After bootstrapping for 21 years, Ben Chestnut sold MailChimp to Intuit for an astonishing $12 billion, making MailChimp by far the most successful bootstrapped SaaS ever. Since 2012, I've emailed Ben approximately once a year to see if I could get him to speak at MicroConf, and it finally happened. Ben joined me on the MicroConf stage in Atlanta for a wide-ranging, often hilarious conversation about building and selling MailChimp.
We talked about how he, in his own words, Forrest Gumped. into SaaS, how he accidentally launched freemium, how they scaled from zero to 1200 employees, his decision to sell, how he would approach opportunities in AI today, and so much more. And if you stick around till the end, you'll hear the counterintuitive advice he'd give to his younger self. I hope you enjoy this as much as I did.
Let's get into it. Hey, before you get started, can I just say, I walked in late. I caught the last few slides of Asia's presentation. This is cheating. You should all be ashamed of yourself.
That It took me like 10 years to figure that out. Like pouring through all my data. It took a long time to get just to amass that much data, learn how to parse it and then look at it and then make those cohort charts.
This is not right. Shame on you and then this Austin guy making a hundred thou-Oh come on, it took me like three years to get there. I will take that as one of the best compliments of MicroConf ever.
Not right. It's what, 2002? 2001?
MailChimp starts to come together. Talk to us a lot, you know, I don't want to spend the whole- talk talking about the early days, but I know that there's a story there of there was no SAS, no one, that acronym didn't exist. So how did you and your co-founder who were running, I believe, was it a design agency?
Yes. Stumble into building an email service provider, email marketing platform. Yeah, I mean, it's probably a story a few people have heard before. I've told it so many times, but it was definitely stumbling into it. We've sort of forest-gumped our way into business.
We were a consulting company building websites. This was 2000-ish, you know, right after the dot-com bust. And, you know, we were building websites for a lot of clients, and what we noticed was everybody was asking us to help them with their email newsletters. And they were asking us to log in to their email. email newsletter clients, which were all kind of bulky and bloated software.
You know, CD-ROMs you installed on your server and that sort of stuff. And it was just miserable for us. We hated using it. I mean, it was billable hours. We got paid for it.
But it was just miserable interfaces and everything. We just thought we could do better. Well, it just so happened, like a few years prior, we had built this failed business. It was an e-greetings website. And the only reason we built that was, you know, We saw a press release that said Blue Mountain Greetings was acquired by Excite for $600 million.
So we were like, well, let's do that. So we built an eGreetings website. It did okay. It didn't make us rich at all.
But the spare parts from the eGreetings website, we found... that code again and we repurposed it and built our own email newsletter tool just to make it easier for me basically to copy paste content and hit send. And then our clients loved it and we kept using it more and more and they would send us checks and the checks were like like 50 bucks, 25 bucks, and I'd have this big pile of them. And I'd go to the bank and I'd run out of deposit slips because I was going there so much.
And I just said, is there any way we can just charge by credit card so I wouldn't have to drive to the bank so much? And we put a credit card interface on it so that our clients can just use it directly. And that was, I guess, SaaS.
Was it subscription from the start or was it a one time? It was a subscription. It was not subscription from the start. I mean, you had to have the URL.
We would give it to a client. They would just, you wouldn't even. log in, you would just go and use the interface. Scary, actually. Yeah.
And so, did you see, how did it evolve into, like, having a login screen and being subscription? Were other players doing that, or did it just feel like a natural step? It did not feel natural at all back then.
I mean, SaaS really, the term wasn't even coined. It was application service provider. ASP.
ASP, which Microsoft had something called ASP at this. It was very confusing. And it was very confusing explaining to customers what an ASP was.
And I don't know who came up with that term, SaaS or the cloud. I heard it was Ben Horowitz, but I don't know. But anyways, it was not natural at all. I mean, we kept stumbling into this.
It's, you know, actually blogs like your blog back in the early days and Jason Freed. I mean, I was constantly reading those and we were all sort of making it up as we went along and stumbling into it. And I'm good friends with Mikkel over at Zendesk, too.
And so we were all just learning as we went. Figuring it out. So let's flash forward.
20 years or so, and you sell for $12 billion to Intuit in 2021. A lot happened in between. I know. We'll cover every bit of it in the next 26 minutes.
Okay, all right, yeah. But I have to imagine in that 20 years, there were offers to acquire you pretty much constantly. So what changed? that in 21, it's like, let's do this.
I'm finally ready to sell this company. In some ways, the pandemic was pretty damn stressful on a lot of CEOs. That's sort of the quick answer.
But really, it's much deeper than that. I mean, I had been... warned in some of my earlier years, in my early 30s, I don't know, maybe late 20s, you know, I had a lot of mentors, and some of them said, hey, you know, Ben, this business, it's your business, you just started it, it means everything to you, it defines you, it's your whole life, and that was absolutely true. And I never thought I'd sell. I thought I'd be a hundred years old, you know, coming into work on my cane and still running MailChimp.
