HubSpot to Partners Take Our Cash Hire Awesome People

HubSpot to Partners: Take Our Cash, Hire Awesome People

7 minute read
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It's a good time to be a partner of HubSpot.

The Cambridge, Mass.-based marketing automation and CRM provider went public last fall. In last year's third quarter, HubSpot's first quarter as a public company, the company grew revenue 51 percent year over year and increased its customer base to more than 12,000 companies worldwide. 

Now they've started giving cash to partners.

HubSpot and CEO Brian Halligan (below, right) at its partner day this week in Cambridge announced it will give up to $300,000 in loans to qualifying partners to hire talent. The $3 million loan program -- The HubSpot Agency Growth Fund -- is available to Diamond- and Platinum-tiered agencies of the HubSpot Partner Program. It includes interest-free loans.

"We have all this cash sitting on a balance sheet, so why not put to it to work with the partners that have helped us grow," Mike Volpe, chief marketing officer for HubSpot, told CMSWire in an interview at HubSpot's headquarters Tuesday. "Let’s help them grow because that helps us grow."

Stocks Up

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The 800-employee organization is growing. Last fall, we had them at 700 employees. Co-founder Dharmesh Shah, the company's chief technology officer, told partners Tuesday at the Hotel Marlowe (near the HubSpot offices in Cambridge) the company's still hiring new talent.

This morning, HubSpot was trading at $53, up from $32 in December. Some remain confident in HubSpot's growth trajectory. Others were skeptical at first.

"Based on my analysis of the recent quarter and surveying the competitive landscape, to which only Marketo is a real threat for what (HubSpot) is doing, I just don't see anything getting in the way of (HubSpot) growth," investor Dallas Salazar wrote this month. " In fact, I see (HubSpot) growth getting more efficient and healthier on a per dollar basis going forward."

Our Partners Rock

HubSpot's did not earmark money for marketing development funds, events or outbound campaigns. It wants its partners to bring in "talented individuals" to "reinforce proven inbound marketing tactics by providing agencies with funding specifically to hire talent and scale for growth," according to HubSpot officials.

HubSpot officials said Platinum and Diamond may strike out with "traditional financial institutions." So why not reach into their own pocket?

2015-21-Mike Volpe HubSpot.jpg

"We’ll have a very lightweight application process to help them grow their business," Volpe told CMSWire. "We want to help our best partners grow even faster. For the ones that want to grow, we don't want capital to be one of the things to constrain them. We have a lot of capital and because of who we are as a company and our size we’ve been able to raise capital efficiently."

The "vast majority" of HubSpot's clients and partners are mid-sized, which don't always have "easy access" to capital.

"This is a perfect marriage," Volpe added.

Unique Move?

Tony Byrne, founder of the Real Story Group, an independent technology analyst firm out of Silver Spring, Md., said he hasn't seen a model like HubSpot's partner loan program.

"But it makes sense," he told CMSWire. "Agencies are increasingly influencing -- and sometimes running -- client digital marketing strategies, and HubSpot will want to empower its closest partners. At the same time, marketing technology partnerships can be fickle -- it's not like SharePoint where an integrator locks into only one supplier -- so if I were HubSpot I wouldn't bank on 100 percent loyalty.  And as a customer, I wouldn't pick HubSpot just because my agency told me to do so."

Byrne added HubSpot sits is on a large pile of investor cash -- Shah reminded partners of this Tuesday -- and they "need to find creative ways to convert that cash into sales growth. This is just one more way of expanding your downstream sales capacity."

R Ray Wang, principal analyst and founder of Silicon Valley-based Constellation Research, called the partner loan program a "smart move to serve as a catalyst and VC-like model to help their partners succeed. When the agencies and partners win, HubSpot wins."

Need for Enterprise?

Ian Michiels, principal and CEO of Pleasanton, Calif.-based Gleanster Research, said allocating these types of funds is a common practice in a half-dozen industries, but in software/high-tech this is definitely an unique approach. 

"Hubspot has over 2,000 agency partners," he said, "and they drive scale in revenue and customer retention through these partners."

Michiels cautioned that margins aren't nearly as good in the SMB space. He sees margins in this space at 30 to 40 percent. HubSpot in its S1 filing Aug. 25 reported net losses of $24.4 million in 2011, $18.8 million in 2012, $34.3 million in 2013 and $16.3 million and $17.7 million for the six months ended June 30, 2013, and 2014, respectively.

Eventually, HubSpot, like most of its competitors, will need to look up-market to meet growth commitments, Michiels predicted.

Learning Opportunities

"Even if they boost mid-market sales it's got to be a lot to drive growth," he added.  

Most B2B agencies still struggle to monetize and drive contribution margin, Michiels added. 

"Clients always want to pay less than they would to hire and manage talent, but that means the agency has find a way to take on these challenges at scale," said Michiels. "It's smart for HubSpot to limit the fund allocations to the most successful Gold or Platinum partners who probably have a successful business model," Michiels added. "But as more and more companies are finding, content marketing takes a massive investment in time, effort and money. The problem is it also generates diminishing returns. More great quality content is just more content. It's an underlying challenge for the entire marketing automation industry."

New Sales Features

HubSpot also announced at its partner day new capabilities to its sales product, Sidekick. It unveiled its premium version of its sales acceleration tool, called Sidekick for Business. 


Sidekick for Business offers access to inbox productivity and prospect insight tools of the original Sidekick product: real-time notifications, contact and company profiles, and integration with their CRM system. It includes analytics into which tactics in their emails, documents, presentations and phone calls are most effective.

New features of Sidekick for Business include:

  • Personalized, email templates available to reps within their Gmail or Outlook inbox
  • Document management that give sales reps and marketers one up-to-date library of content that reps can share from, or present to, prospects in real time
  • Effectiveness reporting for both email templates and sales collateral
  • Prioritized call queueing, offering call integration directly within the web browser that automatically records and logs calls to CRM

Welcome, CRM

HubSpot, known for its inbound marketing and marketing automation tools, announced its free CRM and Sidekick tool in September.

The CRM was the result of "customer-driven demands," according to Volpe. Marketing platform users inquired about using HubSpot's existing tools as a CRM. They could, Volpe said, but it did not include all the features of a CRM database.

"We felt like it was a huge opportunity," Volpe told CMSWire.

Some entities still use Salesforce CRM, which integrates with HubSpot's marketing platform. 

But as other clients grow, they've needed a CRM, and "HubSpot is a great fit for them," Volpe said. "On the flip side we have deep integrations with Salesforce, and some of our customers are happy with using Salesforce."

Combining CRM with inbound marketing capabilities differentiates HubSpot in this space, Volpe said.

"How you get more names in your database," he added, "is one of the key ways you grow." 

Creative Commons Creative Commons Attribution 2.0 Generic LicenseTitle image by rikkis_refuge.


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