Mailchimp’s Ben Chestnut on bootstrapping a startup to $700M in revenueMay 13, 2019 Off By Jill T Frey
The well-known tech startup routine of coming up with an idea, raising money from venture capitalists and other outside investors in increasing rounds as valuations continue to rise, and then eventually going public — or getting acquired — has been around for as long as the myth of Silicon Valley itself. But the evolution of Mailchimp — a notable, bootstrapped outlier out of Atlanta, Ga., that provides email and other marketing services to smaller businesses — tells a very different story of tech startup success.
The company is now closing in on $700 million in annual revenues for 2019, and it seems that it has no intention of letting up, or selling out: No outside funding, no plans for an IPO and no to all the companies that have tried to acquire it (interested parties have include private equity firms as well as big tech players). As Mailchimp has grown, it has been profitable from day one, a notable contrast not just to many other startups, but those specifically in the area of software-as-a-service for businesses. (As a point of comparison, Slack, which is poised to go public, brought in around $130 million last quarter; it is not yet profitable.)
This week, Mailchimp is unveiling what is probably its biggest product update since first starting to sell email services 20 years ago. It’s launching a new marketing platform that features social media management services, ad retargeting for Instagram and Facebook, domain sales, web development templates; and business intelligence.
There is still a lot of tech left for Mailchimp to tackle, and its model shows that you don’t always need outside funding to do it. The BI foray, as one example, marks an interesting move into artificial intelligence, and tapping the fact that the company is sitting on an intent and interest graph that spans some 4.5 billion people — the aggregation of all the emails that have been sent through Mailchimp’s platform. (Indeed, ‘small business’ for Mailchimp means ‘small number of employees’, but in our digital world, that small business might still be handling millions of customers.)
Adding in those new features will not come free: more pricing tiers, and higher pricing, that will take effect from Wednesday for new users. You can read more about that here.
And adding in those new features also comes with another twist: it will catapult Mailchimp into a new arena of competition. Today, some of the company’s notable competitors are the likes of SendGrid, Intercom and Drip. Tomorrow, that list could expand to include Marketo, Hubspot, InfusionSoft, Hootsuite and many more. While Mailchimp was an early mover and by the company’s own admission was coming into the market at a time when there was very little competition, it will be interesting to see if it can take some of the traction it has picked up to date and bring it to an adjacent — but still entirely new — product segment, and at a higher price, to boot.
I took the opportunity to speak with Mailchimp’s co-founder and CEO, Ben Chestnut — who started the company in Atlanta as a side project with two friends, Mark Armstrong and Dan Kurzius, in the trough of the first dot-com bust — on Mailchimp’s origins and plans for what comes next. The startup’s story is a firm example of how there is definitely more than one route to success in tech.
Ingrid Lunden: You’re launching a new marketing platform today, but I want to walk back a little first. This isn’t your first move away from email. We discovered back in March that you quietly acquired a Canadian e-commerce startup, LemonStand, just as you were parting ways with Shopify. (More on that acquisition here, and the Shopify changes here.)
Ben Chestnut: We wanted to have a tool to help small business marketers do their initial selling. The focus is not multiple products. Just one. We’re not interested in setting up full-blown e-commerce carts. This is about helping companies sell one product in an Instagram ad with a buy button, and we felt that the people at LemonStand could help us with that.