Hello, everyone, and welcome to HubSpot's 6th Annual Analyst Day at Inbound. Let me start by saying that I hope that you're all staying safe and well. For those of you who don't know me, I'm Chuck MacLashing, Head of Investor Relations and Corporate Treasury here at HubSpot. While we're going to miss seeing everyone in person, we're excited about the event and what's in store for you today. You're going to have an opportunity to hear from some familiar faces in addition to leaders who you haven't heard from before.
I'm going to run you through an overview of our agenda and some quick housekeeping items before we jump into today's event. Here's our Safe Harbor statement, which is available on our website at ir.hubspot.com. Now, onto the agenda. We've designed this year's content to give you a comprehensive view of HubSpot's business from go to market to product strategy as well as a financial overview of the business. Once I finish up, I'll be handing it over to Yamini Rangan, our Chief Customer Officer.
Yamini will provide a go to market overview that will include how we're driving resilient growth, a snapshot of how customers grow better with HubSpot and a look at our key investment areas over the next few years. After that, we'll dive into a combined founders and product spotlight with our Chief Executive Officer, Brian Helligan our Chief Technology Officer, Dharmesh Shah and our Chief Product Officer, Christopher O'Donnell. You'll hear Brian and Dharmesh's perspectives on how businesses should leverage this time of rapid change and Christopher will present the new products and features that we've built and are launching to help our customers thrive in this new normal. After that, we'll head over to a moderated panel with our Product General Managers. We'll talk about how we build innovative products that are both powerful and easy to use.
We'll then transition over to our Chief Financial Officer, Keith Bueker, who will walk through our financial overview before we close out the day with an executive Q and A session. Just a few housekeeping items to note. First, we'll have 3 short breaks throughout the event so that you can get up and stretch your legs. 2nd, in addition to answering some pre submitted questions during the executive Q and A session, I'm going to try and answer a few live questions as well as time permits. We will open up the Q and A feature below the video feed beginning at noon Eastern, so look out for that.
And lastly, you can find the non GAAP reconciliations for the financial information we discussed today posted on ir.hubspot.com. Before I hand it over, I want to take a moment to acknowledge the unique circumstances under which we're all gathered today. Our inbound team has done an amazing job of reimagining this major event to a digital format. We're expecting more than 65,000 registered attendees from around the world this year, far surpassing the amount we had in 2019. We knew that we couldn't take the typical inbound experience and copy and paste it online.
So we expanded our content to nearly 20 different formats that are designed specifically for digital experience. We've programmed sessions, meetups and entertainment moments around the clock to reach a global audience. And with more than 260 sessions over the course of just 2 days, we have more content than ever before for attendees to experience both during and after the event. We're excited about what the future holds for INBOUND and are proud of the work the team has done to bring INBOUND to the digital stage. Okay.
And with that, I want to thank you again for joining us and hope that you enjoyed the event. Next up here in a minute, we have Yamini Rangan, our Chief Customer Officer. So please stay tuned.
Thanks so much, Chuck. Hi, everyone. Welcome to Analyst Day at INBOUND. I'm so delighted that you're joining us today. My name is Yamini Rangan and I'm HubSpot's Chief Customer Officer.
I joined HubSpot earlier this year to really bring together marketing, sales, customer success and operations, so we can align and therefore delight our customers at scale. For those of you who don't know me, a little bit about myself. I started my career as an engineer and then moved over to go to market as a professional and enthusiast of everything to do with sales and marketing. I spent the last 24 years in technology across product marketing, sales, strategy and operations. I spent about a decade across Siebel and SAP in customer facing roles and functions, and that gave me a deep appreciation in terms of how we delight customers.
I also spent about a decade across Workday and Dropbox helping both of those organizations go through a hyper growth phase and operate as public companies. Across all of those experiences, what I've really loved about my journey is applying very different playbooks. At SAP and Workday, it was the enterprise playbook and at Dropbox, it was a freemium, self serve and data driven playbook. I'm super excited to bring all of those experiences to bear at HubSpot and really looking forward to the journey ahead. Today, what I thought I'd do is really provide my early observations on the state of the business and also help address 3 questions.
First off, how do we have a model for resilient growth and what are the biggest opportunities for HubSpot? 2nd, I really want to talk about our segments and customers and specifically answer the question of who we serve and how we help them grow better at HubSpot. 3rd, I want to talk about the investments that we're making from a go to market perspective over the next 3 years, so we can set ourselves up for scale. Let me actually start talking about resilient growth. Well, 2020 has been a year of pivots, adversity and change.
And it's been a very challenging year across all businesses, and it's true for HubSpot as well. However, what has been exciting for me is really seeing the resilience within our model. As I have rolled up my sleeves and helped the company through the economic health and social crises that our teams have faced, I've firsthand seen the foundation of resilience within the organization. So what drives this resilient growth? We do 3 things especially well at HubSpot to drive resilient growth.
First, we are relentless in solving for our customers. Everything we do is deeply rooted in this philosophy. We ran a number of plays in March April this year to really help our customers as well as partners get through the pandemic. These included payment term flexibility, advanced partner commissions, moving paid features to the free tier, as well as changing our starter tier pricing. These plays were quick, well thought out and well executed.
And based on the feedback from our customers and partners, they're working well. 2nd, we invest in building 2 great products. Our platform is a product and attracts great customers. Our culture is an even more important product and helps attract great employees. We value both equally and this approach has set us up for scale.
We've announced significant product updates this year and have an exciting roadmap ahead. Our culture is really strong and it's all about empathy, heart and adaptability. COVID has certainly been a challenge, but we have responded by supporting, inspiring and most importantly, keeping all of our employees informed during this process. 3rd, the acceleration of digital transformation has really increased the demand for our platform. Our customers no longer have a choice of being offline.
There is no offline marketing. There's certainly no outside sales and there's certainly no outside service. Most of small businesses are looking to take their teams, their go to market as well as their entire customer experience online. Now HubSpot has been evangelizing this digital shift for well over a decade. Our vision matches the moment that we are in and we are set up to help many businesses through this transition.
These are the factors that are the DNA of resilient growth. We obsess about our customers. We invest in the happiness of our employees and we really deeply care about the quality of our product. Now in addition to all of this, we also think that we have an exciting opportunity ahead. We have a confluence of 3 big opportunities: market penetration, product expansion and upmarket growth.
Each of these is exciting, but the combination of all three is very rare and special even given the unique history of growth at HubSpot. Let me actually talk about each of these. Market penetration. Today, we have just over 85,000 customers worldwide, but we operate in a market with millions of small and medium businesses and tens of billions in opportunity. Even in countries and segments where we have seen significant growth, our market penetration is pretty low.
So we're set up for scale and plan to bring a lot more customers in the next few years, especially as more and more businesses invest in digital transformation. Product expansion. While we solve a broad set of challenges for our customers that have historically focused on having great front office applications. Now the traditional approach is to cobble together a set of applications through acquisitions. Well, the software is really hard to buy.
It's really hard to integrate and really hard for our customers to get value out of. In contrast, HubSpot has taken a very different approach of handcrafting all of these applications in house. And therefore, we deliver something which is very easy to use, yet very powerful. This gives us a competitive advantage. Most importantly, we'll continue improving the hubs by adding more sophisticated features to marketing, CMS, sales this year and we'll continue targeting adjacent markets.
This presents a unique opportunity for product expansion as well as total addressable market expansion. The 3rd opportunity is upmarketgrowth. HubSpot has always been a choice for startup and scale up. With the advanced features that we have added this year to hubs and will continue to add in future, we have a product that supports the more sophisticated needs of customers in mid market and corporate segment. This is perfectly aligned with the investments that we're making from a sales as well as service perspective.
The paired product as well as go to market strategy creates a lot of opportunity to drive seat and suite penetration. These three opportunities will set us up for scale over the next few years. Our goal is to bring on more customers, build deeper relationships with them and drive productivity in each of our segments. What are those customers? Where are they?
What segments do they operate in? And how do we actually serve them? Most of you probably know that we have 3 segments within HubSpot that we serve. Small Business, which is 1 to 25 employees mid market, which is 26 to 200 employees and corporate, which is 201 to 2000 employees. Now 1 third of our annual recurring revenue comes from small business, but actually 2 thirds of our annual recurring revenue comes from mid market and corporate segment.
If you think about each of these segments, they are slightly different in terms of characteristics. For small business, it is mostly a product led sales. We find that this motion is very high velocity as well as high volume. A lot of customers start with our starter tier of products. In terms of mid market, this tends to be ones where our customers talk with our sales representatives before going through the sales.
And what we also find is it's slightly lower velocity, but higher ASP within the segment. Customers tend to buy a professional as well as the enterprise SKUs. In terms of corporate, this tends to be more complex sales with a significant amount of time spent with our sales team. And they tend to be lower velocity, but make up for in higher ASP. And in terms of additions, they do go towards the enterprise queue here.
I want to actually give you a little bit of a sense of each of these segments and do a deep dive for each of these segments so that you get a sense of the customer profile as well as the buyer profile, starting with our small business segment. Now small businesses are typically getting started from a company perspective and they are looking to establish an online presence. Most of all, they're trying to build their website, they're providing blogs and social networking as well as email marketing. Now there are a couple of different types of small businesses, ones that are just looking to establish their online presence and need a marketing and sales solution to be able to do that. The other is even more interesting for us, which is the start up to scale up small business.
These are ones that are looking to have a growth platform and will continue to grow on that growth platform. In terms of incumbent solutions, typically they start off with manual processes or Excel and then from there, they typically buy a lightweight solution before looking at HubSpot. In terms of buyer profile, we typically deal with the CEO, the sole proprietor or the 1st employee within the marketing or sales organization. They are time constrained as well as resource constrained. So they want something super easy to use, super simple to use and very easy to get value out of.
Let me walk you through a case study. GetAccept is an example of startup to scale up customer. GetAccept is a sales enablement company for sales teams to design, send, track and e sign documents. They bought HubSpot to take control of their leads and to build their first online presence. Now Get Accept bought HubSpot at the seed stage and therefore we are their core platform for growth.
This gives them full visibility into the performance and they can make data driven decisions based on that full visibility. GetAccept has scaled on our platform. Since buying HubSpot, they have grown from 5 employees to nearly 100 employees and opened 4 new offices. From our perspective, Get Accepts product usage and spend has also increased. They went from being a single hub to a growth suite customer and their monthly recurring revenue has increased significantly since 2016.
GetAccept's journey shows that we've become the platform of choice for small businesses. Our software supports businesses going from start up to scale up and growing seamlessly. Now let me actually talk you through the mid market segment. In contrast to small businesses that are starting from scratch, mid market customers already have systems and strategy and want to drive optimization as they continue to grow. There are 2 paths to HubSpot within the segment.
One path is that we replace a clunky front office platform that's hard to get value from. The other path is we actually replace multiple point solutions that are too hard to manage. In both cases, it's really difficult for customers to grow and they need to drive efficiency. They typically use HubSpot to attribute ROI to marketing activities, improve lead flow and automation as well as automate their entire marketing and sales funnel. On the buyer side, mid market businesses have a lot in common with small businesses, but they have a lot more resources.
The buyer is typically a department head with the marketing, sales or customer success. Integrations are really important within this segment. Software must be easy to use for the front office teams, but it must be powerful to deliver visibility for leadership. Now let me give you an example of a mid market customer that has gotten value out of consolidating within HubSpot. Cloud Technology Solutions is the perfect example of a front office rip out where the company consolidated all of their front office applications on HubSpot.
CTS provides consulting and implementation for businesses within the cloud. CTS migrated to Marketing Hub from a clunky front office solution. This migration was led by our premier services team. It included 20,000 contacts, a lot of templates and workflows from a marketing perspective, but it only took 3 weeks. This time to value is a huge consideration when switching platforms and CTS needed to hit the ground running.
Beyond our product, HubSpot Academy is a core differentiator. CTS is an example of a company that got tremendous value from Academy for all of their core users of marketing and sales. All of them are certified on HubSpot Academy. Within 6 months of adopting HubSpot, the conversion rate improved by 10%, leads have increased by nearly 30% and the website traffic increased by over 80%. Since that initial migration, CTS has added additional portals as well as hubs and their monthly recurring revenue has increased by 100% since 2017.
Ease of migration and time to value makes it easy for businesses like CTS to consolidate on HubSpot. Let me actually talk about the corporate segment and do a little bit of a deep dive. Corporate companies are siloed and complex. They have a lot of processes. They have a lot of systems and they have a lot of handoffs that slows them down and they're looking for powerful and easy systems to use to create alignment within their go to market functions.
HubSpot usually replaces a custom in house application or another enterprise CRM within the segment. And corporate customers often use HubSpot as the system of record and engagement to unify go to market strategies, remove friction and really drive cross customer insights. On the buyer side, this is a pretty sophisticated buyer and with complex needs and they typically find us through external market research firms like Gartner. It is no surprise that integrations matter even more within the corporate segment. And time to value as well as ease of use are very, very critical.
They want easy configurable solutions that do not require an army of IT personnel to manage. Cascio is a perfect example of a company that consolidated on HubSpot's growth suite and removed complexity from its go to market. A number of you may have heard of Casio. They an electronic manufacturing company with both consumer as well as commercial divisions. They had disparate systems across B2B and B2C divisions and bought HubSpot to unify those systems.
Cascio uses Marketing Hub, Sales Hub, CMS Hub, as well as 18 different integrations. The company has built their entire customer journey on HubSpot for their B2B as well as B2C divisions. Since implementing HubSpot, Casio has seen over 10% increase in traffic, huge nearly 500% increase in leads. On the HubSpot side, Casio started as a marketing hub customer, then added sales, CMS around a year later and their MRR has increased almost 55% since 2016. Casio demonstrates our ability to power significant growth for very large businesses.
All of these are examples of segments and customers where we add tremendous value. We have reached a level of clarity in terms of the segmentation strategy as well as go to market strategy. At the same time, in the last few years, HubSpot has been focused on expanding the suite of our hubs. We have continued making our free product more valuable and we have built real power in the enterprise tier. Our segmentation strategy and product strategy are completely aligned.
This alignment creates the foundation for us to make multiyear investments and tilt our overall go to market strategy and drive growth. Specifically, we will focus on 3 areas of investment. First of all, we will be investing so we can improve efficiency within the small business as well as the mid market segment. We already have a great product led motion within the small business segment, but we are going to invest in making this best in class. In terms of post sales, we'll be investing to ensure that it is driven by technology.
