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This episode is brought to you in partnership with Airbnb. This past summer, I took my family to Athens, and it was truly an incredible trip. We ate amazing food, we saw the Parthenon and the Agora, and all the incredible things that you can see in one of the most amazing cities in the world. And one of the things that made it special was the home we booked on Airbnb.
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Your home might be worth more than you think. Find out how much at Airbnb.ca.host. Hey everyone, it's Guy here. So today we're bringing you an episode from our archives.
It's my interview with Ben Chestnut, the co-founder of MailChimp. Now, a few months after we ran this episode in 2021, MailChimp announced some pretty big news. Ben and his co-founder sold the company into it in a deal worth $12 billion. Of course, none of this was public when I first sat down with Ben, so we didn't talk about the deal.
But as you'll hear, the story of how MailChimp got to that exit with no outside investment is pretty incredible. I hope you enjoy it. People were raising their hand saying, so what's the strategy? You know, in my answer, you know, as a startup founders, we don't need no stinking strategy.
We've got this, you know, and half the audience would cheer and say, yeah, we don't need no strategy. And the other half would say, yeah, we do. And I remember thinking, oh my God, there actually is no strategy. And so the whole meeting just completely flocked.
And I remember going back to my office, just sitting there alone, thinking about what in the world just happened to me. Welcome to How I Built This, a show about innovators, entrepreneurs, idealists, and the stories behind the movements they built. I'm Guy Raz, and on the show today, how Ben Chestnut and his partners used a monkey logo and guerrilla marketing to build MailChimp, a B2B brand that grew into a big business by focusing on small business. MailChimp is an online marketing platform, probably best known for its email automation.
You may have heard their ads on podcasts and you might be familiar with their logo. It's a smiling monkey wearing a postman's hat. But it's also a company that helped usher in the era of SaaS businesses, software as a service. The SaaS market, think Salesforce Adobe Twilio HubSpot, is expected to reach more than $270 billion in global sales this year.
Last year, anticipating this gold rush, investors poured over $30 billion into SaaS startups in the US alone. But what makes MailChimp stand out from the crowd are a few key differences. For starters, the founders never took on any outside investment. The company also grew slowly at first, very slowly as you will hear, but it was profitable from the start.
And instead of launching in California or in Seattle, MailChimp was founded in Atlanta in 2001, long before the city became the tech center that it's becoming today. But perhaps most importantly, MailChimp focused on small businesses, which turned out to be a stroke of great luck, because small businesses helped turn MailChimp into the giant it is today. And initially, MailChimp wasn't even the intended product. Ben and Dan had started with a web design company and built MailChimp as a side project, almost as an afterthought.
But through a series of smart decisions, especially around cheap and creative marketing, MailChimp has grown into a company that did around $800 million in revenue last year. Ben Chestnut wasn't a particularly techy kid growing up. He spent hours playing football and basketball and exploring his neighborhood on Spike. He grew up in a small town in Georgia called Hepsaba back in the 70s and early 80s, not too far from a military base.
The neighborhood I was in was just outside of the city limits of Hepsaba, and I don't really know how to describe it as not predominantly anything, it's highly diverse. Lots and lots of immigrant families lived in our neighborhood, Germans, Asians, and when I say Asians, Japanese, Korea, and Philippines, Vietnamese, all over the board, African-Americans as well. How did they end up there? Just military families, marrying into Vietnam War, and then they came and they just sort of moved into this neighborhood.
Your dad was a mom when your parents were in the military, was he a army? Yeah, my dad was in the army. He did seven tours in Vietnam. Wow.
Yeah, he was committed. He was a man of duty. He really loved his duty. Seven tours in Vietnam.
And was he, from what I understand, he was a codebreaker? Was that what he did in Vietnam? Do you know? You know, details are sketchy.
He left with all of his secrets, but yeah, in general, he was a codebreaker. He listened in on the enemy and he cracked codes. Was he in combat units? He was.
Yeah. He was first-cave. Wow. Did he ever talk much about Vietnam?
You know, he only talked about it whenever I would watch movies or TV about war. He could see that I was sort of engrossed in it and everything. And he would take me aside and say, you know, it's not always that glorious. Yeah.
You know, he would tell me things like that, and you know, I could tell he was dissuading me from thinking about joining the military. And I guess he met your mom while he was overseas in serving. And she's originally from Thailand. And so what did she do when he brought her back with him to Georgia?
Well, she had lots of odds and ends kind of job. She worked in some textile factories and that sort of thing. But eventually she just sort of became like a neighborhood nanny. We always had kids from the neighborhood running around her house ever since I can remember.
Our house was always full of children from the neighborhood. And then, you know, of course, she was an entrepreneur as well. She ran a hair salon in our kitchen. Wow.
So people would come and get their hair done. Oh, yeah. Yeah. That's where I learned about entrepreneurship, watching my mom.
Did your mom ever get a brick and mortar salon? No. No, she never did that. She never scaled out of the kitchen.
