HubSpot, Inc. (HUBS) Earnings Call Transcript & Summary

Good morning, everyone. My name is Brian Peterson. I'm the lead application software analyst here at Raymond James. Very happy to have the team from HubSpot, Dharmesh Shah and Chuck McGlashen here to join us for a fireside chat. If you have any questions, like you'd like to lob in, my mail is [email protected]. Both Dharmesh and Chuck, thanks for joining us today. I'm excited for this.

So Dharmesh, I want to start with you. It's interesting at the Analyst Day, you talked a lot about Web 3.0. And I don't think that actually comes up a lot in my investor conversation. So can you talk about like what that means, what does that mean for your customers? And I'd be curious, what does that really mean for HubSpot?

Sure. So a quick crash course -- 30-second crash course on the Web 3.0 and what it is for those that are not familiar. So if we think back to Web 1, the original web, it was mostly about publishing information, making information accessible and there were very few people that created content and most people just consume the web, right? We went to websites and consumed it. The next generation of the web, what's loosely called Web 2, was about interaction. It's like, "oh! now we have sites like Facebook and Twitter and LinkedIn that allow you to actually create content. So everybody became a content creator, but it was very centralized. Very few people kind of owned the value that was kind of created as a result of that, right, because centralized to a very few companies. The idea behind web 3 is primarily around decentralization, it's putting the consumer back in control. That says, "hey instead of having this intermediary, but I go through that kind of owns all the value that I create, I can just publish content directly that I can reap the economic value or other value directly. That's the kind of high order what Web 3 is all about is this decentralization notion. The impact, I think it will have on HubSpot's industry in terms of how businesses engage with their customers is in the same way when Twitter and Facebook and LinkedIn came along and said, "Hey, here's a channel for you to reach our potential customers. What Web 3 roll out is a more direct way for businesses to connect with their customers to say, "Oh -- instead of saying, Oh, I know hundreds of millions of people go to Twitter or Facebook and I'm going to buy ads against that kind of attention. I will now have a way to say, "Oh, well, you know what, I'm trying to sell to CTOs within the Fortune 1000. And I'm willing to actually pay, to have that connection with you or you providing some information. So it's a direct business to customer connection that we haven't really seen in the B2B world. That's the opportunity. Still very early. We don't have any concrete projects right now that kind of pursue Web 3, but something that's moving very quickly. So something to keep an eye on.

Interesting. We'll look for updates on that. That's actually an interesting kind of conceptual mind there. So -- There's also been some new management changes at HubSpot. Yamini is stepping into the role here, Brian sitting is taken into the Chairman role. I'd be curious how that's changed things from your perspective?

The changes have all been positive. So Brian now gets to work on things that he's the most passionate about in terms of strategy and product and working directly with customers. And Yamini has kind of had the advantage of seeing scale and can kind of help us execute on this kind of joint vision the 3 of us have around, what we can accomplish with HubSpot. But we're all excited for this new chapter in HubSpot's history. We think Yamini is a perfect fit, and Brian is a much happier person working on the things he's super excited about.

Brian is typically a happy guy anyway. Since I know in the IPO, he always seems to be pretty happy.

That's true. He has a right to be happy about.

So may be just on some product questions. I know nobody likes to pick their favorite child, but you guys have a lot of different hubs that innovation cadence has continued over the last few years. But I'd be curious where you feel like you have the most room for expansion across your hubs what should we be expecting there?

Yes. So the -- interestingly, the product that we've made the most investment in that I'm most excited about is a product we don't directly sell. It's called the HubSpot Framework, and it's this -- what we sometimes refer to as our primary colors. And it's a foundational software service layer that all of our hubs benefit from. So we have primary colors like reporting and security and messaging and content creation, all of that. And so all of our hubs benefit from that. So as we kind of roll out new hubs, what gets us excited is we get increasing leverage over time because that framework is so powerful and so robust, as we introduce new hubs, they can kind of benefit from software that already exists and the code you don't have to and the code you don't have to write is best code highest leverage code there is. That's the one I know that I'm cheating a little bit by not picking a hub, but I'd like to ask that [indiscernible]. Yes, that's the share foundation. It's one of the things that makes HubSpot very different is the fact that we have that framework that we've built over 15 years, and that it makes us much more agile in terms of developing new hubs relatively quickly, and they're usually relatively robust kind of coming out of the gate.