Both of these motions, both the sales motion as well as the post sales motion is going to be aided by data driven models so that we can identify the propensity of our customers to buy and therefore engage with technology. All of these investments will result in customer experience that is delightful and also efficiency within the segment. 2nd, we will drive productivity within the mid market and corporate segments. As we continue rolling out enterprise features like custom objects, partitioning, as well as permissions this fall, we have an opportunity to meaningfully increase the ASP within our mid market and corporate segments. We're making go to market investments across our organizations in order to support this.
Everything from sales process, methodologies to doing more targeted marketing, as well as improving our systems. This will help us drive seat and suite penetration over the next few years. 3rd, we are investing even more in partner driven services and building an increasingly diverse partner network. For every dollar our customer actually spends with us, they will spend an equal similar amount in terms of services. As we execute on the previous plays, we will bring on more customers and our services opportunity will grow.
The partner program has historically been focused on resell. In order for us to grow better and for our partners to grow better, we are investing heavily in partner enablement, certifications and training, so partners can own majority of the services opportunity going forward. In addition, we will continue to bring our partners a much more diverse skill set. We started about 10 years ago with mostly marketing agencies. Today, our partners are marketing, sales, service experts, CMS migration experts, CRM implementers, integration experts and the list goes on.
We will continue to bring our new categories of partners to serve diverse need of our customers. This is a huge win for customers. When customers work with our partners, they get a lot of value. The customer dollar retention improves and revenue retention improves. This is a win for partners who have tangible opportunity to grow their businesses on HubSpot.
Therefore, this is a win for HubSpot. All of these investments are going to set HubSpot up for scale. As we look ahead to the next few years, there are 3 takeaways I want to leave you with. First, we are in an exciting phase of growth with the convergence of 3 big opportunities, market penetration, product expansion and upmarket growth. 2nd, our product and go to market strategies are clearly aligned and enable us to see opportunities to drive efficiency and productivity like never before.
3rd, we are making investments in each of our segments that will help our customers, our partners and HubSpot grow better. We are entering a very special chapter of growth within HubSpot and I'm really excited about the journey ahead. I hope that you enjoy the rest of the day in front of you. Next up is Brian and Dharmesh discussing how companies, employees, customers and our industry will thrive in the new normal. Thank you.
Wow. What an unusual time. I never anticipated a year ago we would be sitting in an empty Fenway Park kicking off inbound.
Yeah. I think it's going to be fun. It feels a little bit surreal sitting here at Fenway Park, instead of being amidst all the inbound goers.
It's not the same as other years. We miss all the humans, but great, great opportunities for attendees to connect with each other. I think that's going to be the best part.
Fun line events are actually great for antisocial people like me. It's like I get to connect. I live on social media, so this is going to be great.
What's truly unique about what's going on right now is that there's 3 major crises at the same time. And all three crises are impacting businesses in a major way impacting HubSpot impacting your business. Certainly a health crisis going on. There's an economic crisis and there's a crisis of conscience W shaped economic recoveries. They didn't have any classes on worldwide pandemics.
They didn't have any classes on woke leadership. So I'm trying to figure out as they go along here. And it's honestly, it's been really challenging and in some ways really interesting. Certainly been an interesting 6 months. More changes happened in this last 6 months, the last 16 years.
There's no training for this and no playbook.
And it's different than when we were all in the office together relating face to face.
I what's important for folks to realize is that this is not yet the new normal, right? There's nothing normal about us sitting here in Fenway Park in an empty stadium. There's nothing normal about millions of people being in quarantine. There's nothing normal about our kids spending more time on Zoom than we are, right? It's not normal yet.
That's something that's hard for me personally.
There's kind of two dials I have that have changed quite a bit. I have peacetime mode and I have wartime mode. And holy crap, has it been wartime in the last 6 months? I mean, it's impact everything we're doing. Yes.
I think the role of technology is really changing and that's something my team is really thinking about. Everybody from my 1st grader kids to my retiree parents are relying on technology, not just for productivity, but for every kind of human connection right now.
You feel like a heavier responsibility?
I feel like there is a responsibility on product teams. We're reaching out to each other to work, but also just to connect on a human level.
I think one of the skills that forward looking companies need to lean into is they need to be able to think about how do we run amount of collaboration that happened over time was going up. It's gone through. I don't think like, the amount of collaboration that happened over time was going up. It's gone through the roof in the last couple of years. I don't think we're going back to 2019.
I think 2022, 2023 looks a lot more like today. And great managers and great leaders figure out how to lead through Zoom and lead through Slack. I just think back to when I was a kid and my dad, every morning, he'd get up and put his start shirt on, his Brooks Brothers suit, his hard soled shoes and drive to General Electric every day and they do it again on Saturday morning. He had to go to the office to get anything done. And contrast that with myself.
I wake up every morning and I put a nice shirt on, but I wear my pajama bottoms and I don't wear any shoes. I'm in front of Zoom all day. Big, big changes. For me, I'm kind of hardwired to think of change equals opportunities. So I'm cautiously optimistic for really leverage the change, you kind of really leverage the change
and kind of survive in the new normal, if you will. Yes. And thrive in the new normal. Yes.
I have a strange hobby. I kind of fashion myself as like a social anthropologist. I look at the way human behavior is changing and try to think how can companies change the way they work to match that. And it's that odd little hobby that I have that led to the idea of inbound marketing that Dharmesh and I came up within HubSpot in the first place. The humans were changing the way they shopped and the way they learn and the way they make purchase decisions and marketers need to change the way they go to market to match it.
Today feels similar to me where employees are really changing. They're really changing their expectations of their employers, of their leaders and companies, well, modern companies need to change the way they think about all that stuff and match it up with a modern employee. It's a very interesting time. And I think forward looking companies that take advantage of these changes and lean into them will really benefit post COVID.
You talk a lot about this change that's happening and some better than others. But some companies are kind of making the minimal changes, kind of holding us like, oh, we're just going to do these little things and we're going to hope that the world goes back to the way it was. This is not a fad, this is the future, right? We see too many companies sometimes hugging the past too hard. It's like, okay, I'm just waiting for it to kind of go back to the way it was.
And as far as it makes me feel, it's the reality is you can't turn the clock back and party like it's 1999. I'm still an optimist. I think we'll be able to party in 2029, but we need to get these changes in place and they're going to be long endearing.
One of the most interesting things that's gone on in my industry, really all our the front office industry, the tech industry, marketing and selling is, boy, supply and demand have really gotten out of whack. Most companies now, if if they were very office centric, they're going to be on some sort of a spectrum where they encourage diversity. So you're going in your company from competing with a couple of local companies that you're competing for talent with. So you're competing for talent with everybody across the country. You're competing with HubSpot, with Google, with every company out there.
So supply and demand is going to get tougher. The market for great employees is going to get harder. I think great companies are going to have to step up their culture game to attract and retain great people.
Brian and I have been obsessed with culture at HubSpot since the early days. And we think of culture as a product. We build a product for our customers and culture is the product that we build for our people, for our team. Now there are 3 features that have always been in demand since the early years of HubSpot. Number 1 is people want an aligned mission.
They want a mission that they can kind of get behind. Number 2 is they want remarkable autonomy. They want the ability to make decisions, even wrong ones sometimes. And that's the best way for them to learn. And 3 is they want brilliant peers.
They want colleagues that they respect, admire and enjoy. Now, since COVID, we still have all those three features. They're still very much in demand, but there are 3 new ones that have kind of popped up and have an upward sloping curve. Number 1, people are looking for flexibility, flexibility in terms of where they work from and what hours they work. Number 2 is they want transparency from the culture.
They want to know what's going on inside the companies and inside the leaders' heads. And number 3, they want diversity. And the reason they want diversity is the best people want to work on the best teams and the best teams are diverse teams. So if you want to thrive in the new normal, the way to do it is to build a culture that meets the demands of the best people. You have to put those features in.
At HubSpot,
we've been leaning in hard on diversity inclusion for a while now and made really good progress. I'm proud of the progress we've made. And our diversity inclusions initiatives have been really internally focused and we've tried to walk the walk and talk the talk. We're starting to talk a lot more externally about it. We feel like it's our responsibility to try to move the needle.
Here's the thing about history and whether it's the history of racial injustice or the history of business, people think it marches and this is march of history. Doesn't.
It crawls.
And then once in a while, it leaps. We're mid leap right now. When I think of racial injustice, it's really crawled. There was a big leap in the 1960s. There's another big leap happening right now in 2020.
And what's different about the late '60s and today is I think corporations like HubSpot and others can play a role in it. They can speak out about it and can help move that needle. And I think in 2,030, when people look back at today, at least for myself, I want to be proud of the part we played in trying to move that needle and being proud of that leap that's going on in society today.
I have a renewed empathy for our customers. We've been talking to our customers a lot and you hear these stories of how they're dealing with change and how they're just trying to kind of push through it and survive. It's always thought of HubSpot as a relatively empathetic company and really understanding our customers. This has really brought to light how important that is. You don't just treat customers with remarkable respect, but with exceptional empathy.
And one thing that I love is kind of what we've been doing kind of to get the minds of customers and really understand them.
I kind of think of HubSpot as for a long time, we were obsessed with that relationship between ourselves and the prospect. Over time, we shifted that, and we're obsessed with our relationship with ourselves and our customers. I think that's been healthy, and we've done a whole series of things that have brought us closer to our customers and increased that empathy. Like some of the stuff I like that we're doing is we do that monthly staff meeting that's all about the customers. We have the customers I
love that. By the way, it's not just that we get to hear from customers. We get to do it together as a group.
So we
have this kind of collective experience hearing those pain.
Hearing that pain together is useful. Every time we have a company meeting, we have a customer present at the company meeting, like we've really become much more customer centric. I think there's going to be 2 types of companies that come out of this. There will be companies that are leaning into the changes that are happening now or leaning into online marketing, inside selling and there's companies that are just trying to get back to 2019. I think the future 2022 looks a lot more like today than it does like 2019.
So I'm very optimistic for companies leaning into the future right now. A lot of companies are relying on outside selling, a lot of companies relying on offline marketing. But beyond that, I think there's a lot more people have to do. And I kind of think it's almost like a food chain where you got companies that are very human centric go to markets where most of the interaction is human to human. And they have companies like all the way on the other end that you only can deal with computers.
Like if you're dealing with Google, it's computer to computer. I think people need to kind of slide in between where those humans need to rely on computers more and make them more effective to give them leverage. So that's one step down. Another step down is more, gosh, much of that interaction is online. Much of that interaction is self-service with humans really helping those computers and accelerating that.
So what I think we're seeing happen is forward looking companies are starting to slide down that food chain. A lot of HubSpot customers I kind
of think are here and are sliding here. That makes sense. What do you think? Here's how I think about it. And I promise there's no math involved.
Good.
Actually, there's a little math involved. I think trust is more important than ever, likely because it's scarcer than ever. And trust is this abstract thing. So what I like to do is like to think about trust like an engineer thinks about trust. Well, I have to think about everything like an engineer thinks about things.
So simple math, I promise it's not too heavy. The way I think about it, trust is this kind of prediction score. So the trust score for a company is the probability that they're going to do something good, the thing you expect minus the probability they're going to do something evil, the thing you don't expect, right? So we've been focused on this. It's like, okay, are they going to deliver on the thing that I want?
But there's also this side that's shown up a lot more lately in terms of doing the things I didn't want them to do. And it's that kind of interplay that's important. So how does this help companies thrive in the new normal? Realize that your customers are looking at you with much more scrutiny now than they ever have, which is actually good news. You have the ability to stand out, to recognize that trust is going to be important for the long term.
And then recognize that every decision you make, every action you take will either improve your trust score or it will decrease it
and act accordingly.
I like that Darmesh. Here's how I kind of think about trust. Since 2,006, we started HubSpot. Like the importance of trust has been going up into the right. I think the reason that's been going up into the right is that people don't trust anybody anymore.
They don't trust the media, they don't trust the government, just like there's a major trust deficit going on. They don't certainly don't trust marketers and sellers. This importance of establishing trust been going up, think COVID has pushed it up like this. So if you want to thrive in the new normal, you've got to maximize that trust score. Kind of how we came up with inbound in the 1st place, kind of how we came up with is looking the way people shop and learn and buy and helping companies adjust to that.
Holy cow, is there a lot of change going on these days. The early adopters of inbound marketing, wow, did really great. I think the people who are early adopters of the best practices going on today, they're going to do great coming out of this. So whether you're a marketer or a seller or chief revenue ops or ops person, I don't think you want a band aid. I kind of think you want to lean into these changes.
I have
a 9 year old son, Brian, as you know, and just the other day, he was like, Daddy, no, you don't have to worry about telling me where babies come from. I have a friend in his late 11s. I'll figure that out.
Well, what I want
to know is like how have buyers changed? What should companies be doing to kind of thrive in the new normal? And so my response to that is buyers are human, You're human. I'm mostly human. So the question is like, if you want to know how buyers change, like ask yourself, have I how have I changed?
So chances are, Brian, you're not taking a whole lot of in person meetings. You're not allowing yourself to be wined and dined by some salesperson. Chances are your time is even more scarce than it used to be. And chances are you have like 0 patience for someone else's sales process. You're just like, just let me frigging buy the thing.
And so for companies to thrive in the new normal, what they need to do is deliver a purchasing experience that matches the customer's new normal, not their old normal. That's how you thrive.
Yes. One of the things that I think companies need to do to thrive in the new normal is kind of sand down the rough edges in their products, of course, but also their go to market.
Exactly. Yes. So we we're good at finding bugs in our product and fixing those bugs. And we're doing the same thing, applying the same kind of approach to the purchasing process. Like what are the bugs in there?
So HubSpot has a product called Marketing Hub, which is priced based on the number of contacts in your database. And that made complete sense back in the day because that's how everybody prices a marketing product. It turns out, HubSpot's not just in the marketing business. We have HubSpot CRM now, so we're in the CRM business as well. And the bug that we uncovered is that there were lots of customers that said, I want to keep all my contacts in HubSpot CRM, but I don't necessarily need to market to all of them.
And what customers were doing and this gives me nightmares is they were putting them like in 2 different slots. I'll keep all my contacts over here in CRM and then I'll keep another set of contacts over in Marketing Hub. That was a major bug. So in October, customers of Marketing Hub can use the CRM and store as many contacts as they want and only pay for the contacts that they want to market to in terms of Marketing Hub. So how can companies apply this idea to thrive and grow better?