I would have loved to have seen her scale out of the kitchen because I was so proud of her. But I don't know that that was ever her intention. She did inspire my older sister to start her own salon. That was a non-kitchen based one.
Like you say, brick and mortar one. She opened up a real salon that was very successful in the 80s and boy, she was just an inspiration for me as well. And partly because, you know, she would come home every couple of the weekends with toys, toys for me and money for my parents. And I just thought, you know, I want to run a business too when I grow up because this is good for the family.
And I remember I was too young to understand it at the time, but I pieced together the story afterwards talking to my dad and my sister. But she basically had a falling out with her business partners and things got really ugly. And she had to file for bankruptcy and that just ruined her life to be blunt. I mean, it just, and that's the sort of thing that, you know, has kind of influenced me and Dan, my co-founder, his father ran a bakery when he was growing up and he saw that business.
In Albuquerque, right? That's right. In Albuquerque. And it was thriving and he saw, you know, how proud his father was and the same sort of deal happened.
A larger bakery opened down the street and put his dad's business out of business. Ben, when you were growing up, I mean, your mom was Thai, your dad is a white American. But it sounds like you were around kids who came from different backgrounds too. Is that right?
I would describe my neighborhood that way. You know, it was easy to go out and play with friends and, you know, my friends were just from all over the place. I think that when I would go to school, it was a different story. You know, inside the school where I was zoned, there were only a handful of Asians there.
That was a little bit different. That was definitely, it probably influenced my whole outlook on life, definitely, kind of being the misfit. Here's the other thing that's actually quite unusual. You actually met your wife in high school.
She was your high school sweetheart, Theresa. She was my high school. Yeah. I actually did not meet her in high school.
We didn't go to the same high school, but we were actually met her at Fort Gordon in Karate class. She was another student in our dojo. And I remember, you know, I couldn't even drive yet. And she was pretty new to America.
She was adopted by her uncle and aunt. And I remember after Karate class, I would wait for my dad to pick me up and she would wait for her uncle to pick her up. And then we'd say goodbye and go our separate ways. And one day, dojo closed down and everybody was gone except for me and her.
And they had to lock the doors. And so we just sat out on the front steps at night talking and you little listen to that. And my dad pulled up. And I said, well, there's my ride.
I got to go see you later and I got into the car. And I said, hey dad, let's go. And then he looked at me and then he looked at her sitting alone on the front steps and said, what the hell are you doing? Get out and go sit down next to her and wait for her uncle to pick her up.
That's what a gentleman does. And I said, oh, right. Thanks dad. And I got out and I went and sat down next to her and we talked a little bit more.
And that's how I really, really got to know her there. And one day she invited me to come over and meet her. Her parents were ungling ant. I was a little bit nervous and I didn't know what I was going to say to her mother when I met her.
And I rode my bike over there and I noticed lots of cars in the driveway. I thought this is interesting. This is familiar. And I walk in and sure enough, her mother runs a hair salon in the kitchen.
Her mother is a kitchen tittian like my mother. So we got along real nice. I knew exactly what to do. Grab the broom.
Help her sweep up some hair. You got to know where all that hair hides right under the chair. Right under that rubber gasket on the swivel. So I think we hit it off well because I was familiar with this profession.
Well, what about school? Are you a pretty good student when you were a kid? No, I was an awful student, I think. Going through my father's belongings, I got a lot of my report cards that he saved.
In high school, in my early years, I was just a poor student. I made horrible grades. And he sat me down and he said, I guess my future was looking bleak. I was like, oh, you can always join the army.
And that's when I thought, oh my God, even Dad is telling me to join the army now. Something must be wrong. I mean, was high school just hard for you or did you just not care? Or what do you remember?
I remember being bored a lot. And what I wanted to do was just get out of hebsiba. Yeah. He didn't go that far.
He went to Atlanta. Thanks a lot, guys. Yeah. But he did okay.
I did okay. But you couldn't have been a terrible student because you got into college. You went to University of Georgia. I did.
Yeah. I mean, I was probably a C going on a D student freshman and sophomore year. And then, you know, my dad had that heart to heart with me. I shaped up and I became an A student for the next two years.
You would eventually transfer to Georgia Tech where you studied industrial design. And did you have sort of like a job in mind that you wanted to do when you graduated? Yeah. I mean, I just, I wanted to design cars.
I'm a car nut. I love cars. I thought that I would study this and maybe move off to Detroit and be a car designer or something. That was the idea.
Yeah. But I got an internship at an appliance company one summer in a manna, Iowa. You know, my job as an intern was to scan about a thousand paint chips and they're all variations of white eggshell white cream white, off white glossy white flat white. So that was my job.
And I actually finished that in a couple weeks. And then I just started, they let me do prototypes. Let me build models of refrigerators and that sort of thing. And I learned that I'm really, really bad at building models.
And I guess I was, you know, in retrospect so bad at that one of the, one of the designers in the studio, Tippie assigned and said, you know what, maybe, maybe this isn't for you. You should look into this new thing. It's called web design. It's all the rage.
