“Just when you think it couldn’t get worse, it’s going to get worse. It’s going to be like a storm and you’re going to be at the front of the ship just holding on for survival. Too much order is really horrible. I think my job is to find ways to create chaos.” Ben Chestnut, Co-Founder, Mailchimp.
In a follow-up to their frirst fireside chat, Ben sat down with SaaStr’s Founder and CEO, Jason Lemkin, for a Q&A to discuss everything that breaks on the way to $1B ARR and Mailchimp’s $12B acquisition, making them part of the Intuit family.
Much more like this at 2024 SaaStr Annual. Sep 10-12 in SF Bay!!
Before we get into the journey, let’s talk about the outcome.
The Deal – How Did it Happen?
Mailchimp had been through a few informal rounds with other potential buyers, none of whom felt right to Ben. He said “it didn’t end with a good deal,” so they walked away. By the end of process, Ben swore he would never listen to another offer again.
“I was done with it. I was going to move on and just run my company for the rest of my life,” Ben said. And then, a couple of days later, he got a call from Catalyst. Ben had been working with Catalyst for many years and they encouraged him to take one more call – a call that would change everything.
Ben hopped on the phone with Alex Chriss, Intuit’s EVP and GM at the time, and they hit it off immediately. He’s a small business entrepreneur and he’d been with Intuit for 17 years by then. Alex had run a business, got acquired, and he knew the passion required to manage small business companies. And he knew the pain that they suffered from. And perhaps most importantly, he knew what drove the team at MailChimp.
It’s important to note Intuit cares deeply about culture fit, so they did a lot of culture diligence. All which Ben loved. This was all happening during the peak of the Covid-19 Pandemic, so after about a year of Zoom calls, phone calls, and text messages between Ben and Alex, they closed the deal. So, how did they even get there?
Bootstrapping Mailchimp
Ben is a product of the dot com days. He was laid off in April 2000 during the dot com bust and there was a lot of distrust for the VC world. After the bust, there was a movement to do more pragmatic programming and as a result, Mailchimp avoided talking to VCs for years. Until 2007.
One of Mailchimp’s competitors went public that year, then VCs started showing up Mailchimp’s door in Atlanta. Ben always invited them in, let them buy him lunch and try to learn as much as he could. But, Mailchimp kept growing and growing, and never really needed the money. When VCs would offer it, and Ben would try to figure out what they would spend it on, but Mailchimp was making enough that they never needed to take VC dollars.
The Growth of Mailchimp
Someone asked Jim Barksdale, the former CEO of AOL, what is the secret to running a tech company? He said, it’s cycles, bundling and then unbundling. It was kind of a joke he gave, but it’s true. At that time, 2000, everything was unbundling from desktops and mainframes and it was going to the cloud. You needed a marketing cloud, you needed sales and CRM, everybody was willing to pay for all of these different, unbundled, point solutions. Now, we’re at a different time when people want it bundled back together again.
For Mailchimp, as a trusted vendor, their customers want to buy more from them, so Mailchimp needs to innovate. Some SMBs really want one platform where they can manage their business with QuickBooks and then grow their business with MailChimp.
Driving this innovation, at times, can be challenging. Mailchimp struggled to break into the eCommerce world. They built all types of things for their SMBs, but the one that took off was Landing Pages. Initially, Ben thought they were boring, but they have been one of Mailchimp’s most popular features in recent years. Ben attributes this success to Mailchimp’s culture of “tinkering.” Ben encourages the team to make small bets and fail fast. And then, just recalibrate. Landing pages were one of those little tinkering experiments someone did.
How Hiring Impacted Mailchimp’s Business
The Engineer
9 years into Mailchimp’s journey, Ben hired a lead engineer, Chad. The team called him The Chad because he never slept. He was constantly building stuff. Ben hired him to turn Mailchimp into two products – take their old code and divide it into two. One of them to being the list you build for your blog and the other if you wanted to send emails (that’s when Mailchimp would start charging you). Chad worked on that, and he was a machine. But, after a year he said, “it’s impossible, your code sucks so bad. Let me just keep it one product and just make it free up to a point.” That’s where Mailchimp’s Freemium model came from.
The Designer
Aaron Walter, was Ben’s first design hire. He was the first person hired to take over Ben’s job as designer. As a founder, it’s often times hard to let go and hand the reigns over to someone else. Aaron was the perfect fit because he really cared about the brand and the UX. He was able to make Ben’s vision come to light, melding it all into one great customer experience and transforming Mailchimp.
The COO
Ben has had two COOs prior to Intuit. Neil Bainton was their first COO, and he was, as Ben said, “our adult supervision.”
Like, Eric Schmidt, managing Larry Page at Google, and Neil acted as a buffer for Ben. Ben could really push Neil to make the product better, while Neil was a mentor to Ben. He was great at the operational side of things and senior to Ben – about 20 years older. Ben needed that experience in house and the team really enjoyed working with him. Neil help push Mailchimp from 0 to 300M.
Farrah Kennedy came in as Mailchimp’s next COO and got them from 300M to 700M. Ben describe their relationship “like yin and yang.”
Getting to $1 Billion ARR
Ben had no limits when it came to the growth of Mailchimp. Ben studied the art of it and learned from a lot of CEOs and founders out that you could probably get up to 800 million, but that last 200 million is the hardest you’ll ever get.
For Mailchimp, that rang true. And, like with many other businesses in 2020, the pandemic didn’t help. Around half of Mailchimp’s customer base are eCommerce, and the other half are brick and mortar businesses. So, when everything began to shut down, Mailchimp suffered as well.
Through it all, Ben believes that keeping a PLG mentality and driving innovation is key. Listening to small businesses, understanding what they need, pivoting fast and building for them – there’s no ceiling to that type of growth.
Ben used to think a trillion dollar market cap, there’s no way, and now it’s happening left and right, it seems like.
In 2042, Ben still sees that MailChimp is still around, really baked into QuickBooks. “We’re really just getting started with this. It’s still very early days…people have been telling me for 21 years, email’s dead. And it’s stronger than ever, right? Going just fine.”
Key Takeaways
- Trust your gut when raising capital, buying, or selling a business. You must share a vision and connect with a potential buyer, investor, or partner.
- Listen to your customers, and do what makes them happy.
- Understand that your business may need to evolve alongside your customers to retain them.
- Keep a PLG mindset, and always tinker with your product. Make small bets until you discover what pays off.
