All right, everyone. Welcome to INBOUND 2019. Thank you so much for taking the time out of your busy schedules to be here. We are so glad that you're here with us today. We're going to get started with just a quick video and then we'll dive right in.
So with that.
First time I met Dharmesh at MIT for growing a business school. He and I sat next to each other. And it turns out magic happened right there. We both love tech. We both love the idea helping companies grow.
I think it was the day after we graduated, we decided to start the company together. So when we first started HubSpot, there was kind of a problem and an opportunity. The problem I noticed was the way he was buy has completely changed, the way you sell has completely changed. In today's day and age, to be successful, you need to have a customer experience that's 10 times better than the competition. That's the way you build a great company today is really innovating on the go to market and the customer experience.
And our mission is we want to help companies very simply grow better. We want to help millions of companies grow better. We're passionate about it. We want to help them grow in a sustainable, modern, better way. One of the things about the early days of HubSpot and Dharmesh and I is when we started the company, we just didn't want to build something and flip it like a lot of other grounded and kept us really focusing on pretty far out in the future and making long term bets and really trying to grow our business based on success of our customers.
And we still feel that way. We still feel like we've made a lot of progress we need from a lead generation software company to a CRM platform business. We have 100 of 1000 of users, tens of thousands of customers. The 2 of us feel like we're still just getting started. We're mission driven and we're happy with what we do and really proud of the progress we made, but we have a lot more work
All right. Some familiar faces here, which always good to see. Welcome to HubSpot's 5th Annual Analyst Day inbound, everyone. We're so glad that so many of you can make the trip to be here with us in Boston to absorb some of the energy, inspiration and excitement from this week. Also want to extend a warm welcome to those of you joining us over the webcast.
For those of you that don't know me, my name is Chuck MacGlashing. I run IR as well as corporate treasury here for HubSpot. I'm going to be passing the mic to JD Sherman, our President and COO here in a second. Before I do, I just need to run through a couple of quick housekeeping items for the day. So our glorious Safe Harbor statement, you can find an additional copy of this on our website at ir.hubspot.com.
And our agenda for today. So we've got a packed day in store for you. We'll start off the day with an operations overview from JD after he finishes up. Brian and Joe in the back of the room with the 2 lollipop signs there will be leading us to the main stage area for Brian and Dharmesh's founders spotlight.
Just a
quick note, as in prior years, we have reserved seating upfront for you guys. So I just ask that everybody try and stay together, walk down as the group can be awfully busy down there trying to get into the main stage. Just want to make sure everybody gets through to the seating. You're also welcome to leave your bags in the room. We'll have security in here and the doors will be locked.
So take whatever you need. Once Dharmesh finishes up his presentation, there will be a 30 minute intermission. So feel free to stretch your legs, get something to eat or drink. But please do try and be back in your seats for Christopher Donnell's product spotlight presentation that begins at 4:30. Once Christopher finishes up, Brian and Joe with the lollipop signs again will lead us back to this room where we'll have dinner options available in the back right there.
So set yourself down, grab a bite, take your seats. And at 5:30 or so, Kate Bucher, our CFO, will take the stage to walk through a financial overview. We'll cap off the day with a 30 minute Q and A session with our entire executive team here on stage.
All right.
With that out of the way, I'm incredibly pleased to report we have surpassed 26,000 registered attendees for inbound 2019. As you can see, we've grown by nearly tenfold, dating back to 2012 when we first had our inbound, an incredible result that we're super proud of.
All right.
I want
to thank you again for joining us today and hand the mic over to HubSpot's CEO, J. E. Sherman.
All your flaws, please. Okay. So Chuck did all the thanks and everything. It's really good to see you guys again. I like the fact that we can all get together once a year and hopefully dive a little bit deeper into HubSpot and some of the direction that we're heading.
And hopefully, you'll enjoy the keynotes as well today. I want to start with what I consider an innovation. This is my safe harbor haiku, because you don't actually want to read Chuck's. This, I think, sort of sums it up exactly right. So, I'm telling you stuff and it's definitely true, but hey, things can change.
That's pretty much a safe harbor haiku. I'm really not allowed to use that because our legal team doesn't love it, but I feel like it's a major innovation. I always like to start with our mission. I start every big talk with a mission, whether it's with our partners or with our employees, because I think it's really important. It's only a handful of words.
We want to help millions of organizations grow better. But it's really every word kind of has a lot of meaning and it has a lot of meaning in terms of the way we approach our business. First is help. So we're a software platform, obviously, but we're more than a software platform. We're a philosophy about how to grow your businesses better using the entire sort of flywheel, as we talk about it.
And we're also people, whether those people are HubSpot employees or partners, we're passionate about helping our customers be successful. Millions of organizations, obviously, what that tells you is we're focused on the mid market, not the very largest Fortune 500 or the top 100 customers. We don't index that way. I think part of our job is to sort of democratize the technology and the tools and the platform to help those mid market companies compete with the big guys and run the playbook to match their marketing and sales and services with the way their customers live, work, shop and buy, and then grow better. We want to focus on long term sustainable growth the right way, the healthy way for our customers rather than short term decisions.
And we think about our own business that way as well. Okay. Last year, we talked about innovating and adding a lot of new software products. We launched a few products at the inbound while you guys were here. I wanted to give you a snapshot of how that's gone so far this year.
So just as a reminder, I used this chart last year. Back in 2015, roughly, we kind of had one product line we did have one product line, and it was kind of tuned for that sort of 50 to 100 person organization. I'd give that product an A for the sort of 50 person organization. And certainly, we had an enterprise edition that we targeted towards larger customers and a basic edition. But those were kind of C to C- type products.
What we really accomplished in 2018, and we're still on this mission obviously, is to expand that very dramatically. And I joked it's both we've expanded both north south and east west. So north and south meaning that our enterprise products got much, much better and real and are a good fit for a 2000, 3000, 4000 person company. And we went after a simpler, more frictionless model to acquire customers at the low end of that. So any company could start with HubSpot and grow with HubSpot throughout its lifecycle.
And then, of course, the East and West, we added a sales hub and a service hub. So I want to give you some information and some stats about how that's going. Let's talk about East and West first. So what this chart shows is the amount of the growth suite adoption across our customer base. So we have you can see about 37% of our customers now are using multiple tools in HubSpot.
And I think there's still room to grow on that. Also interestingly, about 6% or 7% of our customers are using all three of our tools. Obviously, the Service Hub being the newer tool, adding sort of to the 3rd leg of that stool. I think there's a tremendous amount of opportunity there. When we initially introduced the Service Hub product, it really had a very strong use case for our customers who are using Sales Hub and Marketing Hub that needed to extend into this idea, this concept of a ticket to manage a ticket, a service ticket from their customers.
And we've got a lot of traction with that and that business is growing very rapidly. I think as we continue to invest in that, that business will sort of stand alone and be a more powerful tool and we have a big opportunity to continue to cross sell that into our installed base. So what that does, obviously, is it tends to pull up our ARPUs as we get customers to add more and more of the products that they use from HubSpot. If I think about the north and south motion, as I like to call let's talk about North first. So we spent a lot of time focusing on our enterprise products, so that we could sell to larger and larger customers.
And you remember last year, we added an enterprise tier for sales and Service Hub, and we really beefed up the enterprise tier for our marketing hub. We've been able to, over the last sort of 18 months, kind of double the number of our customers that are using that enterprise tier. So we have almost 8,000 customers now of our 65000 ish customers that are using our enterprise tier product. And again, that tends to pull up our ARPU, which is a very positive thing. On the other side of the equation, let's talk about sort of the southerly direction, if you will.
So what this is about is adding starter tiers across all of our hubs, so that customers can start with our free product, adopt the starter tier, really frictionlessly, often without talking to a human being, and start to use the product, get using it, and we're adding value for our customers before we're expecting to extract value with a conversation to get them to upgrade into professional. And what this tends to do, obviously, is lower the CAC, lower the friction of acquiring a new customer. And that, of course, tends to pull down the ARPU a little bit because those customers tend to be smaller when they start. So you kind of have this interesting phenomenon that I've joked about as being a humidifier and a dehumidifier in the same room. The humidifier is adding to ARPU as customers upgrade and cross sell.
And then the dehumidifiers, we're bringing in lots and lots of new customers with this motion. And you can see that we're getting a lot of nice traction on that. This chart that shows both our weekly active users and our weekly active teams over time, and that's a really nice trend. You can see we're up to almost 70,000 weekly active teams. I like to look at the weekly active teams as well as the users because what we notice is when a user starts and then they invite in team member at a with a very high percentage, almost 20% of the time, those customers those teams become paying customers of HubSpot.
So that's a really powerful motion for us. And by the way, don't worry about those dips in the curve. I took vacation during those periods. So I was able to get the ship righted relatively quickly. In all seriousness, that's like Christmas vacation.
That's holidays, the December holidays. Okay. And by the way, the other thing that happens with that motion is we reduce the friction throughout the whole process. What this chart shows is the percentage of our ARR that we're signing up after the customer is already using our product at some level. And you can see that over 60% of the time, that's the case.
I don't think this ever gets to be 80% or 90% because we have a really strong motion with our sales team. We have a lot of considered purchases of folks coming in and looking for a CRM, a marketing solution, a sales solution. But that's really healthy it's a really healthy motion for us. It really lowers the friction for our sales process. And it's better for the customer, I would argue.
Okay, so let's talk about 2019 and what we've been up to this year. And I call it a year defined by our customers. We really said this is going to be a year where we want to focus on that customer experience. So last year, during Brian's keynote talk, he talked about the flywheel and how you have to reduce the friction for your customers and turn your customers into advocates. And that's something we took to heart ourselves.
And you're going to hear a lot about this in Christopher's product keynote in particular this year. So I'll give you a little bit of a preview on that. As we talked about last year, we used to think about this sort of as a funnel where you thought about what leverage can I get out of my marketing and sales motions to produce the most customers here? The problem with a funnel idea is it doesn't give you credit for delighting those customers. And that in turn turns into your best route to market.
And so we shifted the idea to a flywheel where the
customers were at the center
of that. And this is really what's driving our thoughts around first one is, and I want to introduce this me talk about that a little bit. So the first one is, and I want to introduce this concept that we call internally the mainsail. We love nautical references, everything like we call our planning season, tuna season. When we make a decision, we don't actually make a decision, we sail a ship.
So we have a bunch of stuff like that inside. But we introduced this idea shortly after probably you guys have forgotten about this, but we had a little bit of an outage at the end of Q1. That was actually very rough at the time, but I think it's turning out to be one of the most monumental and seminal moments for the company as we grow because it made us rethink how we sort of develop software. And we came up with this idea of a mainsail where at the bottom of the mainsail are the things that customers absolutely need to be able to count on. We also learned through this is when we were a marketing app and the product had issues for a short period of time, customers were like, oh, my e mails didn't go out.
They'll go out in 2 hours. Whereas when you're running your entire business on HubSpot, it really becomes critical. So the way we thought about it is sort of guardrails and goals. So our product teams who operate pretty autonomously, they sort of listen to what customers want and sort of deliver on that. We said, that's awesome, but we're going to have guardrails around the product has to reach a level of security, reliability, performance and usability before we start working on value and growth items.
And those are obviously at the top of the main sale. So if we weren't a company that loved references, this would be a pyramid or something. But we want to do is we want to make sure that we're delivering on the promise of security performance and reliability. So that's sort of our first big effort this year. We also delivered a lot of really new stuff that I won't go through in detail because you'll hear about it from Christopher next.
But our themes were this year for our customers, we want them to be able to grow easier. We want to make we want to take the friction out of the way of how you have to use HubSpot. We want that to be better. We want to give them tools so they can grow faster. And then we also added a bunch of tools to our free product that we think will drive a lot more usage and in turn feed sort of our internal motion about acquiring customers.
I think that's gone really well. Again, I won't get into any of the specifics about the product launches. We can talk about that later. But also, Christopher is going to talk about that in more detail. But my summary is we sort of made life easier for our customers.
The other thing we invested heavily in is our platform. So far this year, we've added over 100 new Connect partners to the platform. And our customers are really benefiting from this. Our average customer, even though we tend to have small and medium sized businesses, we see that they're using 5 plus integrations on the HubSpot platform with their HubSpot implementation. That's fantastic.
And we've gotten 700,000 cumulative integrations so far. One of the things I'll talk about a little bit is I think this sort of spin an investment flywheel for us because as this platform gets better, it makes the experience better for our customers. Customers are happier. They grow. It makes the platform more attractive to developers.
So we've made some investments there. Another thing that we don't talk a lot about, but I think it's really important and interesting when you think about HubSpot as a platform or an ecosystem, is education. So we've been known for a while for our HubSpot Academy and the content we've done to teach customers about inbound marketing, teach customers about how to grow better. A couple of years ago, we said we want to sort of brand this as a learning center. And we basically created a learning center where you sign up, you get a free user ID, and you can access all of this content.
And you can see over the time, we've had almost 400,000 sign ups and about 250,000 people have earned certifications on HubSpot about how to do inbound marketing, how to do SEO, etcetera, etcetera, right around the flywheel. And I think this is going to be a really powerful sort of force in the overall platform flywheel as we go forward. Okay. Let me look a little ahead and maybe make some actual forward looking statements at this point about how we're thinking about investment for the next, call it, 3 to 5 years. So first of all, as you've heard me talk about, and I've sort of showed you some stats, if you don't believe me, just look at the arrows.
Like, we're on the process of evolving from an app company, where we started as a marketing app, to a suite, to a real platform. And so that's our theme as we make all of our investments. And I think it's starting to pay off. And I think you can actually see start to see the return that we have on this investment. So this you guys are as familiar with these numbers as I am probably.
But 3 or 4 years ago, we spent maybe 13% or 14% of our revenue on R and D. And a lot of companies at that point or public starting to get some scale, they would start to get some leverage for that. We, in fact, have actually increased the amount of R and D spend to the point where the last sort of 18 months, we've been spending about 18% of our revenue on R and D. So we've really increased that a lot. And think one of the places you can really see the benefit of that is in where you if you look at where our revenue is coming from.
So obviously, our marketing hub is still growing very nicely. I still think there's a big opportunity there. But we've layered in additional products driven by that R and D, and that's taken our growth rate up very substantially to the point where we have a pretty big sales hub business now and a nascent but growing very fast service hub. And I think there are more opportunities to do that. So I still think we're in a situation where R and D investment is going to pay off for us, and there's big opportunity to do that.
Kate will talk more in her section about the way we're thinking about the go to market and the marketing sales investment. Our LTV to CAC is still fantastic. We want to keep cranking there. But I think we're getting a return on R and D. And I think that opportunity is actually growing for us to get more of a return on our development spend.
Where are we headed with that development spend? I think we're headed in sort of 2 ways. There's sort of 2 big opportunities for us. The first is to continue layering in fast growing hubs on top of the platform that we've built. So the nice thing about our platform, as we've talked about in the past, is it's built on a common framework, so that the pieces all work really well together.
The value add for HubSpot when we launch a product is, of course, the product has to be excellent, but it's the sort of the 1 plus 1 equals 3. It's the magic of the way those hubs work together to enable our customers to do really powerful things to help their customers. And so I won't talk today about what those hubs look like or when they're coming because that would be a little bit I'd have to swear you guys to secrecy, which we're not going to do obviously in this room. But there's sort of 2 things I would say about that. 1, over the next 3 to 5 years, I expect us to launch several hubs.
I don't know I'm not going to say one's coming in Q4, Q1, whatever, but I think we'll have the opportunity to launch several new hubs over the next 3 to 5 years. And then the decoder ring sort of on what those hubs look like is to the point that I was making earlier. Like the magic for HubSpot is we want to introduce software where you our customers get a 1 +1 equals 3 with the way it all works together. So that's the way we start to think about what might be next in terms of our investment in fast growing hubs. In addition to that, and on top of that really, I think there's an opportunity to layer in the ability to sort of monetize and grow our platform business.
So what we've been doing really with our platform is sort of trying to reduce the friction for our customers to find the help they need, find the software they need, pull down the assets that they need to be able to leverage their HubSpot implementation and grow better. I think we're starting to develop sort of a marketplace for our partners, marketplace for our connect partners with software, even an asset marketplace for like templates and forms and landing pages, etcetera, that our customers can leverage as they look for help to grow their businesses better. And I think there's a big opportunity to do that for us as well. So I think there's in addition to delivering more software, I think there's an opportunity to continue to grow that marketplace, to grow that platform and sort of build marketplaces around that, that we can both monetize and help our customers with. And this is what I've talked about before.
What I think that does for us in general is sort of spin what I call the platform investment flywheel. So we like to use flywheels around here. But what's happening here, and I think we're starting to see the early stages of it is, as our customer base grows, there's a bigger opportunity for partners of all types, software developers, agencies, implementation partners, etcetera. As that occurs, more investment is happening in the platform. Obviously, from us, I just showed you that we're taking up our R and D spend over time.
But also, we're seeing developers build for HubSpot. We're seeing partners invest in HubSpot. We're seeing customers invest their time and energy and expense in using HubSpot more efficiently. And I think as you get more investment, the platform gets better and, of course, happier customers. And then hopefully, we can continue to spend that investment with Flywheel.
And hopefully that's the formula for us to become a really big company over the next few years. So I'll just wrap up really quickly with sort of 3 key takeaways that I think you guys could take away from this. One is, like, we have a really strong go to market model, but we're continuing on focusing on improving that by taking out the friction and then by cross selling across that for other software packages that or other hubs that we deliver. And I think that's going to be a motion that we can continue to rely on to drive a great lifetime value for customers and continue to reduce our CAC or keep our CAC low. The second one is, we're getting a very strong return on investment on our R and D, and I think there's continued opportunity to do that.
So you can expect us to continue to invest in R and D over time. And I think that we'll see the payoff in that. And then the third is like, we think we're still in early innings. We talked about having 65,000 customers. I think the opportunity is much larger for that.