It's really quite simple. You need to dig into your purchasing experience, find every little bug, especially the bugs that really bite customers in the crisis and fix those bugs. One of the things I love about the things your team is doing on the product side is around kind of solving for what we think of as like the time to joy. It's like I bought this thing, how long before I experience joy. In the old kind of enterprise world, it's like you may never experience joy, not one.
And in the off chance that you might experience a little bit of joy, it will be like weeks, months or years in advance. And now it's like people's like, yeah, I bought this thing. I want to start feeling joy like the same day. That's the thing we're solving for is how can we make it quick and easy to get started and start getting value. I think that's one thing that's shifted.
What I think is super cool about the product team in HubSpot is a couple of years ago, you guys made a giant investment in user research and design and we're starting to get returns on that investment. It's we're well known for easy to use. But this is the year we started adding sort of legit power to the platform and watch out. I think the products really stepped up. So I'm super proud of what's going on.
HubSpot is here to help you adapt to any new normal that comes your way. Over the past year, we've been working to add deep flexibility and power into our already easy to use software. Let's begin as we often do, hearing from a customer we truly admire.
SurveyMonkey's mission is to power the curious. We enable organizations to turn feedback into action. We're proud to work with over 335,000 organizations globally in helping them gather customer feedback, gather feedback from their employees so that they can then take action on it and make the world a better place. SurveyMonkey got started about 20 years ago and for the 1st 17 years of that period was exclusively a self serve organization, so selling online to a sort of transactional manner. About 3, 3.5 years ago, the company began selling into the enterprise and that really led to an acceleration of growth.
And so we've been continuing to accelerate growth as we continue that expansion into the enterprise, which means that we need enterprise grade technology to do exactly that on the marketing side. So when I think about what technology should do for your marketing team on the marketing automation side, it should accelerate you. It shouldn't slow you down. It should help you, not hinder you. And above all, I think we're also spoiled by consumer tech these days.
It should be a pleasant experience. It should be easy to use and intuitive for the team. And if I'm honest, prior systems that we're using really didn't deliver on those things. So that was really the thing that drove us to take a look at the landscape and figure out which technology would best suit our needs. And that was what led us to HubSpot.
As a result of adopting HubSpot, I can tell you my team is doing cartwheels. It's and that's barely an exaggeration. So when you think about bringing a more streamlined approach to the way you operate, what we've been able to do is literally improve by a factor of 10, the speed and the simplicity with which we're working. So for example, with our web forms, we've gone from having 10 separate forms to 1. We've gone from having something like 120 form fields and hidden values in those forms down to about 12.
And with the result of that, everything that we do is faster, it's more streamlined, the team can move more nimbly, and that enables us to get more done. It's almost hard to think about this year a marketer without just sitting down and taking the deepest breath you can. It's just been a crazy year for all of us. As I think about the new normal for marketers, this is definitely an era in which agility and flexibility are at a premium. You need to be working in a streamlined way.
You need to be as efficient as possible because especially as marketers, we're often being asked to do more with less or what we have. And so I really think that, that becomes super important. Another aspect of this world, given that we're all working remotely and having to communicate across the miles, is having a single source of truth and being really clear and consistent and aligned on the metrics in the business and what's going on. And we found that with HubSpot's help, we have a much more streamlined, clear and single source of truth that we can relate to in these times. Clearly, as you invest in new systems, you do that with a long term view in mind.
And it was really important to me and my team that we found the technology that we thought would scale with us. We are in fast growth mode at SurveyMonkey. Our enterprise business continues to really accelerate. Our self serve business is also super robust. And as we continue to think about our tech stack, that scalability is super important.
And so with that in mind, HubSpot was the perfect partner that we chose in the process, and we're really confident that, that system is going to scale with us as we grow.
Okay. This is mind blowing. Did you know that the average B2B deal involves 6.8 stakeholders? It's not just sales selling deals, it's everyone, especially marketing right beside them. To thrive as a business, you need to change the way you do business.
And that starts with how you build relationships with your customers. Let's talk about ABM, account based marketing. You see, ABM is all about sales and marketing working together to close deals at a specific set of target accounts. Unlike conventional volume based marketing approaches, ABM is all about creating targeted personalized content to attract and engage key contacts all across companies. It's about getting your brand inside the building and into daily conversation at target accounts.
In May, we launched a new set of native ABM tools now available across both sales and marketing hubs. Things like company scoring, default ABM properties, company based list, AI powered target account recommendations and ABM reporting. And like all of our products, we have integrations with many of the tools you already use for ABM, including LinkedIn, Sigster and Slack. Let's keep the focus on targeted content. Personalization is a necessity in this new normal.
As more marketers continue to run the same playbooks, their customers are starting to tune out their content, the same stuff they once found really helpful. To thrive as a business, you need to change the way you market. And that starts with how you communicate with your customers. I think it will come as no surprise that 80% of customers are more likely to make a purchase when you offer a personalized experience. Today, Marketing Hub unlocks even more ways to personalize your marketing using HubSpot data with big improvements to email personalization, ad targeting and conversational marketing.
We'll definitely help you keep up with changing customer expectations. This is probably my personal favorite, brand new advanced targeting and HubSpot conversations. Now you can trigger unique chat flows based on a visitor's country or their previous activity on your site or whether the viewer is in a particular list. It's pretty nice. And what do you get?
Well, better engagement rates and a more relevant customer experience. But how do you know this personalization is working? How do you know you're thriving in the new normal? Reporting, that's how. The key to driving personalized customer experiences is connected data.
When your data is connected, you can tie every marketing interaction to key conversions and revenue. So you can identify trends and optimize the buying journey for future customers. Last year, we launched multi touch revenue attribution. Today, here's an even bigger step. A brand new customer report builder that pulls in even more of your HubSpot data.
Reporting is no longer limited to standard HubSpot objects like contacts, companies, deals and tickets. As the world changes, your reporting needs to be able to stay one step ahead of every new normal. To pull custom reports in HubSpot on every object and event, including your emails, ads, social posts, campaigns and more. We've also expanded product limits on reporting in the majority of HubSpot portals. So your HubSpot reporting adapts to every change that comes your way.
We're seeing the world's fastest growing brand scaling beautifully with Marketing Hub Enterprise. We love Trello for 1. And they've scaled their content strategy internationally, launching HubSpot hosted blogs in 5 languages. They didn't just grow their organic traffic by 40%, they cut their publication time in half while doing it. And the list goes on.
Airstream, monday.com, many other global enterprises are flourishing as they grow and change. 2020 has been a huge year for Marketing Hub to say the least. But one of the biggest improvements we've made for marketers in 2020 isn't in Marketing Hub at all. It's actually a brand new product line specifically for building and managing web experiences. We're thrilled about this web ops movement.
And there's no one better to tell you about it than our friends at the World Wild Life Fund.
At WWF, we want people to understand that nature is more than just the forest that you go visit on a weekend or elephants in the Serengeti a long way away. That actually nature is the water that we drink and the power that comes out of our sockets. We are working to sustain the natural world the benefit of people and nature and working to create a world where people and nature can thrive together in a sustainable and harmonious way. One of the problems that we've typically had with our web systems today is the integration with things like our CRM and our emails and our social media just wasn't there. And these were all very existed on very disparate systems.
So our emails are sent to one system, our content is managed through another, and then our social media is managed through yet another. That makes it really hard to produce an integrated comms approach. So what we were looking for when we were investigating a new technology solution for Earth Hour is a way we could bring those all together and unite them to be able to deliver really targeted communications messages throughout the range of our channels that we have with the ease and flexibility to be able to deliver really great content to our users. And that's why we, in the end, settled on HubSpot as a solution because not only did it have that content management system that allowed us to replace our website almost like for like, but also to then integrate in our other comms channels that allows us to target and segment audiences and be able to map a user throughout the full journey of their experience across all of those various touch points. So like many organizations around the globe, we've had to pivot and change a lot in light of the COVID response.
And the ability for us to really quickly change and update our content, but also contact our supporters and let them know what we're doing and how we are changing the work that we do and our approach to our conservation work around the globe has been so important. HubSpot has really allowed us to quickly go on and update content at a moment's notice as we've needed to, but also use the other comms channels that we have at our disposal, including our email and our social media channels to effectively target those people who we know are interest in specific areas of work and let them know how that has been changed and what we are doing to address the new normal in the world that we are living in today. It's so much of what we do that can be affected by the realities of the new normal in the world we're living in. And what that really means is that our staff are stretched and we have fewer resources at our disposal. And a lot of these events and moments that we've been building up to for years now have actually had to change, have gone online, have moved.
We've had to really drastically and quickly change our plans in retaliation to that. And HubSpot has been really useful for us over the last few months. With activations such as EarthOW, we've been able to change how we've approached our communications with our users, letting them know how and when events are changing around that particular moment. And actually, personally, as I think of the year ahead, it's the worries that come for the lack of clarity that we know about what's going to be happening and how quickly we might need to change again when other situations arise over the coming months. Because the success we've had with HubSpot to date, we really see HubSpot continue to grow and develop with us over time.
And we are excited about working, continuing to work with HubSpot over the coming years as we continue to grow and think about other ways we can integrate HubSpot into our supported journeys.
CMS Hub is easy enough that the team can build amazing interactive experiences in seconds. Whether you're a marketer, web developer or in IT, you can get what you need, style, security, reliability with CMS Hub. As a modern web developer, you'd expect to be up and running immediately. HubSpot leads the pack of this exciting new generation of web operations platforms, a new way of creating web experiences that makes developers and marketers more powerful than ever. Here's the ideal developer experience.
A clean command line interface gets you running and deploying a fully scaffolded boilerplate site in literally seconds. Every change you make shows up instantly while you still get to keep using your favorite existing power tools like Visual Studio and GitHub. You can create custom modules, templates, themes, anything you can imagine, and easily and instantly have your changes sync to HubSpot. Our CMS is state of the art for modern web devs. This is the workflow you'll reach for when inspiration strikes.
Trust me. It lets you do unfairly cool and powerful things that clients or folks around the office just won't even believe. Here's what's so magical though. Everything the developer creates materializes to the marketer. With most platforms, the marketer still needs the developer to make changes, but not here.
It's all super flexible and drag and drop for the marketer once synced up to HubSpot. The marketer can go nuts, add modules, change button sizes, even embed videos quickly and easily in a matter of seconds. Need to create a custom graphic? You can do that without leaving your HubSpot account using the brand new Canva integration. Click the Canva button from any of your HubSpot pages, design a custom graphic using over 60,000,000 photos, illustrations and icons and insert it right into the page.
You can access Canva anywhere you upload files in HubSpot to. Your website's the beginning. Once your content feels right, you can optimize your page for search. We've built over a decade of SEO best practices into CMS Hub right off the shelf. Update your page and watch your SEO scorecard change as you make improvements.
If your IT team isn't bought in, your website is dead on arrival. Good news. CMS Hub Enterprise provides speed, reliability and security with features like activity logs, single sign on support, out of the box SSL, DDoS prevention and much more. CMS Hub is a developer's dream without becoming a marketer's nightmare. CMS Hub is now available in 2 tiers, professional, which helps you build a beautiful website to grow your business and enterprise, which gives scaling companies even more power and control over their online presence.
Don't just build a website, build a phenomenal customer experience. An engaging website is the backbone of a great customer experience, but expectations are higher than ever. Over 80% of consumers say a great customer experience is one of the most important factors in making a purchase decision. And more than half of consumers say it's even more important now in light of COVID-nineteen. To thrive as a business, you need to change the way you delight your customers.
That's why we're continuing to make big investments in Service Hub to help your customers and frontline service team without sacrificing operational To help you delight your customers, we've built a new channel where you can answer their most pressing questions. In app chat is now in beta, joining Facebook Messenger, web chat, email and forms inside the conversations inbox. You can now easily chat with customers while they're logged into your web app or welcome visitors with dynamic messaging. Customer experience is crucial, but can't come at the expense of your team's efficiency. Service Hub now has out of the box service automation tools that save your team time.
Use an automated bot to manage common interactions like answering FAQs or informing a visitor of your team's hours of availability. Or you can use automated workflows to trigger actions when tickets reach a certain status. There's also a new native integration with Jira. It keeps your support and engineering teams perfectly aligned, saving you time and creating a smooth customer experience. Service reps can create Jira issues right from a ticket record or attach an existing Jira issue to a ticket and you can automate your ticket process with workflows.
It isn't just your company that has to learn how to adapt to an ever changing world, but your customers as well. Service Hub is here to help you and your customers thrive in the new normal. Our marketing, CMS and Service Hubs have seen huge improvements this year, not just in power, but also in ease of use and flexibility. But when it comes to sales software, many companies are still settling for clunkiness and complexity. Our next customer, Cancer IQ, was too.
Then they switched to HubSpot and their experience with sales software completely changed.
Cancer IQ's mission is to use genetic and genomic information to help providers better predict, preempt and hopefully prevent disease, starting with cancer. We take really complex information and simplify it so that people can actually empower themselves in any community to deliver precision healthcare, a more tailored and genome based approach to medicine. Really just how we worked in the beginning. It was very inefficient. We started off using HubSpot purely as a marketing tool.
And as soon as it was time to convert that into an actual deal opportunity, I would take all that information and copy it into Salesforce. But as we started to scale, it really didn't make any sense to have 2 different platforms. And I think one of the things that really helped us choose the HubSpot sales CRM, really about that user experience. So we ultimately went with the HubSpot sales hub because it was so elegant to use. And as we were training new salespeople and building that infrastructure, there were just so many features that were helpful for me as a leader of the organization.
HubSpot has done incredible things to make my life as the Chief Executive very easy. Some of those have been playbooks and making that something that is easily transferred to my growing sales team. Some of it even most recently were a lot of the HubSpot reporting tools to measure sales activity, especially as more and more of our company is working remotely. This is where HubSpot really came in as a handy support for us in making the transition to more of a truly fully digital lead generation process. It's been a really crazy year and HubSpot has helped us thrive through this crisis by just being really nimble and able to take our in person marketing and sales strategies and completely convert them into something you can deliver and And we've been able to thrive in this new normal because we've been able to convert so quickly into this digital era.
Has really been something that can serve so many different purposes based on the stage you are in. And where I am now, again, I'm not in a direct marketing or sales role. I'm still finding every day that there's new functionality that helps me be better at my new job. And as I think about all the things that are going to be needed for me to continue scaling this company, I've got everything that I need in this platform and just need to invest in more of those things as the time is appropriate and when it's needed.
