Episode 004

From rogue experiment to global success: The story behind HubSpot for startups with Kim Walsh

Startups used to tellHubSpot they were too expensive. A few of HubSpot’s team members listened and started a rogue experiment called HubSpot for Startups.

This is the story of this experiment.

In this episode, we cover:
Startups used to tellHubSpot that they were undervaluing them by NOT providing an affordable option for them to use their software.

Priced well below enterprise software, nevertheless it was still unattainable to a struggling startup with the technical expertise and talent get more out of marketing and sales; and therefore, they were cobbling together a lot of different solutions that ended up being a pain to manage and scale with.

A few of HubSpot’s team members listened to their feedback, and with the blessing of our startup-loving co-founders, started a rogue experiment called HubSpot for Startups that helped startups get an edge with 90% off our premium software.

Before Kim Walsh stepped in to head up HubSpot for Startups, the experiment had been seriously flailing, with many process, positioning, and scaling issues.

Hear from Kim how she turned the program around and helped guide its vision to where it is today -- from experiment to serious force that helps startups grow, with over 800 global partners and over 2500 customers worldwide.
Show notes
  • [00:01:56] HowHubSpot got its start as a rogue experiment.
  • [00:06:22] What is meant by accelerators and incubators, and how they affect startups
  • [00:08:09] Why startups weren’t able to use Hubspot at its original price
  • [00:10:49] The meaning of onboarding
  • [00:12:10} The types of dataHubSpot used to pinpoint the problem with the original price
  • [00:13:10] The types of questions HubSpot asked in feedback surveys
  • [00:15:37] How to tailor content and questions to different types of customers
  • [00:16:57] What HubSpot did with the feedback that they received from their startup customers
  • [00:19:46] How HubSpot helps its partners
  • [00:20:30] HubSpot’s go-to market strategy
  • [00:22:59] Why HubSpot for Startups changed its name from Jumpstart
  • [00:26:03] How Google Trends can help business owners understand their market
  • [00:27:39] Resources that Kim recommends
  • [00:28:39] Statistics on how much it costs to fund a startup
  • [00:29:30] How to convince people to listen to others and get feedback
Transcript

[00:00:34] Louis: Hey, it’s Louis here and in the fourth episode of The Humans Strike Back. I’m talking to Kim Walsh, the global director for HubSpot Startups which is a program tailored for small businesses that want to grow using HubSpot, which has now more than 2000 members. In this episode, Kim shares the story of HubSpot Startups and how it turned from a rug experiment to a global success. This episode highlights the importance of listening to your customers, collecting feedback, and being empathetic if you want to succeed.

What are you going to learn? You’re going to learn why most startups couldn’t use HubSpot, how they found out about it, the tools they used to collect feedback, the questions they asked, what a go-to market strategy is and why it matters, how HubSpot scaled this program without forgetting the humans behind it, what was the original name of HubSpot Startups and why Kim decided to change it, and finally the resources she recommends for you to succeed. I hope you enjoy this episode as much as I did.

Kim, why don't we run through the story of this, as you call it, this "rogue experiment"?

[00:01:54] Kim: Sure. At HubSpot, through and through to who we've been since 2006, a lot of things get started with experiments. Experimentation and innovation is something that our co-founders placed a lot of emphasis on over time. One of our largest channels was started out of an experiment. HubSpot for Startups, specifically, was formerly called Jumpstart. It was started out of an experiment by two sales guys, James Stone and Jon Sullivan. What was interesting is they were like, "Hmm, if we partner with accelerators and incubators, they will share our message on our behalf and we’ll get our message out to the startup ecosystem quicker than if we could by rallying marketing around it, or rallying everyone around it in the entire company."

These two guys went out and started getting some really interesting early traction. We were bringing on about 30 or 40 customers a month. What they found was that the reason why this experiment was working, we created a special onboarding for them, but it was working when we gave them a price reduction, almost like a scholarship, to get started with HubSpot. We gave them a 90% scholarship in year one and a 50% scholarship in year two.