I think we've talked about moving towards a platform model. I think there's a real opportunity that we're just starting to see get traction around the flywheel. But we're investing in this company based on the idea, and we really strongly believe that we're in the very early innings of the opportunity for HubSpot. Okay? So thanks for listening.
Thanks for coming again. And our 2 gentlemen in the identical outfits almost will lead us down to listen to the keynotes. All right. Thank you.
Good afternoon and welcome. We are about to begin. We invite everyone to please be seated. Also, just a reminder, this would be an excellent time to silence your device. We appreciate your cooperation.
And again, we're going to begin shortly. Thank you.
Demand attention and push our ways to talk.
We're told to not take no for an answer.
We jump over and over
and never put the phone down.
We're told to cut costs, increase margins and bow to the bottom
line. We're chosen to get in people's faces,
force conversions,
and make it hard to
leave. We're told to grow at all costs. But I see a different way. I choose to grow better. Measured in loyalty, not leads.
I choose to get rid of friction and seek out feedback. One of my mistakes will get better every time. I choose to do the right thing, even when it's hard.
Stay true to my purpose
and build a community.
We're told to grow at all costs. I choose to grow
Thanks everybody. It's a real honor to be able to present to you today. And I'm super excited about my topic. I'm going to tell you about a new species of disruptor in the economy. But before
I get to that, I
want to tell you about my nightly routine. You see, every night, Romeo and I would come home from work and we take a lift and we cruise up to our apartment. The first thing we do is we put on our favorite band sorry, Cranking the music, we boogie over to the Doo Dog area and Romeo's chicken toys are everywhere. We're going to clean out those chicken toys and make room because he got a new package in the mail from chewy.com. He loves the chicken lollipops.
He just loves the chicken lollipops. We finish up our snack. The 2 of us head down to Soul Cycle and we get a good workout in and we come home, shower up. We get our new package from Dollar Shave Up, so we both shave up and then we come downstairs and we order a little Chicken A la King from DoorDash. Then we're a little tired, we want to put our toes up and watch Romeo's favorite movie on Netflix.
Like a lot of you, the 2 of us are trying to avoid screen time before bed. So we read our favorite comic, we lie down on our Casper mattress to make a good night's sleep. I think we have a fascinating evening routine. You don't? I think it's fascinating.
All these companies, I just ripped through all 8 vendors. We swapped out the incumbents for a whole new set of vendors in our lives. And it's not just our evening routine. It's our daily routine. It's all of our daily routines, isn't it?
And a massive wave of disruption happening. Frankly, when we started HubSpot back in 2006, I thought disruption was at an absolute peak, couldn't get higher, but disruption is in an absolute peak now. All these companies, terrific companies are all worth more than $1,000,000,000 Disruption speeding up, not slowing down. Now, did any of you notice anything funny about me in those pictures? Broke my arm.
I'm going to tell you how I broke my arm, but we caught it on video. If you're squeamish, I'd like you to look the other way. Okay. In the video, I'm the guy in the orange pants. Typical day for me, I'll let you guys be the judge.
See a typical day for me, a typical morning, I might be out on the West Coast and I cruise into our WeWork office over there. I got a big important meeting that day. So I get in my cubicle and I want to collaborate with Dharmesh to prepare on Slack and then I run over to the conference room. I don't want to be late because I want to scarf down a sandwich from easy cater and then the meeting is about to start. So I fire up Zoom, make sure everything is perfect on Zoom.
Then we have a great conversation with our new partners from AWS. Fascinating. I think my morning is fascinating. And again, just a wholesale swap out in vendors we do business with that morning. And it's not just that morning, it's every day for me, it's every day for HubSpot, it's every day for all your companies.
Disruption is speeding up, it's not slowing down, really interesting. These companies are fabulous companies. They're all worth over $1,000,000,000 okay. Did anyone notice anything funny about me in those pictures? Ice pack on my back.
Okay. Last time I said, if you're squeamish, look away. I was kidding about it. This time I'm serious. If you're squeamish, I'm looking out at you.
Everyone's looking at the screen. If you're squeamish, I'm dead serious, look away. I'm going to tell you what happened with my back. I told you to look away. I was bit by a brown recluse spider.
Hell of a summer I had. Put me in the hospital. Darn just side effects. I keep talking about this word disruption. That's a word first used in this context back in 1995 by a guy named Clay Christensen.
He's a Harvard Business School professor and he talked about it in this context in a terrific book called The Innovator's Dilemma, highly recommend that book to everyone. Since then though, this word has been heavily overused and heavily under understood. And it's on my top five list of words that are most overused and most understood. It's number 3 on the list right behind artificial intelligence and blockchain. Now what's so confusing about this word?
Why so under understood? I have a theory. My theory is when most of us think about disruption, we think about companies like these. They're technology disruptors, the browser, the Google, the Intel, the iPhone, maybe the Tesla someday. Big deep technology companies.
You add up all the patents across these 5 companies, 50,000 patents. These are technology disruptors. What about our friends? Are they technology disruptors? I'm not so sure.
I'm not so sure. So I like this list a lot. In about 4 months ago, I started preparing for this presentation and I went very deep on this list with 2 of my colleagues at HubSpot. And we talked to almost all the founders. We purchased pretty much all the products.
We read all their terms and conditions. We talked to their big investors. We went deep on them. And my thesis here is they're not technology disruptors. They're a new species of disruptor that's emerged in the economy.
And I call that species an experienced disruptor. Okay. Now when I look at the genetic code of these experienced disruptors and I look at the adaptations, there's 5 of them, 5 things, modern adaptations that they have that have allowed them to really run over the incumbents in their industry.
And
so today, what I plan to do is unpack those 5 genetic adaptations. And what I want to do is leave you all with a playbook that you can take back to your company, so you all can become experience disruptors too. How's that sound? Let's get started. The first adaptation, if I talk to the incumbents, the incumbents you see they focus on product market fit.
The experience disruptors work on experienced market fit. Here's how they think about product market fit. They think of it as necessary, but insufficient to get the disruption that they're really after. So necessary, but insufficient. Let me give you an example of what I'm talking about.
We started this project 4 months ago. And at the time, I had never heard of this company Carvana. But a bunch of my colleagues have purchased cars from them we're raving about them. So I did some research and they are an awesome company. It's a startup.
It was founded 5 years ago. And within 5 years, it started the largest car dealer in the United States. It went public last year. It's got a market cap of $12,000,000,000 This is a killer experience to structure. How did they do it?
And you might think they did it with inventory. Typically a car dealer, they had cars all over the parking lots. These guys do it differently. They build a giant car vending machine. Now that's necessary, but insufficient to get that crazy growth they've had.
The reason they get that crazy growth is they're focused on the experienced market fit. What they're really focused on is they've set out to create a whole new way to buy a car. So don't just buy the car from them. They do all the crappy paperwork. They deal with the DMV.
They deal with the taxes, registration, all that crapola that none of us want to do. Then you tell them, hey, I bought the car, I want it delivered at my house on Tuesday. You give them the address, the car shows up at 2 o'clock on Tuesday for you. Pick a time and a place. Awesome.
You drive the car around for a week, for whatever reason you're not happy with the car, return it, no questions asked. Experience market fit. They've taken the cringe worthy process of buying a car, automated it, institutionalized it and made it awesome. When I look at these experience disruptors, they all have great products, but they have even better experiences.
Here is how I think about all of them.
How they sell?
That's why they win. Okay. Let's talk about the second one. Let's sit down for this one. So to unpack this one, this adaptation, we had to take some DNA from the experienced disruptors and we studied it under a microscope, DNA under there.
And what we expected to see when we looked under the microscope was a double helix shape for DNA. Focusing on it, very surprising, really focused, haven't focused on it. It wasn't shaped like double helix at all and had a very different shape. Their DNA was round and spinning. It was a perfect flywheel shape.
Okay. If you were here last year when we talked
about the flywheel, could you clap for me?
Oh, boy. Oh, boy. Oh, boy. Thank you for coming back. For those of you who weren't there, we collectively here at inbound 18, we retired the old funnel.
The funnel just doesn't understand us like it used to. See the funnel, it gave us credit for our marketing channel, gives us credit for our sales channel, but it gives us no credit for our most important channel,
our
customer channel, no credit for that. I also like that the flywheel spins. The faster it spins, the faster you grow and you want to get friction out of that flywheel in a modern company and you want to track that. So I'm a big flywheel fan. And that brings me to the 2nd adaptation.
If I look at all the incumbents, their flywheels are full of friction. The experienced disruptors, very different. They're very good at pulling the friction out of their flywheel and
getting that thing to really spin.
Let me give you an example of what I'm talking about. It's a company called Atlassian. If you haven't heard of Atlassian, it's a great company. They make B2B collaboration software like Jira, Confluence, Trello, terrific products, really great products. If you had a chance by the way, this company is not a small experience disruptor, it's not a start, it's been around a while.
It's a large company growing very fast, very profitable. Its market cap is $32,000,000,000 These guys are friction fighting superheroes, really good at it. And we had a chance to sit down with Jay Simon, their longtime President. And he's fooled us on fighting friction. The first thing he started talking about is he like in the process of buying B2B software to the process of buying a car.
He actually called it cringe worthy, it kind of hurt. Anyway, he started talking about his marketing department, he talked about his sales department, and he talked about a contract, and he talked about pulling friction out of these three things. And super valuable. So I'm just going to walk you through what he talks about. So his marketing department looks less like a traditional B2B marketing department.
He's a B2B company, but his marketing department looks just like a B2C marketing department. His marketing department looks less like, let's say, SAP's marketing department and more like Stitch Fix's marketing department. They focus less on generating leads and more on generating active users. They focus less on trying to sell the CIO and more on trying to get that CIO to buy from them. All of the B2B experience disruptors are playing this new playbook.
When you look at the marketing departments, they're B2B companies, but they're B2C marketing departments and they're all getting really good at this. What's interesting to me about this is the whole B2B marketing world, this world itself is going through another major interesting disruption. Jay and his crew is really good at pulling friction out in marketing. Now most of the other B2B experience disruptors, they do a really nice job of marrying their B2C style marketing that's very low friction with a slightly heavier friction traditional enterprise sales model. They're really good at getting that going.
And I said most of them because Jay doesn't do this. What impresses me about Jay and Atlassian, they do multi $1,000,000 deals, no sales rep, no sales force at
all, no commission based sales force. And just a few years ago,
you'd buy a based sales force. And just a few years ago, you'd buy a toothbrush or a comb online. Now people are buying multimillion dollar pieces of software, really, really interesting to me. One more, Jay talked about the contracting process, fascinating to me how you thought about it. And what I want to do is kind of role play with all of you.
Let's pretend that I'm a potential buyer of your company's products, okay? You're a salesperson for your company. We're going to do a little role play. I go to your website, I Google you, find you on your website. I love your website by the way.
Terrific. Nice job, the design is great, SEO is great, I subscribe to your blog, I follow you on social, I dig deep, I do the same thing with your competitors. I'm coming along, I'm pretty interested and I
say, I'd like to talk
to a salesperson and learn more. So you do a fabulous job. You engage me, you solution sell me, you really understand my pain, you do a fabulous job. And over the course of a couple of months, I'm building up trust in you, I'm building up goodwill in you over time. And you're doing such a good job, congratulations, I'm ready to buy.
Tell you I'm ready to buy and all that trust, all that goodwill, all of that goodness goes down the tubes and we go through a brutal negotiation over the course of weeks months. Really don't like this, really don't like this. Jay doesn't like this either. So what Jay said was, Basta, enough, no more negotiations. I'm not giving discounts to anyone.
I don't care if it's my sister, no discounts. What Jay wants to do is for us, he wants to keep the goodwill between us. He doesn't want to destroy it. He wants to keep that trust between us. He doesn't want to destroy it.
He doesn't want an adversarial relationship while we negotiate. He wants to keep that partnership going. Really clever stuff. Now, Atlassian is kind of here on the friction side. I'm going to guess your companies are closer to here.
It's going
to be hard to get all the way there, but I think you can get partway there. One more thing I love about Atlassian. I pulled down the investor deck that they did. So the slides they use for investors and this is one of the slides in it. You know what I like about that slide?
It's a flywheel right on there, right? They're a flywheel business. They're a low friction flywheel model. They get terrific products. Great products are necessary, but insufficient for that $32,000,000,000 market cap.
How they sell, that's why they win. It's a terrific company. Okay. What's the 3rd genetic adaptation? The incumbents.
When you're a prospecting customer, it's relatively anonymous experience with them. The experience structures, it's a very personalized flywheel experience. Now one of the things that surprised me in our research project, when we talk to the founders of these companies, they didn't sound like tech people. I'm sort of a tech person. They didn't sound like they came from Oracle or Cisco.
When you talk to them, the language they use, they sounded more like executives from the Ritz Carlton or the Four Seasons. They sounded like they're in the hospitality business, very different mindset. All these companies, I wouldn't describe them as tech companies, I'd describe them as ultra modern hospitality companies. They're really good at this stuff. Now it shouldn't surprise me because a lot of the founders came through the hospitality industry.
They worked in the hospitality industry at some point in their career. 1 in particular caught my fancy and that's Jeff Bezos. Jeff Bezos, I don't know if you know this, but he started his career as a line cook at McDonald's. Kind of interesting to think about what would have happened if Jeff stayed at McDonald's. He went from line cook, store manager, regional manager.
What if Jeff were CEO of McDonald's today? What features might we have? I'm not sure, but for $119 a year, bet we could get all the burgers we can eat, prime beef only at the press of a button in less than 2 seconds. Okay. The granddaddy of personalization isn't Jeff Bezos, it's actually this guy, Reed Hastings.
He's the founder of Netflix. He's the founder of Netflix. And we tried to get a meeting with him. We had already done getting a meeting, but we wanted to do some work on it. So deep, deep research on NEFA, deep research.
Some people might call it binge watching. He used this funny expression. He said we avoid info we avoid psychographics. And he's a really smart guy. And when I was listening to a podcast with him, I had to Google like 20 things.
This is one of the things I Google. Psychographics is a very fancy word for persona. Many of you are familiar with personas in this room. And what he talked about was we're replacing the persona with a segment of 1. See inside of Netflix's database, every one of us, we have a fingerprint inside of there.
The more we use their product, the better that personalization gets. This is one of the real secrets of success. How they sell is why they win. Now Netflix isn't the only company moving away from personas and using data to be much more prescriptive about personalization. This is also happening at Stitch Fix.
Katrina Lake, a really great entrepreneur, she dropped a handful of handcrafted personas in favor of dozens of data crafted clusters, same type idea. Same thing with Daniel Ek, the CEO of Spotify. He's talking about moving away from personas to use cases. Honestly, this one kind of bummed me out. I've done handcrafted personas.
How often have you done handcrafted personas? You made a persona. Right. They're hard, they're really hard. These guys, they had only had 2 personas and they were perfect.
They captured sort of the energy of so many consumers. I thought they were really good. First one. The second one I thought captured the other half of you, because maybe obviously this didn't connect with you. The second one was He did replace them with use cases or mixes.
And some of the mixes were pretty good. I listened of course to the Deadhead dance mix. But the really good one is they have a new mix out there. When I
play Romeo, it goes nuts.
It's a doodle dance mix. Love the doodle dance mix. All these folks,
it's kind of the same
game they're playing. They use data, lots and lots of data to highly personalize your experience with them. Very interesting how they do it.
How they sell
is why they win. Now you can't over personalize. I want to tell you a little bit of a story from my summer vacation. In between the arm break and the spider bike, I was on tour with the Grateful Dead. People still do that.
And any John Mayer fans out there? Yes. Me too. I'm a John Mayer fan and I got an opportunity to meet him backstage. I had 3 minutes for them.
So very quick thing. And I was super I was really nervous to meet him. I thought, who are we going to talk what am I going to talk to him about? I got it. I'm going to tell him the spider story.
Tell him the spider story.
He's super interested. Tell him
about the spider. He likes spiders. And I walk on and we finished the thing. He goes on stage and walks to the concert. I look at my phone and the first thing I see my phone is an ad for Spider Away.
Was it listening to me? What the flock? How if this ever happens to you? Okay. With great data comes great power and with great power comes great responsibility.
Be careful with your data, you can over personalize. Okay, let's do number 4, it's a good one. It's the 4th genetic adaptation we've noticed about our species. The incumbents, well, they're very good at selling to their customers. The experience disruptors, well, they're very good at selling through their customers.
One of my favorite entrepreneurs, I'll give you a couple of examples of this. One of my favorites is Emily Weiss of Guatier. Emily came to inbound last year and spoke. We got to know her. She was terrific.
And she told her story in case you missed it. She started Glossier as the blog. She's a fabulous content creator. And the blog is called Into the Gloss and it was blowing up with beauty tips and then she started developing beauty products, did a fantastic job with beauty products and she's a bonafide experience instructor now. Where she's next level is she's really good at not just creating her own content, but encouraging and enabling her customers to create content too.
So there's hundreds of thousands of pieces of content out there about her products created by her customers. This one in particular, it actually wasn't that rare. It's a video. This is not
a Glossier employee. This is one
of her customers over a 1000000 views on it. She's not just selling to her customers, she's selling through her customers. I'll give you another one. We met Neil, the founder of Warby Parker also at inbound a couple of years ago. He's a classic experience instructor.
He thinks that the process of buying glasses is also super cringeworthy and it is. The old process of buying glasses was a pain. You had to schedule going down to the store. The scheduling was a bear. You had to bring your most judgy friend with you.
So he said, I am going to rethink that. What I am going to do is I am going to mail you the glasses. You try them on. You post them on Instagram and you ask all your judgy friends for their opinion. I like number 1.
How they sell is why they win, of course. What's the last one? I like this one a lot. The incumbents, their business model followers, the experience disruptors, their business model busters. You see what's going on inside most of our businesses is we all live inside an oligopoly.