Look into that as a career. And that was, you know, life changing advice. I went to the Cedar Rapids Barnes and Noble because there's nothing else to do at that time. I found some books on web design by Linda Weimann, Linda.com.
And I learned all about web design. Wow. And this is the late 90s. So like, web design, that command of the premium because it was really like, no one you had to do it.
If you knew how to do it, you could get a lot of work. You could be a complete goof off, but make a lot of money doing it because it was really, really a rare skill. You eventually got a job working for Cox Media Group. I think they're still the publisher of the Atlanta Journal Constitution.
That's right. So, so what was the job they hired you to do? They had a job opening for a web designer for the hac.com. And halfway through the interview, I realized I was in the wrong interview.
Or my resume ended up in the wrong hands. And I was talking to their director of marketing. And she was trying to build her own in-house design agency. And what she was trying to do was build an agency to design all of their banner ads.
I remember, you know, feeling horrified like, oh my God, I am not a banner ad designer. I am a web designer. I do not do these silly little, you know, 468 by 60 pixel ads that's beneath me. And then she told me to pay.
And the pay was $3,000 more than the web designer. And I said, you know what? I can do these banner ads. If I can build a website, I can build a banner ad.
And, you know, at first I just thought, you know, I'll just kind of cruise through this and switch jobs later. But I ended up being really fascinated by the art, like, to learn how within like two seconds to convince someone on the internet to click something is it became fascinating for me. And I, you know, that skill to like build something, an animation really quick and influence people in that way. I believe I carried that.
It was a great skill for me to care for, to ultimately build MailChimp where, you know, I had to build an app that convinced people to buy things from me. How did you meet Dan Kurzius, who would eventually become your co-founder at MailChimp, but how did you, he was also at Cox, right? Yeah, well, you know, there was this thing that was invented called MP3s with an appster and everything. And Cox also, in addition to newspapers, they had radio stations everywhere.
So they thought, well, you know, we've got all this music. We've got this great distribution channel. What if we teamed up with another startup called MP3.com because they have all of these musicians uploading their music. And they asked me to be their web design manager.
And one of the first people that I hired was Dan. You hired him to work on this project. And the idea was you were building an online music site or a portal or something? Yeah, at the time, the hypothesis was don't build one central music portal.
Build one for each local market because the hypothesis was that people would actually care about local musicians. Oh, wow. You know, and so that was the idea. Was it going to be like a streaming service?
Yeah, yeah. And Dan was into music. Dan's, he's into, he was a DJ, he's a music producer, he's into electronic music. And so he interviewed for the job thinking he was interviewing to write content about music.
And halfway through his interview, he realized that I was interviewing him to be a coder and he had no idea how to code HTML. And so he totally lied, totally lied to me and claimed that he knew how to code. He took the job and then he bought HTML for dummies. And he crammed for whatever it was two weeks before his first day on the job.
And his first day he was scared to death and his desk was right next to mine. And he thought he was going to get busted by me. But he was an amazing coder. I used to come back and look at his code.
I remember saying this is remarkable. It's like the code that you would see in books, like no one codes this neatly. Now I know it's because he literally crammed from those books. I imagine around this time, I mean, this was like the heyday of the dot com boom.
And imagine a company like Cox, a media company was trying to, you know, plant its flag everywhere and probably spending money everywhere. Was it like that? I think that their goal was, I think to merge with a search engine. And it didn't pan out, you know, and I think that was the heyday things were, you know, this was the time of Fast Company.
What was the other magazine, Business 2.0? So I think that this is literally how business works, that whole dot com paradigm, right? It's all I knew. And this was 1999.
And what is it like the next year, 2000, April 2000, is when everything came crashing down. The whole dot com bus happened and we were all laid off. And you know, like for me, it's like the whole world had turned upside down. Everything that I knew to be true was not anymore.
You were all laid off just like it came as a total shock. You know, Cox being the good company that they are, you know, they offered a bunch of us jobs back at Cox corporate. And I declined because I felt like if I take the job, I will probably do very well. I will probably eventually become a vice president.
But forever, it will always nag me. What if, what if, you know, what if I had started my own company? It was just something that I wanted to do, you know, since I was young. And so I just felt like I would regret, it was the fear of regret that told me do not take the corporate job instead go my own way.
So you knew that you were going to lose your job? And what did you approach Dan Kurzia and say, hey, let's start something? Not quite. Me and my friend, Mark, we said, hey, things are shutting down.
How about we go into business together? And we had this, we had like two weeks of lead time to think it all through. And that's where we got the idea to start a web design company. This is Mark Armstrong, right?
Yeah, Mark. And so I started the business with Mark and Dan said, I'm going to hold off. I need to get a job at Cox corporate. And one year after Mark and I started, we teamed up with Dan.
We convinced him to join us and the rest is history. So you and Mark start a web design business. And I guess you guys called it rocket science group, right? Yeah, that's right.
