🍿 The future of SaaS? (Why HubSpot bought the Hustle)...

Welcome

Whats up! Welcome to Wouters blog. It’s Wednesday! That means i’m going to be covering: A media business breakdown.

If you're out of the loop on the Power of Owning Your Own Distribution, today's newsletter is a 3 minute case study. You'll learn why Vertically integrated sales channels can be superior -- and why Hubspot bought the Hustle for $30M.

Btw i’m building this newsletter in public! If you want to see the behind the scenes, follow me on twitter..

Follow me booty here lad.

Vertical Sales Channels
The $27M Acquisition That Matters.

About half of HubSpot's (A $28B Company) expenses (so over $200M) are on Sales and Marketing.

That means the biggest expense for Hubspot, and other SaaS companies alike is sales and marketing. The actual acquiring of customers. THAT is the bottleneck for large SaaS companies.

Creating a great product is the bare minimum. There is however, real alpha in finding optimal ways to acquire users.

This is exactly why the Hustle was bought. Hubspot wanted to create a vertically integrated sales channel.

As Dharmesh, the CTO said in 2020:

This was 4 years ago! And a few months before the Hustle acquisition. It's clear that this is still the case.

Why Owned Distribution Is Important

Enterprise B2B SaaS often requires multiple touchpoints for folks to use it. Switching costs exist. They can appear complex. And seem costly.

As such, being at the forefront of peoples thoughts. Earning their trust through value driven activities such as providing content and education. Is a must.

By owning the content and media, Hubspot effectively has better control of their own perception. It's like a huge media company that serves the purpose of making Hubspot look great.

This gives Hubspot significantly more data. More control over their message. More customizability in their marketing, and a longer time horizon to convert customers. That means the CAC should decrease.

Case Study
Why The Hustle?

The hustle at the time had 1.5M tech/entrepreuner readers. A good fit for HubSpot -- who was already advertising with the Hustle. It's likely that they had really great results and as such thought about just eliminating the advertisement cost altogether.

How did it happen? (the deets)

When HubSpot reached out to Sam the founder of the Hustle. He found himself open to talking about selling the company.

As Balaji said the acquisition just makes a ton of sense.

This is a big reason why Penn acquired Barstool. The main reason a media business would be bought is so that the SaaS company owns the funnel with a trusted audience.

Effectively gaining an arbitrage on acquiring customers. As we saw, acquiring customers is hard and expensive (Hubspot spends roughy 50% of revenue on this!).

Austin Rief, CEO of Morning Brew sais the reason this doesn't happen much is because:

2 Learnings
Takeaways

If there’s anything you remember after reading this. I hope it’s the following:

1) Owning Distribution Reduces Costs:

A big reason the Hustle got acquired was to reduce the customer acquisition costs. HubSpot has huge sales/marketing expenses. Integrating a sales channel through owning it's distribution gives it more control. Now controling messaging and customer engagement to a larger extent than before (they own more of the funnel.)

2) Data matters. Get you some more sales Insights!

By integrating a media company HubSpot gained greater control over the sales funnel.. This offers enhanced data analytics, enabling a more customized marketing approach. So HubSpot can learn things from testing creative, messaging etc on the Hustle audience. And then replicate this elsewhere. It's a shift from traditional marketing to a model where value-driven content and education earn customer trust.

Need Help?
Time to help. Need Sales Advice? I got you..

Are you running a newsletter right now and are looking for an external sales-experts opinion on wtf is going on?

I’ve helped sell millions of dollars worth of newsletter advertisements. IF you want consulting advice i’m available for calls.

Reply to this email if you’re interested with your problem(s) + budget.

wait…
BEFORE YOU GO!

Don’t forget

Don’t forget to come back for Fridays newsletter where I will cover:

• The weekly newsletter media breakdown!