A trend to watch: HubSpot acquires The Hustle

HubSpot announced today that they are acquiring The Hustle for what Axios has reported to be $27 million. The Hustle is a 1.5 million reader strong eNewsletter business targeting entrepreneurs and business owners. In commenting on the acquisition HubSpot highlighted the overlap between The Hustle’s readership and parallels with the resources and audience that HubSpot has been building on its blog as well as the overall fit with its customer base.

Anyone who has considered HubSpot is likely well aware of the amount of best practice content they offer their customers and prospects. Adding an engaged audience of potential HubSpot customers and a distribution channel for that content makes tactical sense.

So why does this matter beyond what seems like a smart – albeit expensive – marketing play? I’ve long been a proponent of pairing Software as a Service (SaaS) businesses with content. And it’s a trend to watch as SaaS businesses become more sophisticated in their customer acquisition and deepen their value proposition beyond simply offering a software toolset.

Combining SaaS and content means including content as an essential part of a software product or by adding digital media communities or conferences to the front end of a SaaS business model. It was a major factor in the acquisition of the company I founded – Praetorian Digital – and its merger with Lexipol in the public safety learning and compliance space. In this case, The Hustle offers HubSpot content, a conference footprint and a fledging subscription data product.

For SaaS businesses

If you follow SaaS businesses or have operated one, you know that the beauty of a SaaS business is in its clear metrics such as such as LTV/CAC (ratio of lifetime customer value to customer acquisition cost), payback period, and net churn that supports rapid scaling. Done right, adding digital media decreases CAC by creating an ongoing channel to a captured audience to which you can market your solution and builds brand authority and thought leadership. It provides a warm list for your lead or sales development reps to call and allows you to map lead capture to relevant articles even gating content that closely correlates with purchase intent.

More importantly, it also allows you to map content to all stages of the customer lifecycle, which  improves core metrics like usage and net churn. Taking this one step further, content paired with a SaaS platform presents opportunities for new product features or add-ons. For HubSpot, this could be a premium subscription for customers either at an additional cost or as a value-add to support annual price increases. Learning management system businesses have long applied this strategy by offering course content along with their platform and authoring tools.

Finally, the data from content engagement can create intriguing opportunities to pair software usage data with industry trends. In this case, the Hustle already offers a data product – Trends – that will only grow in value within the HubSpot ecosystem.  

For Digital media operators

Digital media has largely been struggling to find its way over the past several years to compete with social media and the rapid changes in content consumption. For digital media businesses in or around verticals where workflow tools are important, there are important implications. SaaS businesses, who may be some of your larger customers, could be future acquirers or could begin to compete as they build their own blogs and newsletter lists. Think differently about the SaaS businesses you have as customers and look for partnerships and deeper relationships to test the waters.

Alternatively, digital media businesses are in a unique position to swim upstream and add SaaS or workflow solutions to their offerings as I did at Praetorian Digital when we built an enterprise learning platform for first responders to extend our digital media communities. That effort ended up generating nearly half of our annual revenue.

Though doing so is a heavy lift and requires a major shift in culture and different skillset but is well worth the effort when comparing relative valuations and the opportunity to embed your business within your audience. And with software becoming easier to build and manage, the deep domain experience, engaged potential customer base, brand trust and content resident in any digital media or traditional media business presents a set of competitive advantages that will only become more important as we’re seeing here with HubSpot.

Originally posted on FordLogic.com