M led by General Catalyst Partners.
  • Co-founder Shah invested the first $500,000 in HubSpot followed by Edward B. Roberts, Founder and Chair of the MIT Entrepreneurship Center.

HubSpot CEO and co-founder Brian Halligan has made it clear on multiple occasions he seeks an IPO. In preparation for this move the company has upped its board and hired executives such as the CFO of Akamai to help ready the company’s financial governance. According to Halligan, “We always thought HubSpot could be a large, publicly traded company anchoring the software industry in Boston. Hiring a COO with public company experience is the next step on that path…We are on the same fast growth path of all the successful SaaS companies, and need to start preparing for an IPO.” Despite the IPO intent, Halligan isn’t pressed for time. “We want to wait until we have a $100 million run rate to go public,” he said in a published interview.

Other notable company milestone events include the following:

  • On June 16, 2011 HubSpot announced the acquisition of marketing software company Performable. By including the Performable marketing automation software in the HubSpot portfolio, customers could begin nurturing the prospects acquired with HubSpots software. The integration of this acquisition was challenged due in large part to cultural issues but in the end this addition significantly increased HubSpot’s marketing automation capabilities.
  • On July 12, 2011 the company launched the HubSpot Marketplace. This online ecosystem of integrated third party products makes HubSpot more extensible, and interestingly also includes a hub for service providers.
  • On August 18, 2011 HubSpot tweeted its acquisition of OneForty, which was apropos as OneForty actually began as an app store for Twitter, but later evolved to become a hub of guides, software reviews and other social marketing advice for marketers. Oneforty’s SocialBase, a social media management system, ultimately converged with HubSpot’s Marketplace.

Company Outlook

HubSpot isn’t your typical marketing automation software company—and not just due to a unique marketing software application. The company offers a level of transparency seldom seen in the marketing software industry. It chooses to share its financial performance and customer counts, it makes its executives accessible to software reviewers (like and it demonstrates a level of candor seldom matched by a marketing software industry largely made up of small software publishers who broadcast successes without any absolute numbers of verification.

Some factors and accomplishments which suggest HubSpot’s longevity will continue at least through the short-term include the following:

  • The company’s sky-rocketing growth shows no signs of abating, and continued venture funding provides the rocket fuel to sustain and possibly accelerate growth. HubSpot is the highest growth marketing software provider in the industry.
  • HubSpot shows the ability to innovate. The company has been able to translate ideas into intellectual property (IP) that is unique, and in fact, has created a new high growth market sector that competitors are sure to follow.
  • The company pursues a unique target market. While several leading marketing automation software vendors duke it out in the enterprise space, HubSpot nonchalantly penetrates the SMB market—which is a vastly larger target market with near endless potential.
  • The HubSpot software delivers a reasonable value proposition for its target market. When considering acquisition costs, time to value, add-on costs (or the lack thereof) and Total Cost of Ownership (TCO), it’s well suited within the financial constraints of its target market.
  • The company is fortunate to have a veteran management team, lead by co-founders Brian Halligan and Dharmesh Shah and now supplemented with industry veterans JD Sherman, Mike Volpe and David Stack. This bodes well for the company's continued performance.

However, as they say in the financial services industry, past performance is no guarantee of future results, and HubSpot faces a number of business risks and competitive challenges including the following:

  • The company’s international growth will begin its first serious effort in 2013 following the launch of a European headquarters in Dublin, Ireland (aka #DubSpot). However, whether this launch will follow the sky-rocketing growth of the U.S. market, or incur stalls or delays due to competing interests or other factors remains unclear. Also, as the marketing software functionality currently lacks global features sets, such as multi-currency management, multiple languages, an EU data center, Safe Harbor compliance, ISO 27001 certification, etc., it’s unclear whether HubSpot will receive the same embrace in Europe that it has received in the U.S.
  • Despite impressive growth, cash burn is high and growing, and there is always the obvious vendor viability risk for a company that is unprofitable. Based on HubSpot’s growth strategy and venture financing, we find it doubtful that profitability will be achieved in the near-term.
  • Competition in the marketing software industry is accelerating at an increased pace. Competitors such as Eloqua (who has gone public) and Marketo (who likely will be going public) are aggressively increasing R&D investments and assertively pursuing acquisition targets which could upend the marketing software competitive landscape.
  • As HubSpot caters to the SMB market, it is more susceptible to be encroached by a plethora of new start-ups as well as existing players advancing their marketing software solutions. This encroachment is clearly underway and will as clearly challenge pricing and erode margins in the months and quarters to come.
  • For nearly all marketing automation software publishers which link themselves closely to, the most critical risk may be that and the CRM software vendors at large, enter the marketing automation software industry directly. Marketing software vendors will incur sudden impact when (not if) or other CRM publishers expand their marketing software functionality in their CRM software products, to include lead management and marketing automation. In fact, believes such occurrence is imminent. CRM publishers Oracle and Microsoft have entered the marketing automation space with acquisitions of Market2Lead and Marketing Pilot and others will likely follow. Interestingly, HubSpot is more insulated from this market disruption that most of its competitors in large part because its mission and supporting marketing software portfolio are significantly broader than what CRM providers would likely attempt to match.

Next: HubSpot Strengths and Weaknesses >>

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HubSpot Review


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