Brian Halligan, CEO and Co-Founder at HubSpot: The Secrets to $1B ARR ... And Beyond!

All right, hey everybody, um, here with a special treat here with Brian Halligan, CEO and co-founder of HubSpot. And Brian has been kind enough, as well as his co-founder Dharmesh, to join us many times at SaaStr over the years. But this is a special one. HubSpot just crossed $1 billion in AR and 100,000 paying customers. So congratulations, Brian.

Thank you, Jason. Thank you for having me. It's a real honor to be here. I'm a giant big fan of yours and Saastr's.

Well, thank you. I want to kind of do— we've been doing this 5 Interesting Learnings series on Saastr where I pick out the 5 things as a founder that I think are interesting about HubSpot. And it was fun that you want to do this live and chat about it. But before we get there, did you— I know in the early days it's hard to even see it a billion, but did you think you would get there with 100,000 paying customers? Did you think it might be a million? Was this the ACV and the type of customer makeup you thought you'd have when you got to this stage?

Honestly, we never thought much about what the makeup would be when we get to $1 billion, because we weren't thinking much about getting to $1 billion in the early days. We were looking to get the product market fit and go-to-market market fit and really focused on just growing in the moment. So somebody— I was on somebody else's podcast and they were asking me, well, back in the day, when did you think you'd get to $1 billion? And I— when we started the company, we hoped we would get here, but we would have put very low odds on it. And so I'm not sure we really thought a lot about the mix. Having said that, the ARPU of HubSpot hasn't changed that much over our 14 years.

That to me is very interesting, right? You've added, you've added a lot more functionality. You've added, got much broader, much broader, but the ARPU is the same. So what are the, what are the learnings there? You've got CRM, you've got support, you've got this whole suite now. And it's still $10,000, isn't it?

It is. And it's because the denominator is so much bigger. We, we leaned hard. We pivoted halfway through HubSpot from a marketing app to a CRM platform, and we're still kind of halfway through that pivot. Uh, and when we did that, we decided to go heavy freemium, and we decided to go with make it easier to start if you're a little tiny startup, there's two of you getting going. And then you get to 20 employees. We want a price point that you can get into it with a starter edition, then a pro and an enterprise. So we introduced that starter edition inside of HubSpot at a relatively low price point. And you could buy our whole starter suite now for $50 a month. So it's a little deceiving. If you took the starter suite out, the ARPU would've gone way, way up over time. Okay.

That's the subtlety I'm missing.

But what we really did, and we, it's a little current too, cuz everyone always moves upmarket, upmarket, upmarket. We actually kind of slid downmarket for a little while, and we just want to make it easier for people to buy and easier for startups to get in early and then scale with us versus buy some other crappy platform, then have to switch to HubSpot somewhere along the way.

And did you— just going back a little bit, and I want to talk about kind of the revenge of the SMB, which is what I think we're seeing in 2021, right? But, but back in the day when you saw folks like Marketo and Eloqua take off— and I know we're dating ourselves a little bit, right? But you weren't temp— I know you got leads from some of their biggest customers. They came in, right? They must have seen, look, HubSpot's better for me, or at least you're in the deal, you get in the deal. You weren't tempted a bit to chase those bigger ACVs?

Uh, everyone around us was tempted. All our investors were tempted, our board members were tempted.

I bet they were. Your investors were.

Yeah, we were not. And There's— I reread— so I'm not a big fan of Peter Thiel's politics, but he said something really smart in his book way back when. He said, you have to be right about something for a long period of time that everyone else thinks you're wrong about. And I think we were right about our target market. Everyone else in the world, still our big investors, like, well, when are you going to go sell to the Fortune 500? We always thought that there'd be a giant market down below that Fortune 500 for startups that wanted to scale from 2 employees to 2,000 employees and build a killer product for those people. And our thesis was that historically no one made money in that because you couldn't sell to them, you couldn't market to them. You needed this field sales force, you had to fly people all over. It's just the cost to acquire is too expensive. And our thesis was really obvious in retrospect that you could dramatically drop CAC by using consumer-like marketing techniques, inbound marketing, content marketing freemium to get to these people. And so I think we were right about that for a long period of time and lots of other people are wrong. And a little bit of— you have to get the math right to pull that off. And it took us a long time to get the math right. But that's kind of how I think about it. I also, I'll just tell you personally, I think Dharmesh feels the same way. I grew up in my career in enterprise software, selling to the Fortune 500, selling to the CIO. And it's like, It's a hard life. I mean, it's just not super fulfilling, and I wanted a life that was a little bit different than that. I didn't want to have to be chasing CIOs around for the rest of my life, so we wanted to, you know, bring a consumerization that people have been talking about, consumerization of enterprise software for 150 years. It finally happened over the last couple.

