Greetings, welcome to INBOUND 2021. Thanks for joining, and a special thanks to HubSpot customers and partners all over the world. I had hoped we could be together in person this time, which is ironic because I'm not really an in-person kind of guy. I follow the pajama principle. If an activity requires me to change out of my pajamas, I avoid it on principle. Even for an introvert like me, the pandemic has been challenging. We've spent a large amount of time with a small number of people. Relationships have been tested, behaviors have been shaped, and in my case, a copious amount of pizza was consumed. This led to what I'll call some personal growth, about 11 pounds worth. To offset this, I bought a standing desk. In theory it's a standing desk. In practice, I've never actually stood at it. I prefer sitting. As it turns out, in order to get the benefits of a standing desk, one has to actually stand. Who knew? If only sitness tracking were a thing. On the other hand, there's my son, Sohan. This is a photo of him when he's 2 years old, beta testing the latest iOS. Sohan is geeky and indoorsy, just like me. Sohan's 10 years old now, and he's been cooped up for months because of the pandemic, his indoorsiness was overcome by his desperation to get some time away from the parental units. Sohan decided to try boating camp. This is where he learned kayaking and sailing with a bunch of other equally desperate kids. Sohan enjoyed boating camp much more than my wife and I thought he was going to, or that he thought he was going to. One day, Sohan got back from camp and said the words that I found super scary. "We need to talk. Daddy, some of the older kids at camp have been using age-inappropriate words." Yes, Sohan uses phrases like age-inappropriate. I sat him down. I said, "Sohan, you're going to hear these words your entire life. Everyone makes their own choices. Just because they're using these words doesn't mean that you have to use those words." We had a good chat, #prettygoodparenting. Now, the scariest form of, "We need to talk," is when it's followed by, "About our relationship." We need to talk about our relationship. Have you ever gotten those words in a text or an email, or even worse, in person? Usually when someone says that to you in person, they want to talk, like right now, in real life. Talking about relationships can be uncomfortable. As my hero Ted Lasso would say, "It's like riding a horse. If you're comfortable while doing it, you're probably doing it wrong." Speaking of doing things wrong, we have some work to do on our customer relationships, and it's holding back our growth. In a recent study, it was found that 27% of people had a customer experience that was so frustrating that it ruined their day. One out of 10 had such a bad time that it made them cry or nearly cry. We're talking tears here. Last time I cried is when someone put black olives on my pizza. Who would do that? There's good news. This is something we can work on and we can improve, but we all have to get on board and we have to start with a conversation. I'm going to say on behalf of all customers everywhere, the four dreaded words, we need to talk. We need to talk about how this relationship is so one-sided. The only time you reach out to me is when you want something. It's always about you and never about me. It's understandable that customers feel this way. The CRM is usually just something the salespeople use, and making customers happy is the customer support team's problem. In many companies, customers sit at the periphery of the organization. Instead, they should be the center of focus for every team across the entire company. One of the things that gets in the way of customer centricity is something I call funnel vision. It's like tunnel vision, but it cleverly uses the word funnel, and it's even less fun. With funnel vision, customers become so myopically focused on converting prospects into leads and leads into customers, and then they stop there. There's a better model. It's called the flywheel. With the flywheel, instead of just doing a prospect to lead and lead to customer, it continues in a virtuous loop and you convert customers into delighted advocates, people that are so happy with their experience that they will tell their friends and colleagues. This leads to, well, more leads. Some of you are probably thinking, wait a second. Didn't Brian introduce the idea of the flywheel at INBOUND 2018? Yes, he did. Why am I bringing it up now? The reason is, at HubSpot we have embraced the flywheel in a big way. The largest team at HubSpot is the flywheel team, and it consists of marketing, sales, and customer service. We hired our first chief customer officer to lead that team, and this has worked wonders for us in terms of aligning everyone around solving for the customer. If you want productive customer relationships, stop forcing your customers into a funnel and think flywheel. To get that flywheel really spinning well, you have to delight customers. It turns out a generic, impersonal experience just doesn't delight. Here's what non-delighted customers have to say: "We need to talk. We need to talk about how you don't even know me. I know you have other customers, but I want to feel special. I want to feel understood. I want to feel connected." Why do customers feel disconnected from us? The culprit is this insidious, sinister thing I call the Underpants Gnomes Effect. I can't take credit for this Harvard-worthy brilliant business concept. It's adapted from a "South Park" episode, a source of so much business wisdom. The Underpants Gnomes are these little gnomes that go to great lengths to steal people's underpants. Not just new underpants, all underpants. No underpants left behind. Here's their grand master plan. Phase I, collect underpants. Phase II, question mark. Phase III, profit. They accumulate this giant pile of underpants, and they have no idea what to do with them. Companies have a similar problem, instead of collecting underpants, they collect customer data. Of course, the goal shouldn't be to just collect customer data. The goal should be to use that data to deliver a more customized, more connected customer experience. Why do companies fall prey to the Underpants Gnomes Effect? To understand this phenomenon better, we need to take a look at the evolution of CRM. Way back in 1993, a software company called Siebel launched the first legit CRM, or customer relationship management system. They took every customer and made it a record in the database. Now the entire company had this shared system of record. Super useful. The problem was that you had to buy your own hardware and then install the Siebel software on it, like a caveman. Seven years later, Salesforce came along, and they had a brilliant insight. There was this thing called the internet, and all the computers were connected to it, and you could use the internet to deliver software better. Hence came the first cloud CRM. Subsequently, all CRMs, or most CRMs, are on the cloud now. Seven years after that, HubSpot came along, and we had a novel insight ourselves. There's this thing called the internet, and not only are computers connected to it, but people are connected to it, too, including customers. We could use the internet not just to deliver software better, but to deliver a more connected customer experience. Now, what do I mean by a more connected customer experience? Well, number one, the CRM should connect teams within your company. Marketing, sales, and service should all be on one unified system. Two, it's not enough just to connect teams within your company. You should connect your company to its customers. Customers want to have a window into their relationship with you. They want to be able to log in and view their data and interact with it. They want to be able to self-service when appropriate. Customers don't want to just have an emotional connection with you. They want to actually have a real digital connection. Third, it's not enough just to connect teams within your company and your company to its customers. You also need to connect customers to each other. This builds trust because customers gain confidence when they can talk to other customers. More importantly, by connecting customers to each other, they can get the most out of your product or service because they can learn from other customers. HubSpot's investing in this in a big way with something we call the HubSpot Network. The HubSpot Network connects the millions of people in the HubSpot ecosystem so they can discover each other, learn together, and help each other grow better. Some of you are thinking, "Okay, that all sounds awesome, but we just are not able to do this at my company." Now, the issue may be the systems. We need to talk. We need to talk about the effing systems. No, I'm not using a word from Sohan's expanded boating camp vocabulary. I'm talking about the Frankensystem. The Frankensystem is a CRM monstrosity cobbled together with software parts, applications built by different people in different companies with different design goals. It's the result of decades of mergers and acquisitions. Frankly, it's a disjointed, bolted-together mess. Too many databases and too many core applications that all do things their own way. There's no consistency, there's no cohesion, and ultimately, there's no control. No control. It's fine, companies tell themselves late at night, and it is fine. If you're a Fortune 1,000 company with tens of thousands of employees and you have an army of CRM consultants with pitchforks and process diagrams, it's fine. For the rest of us, it's not fine, because a Frankensystem causes us to spend all of our time trying to tame the monster instead of taking care of our customers. If you have a Frankensystem, let me say, it's not your fault. I'm giving you a virtual hug right now. It's not your fault. Nobody intentionally unleashes a Frankensystem in their company. It just sort of sneaks in and it grows, and then it makes it much harder for your company to grow. The result of a Frankensystem is a frustrating, disjointed experience and very annoyed customers. Customers like me. Recently, I leased a Volvo, sight unseen, over the web. You know I'm a parent not because I got a Volvo, but because I was excited to get a Volvo. Honestly, the purchasing experience was awesome. I didn't have to talk to a single carbon-based life form. It came time to make my first monthly payment. Instinctually, I pulled up the Volvo app. No dice. The app can beam signals into space and unlock my car from three continents away, but it won't let me send Volvo money. I go back to the website where I leased the Volvo. Strike out there, too. Evidently, it's a marketing and sales website, not a send Volvo money website. Pro tip, commerce and payments are a big part of the connected customer experience, and commerce is all about convenience. I Google it up. Evidently, there's another website for payments called volvofinancialservices.com. Yep, that's the actual super catchy website name. I try to register. It asks me for an account number. I have no idea what that is or where to find it. Volvo's online knowledge base was not helpful, primarily because of its complete absence. Out of desperation, I contact Volvo. To their credit, they respond promptly. "The account number is in the letter that we mailed you." The letter that you mailed me? I responded, "I have no such letter. Is there another way?" What I should have said was, "The 1900s called on their rotary phone, and they want their fountain pen and parchment paper back." Volvo responded, "No problem. You can call our customer service department with your Vehicle Identification Number. They can use the VIN to then look up your account number, and you can use your account number to then register for the website, and then you can use the website to then submit a payment. I'm going to spare you the details of what happened after that because it might make me cry, or nearly cry. This is a ridiculous but true example of what happens when you have a franken-system in place. Your teams are disconnected, and your customers are disconnected from the company. The dream is to have a single, unified, cohesive, uncomplicated CRM. A CRM that was built for creating a customer-centric, connected, and customized experience. A CRM that was built by people that care, with consistent design goals, one of the primary goals being easy to use by actual humans. That's the dream. Speaking of dreams, we need to talk. We need to talk about the future. It's fun to dream and to imagine where the world could go. Let's geek out a bit on the evolution of the web and how we got here. Way back in the 1990s, when Volvo first started mailing letters with account numbers, we got the first generation of the web, and the potential was mind-blowing. It made me giddy with excitement and gave me goosebumps. That early web was read-only. In order to put content on the web, you had to know HTML and FTP and other acronyms, or you had to have a distant cousin that worked at Best Buy and knew Dreamweaver. With this early web, businesses could take their marketing brochures and turn them into websites. Sure, some of these early websites had ugly colors and blinking text, but they were an important first step towards creating a connection with the customer in a way that brochures never could. Fast-forward 15 years. It's 2005. Brian and I are classmates in graduate school. This was the time that Web 2.0 came on the scene. Web 2 was the new thing. It was read-write. You didn't have to be a technical wizard in order to get content on the web. Even mere muggles could do it. This made me giddy with excitement. Goosebumps again. Brian was excited, too, and that's what led us to start HubSpot. Now, some have speculated that we started HubSpot just so we'd have a place to play ping pong. It wasn't that. Well, it wasn't just that. With Web 2 came this massive shift in buyer behavior, and change equals opportunity. What we saw was that businesses could now create a blog. They could engage in social media, and they could otherwise add value to customers before they tried to extract it. We called this process inbound marketing, and it was a game-changer. Over the past 15 years, I haven't really felt that same level of giddy excitement. No goosebumps like I had with Web 1 and Web 2, until now. I'm feeling this massive shift that feels even bigger than the shift from Web 1 to Web 2. Before we jump in, a quick cautionary note. This segment is rated FP, Future Predicting. I'm going to give you a peek into what I think the future might look like. It's not a peek into the HubSpot product roadmap. You'll see some of the amazing progress the HubSpot product team has made on our CRM platform in just a few minutes. What has me giddy with excitement? What's giving me goosebumps now, 15 years later? It's what some are calling, wait for it, Web3. Shocking, I know. We techies are super awesome at creatively naming things. Here's what has me excited about Web3. Web1 was about information. Web2 was about interaction. Web3 is about decentralization. It's about putting power back in the hands of the people. It's the way the web was always meant to be. Some of you probably have a few questions. One, what the heck is he talking about? Two, why should I care? Three, what should I do? Great questions. In the current Web2 model, your data is split up and fragmented and owned and controlled by a handful of massive tech companies running massive networks. In a decentralized Web3 world, you own and control your data like your purchase history, your preferences, your connections, your credentials. You own and control all this data, so you get to decide which companies that data gets shared with. If anyone's getting paid for access to that data, it's you. Now, some of you are wondering, okay, that sounds fine. Why should I care? How does this matter to my business? The reason we should all care is because this new Web3 model will provide us a new, direct way to forge connections with our customers and our prospective customers. Instead of advertising to the masses that we know little about over these big networks, we can forge direct connections with prospective customers, and we can give them a customized experience based on data they willingly share with us. It's a much more efficient and much more trustworthy model. This feature is