Rocket science group. And who did you initially target? Like who were your clients? The idea at the time was it was something that we observed at Cox.
You know, there was an engineering team, geniuses, rocket scientists, working on, you know, the Cox servers, doing hard things. We were working in the marketing department and marketers needed, they needed stuff too, but the engineers were always too busy. And engineers kind of didn't want to stoop so low to do marketing stuff as well. It was like, it was beneath them.
And so our target market was marketing departments, where we would help them build little micro sites, websites that basically they didn't have to go to their engineering department to ask for. I guess we were sort of like a rogue team for marketing departments. I mean, you're in Atlanta at that time. So our, I mean Atlanta is the capital of headquarters for tons of huge companies to call UPS and then Delta, did you go after those companies?
That was the dream. But it never worked out that way. What we learned pretty fast was it was easier for us to go to ad agencies who were really good at pitching to those big companies. And we would, they would just subcontract with us.
Yeah. One of the tools that we, that we ended up building was a eGreetings website, like bluemountain.com at the time or Hallmark. And we figured out how to send HTML email and we started sending eGreetings and they were, they were really, really cool eGreetings and no one cared about eGreetings anymore. And we thought we were going to get rich because Blue Mountain was sold for $600 million at the time.
We just thought, oh my God, if we make an eGreetings site better than Blue Mountain, we might get $700 million. That was our best plan. So we build this thing and no one uses it. It's a flop.
But you were, you were still doing web design, right? And, and that was going pretty well, right? Yeah. So we went to the web design and turns out a bunch of our small business customers ask us to help them send email newsletters.
And they're using like big, bloated enterprise software that you have to install with CD-ROMs on the server. And, you know, they paid us, you know, by the hour to plug in their HTML code and all of their content. And we were making good billable hours, but we just hated using those other companies software. It was so awful.
And so we just, we just said, you know, we're so sick of this. Let's just build our own. And we just took the scrap code from the greetings website. Luckily we didn't delete it.
And yeah, we used that to build, to build MailChimp. And we called it We Mailer because we thought we could make it fun. At the time, I mean, this is because you built what would become MailChimp early. I mean, you guys started the web design company in 2000 and already by 2001, you had built this email system, right?
Yeah. But in the meantime, the bread and butter of what you were doing was web design. That's right. I mean, we thought that We Mailer might make, you know, enough money to pay for our lunch every day.
That was our wildest, you know, fantasy for, you know, what kind of success we might get out of this. And initially it worked like, from what I understand, you guys were billing people by the hour for web design, which probably added up. You were making decent money. And it was the same thing with the email product.
Like people would say, Hey, we want to send this email out to our clients. They would give you the content and you guys would actually do the emailing for them, right? Yeah. And then we record our time and it might be, you know, 100 bucks for a couple hours of work.
Wow. So it was really good. Probably you couldn't charge as much for that as you could for web design, probably. No, you know, a web design project might get us anywhere, you know, between 10 to $30,000 a gig and this little email thing, you know, we were, we were, we were getting like $100 checks, $150 checks.
Over time, the, we started to get like really big piles of $100 checks from our customers for, for we mail. It got so bad, actually, I ran out of check deposit slips and I said, I do not want to go inside the bank. We've got to find a way to build our customers online. And that was how we actually installed the credit card system.
And that was when Mailchimp became an official SaaS business software as a service before that acronym was invented. How did you guys come up with a name? There were lots of reasons. So first of all, my parents, when they were in Thailand, they actually had a pet monkey and they would always tell me stories about this pet monkey and the moral of the story was always never, ever have a pet monkey.
They're mischievous. They're awful. They make a mess. They get jealous when you leave them to go out on a date, never, ever have a pet monkey.
So I was always fascinated by them, you know, dreaming about what, how cool it would be to have a pet monkey. And then, um, there was a, a phase that I went through, um, my Jim Henson years where I really, really wanted to be a ventriloquist and I got a monkey muppet and I carried that thing everywhere I went and I had like little comedy shows for the family. You could not separate me from my, my monkey. So, you know, I've always loved monkeys and I always brought them into my designs as well.
So, you know, we had our e-greeting site and I noticed like the one e-greeting that I had of a monkey was the most popular e-greeting that, you know, the few users that we had actually sent to their friends. Even like whenever we designed websites for our clients and we had three options to show them, the one that we loved that we always hoped that the client would choose. Whenever we put stock photography in there, we would put monkeys in the one and it would always make them laugh and it would say, I want the one with the monkeys. You know, we had this little saying, you know, when in doubt, insert a monkey.
So, that was just something that we always said and probably when we were like, you know, going to Lyrius, working at 2 a.m. we would just say, just put some monkeys in it. And so we said, hey, how about a chimp mail? And so we decided to call it chimp mail and then of course the domain was taken.
The domain for chimp mail is taken. Wow. The domain was taken. Yeah.
So we had to improvise and call it MailChimp instead. But there was a time I remember when people didn't want email, they're getting so many emails. What were people doing with MailChimp? I mean, were they using it to just contact their customers?
