The Ledger
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Halligan: Founders mistakenly chase high price points over the full demand curve
“One mistake I think entrepreneurs make and investors make is they don't try to maximize the supply and demand curve. They just keep trying to drive those price points up.”
Halligan predicts the next giant companies will emerge in SMB, not enterprise
“All the competitions up in the enterprise, SMB is where I think the next big, giant companies are going to go.”
Halligan: Blending low-price sales funnels improved HubSpot's LTV-to-CAC ratio
“What happened is we blend them together and our total cost to acquire is down or total lifetime values down, but the ratio is up and that's what we want. We want the return on CAC to be higher. And we're just pouring new customers in at this lower price point,…”
Halligan: Winning in SMB SaaS requires low CAC and 100% net retention
“Now the key is you can now build an SMB business, but you have to do two things. One, you need to keep your costs to acquire a customer under control. You can't acquire customers through Google AdWords and TV ads and stuff like that because the math just blows…”
Halligan: Company experimentation gets harder with scale despite higher value
“And the truth is when we were very small, you know, 10 employees, 20 employees, it was easy to experiment. It gets harder. Which is counterintuitive as you get bigger because you have more people and you have more things is more value to experimentation. But m…”
Halligan: 40% of HubSpot's revenue comes through agency partners
“Roughly 60% of our revenue comes from people buying directly from us and we train them and they go off and they use HubSpot for marketing and selling. Roughly 40% buy HubSpot through an agency partner, marketing agency, sales coach, or whatever.”
Halligan: HubSpot's sales product reduced CAC to $1,000 with $5,000 LTV
“Our old cost to acquire a customer was, let's say, 13, 14,000, Total lifetime value was maybe 55, 60,000. On the sales product, the cost to acquire was more like, you know, a thousand bucks and then 5000 dollar total lifetime value.”
Halligan: Sequoia's Pat Grady introduced HubSpot to two-axis pricing
“Then we raised our round from Sequoia, and this guy named Pat Grady at Sequoia, Sequoia, who is an expert on pricing, and he was the one who schooled us on this kind of two-axis pricing. It's like, you need a second axis around something like contacts receipts…”
Halligan: HubSpot lifted net revenue retention from 75% to 100%
“When we did our round with Sequoia,
Our customer retention rate was something like 70%.
What's that?
Logo.
Around 70.
I don't remember exactly.
Our revenue retention rate, including upsell, was maybe 75.
Since then, our customer logo retention rate, you…”
Halligan: HubSpot uses Australia as an isolated sandbox for experiments
“Often we do this in Australia, actually, because they speak English, and it's sort of an isolated place to experiment, and we try to learn things from them, and if they work, then we apply them to the whole company, but really we want to experiment everywhere.”
Halligan: HubSpot charged a flat $250 monthly for five years
“When we first started HubSpot, it was like the model T. I don't care what color you want it as long as it's black. We had a product called HubSpot, not basic pro enterprise. It was 250 dollars a month. And that was it for the first five years of HubSpot.”