still years away, but the pieces are already starting to fall into place. We have cryptocurrencies like Bitcoin, decentralized application platforms like Ethereum, and decentralized social networks like BitClout. These all give us a glimpse into the future that's coming. What should you be doing? Don't worry, I'm not going to suggest that you start moving all your data to the blockchain or that you start buying Bitcoin. What I am going to suggest is you embrace the idea that we're in the age of the customer. Embrace the idea that over time, customers are going to have more and more power, and they're going to be equal partners in their relationship with us. That's what the future looks like. Now, the future is awesome, but it's still the future, and chances are you're kind of thinking about how to grow today. Let's come back from the future, get out of our time-traveling DeLoreans, and let's recap what we've talked about in terms of customer relationships. Here are things no customer has ever said. "You know, I'd love to introduce myself to you for the 43rd time." "I've been meaning to get to know as many people in your company as possible. Transfer me to whoever you want." "You know what this relationship needs is more management." Customers don't want more management, they want more magic. They want to experience a moment that makes them smile. They want to tweet about a company, not at a company. They want to feel connected. Our businesses want that, too. Your growth over the long term is a function of how much customers love the experience you give them. Give them an experience that makes them stand up from their sitting desks, brush aside their pizza, and to gush with friends over coffee about how awesome the experience was. It's time to abandon funnel vision, put to rest the Franken systems, and put aside the frustrating Underpants Gnomes effect. Your CRM platform should help you deliver a better-connected, more customized experience that's focused on the customer. The CRM should put the customer first in the design, not just in the acronym, because better customer relationships lead to delighted customers, and that's what fuels all of our flywheels. That's how we grow better. With that, I'd like to introduce members of the HubSpot product leadership team. They'll be talking about the HubSpot CRM platform and the development that's happened this year. I could not be more thrilled with the progress they've made in helping you deliver on the dream of customer relationship magic. Thank you. Wasn't it great to hear from Dharmesh about the history of CRM? To me, it is just fascinating, the ups and downs and twists and turns this market has taken. I am so excited to be here with all of you in person, in the office, to talk about how HubSpot is going to move CRM forward into sort of the new era. Yeah, one of the things I loved about that was thinking about how we want HubSpot to evolve. We want to be the number one CRM for scaling companies. For us, that means a couple things. It means it's got to be customizable, it's got to be well-connected, and it's got to be customer-centric. We want to focus on end users to do that. We want to build for the people who are using HubSpot every single day. Totally, yeah. Even more than that, I think it's so cool how we keep a focus also on, how do people want to shop and buy, and how can we build a product that's going to help our customers get there? That's right. How many customers have we all talked to that just feel totally trapped by whatever they've done with CRM in the past? It's either they were too scared to get started, they're too scared to move off of it. They've created a monster in some ways. I don't know, it's pretty scary out there sometimes. Yeah, totally. You get into a world where the CRM has been customized to the point where it's like a Rube Goldberg machine, and no one even understands how it works anymore. Everyone's afraid to make changes to it. You absolutely need customization in the way that you set up your CRM and your customer database. You need it to reflect your business, your customer. You need it to make it work for your company. You need to be thoughtful about the way that you bring that customization into the system. There's a big difference with a crafted platform that's built to work together. It really makes a big difference in how you're able to use it, how your teams are able to interact really smoothly, and have an efficient process. When we think about customizing the CRM, we don't just want to make it easy to customize the database part of the CRM, we also want to make it easy to customize the CRM for the users that are using the CRM. We think about the end user who's using the CRM, like a salesperson, or a support person, or a marketer who's in there every single day. We also think about the admin who's setting it up. We not only want to make it easy for the end user, we also want to make it easy for the admin. We want to make it easy for the admin to make it easy for the end user in the way that they're setting up the system. I think an example of that is the way that we've created permission templates. It becomes easier for an admin to add users into the system because they can use these templates. Once they add the users, the users get set up faster, and the experience is natural for them in the product because they're able to see the things that they're supposed to see, and they're not distracted by the things that they're not supposed to see. Most customers I've talked to have gone about this in two ways, right? One, they've sort of cobbled this together on their own with whatever's out there. Two, they've gone with some platform that has cobbled a bunch of stuff together. I don't know, I like to call it the cobbling tax, where no matter what you do, there's a tax to pay. I think that's where we're really coming in with this crafted approach, and it has a big impact on customers and developers and their customers. There's a lot of sort of runway there. That's really important because we know for a fact that the more people at your company who are using HubSpot, beyond your sales team, the more likely companies are to grow, have better, higher customer retention, better customer satisfaction scores, and that's why this crafted approach is so critical. That data was fascinating. If sales, marketing, and service all use the CRM, you will grow faster, and your customers will be happier. I just thought that was incredible and really validating of doing CRM right. Absolutely. This customization is going to be key. Each of our customers is going to need to differentiate themselves in the marketplace. Both an amazing experience and a unique experience that can really help people remember them and help them stand out. We keep saying crafted, not cobbled, and I always want to call out that that doesn't mean that HubSpot builds everything for everyone. Our ecosystem is a huge part of this. If you need to use other solutions alongside HubSpot, we want that to feel seamless, too. We're really focused on the developer experience and on having the integrations in our marketplace and the apps that will help users bring the tech stack together, bring those things inside of HubSpot, so that the user's workflow and the user's day-to-day feels very connected and very seamless. We want to let people build experiences that don't look like they're systems, right? Yeah. The experience that your customers have shouldn't look like the way you have your software stack set up. It should look like a really compelling end-to-end experience with a full view of the customer. Exactly. Typically, when you hear about customization, it's about the developer and making anything possible, and that's sort of what people thought about. I think if you have the customer in mind and their customer in mind, that's when you really bring out the magic. You make the end-user experience more consumer-grade. That's right. You make the developer experience a thing that can be transferred through to those folks. I feel like it's a very unique thing that's happening, and we call it the greatest magic trick in software history. That's one of my favorite things to say. To me, it's really exciting. It is. It's breaking the tyranny of or. We can do both of those things. When we think about customization without complexity for the admin, for the ops person, for the developer, part of that is enabling them to test these customizations before they go live. We're offering a sandbox that's a very production-like environment that's going to enable those folks to do a little test drive and to make sure that it's going to work the way they thought it would before they go ahead and push it live. I am so excited that HubSpot is introducing sandboxes for our most advanced customers. As companies scale, their business gets more complex. Their CRM is going to get more complex. They'll have more properties. They'll have more workflows. They'll have more happening inside of HubSpot. Therefore, the impact of a change may not be obvious. Having a sandbox environment allows them to see things that might have been unexpected before data gets wiped out or someone's workflow is all messed up in production. In a lot of ways, the things that you're automating with HubSpot workflows are things that would've been manual processes before. The things that you're building on top of HubSpot are things that are reducing work for the people who are working out of HubSpot. That goes back to trying to make HubSpot easier, trying to make HubSpot consumer-grade. When it comes to delivering a more connected experience for our customers, we've made a ton of improvements to our CRM platform. Last year at INBOUND, I remember Brian and Dharmesh talked about this RevOps persona, this operations person who was doing a lot of work in HubSpot and was in a lot of pain, couldn't really connect their systems and their process very well. This year, we've really invested in solving for them, and that's why we launched Operations Hub. Yeah. We realized there was this whole other group of people working in the company who either had the title or maybe don't have the title yet. That's right. growing into the title of operations. They spend a lot of their time actually being the people who are connecting data, being the people who are building the business process, and being the people who are doing reporting off of all the data inside of HubSpot. This year with Operations Hub, one of the big things we wanted to focus on was making it easier to connect to a bunch of different systems, because once you can get your data, just because you have the structure to get your data in HubSpot doesn't mean that your data's going to be in HubSpot or going to be in your CRM. We wanted to make it really easy with our sync framework, which is a part of Operations Hub, to allow people to connect systems into HubSpot in a better way than they were doing it before. Ops people are the glue of the CRM in a lot of ways, right? I think that this crafted approach that we have actually empowers ops people probably better than any other platform, right? You go in, you can code a workflow action, and it can impact something from marketing to sales to service pretty instantaneously without having to sort of hack something together across multiple systems. I feel like we're doing a great job empowering these ops people to maybe come out of some of the shadows that they've been in, sort of lurking in the code base somewhere, and being able to do it in a really easy way. That's really the point of trying to solve for front office teams and the end user. We just want to make their lives easier. We want to make them better at their jobs, and make them more efficient. Earlier this year when we launched Operations Hub, we were thinking about empowering operations teams to build the platform and the process that their companies need on top of HubSpot. That meant connecting systems, bringing data in from different systems, and building a business process on top of that data. On November 1st, when we launch Operations Hub Enterprise, we want to take that to the next level, and we want to give operations teams the tools they need to both manage their data and do reporting on their data inside of HubSpot. What oftentimes starts with a reporting problem that a company has actually turns into a data problem, right? Either the data's not there, the data's not good enough quality for them to build a report on top of. What you realize is a lot of these companies, and especially the operations people in these companies, need better tools with which they can manage the data, right? With Operations Hub Enterprise, we're launching a new system inside of HubSpot called Datasets where operations teams can manage their data, they can do calculations on top of their data, and then they can save these datasets that can be reused by everybody downstream, which is really powerful for operations teams. It's powerful for operations teams, but it's also powerful for folks like marketers, sales reps, support reps. They have access to the data without having to manipulate it themselves. Super powerful. Again, that's what our goal is in terms of making HubSpot really easy to use for those folks. With all of these improvements, like the launch of Operations Hub, custom behavioral events, the data sync framework, the new connectors built on the data sync framework, the report builder, the custom data set builder, we've created a CRM that lets you connect all of your data, channels, and teams in the same system to create a better experience for your customers. Some of the magic of Crafted Not Cobbled is not just the fact that, yes, it's all working off the same database and we built marketing tools, sales tools, service tools, ops tools, all those things, but it's these glue features that really tie it all together and allow people to self-serve. The more power we can give to folks, the better they can be at their jobs. I don't think it's lip service either. We have a bunch of data that shows that when people think of the CRM as the heart of their business, they're also more successful. That's pretty compelling as well, right? If you end up having a bunch of systems of record, you end up getting in trouble. If you really orient around the CRM, I think it breaks down the silos of the different parts of the org. It lets people connect everything together. It can be pretty powerful. As much as the CRM is that customer database and you have your sales team, your marketing team, your services team working out of that, the thing that we've seen is that companies continue to have tools outside of the CRM, and that trend is only going to increase over time. Companies are going to have more and more of those tools, and it's so important to have those systems connected into your central customer database, and that's what makes HubSpot so easy to use. I think now we have over 800 apps in the HubSpot Marketplace. With the launch of Operations Hub, we now have 50+ of those apps are powered by our data sync framework. With workflow extensions, we've got 60 apps that are integrated into workflows, so now you can actually power those external systems with HubSpot, based off of your customer data. Yeah, no, it's really getting to be an incredible experience, both for the developers that have to build those things, and then for the users within the company that get to take advantage of that connectedness. Yeah, to be able to sync in a way that's consistent, that's configurable, that really gets the data in the way that you need it, has been revolutionary. One thing I want to make sure we talk about is just sort of the customer part of CRM. I feel like a lot of CRMs in the past- Yeah ...have left the C out of CRM. All of us are consumers in our own right. We have totally shifted the way that we buy a lot of things. Our expectations are through the roof, and I think CRMs need to represent that, right? Many CRMs don't have as many self-service options as you might like for the end customer. They don't have commerce as part of the CRM, and those are things that I'm excited about launching this time around. I think we need to put the C back in CRM and think about not just the people inside your company that are using it, but the people who are actually interacting with what you're trying to sell and interacting with those people. That's right. The