Spurned by Salesforce, HubSpot Aims for Revenge with Sales Software

A little more than a year ago, Salesforce announced it was paying $2.5 billion to acquire marketing software company ExactTarget. It was the largest in a string of buyouts meant to make Salesforce more competitive in digital marketing, giving it more ammunition against huge names like SAP, Oracle, IBM, and Microsoft.

Analysts praised the deal, saying Salesforce was filling a major gap in its product lineup. Salesforce CEO Marc Benioff said the purchase was evidence of his commitment “to become No. 1 in marketing.”

“We needed to do something of consequence and we needed to do something strategic and we needed to do something now,” he said.

At the offices of HubSpot, a smaller online marketing company based in Cambridge, MA, there was less enthusiasm.

Just two years earlier, HubSpot had trumpeted Salesforce’s role in a $32 million investment round. CEO Brian Halligan noted that he and co-founder Dharmesh Shah were such big admirers that they’d named one of their conference rooms “Benioff.”

But when Salesforce went looking for a digital marketing acquisition, it left its own venture investment behind. As the race to buy marketing software assets picked up, this was not a good signal for HubSpot.

A few weeks later, Halligan acknowledged the obvious discomfort. But, in his typically upbeat fashion, he said that being left on the shelf “has unexpectedly energized me and the HubSpot team.”

Fast forward to this week. HubSpot recently filed its paperwork for a proposed $100 million initial public offering, revealing that it brought in about $50 million in revenue for the first six months of the year, with sales growing much faster than losses.

In their speech to an estimated 10,000 attendees at the annual HubSpot user conference, Shah and Halligan joked that they had dreamed since childhood of opening a public appearance with the SEC compliance disclaimer that appeared on the impossibly large screen behind them.

And at the end of their presentation, Halligan delivered what you could see as HubSpot’s revenge: it has developed new customer relationship management software, competing with the core product in Salesforce’s portfolio.

The sales software won’t be widely available until next year, Halligan said. But it’s clearly aimed at Salesforce, which Halligan praised as a good product before cheekily polling the crowd about how many of them actually used it.

Tools like Salesforce, he said, are mainly for the benefit of sales vice presidents who want to keep track of what their salespeople are doing. But those individual salespeople wind up spending a lot of time entering data into forms—HubSpot estimated that its own sales team, which uses Salesforce, spent an hour and a half every day just doing data entry.

HubSpot’s “really kick-ass” CRM software, Halligan said, is intended to automate as much of that process as possible by spontaneously scraping data from e-mails, phone calls, social media, website visits, and other interactions with potential customers.

The message seemed to resonate with the crowd of marketers. On the way out of the packed exhibition hall, it was easy to overhear people discussing how much they pay Salesforce annually, how much they hate using it, and how big a battle HubSpot has on its hands.

That part will be interesting to watch. For now, anyway, HubSpot’s ambitions line up pretty well with the small and medium businesses in its customer base, people who are happy to hear Halligan and Shah say their software can help them outfox bigger, richer rivals.

“We like attackers,” Halligan said. “We want to help those attackers get leverage and grow.”

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  • Ric S.

    I was at the Inbound 2014 conference. We use both Hubspot and Salesforce at our company and do not plan to continue paying for both. Be interesting to see how this turns out.

  • cboulanger

    I was at Inbound14 and HubSpot’s CRM has a lot of potential.

    I expect the new CRM to catch-on quick with their smaller, existing customers because of the ease of use. I doubt that larger firms are going to shift away from Salesforce even if they are already using HubSpot. Bigger companies won’t want to deal with the migration costs (new training, rewriting integrations, data transfer), so they’ll stick with SalesForce+HubSpot.

  • siwanoy

    Baloney. Published reports have them turning down a billion dollar take out offer from Salesforce. Get your facts before publishing nonsense like this.

    • Well, check the dates on these reports – my piece here was published on Sept. 17. The Business Insider piece you’re referring to, with the anonymous-sourced report of a Salesforce acquisition offer that fell through, was published Oct. 2.
      This piece was based on all of the information we had at the time, which is to say: taking into account all of the on-the-record details we know about HubSpot’s history, the storyline of the two companies’ relationship is that Salesforce invested in HubSpot, and then turned around and bought someone else when it went shopping for a marketing software company. In fact, not many people had bothered to point out that uncomfortable fact in the press. But it’s a real dynamic, and widely discussed.
      As a reporter, I can tell you that pieces like this one tend to scare up new stories that have been only lurking in the background before. So, if the Business Insider guy is researching his “gossip on HubSpot” piece (which is a great angle) and asks about the Salesforce acquisition story, people who might not have talked before are suddenly starting to say, “Well, actually that’s not the whole story, here’s what went down.” Happens all the time.
      If I’m able to confirm more details about a rumored Salesforce buyout that didn’t happen, I’ll happily run with them. Email me if you know more! But just remember that a lot of this is based on perception, too. Who did the “spurning” is a matter of where you sit, sometimes.