To power whatever new normal you're trying to achieve, Sales Hub Enterprise includes an enterprise grade CRM that matches the way your business works, starting with custom objects, which I'm excited to announce are now available in HubSpot. With custom objects, you can store any data in HubSpot, including subscriptions, students, shipments, anything you can think of. No matter how your business changes, custom objects are flexible enough to adapt with you. Here's the best part. Custom objects work just like standard objects in HubSpot, so you can easily create and manage them, set up workflows and run reports on custom object data.
Now, custom objects are especially useful to sales, but they have endless use cases across marketing and service too. That's why they're now in data across all enterprise accounts. To Today, with custom Today with custom objects and advanced permissions, you have the flexibility and control to build and scale your business right on HubSpot. But what about sales reps? In my experience, reps spend most of their time wrangling their CRM and entering data, not selling.
That's why Sales Hub Enterprise doesn't just provide the power sales leaders and sales ops need. It also provides the ease of use that sales reps want. So they can spend less time managing software and more time connecting with customers. Sales Hub Enterprise supercharges your sales with AI. For example, HubSpot's artificial intelligence automatically scans a prospect's email signature and pulls all the relevant information, name, job title, company, right into CRM.
A lot of companies promise AI, but HubSpot AI is tangible, practical and valuable. AI takes some work off your sales rep's plates. For the rest, HubSpot sales engagement tools make the daily routine even more efficient. Think more robust mobile app, bulk enrollment and sequences, improved sales navigator integration and much more. To help reps close more deals faster, we've enhanced the configure price quote or CPQ feature set in Sales Hub Enterprise by making our quotes more customizable and the product library much more flexible.
Sales Hub Enterprise also works effortlessly alongside your accounting software. With a new set of accounting integrations and APIs, you can create invoices, associate tax codes, use multi currency syncing and much more with your favorite accounting software directly from the HubSpot deal record. We have new native integrations with QuickBooks and NetSuite, new third party connections with global accounting partners like Xero and Newbox in a brand new set of accounting APIs to enable connection with your back office system of choice. To tie everything together and optimize for the future, your sales leaders need total visibility into their rep performance and deal pipeline. Sales Hub Enterprise brings together all your sales data and arms your sales leaders with everything they need to plan their year.
The all new sales analytics tool gives you rich insights into the overall health of your sales pipeline, so you can coach your team and improve outcomes over time. And the new sales forecasting rolls up team performance and allows for manual adjustment, So you can create dynamic sales forecasts that won't compromise accuracy for ease of use. Best of all, it includes a rep view. So managers can hone in on individual rep performance in their coaching sessions and 1 on ones. For far too long, companies have turned to sales CRMs that are powerful and well known, but painful and not well liked.
At HubSpot, we believe you shouldn't have to settle for bloated CRM software. Sales Hub Enterprise is easy to use and loved by all. It eliminates friction, brings tools together, puts people before process and empowers sales teams to do their best work, helping increase efficiency and sales. No wonder it's a leader across every segment on G2, including enterprise, and is number 1 in satisfaction across all these segments. We are just getting started.
The new sales of enterprise featuring custom objects and so much more is now available. Today, we heard from just a few companies that are learning to adapt in the headwinds of change. And we saw how HubSpot's new products will help companies not just survive, but thrive in the new normal. Throughout every change that may come your way, our promise is to be right there beside you, growing better together.
The way you have traditionally built an enterprise software company, there's kind of a playbook. And it's largely you're buying companies, you're kind of using acquisitions to kind of build up your product and you kind of cobble it together. And you get that enterprise power on the back end, but you also get that enterprise front end. I think the future of software, I think it's finally going to change where you build it from the ground up, you hand craft it from the ground up, and you build it internally with love. And you'll get that nice consumer front end matched.
I think you can really match that now with an enterprise back end.
I think you're totally right. I think the operative word in this new age is easy. So you look at Zoom as an example. Zoom didn't invent video conferencing. They simplified it.
They simplified it to a degree that not only could kids use it, but their parents could actually use it too. It actually like people know how to use Zoom. And I think for too long, enterprise companies have been kind of hiding behind this, oh, but it's supposed to be complicated and our buyers are really demanding. Yeah, there's nothing more demanding than toddlers and teens in terms of software. That's a demanding group, right?
People of all sizes use Zoom, of all sizes use Slack. There's this new generation of software companies that are more like Apple than the old school tech companies.
I think that's exactly right. To your point about the flexibility in our days, our schedules are so fluid, our lives are so intertwined that it blurs this distinction between business Zoom, Zoom, to Postmates, to Slack, back and forth all day. When there's friction there, it's much more obvious than when we were sitting in a cube 9 to 5 putting up with what's on our screen in front of us. It's interwoven into our lives
and it needs to just work. People have been talking about the consumerization of enterprise software for a long, long time now. It's here. And I think there's going to be a whole new breed of companies that go the exact opposite way where it's really easy to buy. It's easy to set up.
It's easy to use and it's easy to it's easy to set up, it's easy to use and it's easy to own. And I think that will be the future. I think things are going to change.
Oh, I think you're so right.
If I roll the clock way back to the early days of inbound, one of the things we saw was that the career of the marketer was changing. I'm starting to see a similar shift inside companies around this kind of revenue ops person.
Think about the people we work with every day and they've really shifted from 5 years ago, 10 years ago being stuck in spreadsheets and at their desk with their headphones on pulling one off reports. And now they're in the room. It's become this very creative technical job.
It'd
be cool to bring that change out into the world.
Yes, I would say. I think the revenue operations, sales operations people, I think that career is going to explode inside of companies. They're going to go from like the unsung heroes to the MVPs. What do you think?
In order for companies to grow better, they need to run better. And that's all about ops. So instead of being unsung heroes, I think we need to sing more songs about ops. I think what we
need to do is kind of similar marketing where we need to build the methodology and the tool set and build that career and help those people grow in their career. I think that's an interesting opportunity for us and for inbound attendees. Certainly an interesting year. When we look back on it, how do you think this year will be remembered?
Clearly, it's a time of massive challenge. I'm hoping that there will be a lot of inspiration, a lot of creativity and an opportunity to solve problems in a new way. And frankly, we hope to be a part of it and power a lot of that innovation that's going to come.
I think we want to build that platform and give the knowledge to people to take advantage of these changes.
And we have to hope or believe that there's some opportunity that comes as part of that.
Absolutely. I think when we look back at this time, we will recognize at a time of great change and a great challenge, but also great creativity. And this is what the human species is really good at, is getting through the tough times and saying, you know what, we're adaptable, resilient, we've been through a bunch of pain this year, but it's kind of set us up for a bunch of progress.
Yes. What we're trying to do with inbound and HubSpot is we're trying to arm people to not just survive in the new normal, but thrive in the new normal with the methodology, with the knowledge and with the tool set to really grow better. Right on the set. Okay, let's do it. I would argue that you need to move to a model that's much more virtual where you're managing by metrics and the answer up.
I'm not sure you guys know, but there's a
noise. As you thrive in the new normal and create an entire nope, nope, nope,
no. Let's do it again.
How have buyers changed? I'm sorry, one more time. I'm just waiting for it.
I was like, okay.
All right. Somebody's the action.
And you can automate and as always, and you can automate your ticket process.
All right. It feels a little bit surreal, but it's exciting. So I'm sorry, I had
No, you need something better than that.
I do need something. I thought we were just practicing.
Oh, yeah.
I'm feeling good. I'm cautiously optimistic. You just said that.
Yeah.
I should say something slightly different.
I think smarter would be better.
I mean, optimistically cautious.
Growing together, better.
Build and scale
your HubSpot with your business.
Ask any question, I'm going to give you the same answer.
Darmesh came with his a game. Trying to make Jira sounds exciting. Best part of my best part of my game room tone.
Hello, everyone, and welcome to our General Manager's product panel. We put this panel together to really give you an inside look into the thought process that goes into building HubSpot. And I'm thrilled to be joined today with members from our product leadership. I have here with us Nicholas Hollins, GM of the Marketing Hub Lou Orphanos, GM of the Sales Hub Ying Chen, GM of our Service Hub and Nancy Reilly, GM of our ecosystem. So with introductions aside, let's begin by talking a little bit about how you all work together.
You each have your own product areas, but I wonder if we could talk a bit about how you build products that can both stand alone, but also work cohesively as a platform. Nicholas, let's start with you there.
Thanks, Megan. Marketing Hub is HubSpot's oldest product and it is the most mature and it was really based off this concept of inbound, which many of the people here listening know is now content marketing. And it was designed around the fact that a marketer could put good content out and as a result would attract leads to the business. And this concept was based on really attract and engage and delight methodology that looked like a funnel. What we realized over time was that if you delighted a lot of customers, you actually were able to use those customers to drive more traction.
And this gave us this interesting concept where if you could bend the bottom of the funnel and put it back in the top, it would actually create more like a circle, a flywheel, where the customer was at the center of everything. This is a really amazing concept for marketers because what it means now is it's not just about attracting and bringing new leads in. It's about how do you actually architect this entire flywheel experience so that the happier customers are, the more they basically help you attract more people. And so, as you think about the flywheel and the customer at the center, it really gives you these interesting opportunities as a marketer to start to think about how you work better with sales, with the attract into the engage phase, how do you work better with service, with the delight phase, and then how do you create more of those happy customers so that in turn the flywheel spins faster and you grow more? And that kind of architecting of the flywheel just opens up a whole new world for marketers to think holistically about the whole journey and to really help them drive more business impact.
So it's pretty exciting.
Yes, I'll jump in on this one, which is just to try to make it a little bit more real. One of the things that worked on this year is an account based marketing offering. And account based marketing is this space that's sort of risen and fallen and how hot it is. But the reason it's done that is just because forever sales and marketing teams have sort of been at odds with each other. I think that's everybody would know that.
And account based marketing ends up being one of these things that sits right at the intersection because it involves a marketing campaign to go after a set group of customers and then sales needs to follow-up on those exact customers and and sort of give the marketing team feedback on whether or not the campaign is working. And in a previous life, I was leading a sales team and can remember the sales team just begging for access to the spreadsheet of all the target accounts and then the marketing team trying to dig into how many activities and phone calls are being made. And the beauty of the HubSpot platform is that we can put all that in one place, right? And it was actually quite easy to get that thing off the ground because now you log in and a salesperson and a marketer can see a company with the same view. They can see all the activities that have happened.
They can see the campaigns that are running against them. And it's basically a shared place for things like this. And so anytime we can sort of push on the intersections between the departments, I think is great. And this sort of common componentry and user interface that we have at HubSpot sort of under the underlying platform makes it really easy to do things like that. I think that just a little bit of the power of the platform there.
And I was just going to add, even if that was okay, to what Lou just said too. Thinking about this, Service Hub is actually a really great example. So you asked about how do we think about new offering. Being able to take advantage of industrial components like CRM, automation, integration and our ecosystem, we were able to very quickly as Service Hub, pivot to a whole new persona around service leaders. So that even though we are a newer hub relative to some of the other hubs at HubSpot, we're able to actually help organizations deliver at scale day 1, whether it's giving them insights about their customers, handling ticket volume, chat messages, as well as being able to give them a really easy to use no code knowledge base built on top of our amazing content management system soon to a theater discussion after this one.
But anyway, I think that it's really exciting that we're able to rapidly bring to a whole market different personas and being able to really lean into those industrial components that we have at HubSpot.
Yeah, that makes a ton of sense. And then Nancy, the ecosystem sort of finishes that off, right?
Yes, that is really true. And the success or failure of a CRM platform implementation can really ride on the power of the ecosystem. And having that cohesive platform underneath those common components has really let us build something special. So developers can go after really broad and really deep solutions. And what I mean by that is if they're tying into that underlying platform, they can build something that's available across all of the hubs, ones we have today and wherever we might go in the future.
So they may be going after a niche use case, whether it's for a specific market opportunity, a geography, whether they're plugging into the platform or into a specific hub and really take advantage of what we've done. So it really lets us bring to life that idea of going from an all on an all in one to an all on one.
Got it. That's really interesting. So if I can, I think the way I would sort of round this off is it sounds like there's this common theme of tighter handoffs, faster ramp time to industrial strength and really just a more cohesive experience for the end customer? And as an outsider, not entirely an outsider, but somebody who's been able to sort of watch the collection of you play off of each other and learn from each other's advancements, it's really created this sort of nice dynamic where the product grows up together regardless of what stage a hub enters in. So I want to pivot now and talk a little bit about our longest standing hub, marketing hub.
It's the most well known. It sort of had the most time to get to maturity in the market. Nicholas, let me ask you, knowing that the long road that Marketing Hub has had and how well loved it is to this point, what's next and what's left in terms of development for that product line?
Yes. Thanks, Megan. There's a lot. And I typically break it down into a couple of areas to kind of help me get my arms wrapped around. As you said, Marketing Hub is the oldest product at HubSpot.
It's what a lot of people knew HubSpot for, for many years. But a lot has changed. It has really opened up even a whole new world for us in Marketing Hub. So, the first is our go to market has changed. A few years ago, the company embraced the free CRM.
And what we noticed was just it helped lots of organizations start to grow and come on and get on board with that. And what we wanted in the Marketing Hub was to do the same thing, was to really embrace that freemium model. And over the last few years, you've seen that where we've brought down an amazing set of tools for marketers. You've got ads, you've got forms, you've got now email, and most recently we've added landing pages down there. And so when you think about that, being able to open up the world of Marketing Hub to freemium customers is a whole new motion for us and it really sets the bar for like how good usability has to be, how easy we make it for customers to adopt the platform, etcetera.
So that's a lot of innovation there that we've both done and we have to do. The other thing is that the world of marketing and MarTech just continues to innovate very fast. Marketers know that. And so that has really mean that the product has to make changes as well in terms of breadth and depth. So over the last few years, we've really added to the breadth of Marketing Hub with things like adding ads to the actual overall platform.
We've added conversations for conversational marketing. As you guys know, we recently released our CMS to really handle the content and the presentation layer that marketers need. So that has really meant that we've now got a lot larger surface area that we're doing for marketers as well. And the part that I'm probably most excited about is that if you think back to the history of HubSpot, it was really an SMB tool and a lot of people really thought like, oh, okay, man, if I'm a small business, if I'm getting started, if I need something easy, I'll go to HubSpot. And what we've also learned now is that we can actually go deep while also being easy.