way that people are buying and shopping is different now, and we want to really meet that need. What you're talking about is not just us building a really easy-to-use CRM, but the fact that that can be extended to the customer's customer. To give them an incredible experience. A lot of people have traditionally thought of CMS as being something different than CRM. When you think about customer relationship management, now, a lot of that customer relationship is happening through the web. It's happening through those experiences that you're creating for customers. You want things to be more self-service. I want things to be self-service. The average person wants to be able to do things themselves, and that's exactly what you can do with HubSpot CMS working with HubSpot CRM. Talk about the self-service portal, because building that on the CMS connected to the CRM, I think is a really great example of this coming together. Our Service Hub is probably the biggest ingredient to creating a great customer experience. Think about when somebody buys from you, what happens after that? Service Hub is there to make that process easy and seamless. We've launched a couple of things that are really going to help there. First one is our Customer Portal. The Customer Portal is basically a mini website that your customers can log into to see the status of their tickets. The reason it's so easy and powerful is because it's built on our CMS. That means you can log in, there's templates already set up for you to be able to create a portal, whatever design you want to use, or you can use one of our designs. It doesn't require any developers. It doesn't require any custom code. It's something that you can set up very, very quickly and provide value to your customers right away. It makes intuitive sense, too, that as when we think about our own experiences as customers, we expect to have, when we have any interaction with a company, whether it's visiting a website or talking to a salesperson, we expect that full view of all the interactions we've had with a company to be there, so they can give us contextual information. That's so true. Customer expectations have risen so high. Regardless of what company they're dealing with, they expect a seamless, clean, useful experience. You could be a small company. You could be a giant company. They have that same expectation, regardless of your resources. When you were talking about building these really seamless digital experiences that are now an expectation, having that data all in one place is a game changer. Customer expectations around digital experiences have just increased so much. A lot of what drives those cobbled experiences is because businesses have let their systems define what's possible, rather than thinking about what's the great experience they want to build, and then being able to build that. There's a lot of things you can do across the journey, and I think we'll continue to innovate there. I'm excited about Service Hub. This year's launches are going to be great, and there'll be a lot more to come there. All right. Let's talk about payments for a second, because there's a lot of pain around this whole buyer experience and buying, in general. I typically see two things when we talk to customers. First, they are not offering to sell things online, when they probably could and should. I think most businesses could sell something online. Everybody could. Totally. Absolutely. When they are selling things through sales reps, that experience is pretty painful. There's hoops to jump through, whether it's Excel or an accounting system or an ERP system or something like that. HubSpot Payments is going to simplify that. The B2B buying process has been broken for quite a while. I typically see two things that customers are doing. First, they're actually not selling anything online, even though their customers probably want them to. The second thing is, with their rep-assisted selling process, there's a lot of hoops to jump through, both for the sales rep and the end user. We really want to go at the heart of those two problems with this really simple payments and commerce offering. HubSpot Payments is a capability that allows our customers to do just what it sounds like, collect payments as part of the HubSpot offering. What we've done here is we've taken this critical capability that's often sitting across a bunch of disparate systems and embedded it natively into HubSpot. You can pull right from your product library, turn a product into a payment link, and put it wherever you want. You stay in HubSpot, you turn it on, and you can start collecting payments today. I think there's a lot of companies that don't think about selling online because they think it's not for them. They think, like, "Oh, I'm not a traditional e-commerce company, so I shouldn't be thinking about this." A lot of them think that way because even though there might be a touchless side of the experience, there's also a side where you are interacting with a person in order to buy something, and it's hard for them to think about bridging that gap. That's exactly what Payments does inside of HubSpot. These are critical parts of the customer experience that have just been sort of off to the side for so long. That's what makes it so great that we're bringing it all together. Consumer grade. You have so many tools at your disposal to make it compelling, to make it meet these very high expectations that customers today have. My challenge to most of our customers is, pick something that you can sell online and start it. You could start it today, and it's going to make a huge difference for your buyer experience. What I love about that feature is that it really meets the challenge of how businesses need to adapt today, and we're filling that need. I think Brian said it last year, how you sell is why you win, and we're really bringing that to life here. I think this is going to be really, really important, and a thing that's been missing from CRM for a long time. Commerce has to be part of CRM or else it's not a CRM. Yeah. We are trying to rethink and reformulate what a CRM should be. There was a baseline of things that everybody thought was in CRM, and then as the market evolved, people started adding more and more capabilities and point solutions, and we think there's just a new baseline. A modern CRM needs to have certain things, and then there's still lots of room for partners and extensibility and customization and all that. I think we are sort of leading the way on the new wave here. You shouldn't have to work for your CRM. Your CRM should just work for you. Yeah, totally. That's our vision for the future. Wow. Hearing all those amazing product announcements gets me so fired up. Hey, everyone. I'm Andrew Lindsay. I lead business and corporate development at HubSpot. I'm really pleased to be here with Yamini and Brian to chat with you all today. Good to see you both. Great to see you. Good to be here. Great. I wish we could be in person with all of you, but live from Boston, it's INBOUND 2021. Brian. Yes. Let's get right into it. I got a question, it's actually for you first, Brian. It's something that has been top of mind for me, and I know I'm not the only one wondering about this. Okay. Many people are wondering about this. Yeah. You had a snowmobile accident, 13 broken bones. Yes. Many surgeries. Yes. Long recovery time. What did you binge-watch during all that time? You started off with a hard ball. There was one show that I got into during my healing period. It wasn't a super popular show, and it was a little heady. You probably didn't see it, Andrew. Try me. Ted Lasso. "Ted Lasso." I know "Ted Lasso." Oh, you do, okay. I know "Ted Lasso." You know who really loves "Ted Lasso?" No. Dharmesh. Oh, yeah. Dharmesh loves "Ted Lasso." Yeah. Geeky minds think alike. Well, now that we've given people and myself. What I really wanted. What I really wanted to know. Yep. Yeah. I would love to hear about some of the changes, some of the transitions, right? Yamini, I'd love to hear about what that was like when you first got the call and learned that you were going to be the CEO of HubSpot. First off, Brian, so glad that you're back, and you are stronger than ever, and you're back in full force, so that's great. By the way, I love "Ted Lasso." I haven't watched the season finale of the last season, so no spoilers this week- Okay ...from anybody. All right. We'll be careful. I just want to keep it clean. I think it's a requirement to be a "Ted Lasso" fan to be on HubSpot's leadership team. Andrew, the call that Brian and I had, it was surreal. Brian calls me up one evening, and we start chit-chatting. We're going back and forth, and then he says, "We need to talk- about our relationship." The dreaded words. I was like, "Oh, no. Where is this going?" You know what he does? He actually whips out a presentation and starts walking me through his decision-making process. This is the first time that my boss has ever actually presented to me, so I was very emotional. I have to say, I think, first of all, there is the enormity of stepping into a role right after Brian as the CEO. Brian's a legend, and I have a tremendous amount of respect for what Brian and Dharmesh have built here at HubSpot. Second, I got really emotional thinking about my journey to this point. I grew up in a super small town in rural south India. Did not have a high school, but don't worry. I did complete my high school. We moved towns. From there, to being an engineer, to a salesperson, to a customer-focused executive, my life has been through a lot of twists and turns. It was especially emotional and very thrilling at the same time. I can tell you, I'm so excited to be here at HubSpot leading the next chapter of growth, and I'm very committed. I'm very committed to being the kind of leader that HubSpot's customers, partners, employees, and all of you deserve. I got a- Thank you. ...little dusty on my side of the Zoom, too. I can imagine. I know. That was an emotional call. That was a really nice moment. Yeah. That's quite a transition. You transitioned as well, Brian. Yes. I'd love to hear about some of the thinking that went into that. Yeah. It sort of crossed my mind literally back when I was in the hospital seven months ago. The thing that was in my mind was I'm a starter. I started HubSpot 15 years ago with HubSpot, and I've been CEO. It's going great, but it's a different animal. We have thousands of employees, hundreds of thousands of customers, billions in revenue. This is a much larger scale company, and I've never seen that movie before. That was sort of one side of my head. I was thinking a little bit about Yamini sort of on the other side of my head, and I was like, "Well, one of the reasons I hired her, she worked in companies at much bigger scale than HubSpot." She had seen that movie, and then I watched over the next seven months while I was on leave, and she was running the company for me, and not only didn't she miss a beat, I think she picked up a couple of beats while I was out. She just did a fantastic job. She's super focused on the customer, super focused on scale. She's not just a culture fit. She's a culture add, so at some point, it just became a no-brainer, like, this is going to be great for our customers, great for our partners, great for our employees, great for the community. Yamini's going to be CEO and going to be able to work on the stuff I'm passionate about. We work great together, I'm super excited and super confident in Yamini in the next phase in HubSpot. Thank you so much, Brian. Means a lot. Yeah. I know I speak for the whole company, Yamini, when I say we're really excited to have you as our CEO. Thank you, Andrew. We're really excited. Thank you. Your experience scaling companies combined with Brian's experience and Dharmesh's experience founding the business, growing the business to the stages today, it's just an incredible win for the entire HubSpot community. I think so, too. Really awesome. Yeah. One thing, I want to switch gears for a moment. Sure. We as a company spend a lot of time thinking about customer expectations. Yep. Right? How it's changing, how it's evolving. Brian, I'd love to hear from you to start, what you see changing with customer expectations. Yeah. I think you know this about me, but I have a very odd hobby. I consider myself an amateur anthropologist, like an armchair anthropologist. Now, most armchair anthropologists, Andrew, they study the migratory patterns of birds. I'm a little different. I like to study the migratory patterns of buyers, and I really obsess about this. From my new job as chairman, I have a whole new perch to study this kind of thing going forward. I'm really excited. We're right at the beginning of a major migratory change for buyers, and I think the way I think about it in my head is B2B buyers, business buyers, are starting to look a lot more like B2C buyers. Yep. I think about B2C buyers, 25 years ago, it was a big deal if you went and spent $25 on a book online, and now people are spending $25,000 on cars online, like this. Dharmesh bought his Volvo online, the whole thing. Business-to-business buyers are turning more into business consumer buyers. They expect a delightful end-to-end, gorgeous, delicious experience buying that product from their vendors. That's a huge change that's underfoot right now. The funny thing about Dharmesh's presentation that I love, and I know him very well, is he's not a big fan of carbon-based life forms. I actually like carbon-based life forms. Thank you. I think if I had advice for our customers and partners, it's how do we get a little bit of that carbon-based life form out of that buying process? Yeah. How do we lower the friction in the buying process? How do we use technology to accelerate it, and how do we enable them to create those delicious buying experiences for their customers? I think everyone's got to move from this old-school way of thinking that it's a very linear, funnel-based go-to-market model to a very circular, flywheel-based, not go-to-market model, but customer experience model. I think we're at the beginning of that shift, and companies that are forward-looking that can take advantage of that, I think will thrive in the next five, 10 years. Got it. Very interesting. I've got to tell you, I love carbon-based life forms. The fact that we can be sitting here together as carbon-based life- It's awesome. ...forms is really awesome. Yeah. You notice Dharmesh isn't here. I know. I was surprised. For a reason. Now, Yamini, I want to ask you, because I know you talk about customer expectations, and you're customer-obsessed, right? I've seen this, and we've talked about it. Yep. Could you share a little about what you see changing with customer expectations as well, and what you've observed over the last year as part of your looking at customer experiences? Absolutely. Look, I'm a lifelong learner, and I think I learn as much from great experiences as I learn from not so good experiences. In fact, in many ways, I think not so good experiences teach you. They teach you what not to do. I have an example, a less than stellar example for you, Andrew. Okay. A dream turned nightmare situation. It started with a dream. The dream was to convert our home into solar. I was very excited about this. We started working with this company whose name I shall not name, okay? They have a fantastic product. We were excited. We were happy to be going on this sustainable journey with them. It's turned into a nightmare. Now, 12 months after we started this project, we still don't have solar going back into the grid. They're trying really hard to give me the experience of talking to every single person within this company. You know what I call it? I call it the deluxe transfer package. You know it, right? I've now been transferred and connected to more people within this company than the number of people I had in my small town back in India. It's quite painful. What is ironic about this is that I am trying to lean into the future with. Yet I'm dealing with a customer experience that's stuck in the past. What I have observed and learned from this is that companies that grow very rapidly, they end up in silos. They end up in very disconnected places. where they therefore expect me, the customer, to become the bridge across their systems, the departments, and the people. That