Yeah, it's interesting. We've seen— when I've done these 5 interesting learnings, I've watched Some folks like PagerDuty, right, which eventually went upmarket. Slack, we know the majority of their revenue is they crossed a billion. HubSpot's at a billion, right? As they crossed a billion, more than half their revenue became enterprise. And we can remember using Slack in the early days and it was almost dev-focused, right? But if I look at your numbers, I mean, your growth this last quarter was 30-some-odd percent, right? Which I think was even up over year over year, quarter over quarter, right?

The growth rate, right?

Accelerating with SMBs, right? So what does that mean? Is it just SMBs finally getting to use these SaaS products? What is it? Is it just because it's not just the cloud getting big? This is SMBs in particular. This is not CIO budget, right? What's happened? Did it just take SMBs a while to get here? Why, why beyond HubSpot being a world-class product, are SMBs accelerating now?

I think these products are getting easier to buy and easier to use and approachable for SMBs. And that just wasn't the case for the longest, longest time. The market is there. If you add up the number of SMBs, it's, it's a giant number. And if you add the ARPU of what someone would pay, it is an absolutely ginormous market. Uh, and the good news for HubSpot is we're like 2% into that market. That market is very, very big and they're just waking up to SaaS that they can use it. And most of this market, The market today versus 14 years ago is very different. The buyer of HubSpot 14 years ago was kind of a Luddite. You know, they, they did press releases and they did sort of, you know, brochures and stuff like that. The buyer has changed and they're pretty technical and they're very savvy with software and they're very fast with software. And that's been a sea change in our buyers, that our original buyer was someone we call Mary Marketer. And Mary Marketer was kind of a Luddite, didn't really understand didn't understand technology well, didn't use it well. We had to teach her how to use technology. Our buyer today is very, very different. It's pretty savvy actually with technology. Maybe they're not writing code in the middle of the night, but they know how to use software and they know how to deploy it and get value out of it.

Well, that's an interesting inversion of the typical early adopter phase, right? Where the early folks like in Slack are super techie and then eventually you get to Mary or Mark, whatever his persona is. But that's been flipped around in the case of HubSpot, right?

A little bit, yeah. We never had that like crossing the chasm curve of Rick Rule, read and reread Cost of Customer so many times. We never had that like early adopter techie type. It was more, we went after Mary Marketer and Mary Marketer, gosh, she was in a lot of pain. Like she was doing trade shows and she was doing press releases and brochures and the world was changing under her feet and she was trying to figure it out. And part of what the magic of HubSpot was, we built an app that was easy for use. We created content for her. We created training and a university. And we helped create that new profession, that new marketing profession, and we helped make her, you know, progress in her career. So it's a little bit of a software play. It was also very much a community and content and training play.

Yeah. And did, now thinking back of that transition from, from, from Mary and Mike to the more tech-focused, did that, was, was going freemium later in life correlated to that? Did you need, did you want to go freemium in part to get into more tech-focused customers, or is that just a coincidence?

It's, well, first of all, it's not really even tech-focused. Like, your average liberal arts graduate that's 28 years old is pretty facile with technology.

Well, they're fluent in the web. Anyone in the next generations is fluent in the web, right?

They're fluent. They're fluent. It's like myself. Like, I'm fluent in the web. I know how to use it. So we're not even going after deeply technical people. Just your average person who's 28 years old today is pretty good at using technology. Your average person who's my age now is pretty good with technology. Your average person 14 years ago, whether they were 28 or my age, was pretty bad at it. So yeah, I guess I would just say that. It's just remarkable how much it's changed there. Like, you used to teach people how to reset their password and stuff like that. It's amazing how much it's changed. And I forgot your question. Ask the question.