So when it comes to the depth of the marketing platform, we've got all sorts of advanced automation that we've added in there. It puts us in a world class setting. We've got lots of partitioning. So as organizations get more marketers in the past, it has been really, really difficult to get marketers in the past, it has been really, really difficult for marketers to be able to show how they've impacted revenue. And even up until recently, it's been the area only for like very large organizations who cobble together a bunch of systems to pull that off.
And we've made all of that seamless and native into the platform while still being easy to use. So, a lot.
That's great. So, speaking of what's ahead, you alluded to this, but earlier this year we relaunched MarketingHub Enterprise. I wonder if you could speak for a moment about how much of a needle mover is this for our customers?
It's been really good. Our mission is to help millions of orgs grow better. And we noticed a few years back that we were doing really good at taking care of customers when they came to us. We were doing really good at taking care of professional marketers. But there was a certain point where a sophisticated marketer, a certain size organization just had to outgrow us.
And so we decided to get really busy and to focus on that dream of like, could you have someone get started with you and then just grow with you, not outgrow you, but grow with you. And over the last couple of years, we've really brought a lot of features and functionality to make that true. When we launched in January of this year, our expectation was that this would really open up a new chapter for us to go after net new customers and attract a whole new audience to HubSpot. And that's true. And that's happened.
But I think what's been more interesting to me is, as an observer of this and a product leader is that our install base has taken really to Marketing Hub Enterprise in a way that has been really surprising to me. And what I think it shows is that we had a ton of pro customers that were on that cusp of being at a point where is HubSpot right for them? Are they too sophisticated? And now that we've relaunched marketing of enterprise, so many of them have moved into enterprise. And more importantly, our NPS is really good.
They're very happy, lots of feedback. So I think it's been a really good move all the way around.
Yes. I've heard you describe that as sort of a magic trick before wanting to be able to both build more power into our lower, more affordable tiers, but then also kind of move up to the enterprise and bring that level of ease to the enterprise tier as well. I think being able to do both simultaneously is really cool.
That's a good point. I was going to say, I do call that the greatest magic trick in SaaS because at the end of the day, our premium tools, free users are somebody that you have to maintain a very, very high bar on usability to make them happy. They have very little patience and there's lots of ease for them to go switch into other things. So, the fact that we're able to make a very compelling premium product is not at odds with enterprise. If anything, what it does is it actually pulls off that always easy now deeply powerful message that we send to the market because the freemium products that we have are the exact same products that power the Pro and Enterprise.
We've just unlocked other functionality. And so that is such an awesome thing for our customers versus in the past if they had to go to enterprise, they had to of course just have something that's powerful, but maybe not so easy to use.
Totally. Now, Lou, speaking of easy and powerful, we have just launched today the new Sales Hub Enterprise. I wonder if you could talk a little bit about what that means for HubSpot and for the Sales Hub in general?
I was going to talk about the magic trick, but now I can't do that, I guess. No, so it's really big. I think this is kind of our coming out party as a modern sales CRM. And so what do I mean by that? I think if you just think about Sales Hub, if you look back on this product, it's 5 or 6 years old.
It was launched as helping out sales reps, end users with a little piece of the sales process. Okay? And so if you think about the sales process, it's pretty basic. You're doing some prospecting, you are managing your pipeline and you're trying to make a proposal and close a deal out and maybe collect some money off of it. And we've been eating away at sort of those pieces of the sales process over the years.
And so we started off with making something really delightful for sales reps. You go look at all the sort of review sites and end users love using Sales Hub. And now we've gotten to the point where we've completed most of the sales process, so you can kind of do everything. And that's been really great. And then what we sort of started to realize is that much like Nicholas said, companies would say, thank you for managing my sales process, it's been so easy, but I can't quite match my business into HubSpot at this point.
And a lot of times they'd have to sort of try to squeeze and shim their business into HubSpot and the object model that we had because it was a little bit simple, right? It was just wasn't built for sophisticated businesses. And so we've been increasing and ramping that up over time. And this inbound is kind of the big launch for that, right? We're launching a bunch of new capabilities around permissioning and custom objects.
And now you can take your business and you can match it in HubSpot, right? So whether you're a real estate company or a construction company who just needs to represent different things a certain way, you should be able to do that. Because if you can represent your business in the system, it's not really going to be as effective as it can be. So we're pretty excited about that. We're actually very excited about that because we think it gives a couple of things.
It gives tons of runway for our existing customers to just keep growing with us, right? They don't have to have this hard conversation about leaving the thing that their users love so much. And we think it opens up a lot of new market opportunity. There's just a lot of people out there that are not happy with their CRM that would really like to see something different. And so we feel like we paid off this consumer front end and enterprise back end pretty nicely here and it's going to be a big moment for us.
So we're
excited to be here with it.
Yes, let me dig in there a little bit. So there are sort of a lot of legacy CRMs out in the market. And you spoke to this just a little bit there, but how do you see our position within that space and what really differentiates HubSpot?
Okay. So if you just think back to the sales process and it's a very simple thing, right, all the way from prospecting to closing deals, Our take here is that you should be able to do that whole thing out of the box in your sales CRM. And unfortunately, in a lot of these sort of legacy systems, they've either moved so far down the stack to become almost like a system of record that they forced their customers to have to make a bunch of purchases and do a bunch of customization to make it work. So we're here to just say, we're going to put everything we feel like you need into this product so you can sort of cover the whole sales process. And we're going to do it in a way that's really easy to use.
It's going to be on this underlying platform that helps you scale. We're going to let you be best friends with marketing and service along the way because everyone shares the same interface. It's really nice. And so we feel like that's a huge point of differentiation out of the box ranging from total cost of ownership to ease of use to just the fact that you can do everything in a single pane of glass. We're pretty excited about that.
All right. So if I
could jump in here, let our technology partners think we're leaving them behind. I totally agree with Lou that HubSpot is building everything you need, But our goal is also to let you plug in anything you want. So we know that businesses today are using a whole lot of SaaS and we need to let those organizations use the tools that they've chosen, whether it's for a point solution or a specific use case. We want to bring that all together and let them run that with HubSpot at the center. So I I couldn't agree more with that single pane of glass.
And that's true regardless of whether you're doing things in HubSpot or whether you're using other solutions from our ecosystem.
Totally. Nancy's famous line is the product has everything you need and the ecosystem has everything you want. I like that.
Ying, so you are the newest GM sort of recently stepped in or fairly recently stepped in as a GM of Service Hub, which is one of our newer products growing at a good clip. But I'm curious if you could lay out what your vision is for this product moving forward?
Yes. Thanks for the question, Megan. So I think we're living in some interesting times right now with the pandemic, social injustice and economic uncertainties. And support agents are under more pressure than ever to balance how do I deliver the life to customers, but at the same time, how do I keep up with rising volume of customer outreach? And on top of this, there's this rising demand from consumers that are basically shifting from the calling channel into messaging over these channels as the new preferred channel.
So I think we, the customer service industry is actually undergoing some major transformation right now because this traditional model of heavy calling and leaning into driving efficiency and cost reduction, it just doesn't meet the needs of today's customers and what organizations actually need out of a modern help desk. So I like to think that at HubSpot, we can help organizations have both. We believe they can help their customers have really delightful personalized experiences, but also doing that efficiently. So that means for us 3 focus areas. 1 is we want to continuously lean into self-service, but lean into self-service that actually adds value to the customer journey, not as a way of deflecting the humans from assisted channels because, hey, some things are good for self-service, some things you just need a human to kind of talk with you.
The other area that we want to focus on is on automation. Now, again, you hear a lot of the industry talk about artificial intelligence, automation as a way of removing the human out of the process, optimizing headcount and again keeping the customer as far away from humans as much as possible. Well, that is the exact opposite direction that I want to take or we believe in here at HubSpot, which is really more how do we build more delightful automation that will help agents. So, you know, things like macros, as an example, that will automate some of the mundane repetitive tasks that agents have to do so that they can actually spend less time doing those repetitive tasks that actually focus on the customer would be an area of focus for us. And last but not least, we want to continuously help lean into that customer insight so that we can empower all the agents as they interact with your customers to be your best agent and treat every one of your customer as your best customer by investing in reporting, looking at analytics, and how do we infuse more analytics and insights as a part of a real time workflow so that, again, you can have that more real time personalized experience.
So lots to work on. I'm super excited to be a part of this dream team and being able to drive this really great new value proposition for amazing service leaders.
I just
wanted to selfishly jump in and say I'm excited too because a lot of what Ying was talking about is going to benefit sales reps. So change in customer service experiences and expectations is just obviously going to make its way into the sales process too, right? So you see things like messaging, we hear lots of sales reps who are just now only text messaging their customers and closing deals that way. Just a different level of expectation than maybe your typical long drawn out sales process, much in the way that the service experience is going to go. So we'll draw on a lot of those things that they build and bring it in with those common components and database.
Yes. It's a great point. As I was going to say, it's just been really cool to see that point of view take shape. And as we are seeing more and more of the customer experience move online, I think that that kind of alignment is going to be even more important, which is awesome. Nicholas, I'm going to come back to you in a moment.
I almost called Service Hub our newest hub, but in reality, CMS Hub is our newest hub, just launched to the world back this last spring. I wonder if you could talk a little bit about the role that you see that playing in the marketplace and the need that you see it filling?
Sure. Thanks. The CMS Hub was really born out of the fact that if we're here to serve marketers, everybody knows that every organization has a website and that over the years, the website has really matured from, let's say, a brochure or a 6 page site to something that more and more marketers are seeing as a driver of ethos that HubSpot has in terms of growing better. It really fits with the ethos around serving the marketer. But we saw an interesting opportunity in that if you think about all of the different business software spaces out there, the cloud and SaaS has really dominated and really become the way we do business and it makes a lot of sense.
Businesses want to focus on their core objective, what they're good at. What they don't want to focus on is security. They don't want to focus on plug in maintenance, on versioning of software. They don't want to focus on scalability issues. They want to focus on their business.
And in almost every area of software, the cloud has handled that with the exception of really one glaring omission, which is the CMS. And we looked at that space and we thought to ourselves, wow, so it's an area that we can help marketers grow better. It's an area of rapid innovation, meaning people are starting to see their site as a driver of experiences. And it's a place where we can bring our expertise in terms of bringing that kind of cloud CMS expertise to market. And it just fit.
And what it has now since allowed us to do is really tie in that presentation layer, the CMS, to also all the things that you do around that whole flywheel journey. It's really allowed that to happen. And even better, we basically were ahead of the curve in unlocking the fact that a CMS should be deeply connected with the CRM. And when we started making those moves a while back, marketers all the time said, I wish I could use the information in my CRM to drive personalization. I wish I could use the information in my CRM to drive custom experiences on the site.
And now that it's out there, we're really excited and customers seem to really love it.
Yes. I think one of the things that I keep hearing from all of you again and again come up separately and also in this panel is this idea of like why is it just assumed that as you scale things have to get more complicated, right? And I think that there's this really interesting drumbeat that I've heard all of you have around how do we make it far easier to do far more complex things. And I think that's kind of a cool it's just been nice to hear that repeated from each of you.
Yes, let me jump in with one other thing I thought for you. I would say Meghan, talking about what you just said, leveraging a CRM data inside of a CMS is not something that you would ask the faint of heart to do nowadays. But the fact now that we have the CRM as a platform, something that with those industrial components that everyone talked about, you're now able to actually leverage all of your CRM data in part of our CMS and make these rich experiences. So to your point, like being able to tie it all together just unlock so much functionality. I just wanted to point that out.
I have one more tie together. Sorry, Sales Hub is just soaking up all the goodness from the platform. Can't help myself. But we're using the CML platform to build a revamp proposals tool on it, right? So you can imagine now, first of all, our customers have been asking for years, like make your simple quoting a lot better.
Now we turn over to our friends in the CMS and they're giving us this entire deep design manager that we can use to build really rich proposals that are going to look better than anything you're seeing in the market today. So another really exciting piece that's a part of our inbound launch as well. So thank you, CMS Hub. Appreciate that.
So then, Nancy, the ecosystem really kind of ties that all together. And there are a lot of platforms out there that are aiming to be the platform of choice for the mid market. What is it in your mind that makes HubSpot stand out?
HubSpot's platform really centers on our CRM. It's right there in the middle of the flywheel. And that's really is homegrown, handcrafted and just connected by design across all of the hubs. So the fact that that's not cobbled together from M and A, it's really grown up together, makes it super cohesive. And as we talked about at the beginning, allows developers to plug in really easily.
And custom objects, which you heard about already, is a huge leap forward in customizability of the data model underneath. So that's just one of the many investments we've been making in extensibility. And it's been a big ask from our customers and our developers. So we're looking to expand the ways that developers can plug in to both our data data layer and our UI. So as an example, we acquired Pysync and that really allows you to bring everything together to it becomes that connected tissue across wherever your data might live.
And that can be as simple as syncing your contacts so that when, you know, someone calls your phone, you know who it is because they're in your CRM or something complex. So for example, we have an accounting firm that centers their stack around QuickBooks, makes sense. And they're using Pysync to sync contacts from payment providers, so Square and Stripe, but also to sync all of those contacts over to HubSpot, where they're driving all of their marketing efforts. And the CMS Hub, which you just heard about, has been revolutionary for developers. So we really provide that ability for developers to work how they want to work, local development environments using our CLI.
It's really made it much easier and more delightful for them to build these unique web experiences. So now, not only is the data layer connected, now the CMS, the presentation layer is connected to that and we've got automation underneath that with new automation extensions that let you plug in and trigger events across systems outside of HubSpot. We've got reporting coming together with unified events. So look forward to being able to look at things that happened in other systems as part of your ROI analysis. We've got messaging underlying it all.
Really that underlying cohesive platform is a huge differentiator and we think one way HubSpot the platform of choice.
That's so great. I do wonder, I mean, the platform is growing really, really fast. The ecosystem is growing really fast. I think we just passed 500 app partners. How do we think about where we should build as a product company and where we should partner in the ecosystem?
Yeah. I mean, the growth of the ecosystem is super exciting, but it always is that difficult decision. And I think like everything at HubSpot, it comes back to listening to our customers, solving for the customer. And we hear them loud and clear through answers to our NPS surveys, through their conversations with our sales and success folks, the people that they're talking to day to day at HubSpot, even through their searches on our marketplace. So we can see where there's gaps in the solutions that we're providing and then have a conversation about where does it make sense for HubSpot to build, where does it make sense for us to look to our partner community or to platforms that exist.