Obviously, startups, they don't have a ton of cash, and you're trying to do a lot, and you're wearing a ton of hats, and you're trying to get a lot done. What's preventing you from getting started with a lot of software is that it's just too expensive. We listened to the startups and we knew that we wanted startups in our ecosystem and we knew that our product was really gonna be a valuable fit for them out of the experiment. We tested with 90% and 50% off over year one and year two, and to grow with them. That was the early innings.

I had done something completely different at HubSpot, I had helped build our enterprise segment. Really human capital extensive, a little bit more traditional sales, hired and scaled a bunch of salespeople, and had business development reps supporting those salespeople over time. Got that to a pretty cool spot and I went to our co-founders and said, "I wanna do something really cool." And then these two guys in sales were like, "We'd love to have someone with your experience take over our experiment and make it something bigger."  

I basically just treated the experiment and the traction that we had gained like any other startup. We went out there and we assessed the total addressable market. We said, "Okay, what does our go-to-market strategy need to look like?" I met with our brand and buzz team and our PR team. We realized that the Jumpstart name wasn't ranking organically. People didn't really know what Jumpstart meant as it relates to startups and HubSpot. I changed the name, HubSpot for Startups, and we did a press release, we told the world about it. That was really cool from the awareness side, and then what we did is I spent basically with the team an entire first calendar year getting it operationally set up inside of HubSpot.

All worked really well, but that's really how we went from trial and experiment to growing and scaling it. I would say the biggest thing that we did early in the early innings was just, created a great PR strategy. We changed the name so that it was simple, people could Google "Does HubSpot support startups," and they would find us. And then we just continued with that startup-friendly price. It's grown. We have we'll call it over 3,000 startups in our ecosystem. We'll get close to 4,000 pretty soon. We have over 900 accelerators, incubators, and VCs in our ecosystem. In 18 months, 20 months, it's gone really well.

[00:05:49] Louis: It certainly does. It sounds like it, anyway. You used a lot of interesting words that I think we need to define.  

[00:05:56] Kim: Okay. Sorry.

[00:05:57] Louis: No, it's perfectly fine. Thanks for running through the story briefly so that people can understand what you went through. What we're gonna do is go back to the beginning of the story and try to understand the practical things that you've actually done behind the scenes to make that happen so that you, listening to this episode or looking and watching this episode, you can take away things, and actually implement them in your business right now. First of all, let's just quickly define accelerator and incubators.

[00:06:25] Kim: Sure, they're a little different. Accelerators, Techstars is a great example of an accelerator, but there's thousands of accelerators out there. Accelerators typically have anywhere between a two-week to a four-month covert and class where the goal of the accelerator is to have startups apply and then enter into their accelerator.

The mission and the goal is that the entrepreneur, the founder of the startup leaves really having the toolkit, and the mind frame, and the help, and the resources, and the mentorship to really go on and be a successful founder and build a successful company. An accelerator typically does take between 6% to 8% equity. There are accelerators out there that don't take equity, so you could look for that if you didn't want to give up 6% to 8% of your equity.  

Incubators aren't necessarily as structured, specifically in North America, as an accelerator. An incubator can be something a little bit more like an incubation space as well as a co-working space. The definitions are really interesting, I might not be doing the best job explaining the difference between an accelerator and an incubator, but it's growing over time.  

This ecosystem between accelerators and incubators from 2006 to now has just flourished over time. What's really fun to be part of partnering with accelerators and incubators is all of our missions are aligned because it's all about helping the startups win. When the startups win, everyone wins. That's what I would say about an accelerator and an incubator.

[00:08:08] Louis: Great, thanks for defining that. The two salespeople you mentioned found out that the startups, in particular, couldn't really use HubSpot at its old price.

[00:08:19] Kim: Yep.

[00:08:21] Louis: Do you know how they actually found that out? And what type of feedback were you getting around this particular issue?  

[00:08:27] Kim: Yeah. We ran a bunch of data. In true HubSpot fashion, everything's ran on listening to our customers and a bunch of data. At that point we had two price points for our marketing, professional, and enterprise product. Since then, we've launched a free CRM, we have sales products, we have marketing products, we have a whole suite of tools for startups. But at that time, it was just our marketing, professional or enterprise edition.  