Oh, it's more just— it's one of the things— there's a couple things that are not unique to HubSpot but are interesting, and one is going freemium later, right? Not starting there. And I know it's the case, but I don't actually know why and if that is tied to the change in some of your buyer personas.

It was so about 7 years ago we pivoted from being— we're a marketing app, inbound marketing, marketing automation, content marketing websites, all that kind of stuff. Stuff. And we pivoted to, we want to solve a different problem, we want to be a CRM platform, we want to help people create awesome, disruptive experiences for their own customers. And so we very much pivoted at that point. When we pivoted our vision for the company, we said we wanted to pivot our business model and have not only a disruptively easy product, but make it disruptively easy to buy relative to the big incumbents in the space. So we said, let's make it freemium. No one else was doing freemium in the CRM space. Let's make the product so easy to use that somebody who's in a startup in their garage comes in, just starts using HubSpot. They get all their contacts in there, they're emailing out of it, they build their website. Next thing you know, they're on HubSpot and we grow with them. And so it was really, it was really at that time when we pivoted our business model and our product strategy. Uh, so it was very culture. The other thing about HubSpot, we're always very rooted in this idea of you want to match the way you go to market with the way humans actually shop for things and buy things. The way humans shop and buy has changed so much in the last 14 years. And whether you're selling, I think, to the Fortune 500 or you're selling to a 2-person startup, I think freemium is the way to go in almost any model because no one wants to talk to your sales rep anymore. They really don't. They just want to try it themselves and set it up. And yeah, you'll talk to your sales rep later on down the road once they've figured out that it might be a good fit. They want to figure out the packaging and they want some detailed questions answered. But you want to match your go-to-market with the way people actually want to buy stuff today.

Yeah, it's interesting. Let's tie that a little bit to another thing that is not uncommon but is very interesting about HubSpot, which is partners in the channel, right? So, uh, I might not want to talk to a sales rep the day I try HubSpot CRM and Marketing, right? But clearly If 40% of your revenue comes from partners in the channels, I want help deploying a world-class marketing CRM solution, right? I want— and when I see that, there's— because there's, there's almost— there's not a conflict, but there's an overlap between freemium product and solution. And as you become more of a solution, most businesses want help, don't they? I don't want to do all the heavy lifting, right? I want someone to help me do this work, even if the software seems to be easy to deploy.

Okay, it turns out it's about 50/50 across our customers. 50% just want to do it themselves and they buy directly from us and they set it up themselves. We teach them how to do it. We teach them how to fish. 50% of them need a bunch of help and they'll buy through an agency partner or a CRM implementer. We have like 5,000 of these partners. They're terrific. And they know our product cold and they go in and they do big consulting projects and they set the thing up. They may use it for them. They may run it for them. And so it splits like 50/50. Um, and so we have a good size channel and that channel takes really good care of our customers. In fact, the retention rate of our customers that come through our channel is a little bit better than the retention rate of our customers that come through the direct channel.

Well, maybe, and they've, there may even be more coverage. There may be more people working in your channel than there are at HubSpot itself, right?

Yes. Yes. So our channel, like we do a billion in revenue, our channels, 5, if you add in the partners, it's 5 billion.

That was the question I was at. What's the most, like how much, how much does it, if on a 10K HubSpot deployment, I know that's an average, so it's a little misleading. Probably the partners drive it up a bit, but how much more do they— do you have a sense of how much more they pay the partner to do the work? Is it 1x or 2x? Oh, it's 5x. It's 5x. Got it.

If you look at SAP, it's like 50x and we're about 5x. Yeah.

And I know the answer is no, but just looking back, were you tempted to bring more of that revenue in-house? Salesforce obviously didn't want it, right? But you look at others like Qualtrics that IPO'd, right? They really like having that revenue in-house because they made it profitable. Were you ever tempted to do more of that work or just you never had any interest, right? Even if you can make it profitable.