Like, how are they using it? There was definitely a stigma to email marketing. If we went to tech conferences and told people what we did, you know, things would get quiet, they'd walk away. You know, we were, they sort of thought of us as sort of like the dark underbelly of the internet.
This was a time when spam, there was no solution for spam. Right. People were like, oh, so you guys are spammers. That's right.
That's right. And in like end of discussion, they'd walk away. I was really popular at parties. Yes.
Absolutely. But there were some, enough people who wanted the service because they wanted to send a mass email out to their customers and they wanted it to look nice. That's right. I mean, I didn't let it, you know, by the way, you know, I was a spammer and, you know, my company had a chimp in Z for its mascot.
So they really took me seriously everywhere. I went. But yeah, yeah, I mean, I knew that there was demand. Small businesses were constantly signing up.
So it was never just waited from it. But by the way, was it just the three of you still or were you able to hire a few more web designers? We had interns here and there, but just the three of us, you know, in our early days, we would just, we would just chant, you know, cockroaches, just be a cockroach. And what we meant was like cockroaches can survive a thermonuclear war.
And so we just thought, you know, that's, that's, let's just strive. This, let's just survive here. I mean, it was just a three of you kind of hunched over keyboards day and day out, just like pounding the keys. Yeah, from morning until sometimes until 1 2 a.m.
I mean, it was a real grind. I mean, I was a revenue, cash flow. Was it okay? No.
No. Let's see. If I get the best that I remember our agency business ever doing was something like between two and 300 grand a year. Well, that was the best we had ever done.
And that was through 2005 here, by the way. So we were always just barely scraping by. What explains that to become more competitive? Was that it?
That was just the more people doing that kind of work? You know, we would get business and then we would get busy doing their work. And while we were doing their work, nobody was pitching for new business. And so when we were done doing the work, there was no new business and we it would basically be like hitting the reset button.
We have to go out and hunt for more business. So it's just like these constant ups and downs and ups and downs that just kept us from really breaking through. And I'll never forget it was like 2005 ish. There was something that totally changed.
I was working at home in my apartment, coding something for sure. And it was sometime in the afternoon, Teresa, she was a night shift pediatric nurse, right? So she was personally supporting you guys or she was she was yeah, health insurance and everything from her really stabilized me, which allowed me to be an entrepreneur. So she's a pediatric nurse.
She does a night shift to make extra money works holidays. I barely see her right. So she wakes up around noon around lunchtime or so. So she flips on Oprah and I'm coding.
I'm just like, Oh, great. Oprah, I've got to listen to this. Roll my eyes and there's some episode on with a guy named Robert Kiyosaki. And he's and he has this book called Rich Dad Poor Dad.
He's that's right. He's selling this book. And I just remember what I remember was how angry the audience was. Because he was trying to teach them about if I recall correctly, recurring income, passive income.
And you know, he was telling them in it, you know, almost condescending voice. It's like, and that's why you're not rich. That's the whole point of my book. And I remember getting the book and reading about interesting.
Wait a minute. You know, we're going paycheck to paycheck chasing client business with rocket science group. Meanwhile, we have this side thing that we built called MailChimp. Now we've renamed it by then and it's just making this recurring income.
And you know, we were having heart to heart meetings about whether or not we should shut down rocket science group because it was just so gloomy. You know, it just didn't seem like it was ever going to grow. And we started, you know, to put the numbers in Excel, just look at the numbers. We drew graphs for the first time ever.
We looked at our revenue over the years and the graph for our consulting business was, you know, pretty flat. And then for the first time ever, we separated MailChimp income from our agency income prior to that. MailChimp just dumped money into our bank account and we used it to pay for lunch. Yeah.
So this is the first time we actually looked at the graph of MailChimp revenue and it was growing. We were like, look at that up into the right. What have we actually focused on just MailChimp? And that's that's what got us talking about becoming a software company.
Wow. So 2005, you start to see the numbers and you know that MailChimp is you can see it growing. But from what I understand, like it was still a tiny fraction of your overall business. Like most of the revenue was coming in through Web Design.
That's right. That's right. And you know, the Web Design projects are like $20,000 by this time. We had gotten pretty good at sales.
And so it was a really hard thing to convince my co-founders like, hey, let's abandon the Web Design business where we're making 20 grand, sometimes 35 grand a pop. And let's go to this MailChimp thing where we make at that time $25 or $50 a pop. And that is just a really, really hard sell. When we come back in just a moment, how Ben and his team finally went all in on MailChimp and how its accidental twin, MailChimp became one of the best mistakes that ever happened to them.
Stay with us. I'm Guy Raws and you're listening to How I Built This. Hey, welcome back to How I Built This. I'm Guy Raws.
So it's early 2007 and Ben and his partners finally decide to mothball their Web Design business and focus full time on MailChimp. And it's an agonizing decision partly because they're not sure they'll ever make enough money taking small payments from small businesses. But it turns out they're wrong. When we finally work up the curb to do it, MailChimp revenue, if I recall correctly, almost tripled overnight.