Each of our companies probably has between 510 competitors. When you unpack the business models, you look at the pricing and the packaging and the warranty and all the terms and conditions, they're nearly identical within this oligopoly. One of the things that really surprised me about these experience disruptors is they rethought those terms and conditions in ways that were much more customer friendly. I was surprised at how powerful this play was. By rewriting those terms, they were able to bust through those oligopolies in really effective ways.
Most of them are dominating their industry.
I'm not
sure if you noticed, but almost all these industries, they're kind of winner take off and they're starting to really beat up on the competition. Now, I want to give you an example of one of these. The example I talked about earlier is Romeo's favorite experience disruptor. And I ordered a medium shirt for Romeo. He's always taken a medium and I put the shirt on and the poor dog could barely breathe, too tight, too many chicken lollipops.
So I called Chewy and I said, I'd like to return my medium for a large. The woman said, no, no, no, no, no, no. That's not how we do it. Okay. How do you do it?
She said, give your medium to a friend of yours and we'll send you a large for free. Really, this worked out great for me. I didn't have to do the return, didn't have to do any paperwork, fantastic worked out great for Romeo. It worked out really well for his friend Woodford. What I like about this is their cost to acquire Woodford was very low, right?
I got Woodford for them. They didn't have to really spend any money to do it. Their total lifetime value of Romeo is very high. Why is that? Well, they have such a great return policy that Romeo should buy all kinds of stuff now.
Now these experienced disruptors really are
a different species. They think
differently, learn a lot in this project. The founders have a healthy disdain for conventional wisdom. They all embrace unconventional wisdom. The founders, they don't spend nearly any of their energy extracting value from their customers. They spend all their energy thinking how do I add value to my customers.
They're really good at this stuff, really impressed with these companies. Help me out here. How they sell is? You got it. Okay.
Now, while we're on the topic of returns, I want to tell you about a trip I had after college. After college, I went to Europe with 5 of my good buddies. We had one of those trips that was 16 countries in 8 weeks. We had a ball. About halfway through the trip, we were in Prague and I walked into this great little shop in Prague and I saw these 2 beautiful vases.
I thought to myself, I'm going to
be a good son. I'm going to buy those vases for my mom. I'll be a nice present. You're back to my youth hostel, I show it to my friends. My friends are like, wow, sonoftheyear, amazing.
I thought I was absolutely brilliant until the next morning when I was packing. I was around Europe with the
2 things
clanking on my back, 8 countries with those things clanking back there. Anyway, I get home. I'm excited to see my mom. I haven't seen her in
2 months. I had a nice
Mom, great to see you. I have these beautiful vases
for you.
Those are nice. Underwhelming response. I forgot about it. She did rear me. A couple of weeks go by, I had to come home, laundry day.
I walk into the laundry room, the damn vases are in the laundry room.
Mom,
they look great in the family room. How about the kitchen? The colors match perfectly. It's a good idea. Let me think about that.
For 30 years, those damn bases stayed in the laundry room. Christmas comes along this year. And under the tree, the 2 beautifully wrapped big boxes from mom to Brian. I opened the boxes, mom returned the vases. With all due respect to chewy.com, I got one hell of a return policy.
Okay. Enough about me. Let's talk about you, about your superpowers. We started this presentation out today talking about my nightly routine. Routines can be good.
Routines can hold you back though. All of you probably have routines. And on Monday, you're going to go back to the office, you've got a choice. You can get back to your office and do your normal routine, drag the spreadsheet on your career, drag the spreadsheet on your company, or you can embrace these new 5 experience disruptor plays and harness your inner superhero. If you want to harness your superhero and if you like these plays, I'm going to summarize them for you.
Okay. She going to go through all of them for you. The first one is Don't obsess completely about product market fit. Somebody in your company is obsessed with that. This is a sales marketing service type conference.
It's probably not you. You, probably you should expect should obsess about experienced market fit, okay? Embrace your inner curve on it. 2, dollars flow where the friction is low. Dollars flow where the friction is low.
Manually remove friction, automate, automate, automate like the superheroes at Atlassian. 3, automation without personalization, that's what people call spam, personalized, personalized, personalized. Think like Netflix in fingerprints. 4, don't just sell to your customers, sell through your customers like our friends at Glossier, really effective tool. 5, rethink ye olde business model.
Rethink it from scratch. Look at your terms and conditions. Look at your pricing packaging. Look at your competitors. Rethink that whole thing.
Now my favorite thing about this list, nowhere on here does it say blockchain. Nowhere on here does it say artificial intelligence. Mirror models like me, we can do this. Mirimotos like you, you can do this. And you get back to your office on Monday, try to get out of your routine and embrace these plays.
And if you do that, how you sell is how you'll win. Want to thank you all for being a fabulous audience today. I really appreciate it. Thank you.
Thank you. Hello, everyone. Brian and I started HubSpot over 13 years ago, And I've learned a lot in that time. Today, I'm going to share with you some lessons, both personal and professional, from my journey to try and grow better. I'm going to share some mistakes I've made that I think are worth avoiding and some things we've gotten right that I think are worth replicating.
Now Brian has mentioned some of his fears. So I think it's only fair that I talk about some of mine. We all have fears, Local fears, global fears, present fears, future fears, personal fears and professional fears. Now since we're inbound, if it's easier for you, you can think of those as B2C fears versus B2B fears. For me, there are a few things that scare the life out of me.
The first one is terrifying. I can't understand why everyone doesn't have this fear. It's just I dread it. I dread it. It's the low battery warning.
I hate that thing. It makes my heart rate go up and not in a good way where you get credit on your fitness tracker, Not in a good way. So why the dread? Without battery life, our devices die. And without devices, all we have is each other.
People, the horror. It's because of this fear that when I got this message from a colleague of mine, Christopher O'Donnell, who is the Head of Product at HubSpot, I was shocked. Not shocked at the valuation for monday.com, great company, great product, more power to them. Shocked because if you look in the upper right, he's got a low battery warning. What's more is there's no lightning bolt in that battery warning thing.
The phone is not charging. The phone is not charging. So yet he has the presence of mind to send me a screenshot, send me a message while like living on the edge. What was even more shocking, it's 6:53 am. Who uses up their battery life by 6:53 am?
And I know some of you are thinking, well, he's making eye contact with us right now. No. I'm not. I'm looking at your foreheads. You all have lovely foreheads by the way, nicely done.
If I'm not looking at your foreheads, I'm looking at the floor. I've built a great rapport with the floor of this convention center, we're BFFs, all 18 miles. Here's someone who also has a lovely forehead. This is my wife, Kirsten. She's in the audience right there.
Hi, Sydney. She and I met 27 years ago. I made eye contact 25 years ago. I was proud of myself too. Thank you.
Now when we first met, Kirsten talked to me about the GRE, the Graduate Record Examination. It's like the SAT, but with less acne. So Kirsten says, I'm thinking about going to grad school. So I'm planning on taking the GRE. And I'm like, well, that's serendipitous.
I'm planning on taking the GRE. I was not planning on taking the GRE. But it wasn't a total lie. By the time I had said those words, I was now planning on taking the GRE. So our first date was a study date.
Now some of you might be questioning does a study date really count as a date? Yes, it does. Study date. It's got the word date right in there. So we plan our date.
I'm not outdoorsy. Kirsten digs the outdoors. I dig Kirsten, so we're outdoors for our first date. This is a photo of us outdoors with our GRE book in hand. Now I apologize for the grayness of this photo.
This was back when you had to get photos developed like a caveman. So we have a son, by the way. He's 8 now, Soham. And he likes to joke that mommy and daddy met in the late 1900s. And I'm like, you're not wrong, but I would tread lightly.
Mommy brought you into this world. She can take you out. Daddy got you on the Internet, she can take you off. Last beer. Now I know many of you are wondering why is Dharmesh fearful of yoga splits?
He doesn't seem like the type that would do yoga or splits. This is actually a fear of water. I have a very rational fear of water because I can't swim. Just never learned. So you see a photo like this and many of you are thinking, oh, that's a nice, tranquil pool.
And the thing that goes through my head when I see this, danger, death awaits. And I can't help but think I did not plan properly to die today. Now my life has turned out okay. I have mostly avoided water my whole life. Beaches, water parks.
Cruises are okay because cruise ships are practically a small continent like Australia. So sure, I've missed out on a few things. But overall, I'm fine. I tell myself late at night, I'm fine. But now I have a son.
His name is Stohan And he's afraid of the water too. So when he was in his late 60s, he wouldn't put a foot in the shallow end of the pool, not even a toe wouldn't go near it. So that night in Maine, I was listening to the sounds of the forest or it might have been someone's Spotify playlist sounds of the forest playing too loudly, I don't know. The point is, I was overcome with guilt. I thought, is fear of water genetic?
Did I pass this down to my son? What have I done to my son? I have failed as a father. Aquaman's son would not have this issue. I felt so guilty.
I talked to Kirsten, who is not neurotic like I am and she says genetics? Maybe Or maybe he just needs to learn how to swim. Brilliant thesis, I thought. So we try that, put Sohan in swim class. And lo and behold, the boy can swim like he were the son of Aquaman.
It's awesome. So this is Sohan at that exact same pool that he would not put a toe into. This is him cannonballing into the deep end of that pool. Thank you. This is awesome.
Did my heart so much good to see him in the water. But then he turns to me and he says, daddy, why are you afraid of the water? No parent wants to look scared in front of their kid. How we face our fears is what defines our destiny And often how we overcome them involves not just one thing, but multiple things coming together. And if there's one person that understands the combination of things, it's this dude.
Now you probably don't know who this dude is because most dudes in the 1800s looked like this. Actually 200 years later lots of dudes still look like that. Back to this dude. I'll give you a hint as to who this is.
Yes, I know.
This is Jean Ben. He was a mathematician from Cambridge, UK. I hear they have a Cambridge there too. He invented the Venn diagram. It's a part of math that's called set theory.
Now you probably learned about Venn diagrams in high school or if you're from India like me, 1st grade. So here is an example of a Venn diagram. You have Paul Simon, gifted musician, singer, songwriter. You have Art Garfunkel, who has the name Garfunkel. Slightly better example.
You have animated characters that love carrots like Bugs Bunny. You have animated characters that are loyal friends like Donkey from Shrek. By the way, it's not the donkey, the name of the character is donkey. I just saved you some googling time. Then you have animated characters that love carrots and are loyal friends.
This is what I like to call a Sven diagram. I know, I know. You have to take the good with the bad folks. You've got a dad on stage wearing dad jeans. You have to expect dubious dad jokes.
That's How it goes? Now for those of you in the audience feeling left out a little bit of FOMO because you didn't get that joke, just let it go. Now many of you are wondering why is Dharmesh talking to us about Venn diagrams? It's because facing your fears involves the intersection of different but complementary things. So a couple of weeks ago, I posted this to LinkedIn.
It got some resonance in the community. I thought I'd share it with you. As a start up, at first you fight death. Next, you fight stagnation. Then you fight complexity.
So before moving forward on the path to growing better, you should know what fears you might encounter along the way. Brian talked about 5 genetic adaptations of the new breed of experience disruptors. I'm going to share with you the 5 fears that you're going to need to face on the path to growing better. Now before we dig in on the fears, it's important to recognize not all fears are bad. Some are worth fearing.
They're dangerous, scary. The important thing is you have to pick the right fears to pay attention to. That's what we're going to talk about. Fear number 1, a fear of commitment. This is a paradox for me.
I'm exceptionally committed to things I commit to. Keesh and I have been together for 27 years. Brian and I have been working together for 13 years. I've been wearing this T shirt on stage for 10 years. When I commit, it tends to stick apart from diets that don't include pizza.
I know that about myself, which is why I find it hard sometimes to commit to make a decision because I mistakenly assume when I make the decision, it's going to last forever. So the result is uninspired compromises. Instead of committing to one path or another, I avoid a decision altogether and I think many people have the same challenge. So we made one of our first uninspired compromises early on at HubSpot. We were unable to decide exactly what customer base we were going to focus on.
Here's a photo from the 1st year of HubSpot. We're having an animated debate over email. Anything else would have required eye contact. Now you can't tell from this photo, we are mid compromise right here. I want to pause and make a few observations on this photo.
I know this looks like a fortnight marathon for dads. It's not. It's a room at the Marriott across the street from the HubSpot office. And so you're wondering, well, why are you working out of a Marriott across the street? And the answer is because HubSpot was on fire, literally on fire.
Like there was an electrical blowout. By the way, don't you hate when people use the word literally when they actually mean figuratively? It's like my heart literally broke into a 1,000 pieces when I heard Ed Sheeran was no longer touring. I'm sad about that too, but really is your heartbreak? Did you count those pieces?
So when I say HubSpot was on fire, and literally on fire, there were literal flames. It was on fire. What was not on fire was my fashion sense. So that sweater and those shoes still own, still wear, almost wore them today. Kirsten suggested I might not want to do that.
Now in this photo, Brian as always is ahead of his time. This is him working while standing before standing desks were a thing. You think of it as a hunching desk. Last observation, both Brian and I are using PCs back then. We both have subsequently switched to Macs.
Brian, because he loves Apple. Me, because of free YouTube album. Anyway, back to our compromise. We couldn't commit to exactly who our target customer base was going to be. So we kept having these animated debates weeks, months, years, it was so painful.
What we learned along the way was that what we needed was the combination of a market that's big enough to support the growth you want and need right now, but that's small enough that you can focus and delight your customers. You need the intersection of those two things. Because when you narrow your focus instead of trying to broaden your market, it's easier to grow and it's easier to delight your customers. And delighted customers are important. A lack of delighted customers is not the quickest way to kill growth, but it's the most reliable.
To get delighted customers, you need to pick a very specific market and commit to it. Now many of us have a fear of making commitments, of making sharp incisive decisions, not hedging. Instead, what we should really fear is uninspired compromises. Those are the quiet killers over time. Fear number 2, the fear of differences.
We're going to go back in time, way, way back in time. This is me, 5 years old. Now many of you are thinking well back then you were able to like have intense eye contact. You're like making intense eye contact. No, I'm not.
I'm looking at the photographer's forehead. By the way, I'm wearing the tie back then because I had not yet discovered that one could just start a company and wear logo t shirts the rest of your life, including on stage. Well, the privileges. This is me, version 1.0. I'm out of beta.
I'm in my early 20s, Indian accent, super geeky. I've kept that consistent over the years. It takes standardized tests for fun or to meet the love of my life. Now I'm originally from the state of Gujarat in India. Shout out to the folks from Gujarat, my family.
I moved to Alabama from India and I moved Alabanian for 10 years. That's where I met Kirsten. Now at the time, I desperately wanted to fit in. Not so easy in Alabama, but I tried. This is me 2.0.
This is the result of what Brian might call some mutations or adaptations. I went clean shaven hoping it would help me fit in. I worked on losing my accent hoping it would help me fit in. I even changed my name from Dharmesh to David, true story, hoping it would help me fit in and make my life easier at Starbucks. This is me 3.0, still keeping it consistent, still geeky, Shift back to my original branding, Darmesh, but I use just my first name, not because I'm cool like Madonna or Adele.
I'm not cool. I do it because most of the time Darmesh is sufficiently unambiguous and because it's my name, there's that. So Me 3.0 went to graduate school at MIT in Cambridge, across the river from here in Boston. There I really fit in. It was awesome.
MIT is teaming with geeks like me, 0 eye contact, even on study dates. While I was there, I met with a grad student in Bryan. I thought this guy seems pretty clueful. We're similar in ways, different ways, but I'm a start up guy. He's a start up guy.
He's more soul cycle. I'm more no cycle. But maybe we could work together someday. But there was one problem with Brian and it was not that he was running around campus with a PowerPoint clicker in his hand, advocating for a disruption in academics, while playing John Mayer on repeat, dressed up as Spider Man. I mean that was a problem.
It wasn't the problem. The problem was that Brian was in business school. So he's going to be an MBA. Now don't get me wrong. Nothing wrong with MBAs.
I love MBAs. 2 out of 3 of my friends are MBAs. And I don't mean 2 thirds. I mean I have 3 friends. 2 of them have MBAs.
And yes, one of them is Brian. And sure, the other one might be Kirsten, a non MBA. The issue was that I was in business school too. And if you have too many MBAs running around, they start using words like disruption and causation and correlation. It's very disrupting, ironically.
So by the way, I often used to make the mistake of assuming causation when it was really correlation. Like since business school, I make that mistake much less frequently. Did they teach me that at MIT? It's hard to know for sure. Thank you.
So Brian and I did end up starting a company together. This is what the early team at HubSpot looked like. We had half a dozen MBAs. We should have gotten a bulk discount. A programmatic discount, no negotiating discounts, Brian, I don't believe in that.
MBAs are business geeks. And if you're building an experienced disruptor, they're just as important as technology geeks. So 6 MBAs on the early team wasn't really an issue, but we did have a big problem. The issue was that they were all dudes, all from MIT, all with a similar background. What little diversity there was on the team, you're looking at
them right now.
Focusing so little on diversity was one of the biggest mistakes we made in our early days at HubSpot. I think I have spent so much time trying to fit in in the years earlier that it didn't occur to me that maybe other people were having a hard time fitting in with us at HubSpot. So if I had a DeLorean that could travel back in time, I'd have HubSpot prioritize diversity early. And maybe also that series finale is Game of Thrones, but mostly the diversity thing. Sorry, I know it's too soon, too soon.
I know, I get it. The best possible time to start being mindful about diversity is times equals 0. When you're just starting, starting a new company, starting a new team, starting a new project. The next best time is now. The data on the benefits of diverse teams is overwhelming.
But there's a very fundamental basic reason why diverse teams are better for you and better for your customers. When YouTube launched their mobile app for the first time, the team observed the strange phenomenon. Many users were uploading videos upside down. And yes, I know you're thinking, well you know that looks a lot like Brian. I assure you it's not Brian.
As evidence, I submit this actual video of Brian on the inbound 13 stage. I love many things about my co founder. One of the things I love the most is that he doesn't take himself too seriously. Love that guy. Sorry for the PDFA, public display of founder affection, not usually how I roll.