Interesting. And so on the product side, I know PieSync is an acquisition that you made. I'm curious how you think about kind of the product development efforts from kind of an organic basis. and from M&A. And as you guys scale up, is there more opportunities that you may look at from an M&A perspective? Or how do you think about that balance?

Yes. We're continuously looking at opportunities. Here's our kind of simple heuristic in terms of deciding whether to buy or build. If -- I mentioned HubSpot Framework earlier. If we can get a high amount of leverage out of our existing software, our existing primary colors, we're less likely to buy. It's like, okay, well, this is not going to be that hard for us to kind of build internally because we get so much leverage from what we already have in terms of the HubSpot Framework. So that's kind of thing number one. Thing number 2 is -- To what degree would an acquisition negatively impact the cohesive user experience that we kind of crafted from the ground up. And if it would negatively impact it, we're less likely to do an acquisition. So a really good example here is Service Hub. At the time we got into that market, massive TAM, great opportunity, we could have chosen to buy. There were lots of great companies in the category. The reason we chose to build is that Service Hub gets an exceptionally high amount of leverage from our primary colors from the HubSpot Framework, and it has a relatively high surface area in terms of the user experience. So had we tried to acquire something, it would have felt like a bolt-on, it would have negatively impacted the customer experience. And so we chose to -- kind of chose to build internally. PieSync is a perfect example of the opposite, right, which is we didn't have a lot of data sync capabilities. It's a back office integration. So the customer experience is not negatively impacted and it made perfect sense. So we're constantly looking for the right balance of can we get leverage or not leverage. And can we not mar that kind of cohesive customer experience?

Got it. And so maybe this is kind of a follow-up to my first question. But in terms of balancing, advancing the existing hubs versus focusing on new hubs like -- how do you balance that, right? Because there's opportunity for all, like all the above. So what is kind of the gating factor in terms of how you're allocating those R&D dollars?

Yes. The 1 word answer to how do we balance, so the answer is carefully. There's no perfect science to deciding where we allocate. Usually, what we try to do, and there's -- and you'll probably have noticed over the first of our history, we have a certain cadence, so we'll get new hubs out there. And they'll be early, and we have a sense of where that product needs to go, but it takes us a few years to kind of get the product functionality to hit kind of market parities we think about. And the way we try to decide is we think there are products that are kind of product constraint that says, "Oh, the feature set is not quite there yet. It hasn't hit the tipping point where most target market customers would kind of accept that products kind of set of functionality and attributes. And there are products that are distribution constraint that says, "Oh, we've got all the right features. Now it's just a matter of getting the word out and seeing if we can kind of drive kind of market penetration and market share." And so we try to kind of wait towards increasing market share when products are still below that kind of thresholds like "oh -- and you saw this with Marketing Hub, we went and spent a bunch of time and energy getting Marketing Hub Enterprise kind of to parity, and we've seen the kind of uptick in the numbers as a result. We did that with Sales Hub over the last 2 or 3 years. And you'll see us kind of repeat that pattern. And then as we have kind of -- as we identify new opportunities are here, new hubs or new categories we can get into, we will allocate a certain amount of our energy to kind of those new bubs, but that's sort of how we think about it. So the first thing is kind of finish the swing on existing products and still leave room for innovation in building new hubs. And that kind of balance has worked out pretty well for us.

We had. And I was going to ask, so like a marketing hub, right, we've seen you guys kind of gradually move up, right? They can grow up gradually like you -- but in my work, I've heard about you guys having a lot more success with that product portfolio. But I'm curious as you kind of move up, how does that impact the product road map, right? Is there kind of a continued effort to rise here because there is an opportunity, but there's also a lot of white space in your core customer space to go get.