We didn't wanna give it away for free because we wanted the startups and the founders to think about, "Are we really ready to do marketing? And do we wanna put a little skin in the game?" Because with using HubSpot, we use the analogy of a gym membership. It's, "You can't just buy a gym membership and not go to the gym and expect to get fit." The same things happens with HubSpot. It's a really robust tool and you gotta be willing to put the work in.

The skin in the game aspect, really, was a key part of our decision. And then the getting back to the pricing. Marketing, our professional product, and our enterprise product at list price are $800 and $2,400. We didn't wanna do free, but we wanted to keep it at a startup-friendly price, and we wanted to make sure that there was value given to the startup based on the price. And also HubSpot, we're obviously taking quite of a hit in the first 24 months, but it is important as our mission to support startups.  

We tested with the 90% and the 50% in year two. That seemed to work really well, it's worked over time. If a startup isn't growing as fast, we wanna work with them in year two. But that being said, we were out there and we were testing it, and the 90% scholarship seemed to work pretty well. At that point, when I came in, our startup onboarding cost was about 60% of our software cost. That was something we heard, and I heard basically founders speaking up quite a bit to me. That was really fun to get in to speak with all of our founders that were in our community and listen. When you think about a SaaS product, the [...] software and the price of the onboarding, typically, you wanna be around 20% to 25% on the services of the onboarding component.

[00:10:49] Louis: Let me cut you right there because I wanted you to define this. Onboarding means?

[00:10:52] Kim: Onboarding means when you purchase the software, there's a human being or their support that actually is there to setup a call with you, kick it off and really get you set up for success. That's really important, that's a value-add to what HubSpot offers, so we wanted to continue to give that. Our startup onboarding cost when I first took over this, it was about $600. The ratio to the cost of the software to the cost of the service was just a little bit of out of touch.  

What's great about the startup community is founders are out there building SaaS products. So when you're out of touch, you'll hear it. So, then we adjusted it. Right now, it's a one-time fee for startup onboarding, which you do get a human. We set you up, talk about strategy, what does success look like, get you all technically ready to go. That's $300 now. We did make some adjustments early on that seem to be playing out pretty well.

[00:11:50] Louis: Okay. You mentioned, in true HubSpot fashion, you talk to customers and you also got a bunch of data. Can I challenge you to dig deeper into the type of feedback, the type of data you were actually getting in the start?

[00:12:00] Kim: On what part of the data?

[00:12:10] Louis: The part where you discover that there might be an issue with startups and the pricing.  

[00:12:15] Kim: For us, we have a pretty good feedback loop. With our data, every single startup customer that we have, we tag as a startup customer. We also created a Slack community for CEOs and founders of our startup. In terms of collecting the data, we would send the message out into the Slack community. We also send surveys, we poll our startup customers. You can do it just simply in a Google form.

But we sent this out to our specific startup customers and asked them for feedback. It was pretty glaring. What came back just in the Google form was you can see visually there a pie chart. It was about 80% of our founder audience who said that the startup pricing was just too high.

[00:13:07] Louis: What type of…Sorry to cut you once again. I think it’s critical questions here. What type of questions were you asking during those surveys? What was the typical question?  

[00:13:16] Kim: "Do you see value in our startup onboarding package at the current price?" 80% no.  

[00:13:23] Louis: That was already quite a leading question in a sense. It wasn't like open-ended saying, "Hey, how can we improve this?" Or, "Is there any reason why you wouldn't buy from us?" It sounds like you already had a clear idea that there was something wrong.

[00:13:42] Kim: Yes. We had a clear idea that there was something wrong. If I didn't have a clear idea that something was wrong, I probably would have said, "I saw you came to the HubSpot for Startups website," or, "We saw you filled out our application, but you didn't complete the application and you didn't become a customer. What's the reason why you didn't become a customer?"  

And we asked them that question, and it came back as our startup onboarding was preventing them. They didn't see value in what we were offering at that price.

[00:14:18] Louis: At that price. So, this is the critical thing. Because value and price are interlinked quite a lot. What did you feel was the reason behind it? Was it because it was too high for the value you were offering, that it was too low? What was it?