All right, back to the curious incident of the upside down videos. It wasn't a small number of videos. It was about 10% of the videos that were upside down. So the YouTube team wracked their big brains trying to figure out why would people do this? This is crazy.
As it turns out, the answer was very simple. It's because 10% of the population is left handed. And so they hold their phones like this. They hold it differently, not wrong, differently. So they were uploading videos upside down from their perspective.
So you would think this is a relatively obvious simple thing. Why did not why didn't the YouTube team catch this? It's because no one on that early team happened to be left handed. They just lacked that perspective. So magic happens when different but complementary people intersect.
We build better relationships, build better companies. Someday I hope all companies will care more about the values we each hold, the value we can each add to the team and will embrace our differences and our quirks. But many companies don't hire for diversity. They often hire for personality fit. They use personality assessments like the Myers Briggs test.
By the way, I am a classic INTJ. I stands for introverted, NT stands for not talkative and J stands for judgy. Yes, I'm that friend. But you don't need Myers Briggs to figure out whether you're an introvert or an extrovert. I have a very quick test we're going to do right now.
So in about 5, I'm going to ask you to turn around a little bit and introduce yourself to the person behind you. Just kidding. Just kidding. By the way, if right now you can feel your heartbeat in your face, you're probably an introvert. I have a real test.
Here's a real test. I would like you to think of a sentence that contains the word network. Don't overthink it. Whatever pops into your head, a sentence that uses the word network. Okay, here we go.
If the sentence in your head use the word network as a verb, as in I went to that party so I could network, Casidar, your next verb. If on the other hand, use the word network as a noun, I didn't go to the party because the network was down, Chances are you're an introvert and the only parties you're going to are LAN parties. Now for all of you that did not awkwardly laugh at LAN parties, you're extroverts. I'm more serious now. So today is popular for companies to hire for culture.
But there's a fine line between hiring for culture fit and hiring someone that's a clone of you. Now I can understand wholly why you would want to hire a clone of you. You're awesome. What you need is a mix of personalities and backgrounds. You need people that reflect who your customers are.
You need people that are different. So you might be wondering, it's like, okay, how can I tell if I'm hiring for a culture or if I'm just hiring convenient clones? First of all, your goal should not be to hire people that just fit your culture. It should be to hire people that add to your culture, move it forward. They'll be additive not just because of skills, but because of a different perspective that they bring.
And to truly hire for culture, you need to know what your culture is. Write it down. Maybe scary because you're thinking, oh, like my culture is going to change over time. That's okay. HubSpot wrote its culture down years ago in a slide deck called the culture code.
It changes all the time. It's aspirational. It evolves as we evolve. So while facing differences are scary, I think surrendering to sameness is much scarier. That's the fear we should actually have.
Fear number 3, fear of change. I'm not just referring to my wardrobe. Many people and companies fear change. Why? Because one day things are finally working.
You have an offering, you have experienced market fit, you have customers. Now finally you're not worried about dying every day, it's just every other day. And so you're worried that if you change something you might like revert back. So change is hard. And there's been a big change for the top CEOs in the country.
Big news, it was covered in all the major publications, covered in the New York Times, Wall Street Journal, The Onion. Here's the news. There's an organization called the Business Roundtable. It was created in 1972 or as someone might say the mid-1900s. It's a group of over 200 CEOs from some of the biggest companies in the U.
S. Including Amazon, Best Buy, CVS, Deloitte, in fact a company for every letter in the alphabet except Y. Yes, I checked. I'll quirky that way. For decades, this group's definition for what the purpose of a corporation was, was to deliver shareholder value.
In other words, to drive profit. This definition for the corporation stood for decades until 2 weeks ago. Those 200 CEOs signed off on a new declaration 2 weeks ago changing their position. Now they say the purpose of the corporation, the top two things, yes, shareholder value is on the list, the top two things, delivering value to customers and investing in employees. I love this news.
This is awesome because one thing we figured out at HubSpot is that companies are actually building 2 products. You have the product you're building for customers, which feels natural and you have the product you're building for your employees, which can feel unnatural. And just like you want to attract and retain the best customers, you want to attract and retain the best people. So what's one of the most valuable features people look for in this product, in this culture? Flexibility.
The future of work is all about flexibility. That's what people want. Geographic flexibility, work where they want. Schedule flexibility, work the hours they want. And method flexibility, do the work how they want as long as creating customer value.
Now this may seem a bit extreme, like it's uncomfortable, was for me too. But there's an imbalance between the supply and demand of star talent. And if you want to attract that star talent, you have to make changes that are in high demand. And there's some symmetry here between what customers want from the companies they do business with and what people want for the companies they work for. So let's double click on this where part, otherwise known as remote work.
It's a biggie. It's one that HubSpot has been adopting in a big way. A lot of remote work can be scary. You worry about communication, culture and the chemistry for great teams. It's scary, but achievable.
We've been evolving our remote work policy to HubSpot for the last several years. I'll admit it hasn't been easy and we still have a long way to go. We're making progress. At the end of last quarter, we have over 200 full time remote employees. Remote is the 2nd most searched for word on the jobs website for HubSpot.
It's a sought after feature. And if we combined all the people that work remotely, full time or sometimes work remotely, put them all in a single place, the living room would be the biggest HubSpot office. So here's a chart showing the growth in remote employees at HubSpot. We expect those numbers to continue to rise because we're doubling down on a more distributed team. Now remember that remote people are people, treat them with the same care that you do anyone else on the team and you can dramatically open up the pool of possible talent that you have access to just by letting the best people do their best work.
And often their best work is done when they're in their pajamas. Speaking of pajamas, here's a Venn diagram showing how my happiness is correlated to pajama time or dare I say caused by pajama time. Now I've taken this and broaden it to a new business principle. This is the first time I'm sharing it. I call it the pajama principle.
It's simple. It states that your success is proportional to the degree to which you let people stay in their pajamas. Thank you. I live by the pajama principle, both as a beneficiary and as an implementer. So many of us are afraid of embracing change.
But by refusing to adapt, we're actually accepting stagnation and that is much scarier. Figure number 4, the fear of disappointing. Sometimes you have to make changes that disappoint some so that you may better serve others. Take chocolate and peanut butter, 2 great things that go great together, just like CRM and e mail marketing. 2 things I love, just like e mail marketing and CRM.
When you combine those two things, you get the magic in the middle, the magical peanut butter cup. This is the OG TBC. By the way, OG TBC would be a great band name. When you bought this classic package, you got 2 peanut butter cups. They were identical and you got 2 of them.
Some people said, you want more cups. Reese's responded, sure, here's a king-size with 4 cups. You're sure to win an Olympic medal, go forth and prosper. Then people said actually we want 1 ginormous cup because sometimes we're having one of those days. For some of us, we call them weekdays.
Reese's responded, sure, Here's a Reese's big cup. Knock yourself out. Then people said actually, we really like M and M's. Can you make Reese's like M and M's? Reese's responded.
Sure. Here's the Rieses Pieces. They taste like Rieses, but they have ugly 1970s colors. No, no. Wait, we got it.
We got it. Take the Reese's Pieces and put them inside a Reese's Cup. And Reese's was this is getting kind of ridiculous, but fine. We heard you like Reese's. So we put Reese's in your Reese's.
Enjoy. And they kept going and going and going until one day Steve Jobs said, Stop. This is crazy. Steve Jobs did say that. But he didn't say it about Reese's.
He said it about Apple. He had just come back as the interim CEO in 1997 of Apple. So his title was iCEO, which I think is kind of cool. It's a little thing. When he got back to Apple, Apple had hundreds of products because they were listening to retailers and everybody wanted their own thing versus listening to customers.
Apple was losing money and by all predictions was going to go bankrupt within 90 days. And Apple said, stop madness. He decided to cut the product line down by 70% and he said every Apple product has to fit in 1 of these 4 categories. Did he disappoint some people? Absolutely.
But a year later, Apple turned profitable and they did it by better listening to customers and simplifying. Because too much choice is friction. I go to Baskin Robbins, I see 31 flavors, my heart rate goes up and not in a good way that you get credit for on your fitness tracker. So much pressure, just give me one scoop of vanilla and just let me go. I know.
It's kind of scary to disappoint people, but the fear you should have is not disappointing a few, but not delighting the many. That's the actual fear. Slash fear, fear number 5, the fear of inferiority. Many companies have an insecurity about their product or service. It's not good enough.
But instead of making it better, they take the easier path and focus on the short term bottom line. And what's worse, they try to fool us. Take this lovely product. It's the 150 Mega Marker Activity Basket. It's fun and it's washable.
Parents love washable things. It's partly why we love our kids because they're washable. Now if you look at the top of that basket, here's what it looks like. If you open up the basket, here's what it looks like inside. I know I'm hearing some groans, some gasps.
Same here, pretty sneaky, right? It's like, I mean, yes, the label says 150 pieces, not 150 markers, but you tried explaining that to my 5 year old niece. Where they place that label was diabolical. It's just not right. They had every right to do it and we have every right to dislike and distrust them
for it.
And today trust is scarce. And as a result, those companies that can generally provide it succeed. And to build trust, we should do 2 things. Do the things we want and expect. So if we sign up for a social network, we should be able to upload photos of our cats, track down long lost classmates, but mostly cats.
What we're not expecting is for our data to be shared with others that are not solving for our interests. So I think every business should take this oath, the oath of experience. We will deliver the experience, the whole experience, and this is the important part, nothing but the experience. Because you always have competition. They might beat you to market.
You may have extra features, but you can always aspire to be the most trustworthy and provide the best experience. Remember this pool? This summer, Kirsten, Soh and I went back to the same pool. Only this time, Sohen wants me to get into the water. I'm reluctant, to put it mildly.
But Sohan has his mom's determination and his mom's I'm not backing down off of this look. He talks me into getting into the pool. I'm grabbing on to the side of the pool for dear life. Even though it's only 5 feet deep, I can literally stand in the pool like literally, note the correct use of the word literally. And I'm like, Sohan, you need to be patient with me.
It's not going to be easy for me to learn how to swim. And then Sohan said one of the most profound things he's ever said. Now kids say profound things all the time. This one stuck with me. He said, Dad, you're not learning how to swim.
You're just learning how to dunk your head in the water. That's okay. He's like, do it. Right now.
Yes, do it.
Wow! Was that like 2 minutes, 3 minutes? That was like one second. All right. Do it again.
Don't hold your nose. All right. Do it again, but keep your eyes open. How did you know my eyes were closed? I know that.
Do it again. Do it again. Do it again. Now do it, but flail around in the water trying to move in some general direction. So I do that with all the grace of a drunken swan.
So here's me in the shallow end of that pool. Now along with wearing far too many clothes, I'm also wearing my Apple Watch because what kind of idiot makes all that movement without getting credit on their fitness tracker? And then here's where I'm panicking. It's like this is one of those infinity pools. There's no wall.
This goes on forever. It's like no, that's not how infinity pools work, Darmesh. It's going to be okay. The wall is coming, the wall is coming, the wall is coming. Okay.
And I have my Michael Phelps moment. So what did I learn besides that it's okay to be a dad that's scared? I've learned that seemingly overwhelming fears can be managed by taking small steps. You don't have to overcome your fear overnight. Just dunk your head.
Listen to one piece of customer feedback. Fix one point of friction. Make one person on the team feel more included than do it again, do it again, do it again. It gets easier and easier. Magic happens when you face your fears and combine different but complementary things.
Facing my fear of eye contact, brought Kirsten and me together resulting in Sohan. Facing my fear of being different resulted in me and Brian joining together to create HubSpot. And facing my fear of public speaking has given me the honor and the thrill to intersect with all of you folks today. I am immensely grateful. Enjoy the rest of INBOUND.
Now go out there, face your fears and network. Up next, Christopher O'Donnell. That Christopher O'Donnell after a break. Thank you so
much. More revenue, more office space, and more employees. But what does it mean to grow better? Growing better means doing what's right for your customers. Sure, it can be the more challenging path, but it's the only one that can lead you to build the company you've always wanted.
To create a place where employees are more passionate about the purpose than the perks and where customers stick around not just because of what you sell, but how you sell it. Today, I'm sitting down with Christina Fagan, the founder of a high end knitwear company with the name so edgy, we can't even say it on camera to talk to her about her approach to growing better. Let's get to it.
I'm Christina Fagan. I'm the founder of that I knit. Oh, I can't say that. Right? Right.
I'm Christina Fagan. I'm the founder of Stiff. We're based here in Boston, and we sell high end hand knit accessories that are all made in Lima, Peru. So how did you get started? I started when I 10.
My mom taught me how to knit while we were summering up in Cape Breton, Nova Scotia where there's not a lot to do except for look at each other and knit. And so I loved knitting as a hobby all the way through middle school, high school and college. And in college, my sisters were making fun of me for knitting a lot and as one might. Shocking, yes, so rude. And they told me that I should start this website called That I Knit.
And so I did, obviously. And it was a really unpopular blog that no one read, which was great, but it was a fun way for me to take photos of things that I had knit and share them with my friends, whoever that may be. But when I graduated from college and started the real world, it was always my fun fact. Hi, I'm Christina. I'm 22 and I have this website called that I knit.
And that always got a good laugh from people and I love making people laugh. And so I started selling things that I had knit for my friends and family basically, and actually decided to apply for this market in Boston called Soa in the South End. Have you ever
been to that?
Yes. Oh, yes. Yes. So very nervously applied for that market when I had a full time job, got in for the last weekend in October, which I figured would be cold enough to sell handmade accessories, because in August that probably wasn't going to work so well. So applied for that, got in and got a sign from Vistaprint and a pop tent and my mom and I knit all summer long, worked up an inventory And we went to this market and it went really well.
So that's where it sort of went from being just me and my bad blog and fledgling Instagram and turned into actually selling things we have actually knit. And from there, it was just really hard to keep up with demand. We had not that not crazy my demand, but for me it was a lot. So we had stores wanting to carry our line and people wanting to buy for holiday and it just wasn't possible for me to knit. You're a knitter, you know.
Right. It
took a
long time.
Yes. Oh, yes. I mean, I couldn't imagine
doing more than like
a scarf
in a year. So Yes, you might lose your social life and
your mobility at your hands. Yes.
So we started like thinking about how we could actually sort of scale this thing in a small way. And so I Instagram 1 night that I was growing my team. And you could join me in knit products for me and my mom. And I figured it would be mostly either no one would apply. That's really what I figured.
No one would want to do it. But it might be 65 year old women who love to knit and just wanted to get involved with something. But it turned out to be all women in their 20s 30s who love to knit and watch Netflix, knit on their way to work, knit with friends or on an airplane or whatever. So we actually had a team of women in Boston for our 1st season who would take the yarn from my apartment and go home and knit you know, while they watch Netflix and knit like 5 half of the time. So that was our first That's amazing.
Test. Yeah. And that's when I quit my job because it was such a promising endeavor. It was
a big move.
It was a big move. I cried. It was just a little overwhelming and my parents thought I was insane. But I moved home and figured I'd give it a year and we did a Kickstarter, which was great as a way to fund our first season and we knit all summer long, worked up a big inventory. And yes, that was our first season.
Yes. Why were you so surprised that the first people who reached out to you were younger women?
I don't know. I mean, I just sort of figured that it would be an older set. And it was like the DIY market was back in 20 14. And so like, not to say that that was like early on the DIY game, but like it just seemed, I figured it would be an older group of people, But it was truly all women in their 20s 30s and 1 guy. He was actually the best.
Joe, I don't know where he is now, but
he was really good. Well, something that I've noticed being new to knitting is that there is a huge online community of makers. Yes. And they have surprised me as well that they're much younger than I
would have expected. Right.
And so I think like that's what's amazing about companies like yours where it's just it's things that are unexpected with an unexpected audience, but an audience that fuels a lot of your promotion as well through social and shares a lot of the different things they wear. And could you go into some of the different activations you've done on social?
Yes. Well, we always do a stick in the wild feature on Instagram. So we feature people who have worn our hats in the wild. So posting selfies or photos with their families. We also even bring them into real life and I chase people down the street with a card that says stick in the wild on it.
Who are you?
So we have that on Instagram. We also have done photo contests. So we've done bikinis and beanies where couple of years ago, there's a huge snowstorm in Boston and I was sitting at home. I was like, oh, I'll see if I can get some photos of this. So I put on there that if you posted a photo in your bathing suit and your hat out in the snow and got outside and did something creative, the best photo would win a hat.
We ended up getting around like 50 people to go out in the snow, jump around, have their kids involved, have their husbands involved. 1 guy even wore a bikini for his wife because she was working. She's a nurse and he got out there, which is really sweet. So that was really fun and a really long day for me on Instagram. So screenshotting everything like a crazy person.
It's like a tall ask too. Could we have Boston snowstorm?
I know. I really didn't think anyone would do it. That's amazing. Within a couple of minutes,
it would.
Yeah. You guys also knit hats for the Make Way for Ducklings. Yes. And I know I've seen that on like the local news.
Yeah. It's cute. Yeah, it's so cute.
So, are there other kind of fun quirky things like that that you just come up with a great idea and go?
We always do the
deckling since usually it's me knitting little hats and I'm running out at 5 in the morning and putting them on, so I'm almost seeing me. But people usually end up finding out that it was me who did it. But last year, we also made a giant hat for the Arthur Fiedler bust. We worked with the Espinade Association and it was hard because I only had 2 weeks to make it. We tried to make it in time for
the world. It's like a very big scale.
It's very large.
It has
a big hat. Yeah.
It was huge.
And I couldn't find the right yarn to knit something of that scale. Like, you know how thin yarn is. Yeah. Yeah. And I wanted to arm knit it.
And I wanted to arm knit it coils and then stitch it together kind of like a sculpture. And so I couldn't find the yarn anywhere. So I went to Michael's and found this blue fleece and cut the fleece into long strips and then tied them together and then arm knit it. It took a long time getting stuff
done, though.