Yes, there's -- it's interesting. We had our kind of management offsite in our planning offsite earlier a few months ago. And the 1 thing we've realized, and this has never changed in the 15 years of HubSpot is our kind of our vision and our kind of future road map is at least another 15 years long. So it's not like,"oh, marketing hub -- and this is for all products, not just our newer ones. Marketing Hub, even though it's kind of been in a mature category, like there is -- as you noted, there's still a lot of white space, lots of innovation is still going. We have new channels that are constantly coming up and the demand from customers kind of continue to come in. And so what we try to do is to say, okay, well, let's keep innovating. We're not treating any of the products as a cash cow that we're just extracting money from. There's still a lot of opportunity for growth and innovation left.

And how do you think about tiers, right, in terms of like packaging. We've heard a lot about your start-up tier. How is that influenced from a product perspective in terms of you kind of sit down and say, "Hey, starter, you go all the way up to enterprise. And I'd be curious how you're thinking about maybe monetizing the different levels of tiers over time. Chuck, do you want to take this one? Or I'm happy to.

Yes. I think -- We've taken the approach, Brian, of -- so we have our starter tier, we have our professional tier. We have our enterprise tier that span across each of our products, right? And for the most part, I think -- Most of the innovation and new features are put into the enterprise tier, and then we have this explicit strategy of dropping functionality down over time into professional in starter to sort of bolster those tiers and add more value and trying to democratize these technologies and features for the masses. I think kind of going back to a point that Dharmesh made around our primary colors and the way that we just think about building product more holistically, is that like the compelling thing about this strategy is that we don't have to invest R&D dollars twice, right? Like we can take features and functionality that underlie those primary colors respin them up into these tiers within each of the individual hubs, so that they're built on the same platform. And so it's really about putting them into the top, letting them bleed down into professional and starter and trying to deliver as much value as we possibly can at both ends of the spectrum so that we're bringing lots of starter customers and may be earlier on in their business journey, allowing them to go up with us and buy core versions of the product, but also at the same time, trying to really bolster that high end of the product so that we can attract customers in that 200 to 2,000 segment and drive both sides of that equation.

So it's interesting, just kind of on that primary colors dynamic, right? It sounds like you can leverage a lot of your existing investments to kind of develop new products, right? So should that suggest that we should see a quicker pace of kind of product innovation and new hubs going forward? Or is that you have more R&D leverage? Like does that innovation cadence to accelerate because of what you've already done?

Yes. So I think that we try not to have a specific -- here's a number of calendar months that are going to span between new hub launches and releases and things like that. We're a little bit more thoughtful about that. But I think where it shows up in terms of that we do get R&D leverage is that we can make new products faster for sure, but we can make existing products better faster. So I think it helps on both fronts. It's not just about launching new hubs as far as getting that leverage. But -- It's been interesting to see over -- it feels like over the last few years, kind of the product team has kind of gone into a new gear in terms of [indiscernible] level of productivity and the things that we're able to accomplish. And there's a lag between when we kind of feel that, that improvement versus when the market and you folks will see it. But we're feeling good about kind of pace of innovation that's happening within product.

Good. That's good to hear. Well, Chuck, I'm sure -- I didn't think you make it this long into a conversation without talking about payments. But obviously.

I'm actually going to put my headphones on here, as luck would have it, my neighbor is having his leaves cleaned up.

I think we can all relate to that working from home experience. Chuck, I'll give you a second. Okay. All right. So obviously, one of the big pieces of news out of inbound, at least from an industrial perspective and thinking about your products was payments. Maybe spend some time on where you feel like that's adding value for customers. And I think of the one of the questions that I get from investors is where are you today? And how far are you going to take that going forward, understanding that payments in B2B, there's a lot of big numbers that get thrown around. So wanted to kind of understand kind of where you guys are today and how far you think you're going to take that?