[00:14:34] Kim: In terms on taking a step back on the data that we did before we sent out the survey is we researched a bunch of other SaaS software companies and researched what their software cost was to their onboarding costs, and that's where we got that ratio of about 20% to 25%, and we knew our ratio was off, our ratio was at 60%. That data specifically helped us diagnose, and then what we wanted to do was speak to our customers, or our potential customers, or the people who did not become customers and ask them why. So that was kind of step one.

Then step two was a little broader question. And then step three, yeah, you could arguably say it was kind of that leading the customers to answer what we really wanted them to. But what I love about collecting customer feedback to a specific startup or founder audience is that they like when we're direct, and they're direct back with us. It helps.  

[00:15:30] Louis: Do you feel, from experience, that this isn't the case from other type of customers that you have, that they tend to be less direct?

[00:15:38] Kim: Yes. Just in my former life, five years ago when I was helping build the enterprise team inside of HubSpot, it depends who you're speaking to in an organization. HubSpot, we have a bunch of different personas, call it "Startup Sally" or "Startup Sam." We had "Owner Olly," we have "Corporate Cathy.”

As you go higher in the organization, what we found with our personas, specifically, is that you have to tailor content to speak to them in a bunch of different ways. Specifically, to our startup persona, we try and be direct as possible, and brevity is something we really try and lead with. Because they don't have a lot of time.  

[00:16:27] Louis: Yeah. They don't have a lot of time, they're under massive pressure to reach their objectives that they have, and therefore, they tend to be more direct. That's an interesting insight, actually. You went through those steps to really understand what was going on, and then you used a lot of words that I understand, but I know that a lot of listeners or viewers might not. You talked about go-to market strategy and other terms like this. You had the issues quite nailed down. What did you decide to do? You talked to the founders, you were saying?

[00:17:00] Kim: I'll share with you what we did. When I say total addressable market and go-to market strategy, that's really step one and step two that we did inside of HubSpot, and I think they're critical to founders and startups, as well, when you're starting something, whether it's inside of a company, or outside of a company is our total addressable market.

We defined who our customers were. We knew we had two sets of customers. We wanted to build partnerships with accelerators, incubators, and venture capital firms. That's one customer, that's our partners. And then we knew that our startups were gonna be our customers. Our total addressable market, we said, "Okay. How many potential partners are there out there, globally? How many accelerators, incubators, VCs?"

And just for the sake of keeping it simple, let's say we said there's 10,000 out there. And on average, on a yearly basis, how many startups come through those partners? Then we'll say, "80,000 a year." Okay, that's interesting, based on cohort size and based on how many people are graduating. And then we took a third metric to that which is, "What is their success rate?"  

A bunch of our accelerators and incubators and VCs that we work with, what's really cool about their model is they typically have between right around an 80% success rate. For example, MassChallenge, they publicly say that they have an 80% success rate. Out of the 80,000 startups that are coming from these accelerators every year, 80% of them are gonna go on to be successful.  

That's a market we wanna help. We wanna help people who are likely gonna be successful. That's just the nature of being a software company. We wanna help them grow quicker and grow better. That's what we did in terms of the total addressable market. I'll stop there. If you want me to explain how our go-to market strategy, executing on that market, happy to do that.

[00:18:59] Louis: I'm glad you're stopping there because you knew I would go into the details now. All right. It seems to me from the way that you're explaining the total addressable market, which is, in layman's term, the amount of people that you hope to reach out to.  

[00:19:12] Kim: Yeah.

[00:19:15] Louis: In a sense. They are human beings at the end of the day. It's not only just a number or just companies, there are actually people behind all of those. It sounds obvious now, but you made this decision to actually choose as a way to go to this market, to reach out to startups, to go through accelerators, incubators, and venture capitalist firms. It sound like you've done that maybe because you knew that those startups going through there would have a higher chance of success than the average.