And it was because building up to that sort of day one for MailChimp, we had decided that, oh, we had to address a few major bugs that customers had been complaining about for years. And so we did all of these upgrades and fixes. And as soon as we finally invested time fixing problems in MailChimp, people started to pay us money. Go and behold, go figure.
And so we really kind of hit the ground running. We did not suffer at all from dropping the consulting business. In fact, I remember just thinking we should have done this sooner. Did you change your business model when you made the pivot from like, you know, pay per use to a monthly fee?
That actually took another year. Like it wasn't until later in 07 because it sounds so silly now when you look back in hindsight. But at the time, there was a movement at the time for micro payments. Yeah.
You know, remember that? Like Apple was like the most famous version, the 99 cent song. I mean, and that was that was really hard to do with the credit card companies for one. But it was just it was like liberating to not have to pay with your credit card huge jumps of money, but to just do this little, little, little, little, micro payment.
And so we kind of like attached to that movement and philosophically, we thought, that's what MailChimp stands for. You know, MailChimp's all about low commitment for the small business owner. But you know, over time, we started to look at complaints from customers and they were, they were telling us like, this is a pain in the butt to constantly have to input our credit card and make some micro payments just charge us bill is by the month. We were stubborn about it.
We were too philosophical in retrospect and it took us a whole year to decide to finally put in the subscription fees. And we did. And that's when business really, really took off for us to in those early days. From what I understand, you guys, 2007 year full on into MailChimp and there was a huge 800 pound gorilla in this space called constant contact.
They were big, right? They were already huge. And from what I understand, like you guys started to attract investors, inquiries to to fund and scale your business. Yeah.
Yeah. I didn't understand really the whole investment world at all. You know, I was just focused on growing the business, surviving and suddenly these, you know, fancy pants, people from the West Coast started knocking on my door and asking me to go out for lunch and they would tell me, you know, there's this company called constant contact. They just IPO.
They made a lot of money. We think you could be the next IPO and you know, I talk about our business and tell them how we help small business and they say, well, that's that's cute. That's great. We can help you take our money and we can help you pivot and serve the enterprise because that's where the real business is.
And I just thought, you know, there's just, I could do it, but something about it just felt wrong to me and Dan. We just, we just wanted to stay. It just felt, it felt really good to serve small businesses. It was just in our DNA.
The investors were saying you can make a lot more money if you focus on the enterprise, on the enterprise, big business. I'm curious because constant contact was huge still is. And I'm sure some of the investors that came to you said, listen, guys, if you don't scale fast, you're just going to get buried. You know, this is going to be because the big guys are out there and they're just going to crush you.
Like you need money to scale fast. Like I'm surprised. I can't believe that no part of you didn't consider taking that money. You know, for the first two, I started to think about it because I really believe their pitches.
And then by the 10th one, I realized they were all saying the same thing. They were all using the same playbook and it was always a scare tactic. Like if you don't take our money, you're, you're just going to peter out and die. And so we, we just, I guess more stubbornly than anything just didn't want to take the money because of that.
We never liked their approach. But how are you growing? I mean, you said you could sort of doubling your revenue. So I'm assuming in that first year, 2007, you're doing maybe more than half a million dollars in revenue.
Yeah. Yeah, that sounds about right. Which is not enough. I mean, it's great, but it's not really enough to, it's not enough to acquire customers at scale.
It's not a ton of money. No. And within a year or so of you, you guys making that pivot, your third co-founder, Mark Armstrong, he, he decided to leave and you guys bought him out. He was, was he just burned out?
Yeah. He just, you know, he burned out. He wanted to start a family. He had other life goals.
And at that time, you know, we were just, the needle just wasn't moving. I think it's just really discouraged. After you rejected the overtures, let's say from investors from what I've gathered from, from what I've read, you could have come with the conclusion soon after that they maybe they were right because I read that as more competitors started to enter that market, your customers are leading for kind of bigger, better equipped competitors. I mean, it got, it got rough for a while there.
That's for sure. We sort of get more competitors entering the market, serving different niches. You know, we, we had this idea, you know, blogs were big at the time and we had this idea to separate MailChimp into two parts into two products. One would be a list collection form, right?
You put this embedded form on the front page of your blog and collect email addresses to grow your email list. That would be one product and we would make that free. And you would, the idea was you'd grow your list and once it got to a certain size and you wanted to finally send them an email, well, then that's when you would have to pay to upgrade and actually use our email tool. So it would be free to compile a list of contacts, but if you want to send an email, I'd have to pay.
Yeah, that's when I'd get you. Right. So we hired this engineer and he works his tail off to get this thing done and, you know, we want to get this done before the Christmas before the holiday season hits. And we get to the deadline.
He says, you know what, guys, this is impossible. I cannot separate this. The code is atrocious. It's a mess.