I'll tell you something weird about valuations. Historically, the way someone would value a company like HubSpot that has 95% software and 5% services, and let's say the software gross margins are 82% and the services are whatever it is, we're a little bit negative on it.

30%, right?

Let's say it's 30%, whatever it is. They would value the software revenue at, call it, 10x, whatever, and they'd value the service revenue at 2x. For whatever reason, they don't do that anymore.

No one cares.

They don't care. And the canonical example of that is Shopify, where they have this fantastic growing SaaS business that is multiple— that is valued at an unbelievable multiple because it's growing really fast. They have this giant payments business that is low margin business.

And larger. It's larger.

Incredibly fast. Yeah, they just blend them together and they get SaaS multiples. So the world has changed the way to think about it. So when we started HubSpot, it was very much in that old world. So for one, that was one big reason we didn't want a lot of services revenue. Two is, is one of the early— one of our early board members had started a marketing automation company and failed, and the lesson he gave us was marketers like services. I mean, you look at any marketing budget, and there's so many agencies doing different things. He's like, you can very easily get wrapped up in doing all of these services. And our early customers wanted us to do all like, can you write our blogs for us? Can you do our social media posts? And they wanted us to do all that stuff. We could have easily done it. But we said, we kind of flipped it and said, actually, can we turn this into an opportunity and build a partner channel and build a big community around this, which is a big moat and enable them to just sell it. And so that's kind of how we thought of it.

I could imagine you, like you're saying, you probably— and sometimes founders see this today too— you could almost have been sucked into being a super agency, right? People would have wanted you to do all— okay, I have this agency and their software, just you, you guys do it all for me. You, you write my blog, you do my actual SEO engineering, you do my ads, you do ever— I want everything from you, right? And I'll pay you $100 grand a year, right, instead of $10 grand a year if you do everything, right?

I'll tell you an early story we had. So You know, our first sales guy, it's a guy named Mark Roberge who spoke at big SEO conferences and stuff. And I remember the first customer he signed up, Jason, was a company called CEO Dad. And I don't know if he's still around, ceodad.com. And he was a professional comedian and a professional dad joke guy. And Mark signed him up and we didn't really know what we were selling at the time. This guy was like our fourth customer. Mark said, no problem, we're gonna have our founder write your jokes for you and read them. Oh man.

He'll sell. He'll sell.

He'll sell all your shit for you.

Throw anything into the deal.

Yeah, yeah, yeah. And he said, no, no, no, no, he doesn't have to write the jokes for me, but I'd love to work with you. And so I remember my first call with him, it was the night he purchased, so he'd been in the deal. And that night I was out to dinner at 8 o'clock at night, there's a restaurant down the street from my house, and I got a call. And I never really get calls on my phone. And so if I get a call on my phone, I assume it's urgent. So I picked up and it sure enough was CEO Dad. And I say, hey, nice to meet you, whatever. And he said, oh, I need, need you, need your help right now. I'm like, all right. And so he said, look on your phone, I just sent you my first blog article. I said, okay, I'll read it tomorrow. He said, no, no, no, you got to read it now. And I was like, okay. I started reading the article and he said, no, no, no, no, read it out loud. Okay, so I'm on the sidewalk reading his article out loud on the sidewalk. And I'm about halfway through it, he said, "What are you doing?" And I said, "I'm reading your article." He said, "You're not laughing." I said, "It's not funny." And so that was the kind of stuff I was getting sucked into.

That could take your 60 hours a week right there.

Totally. And then anyway, I went back and forth on his damn blog article and then I posted it on Reddit and I don't know, it's a disaster. I'm like, "Marc, stop doing that. Just let's sell software." That was one of the early formative moments. I was like, this can't be my life for the next 20 years.

You know, a little bit of scar tissue can focus you as a founder and lead to a great outcome, right? You could have had— you could have been more enterprise if you just didn't have this little bit of scar tissue.

We could have easily built a giant services company. Dharmesh and I knew a lot about services and— or a lot about how to do SEO and content marketing. We could have easily done it. Could have done it. Yeah, but it would have been a bad move.

