Late in 2012, we sold Pardot to ExactTarget and it was subsequently acquired by Salesforce.com. Only in January, the year before, we were actually in discussions to sell the business to HubSpot. At the time, HubSpot was focused on content marketing, search engine optimization, blogging, and analytics. They realized that marketing automation and using the web for email marketing, lead generation, and lead nurturing were the next big opportunities.
So, they decided to evaluate potential acquisitions in the market. For us at Pardot, we had built a strong micro brand. We had a number of customers who loved us, were growing rapidly, and had the start of a platform. In late 2010, we received an inbound email from HubSpot asking if we were available to discuss partnerships. We got excited and thought about partnering with the content marketing giant that we admired.
After some back-and-forth it was clear that a “partnership” wasn’t the intention, so we scheduled an on-site meeting for Adam and me to fly up to Boston in January 2011. Of course, we prepared extensively for the meeting thinking through potential questions, built a new slide deck, and headed north. We arrived in Boston with plans for a full day of meetings followed by dinner and a return flight the next day.
During our visit, we had the opportunity to meet with Brian and Dharmesh, the founders of HubSpot, their executive team, and David Skok, a prominent VC on their board. We spent hours discussing the business, the market opportunity, and shared all our metrics. We talked about the potential to work together and had an incredible working session with their team.
After our meetings, during a small founders-only dinner, we had the chance to talk with Brian and Dharmesh. We discussed why they started HubSpot, their goals, what had worked well, what hadn’t, and their startup philosophies. It was a unique experience, as there are only a handful of times in a career where you get to sit down with like-minded entrepreneurs who so closely share your vision.
By the end of dinner, Brian and Dharmesh floated an acquisition offer. The offer was roughly $10 million in cash and $20 million in HubSpot stock. At that time, HubSpot had just raised financing from Sequoia Capital, valuing the company around $300 million. Our annual recurring revenue at Pardot was about $5 million and growing 100% year over year.
Adam and I considered the offer carefully. We wanted more cash upfront, given the uncertainty of illiquid stock in another private company. We went back and forth, suggesting an increase in the cash component. If not, we were willing to sit tight and continue growing our business.
Ultimately, HubSpot chose to go its own way and continued its incredible growth. Today, HubSpot is a publicly traded company valued at close to $30 billion. Meanwhile, we at Pardot stayed the course and kept building our company.
About 18 months later, we decided to sell the business to ExactTarget, which was quickly acquired by Salesforce.com. Thanks to Salesforce.com’s efforts, Pardot became one of the most widely used B2B marketing applications on the Internet.
Looking back, it’s always fun to reminisce about what could have been. It’s enjoyable to think about the experiences along the journey. The opportunity to spend time with Brian, Dharmesh, and their team, and consider what it would have been like to merge our companies, remains a fond memory.
As an entrepreneur, it’s essential not to get too caught up in the potential exit. The focus should be on enjoying the journey and continuing to build a great business. In 2011, we had one of our first serious opportunities to consider selling, but we chose to stay the course, and were better off for it.
Entrepreneur
via https://www.aiupnow.com
David Cummings, Khareem Sudlow