Boy, I mean, I think to you sort of a Brian Halligan analogy, baseball analogy, like the game hasn't even begun, we're probably like in the on-deck circle, cleaning our cleats off at this point, given that we're sort of 6 weeks into an open beta and are excited to get the product into GA over the next few months here and get going with it. And taking a step back, I think there's a few areas where we feel like payments in commerce within B2B is going to help sort of our customers and carve out a spot within the market. The first is that we're looking to help B2B businesses sell online, right? In some cases, for the first time. The reality is that B2B businesses and -- or B2C businesses and E-com businesses have been at this for a while for the about 5 to 10 years, but the B2B part of the market just hasn't come along. And so big opportunity there to help our customers move online and move in this direction. The second, we talked a lot about this at our Analyst Day a couple of months ago was within that sort of quote-to-cash or sort of last mile of a rep assisted sales process where a quote gets generated and the cash hits the GL is a really, really messy process today with -- that has a lot of manual processes. It's fraught with error -- it takes a long time for our B2B customers to get paid even if they do have a third-party solution that they've sort of glued into their flow there. But I think most important, it's -- our point of view that commerce-enabled CRM is going to shift this historical perception that payment solutions for customers is an area where they should be looking for efficiency gains or cost savings in the back office to a world where commerce in the front office can actually facilitate growth, right? And so for a marketer, this allows them to sort of experiment with and add e-commerce to your website, like I talked about, and other channels as well as sort of capitalize on commerce data and the CRM for things like abandoned card "automation" right, which once again, we take for granted on the B2C side. B2B marketers should have that ability to. For a sales rep, you get agreement to actual payment in a single flow, which eliminates that whole scan and fax or even paper checks or maybe a customer bypasses the entire rep-assisted process and simply makes the purchase touchlessly on a company's website, right? And then for service reps, like you could imagine if they're closer than ever to revenue, which allows them to sort of capitalize on upsell and cross-sell opportunities without actually having to bring a rep in to sort of restart that process. So listen, like we just announced the product, I think it was 6 weeks ago. We're still in this open beta. We're looking to get it out the door and into GA. As we've talked about, this isn't going to be a needle-moving opportunity here in the very short term. That said, we feel like there's a gigantic opportunity out there within B2B payments and commerce over the longer term and are super excited about the road ahead. It's interesting that you're taking that more holistic approach about how to engage B2B. I think one of the interesting, let's say, innovations that you guys have talked about recently is operations hub, right? So that comes up a lot in my conversations with investors. I think they're kind of curious what that ultimately is going to mean for your customers, right, in terms of integrations. And does that relationship change? Does that facilitate more hubs? Like how would you frame it for investors in terms of the kind of the longer-term impact of Operations Hub?

Yes. Operations Hub is an interesting hub amongst the other ones. The other ones are all kind of preconceived and designed to be either today or someday kind of on ramps to the HubSpot platform. So you buy them in, you can start with Marketing Hub or start with Sales Hub or Service Hub or CMS Hub. Ops hub -- Operations Hub is different. And the kind of motivation behind Ops Hub, it targets the kind of operations persona. If you're working in sales ops or marketing ops or RevOps within a company. What's interesting about Ops and the reason we're so excited is that, yes, we will make direct revenue, and we'll sell the product and that's awesome. We like sales. We like revenue. But there's other ways that Operations Hub helps: Number one, beyond direct sales is that, it will increase our reach into that kind of 200 to 2,000 segment. They may or may not buy, but the fact that it exists increases the close -- increases the likelihood that someone will come on to the HubSpot platform. When they do come on as a result of having Operations Hub, if they buy it, it increases retention because what happens is that you're going to more deeply integrate your business with HubSpot. You're going to do programmatic actions, you're going to be sinking data in from third-party systems and you're going to put more of an investment in HubSpot. So we think retention at a macro level actually goes up as a result of Operations Hub being kind of part of the purchase set of hubs for a customer. And third is, as you kind of get deeper into the kind of platform as a result of Operations Hub, we think we will see kind of overall expansion in the usage, increasing number of seats and things like that. So there's just a lot of goodness that happens as a result of Operations Hub beyond just the direct revenue from sales. That's why we're excited.

So maybe I could segue on that. I think 1 of the things that Kate mentioned, in terms of, at the Analyst Day was kind of an NRR figure. It kind of picked up versus where it's been historically. I think maybe some of the starter to kind of upgrade tiers driving that. But maybe just talk about your optimism around that kind of sustained upsell, cross-sell motion that at least we've seen over the last year or and it's really been pretty strong.

