Hubspot & Moz – A Tale of Two (Very Different) SaaS Business Models

hubspot and moz
Spending time looking at Hubspot’s S1 SEC filing for a $100m IPO it’s hard not to think about the other “Inbound” focused leader, Moz.

Disclaimer: These numbers are estimated based on public sources to the best of my ability. They may be significantly off. Hubspot’s numbers are taken from their Public S1 filing. Most of Moz’s data comes from their own reports. Please email me: scott@serps.com with any corrections.

Update Aug 27, 2014: Moz updated me with more accurate data that is now reflected in all images and text.

I’m fascinated and impressed by both companies for different reasons.

There are many commonalities between the two SaaS companies:

  • Both focus on company culture and transparency
  • Both have popular and mostly positive brand images
  • Both are the marketing tech space
  • Both started as SEO focused tools
  • Both are web-based subscription revenue models
  • Both generate majority of customers through non-paid efforts
  • Both have raised significant amounts of venture capital
  • Both are in major 2nd-tier tech coastal markets (Hubspot in Boston, Moz in Seattle)

equity funding
left vs right coast

 

Two Different SaaS Roads…

But even with those common threads, there are massive differences between Moz and Hubspot’s business models, and these differencing are what I find fascinating. Two companies with so many things in common have vastly different approaches to revenue generation.

updated_revpercustomer

Hubspot’s average revenue per customer a year: $8,670
Moz’s avg revenue per customer a year: $1,295

updated_revperemployee

Moz has 136 employees. Hubspot has 719 (taken from the S1). That’s $152,999 per employee for Hubspot and $234,000 per employee for Moz.

updated_cac

Hubspot spends $11,233 to acquire a new customer
Moz spends $131 to acquire a new customer

Calculating Moz’s cost was difficult and may be off significantly, but I doubt it’s over $1,000. I calculated the ~$500 number taking into account estimated personal and marketing costs divided by an estimated number of new subscribers. This is how Hubspot’s CAC is calculated in the S1.

Updated from Moz: $131 / new subscriber – includes all marketing costs and associated wages

To call or not to call? That is the question.

saas salespeople at moz vs hubspot

Hubspot has ~124 sales people
Moz has 0 sales people.

 

Both Moz and Hubspot target the SMB to medium enterprise market. While I’m sure both have many very large brand customers, that market is their sweet spot. My guess is the reason Hubspot needs such a large sales force is mostly due to pricing and a more hands on approach to customer on-boarding and retention. Signup for a Hubspot trial, and you’ll get a call within the hour. Signup for a Moz trial, and you’ll get an email series, but never a call.

Faster growth at a cost

updated_last5yearsreve

Moz made $72,500,000 from 2009-2013.
Hubspot’s topline was $161,798,000 in the same period.

updated_deficit

Hubspot has grown revenue much faster then Moz, but at a cost of nearly $124m of net losses. Both companies could likely be very profitable if they cut sales and marketing costs, but likely at the expense of growth.

Which model is better?

I think a lot of it depends on the goals and personality of the founders. Could Moz succeed with a sales force and an enterprise product? Possibly. Do they want to go down that route? It doesn’t seem so. Could Hubspot survive with Moz’s no sales-people model?

Heck if I know….what do you think?

Sources:

One response to “Hubspot & Moz – A Tale of Two (Very Different) SaaS Business Models

  1. Really great article. Thanks for sharing. I run a small inbound marketing agency and am a huge fan of Moz but have had a major challenge understanding the fandom around Hubspot. Their cost per acquisition may be all you need to share. Thanks!

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