Well, let me just pick— I don't want to spend all our time, but this, this, this 50% from the partners and the channels and doing— so you didn't want to be enterprise, right? But you did embrace agencies, which are quirky and a lot of work. And I've learned a lot about this. I don't know how many folks in marketing do this, but I've learned in the Shopify ecosystem, all the winners in Shopify do this. All the winning Shopify partners partner with the Shopify agencies. You got to do it. The Klavios and the Gorgesses. So, um, Just two questions for folks thinking about that. One, I'm curious, do your part— are they, are they HubSpot-only shops in terms of just you as an application? Do they do other competitors? Do they do other products, right? Do they specialize? And how do you keep them? How do you invest in them?

The vast majority are, are selling— they're not selling Salesforce and Dynamics and Adobe. They're selling HubSpot and servicing HubSpot. But, you know, I'd say 10% of them, and some of the bigger ones support all of them. Oftentimes they're building a solution with HubSpot, so they put in HubSpot, they put in Gong, they put in, um, you name it. You know, we have thousands, we have many hundreds of partners that plug into HubSpot, so they'll plug all kinds of stuff into HubSpot.

With HubSpot as the hub though, so they want, do they want to webify their business or do they want to automate customer marketing? Like, why do they go to the agency, right?

Any number of reasons. Like they may start with, hey, we want a new website and they build them a new website.

Got it.

And then they say, oh, you know, we want to, we have this database. It's a mess. Can you clean up our database? You can segment it. And then, oh, can you help us with account-based marketing with HubSpot? It's like, oh, our CRM, like we never really use our CRM. We got this old CRM and like our reps never use, maybe we can just use HubSpot for that. Can you train our reps how to use it? Like it kind of. Grows from there and they can kind of come in at different angles, but they typically— HubSpot is the hub, not let's say Salesforce or Dynamics. And Salesforce has a lot of great partners and Dynamics does too, and they're pretty dedicated. I think it's hard for them to have multiple hubs. It's just a lot to keep in their heads.

It's a lot.

It's a lot. It is. Um, but they typically are building a solution with lots of different apps. Most of our HubSpot customers now, decent-sized customers, will have 20 other applications plugged into HubSpot and running workflows, and they've got SurveyMonkey, and they've got Eventbrite, and they've got Bevy, and they've got all this different stuff they're plugging in, and they kind of run— use HubSpot as their hub.

Is 20, um, and just two, two on this, then one last question for one at a time, but is that the stack? Do folks run 20 apps integrated with HubSpot? Is it 1 plus 20? Is that a typical, a typical deployment you see?

It really varies on the company size, but if you're You know, we have lots of HubSpot customers that, let's say, are 100 employees or so. They'll have 20 apps plugged into HubSpot.

And do you have a sense, because it is— do you know what their total deployment for SaaS software might be for all of that? Like, what do they spend? Because HubSpot then is just— HubSpot actually is a small slice, even if it's the hub of that overall. It's not like Salesforce where it's often half. Like, if you take Salesforce plus deployment, that can suck up half your budget, right, in some cases. But if I'm doing $10K on HubSpot or $15K and more to deploy, but I got Gong and Bevy, I'm spending hundreds, $100,000+ on top of that, aren't I?

Gong is expensive, really expensive. So if they're using Gong, it's expensive. But if you're using Bevy or you're using Hopin and you've got SurveyMonkey and you plug it in, you've got your, your NetSuite connected into it. It kind of depends on what's going to— like, NetSuite's expensive, but maybe you've got QuickBooks plugged in, that's inexpensive. So, you know, when we look at that, we look at the 5 to 1 It's like 2 to 1 on other software products plugged into HubSpot.

That's interesting. Twice the expense on your partner ecosystem, right? Yes. So if I hit it, if I hit it as a HubSpot partner, I can make a lot of money. Oh, less than— because that 2 to 1 is much higher than some— than a Workday or Salesforce or even a Shopify. It's much higher than Shopify, right? That's a huge multiplier if you're a top 10, top 20 HubSpot, uh, ecosystem app, isn't it? It's huge.

