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March 08, 2011

Google, Salesforce.com and Sequoia invest $32M in HubSpot

I was recently interviewed by Lauren Carlson of Software Advice for a piece she was writing about whether Google will directly enter the CRM market.  It brought back memories of a prediction I made back in 2006 about Google buying Salesforce.com.  I just thought it made sense back then for Google to snap them up because CRM in the cloud (back then we called it SaaS, or on demand, or…well, you know) was hitting its stride – and Salesforce was still private and possibly could be had relatively cheaply.  Well that’s definitely not the case anymore.

I kept thinking Google would jump into CRM as their apps strategy kept going more into business applications, but they never did.  Instead, they’ve created the platform and marketplace that many vendors have integrated their CRM-related applications with.  In fact in a conversation I had last year with Google Apps Partner Lead Scott McMullan, he talked about how CRM was the most popular app category at the time.

Hubspot-logo So I think I agree with Lauren that Google is good with creating the platform that others can integrate their CRM applications with.  But, with today’s announcement that Google (through its Google Ventures arm), Salesforce.com and Sequoia Ventures are investing a total of $32 million in HubSpot, maybe they want to do more than just provide the platform.

For those not familiar with them, HubSpot – through their powerful marketing application platform and endless supply of great content – popularized the concept of inbound marketing.  I’ve known the founders – Brian Halligan and Dharmesh Shah – since they began the company back in June of 2006.  They understand what small and mid-size companies need with respect to building lead-generating web presences, and they continually add tools and services to their platform to deliver it to their customers. 

They know how to get leads with content – all kinds of content.  Their Website Grader tool has been used by millions at this point.  Their webinars are attended by thousands at time – I know this because I participated in one that had over 6300 registrants and 2700 actual attendees.

I’m in the process of doing my CRM-ISH of companies to watch in 2011, when it comes to the SMB market.  Last year Google, Salesforce.com and HubSpot were all on it.  They were all poised to be on the list again this year before this, but now I’d really be surprised if they all didn’t make it…translation – they’re all gonna make it…

I think this is potentially a huge development, particularly with regard to the SMB market.  Each of the three companies already play an important role to thousands (and in Google’s case millions) of small businesses.  And they each have areas they specialize in. I think these areas are very related and could prove to be extremely synergistic. 

Now I know Google Ventures is the venture capital arm, so it doesn’t automatically mean we should expect deep integrations between Google Apps and HubSpot – but you have to think there will be some serious explorations taking place around this.  You‘d also expect the same to be the case with Salesforce.com and HubSpot.  The possibility of deep level integration of HubSpot’s marketing platform with Salesforce.com to, for example, create a Chatter feed from website activity on HubSpot could be game-changing.  Also think of a potential HubSpot integration with a variety of Google applications to move from lead generation to realtime collaboration opportunities at the moment of interest – and then analyzing every move in order to optimize the process.  Even if Salesforce.com helps HubSpot to grab more of their customers it will be potentially huge for them.

 It will be fascinating to see what comes from today’s announcement, and what these three companies develop.  Maybe HubSpot will bring Google and Salesforce.com together in a way that I thought would’ve happened back in 2006.  Whatever the case, this is a development that you need to keep both eyes on.



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