Yes. I mean listen -- we're quite happy with the net revenue retention performance of the new business -- of the business and the new range of 110% plus that we shared at the Analyst Day back in October versus the prior range of 100%, I think, if you sort of take a step back, it's NRR has moved up from what used to be in the 90s at the time of the IPO to that 100% a few years back. And of course, we've moved it up here more recently. I think that starter upgrade motion into the core versions of our product is a driver there. And it's an important one. That said, I think we're even more excited about the -- well, 2 things really. First, that our customer dollar retention has moved up and lockstep with net revenue retention from what had been in the low 80s a few years ago into the mid- to high 80s, high 80s depending on the quarter. So basically, our gross retentions moved up. And then when you think about how we got to 100% historically, there were 1 to 2 factors that got us there from an upsell and cross-sell perspective. When you think about today, it's the cross-sell of new hubs into the existing base. It's customers that are taking more seats on the service and sales side, it's more marketing contacts. It's customers that are standardizing on the entire CRM suite or CRM platform upfront. And so the diversity of drivers that gets us from this range of about 100% historically to 110% plus today is quite a bit more diverse, and it starts with the growth side of the equation, which I think gives us a lot of confidence that we can continue to put up this 110% going forward. The last thing I'd say is, while the new 110-plus NRR brings all sorts of goodness for things like revenue growth, and that's obviously great. Now I think -- We're even more excited about what the higher levels of customer dollar retention and net revenue retention ultimately speak to like when you really boil it down around like our maniacal focus on delighting our customers, delivering a ton of value with the platform that's causing -- or leading to customers to stick around longer, they're utilizing more of our products. And ultimately, I think these numbers speak to the value that customers are getting out of the entire platform, which is awesome.

And so Chuck, maybe I can follow up on the kind of maniacal value. Like that's kind of come across culturally as I've interacted with you guys over the years. How much do the customer needs and what their requests are kind of influence what's coming in the road map, right? Like I know you guys have a lot of innovative ideas, but I'm curious how that customer heartbeat and their pain points are really influencing what's to come for HubSpot.

Dharmesh, do you want to take that?

Yes, I'll take this one. The short answer is a lot, right? We have all these channels where we can kind of learn from customers. We can obviously watch product usage and things like that. We have channels that kind of on a regular basis see what kinds of features are coming up in Sales Hubs, right? So we have a tracker that tracks of things that set both. Here's the set of things customers keep asking for, we know the kind of opportunity, dollar value associated with things that we don't have in the product yet or that we don't have yet. And so one of the nice things about being in the CRM industry like we are, it's a relatively well understood industry. But the path is actually relatively clear. There's lots of innovation happening. There's lots of improvements that we still can work on and make. But it's not like we need to kind of invent a new energy source or put someone on Mars in order for kind of HubSpot to achieve its ambitions. The path is very clear. We want to help our customers deliver delightful experiences to their customers. And the fact of the matter is, even though the industry has been at it for a long time now, we are just awakening to this new reality of digital transformation that says, "Oh, customers even in the B2B world are demanding a more fluid and frictionless experience. And there's -- the industry still has a lot of work to do. So -- So we listen very, very closely to our customers. And most of the things we do is our result getting traced back to a relatively large number of customers, not just all these 4 people have this idea.

Yes. And the 1 thing I would add to that is it's not just customers anymore, Brian. We have nearly 1,000 application providers that have built on top of the HubSpot platform. And so the ecosystem that surrounds HubSpot and the asks at the table have expanded in terms of who needs what. We've got a partner channel of a few thousand customers or partners that represent over 40% of our revenue that are reselling HubSpot software, but even more important, building their agencies around HubSpot and serving our customers with retainers and in many cases, acting as the front office extension of many of the small and medium businesses that also have asks around what they need from the product going forward, too. So it's customers, it's developers, it's partners, it's that entire ecosystem that I think helps to drive the future road map.

Got it. And so Chuck, I think I got a question, e-mailed me to from an investor. I think it's probably for you. In terms of how you're looking to kind of sell more broadly and you have the platform that's expanding, you've referenced NRR, so I'm just making sure I'm reading this right. How does the go-to-market motion change? Is that more partners, different partners, more sales and marketing investments? How do we think about the sales and marketing motion changing as you're kind of building out the product platform or does it change at all?