And the ecosystem has evolved. There's different types of partners in the ecosystem. Like we always have Facebook and Google, these giant ones. Um, and then we have like the venture-backed startups and like Hopin and Bevy are good examples of that because they're top of mind. Um, but then we're starting to see more and more companies just start on HubSpot. Like there's a great company called Org Chart Hub and they, they make it really easy within the CRM to build an org chart that you can use and share within our CRM. Like more and more entrepreneurs are sort of building their whole business around HubSpot. The other thing that's happening that's interesting is a lot of these partners we work with, like we have software partners and we have services partners. These services partners, I mean, with the advent of JavaScript, your average sort of developer that, that doesn't have a CS degree can do amazing stuff now. And so they're, they're using JavaScript and extending HubSpot in amazing ways. With one-off things they're building on top of HubSpot. That is mushrooming on top in our ecosystem as well.

Got it. I didn't, I didn't completely realize why there's affinity with Zapier and similar applications, but now I get it, right? Because they can make HubSpot so much more extensible, right?

Yeah.

All right, last question on this, and I want to just do one last one on sort of free channels. But so these, the, these, like, how, how, just for everyone to learn, how defensible— because I view these, these, these agencies And partners, if they're HubSpot shops, right, you have to invest in them because if you treat them poorly, they will go away eventually. But if you treat them well, I find it one of the quiet biggest moats out there, right? When you go to that agency and they're a Shopify shop, right, on their door, that's a big deal. That's a big deal, right? And is it, is it a moat for HubSpot? Is it, is it defensible? Is it something people should try to pull off when they can?

I don't think it's quiet. I think it's a loud moat.

No, I know it's a loud moat, but I think folks that have only sold direct— I don't know what percent of SaaS companies have no third, but it's a lot, right? It's not a part of the playbook that everyone gets, is my point. Not everyone sees it, right? I think it's a giant moat, isn't it?

It's a giant moat. It's a huge competitive advantage. They're largely wedded to us. They build their whole business around us. So you think of HubSpot as a billion-dollar company. But the HubSpotosphere is this $5 billion entity, and there's thousands and thousands of people outside of HubSpot who deeply understand the product. They're strongly incented to go sell it and make their customers happy. It's a huge moat. It's, you know, the company who's fantastic at this is Microsoft, has a huge community of partners around them.

We don't get it unless you've seen it. You don't get it. It doesn't make sense to you. Right.

And I grew up and I have a weird— I grew up at this software company called PTC. CAD software company. And I spent a bunch of time in their direct channel and we had resellers and implementers and I spent a bunch of time in there and I was like, this model can work inside of HubSpot. It was basically a reseller model we had, sort of similar to AutoCAD. People know more about AutoCAD, they go through resellers. And so it was sort of in my DNA because I worked in the channel for a long, long period of time.

Yeah, I continue to learn. I was listening on, we were talking about Clubhouse before and Harley talking about the president of Shopify a few years ago when they were neck and neck with BigCommerce and another, right? And today it's vast. And he was talking about how ease of use and onboarding were the reasons, and I'm sure they are. I mean, he's been there since the early days, right? But when I, as a student of this, look, I think it's the partner ecosystem.

I do too. It's the platform.

Because good God, when I, now that I've invested or worked with some folks in the Shopify, you can't, like, it is, you cannot get in there, right? These Shopify shops, they're, you know, it's a big, I got to go online tomorrow, Brian, there's COVID's hit. And like, if you're a Shopify shop, I almost I don't care, like get it done for me, right? And I'm not saying it's the same at HubSpot, but it's an amazing mode if you can do it and understand it, right? And people don't get it. People don't get why Microsoft wins here, right? I didn't get it and it's powerful, right?

And it lowers the risk. Let's say you're SaaS and you're looking for a CRM and you're like, I could go with HubSpot or I could go with Salesforce, but I'm working with this agency who's built a whole bunch of stuff for me on this other side and they know how to implement HubSpot. It just lowers the risk for you.