So one example would be accounting. There are a lot of really great accounting platforms out there that our customers are using in the SMB and the mid market space. So we've invested in connecting to QuickBooks, for example, and to some of the other leaders globally in the accounting space because it makes sense, right? Customers want to take a deal all the way through to where they're getting paid. And if you want a 3 60 degree view of the customer relationship, have they paid their invoice is a big piece of that.
So tying those together and partnering with the big accounting platforms makes a ton of sense. So we listen, we work closely with current and prospective app partners to see, you know, what are they working on, where can we connect with them and our solutions partners who are working with our joint customers day in, day out to see where our platform might not be meeting their needs and where we can be partnering more effectively or building new things. And then finally looking ahead, everyone on this call is always looking for what are the trends for the personas and the careers that they're serving and what's going to emerge as kind of the next thing. And where would we build? Where do we bet on partners?
Where do we invest? Always investing in the extensibility of the platform to let our our customers choose what they want to plug in, but also looking towards what's going to work best for them.
So speaking of looking ahead, these are times of just enormous change. It may be too early, but have you seen any trends that you're watching in terms of what's making up the future tech stack for our target audience of businesses?
Yes. So I mean, I think the near term effects wouldn't surprise anyone. There's a big focus on remote apps. We're all like we are right now interacting remotely with our teams, with our customers and prospects. So we've invested heavily in our integrations with things like Zoom, with Slack, with these remote collaboration tools, even adding new ones to the list like Microsoft Teams based on the input from our customers.
But I think as, you know, this just goes on and as we look towards the future, customers are really looking hard at every dollar that they're spending on technology. They're really kind of looking at their tech stacks, as we already said, they use a lot of SaaS for good reason, but they need that stack to do 2 things. They needed to make their team more efficient and they needed to create the end customer experience, that's really remarkable. So having these thoughtful, deep, seamless integrations into the system of record or into kind of that center of the tech stack has never been more critical than it is today.
Awesome. So I want to sort of start to wrap things up now and maybe pose a final question to some of you, which is what is it that most excites you about the road ahead? What are you looking forward to when you're carving out your product direction for the coming year and beyond? Nicholas, I might start with you on that one.
Sure. Thanks, Megan. I think I'm most excited about the combination of the CRM and the marketer. I think back and in the '80s I'm going way back. In the '80s, there was a lot of energy put into personalization and getting that right piece of junk mail into the right box at the right time.
And I laugh about that when I talk with marketers because what it really means is that the fundamental desire of a marketer to get the right message to the right people at the right time has really not changed. It's all about that attract. And we at HubSpot want to do it in a really good way. The issue is that a lot of things have changed in the world today in terms of technology channels, etcetera. If you go to every marketing system that's out there, at the core of it is some sort of list management and marketers are constantly breaking their back, trying to figure out the right list.
They're breaking their back trying to segment it. They're breaking their back trying to figure out how to personalize it. And that is really difficult to do when you're just using a basic list manager. But man, when you bring a CRM into the equation, you unlock incredible amounts of power for the marketer. And so people tend to think of a CRM as like that's a sales tool, that's something that a salesperson uses, but that is not the case.
The amount of information that's inside of a CRM is mind blowing when you start to unlock that for a marketer in terms of being able to do true segmentation, to be able to do true personalization. And we are just getting started in a world where marketers can unlock that. So that is just amazing in terms of when you think about the next decade, what it can mean whenever you understand all the touch points that you ever have with the customer, so that then you as the marketer can be as authentic and be as effective as possible. That's amazing. And I think that we're in early innings and I think that HubSpot is going to be a real power player in there.
The second thing is that I'm excited about, it's a little geeky, but GDPR, CCPA, a lot of these privacy and compliance things, they're scary. They're hard. Things are changing a lot. We don't know how the overall macro viewpoint is going to end up. And I constantly talk with marketers who are nervous about how do they stay compliant.
They're nervous about what do they need to do to stay ahead of the curve. How do they protect themselves or organizations? They deeply want to play ball in a very positive above board way, but it's difficult. The rules are changing. And I really love the fact that we at HubSpot get to focus on that for them.
We get to educate, which we've always been really good at. We get to build software that helps them stay compliant and we are relentlessly focused on how do you navigate making sure you stay focused on helping them grow better while also still being compliant. And as you think about that, I guess I'll just wrap up by saying growing better, it doesn't mean you're just compliant at the sacrifice of growing and it doesn't mean you grow at the sacrifice of doing it in a really good way. And I think that we're really well suited to do that for our customers. So, I'm excited about helping them be more effective, taking the pain out of their work.
And I'm excited about really reducing a lot of that fear around that. So it's bright days.
That's great. Any other thoughts before we wrap?
So I was just going
to ask something very quickly. I've been super excited to see how our customers are actually really leaning into what does it mean to deliver a great customer experience. That is not just a job of the marketer, It's not the job of the service representative and it's not the job of just like the account manager. And being able to see this customer experience focus kind of come to life actually within Service Health is really exciting. Being able to have the marketer who traditionally don't get involved with the knowledge base at all unless you force them to, to actually leaning into like really taking ownership and optimizing the design of this really great self-service experience upfront.
Another area that we see is account management and relationship management taking interest and building advocacy programs to make sure that they know how their customers feel and then making sure that they're providing the right level of outreach. And all this just makes the service leaders job a little bit easier because they are the ones that are orchestrating the customer journey throughout the full lifecycle of the flywheel. So I think for me, it's just really exciting to be able to kind of see the intersection of all these different personas that each one the hubs serve and actually seeing people not paying just lip service to, yeah, we care about CX, but that's marketing's job. So I think that's an area of excitement for me.
All right. I think we'll leave it there. Thank you all for sharing your insights into how we think about product development. Nicholas, Lou, Ying, Nancy, we appreciate everything you've shared here today. We so often say that we're in uncharted territory of the world right now and it's been such a pleasure to be able to see you along with your teams start to draw that map for what the future will look like for HubSpot product and for our customer experience.
For all of you in the audience, the content doesn't stop here. Up next, we'll have a financial overview with our CFO, Kate Buechner. So stay tuned for that. Thank you and hope you have a nice day.
Hello, everyone. Thank you again for tuning in with us today. I'm Kate Buecherb, HubSpot's Chief Financial Officer. I know it's been a long day. We're heading into the 3rd hour of this webcast.
I will try my best to keep it interesting. I plan to cover 3 things with you in the next 20 minutes. I'll start by reflecting on how HubSpot's built a strong and durable business. Next, I'll double click on 2020 and the impact that the economic environment has had on some of our core KPIs. And finally, we'll look at the opportunity ahead, key areas of future investment and the impact on our long term P and L.
As always, here's our Safe Harbor statement, which you can find on our website. Now, let's dig in. Over the last 5 years, we've grown our customer base by 38% annually. At the end of Q2, we had 85,000 paying customers growing at 34%. Particularly notable is that this represents a reacceleration in customer growth in 2020.
Much of that growth has been fueled by our starter customer additions, but we've actually seen strength in customer additions across the entire portfolio. Professional and enterprise net additions are up more than 30% year over year. This leads to strong consistent growth in revenue. Over the past 5 years, our revenue grew at a compound annual growth rate of 32%. We are driving growth at scale with over $800,000,000 in expected revenue for 2020.
As far as where revenue growth is coming from, we're not dependent on any single source to drive this growth. There are a number of ways to look at revenue diversity. What's clear is that there's a growing diversification of our revenue across a variety of lenses, balance and go to market channel, balance and geography and a growing balance and hubs. International business is more than 45% of our installed base and it's growing fast, but North America is a huge market and is still growing at 20%. Our partner channel has continued to represent almost 40% of our installed base, even as our portfolio has expanded.
And HubSpot is not just a marketing application company anymore. More than a quarter of our ARR comes from other hubs, which have grown nicely and will continue to grow as a proportion of our installed base. While we tend to look at diversification through our go to market and hub lenses, I thought it would be helpful to take a deeper look at our customer base through a couple of additional viewpoints. I will add a caveat upfront that small business customer metrics can be difficult to track and measure, so we're sharing what we have. Historical perception was that HubSpot was highly concentrated with companies with just a few employees.
The fact is that while a third of our ARR comes from companies with fewer than 25 employees, 2 thirds of our ARR is generated from larger businesses, namely companies with more than 25 employees. Turning to our addition mix, Starter gets a lot of attention for its outsized impact on customer additions, but the core Pro and Enterprise additions make up the vast majority of our installed base. And finally, we're nicely diversified by industry. Industry data is not readily available in the SMB market and many of our customers do not self identify with a specific industry. Of the customers that do, we have very little industry concentration.
In fact, our largest industry is software and it represents just about 10% of our installed base. We continue to see a growing portion of our customers adopt HubSpot as a platform from which they run their business. There are a couple of data points that demonstrate this trend. First, we look at the share of our customers using multiple HubSpot products. This number has been on a steady climb and more than 40% of our customers at the end of June owned multiple HubSpot products.
The other metric that we're increasingly watching is the share of our customers who are integrating third party applications into HubSpot. This number has also been increasing. 94% of ARR comes from customers who have integrated at least one application into HubSpot and 57% have more than 5 integrations. The metric has shown to be a strong indicator of engagement and retention is meaningfully higher with these customers. Our strong top line metrics have also translated into a business with solid profitability, positive free cash flow and a strong balance sheet.
As of the end of Q2, we had over $1,000,000,000 of cash on the balance sheet, which gives us the ability to invest in our business through economic downturns and the flexibility to consider inorganic investments to drive long term growth. As many of you know, unit economics play a critical role in the investment decisions we make particularly on the go to market side of our business. A lot has changed at HubSpot since our IPO in 2014, but our business has remained grounded and strong underlying unit economics. Our significant investments in our freemium go to market model and our expansion from a single app into a full suite have allowed us to deliver strong consistent unit economics with modest improvements from year to year. Even in the economic uncertainty in the first half of twenty twenty, core unit economics remained around 5 times LTV to CAC, which is consistent with our average since the IPO.
Speaking of 2020, it's certainly been a challenging year in many regards. Let's take a deeper look at some of the ways in which the events of this year have impacted HubSpot's business results. The recent pandemic has impacted the HubSpot community of employees, partners and customers, and we took some meaningful actions over the past months to support each of these stakeholders. We've talked about these plays at length on the earnings call, so I'll not repeat them now. What I will share is this, the common theme around all the actions is to provide customers and partners the tools and flexibility needed to remain productive, engage parts of the HubSpot ecosystem.
We believe these plays are working well as designed as evidenced by some of our core KPIs. We often get asked about the pace of requests that we've received for COVID relief. So I thought it would be helpful to share how the requests have trended since the beginning of March. This graph shows the share of total customer relief requests over time. We saw 65% of the total requests for COVID relief between March the end of April, and more than 90% of the requests happened by the end of Q2.
Obviously, things could change in the future, but we're cautiously optimistic by the significantly declining trend that we're seeing over the last couple of months. While this is a positive sign for existing customers, we also saw strong demand from new customers throughout the period. To this point, it's worth highlighting that our new business in the first half of twenty twenty was largely on target with our internal plan coming into the year. Starter has become a strong customer growth engine for HubSpot over the last 3 years and this has intensified in recent quarters as a result of COVID and our associated pricing and packaging changes. As of the end of the second quarter, a little over a third of our overall customers were using our starter tier of products.
A big change from 2017 when the freemium motion was just getting started. We believe this represents a big opportunity for future growth as these customers upgrade to core professional and enterprise versions of our product. The motion is working for us today. Approximately 30% of our professional and enterprise ARR is generated from customers that began with HubSpot on a free or starter product. That said, this increase in the mix of starter customers has also created a headwind to our average subscription revenue per customer.
As you can see in the blue line on the graph to the right, our blended total ASP has declined slightly since the introduction of the freemium in the beginning of 2017. If we look at the same metric for our core product additions, ASP increased by more than 30% over the same period, meaning that the overall ASP decline is the result of the customer mix shift, not the core value proposition. And finally, let's take a deeper look at retention. We don't often talk about the breakdown of our overall retention. We have shared in the past that underneath our 100% net revenue retention, we see low to mid-80s customer dollar retention.
We then build up to 100% with the net upgrades coming from customers upgrading their additions, buying additional hubs and adding seats or contacts. Overall customer dollar retention has held pretty flat over the last few years. Admittedly, we were concerned about the impact COVID would have on our cancellation rates as companies faced additional financial stress. This in part led us to design the customer plays that we did. As a result of the plays, as well as our diversification and the value HubSpot provides to our customers, our customer dollar retention held up pretty well through 2020, holding in the low 80s for Q2.
Since then, we've rebounded back to more normal levels and feel confident that the ingredients are in place to improve this metric over the long term. Secondly, as we saw with the metrics on the prior slide, customer dollar retention is pressured by our increasing mix of starter customers who tend to have lower gross retention. That is to say holding customer dollar retention flat has actually meant an improvement within the professional and enterprise additions. You can see this improvement in the purple X Starter line. 95% of the business is getting better.
Our overall customer dollar retention has stayed flat, while we have absorbed the impact of Starter. Lastly, there's one other aspect of how we've measured customer retention internally that I would like to share. At the time of the IPO, HubSpot was really a single app company and our retention and customer definitions were simple and based on a single marketing hub view. As we built out our suite, we've needed to analyze our retention in multiple ways, including at this hub level, but also at an overall customer level. The numbers we've shared in the past were retention at the hub or product line level.
This means that if a customer who bought both marketing and sales hubs canceled one of their products, it would negatively impact our gross retention metric. We've begun to focus internally on gross retention that is at a true customer basis, which is higher since it reflects only customers who are leaving HubSpot entirely. While our overall retention has not changed, our true customer retention is in the mid to high 80s, suggesting a greater stability in our customer base. Now let's talk about how HubSpot is positioned for strong, durable growth into the future. As you heard from Yamini, we have 3 big opportunities for growth over the next few years: market penetration, product expansion and upmarket growth.
Our go to market and product teams are aligned in their strategies to tackle these opportunities through a focus on efficiency at the low end and the creation of a powerful CRM and front office applications that allow us to deepen penetration and scale with our most sophisticated customers. Now I'd like to share a bit more detail about how these strategies translate at the hub level. As of the end of Q2, Marketing Hub was a $600,000,000 plus ARR business, growing about 20% year over year. As you've heard, the big news in Marketing Hub was the relaunch of Marketing Hub Enterprise in January, which answered the most pressing customer requests for key upmarket features. We also believe that Marketing Home Enterprise will further benefit from the CRM customization announced today.