Yeah. Stuff done, Not other stuff, but it was like 2 weeks of this and like really hurting your back, cutting fleece along the ground. It ended up looking really good and it was fine.
So how do you come up with different fun quirky activations? Because your brand does feel well, it's I consider a little more high end. Like it's still very quirky and fun and personable. So how do you come up with some of those things?
I don't
know, just being weird. Yes, and just going for it. I think through starting this business and being through all the ups and downs in the past 4 or so years like failure is just a part of the game. So just going for it and trying like going into putting that hat on the Arthur Speedler bus is not sure it was going to fit. And all these people were watching us like putting it up, holding this big ugly blue fleece knit hat and just being like, well, whatever.
If it doesn't work, it doesn't work. But give it a shot, yes.
And did you have that mentality of just give it a shot, see if it works? Is that a piece of what helped you grow from being you and your mom now to having such a large group of makers and a team and such a great business?
Yes. When I started, I told myself and I told my parents that I give myself a year, like 1 year and I'll know by then if this is working. But looking back, like really, like was it working in a year? I don't know. But it felt like it was going in the right direction.
But yes, I guess just not being afraid to fail because I'd rather give it a shot than regret it. So I think and I think that that mentality has with that as the team grows, we have a new saying here called no bad ideas. So that's a big part of our culture where you just throw it out there. Sometimes it's a bad idea.
It's okay.
As the business grew and you started to realize that there's a real audience for this, you knew what you were doing. It seems like a mission really started to come together. And at some point, you started to employ women in Peru. Yes. Would you mind talking about that?
Yes. So the team in Boston was great and really cute and a fun way to try scaling, but it really wasn't scalable. So I started Googling some things and found this great group of women in Lima, Peru. It's where we were getting all of our merino walls. So it made sense from a carbon footprint to have everything made down there anyway.
And Peru has a very long standing tradition with knitting. On top of that, I always felt really strongly about using this company and this platform as a way to do good. So it made more sense to me. Plenty of people gave me the advice, why don't you go have this made by machine in China, like that's totally possible. But I'd rather lose a couple of dollars on our margin, employing people who need the income.
And it felt really right working with this team and going down to visit them. It's even more cemented in my mind how important it is. These women can stay close to their families, knit from home, take care of their kids and bring in like a real income where they can even send their kids to college on the money that they're making from knitting. Many of them are making more money than their husbands. It's really cool.
They're entrepreneurs. So that's a big piece of our business now is no matter what product we're making, we're making it the right way. It's sustainable and good for the world.
Something that my team at HubSpot has encountered when we've done paid promotion on Facebook or Instagram is that Facebook won't actually allow you to promote content that has cursing or swears in it. Yes. So, how has that impacted your business, if at all?
It has been challenging. We've definitely gotten creative in the way that we phrase the name of our business, going more with STICK, which is an acronym for our company. And that's working pretty well. But to be honest, it's not really a main focus for us. It's not where we've grown our business yet.
While it is definitely a great resource, the way we've grown our following and grown our customer base has been through more organic social media, whether it's collaborating with another business, using influencer marketing, getting our product into the hands of people who have huge followings and people really listen to them, doing pop ups and getting in front of people in a physical location or doing grassroots, guerrilla style marketing like putting hats on a deckling or on the other bus. We find that or at least with our followers and the way that we've grown our brand that user generated content and seeing real people wearing our hats in the real world is the most effective for engagement for us. So we have so many people posting photos of themselves and their hats, whether they're on a ski vacation or walking their dog or a selfie on their way to work in their Instagram story, whatever it is, that's where we get a lot of our content and we post it. Some of those actual people are quite well known. We've had celebrities like Sarah Jessica Parker, Katie Couric, Kristen Cavallari, Valeria Baldwin, Mikaela Shifrin, Hannah Teter, some pretty influential, pretty awesome women wearing our hats and loving them and loving our story.
And when they share that on social media, it's insane. For other small businesses who would be trying
to grow their business, what kind of tips would you give them?
Using tools available to you that can help you streamline processes and systems. Obviously, we love using HubSpot for our email marketing and our CRM. We really work in Asana, especially with our team in Peru to do project management. And then, of course, Canva, I think, is probably our favorite tool where we can really easily create marketing materials without a degree in Photoshop. For social media, I would say be patient.
I think we've had a lot of conversations here about this topic and obviously not buying followers or buying likes. That's a really short term band aid that doesn't work out in the long run. If you're promoting your things to bots, no one's going to buy anything. The user generated content we've been able to gather from our following has been really big in not only content creation, but also word-of-mouth marketing even though it's through Instagram, but people posting about our company and their hats, their wraps, whatever it is, that's really been that's what I attribute most of
our growth to. What do you wish you've known when you got started? Don't do it.
I mean, I love doing it, but it's been cool to see how it's changed other people's lives too. And I think that everyone works here is an entrepreneur because everyone whatever department they're in, they're leading the way and figuring out all the problems and solutions as they go the same way an entrepreneur would. And I think inspiring these women in Peru and giving them the tools to create their own businesses is so important.
From the beginning, we've always wanted to be approachable. We answer the phone, answer every email and we're trying as fast as possible. They're coming to us they want to talk to people who make the bike. That's where we get interest. They just know that Santa Cruz has their back more than most other companies where The quality of
the bike, the warranty and just the reputation of the brand, they just always take care of the customers.
The customer The
customers dictate the future of the company.
I deal with a lot of our Santa Cruz warranty situations, work with guys like Willie and Steve pretty closely.
There are a few guys who are pretty legendary here and they were definitely at capacity and we had to figure out how can we make it so that the stuff they do that's super personal can be done without it seeming artificial. So it's important for us to figure out how do we make it so we can answer more people in the same amount of time. So, to do that, you've got to have a shared platform where everybody can tap in the way HubSpot approaches automation. It really is about enabling the human touch and not removing it.
We explored a few other options, but HubSpot service easily stood out as the best option. The reporting feature was extremely easy to work with and had countless options compared to the other services that we were using.
The most complaints you hear about is they don't get back to you. During busy season, it's in space.
Dealing with warranties is definitely a little more of a hassle than a couple of years ago. But now with HubSpot service, we can have a team of people viewing the exact same page. And if there is a customer that needs help that day, we know that they're going
to get taken care of. Efficiency definitely went up, we should know that about it.
I mean, I can give an example. Yesterday, someone came in with a frame with the hospital failure, and we had an answer yesterday afternoon using
the form. So that would probably
have been a week at least before.
Our time to respond has definitely improved. When you scale up, it's like it's harder to get that feedback to the right places. And so HubSpot's making that easier for us.
Before HubSpot, it was email from around the world. Emails get lost. Prior to having HubSpot Service Hub, there was real no way to log warranty claims or inquiries from all the different customers that we had. So now that we have HubSpot and HubSpot ServiceNow, we can actually look at the history of those individuals and we can take care of them once and not have to keep going back to
them. With HubSpot now, you can make sure we're not have multiple people chasing the same customers, right? That's huge. Having everything centralized helps kind of
make that
a little more cohesive.
Everything we do is to grow smarter. So when we look at what tools we're using and how we use HubSpot, what we need is something that's flexible and grow with us. We're bringing things together for like this whole three sixty view.
Word-of-mouth is huge here at Seneca's Bicycles. Our reputation for customer service and warranty, people talk about it around the world, that's what I'm most proud of.
We make great bikes. We have fun doing it. And
that's not just a slogan.
That's actually what we do every
day. It's just cool knowing that there's a company that supports your kind of community. I'm friends with a good amount of them. They're all shredders. It's not a marketing ploy.
We're not doing it just to say, look at what we're doing. No, that's bullshit. We'll just do it because that's what we truly believe in.
We call them our customers. But they all have a story. Like the one who traded her corner office for 1 in her basement. His back shed. Her grandmother's living room.
You sell to the expert of light and color, and the one with an eye for detail, The engineer, a marketer, an SVP. You sell to the stay at home dad who never clocks up and the person whose dream job starts after 5 p. M. Those who can break anything down and those who build things up. The person who emptied his savings account borrowed as much as the bank would allow, the one who keeps to herself and the one who needs to be seen, The PhD and the person working nights
to
earn his GED. The beginner, the experienced and the market.
Email and CRM go together like chocolate and peanut butter.
Like summer and country music, like avocado and toast, or like baseball games and hotdog. Like good weather and a long weekend.
Like a long ride
and jumping into a cool lake.
I like podcasts and commutes. Like tangibles and hobbies.
I like
mac and cheese.
Or like campfires and guitars.
Or like coffee shops and WiFi.
Like online shopping and free shipping.
Like a road trip and
a great playlist. Like a cup of tea and
a great book. Like rooftops and summer night. Or like sunshine and a cool breeze.
Like put steaks and bacon.
Like meeting invites and lunch included.
Like birthday parties and pinatas. Like laptops and stickers.
Email and CRM go together like up and to the right.
And now email is available for free in HubSpot. Free in HubSpot. Free in HubSpot. Free in HubSpot.
It's free in HubSpot.
Hi, my name is Flora.
My name
is Nir.
I'm Lindsay.
And I'm Pat.
Now that we're acquainted, please don't follow any share.
Which social media platform was founded first, Friendster or MySpace?
I don't even know what Friendster is.
Is it the precursor to Facebook?
It's a pre precursor.
Oh, I use my space. I went with that. What
did you put?
A professor.
How are you, right?
I don't know.
Yeah. This company could be called the Uber for grocery delivery.
I know this. I know this. I'm pretty sure. I don't actually know. Instacart?
I'll put Instacart.
Hey, I
think you're right. You feel
like I'm writing a
lot more than you did?
Yeah. You're writing an essay over there. I don't know what you're doing.
Well, outside the city in the suburbs, we use Stop and Shop Peapod. In which city did food ordering delivery platform Grubhub get its start?
The true hub of America, San Francisco.
What about Toronto?
Hot dog delivery, right? That was, I think, how it started.
It's been called the everything store.
It's actually Target.
Maybe it's Costco. Amazon.
I said
Amazon too.
Couple of ways could have gone on that.
This company got its name from an experience staying at someone else's house on an air mattress.
It's got to be Netflix.
Yeah, Nets
are full of air.
Airbnb? Airbnb. Airbnb just bought a hotel tonight.
How much did they buy it for?
$1,800,000,000 Why
didn't they buy it for like 100 a night?
This feels like a layup.
You can use the services offered by the company seamless to deliver what product?
Is this actually what you put? Books?
And like maybe they're ebooks because they don't have standards.
I'm gonna guess. I'm gonna say some sort of content delivery.
You didn't give me airbags for the capitalization. There is no way
Obviously, when I say content delivery, I'm talking about cheeseburgers.
All the companies we've been talking about have one thing in common. What is it?
I got it.
I'm taking so long to sell a platform. Yeah.
I could sell through the slow mo like it's reality TV.
What's a platform anyway?
Great question.
I'll tell you exactly what a platform is. Or better yet, I'll show you. A platform company is a business that creates value by connecting 1 or more groups of users deemed producers with 1 or more other groups of users deemed consumers. A good example here would be Grubhub. It serves as a marketplace where hungry people, consumers, can get connected with good restaurants, producers and even have it delivered by a third party of drivers.
Time for the true false lighting around where you will decide whether this company is a platform or not.
True. At the end, you'd have to be naive to think it's a platform.
Efficiency cooing right here. True.
It's a tasty platform but it's not a platform in the true
sense. Answer carefully.
Yep, fooled you. Once a platform company provides value to their customer, it seems like all these companies just continue to provide more and more value. Help you grow that.
This is a piece of customer feedback. It's 3 sentences, 39 words, 156 characters long. Some pieces of feedback are longer and some are shorter. Some might be urgent and others can probably wait. But anyone who has ever written feedback wonders, does anyone actually read it?
On its own, a piece of feedback is easy to ignore. But the customer who wrote it spent weeks, months, and sometimes even years thinking about ways to improve your company and products. At HubSpot, we think that deserves our attention. That's why we read all of our feedback. It starts when your feedback reaches our team.
And we mean our entire team. Product experts, customer success managers, marketers and more can discuss the issue. We compare this single piece of feedback with hundreds of other tweets, emails, chats and calls, and the problem starts to become clear. So we all come together to scope out the project, build the feature, test it with users, and refine based on results. Finally, the feature is released to you.
That single combing through countless articles, thank you. To everyone who has ever called, chatted or submitted a survey, thank you, thank you, and thank you. We see you, we hear you, And we value every character, word, or sentence that you type. You help us grow better.
Welcome. Welcome.
We see you. We hear you. Thank you. Thank you for every character, every word, every sentence, also for every rant, your praise, and the moments of delight that we've built together. See, at HubSpot, our mission is to help you grow better.
And to do that, we need to know from you what that's going to take. We spend our time listening to customers and learning from companies that do the same. We just heard Brian mention some products, really cool products that have totally changed his perspective. We saw how his perspective has changed. And some of these I relate to because I'm a daily user of them, like Lyft and Chewy.
I have a little black lab, she's 10 years old and DoorDash. Some of these companies I relate to just because they're so freaking cool, like millennial pink level cool. So Emily sorry, Brian mentioned Emily Weiss and Glossier and I want to dig a little bit deeper there. And I could say that I'm not a user of Glossier's products, but I think my dewy glow gives it away. What I admire about them is how they really listen to customers.
They're really super driven by customers. So check this out. This is a product that Glossier has built. It's called the Milky Jelly Cleanser. What a name.
And wow, what a product. It's award winning and all that, but the best proof is in what customers are saying about them and how fast customers are reordering. The best skincare products on the planet. Magic, must have, perfect, wow. Over 1305 star reviews.
See, by developing products centered on their customers, Glossier grew to over $800,000,000 in revenue last year. How on earth did these folks pull this off? Well, how do you develop a face wash? I've never done it. I can imagine a product manager putting on his or her standard issue black T shirt and doing the incremental stuff, maybe make a face wash that's a little bit scrubbier or
a little bit bubblier, maybe make
a little more expensive, get a better margin, but that's not how you make a great face wash. A people powered ecosystem. That's how they did it. You see in 2015, Glossier's product team set out to build a face wash completely driven by customer feedback. And so they used their blogs, their social media, email, they engaged thousands of readers to come and give them feedback.
And what they heard drew them to a path that they likely never would have taken without that kind of input. We saw how well it worked out for Glossier. Shouldn't HubSpot do the same? Yes. In fact, we decided not to get up here this year and announce a whole new hub.
We took a year to obsess only on the feedback and let that guide our roadmap. You see, Brian and Dharmesh have created this customer obsessed culture And we live in it every day in a bunch of different places. So let me give you a peek what it's like to be on our team. Whether I'm on my phone or my laptop, this is where I hang out every day, along with about 1,000 other HubSpot. It's a Slack channel.
And in the Slack channel, we see every single survey response, every single piece of customer feedback that comes through. And nothing warms my heart like seeing a support rep and a product manager, a customer service manager, maybe even a founder chiming in on a piece of feedback. It's this magical aligning experience when we're all reading and discussing real feedback in real time. But NPS is just the beginning. See, we have to have one place where the whole community can vent and brainstorm and build off each other's ideas.
And that for us is the HubSpot Ideas Forum. So there's some terrific ideas here. We watch this really closely. And I promise that we'll get into some serious stuff, but first, let's have a little bit of fun. So there was a customer who remarked that we had done everything that they had asked us to do and so they threw this up on the ideas form just to see what we would do.
In case you can't read that, it says, I want a pony. And it got 220 up votes and all these people piling on in the comments. So we said, let's do it. And then the post office turned us away. So we figured a real pony was not going to make it all the way to this customer in New York.
So we did what any good product team would do we sent them this little guy, a stuffed pony named Douglas to Manhattan. I'm told Douglas enjoys everything bagels with a nice smear of cream cheese and sharp spicy yellow mustard on his hotdogs. So, ponies aside, there are a ton of ideas on this forum and we have the vast majority of them either delivered or currently under construction. We're going to see a bunch today. As you can see, it's a super active community.
But I'll be honest, what we're not good at is closing the loop and reaching out and telling each one of you when we've done the thing that you cared about that you voted for. So we learned that's a full time job for someone, we've made it someone's full time job, Look for us to do better there and thank you for the feedback on that. And now I want to prove it to you. Across tens of thousands of conversations with you this year, there were 3 central themes to your feedback. Three ways that you challenged us to grow and grow better.
The first was pretty simple. Dear HubSpot, I just need this to be easier. We saw from Brian's talk and the products he discussed that ease of use is no longer nice to have. It's a must have, especially for your overworked and scaling growing businesses. So we didn't have to look very far for this first make it easier for me feature.
It was the number one idea in our ideas forum. In fact, this problem is so old across our entire industry, I swear this is true, researchers found this painted on a cave wall in what is modern day France. Totally true. Since the dawn of managing, I should say, customer relationships, that data has been messy. And the single biggest source of that messiness has been duplicate contact data.
Tens of 1000 of years later, you all still have duplicate contact in your CRM. Duke Data makes marketing tracking less effective and less accurate. It creates more friction for your sales reps in the selling process. And the process of addressing this, the process of finding, merging, deleting duplicate contacts has been enormously difficult. Why?
Well, it's been manual. Not anymore. We're thrilled to launch a new contact deduplication tool powered by artificial intelligence and it makes it a breeze to keep your whole database clean. No other CRM in the market has such a powerful feature built into it. We stand alone.
Clean data gives you your freedom back. And nothing says freedom like the open road. Let's take a look at how Harley Davidson is using Contact.
We have a lot of people that will come in, never ridden before. Once they get on a motorcycle, they're really hooked and then they get out on the road and they kind of understand when we talk about personal freedom and things like that. Our relationships with our customers are really a key ingredient to our business. When guests enter our store, you can see their eyes light up when they walk in the showroom and see all of the motorcycles. I mean, they understand that this is an experience that's a lot different than other stores that they walk into.
Our guests are very unique. What we try to do is tailor a unique experience for each one of those guests. HubSpot really helps us with our customer experience. It helps us speak to our guests and understand what they're looking for in their journey.
