(This article originally appeared in Forbes)
Earlier this month there were rumors circulating that Amazon has been considering the acquisition of customer relationship management and marketing platform HubSpot. Why would the world’s largest online marketplace that sells everything from books and movies to cloud hosting services be interested in a CRM and marketing platform too?
According to reports from internal conversations, the company has been dissatisfied with its current marketing and content management system called Pinpoint and its internal marketing team believes that buying HubSpot would help Amazon “truly go big on marketing cloud.” Not only that, but adding a popular business application would help build awareness of AWS’ capabilities as a platform and provider for business applications, and that could potentially open up new markets. Neither company has confirmed these rumors.
That was back in August. So far, nothing more has happened as far as the public knows. As far as I know, let’s hope, for the sake of the HubSpot community, that this idea dies on the vine. Because buying HubSpot would be a huge mistake for both companies. And for these three reasons.
For starters, Amazon’s is buying HubSpot to serve Amazon. It’s no secret that the company’s marketing team needs a better solution than what it already has. So instead of becoming a customer of a CRM company like Salesforce or Oracle (like most larger companies do), its solution is just to buy an existing platform and make it its own. Maybe they can also sell it to businesses like mine. But that’s not going to be their first priority. Amazon’s first priority will be Amazon. Of course they would continue to maintain a level of service for the existing HubSpot community. But not if resources are diverted away from building out the internal marketing platform that it desires. Which means that HubSpot partners and customers will have to stand in line for attention.
And speaking of partners let’s also be clear that Amazon is not a channel company. Sure it sells products through third parties. But a channel-focused company is something much different. Channel partners are…well…partners. Just look at Microsoft. Microsoft has an enormous community of partners that not only sell their products but build solutions and provide services around their products. Microsoft has thousands of employees devoted to managing this channel and invests hundreds of millions of dollars ensuring that it can continue to serve this community because the company truly depends on its partners’ success.
Other companies that rely on distribution and service partners are organized to support this channel. HubSpot is one of them. HubSpot has separate channel programs specifically designed for app developers, marketing agencies, IT firms, startup organizations, educational service providers, affiliates and nonprofits. The company — like all other channel companies — provides this ecosystem with leads, training, tools, materials and marketing funds to expand their businesses. Amazon is simply not structured to do this, nor does it have the culture to adapt. Merchants are not channel partners. If Amazon buys HubSpot, there’s a strong chance that the company’s channel will be under-served and significantly weakened.
Finally, HubSpot is not a technology company. It’s a service company. Its software and tools are only successful when services are provided. You don’t just flick a switch when you sign on with HubSpot. It takes months of developing processes around it and then years of ongoing nurturing to ensure that the tool is truly functioning as the sales and marketing backbone of a company. Why else are so many channel partners needed to implement it? It’s because the great majority of HubSpot’s customers recognize the power of the platform, but can’t really get it to perform without help. You don’t just buy a Peloton. You rely on the company’s services so that you can use the machine effectively. Same with HubSpot.
As a CRM implementer, I’ve learned that the best CRM implementations survive when there’s a strong partner providing ongoing support, guidance, advice and consulting. HubSpot needs to be integrated with other products and customized to fit a company’s specific needs. Data has to be migrated and users have to be continuously trained. Amazon does not have the organizational structure to meet this type of customer relationship. To truly turn itself into the kind of service provider needed to implement HubSpot the company would have to radically change its culture. I don’t see that happening.
So should Amazon buy HubSpot? As you can see, I’m not a big fan of the idea. But there is a compromise: a significant, non-controlling equity stake. By becoming a major shareholder of HubSpot Amazon can have access to the company’s technology and resources without materially changing the culture of HubSpot. And of course it can leverage HubSpot’s use of AWS.
By keeping Hubspot’s leadership and organization in place, Amazon can not only benefit from the platform’s capabilities but also provide it with the resources needed to expand their operations and become a more powerful CRM application — and gain market share. To me, this would be the best solution both for Amazon and for HubSpot’s community of customers and partners.