Finally, the introduction of a new pricing structure for marketing contacts addresses a key friction point for multi product customers who want to leverage HubSpot CRM as our system of record, but don't want to pay for thousands of sales and service contacts that they don't intend to market to in the short term. This positions the Marketing Hub with a number of exciting growth drivers, including continued tailwinds from increased digital transformation, the ability to drive up market traction, increased cross sell capabilities with marketing contacts and future upgrade opportunity in the large recent starter cohorts. Our sales hub was $160,000,000 ARR business at the end of Q2, growing approximately 60% year over year. Like in marketing, our sales hub enterprise relaunch announced today answers the consistent requests from our larger customers for functionality that will allow them to scale with HubSpot. These new upmarket features position Sales Hub to address the mid market CRM opportunity and drive increased seat penetration within our larger customers.
In addition, the necessary shift for companies toward an inside sales model fuels the near term opportunity for Sales Hub. At the end of Q2, Service Hub was a $30,000,000 plus annual ARR business, growing around 100% per year. Service Hub is a product where we're still relatively early and continue to execute against our product roadmap. New capabilities like in app chat and intelligent automation targeted at growing teams will position Service Hub to go after opportunities and scaling organizations as well as the opportunity in our larger recent starter cohorts. As of the end of Q2, the CMS Hub was a $25,000,000 ARR business growing about 45% year over year.
The growth rate on the CMS Hub may be a bit confusing, so let me add some color. The CMS is a product line that was created in 2013 and sold as an add on with our marketing hub. So there was an existing install base of customers leveraging our CMS prior to the hub launch in April. Since the introduction of our standalone CMS hub, the growth rate has inflected up by a couple of points each month. As a point of reference, net new ARR growth over the past few months was north of 100%.
With the hub less than 6 months old, we're obviously early in addressing the market opportunity. We believe our CMS empowers the marketer to use their website as a core marketing tool to create personalized experiences with customers and prospects and become the true face of the company online. Taking a step back, we continue to believe that the overall opportunity in SMB is huge. Today, we have just over 85,000 customers worldwide. We operate in the market with 1,000,000 of businesses and tens of 1,000,000,000 of dollars of opportunity.
We believe that the front office opportunity is broad and we have more work to do to help businesses address these challenges. And finally, we're just starting to see the impact of the power of integrating HubSpot into the larger ecosystem of users, service and technology providers and the learning community. We will continue to invest in the business to attack this opportunity and drive durable long term growth. Finally, I would like to share a couple of changes to our long term financial targets. First thing to notice is that we are not changing our long term target for operating margin.
It remains 20% to 25%. There are a couple of more nuance changes however that I would like to highlight. We're increasing our target R and D spend as a percentage of revenue to 18% to 20%. As we said in the past, we want to continue to lean into product innovation as we believe it's the foundation for sustainable growth. 2nd, we're more comfortable with our ability to move the G and A expense as a percentage of revenue below 10%.
We've been successful in showing modest scaling as the business grows and we believe that can continue. As a result, we've adjusted our target spend for G and A to 8% to 9% as a percentage of revenue. Finally, sales and marketing expense remains the furthest away from our long term target. We still believe that 30% to 35% is the right goal and we'll move in that direction in a balanced way that takes into account the size of the opportunity we see and the strength of our underlying unit economics. Okay.
Let's wrap up with a few key takeaways before we open it up to Q and A. HubSpot is performing well, delivering growth and profitability in a time of notable economic challenge. Our powerful, easy to use products answer the call of organizations who are moving their businesses online. Our product innovation and go to market strategy are aligned to drive growth against our key opportunities of increased market penetration, product expansion and up market growth. We are still early in addressing the front office opportunity and we're well positioned financially and strategically for long term success.
And with that, we've concluded our prepared remarks for this year's Analyst Day. Please hang tight while we assemble the executive team. We'll take a short break and you can stretch your legs before we head into a Q and A session. Please stay tuned.
Thanks for sticking with us everyone and welcome to the Q and A portion of our Analyst Day event. We have Brian, Dharmesh, Yamini, Kate here with us to answer your questions over the next 30 minutes or so. The Q and A field at the bottom of your screen should be open and we already have a bunch of questions in the queue. So we're going to go ahead and do our best to get to as many of them as possible before we wrap up for the day. Okay.
With that, first question looks like it's going to be for Brian here. It's a COVID impact question. From COVID and the macro conditions that have ensued, how would you parse through the positive and negative impacts that you've seen to the business and how those have netted out? When do you expect the tailwind associated with the digital transformation shift underway to outweigh the headwind customers are seeing from COVID more broadly?
Yes, that's a great question. I kind of think of this year as kind of a tale of 3 cities. January February this year maybe were the 2 best months in HubSpot history. We did a lot of hard work in 2019 to get ready for 2020, particularly on the product side and sort of took 2 steps back, so we could take 3 steps forward. We're getting a nice return in January, February.
Things are going great. And then COVID obviously hit in mid March, and we definitely felt a headwind on new and on retention from mid March through, call it, early June. And then that headwind turned into a tailwind. And from early June and through today, we're feeling a nice tailwind from COVID. The pandemic is funny because it's really been a brutal impact on so many businesses.
It happened we happened to be well positioned to almost to take advantage of it. Like our sales were up, pointed in the right direction to catch that tailwind. I mean, every company today needs to move from outbound to inbound, from outside sales to inside sales, from offline marketing to online marketing, like everyone's got to digitize their go to market. It's just it's required today and our product is very well suited to that. In fact, I remember when this first started, I sat down with our product managers and was talking about what can we do, what can we do, what can we change in our product line to help our customers more.
And what we're building is really well suited for customers to sort of lean into the changes that are happening today. So been an interesting year, tale of 3 cities, really strong growth at the beginning, big headwind, nice tailwind. I'm cautiously optimistic
for the rest of 2020. Great.
Thanks for that, Brian. I'm going to try and bucket these. It looks like the next one here is sort of related to COVID, probably even more for Kate. Kate, can you provide more color on the recent trends in MRR recapture rates for customer cohorts that received some of the steep discounts as part of your COVID relief initiatives?
Sure. So just I'll start just by reminding people, one of the plays we ran as part of our COVID impact plays was one where we particularly impacted by the pandemic, some short term very steep discounts. And most of these took the form of a 3 or a 6 month discount. The play the recovery from that play is actually working a little bit better than we expected and for a couple of reasons. So in my prepared remarks, I showed you a chart that looked at sort of the declining trend in the number of customer relief requests that we've been seeing over the past couple of months.
And what that translates into is that we actually gave out less overall discounts than we had thought we were going to when we went through this and planned this play initially. The second thing that's happening is as these customers are coming out the other side of the period of deep discount, first of all, fewer of them are actually churning off of HubSpot, which is great. And the customers that are staying with HubSpot are actually moving back toward a more normal pricing to a degree that is larger than what we would have expected to occur. So the play is working better than we expected. We're sort of really happy with what we designed and
executed. Great. Next question, Brian, Sales Hub Enterprise. The question is, Nice to see Sales Hub Enterprise relaunch. What features and functionality announced are you most excited about?
How much can the revamp of Sales Hub Enterprise make HubSpot a more credible CRM platform for the mid market?
Yes, that's a really good question. Super excited about SalesLabs Enterprise. I spoke a second ago about the kind of 2 steps back, so we can take 3 or 4 steps forward this year and SalesLabs Enterprise is part of that. And if I really think about what's going on inside of HubSpot, we have 3 tiers of product. We have our starter tier, our pro tier and our enterprise tier.
And the product line that was we had the least tight product market fit, let's say, is this enterprise tier. And I think of this as companies between 202,000 employees, let's say. This year has been the year of enterprise for us where we've really invested. So we released a new Marketing Hub Enterprise Edition back in January. This has done really well.
And the idea behind that, if you remember from earlier earnings calls was, we were competitive in that space, but a lot of times what would happen is a company would bias at 50 employees, grow to 1,000 employees, let's say, and graduate off of us. We don't want people graduating off of us. And there was a gap. There were like 3 or 4 kind of complicated things that those companies wanted as they scale. Marketing Hub Enterprise filled those gaps and that business is going really well.
It started off strong in January and has grown really well through the year. Then we came out with CMS Hub Enterprise, similar sized companies. That product is doing really well, very happy with it. Today, kind of continuation of the story is the Sales Hub enterprise product. So it's this year of the enterprise, the product market fit in this sort of area of our product line has gotten much better.
The thing with SalesUp Enterprise, it's very similar to what we do with MarketingUp Enterprise. If you're a 50 person company and let's say you grew and you scaled with us to 1,000 employees, a lot of them will graduate off of us and there's some gaps in there that we filled with this release. And I can go through a couple of them that are top of mind. One is when you buy the product at 50 employees, you've got a relatively simple business model and you can use HubSpot because we've got a standard set of objects to use like customers and leads and whatnot. As you get bigger and more sophisticated, you want to model your business with custom objects inside of HubSpot.
This is a very powerful capability, very difficult capability that we put in the product. Then you get all those custom objects in the product. You want to use our workflows and you want to be able to report on that entire thing and do advanced reporting. So it's custom objects and advanced reporting in there. The other thing that big companies want to do, it's been a big gap for us, is their operations people want to go in and control those objects, controls the fields and control the data, who can access the data, who can change the data, update the data.
As you scale, you don't want your 300 sales reps changing all kinds of stuff. You want to control that kind of stuff. That's the 3rd gap. Couple of other nice features in there that people have wanted is the ability to do account based marketing. You're selling to a big enterprise, you want to model that enterprise inside of HubSpot and you want your whole company to kind of go after that enterprise in a very holistic way, advertising, email marketing, sales reps, BDRs.
That's a powerful new capability. The 5th one that I think is underrated and it's going to be great is within HubSpot, what our customers want to do is be able to create a quote, bring it to a proposal and then a quote, send out that quote, get approval for it, have all that sync back and forth with their NetSuite or maybe QuickBooks and get that all synchronized. We're starting to build that out and made big improvements on the CPQ side of HubSpot. So Sales Hub Enterprise is a big deal. I think it's a much bigger deal actually even in Marketing Hub Enterprise and it's a continuation of this story of really beefing up that part of the product line.
So I'm looking forward to see how the market responds.
Awesome. I think related question maybe for Yamini here on around sort of go to market that would be related to Sales Hub Enterprise. Are there any go to market changes or investments that you're making to support higher touch, more complicated upmarket sales?
Yes, I think that's a great question. And I'd say that we absolutely are making investments on the go to market side to be lockstep with the product strategy. So Brian just talked about this being the year of the enterprise and we are certainly looking at the go to market to make sure that we are in lockstep. So first off, we hired a great leader for the corporate segment in North America. David Katz, he comes from Intercom, Dropbox, LinkedIn before that.
He has actually served customers within the corporate and enterprise segment throughout his career, and we are delighted to have him. He joined a few months ago. He's bringing a ton of rigor, discipline and just that ability to handle much more complex sale to the organization, which is great. We're excited about him. 2nd, we are making a number of investments across the flywheel to be able to handle and continue to handle those complex sales that you talked about Chuck.
On the sales side, this includes sales process, sales methodology and training so that our sales teams are well equipped to go where the product is going. And on the services and support side, we have a much more rigorous process for onboarding customers within the corporate segment as well as continuing to provide white glove services within the segment. So we're making a number of investments across the flywheel. And we've had some great results. Like earlier today, you heard about SurveyMonkey and you heard from their CMO of how they're scaling with HubSpot and we are their global platform for all of their marketing campaigns.
G2, Trello, Randstad, these are other organizations that are really scaling well with HubSpot within this segment. So overall, we are in a place where our product strategy is clear. Like Brian said, we're really filling out that enterprise segment and we have a very clear roadmap and we have a very clear segmentation view of which customers we're going after mid segments. And most importantly, our product strategy and the go to market strategy are clearly aligned. So we're feeling really good about the investments there.
Great, Yamini. And yes, that was my wife that was crawling behind me trying to sneak by after putting down our son for a nap. So for all of you that noticed that, thank you.
It was impressive crawl.
All right. So Kate, guidance, this person asked, you didn't update financial guidance within your prepared remarks. Does the current demand environment give you more or less confidence in the guidance that you provided in early August?
Yes. So you're right. We did not update our formal guidance. Believe it or not, we're basically 1 month out from our next earnings call and we will obviously share results around how the quarter ended and our updated view of the full year at that point in time. That said, you did hear Brian talk about the tailwinds that we are feeling in sort of the current demand environment.
And so that does give us confidence in the quarter and full year guidance that we shared in August.
Great. Let's move on from that. Let's see. Brian, I think this one would probably be for you, Starter Growth Suite. How would you best characterize the customer profiles of the new Starter Growth Suite cohorts that you've added recently as part of the $50 promotion?
Any key differences in retention, activation rates, upgrade rates, size of customer, etcetera?
Okay. That's a really good question. Just to refresh everyone's memory, historically, if you wanted to buy get back down here, we have our start up. If you wanted to buy kind of the whole suite, I think it costs $115 per month. When COVID first hit, we said, yes, let's offer the full suite and let's offer it a big discount and try to help our prospects out, our customers out, help more people take advantage of HubSpot.
And a lot of people did. We offer the growth suite of $50 a month and demand really surged for that. And that surge has stayed up. It's been very steady right through the day. So, it's gone really, really well.
And a lot of people keep asking me, we're going back to $115 what's strategy there? And my answer is we're just going to let the data kind of inform it. We were a little surprised that the shape of the demand curve down there was better than we thought. And we're looking at things like what are the size of those customers, what's the retention rate of those customers, what's the upgrade rate of those customers, what's the activation rate, etcetera, etcetera. And the early signs are quite positive.
The size of the customers is interesting. We were a little worried that real small companies were going to buy that weren't sophisticated, maybe 1 or 2 person companies. And that really hasn't been the case. Like maybe if the typical size company that purchased HubSpot before and bought that gross proceeds for ex employees, maybe 0.9, 0.8x. Ryan, maybe you could mute.
If the retention rate is something else we look at, sorry, I will strike there, Chuck. The retention rate, we also look at quite carefully. There's a bit of an asterisk on this. Retention rate is quite good on there. It's a 12 month contract, so it's not really apples to apples.
The upgrade rate is pretty interesting. It's not quite at the same rate cohort to cohort as the previous cohorts pre COVID, but it's only kind of a smidge lower. And given the volume is so much bigger, it's quite encouraging. So overall, I look at that Starter Suite as going well. And we need to get really good at upgrading from that Starter suite to the pro suite and the enterprise suite.