People are so passionate about it that it doesn't take a lot for me to really put in to get them excited. I just feed on that excitement and I push it right back and we share that with each other. My job is to help get them excited and to bring them in. I import leads daily. Harley doesn't always give us an email address.
It will create new contacts very, very frequently. We do have a lot of duplicates in the system. We have over 34,000 contacts in our system. So we do have a lot of data that we need to put through to early lockdown. Because we have duplicates in the system, sometimes with a different email, the same customer will get the same email to 3 times depending on how often they're in the system or product specialist A is going to reach out, but then product specialist B also reach out because they don't know that A is reaching out.
So it's just a bad experience. And HubSpot has really helped us take that out and just really customize our communication to better suit our customers. Deduplicating feature works, basically people that have the same first name, last name, or same address or phone number finds them so that I can decide is this the same person or not. A lot of times we'll have people buy a nickname like Rob, maybe it's also Robert. So it really helps me minimize that.
I was blown away. I was like,
this is amazing. Where was this? So it was awesome. I love it. There's a lot of ways HubSpot has really helped with efficiency and it helps
because it helps us bring our customer experience to the forefront. Lets our sales and marketing teams work together to be able to provide the experience that customers want. Harley Davidson is really about riding motorcycles or using motorcycles
exhibit who you are and your style and where you
want to go and what you want to do with life.
Wow, who wants a Harley now? I know, I do. Well, thank you, Carolyn and the whole team at Harley Davidson of Oakland. I'm so psyched to see you having this level of success with HubSpot. You guys absolutely rock.
Now deduplication wasn't the only thing we did to make HubSpot easier and not even the only thing around contacts. So here's a big idea that many of you mentioned in feedback and that we really wanted for ourselves. We use HubSpot CRM exclusively inside HubSpot. So speed. Speed makes the product easier to use.
This is very true. So our platform needs to feel lightning fast. This year we spent an enormous amount of energy speeding up wide swaths of the platform and this is my favorite example. This is one of the toughest problems we had. You see, this is called the contact detail page.
And this layout gets loaded millions of times a day. It's a mission critical thing for sales reps, for marketers and service folks. And there's such an enormous amount of data on this page, there's a ton of heavy lifting that has to happen. It's a very, very hard page to load quickly. Let's take a look at how it loaded this time last year when we were in this room together.
And now let's race without motorcycles. On the left is the new version and on the right is the old version. Let's see how they stack up. Wow. Fast feels easy.
What do you guys think of that? We also redesigned this critical page to have a lot more information in it, while still having a very approachable clean UI. That was something you guys pushed us for and we delivered on that. You've gotten great feedback on that. So that's not all.
Let's see what else you were asking us for. Contact deduplication was the number one most requested feature. What we're going to talk about next is the number 2 most requested feature. Workflows are hard to manage without foldering. Stephen Franklin here was hardly alone.
450 customers asked for this. There were 10 pages of comments and frankly our marketing team really needed this as well.
Done. All right.
Folders and workflows. Now you can keep your HubSpot account organized and you can assign folders by team, by geography, whatever fits your business best. So sometimes feedback is easy to understand, but it takes a while to get to. So we were really glad to get this one done for all of you who voted for it. People wanted to link branches of workflows together.
In fact, lots of you needed this critical feature. It saves time and it also keeps your workflow design clean and elegant. And we heard you. Today I'm happy to introduce merging workflow branches. Here's an example.
Let's say you're building an onboarding experience with email. You may want each person to have a very tailored experience up until the end where you want everybody to get the same email. Now that's very easy, you can do it in HubSpot with just a click. Merging Branches is available today in companies, tickets, deals, quotes and it's coming very soon to Kontxt, which I know you're all excited about. All right.
Customers should be able to just click a link and buy. How can we make the last mile of the sales process as frictionless as possible? You've all heard of e commerce. We think the future is B Commerce. Digital B2B Commerce.
I'm going to admit, the next slide is the most self serving of the entire presentation. And by self serving, I mean, it's literally self serve. It's your customers serving themselves. These guys are excited. Who's excited for this?
This is as cool as it seems. I'll tell you, I know some of you are actually already using this. I saw examples this morning of agency partners selling courses and all sorts of stuff off their website. And that's easy to do. You can put a link on your website, you can sell services, courses, whatever you want.
You can put a CTA in your email signature. You can send links through chat. Very, very cool. Rule number 1 of sales, if a customer is ready to buy, let them. So dear customer, we heard you.
We've made it easier for you to do the things that you need to do in HubSpot. Here's a snapshot of some of the other related improvements we didn't get to today. And let me ask, for all of you who needed HubSpot to be easier, who's excited about all this new stuff? Okay. The second theme of your feedback was, Dear HubSpot, I Need More.
And with apologies to Christopher Walken and Will Ferrell, you are not asking for more Cowbell. You're asking HubSpot for more enterprise level functionality and more integrations just to be sure that you'll never outgrow us. Makes a lot of sense. So let's start by meeting a unicorn company here in Boston who continues to grow better through our vibrant developer ecosystem.
We are a cybersecurity company. We help large enterprise businesses keep their employees and their data safe from breaches and hackers. But one of the first things that we did as a team was step back and take a look at all the tools that we have in place and make sure that we were using things that were not only going to help us grow, but also would grow with us. When we looked at the platform that we had in place, it did not represent a central hub where we could plug lots of things in and expand our go to market.
It was a mess. We're managing multiple tools, multiple logins and reporting was a nightmare and we made a decision to consolidate and go all in one platform with HubSpot.
We have over a dozen apps integrated with HubSpot that are helping us grow and scale globally. That's why we love the HubSpot app marketplace. It's a central hub, an easy place to discover new tools and for our team to connect with customers.
It's almost like downloading an app on your phone. It's a click to configure. You're not relying on IT. I'm confident that I can set up a new integration through a couple of clicks. In one specific instance, we identified a marketer,
a goal and a budget on Monday, and we had results showing up on Friday.
I really see it
as my job to enable the team members to be able to execute on their jobs on a day to day basis in the most seamless and efficient way as possible. Some of the integrations that help make that possible, things like Google Search Console, SurveyMonkey, Hotjar, Perfect Audience and Eventbrite.
Eventbrite allows us to measure the effectiveness of those events, but also share the information back with the sales team in a quick and timely fashion. And GoToWebinar helps us effectively track who's attending what and share that back with
the various teams that need to know.
And using HubSpot as our one central hub connected to these different integrations allows us to track how our events, how our webinars and how our other campaigns impact the bottom line.
HubSpot HubSpot has enabled cyber reasons to grow. We've run 250 roadshows across the United States and Europe and that's all been executed directly through HubSpot. HubSpot certainly makes life easier from a marketer's perspective. More importantly, HubSpot is making a better experience for our customers.
The user experience on our website, it's helping us improve how people consume our content and how we interact with people at events.
If we didn't have HubSpot, Cyber Reason wouldn't
be able to move as fast as it does.
Life without HubSpot would be chaotic. There's no other way to put it. Deciding to go with HubSpot was one of the best decisions that we've made. HubSpot is a platform and a teammate. It's really great to be able to see a team work so efficiently and the tool benefits me, it benefits the marketers and it benefits our customers.
All right, let's hear it for cyber reasons.
I'll tell you, it's amazing to see the growth that they've had and it's been a huge privilege for us to be along for some small part of the journey. So let's take a deeper look at the app marketplace they're talking about. It's a totally redesigned and rewritten app marketplace with 100 more apps and extensions than last year. It's growing, frankly, faster than we expected. This all new marketplace makes it easy to find a curated set of over 300 apps and extensions.
You can plug them into your HubSpot account with just one click and that gives you the power to connect all the tools that you use easily into one place. And Cyber Reason's Director of Customer Success has gotten into the fun too. Her name is Jean and she told us our NPS score went up significantly this year because of our new engagement model, all of which would not have been possible without HubSpot. See, Gene's department was able to turbocharge the flywheel by bringing all of their applications into one place. Very, very cool.
Great work, Gene. Let's see some more feedback. Paul Taylor at Sourceability told us they needed to easily assign permissions across groups. Makes sense. You need the right people to have the right access to the right tools at the right time.
So whether that be the content for a team's region or a sales pipeline for a given sales team, you need to be able to manage this easily and manage it over time at scale. Let's do it. Today, we're happy to introduce new permission sets across all HubSpot Enterprise products to help your growing company stay organized. It's a centralized tool for admins to manage permissions for groups of users, so you can spend less time organizing your team, less time administrating and more time on the fun stuff actually helping customers. Now CJ at Complete Payroll asked,
how
can customers share on our behalf? What a cool idea. Take your customers and transform them into your best sales people. This is what the flywheel is all about. And how could we do some work once, set it up and have it work magically forever?
And I love this next one because it shows the power that our newer products have because they were built on the unified HubSpot platform. See, by using this massive existing powers of workflows, you can automate to leverage your own customer NPS feedback. You can create triggers for tasks and deals, quotes, reviews, emails and you can do it all from within the workflow engine that you already know and use and love. See, building a process around your feedback is the single key to growing better if you ask me. And with advocacy automation, it makes that an easy 10 out of 10.
I see no reason why we shouldn't be able to test multiple variations in AB testing. Now we all know marketers absolutely love experimentation. And experimentation is about trying big, big crazy things. So why should we limit AB testing to just A versus B? This year, we set out to make experimentation a whole new level of powerful.
This uses the same artificial intelligence that we use for contact deduplication. We've made adaptive page testing very, very easy and I'm telling you this is really cool. You can now test up to 5 variations and my favorite part is that as you go about the rest of your day, HubSpot will sniff out the winning variation and start to incrementally point more traffic in that direction. It's all machine learning and AI behind the scenes, super cool. Now, Kirsten from CIAT wrote in, ultimately, we want to help where students are chatting with us.
Customer feedback comes through a variety of channels, comes through social media, comes through email, forums, all over the place. It's true for us, we know it's true for you. A big place customers want to be engaging with you today is Facebook Messenger. So I absolutely love this release. Over a 1000000000 people use Facebook Messenger.
Now with HubSpot, you can create these seamless Messenger experiences across your Facebook business pages and then manage them within HubSpot in a unified inbox. Super cool. That lets you have more personalized conversations, build stronger relationships by meeting your customers where they are in the way that they want from you. So look, here's the thing. Sometimes feedback can be tough to translate from the words we're hearing into actionable steps in the product.
It can be hard to squint and kind of read the tea leaves. For example, with reporting, we've been getting a lot of customer feedback saying vague things like I need to be able to drill down into reports and add drill downs into reports. And we've been scratching our head and don't know what to do with that. But over time, we started to piece together a trend. These are actual support issues filed for our reporting tool and we finally got it.
You want to be able to drill down into reports. So we've added drill downs into all reports at HubSpot. Who's excited about that? Before, admittedly, you had to navigate through the product to find exactly what you're looking for and now any report you see you can click through and get the information you need to make better decisions with just that one click. But that's not all we have for reporting.
What I'm going to share next is the number one most requested feature for marketers. First, I want to try something here. I'm going to ask you all a question. I want to take your temperature here. Who feels like their marketing department doesn't get enough credit?
It's the truth. Despite everything you do, despite all the leads you generate, all the demand, all the awareness, sometimes marketers can feel invisible. What can we do to respond to this? What you've asked us for is you've asked us for proof of the ROI of everything that you do. Just look at this.
The most intuitive, the most exhaustive, the most powerful multi touch attribution reporting available on the market. Who's excited for this? This is it. This is the key to showing how all the pieces fit together and in the immortal words of the great philosopher, Jonathan Van Ness, you are strong. You are a Kelly Clarkson song.
You've got this. He's kind of my hero and he's totally right. You've got this. You've got with our new multi touch attribution reporting, the power of HubSpot to create amazing reports that give you the proof you need. You can now see all the way, for example, from website first touch all the way through to closed deal.
We'll also show you how the individual assets you're creating lead directly to revenue across email, blog, landing pages, you name it, across entire campaigns. It's time to show what's working and get some credit for your hard work. So we heard you. We're making sure our tools have what you need as your business grows from the new app marketplace to advocacy and automation, multiple lead scores, didn't even get to that today, a lot of other stuff, attribution reporting. So for everyone who needed HubSpot to do more, who's excited for everything we just saw?
Okay. Let's talk about founders. Let's talk about founders for a second. A lot of people think of startup founders as jetsetters in cashmere sweatsuits, driving brand new Teslas in their penthouses, sipping imported Matcha Tea, looking out across the desert thinking big, deep thoughts. The reality of being a founder is sleeping under your desk, it's making ramen in a coffee pot.
It's booking a room at the Marriott when your office literally catches fire. So for founders, this next section is just for you. Thomas Barry from PicMonics said it best, as a start up, we're always looking for new tools that will help us grow and to make an impact on a smaller budget. So we believe that growth, especially when you're starting out, shouldn't break the bank. When we made our CRM free 5 years ago, we thought it was the right thing to do.
You see, to us, growing better means building businesses in a sustainable way. So we wanted to continue to invest here. Investing in building tools that can help small businesses, early stage startups thrive and grow, especially in those extra lean early times. Let's meet 1. Let's meet Acone, an early stage startup from right here in Boston.
With Honeycomb, any brand or community or organization can launch their own custom social network. I think what's beautiful about how we approach social networks is that it's about human things. It's about shared values, shared experience, a shared belief as opposed to just casual friends and followers.
We're definitely a startup. We've grown a lot. We've worked with Lady Gaga. She's actually one of our first clients. HubSpot has helped us a lot while working on marketing and sales because we've been able to utilize and take advantage of bigger free products as well as the paid platform.
Our relationship with HubSpot started with the free CRM and being able to track the leads that we were nurturing
through the sales process.
HubSpot has become our daily bible database center. Everything that we do day to day revolves around HubSpot and the data that we're getting from it.
Email marketing is a new free tool for us. We were extremely happy to see that come. A lot of the email marketing tools out there are extremely expensive to market new products that we put into the platform to existing customers has become a lot easier for us and a lot more economical and it produces really beautiful emails.
One of the things that I actually watch on the daily is the chat bot because that's our first touch with the customer. So just being able to see naturally what are people looking for and what are they expecting on the platform. That's been very big, not only on the sales side, but for engineering because we get to see what are people really looking for and how can we help them best.
Honeycomb uses the ad connector really to understand where everything started, what that first touch point for that customer was.
So just using all those tools altogether have helped us create
the most bang
for our marketing dollar.
We want to have hands on experience to understand how is this product going to affect our company. And the free tool really helps us do that because we can put into the system and see how it works instead of making a decision based on a sales pitch.
Like HubSpot is offering a powerful marketing, sales and success platform for small companies like mine. Honeycomb shares that same value that we can offer something really powerful and beautiful that really helps people at minimal cost.
Let's give it up for Honeycomb. Cool team, cool product and they're doing great stuff. We're excited to be part of their story from the very first chapter. In working with these early stage startups like Honeycomb, we knew that investing in our CRM was going to help companies of all sizes grow. We've seen that today.
So when we thought about which tools to make free, we decided to go right for the core. Let's make the core stuff that every business needs to do, make it free. You can see where I'm going with this. We mentioned this in the video. 2 borderline insane additions to our free suite of CRM tools.
The first one, we've moved ads into the free CRM. Now you can do cross network advertising and you can track the performance all from one place, you can do it for free. And that's not all. This is a biggie, been at this a while, I never thought that I would see this day. Free email from HubSpot, right in our free CRM.
Check this out. It's so beautiful too, honestly. It's just gorgeous. Our all new drag and drop email editor is super intuitive, built from the ground up. So whether it's your first marketing email ever or your first of the day, you're in great, great shape.
Email deliverability also is sky high, 98.21%. If you're curious whether that's something to be excited about, I'll let you Google it on your own time, it certainly is. With HubSpot's free tools, you can now do everything from engaging with a contact on website or email, you can live chat, you can schedule meetings, you can create help desk tickets and that's just the tip of the iceberg. Look at everything you can do for free in HubSpot today. That's just remarkable, isn't it?
I saw all the iPhones and Androids come up to take a picture. You should take a picture of this. We're very proud of it. All right. We've covered a ton of ground here today, but I could only scratch the surface.
So I encourage everyone in the room to spend time with our general managers. Now this is my team I get to work with very closely on a day to day basis. It's our product leaders for Marketing Hub, Sales Hub, Service Hub and our ecosystem, our entire platform. So tomorrow, they're each going to do a deep dive on their part of the product. We're going to geek out.
If you're an extrovert, you can go shake their hand and put a face to the name. I know they would love to meet you. They've worked really hard on these presentations. Go check these out. Okay.
For everyone, not just the folks here today at inbound, but also the folks on the live stream, you can head to hubspot.com/new to see everything we talked about today and a lot more we didn't have time to get to. Thank you for being a great audience. We've made a lot of progress this year. I'm excited to see what happens. See you next year and have a great inbound.
That we've been getting in our recent investments. And then I'm going to talk a little bit about how we're thinking through investments for the future. One note before I dive in, I will be sharing a number of metrics today that I hope can provide a bit of additional insight into the business. You should not expect that we're going to provide these metrics on a normal quarterly basis. I'm sure that's not shocking to most of you.
All right. We did try this three times just before we got up here. Okay. I'm going to go to plan B. All right, here we go.
Hold on one second. All right, let's start with a high level view of the business. HubSpot, it's a pretty good business. We continue to deliver strong consistent top line growth. Over the past 4 years, our revenue has grown at a compound annual growth rate of 35%.
At the same time, we've expanded our operating margins by 13 points, which is better than the framework for growth and profitability that we have shared with you in the past. We delivered this growth by engaging with millions of visitors to our web properties and converting them into active users and customers. At the end of Q2, we had over 400,000 weekly active free users of our CRM, growing 45% in the last year. We had almost 65,000 paying customers growing at 35% and we had more than 24,000 multi product customers growing about 75% year over year. Notably, we're not dependent on any single source to drive this growth.