lends to a really poor customer experience. For all of you customers out there, as you're thinking about this, the one thing I would share is that always look at it from the customer perspective, not from a function or a department perspective, and that's certainly something that we think about deeply here at HubSpot. Yeah, that sounds like a real abuse of power, Yamini. Okay, that's funny. Brian, if I may. Yeah You mentioned being an anthropologist, right? Yes. Could you- Amateur, by the way. Amateur anthropologist, but anthropologist nonetheless. If you could put that hat back on for just a moment and discuss about some of those patterns that you mentioned, and Yamini mentioned, and extrapolate from that into the future of HubSpot and the future of HubSpot CRM. Yeah. I think of HubSpot, Andrew. It's really two chapters in HubSpot. Chapter one, the aha Dharmesh and I had was that humans were sick and tired of being marketed to and really good at blocking it out. Yep. Yep. We created a new methodology for them, inbound, and then we created a marketing app to help them match the way they market to the way people buy. A couple of years ago, we had, really, our second aha. It's just like Yamini's story. People are sick and tired of cringeworthy customer experiences. Yeah. It's not just limited to marketing. It's the entire end-to-end experience. We created a new flywheel methodology, and we moved from a marketing app to a CRM platform. That's ongoing. It's going extremely well. That's what HubSpot's up to. We are building a very modern, customer-in legit CRM platform for scaling companies, and we're just getting started. It's going to be really good. Got it. Clearly, CRM is the space in which we play, and we think a lot about. Yep. Can you share a little bit, Yamini, about HubSpot's approach to CRM and how that might be evolving? Look, I think Brian put this very eloquently. There is a whole massive shift that's happening towards the buyer. Yeah. Buyers want low friction. They want consumer-like experiences that are end-to-end. Therefore, the way we are approaching CRM is changing. Yeah. It's much more about buyer empowerment. Not about seller enablement. I started in CRM a couple decades ago. At that time, if I needed to call a customer, I actually pulled out a contact card. That's what it was called back then. I would dial, and that was it back then. That is what customer relationship management meant, and it was, for me, the seller way back then. I think CRM has changed so dramatically. Right now, you don't have a customer that is calling you. They visit your website. Yeah That could be the front door into your company. They could, without even talking to any human within the company, they could download a free trial of your product. They can actually experience your company and your product through that. Pretty late in their buyer's journey, they may do the more traditional thing and call a rep. It is about making that journey great. CRM is now all about providing something that is connected, that can delight the customer in the journey that they take with you. As Brian mentioned, that's been our chapter too. That's what we've been focused on. We're really laser focused on that buyer empowerment, not seller enablement. we're really focused on having that magic- creating that magic companies can provide for their customers. I love that. Yep. The magic. Magic. That's what we're focused on. That's right. I like Dharmesh's customer relationship magic system. I like that. it might stick. It might stick. Yes. I like that. I like that. Speaking about some of the magic, we heard a series of really exciting new product announcements. Yes. Right? I'd love to hear about your thoughts on those and what particularly excites you about HubSpot's product feature. Well, Andrew, as a parent. Yeah I always get asked, who's my favorite son, and I never fall into the trap. I am not going to fall into that trap, and I think we've had some amazing product announcements l aunches today. They're all very exciting. I will highlight three. Okay Which I think are going to have the most impact for our customers. The first one is HubSpot Payments. This is big. B2B buyers have a long way to actually catch up to providing a very customer-centric buying experience. Think about your latest Amazon purchase or my Chewy purchase, your Warby Parker purchase. Our vision is to help B2B companies sell touchlessly to their customers, and we want to be able to do that. We also want to make that rep-assisted selling motion, the last leg, the last mile of that sales process, just smoother. HubSpot Payments that we launched today, it's in open beta. That's going to be the first step in helping our customers sell to their customers o nline. That's pretty exciting. I think the second I have to talk about is Operations Hub Enterprise. That's another huge one. This ops persona, we call it the revenue ops persona. They are really critical in go-to-market organizations. They are like the unsung heroes with capes because they're asked to do so much. Their job is to provide great insights to the VP of Marketing, to the VP of Sales, to the VP of Customer Success, and we want to empower them with the right tools and the right insights. Earlier this year, we launched Operations Hub Starter and Pro, and that allowed these operations professionals to get all of the data f rom their entire tech stack right into HubSpot and also automate the workflow. In November, when we launch Operations Hub Enterprise, it's going to be all about reporting. What do you do when you have the data and when you have the workflows? You start driving insights out of it. We're squarely focused on reporting and squarely focused on data. I'll tell you, as a former operations professional, I'm just giddy with excitement. It is going to be so powerful for these folks. Yep. The last quick one- Yep I'll make it really quick, is Service Hub Customer Portal. This is going to streamline the communication between companies and their customers. Customers are now going to be able to look at all of the interactions that they're having with the company simple, powerful, streamlined. I'm very excited about all of these announcements that we made today. It really takes a massive leap forward in terms of offering a connected, customizable, customer-centric CRM that's going to help scaling companies a lot. I love it. I agree with all that. HubSpot's product organization is on fire these days. We're just getting started. There's much more coming. It's really impressive what they're doing. Yeah. Clear path to customer magic, right? Yes. Excited. Yep. You're talking about the product organization being on fire, and this is just getting started. Yep. Can you share a little bit more as you think about what the future of HubSpot CRM may look like? Yeah. I've been watching the CRM industry literally since 1990. I remember my first sales job out of school, installing with floppy disk, a contact management system to track contacts. That was my first use of it, but I purchased CRM many times. I've implemented CRM. I've used them all. There's a tried and true playbook for how you build a CRM company. It basically goes like this, Andrew. You start with SFA. You get a little bit of traction, then you start acquiring, cobbling, cramming, gluing, and taping together tens of acquisitions, and that's how you build out your CRM Suite. That's how the industry has gone. That's how a lot of people think we should go. I get a lot of advice like, "Why aren't you just buying your way to a CRM Suite?" The whole industry's zigging, we're zagging. We're not going to follow what the big CRM vendors are going to do. We're going to follow a little company in California. I'm not sure if you've heard of them. They're called Apple. Yeah. We're going to follow Apple. What I love about Apple is it certainly scales, internet scale, it's just such a gorgeous customer experience and such a gorgeous user interface. You unpack it, then you just feel something different. You connect it to the other devices, it feels different. You use it feels different. We are crafters. Apple crafts those products with love. Yeah. That's what we're doing. We're crafting a CRM product in-house with love from the ground up, and I think our customers are going to love it. Our partners are going to love it. I think it matches the time, and if you're a normal company, I think you should buy it. Now, I will say this, I'll caveat it. If you're Walmart or you're Delta Air Lines, maybe you should buy one of those Franken systems. If you have 100 developers sitting around with nothing else to do, and you have millions of dollars, a pile of money with nothing left to do it, feel free. Go and use one of those. But if you're a growth company and you want to get after it and build a modern customer experience, I feel like we're building exactly what those companies need. I'm really excited about it. Yeah. We're building it by being agile crafts people. We're ziggy crafts people. Ziggy crafts people. That's right. I like that. I like that. Before we come to a close, I just want to acknowledge the difficult time that it's been for a lot of people, right? It's been a difficult year, a difficult couple of years. I know each of you has had your own challenges. I've had my challenges, with those come lessons and life lessons. I want to ask, is there any life lessons that you'd want to share with the folks listening? Start with you, Brian. Sure. Mine's very personal. Back in February, as you mentioned, I had this terrible snowmobile crash, and I was lying in the snow, not confident that I was going to live. Running through my head was a Dalai Lama quote, and I'll probably get the quote wrong, but it goes something like, "Live a good and honorable life so you can enjoy it when you're an old person." As I was running the tape of my life sort of through my head or the movie, HubSpot's a relatively large part of my movie. I feel like we've built a good and honorable company. I'm proud of it, so I look back favorably on it. I think the Dalai Lama would've liked what I saw. Now that there's sevem months apart from that, or eight, I guess it's eight months, and I'm healthy now, I just look at it as there's so much more work to do to achieve our mission. Our mission is we want to enable millions of companies to grow better. Our mission isn't to enable thousands of companies to grow. It's millions to grow better in a modern, awesome way. Lots more work left to do. The second thing I would say, and a lot of people at HubSpot know this about me, but I have my own personal mission, and you two are sick of me talking about this. My own personal mission is I hope to build a company that my eventual grandkids, decades from now, will be so proud about that they're bragging about it to all their friends. That underlies a lot of my decisions. It underlies a lot of the long-term perspective we take on things. It underlies the zagging instead of zigging. It's an important part of my DNA when I think about the company. I hope when I'm an old, cranky anthropologist in my rocking chair, that my grandkids are crowing about HubSpot, and I'm looking back at my life and feeling like I had an honorable and good life, and that HubSpot's a big part of it. I hope that for all of you out there watching. I hope that you can look back at your life and your career and feel like you had an honorable and good career that you're proud of, and your grandkids are proud of. My hope is that HubSpot can maybe play a little or even a big role in helping you do that to your career. Thank you to all of you who are HubSpot customers and users. That's great. Thank you for sharing that, Brian. Yep. Really appreciate that. Yep. Yamini, I'll ask the same question to you. Lessons learned. Look, mine's personal, too. I've had kind of a roller coaster ride from the time I started in my dream job at HubSpot, January 2020. I think we hit the pandemic crisis mode literally two months. Two months in. Yeah Two months into my new job. Yep. That was a pivot that we had to make. This spring, Brian obviously called me to take care of HubSpot so that he can recover from a life-altering accident. Yep. Six months later, he came back in and asked me to be CEO. Yep. Two weeks after that, I suffered a personal loss. My dad passed away, and it was exceptionally emotional, and he's been a huge supporter. Life has been full of ups and downs. Well, the only way I get through tough times, and there will always be tough times mixed with great times, is to care deeply and persevere relentlessly. That's been my life lesson. Now, as soon as we got into the pandemic, there was an ocean of uncertainty. People worried about jobs, their health, lives, livelihood. My job at that time was to remain calm and provide clarity to HubSpot's customers, partners, employees. Do it quickly, decisively, but more importantly, do it from a place of deep empathy and care. That's what I did. When Brian, you called, it was super emotional. My first thought was, "My God, I hope you're okay. I hope we give you all of the space for you to recover, and you've built this wonderful organization. We'll take care of HubSpot for you." That's exactly what we did. We focused, and I have been relentless in terms of execution and driving HubSpot forward from there. That's been my life lesson. I will also say that's my commitment, that I will relentlessly pursue the vision that Brian and Dharmesh have for HubSpot, relentlessly focus on delighting our customers, and building an organization that people are just excited and proud to work and get their best work done. Thank you. I really appreciate that. Yeah. That was good. That was a good close. I just want to say thank you both. Yes. Right? Thank you spending time with us. Thank you. I really appreciate the honesty and the candor, hearing about both personal learnings and also thinking about the business as well, and all of our customers and the entire HubSpot community. For all of you out there, thank you for spending time with us. Really excited about INBOUND 2021, and hope to see you in person soon. Thank you, and enjoy the next couple of days. Thanks, everybody. Thank you, everybody. Hey, everyone. Good morning, good afternoon, good evening, wherever you're joining us from. Welcome to HubSpot's Financial Analyst Day and INBOUND. This is my first as CEO. INBOUND 2021 has special meaning for me. I am honored to be following Brian Halligan as CEO. It's moments like this one, having the chance to talk to you and represent this wonderful organization, that I realize in a very real and immediate way what that honor means. We have a short period of time together. Here's what I'm going to focus on. I'll provide a quick view of our performance and state of business. I want to share key customer trends and how that is shaping the need for a modern customer relationship management. I'll finish up with HubSpot's growth strategy. Nine months into 2021, we are operating from a position of broad strength and are continuing to build momentum to becoming the number one CRM platform for scaling companies. We're seeing strong financial performance, with our full year 2021 revenue guidance projecting acceleration to 44% growth. We're also continuing to invest in our powerful platform with five Hubs, and our ecosystem is thriving with over 900 application integrations. Our solution partner ecosystem is also thriving, and partners are seeing 47% year-over-year growth in ARR. Earlier this year, TrustRadius recognized us as one of the most loved software platforms in 2021. All of this is powered by our incredible team of nearly 5,000 employees around the world, some of the best in the business that I'm proud to work with every single day. Let's take a step back. I want to talk about broader trends impacting our customers and, as a result, our industry. If we look at the significant trends of the past 100 years of business, there have been four main shifts, each defined by a different core competency and each creating winners and losers. In the age of manufacturing, it was about industrial design and efficiencies of scale. In the age of distribution, globalization accelerated and the core competency was setting up global supply chains. In the age of information, the core competency was about organizing and delivering information over the internet. We are now in the age of the customer, and in this era, the buyer has the information and the power. The core competency is delivering a great customer experience. You may be thinking, what is new here? Well, what is new is that the pandemic made providing remarkable customer experiences go from being a competitive advantage to a critical necessity. Because of this, the needs and expectations of CRM have changed pretty drastically. Let's dive in and talk about what it means for companies to win now. Companies must deliver a delightful customer experience at every stage of the journey, and what that means looks different now than it did just 20 years ago. I bought my first car in 1997, a silver two-door Nissan 240SX. I was very excited to be getting wheels. I'm sure you can all relate to that excitement. Well, the only thing I controlled was deciding that I wanted to buy a car. From that point on, I was at the salesperson's mercy. Did not know if I was paying a fair price, did not have an easy way to compare makes and models across dealerships, and I spent multiple weekends dealing with car dealers. My experience at the car dealers was worse than going to a dentist, and it only got worse during service. 