HubSpot - How to Grow a Billion Dollar B2B Growth Engine


HubSpot invented the term Inbound Marketing, and has lived it’s mantra, driving their business from an idea in 2004 to a $50M+ run rate in 2012 in the competitive marketing tools and services category. But is the story that simple? A deeper dive reveals that a deep belief in metrics, an organizational focus on growth, and a commitment to sales excellence has fueled their explosive rise.

In 2004, HubSpot co-founders Brian Halligan and Dharmesh Shah met at the Massachusetts Institute of Technology. Or, as Halligan says, “HubSpot was born out of the loins of MIT.” [1] Founded in 2006 on the concept that traditional marketing is broken, HubSpot offers an inbound marketing software platform that helps businesses “market to humans.” [2]

The Cambridge-based company’s growth has been impressive. HubSpot began in 2006 with just three customers, and they ended last year with 8,440. [9] In 2011, the company did $29 million in revenue, which was a full 81% growth over the previous year [3], then jumped to almost $53 million in 2012. [9] As of 2012, their Average Customer Value (ACV) was somewhere around $6,220 per customer ($52.5m / 8,440 customers).

To date, the company has raised $131m through VC funding. [14] Major sources of funding include General Catalyst ($5 million in VC funding in 2007), Matrix Partners ($12 million in VC funding in 2008), Scale Venture Partners ($16 million in VC funding in 2009), Sequoia Capital, Google Ventures, and ($32 million total VC funding in 2011).

Data on whether or not the company is profitable yet isn’t easy to source, but HubSpot CMO Mike Volpe explained on Quora in 2010:

"HubSpot could be profitable if we wanted to, our current revenue run rate is in excess of $20 million.  We just believe that there are tens or hundreds of thousands of businesses that we can help transform with better marketing (beyond the 3,000+ that use our product today).  We want to continue to grow fast and be the leader in this market, so we are investing in even more rapid growth.  There are many things that worry me, but our ability to be profitable is not one of them." [15]

HubSpot has chosen to focus on growth rather than profit for now, and that dedication is evident in the numbers above. So how has HubSpot made such huge gains, so quickly?


Gaining Early Traction by Practicing What They Preach

Early Traction

Inbound Marketing

Both Shah and Volpe say that HubSpot uses a combination of inbound and outbound marketing [19], but data that speaks to how much is spent on what isn’t available.

In 2009 Halligan and Shah literally wrote the book on inbound marketing—Inbound Marketing: Get Found Using Google, Social Media and Blogs. True to form, HubSpot offered promotional resources like free eBooks with content sneak peeks.

Volpe says that inbound leads are generally cheaper to acquire, and it should come as no surprise that inbound marketing has been critical to HubSpot’s growth:

“I cannot emphasize enough the importance of inbound marketing in our growth. (I know I am biased and I know it is self serving, but that does not make it a lie.) ” [3]

The company’s inbound marketing strategy covers the spectrum, but one area in which they’ve really excelled is content marketing. From the outset, HubSpot has offered resources like expert blog posts, webinars, and tools. For example…


Website Grader

Between 2006 and 2011, HubSpot’s free Website Grader was used to grade more than 4 million websites. [7] Anyone could enter a URL and get insight about which aspects of a site were performing well and which ones could be better.

Like the best free resources, Website Grader was good for both Hubspot and prospective customers—first, it helped users understand that their sites weren’t performing as well as they could be, making the value proposition of an inbound marketing system more appealing. Second, it did this for free, functioning much like a free consultation, yet the time and hassle of speaking to someone was replaced by a simple web experience. Hubspot didn’t have to pay sales staff to walk users through the process because it was automated.

This is why Website Grader (and free-but-valuable tools like it) are a win-win. Website Grader was easier to market than the actual HubSpot product, because it required no up-front investment yet provided instant value. Additionally, Website Grader brought visitors one step closer to becoming customers by showing users the need for HubSpot and collecting contact information for sales, generating tons of inexpensive leads.


Twitter Grader

Hubspot went back to the free tools playbook in 2009. When business owners were still working to figure out the appropriate application and ultimate value of social media, HubSpot launched Twitter Grader, generating a ton of buzz among influential social media types and making HubSpot a part of the growing conversation around social marketing.

Twitter Grader generates diagnostic reports of Twitter users, measuring their influence based on factors like follower ratio, update frequency, and level of community engagement; and playing off of powerful motivators such as vanity and game mechanics (like how users rank among Twitter users in their areas).

CTO Dharmesh Shah explains, “What Twitter Grader is trying to measure is the power, reach and authority of a Twitter account. In other words, when you tweet, what kind of impact does it have?” [6] Similar in form and function to Website Grader, this free tool gets tens of thousands of uses per month. [4]

When Twitter Grader first launched it set off a wave of viral awareness, with people sharing their Twitter scores with their followers, perpetuating a seemingly-endless cycle of more and more people checking their Twitter cred. Again, this free tool drove leads and tons of awareness for the company.