Yes, I don't know that it necessarily changes. I mean Yamini talked at our Analyst Day, one of our core growth pillars was about strengthening our bimodal approach. And it is much a point around the product, right, and adding features and functionality at the higher end of the equation and sort of driving that through our additions and down to starter? Is it is a point that she was making around selling and servicing our customers within the 2 to 20, the 20 to 200 and the 200 to 2,000 segment. The way that we've traditionally thought about sales and marketing is through the lens of unit economics, right, and making sure that our cost to acquire within those 3 segments supported the lifetime value that we generated, and that continues to be the same today as it ever was. It is absolutely a focus on that partner channel and making sure that we're not only bringing on new partners that can support us in some of these emerging areas around CMS and operations and customer service, but it's also making sure that we're putting the right investment behind the partners that we already have today that are supporting the 40% plus of our revenue that they generate. And so I don't know that there -- I wouldn't say that there's a new approach. I think it's about refining our existing approach and making sure that we're being as efficient as we can possibly be with the spend and making sure that we're putting it in the higher -- the highest value-add places that we can. Dharmesh, I don't know if you would add to that.

No, yes, I agree with all of that. So I think the overall go-to-market motion stays relatively the same. We do at various points in HubSpot's history. We will optimize for certain segments or invest disproportionate calories in a particular time period. So you've seen us over the last year or 2, put more calories into that 200, 2,000 segment to try and optimize so that kind of improve our win rates and such. And kind of underscore the partner channel, that's a very distinct thing that's hard to build. The relationship we have with our partners going back from the kind of early years, has been exceptionally kind of synergistic. It's -- I hate to use that word, but it's the only one that comes to mind is the benefit, and they have been very appreciable. We just had our partner day a few months ago. And it's the highest kind of NPS we got back from our partners that we -- I think that I can recall in recent memory. And so they're really kind of pleased with the kind of new hub rollout. It creates new opportunities for them. When we were just a marketing software company with marketing applications, there was a limited set of things that they could. Now as we're moving into sales and service and automation and digital transformation, the kind of high-growth agencies, the ones that are expiring and ambitious. They have a lot of room and a lot of headroom to grow, and we're there to support them in that. So they've been a great channel for us.

So it's interesting as I talk to some of your partners, one of the things that I've consistently heard is CMS Hub and how well that's doing. It's resonating very well in the market. Maybe talk about -- I know there's some product you've had before. I think there's been some improvements made to that. Talk about what kind of drove that effort? And what are you guys seeing from CMS Hub right now?

Yes. So CMS Hub is a really exciting product. But here's the things that I think we can all roughly agree that the world is going through this digital transformation process. Big and small businesses, consumer B2B, all of it are going through this transformation that are at gearing stages. We think having a kind of connected website experience is one of the early and critical steps in that process, right? So you can't really be in my mind, a modern CRM without having that component of it. It's like, okay, well, we do everything, but we don't let you interact with your customers over a website that's connected to the CRM itself. So we're excited strategically for having that and we built it all once again in-house crafted it for this purpose. What we've seen from us recently is that we've kind of made CMS a more kind of effective on-ramp HubSpot platform as well, right, by introducing the starter tier. So we can kind of get businesses early in their digital transformation journey, so they take that right first step and start with CMS Hub and kind of -- and that might be their first step on the CMS, I mean, the HubSpot platform. So we think it's just an exciting product. It's got its own market opportunity as far as stand-alone sales, but we think it's going to be an exceptional on ramp over the years for HubSpot. It's a great differentiator for us.

And what about -- I guess I'm hitting on all the hubs here, Dharmesh, because I don't know we get to interact with you like this, but just in Service Hub, right, and how you've developed that and some of the features that you've added. And where do you feel like you guys are really differentiated in terms of kind of that broader product offering versus some of the competitors out there?