It lowers the risk for you, right? And I think the other interesting line we could talk forever is what, you know, as Saastr Inc., as an S— we're a big enough SMB that I'll throw money at deployment now. Like, I have more money than people, right? So I talk with these vendors like Event Software, talking about events. I mean, we've qualified like 40 digital event software, right? And like, stop talking to me about what your ACV is. Here's our needs. We're at scale, right? I will pay you more money if you solve these. I really don't care whether it's $10 grand or $20 grand or $40 grand. Grand a year. I want you to solve my problem. Right. And there's, there's an SMB line that HubSpot plays in this space that you raise. But it's a tough spot, isn't it? It's tough to solve those problems. Those people aren't good at it until it's $100K or more. Right. It's real work to do that.

Yeah.

But your partners can help you do it. The partners give you that lift. Right.

At last, one of the things that's been interesting about our partners is our partners pull us up. Like, if you look at our largest deals, like Lemonade is a customer and we got a whole bunch of big companies that are customers now, SurveyMonkey and other folks, are usually— it's our partners pulling us in there. They're in there doing other work and they pull us into a bigger deal. That's often— they're sort of a gravity pulling us up. But you were talking about how do you take care of your partners? So we do Net Promoter Score on our customers, Net Promoter Score on our employees, Net Promoter Score on our partners. We obsess over raising those. And we listen very carefully to our partners. And what our partner— what partners want is they want, they want to grow their business. So they want an ecosystem that's growing, there's stuff going on, and they can find ways to make money. They want, if they do well, to get tiered. And it's like amazingly how important tiering is. And Napoleon said this, something interesting. He said, it's amazing what a soldier will do for a little piece of colored cloth on their shoulder, you know, like each tiering is really important. And if you're an elite tier partner with HubSpot, you get unbelievable benefits. Um, the people who deal with those partners are really important. Like we have a certain ratio of our, our partner managers to partners. The quality of those people and the engagement is really important. The training you give to partners. So we train the heck out of them, not just on HubSpot, but like, how do you do retainers right? How do you hire right? How do you build a culture? Like teach them how to build a services company. That, in fact, Jason, is really what enabled it to take off at the beginning. They all were interested in inbound, but they were all interested in our theories on how to run an agency properly. We built a whole methodology on how to run an agency. That was really key for us in the early days.

Yeah, until you see that— I remember the first time I walked into a software company back in the day that was training their partners in a huge room with like— I'm like, what is this room for? Why did you fly out 200 partners? Into your company. I didn't even get it. It took me a while to figure out what was going on, right? But if you do that, it's powerful, right? It is so powerful, right?

And these partners want help. They're typically like 20-person companies, and the CEO's doing a lot of the selling. They're busy, they're haggard, and they're like, can you help me grow my business? Then our answer is yes, we're going to teach you not just about implementing HubSpot, but we're going to teach you about how to grow your business. That's been a key secret for us.

All right, last one. I love this partner discussion because it's so— it's underdiscussed, right? It's so interesting. The last one I just want to hit is, and I'll tell you why, is I think in your, in your last quarterly announcement, not this one, but the last one, you said that 60% of your customers come from free channels, right? That 33% came from word of mouth. If I got this a little wrong, you can correct me or ignore it, but 33% from word of mouth, 26% from SEO and Google, and 13% still from your blog, right? So the reason I bring this up is, as founders, we try to learn the case studies of other companies, right? But we have to make sure we get them right or we copy them the wrong— we learn the wrong lessons. So 60% seems like a lot, right? And I think this might be the secret sauce to why HubSpot's business model works, because I think for at a $10K ACV with a sales-driven model, if you had to pay to acquire all these customers, I don't think the math would work, right? It seems to me this is a magic engine. Is this free? Maybe 60% consistent with those, but I haven't seen it broken out the way you guys broke it out, right, between word of mouth, SEO, and blog.

We have a few— I guess we have a few little engines that work. One is ye olde content marketing, inbound marketing, writing blog articles that are interesting, creating research content that's really interesting, getting links into it, ranking in Google, trying to make that content super compelling so that everywhere people go, whether they're in Twitter or they're on Instagram or they're in Google, they just seeing our content everywhere and we're building up a lot of credibility with people. And then, so that's an engine that's just—

It doesn't seem to have a limit, even at a billion in ARR, it doesn't really seem to have a limit, does it?