HubSpot’s Blog—Inbound Hub

When searching HubSpot’s blog Inbound Hub for “landing page,” you get 4,480 results. That’s a lot of content, most of which comes in the form of resource posts like “What Is a Landing Page and Why Should You Care” and “11 Simple (But Critical) Tips for Creating Better Landing Pages”—each with a relevant call to action at the end. Volpe claims that HubSpot’s addition of a Call to Action at the bottom of every blog post tripled the number of leads they were getting from the blog. He explains:

“A lot of people have calls to action, or offers in the sidebar of their blog, and those work.  But having one… and again, it wasn’t the same one on every single article, it was tailored to that article. So if you’re reading an article about, you know, optimizing landing pages you’ll have an offer at the bottom of that blog article that has something to do with a landing page optimization webinar or something like that.” [8]

As HubSpot has become more sophisticated in identifying onsite visitors and personalizing the experience, they’ve been able to drive calls to action not just for new visitors, but to re-engage existing customers as well. For example, the marketing on Inbound Hub for customers suggests new tools to try in the HubSpot suite, while new visitors will be driven to ebooks or free tools. [9]

Inbound Hub generates real results, the blog is full of useful and shareable content that results in 20% of all of HubSpot’s organic leads. [5]



In response to a question on Quora about how HubSpot got so many Twitter followers, Mike Volpe writes:

“As far as I know, we were the first company to hold a webinar on the subject of "Using Twitter for Marketing and PR" - we got over 3,000 registrations for it, and tons of new followers that day back in 2008.  And during that webinar and all of the webinars after it, we used Twitter as a discussion tool during the webinar, to allow people to chat and ask questions.  I am also pretty sure we were the first company to use Twitter for discussion during webinars - we started that in 2008.  Because of this, many of the hashtags for our webinars have become trending topics on Twitter - most recently #emailsci, but I think more than 5 of our webinars have been global top ten trending topics since 2008.” [4]

Just like with Website Grader, Twitter Grader, and Inbound Hub, HubSpot uses webinars to educate users, generate buzz, and attract thousands of new website visitors—a number of whom will eventually become customers. [5] One of their most popular webinars, Volpe reports, had 13,000 signups. [8]

Through focusing on inbound marketing as a means of establishing themselves as an authority in the field, HubSpot was and is able to generate a huge volume of relatively low cost (especially when compared to outbound marketing), high quality leads. [3] How do these leads compare to those resulting from outbound marketing? Volpe explains:

“The conversion rate from those leads, if you compare…inbound leads vs outbound, or paid, the types of things where you’re annoying people and kind of g

    • Sean Ellis (@Sean) Link

      Great post Morgan. Comparing Hubspot's b-to-b growth to the studies for more b-to-c products like Snapchat or Evernote, it looks like b-to-b marketing is a lot more hard work. Seems like b-to-c is more product driven.

      I'd be curious to know how much their value proposition has evolved since 2006.

      Overall Hubspot has a really impressive growth story and I'm sure it will be informative for lots of b-to-b marketers.

        • Morgan Brown (@morgan) Link

          Thanks Sean. One of the things I didn't get into here, is that they made a significant shift in how they price their service back in September, 2011 that based pricing tiers on the number of contacts managed by the system.

          This fundamental pricing change shifted the way users perceived the value of the product, and no doubt had an impact on marketing, messaging and value prop. While I couldn't find much about its actual impact online, I am confident it's material to the Hubspot success story—how much so vis-a-vis these other factors is a question that I can't answer.

            • Ed Fry (@edfryed) Link

              HubSpot's pricing is fascinating because it covers software use, services, usage numbers and more but targeting very different target audiences.

              This is really worth studying:*/http:/

                • Morgan Brown (@morgan) Link

                  Totally agree Ed. They also made a major shift in pricing that changed fundamentally how users valued the product. I also think it's incredibly smart, and challenging, and gutsy, to charge for training up front. It's common among enterprise software installs, but for the lower ACV customer it's a strategy that probably flew in the face of most people's gut instinct on how those types of customers would take it.

                    • Dharmesh Shah (@dharmesh) Link

                      Morgan: Thanks for the detailed write-up.

                      And, for the record, you're right -- charging for training up-front does fly in the face of conventional wisdom in our target market (SMB). But, we don't deserve credit for the courage to defy conventional wisdom -- we get credit for diligently looking at the data. We tested it both ways.

                        • Morgan Brown (@morgan) Link

                          Thanks Darmesh—and that upfront charging test must've been a heck of a test. You'd need several months of data at least to see if it made sense, right? Kudos to your team for always testing everything. Too many orgs have sacred cows that get tested around.

                    • Ed Fry (@edfryed) Link

                      I think the other key point on pricing is "hiring the right customer".

                      Annualised pricing only, with a prospecting process before being brought on as a customer means less flaky clients. Monthly pricing gives many opportunities to review "is this working yet?" and lets organisations who won't give it a chance to come onboard.

                      I see this with Qualaroo too? You really have to dig to find a budget-friendly plan for small businesses on a monthly basis to avoid tying up cashflow. But I bet those cohorts are comparatively weak compared with folks signing up to annual plans and using Qualaroo every week?

    • Jason Peck (@jasonpeck) Link

      Great post. I've attended a few events that Hubspot (Mike Volpe or Brian H.) have spoken at, and they've always shared really great insight during their talks. This kind of thought leadership is key when trying to build awareness/trust in the b-to-b space. How they get these speaking gigs? That's something I wish I knew more about :)

        • Dharmesh Shah (@dharmesh) Link

          Glad you enjoyed Brian and Mike's talks. They're really good.

          In terms of how they get speaking gigs? Simple -- through the kind endorsement of folks like you, word spreads and invitations come. So, if you enjoyed a talk from someone @HubSpot (or from anywhere, for that matter), let the organizers know.


    • David Arnoux (@Darnocks) Link

      Best piece I've read in a long time. Can't believe it took me this long to read it and I'm on every day. I really appreciate how you've taken the time to structure and detail it. I have a new "B2B oriented" client meeting tomorrow and this has given me many ideas. Thx.