Ben Chestnut's 20 Years, Founder of MailChimp
He was 26 when he was fired and started a web design studio.
I was warned a month in advance, so I had time to plan my future life.
After being fired in 2000, Ben Chestnut took up what he knew best: website development. Over the years, he has created nearly 2,000 banner ads for his former employer, Cox newspaper. He knew exactly how to create interactive objects on the Internet.
And I thought ... Well, this is our chance to start a company. My business partner and I just found clients. We went knocking on doors down the hallway from our office. And we got paid projects. We received projects for $ 13,000 and $ 32,000. Even before getting a business license.
Unfortunately, for running a web design studio, your phone call is more important than your design prowess. Studios often attract the quirkiest businesses, where customer opinions are substituted for real KPIs and a soothing voice can be more important than product movement. Naturally, a group of introverts and thoughtful designers called the Rocket Science Group have failed to succeed in an environment where appearance is more important than essence.
After five years of impossible work with clients, spinning like a squirrel in a wheel, Ben calmed down, the fuss ended, and he became the owner of a stagnating web studio. Revenues were stuck for a long time, stuck on a stubborn plateau, and the team was drained by a combination of uncertainty and grueling work. The very meaning of the masochistic lifestyle has been questioned.
This doubt prompted Ben and his team to rethink the core logic and foreseeable future of their business. A table was created detailing the revenues from all of the agency's projects. And there was one row in the table that gave Ben the only answer he needed. It turns out that one of their internal side projects quietly made more money than all of the agency's consulting projects put together.
Chimp is born
At the Rocket Science Group, creative minds grew tired of introducing the same feature over and over to their clients' websites: a mailing list building tool. The work described was repetitive and ripe for creative automation. To get rid of the burden, the team developed a one-stop, self-service solution and charged customers 1 cent per email sent.
Rather than ignore the problem, Ben and Dan identified it as an opportunity to help their clients solve it. They took code from a failed digital greeting card product they created and customized it to launch MailChimp in 2001 for their web studio's client base.
The rumor spread slowly. Old clients who no longer worked with the Rocket Science Group still used the email tool. Small business owners who had never been a client of the agency started making inquiries. While Ben was focused on securing the studio, his email tool has quietly grown its own little followers.
The amounts were still small. When you're chasing $ 30,000 web design projects, multiple $ 50 invoices don't need much attention. Ironically, it was the increasingly inefficient task of billing these small invoices that prompted Ben to introduce a monthly subscription model and create credit card-related functionality for MailChimp, effectively spawning one of the first SaaS products.
How does a back-end tool used internally turn into a $ 4.2 billion giant industrial giant without investment? Let's talk briefly - using partisan techniques:
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Ultimately, Chimp succeeded because it found its way into the hearts of small business owners. Ben's mom used to run a hairdresser right in the kitchen in the house, so Ben was well aware of the challenges self-employed people face on a day-to-day basis.
He knew small businesses didn't have separate marketing budgets - buying a new TV for the living room or investing in Facebook ads were funded out of pocket. He knew that self-employed people are the end consumers of his product, and that these are the decision makers who care about the product.
Ben: “The content we put out is like ... A second chance in life ... How to know when to hold on and when to give up ... This is the struggle [small] entrepreneurs face all the time. […] We want to help them get out of the kitchen. "
It sounds trite, but the secret of Ben's success is that he was honest with himself, knowing his strengths and weaknesses. When Ben's father bought him a computer, Ben didn’t study programming - he learned to draw in a program that required 5 floppy disks to run. In fact, as a child, he wanted to become a cartoonist. Is MailChimp an incredible engineering feat? Maybe. But its essence is creativity, and that seems to be enough to build a billion-dollar tech company.
Shut up and take our money!
One of the most interesting aspects of Ben's biography is that he raised MailChip without any outside funding, making this story somewhat unique in terms of tech companies.
The main reason Ben could have done this is because MailChimp has been a revenue-generating software from day one. Product prices have changed over the years (email -> monthly subscription -> freemium), but unlike products like WhatsApp, it had a very clear revenue model that didn't involve selling user data. It is also crucial to consider that MailChimp was a spin-off of Ben-run studio through which MailChimp was originally funded.
Ben: “It was an interesting time for us. These were the early days of SaaS, nobody really solved problems with a SaaS approach or for small businesses. So we had a good opportunity to go for it alone. And we always just made a lot of money because we were the only ones willing to do email (a very unattractive business) for a small business, which is also not very attractive. "
Ben didn't seem to mind taking the investor's money. But the world was still recovering from the dot-com crash, and venture capital firms were reluctant to throw money at internet companies. Many feared the SaaS freemium model, which was new at the time. Most of the investors Ben met with argued that MailChimp should target businesses because there is a lot of money out there, not small businesses.
Investors could not verify the profitability. Why serve a highly fragmented, emotional, low-budget small business audience when 30% will go out of business in 2 years and 50% in the next 5 years? From personal experience, Ben realized that even when solo projects fail, they keep their mailing lists and most of them start something new in the future. This way, MailChimp doesn't necessarily lose a customer, even if they temporarily go out of business.
Of course, once earnings started to rise, investors lined up outside MailChimp's door. Over the years, Ben has seen dozens of competitors take millions in funding in hopes of outgrowing the company. Every VC-backed member could mean Ben made a terrible mistake by remaining self-funded. However, as of 2020, MailChimp was still in a comfortable position with a 60% stake in the email industry .
Ben: “I've been in this business for 19 years. So I had waves of competitors taking money from investors, and I went through the stages where I said, "Lord, now they're going to kill me." Funding keeps getting bigger and bigger ... and nothing seems to be happening. We just keep aiming focus [...] and everything is fine. "
Could MailChimp grow even faster if the project had VC money? Maybe. But, most likely, corporate investors would have gradually split off MailChimp's culture of creativity and innovation, which made the company special.
7 Fun Facts About Ben Chestnut and MailChimp
- For Ben, the mixture of cigarette smoke and hairspray is the smell of business. His mom set up a hairdresser in their kitchen, and that's how Ben got introduced to entrepreneurship as a kid.
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- Ben's motto is: love what you do , not traditional do what you love . He says, "Over time, all passions will fade away if you turn them into a profession, and the only way to maintain a sense of purpose is to learn to love a craft that you are well versed in."
Guys, no one will come
As an epilogue, I would like to leave you one of my favorite quotes from Ben Chestnet:
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