20 years later, I purchased another car, and it couldn't have been a more different experience. I researched make, model, fair price, walked into a dealer, and bought my car over lunch in less than an hour. The service experience has been even more delightful than the purchase experience. A connected customer experience looks and feels very different today, and B2C companies are nailing it. This is simply not the case with B2B companies. What does it really take? B2B companies need to take a very different approach to win. They must bring a consumer-like buying process into B2B. They must be able to connect their teams and connect to their customers. As we have seen more and more in the last few years, they have to be able to pivot and adapt in order to grow. If we've learned anything from the last 18 months, it's that we have to make it easy for people and businesses to buy. Buyers don't want friction across the customer journey, but B2B is really lagging here. In fact, 77% of B2B buyers said their latest purchase was complex and difficult. Companies that can deliver this consumer-like buying experience will win. Now, delightful experiences happen when the company knows who you are and where exactly you are in the journey. You don't have to repeat information to different people from different departments, and you don't have to re-enter data. When you need an answer, you can get one really fast. Well, that requires the company to be able to connect systems across teams and derive insights from that connected data. Unfortunately, many businesses are having to cobble together multiple systems that are entirely disconnected. On average, our target prospect is using 50 SaaS applications as part of their tech stack. The fancy industry term for this many apps across a business is tech sprawl. Honestly, I call it a cobbled mess. To deliver a remarkably connected customer experience, companies must have remarkably connected systems that deliver insights. Finally, pivots are inevitable today. Which company hasn't had to shift gears super fast in the last 18 months. In fact, the last 18 months have forced companies to not only pivot, but to build a foundation to be able to continuously pivot in order to survive. We've had so many customers across a diverse set of industries recognize the shift and adjust their strategies. One HubSpot customer who has done this really well is Crunch Fitness. Many of you probably know Crunch Fitness. They are a fitness chain with over 300 locations. When the pandemic hit, they pivoted and found new ways to connect deeply with their customers. They moved their community online by starting a newsletter and produced new relevant resources about everything from how to exercise in a small space to workout routines to do at home. They adapted to new habits and interests of its customers, and that pivot helped Crunch increase sign-ups by 28%, even when all the clubs were closed. Crunch Fitness went from building fitness centers to enabling fitness anywhere, which is such a profound shift. To stay agile, companies need technologies that power innovation and can help them pivot and grow. In March and April of 2020, when the pandemic headwinds were really strong, a lot of people predicted that small and mid-market companies would crumble, and that did not quite happen. What actually happened was quite remarkable. We have seen many of these companies pivot, survive, thrive, and accelerate growth. These companies embrace technology to connect to their customers, drive insights based on their customer interactions, and transform their businesses. Powering this profound shift is modern CRM, which is radically different and has been redefined. How is modern CRM different? It is customer-centric. It takes you from being built for sellers to being built for buyers. It is not cobbled together, but crafted to connect insights across functions like marketing, sales, service, and operations. It does not add complexity, but is customizable and powers innovation when you want and you need to pivot. As a result, it should help you connect with your customers and create customer relationship magic. HubSpot CRM is the right fit, functionality, and foundation for scaling businesses. For those who missed it, we're really excited about the brand-new launches announced earlier today during Product Spotlight. They demonstrate the fantastic progress we're making towards realizing our vision of being the modern CRM platform for scaling businesses. HubSpot Payments is our first step in enabling our B2B customers to deliver a consumer-grade buying experience. In the next few minutes, I'll dive a bit deeper into HubSpot Payments experience and the value it can bring to our customers. The announcement of Operations Hub Enterprise, as well as the improvements to reporting and custom events, enable a deeper level of connection and shared insights between marketing, sales, service, and operations teams. Our new sandbox, admin features, and forecasting tools all exemplify the notion of customization without compromise. These launches are part of our ongoing innovation and efforts to help our customers grow better. I want to shift gears and talk about our strategy and the key pillars that we are focused on to serve our customers and drive growth. Our path to being the number one CRM platform for scaling companies is clear, and we are focused on four strategic pillars. Let me take you through each of these pillars, why they're important to HubSpot, and where we are investing. As I just talked about, customers need a modern CRM platform that is customer-centric, connected, and customizable, and that is exactly what this pillar is about. We want to build a CRM platform where each of our application hubs, Marketing, Sales, Service, CMS, and Operations, and our platform, have world-class functionality for the segments we serve. This pillar is really important because it opens up a huge opportunity for us to drive broader multi-hub and suite penetration across our install base. The path to world-class front-office platform is clear. In terms of hubs, we have a strategy of going broad and going deep. We plan to expand on our product portfolio and add hubs to solve new front-office use cases for our customers. We plan to build depth by adding more valuable features into editions of our existing hubs. As we have moved from app to suite to platform, one of the key advantages we have is how we build products. While each hub is tailored to deliver on a specific set of features, the underlying structure of each hub is based on a common framework of what we call Primary Colors, content, messaging, automation, reporting, and data. By using our Primary Colors, both our customers and HubSpot win. Our customers win because all of our hubs have consistency and cohesion, leading to a much better experience than a cobbled-together system. We win because we get leverage from existing code, allowing us to build hubs faster and with more robust functionality. Through our deep investment in this approach, we've built a platform that is both easy to use and deeply powerful. This sets us up to win in the future. Going forward, our strategy is quite simple. We intend to invest in our platform and make our hubs better. In terms of platform, for users, we will invest in consumer-grade quality and usability to drive our customer net promoter score. For operations professionals, we plan to invest in governance, data models, permissions, certifications to provide more control. For developers, we will focus on improving our extensibility and ecosystem capabilities. As we think about hubs, we will continue to invest in anchor hubs like marketing and sales, accelerate emerging hubs like service, CMS, and ops, and we plan to launch new hubs to expand TAM and support growth. We are just getting started, and there is a lot of innovation left in delivering this world-class front-office platform that will help our customers scale. All right, our second strategic pillar. Our pillar here is to strengthen our segmentation approach. You've heard us talk about optimizing both product as well as go-to-market to serve each of the customer segments we target. As a reminder, we have three segments, two to 20 employees, which is small business, 20 - 200 employees, which is mid-market, and 200 - 2,000 employees, which is corporate. Overall, the strategy is working well, our net new customer editions are up nearly 30% year-over-year through the first half of 2021. Our blended professional and enterprise ASPs are up over 10% over the same period of time. I think there's still a lot of opportunity left here. We want to double down on our approach. Our segmentation approach is unique and drives product innovation. We're doing two things with product. One, we are democratizing high-end features, typically available to enterprises, down to starter and freemium. This is helping us not only sustain, but actually build on our competitive advantage with starter and free. Two, we're actually bringing human-friendly product and purchasing experiences to pro and enterprise. This easy-to-use and easy-to-buy experience, combined with powerful features, will help increase our competitive advantage across pro and enterprise. What is really great here is that our product, pricing, and go-to-market are all well-aligned. Here is exactly how we are operationalizing our strategy. Within our corporate and mid-market segments, we're focused on professional and enterprise editions. This is an inside sales and partner-driven motion, and leads to high ASP and high value. Within our small business segment, we focus on starter suite and upgrade path to pro. This is a product-led and sales-assisted motion, and this leads to high velocity, high volume sales. We plan to invest in both product and go-to-market to strengthen our segmentation approach. To drive volume, we will optimize our touchless buying, onboarding, and activation experiences. We will also scale our product and lightweight chat-based sales motion, which has been working for the segment. To drive value and ASP, we plan to continue to build powerful features that are easy to use. In addition, we are investing in sales enablement, team selling, and rolling out initiatives that can drive sales productivity. I'm excited about this pillar and the impact we have already begun to see from this strategy. Okay, onto our third strategic pillar, commerce and payments. Today, CRM and commerce are independent categories. Our strategic bet is that the future will be commerce-enabled CRM, and therefore, we are investing in payments and commerce. Let me explain why. In B2B, there are basically two ways to buy, a rep-assisted sales motion and a touchless sales motion. In the rep-assisted sales motion, the buying process is awfully complex and manual. First, you have to generate a sales quote, then get a signature in another system, convert it into a bill in yet another system, and then get payment in another. Rarely does any of this data make it into the CRM. Only two words to describe this, cobbled mess. Now, in terms of providing a touchless sales experience, well, here, most B2B companies that want to sell online haven't just gotten started yet. The store is closed, and B2B commerce really isn't happening yet. Why is this a problem? There is a vast abyss between the front office and back office that has traditionally been filled with glue, duct tape, manual processes, and commerce has been orphaned in this abyss. CRM should be all about customers. Most CRMs stop short of helping customers pay, as they simply don't facilitate the purchase process. In many ways, the customer has been missing from customer relationship management. This causes significant pain, wasted time across systems, lost revenue by delaying or missing collections, and poor buying experience. If a picture is worth 1,000 words, a demo has got to be worth 10,000, right? Let me invite one of our star product leaders, Matt Schnitt, to show us what commerce-enabled CRM looks like for a HubSpot customer today. Take it away, Matt. Awesome. Thanks, Yamini. Let's take a look at how CRM and commerce are coming together for one of our beta customers, Black Swan, a small professional services company that sells negotiation training. Black Swan was selling large deals through a sales rep for in-person training, and billing for those trainings through their accounting system. The pandemic hit, and they needed to quickly pivot to selling virtual trainings through their website. To do that, Black Swan used HubSpot Payments. Here is a live example they are transacting through today. How do they do it in HubSpot? Let's take a look. They simply created a payment link to sell a product and can easily insert that payment link onto their landing page using our new payments module. They simply select the link and can change certain attributes of that link, like the button text and the styling. Just like that, in clicks, not code, Black Swan is able to create a purchasable landing page to sell their virtual training. When somebody clicks on the CTA, it takes them to check out using HubSpot Payments. The magic of CRM and commerce really shines through when looking at what happens after a customer purchases. A deal automatically gets created and associated with a contact, company, and product inside of HubSpot. This allows them to unlock the power of the CRM platform. Imagine Black Swan wants to send out a marketing email three days before the training. With the Zoom information for that training, they can do that all from within HubSpot. That's the ability to create a landing page, make it purchasable, and do all the downstream automation and reporting off of the purchase in one platform. It's truly remarkable. With the world opening back up, Black Swan wants to go back to selling in-person trainings. How would a sales rep do that now that they've started using HubSpot Payments? They can use HubSpot's native quoting tool and add payments directly into it. Maybe they just want to accept the ACH payment method because this is a large purchase. A sales rep can send out a quote that is professional and clean, and what the buyer sees is not just the quote, but also a checkout page for them to pay. This eliminates much of the friction of collecting initial payment. As you can see, the checkout experience is the same regardless of how the buyer purchases. HubSpot Payments is an omni-channel commerce tool for however our customers want to go to market. Back to you, Yamini. Thanks so much, Matt. I'm thrilled to see Black Swan's success using HubSpot Payments. There is true magic when you have commerce-enabled CRM. Here's why. Selling online becomes an extension of interacting with your customers. The tools and data you use to interact with your customers are already there. Imagine trying to do it with a back office ERP system. Bringing commerce into your CRM can dramatically improve the rep-assisted sales process. The final piece of magic is what happens after the purchase is complete. This is exactly what Matt showcased. Commerce activity becomes part of the customer contact and product record, which provides valuable context across every interaction with your customer. Now your sales