[00:19:47] Kim: I would just say we didn't know that at the time. The strategy was if we can create great partnerships and help startups—we help our partners in one of two ways. One is obviously the price sensitivity of the scholarship for HubSpot, and then two is education. We go into our partners, and we teach startups how to grow with sales and marketing. We knew that if we wanted to have this strategy with partners, we could help them, and we could help the startups with education. That's why, in hindsight, it actually tends to work out really well because the likelihood of success means that they are turning out to be really great customers.

[00:20:28] Louis: Okay. Right. Now, let's go through the step two, which is the go-to market strategy.

[00:20:33] Kim: Sure. The go-to-market strategy, we had two options at the time. One was when a startup fills out an application to HubSpot, do we wanna create a specific team to help them get started or call it a sales team? Do we wanna create our own startup sales team? Or if an application comes in, do we wanna send them to our existing sales team? We have call it 350 sales reps all around the world. This was a really interesting decision.  

We didn't know at the time which one was gonna be right or which one was gonna be wrong, but we cared about building a business inside of HubSpot that had really great metrics, that looked really good in terms of how quickly can this scale leveraging all the humans and employees around HubSpot that are geographically dispersed. Because when we launched HubSpot for Startups, we want to be global right out of the gates. We just didn't want to do it in the U.S., we wanted to take a global lens right from the beginning.  

With our go-to market execution strategy, we chose the latter. We chose not to hire a specific startup sales team. Arguably, we could go faster if we did or do, but we don't. We have our inbound growth specialists—within a traditional sense, they’re salespeople—but they're inbound growth specialists. When a startup application comes in from hearing about it through one of the partners, now they speak with one of our IG—inbound growth—specialists around the world.

This is really cool because if you think about it, you're sitting in Paris, what if you wanna speak to someone who speaks your language? What if you wanna speak French to someone If we chose to build a startup-specific sales team and then build that out over time, we wouldn't have been able to go fast enough with our engine that we wanted to build. I think the decision, in hindsight, or in retrospect, worked out pretty well, and it's allowed us to scale globally and hit startups all over the world and help them, which is cool.

[00:22:56] Louis: Right. And then you said something interesting. At the time, the program was still called Jumpstart. Is that right?

[00:23:04] Kim: Yes.

[00:23:06] Louis: How did you find out that this wasn't necessarily the right term?  

[00:23:11] Kim: Sure. I did something pretty simple. I googled the term "jumpstart" and HubSpot, our program for startups, was nowhere to be found. We had created a bunch of startup content. Our co-founder Dharmesh—one of the ways got started was Dharmesh, actually, in business school created on startups.com his blog. I knew we had this audience, this startup audience.

When I googled, and we did almost like an SEO audit of Jumpstart, we weren't found. We weren't found on the first page of Google. Just taking one of the key aspects of inbound marketing, we changed the name, we changed the title. The team knew that if we changed Jumpstart to HubSpot for Startups and we leveraged hubspot.com/x, that we could get a bunch of SEO juice and a bunch of credit that way.

Now, our website and our domain is www.hubspot.com/startups and HubSpot for Startups and HubSpot for Startups is much easily recognized in terms of a keyword and a content cluster perspective. That's really why.

[00:24:35] Louis: Right. These are all very specific terms, but I love the insight behind all of that, which is really about people had a much better chance of remembering what you were doing and this program if you just called it by a way that they would remember in simple terms. People might naturally say, "What is this HubSpot for Startups program you have?" That would be a natural phrase, sentence that people react to. You say, "Well, Jumpstart is something that you need to know in order to describe."   

You managed to use a term that people were naturally using and leveraged that to change the name of the program. Obviously, in Google, the more people search for something, the more Google knows about it, the more it's gonna display pages that people like, and into this search, and the more your page is gonna rank higher. Google, the only thing that they want to do is help people search and find the answers fast. That was kind of a nice, in retrospect, sounds like a very nice move to make this program even more successful.

[00:25:38] Kim: Yeah, I think so. Everyone says you kinda get lucky about that. But I would say we'll chalk that up. But it's easy to say it made sense, at the time it didn't always. We didn't see that clearly back then, but now it's worked out pretty well.

[00:25:55] Louis: Before we wrap up this story, is there anything that you feel I've forgotten that could be very valuable for people?