I think it's a nice opportunity we have in HubSpot, feeling good about it.
Great. Dharmesh, towards the very end of your founders' keynote, Brian and you and Christopher, your Head of Product, talked about the shift that you're seeing inside of companies towards a revenue ops persona, how much should we read into your point about building the methodology toolset and advancing ops people's careers that an ops hub is your next
hub? Good question. First of all, I'm not here to announce any new hubs. But I will say about this ops persona or this ops role that's interesting. Talking to more and more customers, what we've seen is this convergence between marketing ops and sales ops and service ops into this new kind of rev ops role.
And the reason it's so interesting for us is that, that particular person within an organization, which starts to happen as you're scaling, they find HubSpot's narrative very compelling. They're not making individual choice about just marketing tech or just the service tech or just they're trying to build out an entire platform, entire stack and HubSpot's kind of story around being this built from the ground up, mid market focused. It's easy, but it's powerful. That narrative has really been appealing to those rev ops people. So what we want to do is kind of repeat the playbook we had in our early years around marketers, which is, okay, we want to put these rev ops people kind of in our focus, let's create content for them, let's create certifications for them, let's get to really know them because we think they are the influencers and the impact decision makers for the platform choices that we think our customers will be making.
That's great. Maybe shifting back to Kate on this one, 2021 beyond, the question is in a SaaS model, an ARR growth recovery can lead revenue growth by a few quarters. With this in mind, how much will the slowdown in ARR growth in 2020 impact 2021 revenue growth?
Okay. I get all the guidance oriented questions. So we obviously have not provided 2021 guidance. I'm going to be as a result careful of what I share. Whoever asked the question, you're right around your sort of interpretation of SaaS economics.
The impact on revenue will lag the impact on ARR and it will sort of exist for a number of quarters after. So if we saw, for example, a deceleration in ARR growth in the first half of twenty twenty, It would impact revenue both in the second half of twenty twenty, but also into 2021. The truth is there's lots of other things that are going to impact revenue growth in 2021, not the least of which is performance in Q3, performance in Q4 and frankly the overall state of the demand environment as we enter 2021.
Great. I'm going to package this one in. It came in from somebody else, but I think it's basically a follow-up to that question. If 2021 revenue growth is still is up against a tough comp given the ARR dynamics at play and you continue to invest heavily, is there a scenario where expense growth outpaces revenue growth and drives maybe a little bit of anti leverage in 2021?
Okay. So internally, we are frankly just getting started with our 2021 planning. So there's I would say, I'm not going to comment on any specifics here on leverage for 2021. I did share in the prepared remarks the long term financial model and what that shows and should was hoping to reinforce is that we do believe that the business will show increased profitability over time. But what we've said in the past and what we continue to believe is that we're going to invest for that long term and that the path to get from here to there is just a straight line.
You'll see periods of steps up and flat. That said, I think let's hang in a couple of quarters and then we'll talk about 2021.
Great answer.
Thanks, Chuck.
Let's see. Sure. There's probably one for Darmesh. Front office, let's see front office, okay. It seems like data is becoming more and more important to the broader CRM suite.
Understanding how and when a prospect is engaged in the past can help inform a sales rep's actions and reaching out to that prospect at the right time and through the right channel, what can hubs do to connect data across its marketing, sales and service hubs into the CRM?
Yes. One of the most compelling things about so I agree, data is super important, comes up in every conversation we have with customers and prospects. And the big compelling thing about the CRM platform from HubSpot is that you don't really have to kind of integrate and connect the data across marketing, sales and service. It's actually the same database, literally the same database sitting in the same data repository. So what that does is it makes use cases that cross those kind of divisional boundaries much simpler for a company to execute.
So for instance, let's say you're using Service Hub and you're logging customer tickets and that data is sitting in HubSpot CRM. And you might say, well, you know, I want to set a marketing campaign out to any customer that has logged a ticket in Service Hub over the last 90 days. Now, because all that data is sitting in one central repository, there's no connectors, there's no integration, that's actually doable by mere mortals, right? The marketer can sit down and actually launch that marketing campaign without any developer assistance.
That's great. Let's see. Maybe on the it like we have a question around the marketable contacts decision, Brian. Can you talk about the rationale behind the decision to change marketing contacts pricing structure? Does this new pricing structure give you a competitive advantage?
It's a great question. If you think kind of roll the clock back in HubSpot, 1st 10 years of HubSpot, we were built a marketing app, really good marketing app. And the way people charge for marketing apps is by there's a 2 axis pricing model additions and then size of your database, your contacts. And we did the same as pretty much everyone else. And that worked really well as we expanded the business over the last 4 years from a marketing app to a full front office suite.
There was an unintended consequence there. And so imagine you're a marketing customer and you add the sales hub and you have 100 sales reps, those sales reps start adding contacts into the database, your marketing build goes through the roof. This is a sharp edge for our customers. It's irritating them. They don't like that, obviously.
And
it's a loud complaint. Frankly, it's a complaint we've heard for several years now. And so we decided to change it, like let's shave off that. I'd like one of the things that I like about Dharmesh's talk and then our inbound talk was, you should fix all the bugs in your product, but you should fix all the bugs in your go to market, in your business model. This was a bug in our business model.
And so we changed it and we said, going forward, you only are only going to have to pay for marketable contacts, contacts in which you're putting those contacts through workflows, you're emailing them, you're advertising to them, you're chatting with them, the marketing department is actively engaged with them and your sales reps can put as many contacts in there as they desire. And so this is going to make our customers a lot happier. This is a relatively loud complaint for us, one of the loudest complaints we have. And it's going to make us much more attractive for potential customers there. Your customer is coming in, you have 100 sales reps and you want to buy sales sub and marketing hub, like this is a barrier to your purchase that makes it harder to buy and harder to scale.
And so I really like the change. I think our customers are going to be delighted by it and I think it's going to enable us to get more customers and grow better over a long period of time.
Great. This one just came in literally hot off the press, while Brian was asking the question related to marketing context. What's This is for Kate, obviously. What's the expected financial impact of the marketable contacts decision? Is this incorporated into your full year guidance?
Yes. So I think one thing that we did well with Markable Contacts is we ran a pilot for a number of months. And among other things, it let us confirm some of the financial assumptions that we made around the impact on of marketable contacts. And what I would share is that the impact is modest and we're very comfortable that it's incorporated into our guidance already.
Cool. CMS Hub question here maybe for Dharmesh. Can you provide us with some more perspective on the CMS Hub opportunity, how it's differentiated itself from other solutions in the market?
Sure. So if you look at the CMS category, there are great products if you just want to stand up a website, great products for the prosumer and small business market. There are pretty good products on the enterprise side for the Fortune 1,000 if you want to really develop a custom web experience. But we think there's like a HubSpot shaped hole right in the middle with the mid market, which is where we're focused that we're trying to fill. And what has us excited, there's a couple of things.
One is a CMS is really an important part of this digital transformation that any business is going to go through. You cannot worry about your website. So in order to have a true CRM platform, we think you need to have a CMS. The other part that's exciting is our CMS is deeply integrated into our CRM, as you would expect. So, things that would be relatively hard to do.
So let's say you have a list of customers that are tagged as VIPs in HubSpot CRM. You may want to expose some portion of your website only to those customers. Now, if you were trying to do this with other CMSs, you'd have to get developers, you'd have to kind of get a new database to stand that up. HubSpot makes those kinds of use cases super simple. So we're excited that there's a market for this.
The customers have been telling this for years. Our partners are really kind of picking up on this and building out these solutions. So we make these very kind of transformative visual experiences possible by mere mortals. That's the exciting thing.
Great. Maybe transitioning over to Marketing Hub, one for Brian here. Can you talk about the growth drivers for Marketing Hub going forward? Can Marketing Hub sustain 20 percent growth over the next couple of years?
Sure. Again, if you roll the clock way back, you can go back to the 1st year Dormesh and I started HubSpot back in 2006, we were starting a marketing software company. We had a heck of a time raising venture capital. No one was interested in marketing software. Oh, it's a crappy industry.
No one can build like a big company in there. And wow, that turned out to be dead wrong. There is a huge marketing software industry right now and some big players in it, including us. So the industry itself is blooming. The market is big and growing fast.
Now, our products are unique in ways relative to the competition and unique in ways that are super valuable to our customers. So we're in a big market with a unique, powerful, high quality offering. So that to me lends itself to like this is a product that can grow fast for a very long period of time. Now specifically over the next couple of years, actually this year, what's going on in Marketing Hub that I think is really exciting is you get the enterprise tier and starter tier, your marketing hub enterprise. We talked earlier about the gaps in here that we filled the gaps.
So I think this will go really well. We're attracting lots of cool new marketing hub enterprise customers like SurveyMonkey. SurveyMonkey had, let's just call it 2 other enterprise marketing products and they acquired a company that used HubSpot. And they said, we can't have 3 marketing platforms. They did a bake off across all three platforms, picked HubSpot and they're rolling it out across all three.
So we filled the gaps. Other great companies, Eventbrite bought HubSpot recently, eBay, like legit companies are buying it and it's very competitive. Plus, it used to be people have graduated off of it, much less graduation happening. Then we get the starter edition. The starter edition has really popped during COVID here, and I think it will continue to pop.
We need to get really good at this upgrade path over time. So count me and Jeff as bullish on Marketing Hub over the next couple of years. I don't know exactly what the growth rate will be, but I think we're super well positioned right now.
If nothing else, we have your chalk board back there, which says it all.
You get your art back there. That says a lot about you that day.
I'm a big art guy. What can I say? Domestic versus international, maybe one for Yamini here. How should we think about domestic versus international opportunities and how you prioritize
tons of opportunities, both international as well as domestic. If you think about it, we have 85,000 customers today in a market where we have millions of small and medium businesses and tens of 1,000,000,000 in opportunity. So whether you look at it from the countries that we are growing or the segments we are growing, we have pretty low market penetration. Now if you think about the U. S.
Market, we're really happy with the growth rates in the U. S. Market given the sheer size of the installed base that we have here. And we have opportunity to grow net new, all of the things that Brian and Dharmesh said in terms of the product, it gives us opportunity to grow net new and we have an opportunity to go back into our installed base and sell and cross sell and up sell into Sales Hub Enterprise and CMS. So I think we have a pretty good opportunity domestically.
Now international, I think that we are in an earlier innings in terms of international. We made a number of investments in Ireland, Australia, Singapore many years ago and they have been kind of the workhorses of growth for us. They have really delivered over the past few years. And then more recently, in the last couple of years, we have made investments in countries like Germany and France, and they are just at the point of inflecting. And so again, the investments that we have made internationally have been great and have really set us up for 40% growth.
In terms of your question about how do we prioritize the investments across international and domestic, we rely pretty heavily on unit economics. So in my talk, I mentioned the areas that we are investing from a go to market perspective, which is making small business much more efficient and driving much more productivity within the mid market and corporate. We look at it as where can we make these investments based on the unit economics and that has worked really well for us. So overall, we're feeling really good in terms of the opportunity domestically and internationally as well as how we're placing our investment bets.
Great. Thanks for that, Yamini. We're into overtime here. That said, we got a bunch of questions around M and A, uses of and organic opportunities. Maybe finish with one for Brian here.
Which parts of the front office market are compelling to HubSpot as you've expanded into new markets? What are not good fits? You've traditionally been more focused on organic investment to drive growth. Do you plan to continue that philosophy or are there inorganic opportunities you consider adding to drive incremental growth?
Okay. I love that question. Thank you. I have a couple of like macro thoughts about that, Chuck. If you think about ye olde CRM industry, I've been using CRM since 1990.
There's a ye old playbook for building a CRM company and there are lots of enterprise CRM companies up here, 2,000 employees north. And the plan is basically you build a private equity firm and you acquire a bunch of companies and you kind of cobble them together into a solution and then you hire an army of enterprise sales reps to go out and sell it. And I think that's worked pretty well for a bunch of companies out there. But I think times are changing. I think they're changing a lot.
Our industry and all we have a lot of and folks on the call who have been watching software for a long time, we've been talking about the consumerization of enterprise software like approximately for a 1000000 years. And it's finally here. Like you think about what Zoom is doing and Slack is doing and all the new modern software companies are taking off, they have these powerful enterprise back ends like these folks do, but they pair it with like a consumer like buying experience and a consumer like front end. And that's what we're up to. And to do that, we can't use the old CRM playbook and cobble together a bunch of applications and a bunch of different UIs, a bunch of different data models, a bunch of different synchronization happening in the back end and glue and all that stuff.
And so the way we go about building HubSpot, can you see all the way down here, Chuck? Yes. Underneath HubSpot, we have something we call it our primary colors. We changed the name 10 times, but the last year was 6 months, we started with primary colors. And the primary colors are things like automation, content, messaging, reporting, things like that.
There's a handful of them. And the applications themselves, the marketing hub, CMS hub, sales hub, service hub, we basically take those primary colors and the product managers are a little bit like artists and they build these beautiful applications, beautiful interfaces. They all rhyme with each other. They all work the same way. We release a new feature like we release custom objects.
They inherit all these primary colors and they all work alike. Our customers love the fact that they're not cobbled together, that they're all built on the same database, it's all one user interface. And we think we're on the right track to building modern, unique product that solves real problems for customers in a highly differentiated way from the old CRM industry. So that's a long way to answer to a short question, but we will do more M and A, but we'll be pickier than your average CRM company, because part of our unique competitive advantage that unique competitive advantage is super valuable to our customers is that we are all in one, that we are using primary colors. We're building this consumer like experience on the front end match with that enterprise power on the back end.
And we don't want to ruin that. So when we buy, you're going to be very picky. We bought a company last year called PieSync. That was kind of a perfect buy. It's sort of like a primary color we can add down here in the bottom, the synchronization engine that we can inherit across the platform.
So we'll look for more opportunities like that. But we think we've got a unique product that's got it that's uniquely valuable in the market and we've got a big opportunity and we're going to lean into our advantages here.
Great. I think that's about as good a place as any to sort of wrap up the Analyst Day. I think that that's all the time we have for questions today. I just want to thank Brian, Dharmesh, Kate, Yamini and the entire inbound team for your hard work and pulling off the Analyst Day here. For those of you on the line, we'll be sharing the slides from today's presentation to our IR website here shortly.
So look out for that. The full recording of the webcast from the event will be up tomorrow. And I just want to thank everybody for tuning in, taking the time to join us today. We'll see you all soon. Be well and take care.