team knows when a customer has an overdue invoice. Your marketing team knows not to market something to a customer that they've already bought. When you think about it, the end use cases are endless. We're so excited about our new HubSpot Payments offering, which is now in an open beta, and we're confident that it's going to help millions of organizations grow better. On to strategic pillar number four. We want to build a company that future generations, employees, customers, partners, and investors are proud of. In order to do that, we want to power HubSpot in a way that we grow sustainably. Our fourth strategic pillar focuses on scaling HubSpot, our processes, and our systems. We have a few clear priorities across environmental, social, and governance areas that I'd like to highlight. First, we want to become a leader and innovator for hiring and growing diverse talent, and we are embedding diversity, inclusion, and belonging in our systems and processes. I'm personally passionate and very committed to this. We're a proud member of the UN Global Compact, and we are committed to adopting and reporting on environmentally sustainable practices and tracking our progress over time. We plan to double down on customer trust. Customer trust is exceptionally important to us, and we will continue to invest in protecting customer data and scaling our systems and processes internally. I want to close out by saying how incredibly excited I am about the next chapter of growth at HubSpot. In the age of the customer, the true core competency is customer experience. The pandemic didn't just accelerate the digital transformation trends we've been seeing, but it's redefined what customers expect from a connected CRM. We meet the needs of the moment, and we have a massive opportunity ahead of us to help our customers transform their businesses. I'm confident that we have the right strategy and investments and the right team to execute and win. I will now hand it over to Kate Bueker, our CFO, for our look into our financials and the path ahead. Kate? Hello, everyone. Thank you for joining us today. I'm Kate Bueker, HubSpot's Chief Financial Officer, and I'm excited to have the opportunity to share with you, at least virtually, some insights about HubSpot's financial performance. As always, I would like to remind you of our Safe Harbor statement, which you can read in detail on our IR website. I plan to cover three major topics with you in the next 20 minutes or so. I'll start by reflecting on how HubSpot has built a strong, durable business that has accelerated over the past year. Second, I'll double-click into our strategic pillars and highlight the impact they are driving on our financial results. Finally, we will look at our approach to profitability and growth and review our long-term P&L. Let's start with a short reflection on our strong and durable business. It's been 15 years since HubSpot's founding and seven years since our IPO. We've had some incredible milestones during those 15 years. Late last year, we surpassed 100,000 customers, enabling businesses in more than 120 countries to grow better with HubSpot. We transformed our product from a single marketing application to a full CRM platform, and we built a billion-dollar-plus install-based business and a global team of almost 5,000 employees. Throughout all that time, our mission has remained the same: helping millions of organizations grow better. Keeping customers front and center has been a key driver of our success, and we have delivered strong, consistent growth as a result. Over the last five years, we've grown our customer base at a compound annual growth rate of 36%, and that growth has accelerated over the past 18 months. At the end of Q2, we had over 121,000 paying customers, up 40% year-over-year. Over the same period, our revenue also grew at a compound annual growth rate of 36%. In addition, we expect full year 2021 revenue to be approximately $1.27 billion, representing 44% year-over-year growth, a significant acceleration from 2020. Our top-line growth has translated into a strong and profitable business. We expect operating profit to exceed $100 million this year, and free cash flow generation of about $175 million in 2021. As of the end of Q2, we had over $1 billion of cash on the balance sheet, which provides us with the ability to continue to invest in our business and the flexibility to explore inorganic investments to drive long-term growth. The sources of our growth have diversified over time. We have balance in our revenue across geography, go-to-market channel, and product. Our international business is almost 50% of our install base, and it's growing fast. At the same time, we've been able to accelerate our growth in the U.S. to over 40% in 2021. Our partner channel has continued to represent almost 40% of our install base, even as our product portfolio has transformed. We've seen our suite and platform expansion plays pay off as non-marketing hubs now account for about 1/3 of our ARR. Let's dig deeper into the impact of our strategic pillars on our growth. As you heard from Yamini, we are focused on four strategic pillars on our path to being the number one CRM platform for scaling companies. While Yamini walked you through the core strategy of each of these pillars, I'm going to talk about how these pillars impact our financial results. I plan to focus specifically on our platform, segmentation, and payments pillars. I'll start with our first strategic pillar, deliver a world-class front office platform. This is a vision that we have been sharing with you for a few years now. As we've discussed in the past, we've been on a journey from the marketing application company where we started that helped companies get found on the internet, to a suite of products across the customer experience, to a CRM platform today that helps our customers create the end-to-end experience that their B2B customers are increasingly demanding. The core of this platform is our world-class CRM and front office suite of products. As we have done in the past, I will take you through some performance highlights of our individual hubs. Before I do, I want to take a step back to remark on the overall performance of our product suite. The growth of our two largest hubs, marketing and sales, accelerated year-over-year, and growth across the entire suite is healthy, with all but Marketing Hub growing in excess of 50%. Let's take a look at the detail, starting with Marketing Hub. Growth accelerated materially in the last 12 months, fueled by the launch of a number of upmarket and mid-market features. Marketing Hub is now an $840 million business growing in the mid to high 30s. Our Sales Hub has become a legitimate CRM for mid-market customers with the addition of custom objects and features like conversation intelligence. It's a real front door for new customer acquisition and now represents almost $300 million in ARR, growing in excess of 70%. Our newer hubs also continued to grow nicely. Service Hub is a $60 million business growing over 80%. While Service Hub remains primarily a multi-hub sale, we are excited about the Service Hub roadmap over the next 12-18 months. Finally, CMS continues to grow nicely as our customers find value in the CRM plus CMS combination. It's a $45 million business growing comfortably above 50%. Taking a look at Operations Hub, where we're just getting started. You will remember that we launched Operations Hub Starter and Professional in April of this year. We're excited with our announcement today that we are adding the Enterprise edition of the product that creates a step function increase in reporting and automation capabilities for our customers. It's early days, but the adoption trends are quite strong, with $8 million of ARR and more than 10,000 customers as of the end of September, which is a strong signal of the value our customers see with Operations Hub. We continue to see a growing portion of our customers adopt HubSpot as a platform from which they run their business. We often talk about the share of our customers that are using multiple HubSpot products. This number has been on a steady climb for a few years, and almost 60% of our customers at the end of Q2 utilize multiple HubSpot products. We are also seeing a growing portion of our customers adopt the entire suite. 30% of our customers are leveraging 3 or more hubs at the end of Q2. Encouraging, we're seeing roughly half our new customers start with multiple HubSpot products, including almost a quarter that are adopting the CRM Suite in their initial purchase. This broadening adoption of HubSpot products is one of the important factors driving our strong customer retention improvements. Over the last 18 months, we've seen material improvements in both our customer dollar retention, which you may refer to as gross retention, and net revenue retention metrics. I particularly like the balance of the improvement across these two metrics. The strength in gross retention provides a solid foundation, and we've seen gross retention move from the low to mid-80s to the high 80s over the last year or so. As we've talked about on the last few earnings calls, the drivers of the improvements to gross retention are straightforward. Customers are using our product more across more of the core product capabilities and across more of their teams. We are also seeing a benefit from our customers signing longer-term contracts with HubSpot. We've also seen an improvement in our net revenue retention from the 100% range to north of 110%, and we feel good about our ability to deliver net revenue retention at or above 110% going forward. About half of this increase is the result of the gross retention strength that I just discussed. The other piece of the improvement is a diverse and growing set of upgrade drivers. As our product suite continues to improve and expand, we are seeing growing opportunities to sell into our install base of customers. Edition upgrades from Starter to Pro and Pro to Enterprise, seat expansions in Sales Hub Pro and Enterprise customers, and continued multi-hub adoption are the key drivers here. Our second strategic pillar is to strengthen our segmentation approach. This pillar is about continuing to optimize our product and go-to-market to serve each of our customer segments. This means investing in automation to drive high velocity and volume with our smaller customers, and leaning into product innovation and a more tailored go-to-market approach in the up-market segment. We are seeing success in both these motions. Our Starter edition has fueled customer acquisition for HubSpot, and Starter customers have grown from a small sliver to north of 50% of our customers as of the end of Q2. This growth both builds a competitive moat and creates a growing upgrade opportunity. As you can see in the chart on the right, we are seeing strong growth in the MRR of our Starter cohorts as their businesses grow along with their adoption of HubSpot. Up-market, we are seeing nice expansion in our average subscription revenue per customer. This is being driven by both existing customer ASRPC growth, as well as success in selling larger new customer deals. Internally, we look at the number of deals with ASP greater than $3,000, and the volume of these larger deals has increased fourfold over this time period. The combination of the mix of our customers across our segments and the ASPs of each of these segments are the drivers of our core KPIs of customer additions and ASRPC. Over the last 5 years, HubSpot's blended ASRPC has remained relatively flat as these two factors have largely offset one another. More recently, we have seen ASRPC grow in the high single digits as we lapped our big 2020 Starter cohorts. These two factors will continue to volley as we drive investments in both our up-market and smaller customer segments. On to our third strategic pillar, which is to invest in B2B commerce and payments. As you heard from Yamini and Matt, HubSpot Payments is our first step in enabling our B2B customers to deliver a consumer-like buying experience. With HubSpot Payments, our customers will be able to embed payment capabilities on their sites and invoices, facilitate one-time and recurring transactions, and accept both credit card and ACH payments. The open beta, which we announced today, is initially focused on U.S.-based existing customers and is best suited for small and medium businesses with less than 100 employees. We estimate that about a third of our customers are the right targets for our initial B2B commerce product. I know many of you are familiar with the typical monetization models for payments, but I wanted to talk you through the financial impact to HubSpot because it's different from our core software business. We intend to monetize HubSpot Payments through a per-transaction fee, which is linked to the transaction amount and the method of payment. HubSpot will recognize the gross amount of the transaction fee as revenue, and we will have COGS associated with the processing of the transaction, including interchange fees. As a result, the gross margin of the payments business will be much lower than our traditional software margins. We are excited about the potential contribution of payments to our overall results in the longer term. In advance of the open beta we announced today, we've been running a small public beta over the past month or so. As of the beginning of October, we had unlocked our payments capabilities to 3,000 HubSpot customers, and we are encouraged by the results thus far. Without any product promotion, over 20% of those customers have found and engaged with the feature in-app, and more than half of those have started the sign-up process, indicating a high degree of interest. While it's still very early, we're encouraged by the activation of HubSpot Payments by these customers. This is just the beginning. As you have seen us do many times before with our new product introductions, our intention with B2B Commerce is to learn and evolve. We believe there is much opportunity to expand our commerce capabilities and grow the business over time by addressing more complex contracting billing requirements, expanding outside the United States, and developing other adjacent financial services. Finally, before I wrap up, I would like to share a few thoughts around our philosophy on growth and profitability and walk you through how we're tracking against our long-term financial model. As we think about balancing growth and profitability, we ground ourselves in our mission and the opportunity we see to help millions of organizations grow better. We continue to believe that the opportunity in the SMB market is huge, and our market share remains in the single digits when you consider our 120,000+ paying customers against the millions of small and medium-sized businesses worldwide that we believe would be a good fit for our CRM platform. With that in mind, our philosophy around growth and profitability remains unchanged. We've been investing to drive durable, long-term revenue growth at scale, and this remains our number one priority. That said, we regularly look for ways to become more efficient as we scale the business and expand margins over time, in line with our long-term financial framework. Overall, I think that our philosophy for driving growth and delivering incremental leverage has served us well. If you look back in history, HubSpot was on a path to deliver consistent operating margin improvements year to year. A few years ago, we saw a big market opportunity, and we made the decision to increase our investment, particularly in R&D, to go after it. As a result, our operating margins have remained relatively flat over the last couple of years. At the time, we believed this was the right choice for the business over the medium to long term. Looking back today, we feel even better about that decision. Like many other companies, we have enjoyed a tailwind to our revenue growth from the acceleration of front-office digital transformation. That said, we believe we've seen a larger impact from those purposeful investments across our CRM platform, and that they have allowed us to accelerate our organic revenue growth rate over the past 18 months. While we are still actively working through our plan for 2022, you should expect that we will continue to prioritize growth again next year. While we'll have