Yes. So Service Hub, it's a little bit earlier in its evolution than Marketing and Sales Hub, but the kind of the rhythm and the kind of MO that we're applying there is the same as we've done with the other hubs with a fair amount of success. So Service Hub, the TAM is astronomical, right, based on who you ask, it might actually be bigger than the Sales Hub TAM, if you look at kind of the enterprise sector in CRM. So from our perspective, Service Hub is doing well. It's kind of growing faster and doing better than Sales Hub was at that point in its evolution. The reason we're excited about it and customers who currently buy it mostly alongside other hubs, right? They don't just buy Service Hub as most of them are kind of cross-sell things. We think that will change over time. We think it's an independent opportunity. It's another on-ramp to HubSpot and the market need is there now. So more and more companies are realizing that you need -- you need some automated, digitized way to provide customer service and customer support, even if you're a 100-person B2B company, like that's going to be -- that's just table stakes, right? So it creates this new ocean of opportunity that we don't think has been well addressed yet. And the differentiator for us is still goes back to the platform. So do other products in the category have more functionality, Absolutely. But is there an easier way to have a full-fledged offering in the CRM space for modern CRM, we don't think so. So the NPS on Service Hub is high, the customers that use it, and they love the fact that it feels like the rest of HubSpot, it's all 1 database. You don't have to go and redo a bunch of things or retrain a bunch of people. It's all 1 singular cohesive platform.

Do you think we'll ever get to the -- Dharmesh, I'd be curious you can both weigh on this, but do you think we'll get to the point or are we at the point where kind of SMB B2B customers start thinking about these motions holistically, right? Because if they would have bought by a CRM or buy a marketing tool, are they now saying, "Hey, the pandemic has kind of highlighted this need for digital engagement." So instead of just pay, buying 1 and hoping it integrates with the other, we need a platform in, i.e., into HubSpot, that's a platform, right, because some competitors have one, but maybe not the others, like is that happening now? Or is that the hope when a couple of years out, how do you think about that?

So it's already happening now. So there's 2 things you should kind of think about in terms of that kind of platform kind of philosophy. So an increasing number of customers are buying more than 1 hub and kind of moving towards making, what we think of as, a platform decision once you buy 2 hubs even. That means you usually have other hubs in your mind. The reason you're closing HubSpot is it's because it's a platform. But in my mind, it's hard to kind of prove it one way or the other, that's not really related to the pandemic. The pandemic has helped well, what it has done is kind of compress sales cycles and increase urgency like, "Oh, I need to do digital transformation. I need to do it sooner. I am more cognizant of the time to joy like how quickly can I buy the product and start actually using it and getting benefit from it. I don't have the time for a 9-month, 12-month implementation cycles. So the pandemic has helped with that, but this notion of people making platform choices. That's been going on pre-pandemic. It's still going on now and will still continue to go on post-pandemic because it just makes sense for us especially in our market to make that platform choice, to have everything kind of work together and be cohesive. If you have an army of -- if you're a 50,000-person company and you're in the Fortune 500, you have the luxury of having an army of consultants to go through the implementation cycle and get everybody trained and on-boarded. If you're a 200-person company, you just don't have that luxury. So that platform story sells really well. And we see that being -- increasingly, it's a little bit like we got a Apple versus PC thing, is you're going to make a platform choice. You may not buy everything on that platform day 1, but that's sort of where you're headed over time.

Brian, I would add 2 things to that to you like. We're getting much more feedback today than ever before that customers don't know where marketing ends within our platform and sales begins and sales ends and service begins and -- In many ways, they view it as the singular platform that is their front office that everybody logs into in the morning and utilizes and then logs out of at the end of the day when it's time to go home. I think the second thing that sort of helped with this platform choice that I know that Dharmesh could probably talk about for much longer than the next 3 minutes is our investment into the ecosystem, right, in opening up our APIs and allowing near 1,000 applications to plug and play with HubSpot that if we are your marketing and sales and CRM backbone, but you want something else on the service side or you need additional features and functionality that go beyond what we offer in our enterprise suite, you can pull on this application ecosystem that sits a top hub spot to sort of fill in those gaps, right? And I think it helps get customers over the edge on standardizing on the HubSpot platform in the mid-market like many enterprise customers standardize on a singular platform that may be a market from us.

Understood. And Dharmesh, maybe I'll sneak in. I do see the John Lennon painting in the background here. Do you have the favorite Beatles song.

I have to say imagine even though it's cliche, just because of the kind of philosophy behind Lennon and at that time. So that's -- But credit goes to my wife for actually picking that particular painting. It's a local artist here.

I'm a fan. I'm a big fan. All right, guys. Thanks so much. That's all the time we have. Everybody, thanks for listening in.

Thank you very much, Brian.

Thanks for having us.