I cannot untangle this code into two products. I'll need another two years to get this done, but I do have a compromise. Just keep it in one product and just make the whole thing free up until a certain list size. So like if you had 50 contacts or 100, up to 100 contacts, whatever.
What was it? I think it was 200. And if it passed 200, then you'd have to start paying. I said, yeah, I guess it's an okay compromise.
I didn't like the idea at first, but you know, you know, give away your product. Yeah, you would come from Cox media that had owned the Atlanta Journal Constitution and their downfall. Many newspapers downfall was they gave away their contact for free on the web. Right.
And we had never up until this point, we never even had a free trial for MailChimp. You know, so this was a decent compromise. We had to hit our deadline before the holiday season started. So I said, okay, let's do it.
We'll call it, I don't know, the MailChimp free plan, whatever. And I wrote a blog post about it. And instead of publishing it, I decided, let me just save it as a draft, think about it a little bit more, come back and rewrite it, publish it later. And I guess I might have been the weekend.
I came back on a Monday morning and I sit down, go to the computer and somebody had left a book on my desk. It was by Chris Anderson. It was called Free-Mim. Chris Anderson, the former editor of Wired.
That's right. I didn't know who he was at the time, but I pick up this book and it says free me. I'm going to read the back and I'm like, huh, that's what we're doing. Okay.
I said, I guess I'll change my blog post. I'll change the title. I won't call it MailChimp's free plan. I'll call it MailChimp goes free-mium.
It's a according to this book. Free-mium is a movement or something. And I publish it and you know, it gets some traction, but not much. And then out of the blue, a guy named Charles Hudson calls me up.
He's he's a guy that I think he was an ex-Googler turning into an investor and he was starting to hold conferences at the time. Now he's very famous now as an investor, but these were his early years and he calls me up. He says, I'm starting up a conference called the Free-Mium conference and I'd love for you to come and speak about free-mium. And I'm going to have other entrepreneurs.
We've got a guy named Drew Housden. He said this thing called Dropbox. He's been a show guy. Some other dude named Phil, he's got this thing called Evernote.
A bunch of you can come and talk about this. And I went and I spoke at the Free-Mium conference. My angle was how free-mium is great, but it's rife with abuse and you better have some good anti-spam algorithms like MailChimp does. And I went and talked about it and it got on TechCrunch.
It started to hit the news and that's when it was the rocket ship ride really started from MailChimp. People found out about it and start signing up. That's right. And importantly, you know, if you sign up and send an email from the Free-Mium plan, the catch was our logo was in the footer of your emails.
And so it went viral. People would click on that sign up as well. So you've got the Free-Mium model going. This is like 2009, if you can.
That was a game changer because all of a sudden you've got all these users. But I wonder, I mean, you know, the thing with like a Dropbox is they make their money from enterprise users, you know, big businesses that are paying, but something like 90% of their users aren't. So I have to imagine the vast majority of people signing up are not paying you anything. Yeah, that's right.
In fact, mostly when we had these Free-Mium users, I mean, the overwhelming majority were free, but they started to convert. They started to grow their lists. You know, I think that, you know, when you're a small business, the odds are against you. 30% die in two years, 50% die in five years.
And so they need a tool that kind of gives them a shot. And prior to that, I mean, you had to commit to paying 50 bucks a month somewhere and you didn't even know you were going to make it. So that was the appeal of MailChimp. Like you had this runway to try new things and grow.
And we only made money when our customers actually succeeded. So at this point, how quickly did you guys start to grow? Like how quickly were you getting more users? Well, you know, when we launched Free-Mium, it just exploded.
So you're talking about having, you know, a few hundred thousand customers at the time after six years of business. And then within one year of launch premium, we ballooned to a million users. And it just kept growing exponentially after that. And so that was just a really good kind of a funnel for new customers to come in and convert down the road.
And it would take them quite a while to convert. I don't think most businesses would have the patience to wait for these customers because you'd see them come in and start a business, set up a MailChimp account, try to do something with a business. They would fail. They would shut down their business, but they would keep their MailChimp account open.
They'd get a job somewhere. They would learn how business actually runs. Then they'd quit again after three years or so, go back to their MailChimp account, start their business again, and do well the second time around. So you're talking about like a sales pipeline that was like seven to ten years.
Who has that kind of patience? Well, Ben, just not encouraging to have that kind of patience because we had nothing else to do. How are you? I mean, why would somebody go to a service like MailChimp when they could go to a much bigger competitor that probably had much bigger staffs and maybe they were more sophisticated?
What were you offering that they weren't? Personality. When you're serving small businesses, you're talking about entrepreneurs with a dream, right? They're probably starting a business that's been started a million times before.
Your ice cream parlor is not a new invention, but they have a dream. They have something unique. Theirs is going to be different because XYZ. There's something unique about them.
And so MailChimp, with the chimpanzee mascot, we were weird and offbeat and quirky, just like all entrepreneurs. So now we have this sort of internal tagline that we say we got you because we get you. I believe that that's why they came to us is because our unique brand showed that we understood what it was like to be an entrepreneur. Did you guys had kind of toiled away for six plus years on the web design service, then pivot to MailChimp?
