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HubSpot CEO Yamini Rangan - how AI and Clearbit data can accelerate customer success vision

Stuart Lauchlan Profile picture for user slauchlan November 10, 2023
Summary:
The deal has yet to close, but CEO Rangan has drilled a little deeper into HubSpot's decision to acquire Clearbit.

Yamini Rangan
Yamini Rangan

Last week HubSpot announced plans to acquire Clearbit. At the time the two parties were both tight-lipped about the thinking behind this move, although Barb’s analysis of what’s likely to come provides us with some useful insight. But as HubSpot announced its Q3 earnings this week, more clarity did emerge about the rationale driving this acquisition. 

With the caveat that the deal has yet to pass all the necessary regulatory steps, CEO Yamini Rangan explained that on completion what Clearbit offers is a way to accelerate HubSpot’s wider vision: 

Our vision is to give millions of companies the best possible data about their customers in HubSpot. Today, we pull in data from website visits, marketing e-mails, sales calls, support tickets and more, and we unify all of that data on a beautiful, simple customer record. This is arguably the biggest advantage with HubSpot. With Clearbit, we will be able to bring in even more external data that can help our customers connect better with their end customers.

What this unified data means for customers is: 

While we can help our customers identify great fit customers and provide clear signals on buying intent, both keys to increasing their go-to-market effectiveness, our customers want company data. Not just the name of the company and employee count, but they want rich attributes about companies including demographic data, like who is the CIO, and techno-graphic data, like which automation products are they using? In addition, they want a real-time way to monitor buying intent. Not just based on direct engagements within HubSpot platform but also based on customers' activities outside of HubSpot and around the web.

Why Clearbit?

This is where Clearbit comes in, said Rangan: 

They have 100+ attributes for more than 20 million companies from more than 250-plus public and private data sources. We can take all of those data from HubSpot and Clearbit to power generative AI tools to create even more personal messages and insights for customers. Our differentiation will be to bring together a unified customer data with powerful AI tools that can consume that data and our market-leading engagement hub to supercharge our customers' go-to-market efforts.

As to why HubSpot chose Clearbit to meet these needs, Rangan said: 

Clearbit has world-class data, and they share our commitment to helping customers grow. They also have a deep bench of B2B data experts with a bold mission to leverage AI to power insight. In all our conversations with Clearbit, it was clear that the team would be a great addition to our culture. And most importantly, this does not take away from our approach to building great products with cohesive user experiences. We use Clearbit data on our product today, and we have a very clear vision for how we can integrate their data to provide immediate value for our customers. In addition, we can leverage our product-led partner-led and sales-led distribution engines to get this into the hands of our customers post close.

And there’s an AI angle on all this too: 

What we're doing is we're bringing together this data and powerful AI tools that can consume that data and world-class engagement hubs, and that will help our customers connect and grow better.

If we step back and think about the rationale for us, the age-old problem with CRM is that when you open up the box and set it up, it's empty. And our customers want us to pre-fill it with data on day one. They want us to pre-fill it with company data, who else can they sell to, intent data, who else is looking to buy their products and services and contact data, who do we connect to? This makes complete sense for our customers and it solves a huge problem for them.

That's why Clearbit makes sense…they have 20 million company profiles with rich attributes for each of these companies and [it] makes absolute sense, especially in the world of AI…we want to have engagement hubs powered by a Smart CRM, powered by data, powered by AI that helps our customers grow. That's what we are accelerating. 

As to what this will cost the customer, Rangan gave a cautious reply: 

Once [the deal] closes, you can expect a couple of integration phases where we'll share a lot more about the pricing strategy. But [in] the initial phases, we'll look to get Clearbit data into our customer base. Clearbit is already in our app market. They already have an integration with HubSpot. They've already been working with our customers. So I think it will naturally continue with what they currently have. And then medium-term to longer-term [we] will more seamlessly integrate their data into HubSpot's products and use cases. And again, our vision is really, how do we accelerate our customer platform with this data? So we'll be very thoughtful,  both in terms of pricing strategy, but also go-to-market.

My take

On a wider note, HubSpot’s numbers for Q3 were strong, with revenue of $557.6 million, up 26% year-on-year, of which subscription revenue was $545.8 million, up 25%. GAAP net income was down from a loss of $31.4 million for the comparable period last year to a loss of $5.5 million. Customer headcount grew by 22% year-on-year to over 194,000 customers globally, with over 9,100 net new customers added during the quarter.

But Rangan cautioned: 

Overall, we continue to operate in a choppy and challenging environment. Sales cycles remain lumpy, budgets are still under scrutiny and buying urgency remains low. It is clear based on my conversations with customers that they still need approvals from multiple decision makers and are continuing to optimize spend.

That’s an ‘interesting’ backdrop against which to make the Clearbit move. But it reflects well on HubSpot that it is ready to invest in a turbulent macro-economic environment. This is an acquisition and integration that we can clearly expect to return to in 2024. 

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