Hey everyone, I find it extremely valuable to study successful companies (and some failed companies) to reverse engineer their success. I want to know how long it took a company to get from idea to the first customer, to scale from 100k to 1MM, etc. It's nice to have a solid benchmark to compare progress against. You can get a good idea of if you're growing fast enough, if you need to pivot or persist or if you're running into the same problems a past failed startup hit.
I figured it might be fun and valuable for you all to convert my notes into a readable piece of content!
Here is my analysis of Hubspot. What's cool about Hubspot is that it was a smooth road from zero to a billion dollar company. Several factors make it so smooth. Creating a unicorn isn't always hard; you just need to be brilliant with 15 years of experience and be in the right place at the right time 
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Initial Ideation
August 2004 - Dharmesh Shah (34) and Brian Halligan (37) meet at MIT doing their MBA.
At this point, Brian is an experienced VP of sales. Had grown a global business from 0-100 million and ran sales for Groove networks which Microsoft acquired.
Dharmesh had spent 11.5 years as the founder and CEO of Pyramid Digital Solutions, an enterprise software startup in the financial services sector. Pyramid was acquired by SunGard Business Systems, an $11 billion technology company, in August, 2005.
Dharmesh and Brian were interested in helping SMBs with technology and began discussing the idea.
2005
At the time, Brian was working as an entrepreneur in residence for Longworth Ventures and was helping their portfolio startups with sales and marketing.
Dharmesh was blogging his way through the MBA (https://www.onstartups.com/)
Unique Insights - Brian saw all these VC backed companies had the same playbook: cold calling, PR and tradeshows - Dharmesh's startup blog was getting way more traffic then all the venture backed startups - There was a change in human behavior, humans were learning to filter out ads, spam blockers, do not call lists etc. Instead, people were searching for what they wanted. - When trying to implement inbound strategies it was a mess of open source CMS tools, complicated CRMs, email marketing tools, and then SEO consultants
In summary, they saw inbound as the future and wanted to build a platform for SMBs to take advantage of it.
2006
By 2006 they had formalized their business plan, were semi-finalists in MIT's business plan competition and decided they'd pursue it full time after graduation. At this point, they had basically invented inbound marketing (or at least the term). They began telling everyone about it and started a blog to share their ideas.
In June of 2006, Hubspot was officially founded with a $500,000 seed round funded by Dharmesh.
Traction timeline
2006 - 3 customers / 3 employees It took them around nine months after building the business plan and their insights to get a solution together. It wasn't a great solution, but they were providing value. The gaps in their software were filled with Brian and Dharmesh consulting with their customers.
2007 - $255k in revenue / 48 customers / 15 employees
The platform was maturing, and they saw a lot of demand for their services. Early case studies proved there was clear ROI for businesses investing with them. In September of 2007, they raised a five million dollar venture capital round. Brian and Dharmesh were well connected and this round came from a Boston based VC firm, a number of local businessman and MIT academics.
Hubspot's pitch at this point: "HubSpot offers the first integrated Internet marketing platform to help businesses get found by more prospects and convert higher percentages of them to paying customers." Pretty compelling in my opinion.
2008 - $2.2M in revenue / 317 customers / 42 employees
They are still doing some consulting, but their platform is growing more and more mature. They are scaling fast and have more demand than they can handle. At this point the business is made and they go on to keep rapidly scaling. Just 8.5 months after their series A, they take a B round, raising 12mm. Here's a TechCrunch article outlining it as well.
2009 - $6.6M in Revenue / 1,150 customers / 96 Employees
October 19th 2009 - Series C for 16 million
2010 - $15.6M in Revenue / 3,855 customers / 176 Employees
2011 - $28.8M in Revenue / 5,961 customers / 304 Employees
March 8th 2011 - Series D for 32 million. This round is interesting to me because it's when all the big players jump in (Sequoia, Google Ventures And Salesforce). Before this it seems they were at an early stage (even when generating millions in revenue). At this point, they have over 25 million in annual recurring revenue.
November 5 2012 - Series E for 35 million
Not much more to say here. This is their last round, they are a juggernaut at this point on the way to IPO
October 8 2014 - IPO
A little over ten years after Brian and Dharmesh met, Hubspot raised 125 million with their public offering.
Near Deaths
"We've never had to walk through the valley of death. Ours has been a rather smooth ride. Sure, we have weeks where we're putting in 60 hours – but there have been no near-death experiences. It doesn't have to be awful like that! If you have a great idea, a great co-founder, great people, and a good market that's changing, you have a shot. It's really hard if you're in a crappy, crowded market — and even harder if your product is not remarkable. It's very tempting to follow the herd, but in the age of the Internet, you need to be remarkable in every way, shape, and form. And the nice thing is that if you are remarkable, the Internet will put wind through your sales. But you have to radically differentiate yourself. Watch your competition, but never follow it." - Brian Halligan on ScaleFinance
Thanks for reading! This is a great example of a startup going perfectly. They were an experienced team that found an amazing solution in a hot market.
I had a lot of fun putting this together and will do another one soon. I'm going to be taking a look at a company that didn't have such a clean ascension into millions in ARR.
Also, if you have any suggestions of companies I should reverse engineer or any missing information you'd like to see, please let me know!
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