That's something we talk about internally, like the amount of traffic we get through Google, it does— We always think, well, that was it. That was—

Yeah, it's got to plateau. It's got to plateau, right? But it doesn't.

The problem with it, it takes a long time. You got to build up tremendous amounts of domain authority over a long period of time. And it's, and you know, it's easier to venture back start. You just got a big round, give the money to Google and Facebook versus give it to a content creator that creates great content that will build you a sustainable moat over a long period of time. That's one thing we have going for us that's super sustainable. The freemium product, like, we think of ourselves, we want to— the thing that's different about HubSpot than Salesforce or Adobe or Microsoft or Oracle, all the other CRMs, they started with Salesforce Automation and they just bought a whole crap ton of other companies and glued them together and built a CRM that way. And it's a tried and true way of doing it. But I think that's going to— I think this is something that we're right about, that we're going to be right about for a while, that everyone thinks we're wrong about, but we're building ours from scratch. Like every line of code is ours and we're building from the ground up. And we're building it to be Apple-like easy to use, like really easy to use, super scalable on the backend. And we're building it all from scratch. So we're handcrafting it versus cobbling it. And I think that's going to really benefit us because we do it that way. We can actually do freemium. Like if one of those companies wanted to do freemium, it would fall down on itself because it's hard to stand that darn thing up. It's really hard to use, really hard to set up. And so we try to lean into our strengths where maybe our competitors have weaknesses. And so we're trying to zig a little bit where everyone's at. So just the premium in the ease of setting it up is a real key for us in growing our business. And the partner channel is a real key to growing our business. Um, our culture and our being a really good place to work, that's a real key. So we have like 5 or 6 things that we're really, really good at. We suck at a whole bunch of other stuff, but 5 or 6 things that are hard to replicate and take time and energy that we've really kind of mastered.

Yeah. And it takes a lot of that. I think maybe the takeaway from this, it's interesting, is a lot of that takes more patience, right?

It takes a lot of patience.

The real reason, I mean, you're building rather than buying. And the first time I met Dharmesh might have been in 2014 or '15 when you guys were thinking through some build-buy decisions. It takes longer. Mark Benioff doesn't want to waste time. He wants to hit scale. And that's not necessarily wrong, but The patience of Build, I mean, it's years. It's years you get behind to get ahead of that J-curve, but if you get it right, you come out ahead on the other side of the J-curve. But it is like SEO or other things. It's a long bet. It's a long bet.

And I'll tell you about that bet. So we have some debates about that bet a few years ago. Everyone around us is saying, one, go to the enterprise, and two, start acquiring, just start acquiring.

It's like you have your You have the brand, you have the brand, so go plug stuff into it, right?

And you've got a $23 billion market cap. Let's just— let's put it to work. And we debated that one a lot, and then we said, we're just going to bet on ourselves. We're going to go the opposite way everyone's telling us to do. We're going to build something that is beautiful, that we're going to love, our customers are going to love, our NPS is going to be sky high. And the reason we're accelerating today, as you mentioned, our revenue is accelerating It's that we made a bet 2.5 years ago that we were going to build, and we did a bunch of stuff at the platform level, and we're getting the return on it today. That's why HubSpot started to reaccelerate this year.

Well, good. Well, listen, Brian, thank you for this time. Congratulations on reaccelerating. It's wonderful to see. It's inspiring, I think, to all of us to see that and to watch that. It's fun. Now you can— I know you're a public company, but out there on the horizon is $10 billion.

Yeah, it's out there.

You can squint, you can squint, but at 33%, you can see it, right? You can see it, right? And in fact, you can't tell Wall Street, but there's actually a date on a spreadsheet you have within a couple quarters where if things go just right, you can see $10 billion. It's crazy that you can see $10 billion out on the distant horizon, isn't it?

It is crazy. I just want to say thank you to you. I love your content. I'm a big fan of your conference and everything you do. You're fantastic. We love SaaS startups. I love your Twitter feed. You are the man. I appreciate you very much.

All right, Brian, thanks for the time and good catching up.

All right, cool.