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Brian Halligan was fed up. “As an entrepreneur, I could see that many start-ups failed miserably at sales and marketing,” he says. “Spam, cold calls, pop-up ads – people just blocked them out. The conventional wisdom was dead wrong.”
Dharmesh Shah was crushing it. As a graduate student, he built a big following for his OnStartups blog without using conventional outbound marketing tools. “The way people live, shop, and learn has changed,” he says, “and marketing has to map to that.”
Together they came to the realization that instead of the old outbound marketing methods of buying ads, buying email lists, and praying for leads, it is much more effective to take an inbound approach that focuses on creating quality content which naturally pulls people toward your company and product.
After the two graduated from the MIT Sloan School of Management, they wrote a book on a new approach to selling: “Inbound Marketing: Get Found Using Google, Social Media and Blogs.” They also founded HubSpot, which automates their approach using software as a service. The result is stunning: even the smallest business can now reach a worldwide market and grow dramatically.
Go big or go home
The two founders thought they had started a software company. Instead they had launched an entirely new category. “It’s a ‘go big or go home’ world,” says Halligan, the CEO. “When new industries form, the number one player typically takes 80 to 90 percent of the market. We saw an opportunity to be that company”. Enter Larry Bohn, Managing Director of General Catalyst. Bohn had gone big with business software companies not once but three times. So he knew that bringing in the Series A funding of $5 million would not be his biggest contribution. “Larry laser-focused on two things,” Halligan recalls. “Did we have a clear strategy to grow the business, and did we have a team that could execute it.” That didn’t change during the Great Recession. “When the economy tanked around 2008, our churn rates went way up.” Halligan recalls. “Lots of customers went out of business. That was nerve-wracking.” But HubSpot had a secret weapon for defying a down economy: they knew how to practice inbound marketing better than anyone else. The company continued to invest in content creation, building up a highly respected and trafficked marketing business blog and attracting attention from marketers and lovers of marketing everywhere.
Just as they went against traditional marketing rules, HubSpot also tossed out the conventional wisdom on hiring. “Experience is over-rated,” says Shah, the CTO. “It tends to make people repeat themselves.” So HubSpot went after people with an “inbound aptitude” – and offered a $10,000 bounty to anyone who referred a software developer that HubSpot hired and considered “awesome.”
To reduce churn, HubSpot put a focus on becoming a “lovable” company that customers would never leave – and not just because the product is so good. From the shyest developers to the alphas in the C-suite, HubSpot hires for “HEART”: people who are humble, effective, adaptable, remarkable and transparent.
HubSpot passed $50 million in sales in 2012, reached 10,000 customers in 2013, and went public in October of 2014. Within two months the company’s market capitalization passed $1 billion. But these milestones are not what thrill the founders.
The category they created has become a community, with HubSpot at the center. Its annual INBOUND conference for customers and partners now draws well over 10,000 people, representing the many thousands of small and medium-sized companies that rely on HubSpot to keep their businesses thriving and growing.
“For a lot of our customers, HubSpot changed their lives,” Halligan says. “They were a little tiny company and now they’ve got leads pouring in and they’re growing their business. That’s the most important thing we’ve done, and we’re not done yet.”