more specifics to share in Q4, I would not anticipate that we will deliver meaningful margin improvements in 2022 as compared to 2021. With that, let's talk about some of the moving parts across the P&L against our long-term margin framework. To begin, we are not changing our long-term target model for operating margins. That said, I'd like to give you some color on some of the key areas of our P&L as you start to think about next year. Our overall gross margins remain quite healthy and stable in the low 80s. While we've seen some natural leverage in our cost of goods sold as we've scaled, we've invested in the resiliency of the platform over the past few years. We launched an EU data center in July, and we've seen some additional costs associated with the increased customer usage of the HubSpot platform. As I highlighted in my earlier comments, HubSpot Payments will contribute a lower gross margin, so we expect some pressure on our overall gross margins as HubSpot Payments scales. That said, we do not expect that HubSpot Payments will meaningfully impact our gross margins in 2022. We feel great about the innovation engine here at HubSpot, and we plan to continue to invest aggressively in product development, as we believe it will continue to be the foundation for strong organic growth into the future. Sales and marketing as a percentage of revenue remains the farthest away from our long-term target model, largely by design. We believe the right choice for the business is to focus on driving top-line growth, given our strong unit economics, favorable demand trends, and the significant global opportunity in front of us. Finally, we've shown steady improvements in G&A spend as a percentage of revenue and believe that we can continue to trend G&A investment toward the 8%-9% range. Okay. Let's wrap up with a few key takeaways from today. HubSpot continues to deliver strong financial performance with outsized growth and strong profitability at scale. We see significant opportunities to continue to expand our product offerings, drive growth through segmentation, and launch new revenue streams, like our payments offering. While the addition of our payments business could have modest impact on the composition of our P&L, our long-term operating margin targets remain unchanged. Okay, with that, we're going to take a short break and move on to our Q&A session. Thank you. Welcome back, everyone. Thanks for sticking with us, and welcome to the Q&A proportion of the Analyst Day here at INBOUND. We're excited to be back here live on the Lawn on D at the BCEC. I have with me here Brian Halligan, Yamini, Kate Bueker, and Dharmesh Shah. How's everybody doing? Great. Fantastic. Nice. Well. Great. Good. Fantastic. I should say up front that we're really excited to be back here at the BCEC, although we do have a little bit of flight traffic overhead. Bear with us as we manage through that. We've got about a bajillion questions here. Okay I should clarify, is Halligan math for the fact-checkers out there, not Kate math. Joking aside, we're going to do our best to get to as many of your questions as possible over the next 30-35 minutes. With that out of the way, we ready to get started? Yep. Let's do it. Let's do it. Okay, fantastic. First question's coming from Mark Murphy from JPMorgan. It'll surprise you to hear this is on the payments business. Maybe Yamini could start. Could you expand upon your differentiated payments vision? Who are the key partners? How will it differ from other CRMs that have commerce offerings? I've got a follow-up for Kate. Great. Mark, I hope you're doing well. Thank you for starting us off strong with the payments question. The way we think about it is that commerce-enabled CRM is fundamentally different than commerce as part of the back office. Historically, commerce has been part of the back office. It was sold to the finance leader typically, and it was a lot more about collecting payments and revenue and cost savings and efficiency. The way we think about it, commerce-enabled CRM, the value proposition is fundamentally different. It is all about growing revenue, not saving costs. That's a very different approach. Over the past few months, we've been talking to a lot of our customers and asking them how we can help them grow. It became super clear to us that commerce needed to be part of CRM to drive growth. There's specifically three things that I want to highlight. First off, we enable completely new payment streams. We've been talking about this all morning. B2B buyers are now much more ready, willing to use their credit card, use ACH payments, and be able to process transactions online, and we want to enable those new streams of revenue so it's driving growth. I think the second thing is that this rep-assisted sales motion is just exceptionally challenging, especially in the last mile of it, and we want to make it super easy, super streamlined, so that reps can focus on growing the business. Then the third part of it is that commerce is part of CRM. You just get so much more context about your customers. Imagine marketing being able to run campaigns on abandoned carts. Sales having very clear answers for where the customer is within the cycle. Service being able to prioritize conversations based on purchase history. I mean, the use cases are literally limitless and endless for commerce-enabled CRM, so that's what we're focused on, and it's a very differentiated value proposition than everything else. Kate, I'm sure you can add to that. Yeah, I think you're absolutely right. I think this is very much around growth versus cost savings. Yep. It's a new revenue stream for us, as you know. It's going to look fundamentally different for HubSpot as a P&L driver. We are, as I shared in my presentation, intending to charge on a per-transaction fee. This is a new revenue stream based on the volume of purchases that we will enable for our customers. That's great. Actually, I think that leads in really well to the next question from Ken Wong from Guggenheim. He asks, "Any sense for how big the payments opportunity will be? How much GMV is currently being processed by HubSpot customers today?" Yeah. That's a great question, Ken. I would say that, first off, this is a longer-term play for HubSpot. We're very early days, and we know the market is going to continue to develop. If you specifically look at the segments that we are focused on today, which is customers with less than 100 employees in the U.S. that are B2B companies. If you look at that specific segment, the GMV runs in the tens of billions. If you look at the total addressable payment volume within just that segment, it runs in the hundreds of millions. We're talking about a large market where we are early, and I'd say that the way we approach this, we have a playbook for doing this. We start out, we learn a lot, we iterate, we evolve, we make our product great, that's the approach that we're going to take. I'm pretty excited about how we think about developing the roadmap, going forward with embedded payments and native invoicing and things like that. I see this as a broader opportunity in the commerce space in front of us. That's good. If you guys can believe it, we have another payments question. All right. Samad Samana from Jefferies. Maybe for Kate here, and I think it kind of builds off of what Yamini was just answering. How should we think about the payments opportunity within the install base and how we're sort of cutting that? I think you referenced it in your deck. Also, how will we recognize revenue on a gross or net basis? Can you speak to the net take rate?- Yeah We expect to achieve over time? Yeah, sure. I do think that Yamini set up the conversation really well. The initial payments offering, we think is well suited for largely a third of our customer base. U.S.-based customers with roughly 100 employees or less, people who are business-to-business customers selling services, selling software. Yeah. Yamini described the opportunity well. We will process the transaction, we will recognize as revenue the gross amount of the transaction fee. We will have costs associated with the processing of the transaction. A lot of that will be the interchange fees associated with credit card payments. That's great. Okay, let's switch it up. Brian, we've got a question here from Kirk Materne from Evercore. "Can you discuss how the competitive environment has changed given your broader product portfolio and whether the opportunity is shifting slightly towards competitive replacements versus greenfield opportunities as customers look to consolidate the number of vendors that they work with? Oh, that's a good question, Kirk. I think this is sort of a classic HubSpot playbook. If you think about HubSpot, we started as a marketing app, we moved to a front office suite. Now we're moving into a front-office platform. Underneath all of that are our set of what we call Primary Colors, and then we mix these Primary Colors into our applications. Payments is going to be a Primary Color, and it's going to be a very powerful one that's going to deliver a lot of value to our customers. I think what's unique about HubSpot relative to the competition and other CRM vendors is most of them bought an e-commerce offering, and kind of bolted it on, and it's kind of ugly to set up, and it's expensive, and it's hard, and our unique special sauce is we're very good builders, and we build awesome products from scratch with consumer-like user experience in the front end and enterprise experience in the back end. I think it's going to be highly differentiated, and I think it's going to sell really well. That's awesome. Let's see. We've got a question here from Ken Wong from Guggenheim on the Service Hub. Dharmesh, maybe you can take this one. Management has consistently highlighted Service Hub as an area of improvement. Should we view the introduction of the customer portal as a missing element that potentially inflects the adoption of Service Hub growth? Yeah. Thanks for the question, Ken. Service Hub is our fastest-growing hub right now outside of Operations Hub, which was just released earlier this year. The growth has been great, and it's further along in its evolution in terms of growth rate than Sales Hub was at that same point in time in its life cycle. What we're going to do with Service Hub is the same playbook we've had with Marketing Hub and Sales Hub, which is we identify the key features the market's looking for, and once we hit that critical mass with the core features that they need, is we sort of hit the gas and say, "Okay, now we want to push this and make it an independent front door of the HubSpot platform." To answer your question, the customer portal is one of the most exciting features and one of the longest-running feature requests we've had. It was awfully hard to build, but we're super excited about the impact that can have on Service Hub and its growth over the coming years. Okay, that's great. Maybe we'll come back to some more payments questions. They're coming in. Sure heavy at this point. Stan Zlotsky from Morgan Stanley. Maybe a question for you, Yamini. He asks about the payments business. Does this mean that CPQ is the future product direction for payments? That's a great question. The way we think about it is that if you look at B2B companies, there are two ways that they sell. One is touchless, what we call B2B commerce, and then the second is the rep-assisted sales process, and that's where the CPQ actually comes in. Today, the last mile of that rep-assisted sales process is really complex. You start with actually generating a sales quote, then you send it out for an e-signature and get that contract signed, then it becomes an invoice, and then you get payments, and each of these are individual systems with glue and duct tape and manual process and paper checks mailed in. It is a mess right now. The way we think about it is we want to make that last mile of the rep-assisted sales just easy and smooth. We're going to streamline it. We're going to bring multiple steps together. As you saw in the demo, it just becomes a click and a pay, and that's going to help a lot of salespeople focus on growth, not on just getting all of those payments done. I think that's certainly the direction that we'll go. That's fantastic. Brian, maybe a question for you on the competitive payment side of the ledger here coming from Keith Bachman at Bank of Montreal. He asked, "How is payments different from what is available today from other companies? Is the payments offering more for B2B or B2C companies? Oh, that's a good question. Since day one for HubSpot, we've been really focused on B2B. The payments and commerce requirements for a B2B company are vastly different from a B2C company. Like Yamini was saying, there's the rep-assisted motion with all that sausage-making in there that we want to make really smooth and clean for the rep and for the customer. There's just the ability for a software company or a service company, a B2B company, to sell their product online. It's a very different set of requirements, and we're leaning hard on the B2B side. That's great. I'm going to stall here just for a second as that plane goes overhead. Michael Turits from KeyBanc has a question on Operations Hub, Yamini. Sure. He says, or he asks, "The Operations Hub feedback is obviously good but early. What can you tell us about the roadmap in terms of maturing feature sets and integrations? Are you seeing the most success selling it standalone, part of the CRM bundle, or just paired with Marketing and Sales Hub?" Yeah. I'll get started, and maybe you can add to it as well. Operations Hub, as Kate mentioned in her prepared remarks, we've seen 10,000 customers. The initial feedback has been really, really positive, both from customers as well as partners. The RevOps persona is such a critical persona within almost every go-to-market operations organization, and they have the job of delivering insights that can fuel growth for organizations. It seems like a very complex job. It is a complex job, and therefore, we want to empower them with the tools and solutions. What you saw us do earlier this year when we introduced Ops Hub, both the Starter and Pro, is we helped those operations analysts get all of that data from their entire tech stack and put it into HubSpot, and we become almost the CDP at that point, right? We bring all of that. With Pro, once you have the data, you start really sophisticated workflows and analysis on top of that, and automation on top of that. Where we are going with this when we launch Operations Hub Enterprise in November is once you have all of the data, you want to be able to drive reporting, and you want to be able to drive insights from all of that reporting. That's where we are headed. When we talk to our customers about reporting, the single biggest challenge that they have is the data t hat supports that reporting, that supports the insights. The powerhouse feature you're going to see us talk a lot about is Datasets, and it sounds complex. It's not. It's really taking and managing the data, manipulating it with calculations, and then being able to get the rest of the organization to use it. It's going to be super powerful. Ops Hub is where the power of our entire crafted approach comes together because that's where it supercharges the entire CRM Suite. Maybe you want to talk about where we are seeing Ops Hub from a growth perspective. Sure. I think the trends we're seeing in terms of the adoption are very much the same as what we've talked about over the last couple of earnings calls. The volume of customers is really coming at that Starter edition. Primarily, we see Starter customers adopting that as part of the full suite purchase. In terms of the MRR, we are seeing the vast majority of the MRR come from our professional customers, which we would expect. That motion is much more of a cross-sell motion than a new purchase motion. Great. I think Mark Murphy may steal your heart with this question here, Dharmesh. It's on Web 3.0. He says, "For a guy that does not like carbon-based life forms, Dharmesh is pretty darn good at connecting with inspiring carbon-based life forms. I agree with that. Can you please expand on Web 3.0 And what it's about in terms of decentralization and how HubSpot may ride that wave well into the future? Yeah, thanks for the question, mate. I love