And you start to see steady growth. Was it pretty soon? Like by 2010, where you were like, okay, this is going to work. This is going to be big.
2010 is when we're at a million users growing to 2 million fast. Servers were dying constantly. We were having to constantly move from data center to data center just to keep things alive. And were you making money?
Were you profitable? Yeah, we were making good money. I wish I could remember the timeline. It's been 20 years, you know?
It's all a blur now, but we were making probably 10 million, 15 million at the time. We were doing really, really well. And you were able to grow into Pyre and expand, right? So we were trying new things like fun branding stuff, trying this new thing called Twitter in 2008.
Yeah, I'd say 2008 is 2010, I'd say, is when we think, yeah, this is real. This is going to be something. And entirely cash flow was funding. Everything was funding.
Hiring, it was funding innovation and the engineering. Just the cash flow was funding that. And we were totally self-funded. Investors still came and they would say take our money and we'd say, we don't know why.
We would need it. We were making plenty. But you saw an opportunity there because most businesses in America are small businesses, right? And most people in the US are employed by small businesses.
We saw the opportunity. We saw the inspiration too. It just felt more fulfilling. I mean, remember we had a taste of serving big business.
We knew what that was like. We knew that it would fill the wallet. But serving small businesses, serving the underdog was always our thing. And it just felt better.
And yeah, the volume was there, you know, the idea of that long tail. We worked as an agency. We know what it's like when you lose a big client because of 9-eleven or a pandemic or something. Yeah, you lose a big anger client.
You can't pay your bills and you have to lay people off. It's horrible. You have to depend on just a handful of customers with a long tail. We're serving thousands or millions of tiny customers who pay small amounts of money.
You don't rely on anyone too much such that they're too big to fail. We cannot survive without them. We're actually a very, very much more resilient company serving the long tail. But at the same time, there were still things you couldn't do, right?
Like one of the things that's interesting that Red was that there were big companies out there, right? That were doing national ad campaigns, or our national radio and cable news. And I'm thinking even with 15 or 20 million in revenue, you probably couldn't do that kind of marketing campaign. We had to be super creative, right?
So I remember one of our biggest competitors announcing that they were opening up an office in San Francisco to be with all of the other tech companies and show that they had a presence there. And I just remember being just really jealous, just being honest. And I remember telling my team, my marketing team, I want you to get a billboard across the street from their office. And all I want you to do is just put a big giant winking chimpanzee on it.
So that when their customers visit, I want them to see MailChimp's logo. I'm not proud to share the story. But fortunately, my staff's just like, okay, we're not going to do that. They secretly went off and they said, but a billboard is an interesting idea.
They're cheap, nobody uses them anymore. And so they went off and they found one of those media companies in San Francisco who said, we don't have any billboards across the street from this particular office, but we do have one on the top of this building right across from this building called Moscone. And we had no idea what that was. But we said, you know what, screw it, let's just take it.
And it turns out that's a pretty popular building in San Francisco. It's where Apple used to hold their WWDC events. So crowds of people would gather outside of the Moscone Center up and down the street, they're waiting to get in, and they would use this new app called Instagram to take selfies. And what would they do?
They would take a selfie with a winking chimpanzee in the background. So we went viral that way, and then billboards just took off after that. We started to use billboards in all kinds of cities after that. And you guys did like merch too, right?
Like you made t-shirts, I mean, you're the monkey mascot, like Oliver Place. I had the typical kind of cafe press, you know, stick the logo in the upper left pocket area. And I had a designer said, you know, we can make this really, really cool. We can use these really designer t-shirts that feel really soft and comfortable.
And then we decided to make it something that people would want to wear. And so he created these and then we decided, you know, what if we just had like a t-shirt giveaway and it went viral, we did a t-shirt giveaway and it just went berserk on Twitter. And we always had really lucky breakthroughs on new media, new channels, new networks, Twitter, Facebook, Instagram. It seems like since we were constantly tinkering, we were always there when those channels got big.
I still remember the day when someone told one of our employees said, I listened to this thing called Podcasts on my Drive to Work. And I think we should sponsor a podcast. And I thought it was just a weird idea. I never heard a podcast, but I said, screw it, hear some money and go sponsor podcasts.
It was the Joe Rogan podcast. And so like we were always like really on the early cutting edge of all of these new inventions at the time. Eventually we did get the budget to do things like TV and they were okay. But they're not all they're cracked up to be.
Did you go through a period where you stopped listening to the Atlanta public radio station because you got sick of hearing the constant contact ads? Yeah, yeah totally. Absolutely. But I mean, eventually we started to do that.
We were sponsoring podcasts, public radio shows, and that is ultimately what led to us sponsoring Serial. Yeah, let's talk about that because that show totally mainstreamed podcasts. Like it was parodied on Saturday Night Live. It was like tonight's show.