Is innovation built or bought?

In the world of Customer Relationship Management (CRM) solutions, two names dominate the conversation: Salesforce and HubSpot. Both have built empires by helping businesses streamline their marketing, sales, and customer service processes, but beneath the surface, their paths to success couldn’t be more different.

In this blog, we’ll explore how Salesforce’s acquisition-heavy approach stacks up against HubSpot’s in-house development strategy and what each means for businesses like yours.

A battle of CRM giants

HubSpot and Salesforce are both multi-billion-dollar companies with hundreds of thousands of customers. Salesforce is often looked at as the “first-mover” in the CRM industry while HubSpot has been looked at as the disruptor, trying to break into a space once dominated by a monolithic presence.

At their core, they both claim to do similar things: they are tools that can be integrated to help businesses drive success across marketing, sales and customer service functions. But while their missions are similar, how they got to where they are today are very different stories with very different impacts on their end-users. 

Salesforce's acquisition approach

Salesforce started out as a CRM platform in 1999, founded by former Oracle executive Marc Benioff. Benioff saw the writing on the wall in terms of the future of software and the impact the Internet would have on this industry. Instead of installing a software like Microsoft Office, he made Salesforce available over the Internet and pioneered the now ubiquitous “Software as a Service” model.

Over the next 14 years, Salesforce would go on to acquire 21 different software companies to help expand their product offering into digital marketing and customer service. 

While mergers and acquisitions (M&A) might improve a company's bottom line, historically, they seldom enhance or benefit the end user's experience—and that's where the issue lies.

Some of Salesforce’s most important acquisitions came in 2012 and 2013, when they acquired Buddy Media, Radian 6 and most notably ExactTarget (which had previously acquired Pardot, the marketing automation platform). These were three completely independent platforms now bridged together through piecemealed integrations to launch Salesforce’s “Marketing Cloud”.

Salesforce has the benefit of slapping a well-known and respected logo over all of these different point solutions, but the truth is when you’re purchasing Salesforce, you’re purchasing over 70 different systems “hidden under a baby blue trench coat”.

Sure, this may benefit the stock price, but how can a platform developed on hasty integrations truly benefit the end-user?

HubSpot's product development strategy

Whenever we migrate our clients from Salesforce to HubSpot we constantly hear phrases like, “I can’t believe it’s that easy”, or “that is going to save us so much time”.

These statements are often Hub-agnostic, meaning we hear them whether we're creating a drip campaign in Marketing Hub or creating association labels in Sales Hub. And there’s a pretty simple reason for this: HubSpot has focused their time and energy on developing and enhancing all of their Hubs in-house. They understand what their end-users need, want and expect out of their product and they've focused on building solutions that meet those criteria.

While HubSpot has acquired 13 different companies since its founding in 2005, these have been value-adds to an existing system (like the Performable acquisition in 2011). This acquisition opened the existing Marketing Hub to new features like marketing automation and expanded the already rich feature set. (Let's call it coincidence that Salesforce started acquiring marketing software companies around the same time as HubSpot's Marketing Hub enhancements went into full speed – I think it’s safe to say Salesforce smelled blood in the water).

HubSpot acquires companies to expand and improve already existing functionality – they don’t acquire companies to launch new products or offerings. Their acquisition of Cacheflow this month is a perfect example. Cacheflow provides a CPQ (Configure, Price, Quote) solution which HubSpot can eventually integrate into their existing Commerce Hub (and hopefully Sales Hub). HubSpot does not want to acquire a company and launch a front-end Hub as this goes against their M&A policy.

Furthermore, HubSpot does not just acquire companies–they bring the acquired team on board, learn their platform, and collaborate to thoughtfully integrate it into HubSpot. For example, their 2019 acquisition of PieSync was gradually sunset and rebranded into Data Sync/Operations Hub by the end of 2021. HubSpot takes the time to understand how the new acquisitions fit into its larger puzzle rather than rushing to market–they don't simply acquire, rebrand and go live.

HubSpot develops their primary offerings in-house to ensure a standard user interface and experience, which is invaluable as an individual contributor. All Hubs are developed on the same unified code base, which allows for a seamless transition between different parts of the platform with no loss of context.

Two paths, two outcomes

To sum up, Salesforce frequently acquires companies to “expand their product offerings,” but the underlying motive is often to boost their stock price and satisfy shareholders.

In contrast, HubSpot focuses on developing its core offerings in-house, making strategic acquisitions that enhance its existing platform.