We now operate 9 offices globally and we generate about 40% of our revenue outside the United States. With the growth we've seen from our sales hub product over the last few years and the successful introduction of our service hub, those products are fast approaching 20% of our installed base. And our partner channel has continued to represent 40% of revenue. Importantly, the strong growth and profitability has translated into strong free cash flow generation that continues to strengthen our balance sheet. HubSpot ended the first half of twenty nineteen with nearly $1,000,000,000 in cash that will continue to invest organically in the business and will provide us with a lot of flexibility to evaluate inorganic opportunities.
Okay. Let's take a step back and look at the impact of our investments in the suite.
As you
heard from J. D. This morning, the big effort in 2018 was completing the North South and East West expansion of the suite. Under the covers, there are 2 complementary Under the covers, there are 2 complementary forces
that are driving our business.
1st, we're getting lots of customers through our freemium motion that tend to have lower ASP. And second, we are growing these customers over time through upsell and cross sell motions. Let's see how these individual motions are performing. At the low end of the portfolio, we've taken a ton of friction out of the customer buying experience. It's allowed us to attract a large and growing base of starter customers that come with a customer acquisition cost that's a fraction of our traditional sales model.
So how's that motion going? I think it's going pretty well. We're approaching 25,000 starter customers, which is up 150% year over year. Marketing starter has been fueling this growth. Marketing Starter customers have grown an impressive 400% since the relaunch of the product last July.
Our expanding free and starter customer base is also key to growing the flywheel within HubSpot. We like this freemium motion because we're adding value by allowing our customers to use our software before extracting value, which is a better experience for our customers and makes them more likely to stay and grow with HubSpot. It's also a more efficient go to market model. We estimate that the cost to acquire a customer through this motion is approximately a tenth of the cost of our traditional inbound sales motion. Secondly, our starter customers are more likely to buy more HubSpot products over time than our traditional leads.
Over the last year, our starter customer upgrades have increased 150%. And if you look at the growth of just the upgrade to professional and enterprise additions from those starter customers, the growth is even higher. We've also been investing to remove the friction and demonstrate the value of the entire HubSpot suite of products. That motion has also gone quite well. Customer adoption of multiple products has continued a steady climb and we're now approaching 40% of HubSpot's customer base using 2 or more products.
We also have a small, but fast growing number of customers who are adopting the full suite. These complementary forces have introduced some quarter to quarter noise in our traditional KPIs. While our customer account growth has remained strong, the net result has been a more muted growth of ASRPC than we would have traditionally expected. On the right hand side, we've isolated the ASRPC of our sales hub and of our marketing hub X Starter. And as you can see, these ASRPCs have continued to expand nicely.
Now let's talk about our portfolio of products. We'll start with Marketing Hub. At the end of Q2, Marketing Hub was a $530,000,000 ARR business growing in the mid to low 20s. Marketing Hub is our most mature product and we're focused on getting the freemium motion and Marketing Hub really cranking. In mid June, we introduced free e mail and free ads and we had 26,000 free e mail sign ups in July alone.
We're also adding robust functionality at the high end like drill downs and multifactor attribution reporting, so our enterprise customers can stay and grow with HubSpot longer. Our Sales Hub business has doubled from $50,000,000 in ARR a year ago to over 1 $100,000,000 in ARR at the end of Q2, and it continues to grow about 100% annually. SalesLift is a product where we are still adding a lot of new features. You just heard Christopher talk about many of them. We know what's on the roadmap and we're executing against it.
With all the improvements we've made in Sales Hub, we are increasing the price of sales professionals. Beginning on November 1, the price of Sales Hub Pro is increasing to $500 or $100 per seat. We launched Service Hub last year and it grew faster than any of our other products. At the end of Q2, Service Hub was a $14,000,000 ARR business with more than 5,000 customers and it's still growing really fast. When we launched it, Service Hub was a great fit for our existing customers who needed a solution to manage tickets.
The majority of our Service Hub customers are multiproduct customers. What we're doing now is investing in Service Hub to make it a robust product that can stand on its own. And we're doing this because we think that Service Hub can be as big or bigger of an opportunity than marketing or sales. Okay. Now let's look at the investments we're making to set up HubSpot for strong durable growth.
As you heard from both Brian and J. D, 2019 has been a year we focused on investments in areas that are really bringing value to our customers. Many of these investments are not designed to optimize near term financial performance, but we believe that solving for the customer is entirely aligned with solving for the The investments we're making in our main sale initiatives have likely resulted in fewer new product introductions in 2019. That said, we believe these investments will enable us to increase the efficiency and the effectiveness of our R and D efforts and allow us to speed up innovation and create a better customer experience over time. Likewise, the investments in our freemium go to market are probably causing some cannibalization in our professional and enterprise additions as customers start at lower ASPs.
But it removes a ton of friction in getting started with HubSpot and it creates a much more modern buying experience. Finally, it takes time and investment to build the ecosystem scale that we believe we will that will enable us to monetize our platform over time. And we think this is the right solution for HubSpot and for our customers. We feel good about these trade offs because we fundamentally believe the opportunity for growth in the mid market is really big. While we're super happy with our 65,000 customers, as you can see, that's just the tip of the iceberg.
We'll tackle the opportunity by continuing to sell our existing hubs, by entering new markets, by launching new hubs and by growing the ecosystem of products and opportunity ahead, we try to ground ourselves in our long term financial model. A few thoughts here. 1st, I want you to think about the long term targets as just that, long term. You saw in the opening video today that we are trying to build a big successful company and we're focused on investing for the long term. 2nd, you can see that we're sitting at the high end of the range of R and D spending as a percentage of revenue.
In the near term, I actually think that number will go up a bit. As we continue to drive innovation in the product, we think that's the right decision for us to drive sustainable growth for HubSpot. And lastly, we've made steady progress towards our long term profitability over the past few years. We doubled operating profits in the first half of twenty nineteen versus the prior year. On our Q2 call, you heard both Brian and I say that this expansion was more than we would have hoped.
And we also shared that this is primarily because we got behind on hiring during the first half of twenty nineteen. We continue to expect that we're going to catch up on hiring in the back half of the year. This will position us well to execute in 2020, but it will create a headwind to profitability. And while we're still in the very early stages of planning and certainly anything can change, we currently do not anticipate incremental leverage next year as a result of our second half hiring and the continued investment in R and D. We want to make sure that we're making the right decisions for the long term benefit of the company.
There's another important reason that we're not speeding toward our long term financial targets. Our core unit economics remain very strong. We reviewed this last year and our unit economics now are stronger than when the company went public. And while the long term opportunity that we see is going to drive the bigger decisions that we're making, Our near term investments are grounded in our unit economics and they're delivering 5 times LTV to CAC. So let's wrap up with a few takeaways before we open it up to Q and A.
HubSpot's financial performance continues to be both strong and consistent. Our customer focused R and D is paying dividends across our portfolio and you should look for further suite innovation and ecosystem will provide us with a lot of flexibility for both organic and inorganic growth opportunities. Thank you.
Brian, Joe, do you guys right here, Mark?
I don't know if the live stream can hear you though. Is that working?
Thank you. Mark Murphy with JPMorgan.
Curious what would have to happen for sales cloud to clock in again at 100% in the coming year. Cato wasn't sure, if you were alluding to that possibility or maybe that is a little outside the realm. And then as well, launching contact deduplication, some of the pricing is based upon contact volumes. Would you expect any possible impact from that as people wipe out some of the contacts in their database?
Sure, I can start. Maybe the second part of that question is like we do actually encourage our customers to keep their databases tidy. And we've had that question before like when GDPR came up, right? Are you guys going to see an impact on that? I don't think we'll see a significant impact on that.
I think it's just part of the sort of overall hygiene of what our customers should do. That said, it does rhyme with some of the stuff that Kate talked about, which is we're not trying to figure out ways to stick it to our customer and charge them for contacts that aren't valuable, that's definitely not the long term way to grow better. So we're focused on sort of enabling our customers to use the tool in powerful and easy and simple ways. So that's where we're going to continue to invest there. As far as you want to talk about sales?
I'll just start on the sales hub. The numbers that we showed in terms of growth rates are really reflective of sort of the current growth rate of that hub. In order to continue to grow, we'd obviously need at 100%, we'd obviously need to have really strong ongoing new sales performance. And I think it's not limited by opportunity. I think it will be limited really by the capacity that we have within our own sort of sales and go to market organizations?
Yes. Well, I think there's sort of 2 things with the sales hub that are both powered. You saw that we have about 37% of our customers using multiple products. That should grow. That's an opportunity that I still think is there.
And then the sales hub continues to be our primary driver of that sort of freemium touchless motion. So I think both of those are healthy motions. Obviously, growth gets harder at larger numbers, but that's a real big growth driver for us. And I think it will continue to be a big one of our biggest growth drivers in 2020.
Hi, thanks. Samad Samana with Jefferies. So Kate, obviously, I have to ask a question. If you're talking about flat margins for 2020, how should we think about that in the context of growth on the other side of that equation? And then just a follow-up question.
Yes, I think that's a backdoor question around 2020 guidance. And we are obviously not going to share the sort of top line thoughts until we get to the appropriate point in time. That said, I think we wanted to be very upfront with you around the fact that we want to continue to grow this business for the long term. And we see sort of the bow wave of hiring in the back half of the year and the pressure that it will put on 2020 margins. And so we wanted to make sure that this group is also aware of that phenomenon.
Great. And then Brian, maybe one for you in terms of monetizing the ecosystem that you've built. I think that that's really an interesting opportunity. We've seen it with other software companies, whether it's salesforce.com, Shopify with their ISP partners. So I'm curious if maybe you could talk a little bit more about if you've started talking to partners about that path to monetization and how you see maybe the mutual benefit and maybe the models that you're thinking about?
Yes. We're talking a lot about that. I think HubSpot is a really interesting company, obviously.
We're in leadership, I would add.
We're on this path on the suite and we've got 3 hubs. And those 3 hubs are great. There's tons more work to do in all three. It's just like still tons of opportunity like the sales hub, the sales hub enterprise product tons of stuff in our heads we're working on actively that will go in there. So more opportunity there.
There's opportunity for more hubs. And then I think our ecosystem is a major opportunity and there's pieces of that. There's the agency ecosystem that's going great, lots of opportunities there. There's the app ecosystem also going great. We do a nice job of monetizing the agency ecosystem.
I think you'll see over time, we'll start monetizing the app ecosystem. We want to get that flywheel really cranking fast. So we don't want to put any unnecessary friction between you, let's say you're an app potential app partner, you want to build some app for our CRM system. We want to make it so easy for you to jump on and start selling your app. We don't want to start taking margin now.
But eventually, I think we'll get really good at that. We'll talk more in the future about that idea of ecosystem. We think of it more broadly than just agencies and application developers. There's more types of partners out there and more monetization opportunities. We're really bullish on that as the next as a big wave of growth for us in the future.
Thanks. Brad Sills from BBA Merrill. Obviously, a lot of investments in kind of more free with ads and the e mail. You already have this wide funnel already of 440,000 weekly active users in CRM. So the funnel should be widening, more velocity coming in.
How are you guys managing kind of the triggers for the upgrade? I know a lot of that is self serve, but what are some of the things you look for? And what are some of the learnings you had in the freemium channel? What's worked and what are some of the things you expect going forward?
Sure. Something we think a lot about is how do we make that freelayer super powerful, pulling people in and then pulling people up through. We feel like it's still also quite early in that game. I was talking to someone over at Dropbox last week, they have 600,000,000 active users. So we're a drop in the bucket.
And CRM is not like a niche product, kind of everybody needs CRM, maybe not as many people as would need a Dropbox. So it's a huge opportunity. That's why we're investing. We're making that free CRM more powerful. We want to make it kind of a standard system out there.
More users of that we get, the more upgrades we get, the more users of that we get, the more partners we get and that flywheel starts spinning too. So we're excited about what's going on. By no means do we feel like we have that figured out that the trip wires and whatnot. And I talked in my comments about Atlassian. Atlassian is really good.
They have this B2C style for your media models, so do we. If you look inside our marketing department, it looks more like Stitch Fix and SAP. And we're really focused on active users and getting that motion going. And we're still early. We spend tons of time and energy making sure those trip wires are well thought out, such that people can get lots and lots of value.
But if they're growing, they're a 30 person company, they're a legit company, how do we design it such that when they're getting more sophisticated, they need to trip into those products. So early, but making progress on it.
Yes. The one thing I'd add on that is, as I showed you guys the chart earlier of the user growth. And if you really look at that closely, you see some interesting things. You see there are periods where it just takes off and then it sort of the growth levels out a little bit and it takes off again. And what you're seeing there is the experimentation that's happening on our team.
What if we did pull this down? What if we made this change and everything? And so it's really a sort of an incremental, I won't call it guessing game, but it's a these are building the capabilities to drive this growth. And I think you just get better and better at it. And we look at companies like Atlassian or other companies that have this type of a model.
And I think there's still a lot of improvement that we can make.
Hey, guys. Good afternoon. Stan Zlonsky, Morgan Stanley. A couple of questions from my end on the partner ecosystem. Are you making any changes to partner tiers or the kind of tiers that you have and what partners need to do to get into those tiers?
And then I have a quick follow-up.
Yes. Let me answer that. Okay. So a lot's changed for us. As you know, we used to have one product, a marketing product, and so sort of one agency type of marketing agency.
And now we have a suite and we're building a platform, so it's about a broader partner ecosystem. So we're making a bunch of changes associated with that. One is just really straightforward with tiers. We're recalibrating that. And that's sort of like the north and south of partners, right?
We want we're adding a new tier called the elite tier with higher requirements to achieve that tier and therefore more benefits. And that's sort of the that axis, if you will, is how we figure out the partners' like investment in us and then our investment in them back. That's what that tier is for. The other thing we're doing is sort of going in East and West parlance. The East and West here is like partners are going to need to be able to differentiate themselves based on not only their tiers, but on their capabilities.
And so we're introducing certification or credentialing for partners, for partners who are specialists at advanced CRM implementation, partners who are specialists at CMS implementation, on and on we'll add that. So you can think about the evolution of the partner ecosystem as sort of keeping up with the way the company is evolving and our offerings are evolving and our platform is evolving. So you'll see that on a multistep journey. But this year, we are making a few changes to the tiers in specific.
Are you adding any tiers at the low end of the partner?
What we've done is we've added a solution provider tier, which is sort of almost like a freemium version for partners. So to date, when we had a marketing solution, the partners had to buy our marketing software and then get onboarded with our marketing onboarding. And it was a bit of a commitment. They had to step up. And that made sense from the perspective of where we were.
In this new model, there's ways for partners to get started at a much lower cost with our starter edition, with some basic onboarding, some less human touch. They start by being almost like a referral partner. And then from there, we can figure out and they can figure out if it's a good fit and move them up into the sort of traditional solution provider part of the market.
Got it. Thank you. And just as a follow-up on the Connect platform, right, in the marketplace and everything you have. As we move forward, right, how are you thinking about potentially monetizing? We've all looked at software for a very long time and you have companies like AppExchange, Salesforce AppExchange, right?
They do take small take rates. Is that how you guys are thinking about it moving forward? Thank you.
Sure. I kind of answered that one before. But at some point, I think we'll do that. What we don't want to do is slow down. It's like we have this big customer fly wheel and there's another fly wheel with gears on it that hook into the gears and the customer fly wheel and it's this app partner exchange, app partners at our house and it's going to be great.
But we want to keep that going. We want to make it really easy to join the program. We don't want to make it punitive. We want to keep that friction really low. So for now, we're not going to charge, but you should expect that over the long haul, that's another revenue stream for us.
And just one quick note on that too is that one thing that's I think different about HubSpot because we're focused kind of in the SMB space. There's 5,000 plus marketing and sales tech companies out there. So we want that kind of 1,000 flowers blooming model. Like everyone is building software for our industry should be integrating into HubSpot. And we think there's more opportunity than just doing a directory or providing some sort of marketing assistance.
Being a software company ourselves and having gone through is like, okay, can we use our platform and offer that up to these software companies that are sub 100 people and actually create value more than just the listing in a direct way somewhere
where there's opportunity to actually add value.
Hi, Jen Lowe from UBS. Thanks for doing this today. In JB's presentation, you talked about potentially having a few new hubs over the next few years. Kate, you talked a lot about R and D as well, but there the focus in the near term seems a bit more around mainsail and around platform investments. And then there's clearly incremental dollars too.
But as we think about that weighting, you talked about mainsail potentially pushing out some of the other new product innovation you might do. How do we sort of square that with the idea of having new hubs in the future versus some of these more platform and infrastructure centric investments being made today?
Well, I think the platform and infrastructure investments are actually enabling investments for us to keep building on top of our platform. I think we as I mentioned in my talk, we had an outage early in the year and it was a little bit of a wake up call. And I think we learned that we have to have a rock solid platform to build on. That's point number 1. Point number 2 is the way we build software is pretty interesting as well.
We build sort of a framework that other products can get built on like and that's great for the way we bring products to market. It's also great for our customers because once you've learned how to do workflows in HubSpot, you know how to do it across all the products. Once you learn how to use the editor in HubSpot, you know how to do it across all the products. And then when we introduce additional hubs or other things, we use those building blocks, if you will, that framework to deliver that software to the market. So you get the benefit of a really solid robust platform.
You get the benefit of scale and efficiency across those frameworks and you get the benefit of usability. So I think this year was an important year to really set us up down that
path. Over
here, it's Fred Bracelin with KeyBanc. A couple of questions if I could. Let's start out with this idea of expanding beyond 3 hubs. I know this is a 3 to 5 year vision. But as we think about the 3 hubs today, I'll put it in that front office category, sales, marketing, service.
What's the aspiration? Is the aspiration as bold as saying we're going to look at maybe DAC up assumptions for this environment. What's the scope of the opportunity you're looking at? And obviously, given the experience market fit focus that you have today, what are customers asking for? Obviously, you're not going to pre announce products, but just give us an idea for what are those hit list of things that investors or customers are asking for?