you, Mark. Of course. Web3, what it does is It's basically a continuation of what HubSpot's been working on for 15 years now, which is we recognized early that power was in the hands of the customer, right? The customer, that's where inbound marketing came from. That's where all of our product development leans towards that end customer. What Web3 allows is that it's just a continuation of that same story, which is a customer has much more power, much more control over their data. The reason it's interesting for HubSpot customers and the market overall is that we can now have, with Web3, a direct connection with those customers. We can remove the intermediaries. We don't have to do inefficient advertising to the masses when we don't really know much about them. We can do much more targeted building of these connections with customers, and we think it's better for the customer, better for businesses. Still very early. We're not launching new features or anything like that yet. My personal opinion is that's where the world is headed, is more power to the customer. That's fantastic. Let's see. A question from Rishi from RBC around the durability of growth for Yamini, and Brian, maybe you can tack on if you've got some thoughts. He asked, "Philosophically, how are you thinking about the sustainability of some of these digital transformation tailwinds you saw as a result of the pandemic? You want to get started? Sure. I sort of think there's two things going on inside of HubSpot. One is we are seeing a tailwind from the digital transformation that happened through COVID, and it's still here, but I think a more powerful tailwind is just the product and the value prop has gotten better. I give credit to some of the big investments we made back in 2019 around a thing we call Mainsail, around Primary Colors, around really focusing on the Net Promoter Score of our customers, and big investments on the platform side and big investments on the app side. I think it's more of that. I think our products have just gotten better. Our value prop is kind of perfect for the times, and I think there's a little bit of COVID tailwind behind us, too, but I think it's swung now more it's execution than it is COVID tailwind. I don't know if you agree with that. Oh, I completely agree. I think it's the combination of what we're seeing in the market, the need for much more digitization of the whole front office, and I think it's also the bets that we're making. I think two years back, we made a ton of bets that's working. We are doubling down on building this world-class CRM platform where we can actually provide a much more crafted solution that helps all of our customers. We know what we need to do. We have, collectively, in our heads, ideas for product innovation for the next 10 years, for the next decade. We know exactly what we need to build. I think the combination of where we're going with the product, the level of innovation, as well as what we're seeing in the market, gives me a lot more confidence in terms of the sustainability of our growth. Yeah, me too. That's great. Speaking of investments, Brad Sills has a good question here from Bank of America on the enterprise investment side. He asked, "We see investments in the enterprise segment of the market, Operations Hub Enterprise, sandboxes, et cetera. Does this indicate more focus in the upmarket businesses? Should we expect to see growth shift more towards ASP away from customer adds? Would the company target customers with greater than 2,000 employees at some point down the road? He also gets the award for asking if we're going to go above 2,000. That's five questions there, Brad. All right. I like it. He's got five more after. Okay. We'll keep it rolling. Let me parse a couple of things out. First of all, HubSpot runs on HubSpot, and we're a 5,000-person company. From a product perspective, sure, yeah, we can absolutely scale and support. As I mentioned in the prepared remarks, we are really focusing on our segments and approaching each of those segments with the right investments, both on the product side as well as the go-to-market side. In terms of upmarket, we focus on the 200 - 2,000 segment, and that's where you've seen a lot of the product investments in terms of Marketing Hub Enterprise, Sales Hub Enterprise, with a lot of the powerhouse features go. That makes us win a fair share of that particular market segment. You'll continue to see us make investments within that particular segment. Anything else that you'd want to add? I guess I would. I'll hit his question on ASRPC versus new customer adds straight on. Good. Because we get a few of those in here. I'm sure. Those of you that have asked it, this is the answer. Look, I think we believe that there is growth in both. It comes back to the segmentation strategy that Yamini is outlining. We're making investments to drive velocity at the low end. We're making investments to drive value and retention at the high end. What happens is that you're going to see customers continue to grow. We have a big market opportunity. We have 120,000 customers against a three million addressable market. As we continue to improve the product, we're going to see our customers stick around with us more, buy more hubs. You have, and have had for a while, both of these motions. What I shared in my presentation is that those two motions tend to volley, and from one quarter to the next, you will see either greater success in adding new customers or greater success in driving ASP, and therefore ASRPC. It is not something that we purposefully don't guide to it because we don't manage the business that way, and I think you're going to continue to see that trend from us over time. I like how you say volley. Your tennis background. There you go. I like that. Yeah. Kate, maybe sticking with you, so a question here from DJ Hynes at Canaccord. He asked, "What are the assumptions around long-term payments, revenue contribution, and margin that give you confidence that gross margins can stay in the low 80s? Yeah, it's a good question. I guess one point of clarification, I will acknowledge the Payments business has a much different margin profile from a gross margin perspective. The Payments business, however, has a much different profile in terms of the sort of go-to-market support required to grow that business over time. We feel very good about the ability of that business to deliver an all-in operating margin that is really positive for HubSpot as a general business. That said, we had a public beta launch about three or four weeks ago. The data is very early, and it will take some time for customers to discover the payments capabilities, to onboard to HubSpot Payments, to sort of adopt and ramp up the GMV that they are leveraging HubSpot Payments to process. That will take some time. What I did share in my comments is that for 2022, we are comfortable that payments will not have a material impact on our overall gross margin. I think over time, as the business scales, that will change. Yamini, a question for you from Brent Bracelin from Piper Sandler. He asked, "Sales Hub growth of 70%, even at $290 million in ARR, is certainly impressive. Can you walk through the growth drivers of Sales Hub? Is it predominantly cross-sell, multi-Hub, or is there a material portion of growth driven by single Hub sales deployments? All of that. All of that. All of that. I think all of that. We are seeing all of that, and it is quite impressive. Again, if I step back, last year at INBOUND, we powered up Sales Hub. Our customers had been asking us for these custom objects for a long time, we added custom objects, we added advanced CPQ functionality, we added field level permissions. I know maybe you think that is not cool. It is very cool. I agree. it gives a lot of ability for admins to be able to get the right visibility of the fields, and that was up-market ask of our customers. Earlier in Q1, we added conversation intelligence, which is a category in and of itself. All of those have powered up Sales Hub Enterprise, and therefore, from an up-market customer perspective, we see it in multi-hub because combination of Marketing Hub and Sales Hub is exceptionally powerful. Combination of Sales Hub and Service Hub is exceptionally powerful. More than that, this week, we just announced a bunch of additional features that our customers have been asking. sandbox, really important to model, to have that whole data model in a separate way before you run into production. A lot of governance features that we have just introduced, and then more advanced forecasting. All of these are investments from a product side. What we're doing from a product is powering Sales Hub. I'd go back to the playbook that we talked about. We launch a hub, then we look at it, we get feedback, we iterate, we evolve the product, and then we get it to best in class. We did that with Marketing Hub, and we're on the path to doing that with Sales Hub. I'm really excited about the announcements from today as well. That's great. Dharmesh, question for you from DJ Hynes at Canaccord, on the AI side. He asked, "Can you talk about how you're leveraging AI across the platform? What's working well? What needs to be better? Most important, what's next. Sure. Thanks for the question. Our approach to AI and ML, machine learning, is actually different than what you see in the big enterprise CRM offerings. What they're doing is saying, "We'll provide you the tool set, and you'll have your own data scientist, and you'll use our tool set to implement machine learning as it makes sense." In our market, what our customers have really asked for is the benefits of ML without the burden of having to understand how ML works. What we do is we look across the entire product line on a continual basis and say, "Given the state of ML right now, how can we improve the product, both for our internal users, whether it's a marketing person, salesperson, RevOps person, and the end customer?" We've learned that when you send email at the correct time based on past data, engagement rates go up, right? That things look better. When we look at our entire data set, we talked about data quality earlier today. When we can use machine learning to detect duplicates, that cleans up the data, allows us to do much better reporting, much better forecasting. The question we ask ourselves is how can we use ML to make the product better in the ways that customers actually care about, versus giving them tools for them to do it themselves? That's great. Kate, wouldn't be an Analyst Day without a modeling question from Samad. Oh. Samad at Jefferies. You were correct. Yeah. You were correct. Yeah. You can thank him for this one. He asked, "Will you report payments revenue separately or within the subscription line item?" Samad, thank you for the question. Always look forward to your modeling ones. You can expect that for the next few quarters, we will report the payments revenue as part of our services and other revenue line. Over time, we will analyze whether it makes sense for us to break that one out further. That's great. Brian? Yes. Keith Bachman from Bank of Montreal, question on payments. He asked, "Can payments be successful without a full commerce offering? If so, how and why? Particularly against a company such as Shopify and other competitors in the B2C side. Oh, we are huge Shopify fans. I know Tobi well and love that business. I just think they're up against a very different game. They're playing a very different game than we are on that B2C side. It's a very different set of requirements they have. Those guys are also starting to really put a dent in what Amazon's up to, and I applaud their efforts. What a B2B company wants to do is very different. They want to streamline that last mile, like Yamini likes to talk about at the sales process. They want to get their services product or software product, their limited product inventory, just up online and be able to sell it online. I don't see us competing with Shopify at all. I see them being the other side of the coin. Big fans of what they're doing. Okay. That's great. Yamini, Rishi at RBC asks, "On payments, what features or technology integrations need to be added to grow the target customer base from a third today to a higher level over time? Yeah, that's a good question. I would say we're very early, right? Right now, next year, the focus is going to be on driving adoption across the specific customer base that we're looking at. That's why we think about it as the near-term opportunity as really embedding payments into every workflow possible. You can imagine it in forms, you can imagine it in meeting invites, you can imagine it everywhere showing up within the product. That's the immediate focus. Now, beyond that, I think there is a ton of work to do in terms of the commerce use cases and building commerce into the platform, their native invoicing, a lot of integrations with back office, continuing to build out the platform. We'll keep, again, learning from what we see in the market next year, expanding our addressable base. Kate, I don't know if you want to add to that as well? Yeah, I think the other point that I would make is we offer today both payment for one-time- That's right. ...services and also recurring services. The use cases we're addressing today are pretty simple. Yep. Those will become more complicated over time. The other important thing is today, we're very much focused on the U.S. and there is a big world out there. Over time we can potentially address the international opportunity. That's great. Looks like we probably have time for one or two more here. Question from Keith at Bank of Montreal, maybe for Yamini. How do you envision your solution portfolio or so, our hubs expanding over the next two to three years? For example, could you see your portfolio doubling over the next three to five years? What's the magical number of hubs? We don't have a magic number, for sure. Although I'll say our product team and our engineering team are incredible, and they're capable of doubling from here. I will say, maybe philosophically how we approach it is we talk to our customers all the time, and we're constantly identifying use cases, challenges that they have in terms of everything that they need to do to grow their organizations, because that's our mission, right? Mission is to help millions of organizations grow better. From that point, we do two things. One is we actually look at the persona. Who is the unique persona that we are targeting, and what are their key pain points that needs addressing so that they can help the companies grow? Philosophically, we start with the customer, then we identify the persona, then identify the pain points, then we continue to expand. As I mentioned, our strategy is to go broad and go deep. As we go broad in terms of the product portfolio, it comes naturally in terms of what the evolution of our customer challenges are, going deep, we build more and more value into each of the additions that we launch. That's the approach that you'll see. Perfect. One last one for Kate. Brian Peterson snuck this one in at the end here from Raymond James. For Kate, should we be thinking about 110% net revenue retention as the new normal, or are there things in future years that wouldn't reoccur that could possibly pull it down? Yeah. Thank you again for the question. I love a good retention question especially when I can talk about setting a new target level. In general, you should expect that we have shared this new 110 + retention level because we feel really good about our ability to continue to deliver results that are at or around that range. Over the last couple of quarters, we've talked about the fact that our net revenue retention took a nice step up, tried to share a bit of the details today around some of those drivers. I think you continue to see the core underlying customer behaviors that are driving the new, higher level of customer dollar retention. We feel, and net revenue retention, so we feel really good about our ability to continue to deliver that. That's awesome. Thank you. All right, everyone. I think that's about all the time we're going to have for questions today. Thank you to Brian, Yamini, Kate, and Dharmesh for your time. Thanks to all of you out there, wherever you are, for joining. Be well and take care. We'll see you soon. Thank you. Thank you so much.