How HubSpot grew a billion-dollar B2B growth engine

HubSpot invented the term “inbound marketing” and has lived its 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?

The following is an edited excerpt from Startup Growth Engines: Case Studies of How Today’s Most Successful Startups Unlock Extraordinary Growth by Sean Ellis and Morgan Brown. This excerpt was provided by the authors. You can buy a copy of their book here.

HubSpot invented the term “inbound marketing” and has lived its 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 its 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.” Founded in 2006 on the concept that traditional marketing is broken, HubSpot offers an inbound marketing software platform that helps businesses “market to humans.”

The Cambridge-based company’s growth has been impressive. HubSpot began in 2006 with just three customers, and they ended 2016 with 8,440. In 2011, the company did $29 million in revenue, which was a full 81 percent growth over the previous year, then jumped to almost $53 million in 2012. As of 2012, their average customer value (ACV) was somewhere around $6,220 per customer ($52.5 million / 8,440 customers).

To date, the company has raised $131m through VC funding. 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.”

Inbound marketing

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

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’m] am biased and I know it is self-serving, but that does not make it a lie. ”

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.

Website grader

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

Twitter grader

HuhSpot’s blog: Inbound Hub

Webinars

Partner program

Highly selective hiring

Growth As a core company value