Hubspot Case Analysis - 1257 Words

Halligan and Shah, the founders of HubSpot, are faced with the question of how to accelerate Hub Spot’s growth rate and increase profitability. HubSpot recently broke the 1,000 customer mark and management needs to decide whether to continue targeting both Marketer Mary’s (MMs) and Owner Ollie’s (OOs), or either the MMs or OOs exclusively. We have analyzed the revenue projections for the different market segments and arrived at our decision based on the potential customer growth in each segment, the churn rates, and the net present value (NPV) of the projected profitability over a period of four years. Our analysis (Exhibit 2) suggests that by focusing exclusively on the OOs, who have a faster sale cycle, lower acquisition costs, and†¦show more content†¦The average monthly churn rates remain constant for the four year period. 5. No competition will enter the market and impact the conversion rates and the leads. 6. Variable costs consist of distribution, operation acquisition costs incl. sales compensation, travel, promotion, communication, presentations and all other costs needed to sign the contract with the customer. 7. Acquisition costs will remain constant as of Dec. 2008; no other variable costs are assumed. 8. Fixed costs assumed at $1 million p.a. and include employee salaries, rent, RD/software development maintenance, equipment services (incl. depreciation), utilities, patents (incl. amortization), employee education training, and professional service fees (i.e. lawyers). 9. Currently the allocation of sales effort is 50% for each segment; the customer numbers (output) can be increased linearly by the reallocation of sales effort (input). 10. Investors main goal in providing funding is to maximize returns Exhibit 2: Revenue and Net profit ($ million) for 3 different types of segments over time Focus on segments OOs only MMs only Both MMs OOs * 2009e Revenue $10.15 $7.64 $8.90 Net Profit $6.92 $2.56 $4.74 2010e Revenue $16.68 $12.30 $14.49 Net Profit $12.54 $5.57 $9.06 2011e Revenue $21.63 $15.79 $18.71 Net Profit $16.24 $6.75 $11.49 2012e Revenue $21.86 $15.89 $18.87 Net Profit $16.46 $6.85 $11.66 4 year NPVShow MoreRelatedHubspot Case Analysis2368 Words   |  10 PagesHubSpot: Inbound Marketing and Web 2.0 Highlighted S.W.O.T. 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