HubSpot’s growth strategy — force feeding content
One tech giant is succeeding with strong products, great execution and driving content to customers.
Hubspot is a cloud-based customer relationship management (CRM) software — i.e. providing business tools for marketing, sales and other areas.
Customer relationships matter
The company first started as an app for marketing tools. By expanding into sales, operations and customer management, it became a massive software ecosystem that’s about to get larger… This year, HUBS launched:
- HubSpot Payments — which helps its customers to accept payments.
- Operations Hub — a suite of tools to automate business operations.
COVID accelerated the demand for CRM tools as businesses needed cloud-based tools to move operations online. This accelerated HUBS’ sales from 24.7% (2020 second quarter) to 53% (2021 second quarter).
HUBS has a strong track record of execution and growth — averaging 30% sales growth in the past 7 years — with its stock performance even more impressive: 60% annual returns since its IPO in 2014.
Content marketing machine
Talk to any marketing or sales professional and they’ll probably have heard of HubSpot. Or search any “marketing” keyword on Google and you’ll likely find HubSpot on the front page.
There’s a reason. HUBS dominates online marketing content — especially in Google search results (SEO). And with the best type of marketing being free marketing, there’s no better option than Google search traffic.
HUBS has been investing heavily into content marketing over the past few years. For example, in 2021, it:
- Launched a podcast network.
- Acquired the business newsletter, The Hustle, for $27M.
Since creating content requires a big upfront investment, HUBS is expecting lower sales & marketing expenses (as a % of total sales).
Is it worth it?: This will give HUBS a competitive advantage by lowering the cost to acquire customers over time — and it’ll need the leg up.
Investors: Big enough for two?
HUBS plays in the massive $53B CRM market — expected to grow to $128B by 2028. But the space is highly competitive with Salesforce (NYSE:CRM) leading by a mile, leaving Adobe, Microsoft and everyone else far behind.
At a $284B valuation, SalesForce is nearly 10x the size of HUBS — but both companies share similar qualities: Impressive financials, growth and product.
Must read: Why software stocks may be the better pick to avoid current market risks…