[00:26:03] Kim: I don't think so. The only thing I'll say to build off of your comment on leveraging the power of what humans are searching for via Google, Google has a really great tool, it's called Google Trends. If anyone out there hasn't used it, it's a great tool to help understand how big your market is. So maybe just give the Google Trends tool a try.

[00:26:25] Louis: That's a very, very good point and I wanted to ask you about resources. Before that. Once again, Kim, you're the global director for HubSpot Startups, which started as a frustration on the startups side where people didn't feel like the pricing was right for them, or at least the value was right for them. It started as a rogue experiment, and now it's a very successful tool and program.

The key points that we talked about was the importance of customer feedback, listening to people, having a feedback loop, sending surveys, creating communities where you can collect feedback in an easier fashion. You also talk about starting a kind of the culture of rogue experiment in a startup company. Even for a company like HubSpot that has thousands of employees and a lot of customers, you can start experiments, you can try things and get buy-in from people after that.

Then you talked about the key to go-to market strategy, and the total addressable market, and how to use that in order to launch something and reach out to the right people. Apart from Google Trends, which is a fantastic tool that we do use in Hotjar as well as to understand whether people are searching for certain terms, and whether this trend is growing, do you have any other resource that you think people can benefit from?

[00:27:43] Kim: Yeah. I think it's a great question and yes, there's a ton of resources out there. The only thing I'll say is starting a company, arguably, there's never been a better time. Arguably, someone can say that it's never been easier to start a startup. There are a ton of startup programs out there that are designed solely to help startups grow. Stripe Atlas, Amazon Activate, Google for Entrepreneurs, SendGrid, HubSpot for Startups. There's now Octa for Startups, Shopify, I'm probably missing a few. Facebook, they have a startup program, I think.  

It's just growing, and you're gonna see it more and more. I would just say if you're out there and you're a startup, be resourceful because you can, arguably, grow and scale and get off the ground. I'll share a statistic that I presented and our co-founders presented, which was in 2006, to start HubSpot cost our co-founders about $200,000. Fast forward to today, if they were to start HubSpot today, it would cost about $1,200. It's a good time.

[00:29:04] Louis: That's a very good number, a very good stat. It shows also that even if you don't work at a startup and work in a bigger company, perhaps you can treat your projects and certain things as a startup inside the company and in order to leverage those benefits, that way can start new things very cheaply now, very fast, and see how people react.

The last question is really back to the core of the show, and the movement is about the human-centricity and caring about people. How would you convince people to actually listen to others, and to get feedback, and to act on this feedback, especially for people who are a little bit scared of doing so because they might find that it might get them away from actually making money or reaching their objectives?

[00:29:46] Kim: I believe in the movement. I believe on being better humans, and listening. Two words that stick out for us in business is empathy and compassion. Empathy is listening, compassion is supporting as well. I just think it's really important in today's world. I don't think people wanna be sold to. I don't think people wanna be spammed and marketed to, essentially. It's gotta be in a way that works for them.

I would just say that when you think about in a way that works for them, you've gotta match the way people wanna buy with how you actually tailor the conversation to them. And they're all humans. Yeah, maybe in a B2B model, you're selling to businesses, but you're selling to a human being inside that business, or you're supporting your product or service to a human being with inside of that organization.

I think listening, and empathy, and compassion, and the impact that you can help make on others, I think will just make everyone a little bit more happy, hopefully.

[00:30:54] Louis: Great.

[00:30:54] Kim: Easier said than done, but...

[00:30:56] Louis: Yeah. But this is why we talk to people like you who have stories to show the benefit of doing that. To add to what you just said, people hate to be sold to, but they love to buy. This is what you kind of need to do as a marketer, but not necessarily as a marketer, as a designer, as a developer, as a startup founder.  

Right, Kim, you've been an absolute pleasure to talk to. You can find all of the information, all the resources we mentioned, links to the resources, more details about the show and this specific episode if you are going to hotjar.com/humans. Once again, Kim, thank you very much.

[00:31:31] Kim: Thanks, Louis.

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