Sure. I would echo what J. D. Was saying earlier. We did that always rattled us at the end of March.
I think it appropriately rattled us. And we looked at our platform. We said, what do we need to do to dramatically lower the likelihood of that ever happening again? And if it happens, how do we dramatically lower the blast radius of it? And so we've taken a couple steps back so we could go 2, 3 steps forward.
And it's been a concerted effort on the dev team this year. I sleep much better at night. I feel better about the long term prospects of HubSpot. I feel better about the way we build products and just working off a much more solid foundation. And I'm in it for the long haul.
I've been at it 13 years. I'm in it for the very long haul, so it just makes perfect sense that we would have done that. Having said that, I do think our foundation is pretty getting pretty darn solid. And like JD said, down below the foundation are the set of shared foundational services, whether it's workflows or web pages or email or messaging. And we can weave those together in very creative ways to build more applications.
And so when I think of HubSpot, 3, 4 years down the road, there's definitely more than one additional hub that will come out. We have them in our heads. And I would say over the next 3, 4 years at least what's in my mind is front office. Think there's plenty of wood left to chop in front office. We have a very small percentage of the overall installed base.
So lots and lots of work left to do in front office. I doubt you'd see us take a jump into HR or accounting, something like that in the next few years.
Helpful. And then just as a follow-up building on that narrative. On one hand, you're signaling you're going to kind of go above that 18% longer term target R and D. But on the other hand, you've also kind of hinted at maybe evaluating inorganic ways to maybe accelerate new hires, all sorts of things. So how do we balance that as you think about the build by strategy?
Yes, I can take that one if you want. And then you can debate me. We can have a debate right here. I actually think, honestly, I feel like we're more ready to consider in organic strategies now than we ever were for a couple of reasons. One is the platform point that Brian was just making.
As you have that platform, it starts to be easier to integrate applications, because that's what the platform does. It enables us to do with APIs and we're building our products with that in mind. So I think that was a big step forward. So I think those opportunities opened for us now. To the part of your second question, it goes It's interesting.
We don't have a lot of customers. I have not encountered a customer that said, can you please rebuild my accounting system? They all kind of have accounting systems they like, but what they're saying is, can you please integrate to my accounting system? And we're spending a lot of time and effort to that as well. But we still think about and this echoes exactly what Brian said, our mission is helping millions of organizations grow better and that's largely in the front office.
But that integration piece is going to be important both to our customers and to some of our growth strategies going forward.
Great. Jonathan, key summit insights. Really enjoyed your presentations, helpful. Two questions, one for Kate. Specifically, you're talking about the guidance and trajectory margins for 2020.
I guess directionally, which I know you're not talking about giving guidance beyond that, but I guess what you have given before is the real scenario where above 30%, 30%, etcetera, etcetera. Are we look should we directionally be thinking about that's what you're targeting is more the higher growth, the directional part or are these investments more just table stakes, let's get the product, the platform up to snuff, so you don't have any more of the Q1 outages? That's the first one.
Yes. I think that framework continues to be a helpful framework. I think that you should not look at it though in every single period and expect it to linearly match up. And so I started the conversation by saying we've added 13 points of leverage over the last 3 or 4 years and it's above that framework. I think you should look at that framework over a couple of year period of time.
And we will endeavor to continue to keep within that framework, but maybe over just a little bit of a longer context.
Can I just add to that? So I think about it in short term and long term, and I hope this is okay. Short term, we grew really we're growing really fast this year, and we kind of outkicked our coverage to use a football metaphor. Like we didn't
I have no idea what that means.
That means your punt is very long and your coverage team can't make it down there, and so they get a long run back. Anyway, we outkicked them. So we didn't hire as fast as we had expected, and it didn't keep up with the growth. So our margin expansion this year was greater than we thought. And I think as we catch up, our margin expansion next year will go the other way.
Long term, I thought it was a good question. I think Mark asked it maybe with Samad. There's a trade off here because we think we're trading off and investing for long term growth. I don't we won't give guidance for next quarter or next year or whatever, but I'm pretty confident based on the numbers and the data that we showed you guys with the return we're seeing on our R and D that by doing this, given the market size, given the momentum we have, we're going to over the next 3 to 5 years have a higher growth rate than we would have had we not sort of step back and make some of these investments.
All right. Second question is more of high level. This is for Brian or Dimash or either of you. Entertaining presentations that you both of you had. You talked about stuff that's happening, the disruption, companies, you listed examples of companies that like Ryan you're using now that replace stuff you companies, products you used before.
What's I guess to say that you guys aren't like forward thinkers, you guys are academics, you're forward thinking and you're early adapters, and it's going to take a long time for society, for the consumers, for the buying public to catch up. I mean, the message took you how many years to finally jump in the pool? Brian, how long did it take for you to convince people, even help them understand what inbound marketing was? So that's more high level question for you guys. Thank you.
I can answer it. I would say, yes, we tend to be out front. That's the point of the presentation. We want to stimulate you to think a little bit and what's the future look like. We're trying to predict the future.
We've had some success at that. I think I'm largely I wouldn't have done it today unless I thought I was largely right about that idea of so many of the disruptions I'm seeing happening like product market fit, of course, you need to get there. But if you get a little bit of a product advantage competition is really good at adding features, really good at that. You just look at HubSpot, we're not like wildly successful, we're pretty successful company. Why are we successful?
We have a great product. But we have a killer channel and we have killer SEO and we have a freemium model. It's not just about what we sell, it's how we sell it. And we want to sell it even better in the future. And I just think that's the way to do it.
And so I'm pounding any table that will be in front of me, trying to encourage our customers to do the same thing. I'm trying to build a platform that will enable our customers and our partners to pull that type of vision off, So I think that's how you win in the future.
Just one quick comment. Brian said, I think a lots of smart things. But I think one of the keyest insights is the it doesn't take it's just it's for mere mortals. So this sounds like this is not AI, this is not blockchain. This is, you know what, like normal B2B companies, people are buying are going to expect this kind of experience.
They want to be able to self-service, they want to be able to put their website up, they want to be able to do this. This is not rocket science. So this is not we're building things that's 20 years out. This is like they should already be doing it. Their customers have already appreciated.
We're trying to make it easier, so they can kind of get on board instead of waiting 5 or 10 years. So we don't think it's that far out. We think customer expectations today are ahead of where the market should be.
Peter Levine with Evercore.
Some of
the questions, you announced a number of new products or features for the freemium across sales marketing service. So at what point is there a paywall where you want to entice your customers to obviously upsell your partners, but at what point do you kind of make that debate internally to kind of
It's a hot debate as I was talking about before. There's sort of 2 ways to come at this problem. There's one is a usage type paywall. So like for example, with the free email, you can send 2,000 emails a month and they're branded with HubSpot. Others are functionality paywalls and we experiment with both.
We try to figure out the first thing is we want to make sure that that free product is actually adding value to our customers, that they can experience what it's going to be like the power of the HubSpot platform. And so we want to make sure that the users levels are right and the functionality is real, so they don't hit that paywall right away. That's just a bad experience, right? And then what we want to do is that's how we sort of figure out which customers are ready for more features and we try to do that in a very light touch product driven way as well. We try to use their behavior in the app to figure out, oh, you're ready to try your first workflow, you're ready to set up sequences for your sales team, etcetera.
So in addition to those usage paywalls, we figure out where the functionality makes sense. And we go back and forth on a lot of that. We run tests about that. But it's a science, honestly. The folks that do this use a ton of data.
They have control of the knobs and dials in the product and we just keep cranking at it.
Just one quick note to kind of intersect the app ecosystem questions earlier. One of the nice things about the freemium model and having this large free user base, so we've had the usage based thing, we've had functionality based thing. In the future, you can imagine an integrations based thing as well. This is, oh, you can use integrations for these particular ones, but once you need these kinds, you need more than 3 or more than 4, can be a trigger point that we haven't historically kind of tapped into. So as that number of integrations grows, our opportunity to kind of monetize through just getting more upgrades on the free product, I think would work because we've seen the patterns.
Hi, it's Drew Beja with Granahan.
The hiring,
just talk
a little bit about the metrics you've seen where you've under hired, if you will, just to kind of quantify that a bit. And is it and you're already growing at a dizzying rate, dizzy rate, in terms of count. And I'm just wondering what gives you the confidence in this sort of economy that you can accelerate that? Or is it just you got to pay up for engineers and your body count is not going up, it's just you're paying more
for it? I can start. If you look at the headcount growth, it's far less than the revenue growth. We want it to be less, but we don't want it to be as far less. The interesting thing about the miss on headcount was it's not just engineering, it's sort of across the board.
And we think about it as very I like Starmesh's slide. It's like there's kind of 2 big flywheels. I know I'm a flywheel guy.
The
2 big flywheels inside of HubSpot's customer flywheel, there's an employee flywheel. And the employee flywheel is very much a function of how do we have an offering for employees that's kind of like we think about the product offering? How do we give it how do we have a killer culture that they want to come to work here, that it's stimulating that they learn a lot, that they're skilling up, that they like their manager, all that good stuff. We spend a lot of time on that. And I we're good at a lot of stuff.
We're not as good at other stuff. We're good at that. We're very good, I think, at culture. Our employee NPS scores are very high, if you look at us in Glassdoor. And so that I think is the hard part of recruiting because if that's broken, then then you're hiring crappy people, you just the good people won't come to you.
So we kind of screwed up, I think the part that is solvable, that's just we need bodies out there, recruiters to do the hard kind of grinding work of recruiting and we fell behind on recruiters, fell behind on recruiters, we fell behind on recruiting. So I'm actually pretty bullish and Jamie may have some things. I'm pretty bullish on our ability to catch up. I think we have the base foundation in really good shape.
I think I can say as the Chief Operating Officer, we just didn't operate well. Our recruiting funnel, if you will, our recruiting flywheel, I guess we would call it. And we've just picked it up. I think we're in good shape. The product is healthy.
The product is great. We particularly find ourselves with a big home field advantage in Boston, I would argue. We have a pretty growing home field advantage in Dublin, which our 2nd largest office. We're opening a brand new office there. Darmesh talked about in his talk about the remote work growing.
So I feel like we have all the pieces in place.
Are you getting paid by the football reference?
I wish because I'd be doing quite well.
Chris Murn with Goldman Sachs.
I just wanted to ask about the multi product customers. It seems like there's been a lot of traction there closing in on 40%. So when you think about taking that even higher over time, maybe 50% plus, what are the main drivers of that? Is that just all the investments you're making in product? Is it just sales?
I mean, I'm sure it's both, but just maybe diving a bit deeper on what the main drivers of that are? And then specifically as it relates to service, Kate, you might have made a comment that that could be as big as marketing over time. It's a little bit more competitive there, Zendesk is certainly there, SMB even up to enterprise. So how do you think about getting from point A to point B on that as well?
Okay. I'll start. Okay. So the interesting thing about getting 50% plus of our customers on the growth stack, our growth suite using more than one product is you kind of have a humidifier, dehumidifier thing there. As fast as we get brand new starter customers using one of the products, that brings the average down.
What we really want to do is we want to create sort of this river of customers who are starting with one product and then we're upselling. So we don't assess too much about the percentage. I do think it's going to go up over time. But what we want is we want to get that sort of great river running through our business where lots of customers are starting for free, they're upgrading the starter and then we cross sell them. That would be sort of the motion that we want to have there.
Second question on the Service Hub, as I mentioned in my remarks, the real power of that Service Hub offering when we launched it and why it grew so fast was it was just such a natural extension for our customers to if they had one particular use case, which is I need tickets. I need to be able to manage tickets inside of HubSpot for customers I've signed up through services. And that's worked really well. I think as we grow that product line and it becomes a larger and larger opportunity, the magic is still going to be in that 1 +1 equals 3. That's really where a lot of the power of our platform, the differentiation comes in.
And as well as what Brian would talk about, it's like we want to sell how we sell that is also how we're going to win.
The other thing that I would add is, I think we figured out the playbooks for some of the cross sell motions. J. D. Talked about the cross sell motion of the Service Hub. And I think that playbook is one that we just really know very well and we're executing.
I think there are others that still have some work to do. In particular, I think there's lots of opportunity to cross sell marketing into a bunch of the new sales hub customers, and that's something that we're going to be working on.
Hey, Jen Frode for Stephens. Thanks for taking the questions. Couple first one pricing power, if I may. I know there was a small increase to the pro level service hub this year and then last year we had the enterprise price increase. Just get a sense of kind of how you think about growth in terms of new customers versus price and how that will play out over long term?
I think traditionally,
well, how will I say?
I think when we raise the price of Marketing Hub Enterprise, a lot of the value of the increase we didn't hear the pushback, right? I think that was a good move. We continue to sell Marketing Hub Enterprise. We were not getting pushback there and we realized a bunch of the impact of the price increase on new customers. I think with the Sales Hub Professional, we've added tons and tons of features.
We look at how that product compares in the market. We look at how that product is priced in the market. And we think we have a similar opportunity to really capitalize there.
I think what we're going to want to keep doing with our prices kind of keep tilting that axis. Think about where we were 5 years ago, we basically had $17.50 product, right? And what we've done is we've brought the prices down to get started and up as we've added functionality. So I think there's still an opportunity for us to keep tilting that capture the entire consumer surplus, if you will, right? I think there's still an opportunity for us to do that.
Okay. And then one follow-up. I'm sure
that you've tested this, but with all of the new free features you're adding, is there any risk that customers may actually downgrade to free their paid version?
Now I'm sure you've tested this,
but just kind of wanted to ask.
Well, I think that the reality of the sort of world in which we live and you hear this from the sort of front and center and the disruption thing is, yes, we probably did disrupt our pro and enterprise business a bit when we introduced starter. But if we don't do it, somebody else will. And I think we want to modernize ahead of the curve, not get caught flat footed and have somebody else disrupt us.
And by the way, Martin, so my second pricing and packaging philosophy discussion is about features, which is what's going to happen over time with any product line is that the features that used to be demanded only by enterprises, they start to be required by everybody. So you have to keep innovating so that you can put more and more features in your enterprise and keep pushing down the function the features down the stack. Otherwise, you're going to get disrupted from below in that way. So the way we think about, in addition to sort of tilting the curve on pricing, as we want to keep innovating and keep driving that functionality down that folks 3 years ago only enterprise is needed now every business is part of sort of standard issue. So as we think about pricing and packaging going forward, that's going to be a big part of it too.
So I think you can we'll probably be having this discussion again next year, what other features did you push down into the starter tier and the free tier and it'll be matched with what other new things that we bring to the top of that product stack.
We'll take 2 more
questions. How
are you doing? Josh Bennett from Wetherbee Capital. I'm wondering if you can comment a little bit on thinking about the idea of kind of rolling out new hubs over time and maybe using Service Hub as an example, talk about what was the process by which you kind of came up with that new hub? How long did it take to develop it from a technical side? How long do you typically test these hubs before you kind of do the full rollout?
Give us a sense so that we can get some kind of feel for how the rollout and development of new hubs goes? Thank you.
We've been thinking about Service Hub for a long time. When we started coming out with our sales hub and our free CRM, we were already thinking about Service Hub. The Service Hub, what I liked about it is, it's a little bit like I talked about earlier. Underneath Service Hub, our web pages, our search engine optimization is conversations and chat is e mail. So you're kind of assembling Lego pieces when you're building it.
And so I don't remember how long it took, year ish, I'm not sure. It just sort of kind of flows out of that CRM is what happens. And then, yes, we test it. We have a pretty aggressive beta program. We're getting better at that beta program.
One of the great things about our agency partners is they make terrific beta testers of all our products. And so you can imagine that for existing hubs, it's not like we have to think real hard about what would be additional hubs. So we have them in our heads more than one. They're relatively obvious. And for the most part, they are they're heavily leaning on and leveraging the framework underneath HubSpot.
And so hopefully, we have the same success. I mean, we built a marketing business, took us 8 years and went really well, then we built the sales business. That thing's gone great. It's over $100,000,000 Then we go with the service business. And would you say it was $14,000,000 like that's cranking.
What I've noticed in the market when I talk to customers, I talk to tons of customers. And you saw today in Christopher's presentation, his 3 companies that he referenced, at least 2 of the 3 were using Service Hub. They picked HubSpot. They picked HubSpot as a platform and then they assembled all the other apps around it. And maybe HubSpot Service Hub didn't have every feature that they needed, but it was close enough and they understood the value of having it all in one.
There's a lot of that going on. I think that's people are going to pick a hub in the future just like Dharmesh and I talked about in his presentation, we're both Apple people, we both have Macs. It's not like we won't buy an Android phone, we buy an iPhone. I think it's kind of going to be the same thing in the CRM industry. That's part of why we're doing the platform initiative.
We want lots and lots of these 3rd party applications to be able to plug in. We want to have it be all in one, manage all that inside of HubSpot.
Hi, Ryan MacDonald with Needham over here. I guess just piggybacking off of the previous question. As you were expanding your hubs previously, you have not yet I guess fully built out this app ecosystem. So as you sort of think about adding additional hubs, how do you do that without alienating the app marketplace or the ecosystem of your partners moving forward? Thanks.
Carefully.
Carefully is right. I think one of the opportunities we have at HubSpot is rethinking the relationship between app partners and the platform provider. And part of what we've communicated is that we will solve for the customer, which is we think choice is good. So we want as many integration partners building on top of the platform, but we have not said it's like, okay, we're going to carve out this territory, we're not going to do that. We're not going to acquire into it.
We think if it's the right thing for the customer, we'll do that. And I think our app partners kind of trust us. We've had these conversations with them, but we are very, very mindful, having been on both sides of that particular equation of I think what it would take to kind of build a trust in the same brand that we have within our customer community and our agency community now, we think we can build a similar brand for HubSpot within that is a good company to partner with. That's the hope that's we're building. And with that,
I want
to thank everybody for coming. Thank you for your support
and wish you safe travels.