But these, my mentors told me, one day you're going to find out that the business is not really you. It doesn't define you. It's a tool.
It's a nice thing that enriches your life. You should be proud of it, but it doesn't, it doesn't define you. So one day, you know, if you're ever ready to sell it, could you please sell it to me?
That was somebody, you know, so it's a little suspicious advice. but later on you know in when I got into my 40s you know I had two kids they're you know getting into their teenage years and you know you're this is morbid a little bit but your friends and family starts to pass away and you start to look at life a little bit differently to be honest with you and you know you realized then hey this business they were right it's it's a wonderful thing I'm so proud of it I always will be but it's not me that's it like that will happen yeah that was because MailChimp was always one of the examples I would say everyone sells, but of course there are some exceptions like MailChimp, Basecamp. I don't remember.
I even, I used to use like BareMetrics as that example, because I didn't think Josh was going to sell. Slowly one by one, all those companies aside from Basecamp have sold. So when I heard the news, I was super happy for you because I knew that you were 20 years, two decades into this journey. And that if you decided to sell, that it was your decision, that you weren't forced to sell, that it wasn't some desperation. move and that I believe the purchase price came out immediately.
I was like, well, that's it. You're in the record books now. You know, if Guinness had the most bootstrap, the biggest bootstrap exit, it's the two of you.
Now you were completely bootstrapped. Is that right? So similar question.
It made the math really easy. Well, I bet. Yeah.
But you had to have had funding offers from 2001 all the way to 2021. I'm sure there were just constant, we want to fund you. So why say, why? Why say no over and over and over to that?
Because I'm sure at some point it would have made it easier in the early days. Yeah. It was timing.
I mean, when we started, it was during the dot-com bust. Nobody was getting money. I mean, all the VCs had gone bust. And so many years passed before the economy came back again and VCs started knocking.
But by then it was too late. I mean, MailChimp was already making tens of millions of dollars. We were on the verge of making hundreds of millions. And I could just see just over the horizon hitting a billion. And so, you know, when they came knocking, it was nice.
It was good for my ego, but I was like, I couldn't figure out what I would spend the money on. I was already making enough of it. That was really the most matter-of-fact reason. The other one was that what I noticed every time they came knocking, they would really just give me someone else's playbook.
They would say, take our money, and then you can do what Constant Contact did. They really just wanted me to be the next IPO. And it's understandable. That's their job.
is to get exits for their LPs. And I'm an LP now, so I get it now. But their job is to really get an exit out of you. And so I kind of, as an entrepreneur, I'm sure you all can relate, I wanted to build my own thing my way.
This was my baby. I was going to do it Bruce Lee style. This is the way, my way.
And so that was one of the reasons. I couldn't quite articulate back then, but it was sort of like a lack of respect that they had. for the thing I was creating. I didn't want to be a copycat.
I didn't want to be a copycat, and I didn't want to take orders from some nerdy MBA VC to become a copycat. That's like the worst hell, you know? No. Anyways, I just, that's the main reason. But I'll say, you know, the older and older I got, you know, the more, like, bigger private equity firms started knocking, and then I was kind of like, you know, give me your business card, and I would put it in the safe, and I would tell my wife if I die, you know, call these guys.
So it's good to keep those connections. Build them over time. So you didn't raise venture, but as you just said, you're an LP now.
So you're on the other side. You're an investor. You should all take VC now and exit.
And do an IPO and run the constant contract label. Yes, absolutely. So has your thinking changed on venture over the years or since the exit? It really hasn't.
I have to invest my money. It's a lot to, you know. The term I learned is mobilize.
You have to mobilize the money. And there's only so many banks you can put it in and real estate investments. It's all kind of slow. And so you put in a private equity. And I just, you know, I have a family office that manages that.
I don't really take any active role. I don't invest directly. I don't really... I don't know where the money goes.
Well, except for the check you're going to write to the next tiny seed fund. Of course, sure. We'll talk about that. Yeah, so no, it's not like I'm an active investor now that's out there mentoring. boring or doing anything like that.
It's just kind of like a, it's almost like the way you think about maybe like a money market account, like just, just an asset class. You're diversified across a bunch of stuff. Yeah. Yeah. Um, so I want to talk freemium because I believe Sorry I started a competitor to MailChimp, by the way.
Did you even notice? Did the word drip ever come up ever? Yeah, you know, you put it out there.
I was like a rounding error. I was like a gnat. Did it ever come up in your office?
Anyone ever say that? That's why I said don't meet your heroes. I mean, he was a hero of mine in the early days.
And the bastard started a competing product. When they say it's lonely at the top, you know, this is what they mean. Like everyone you know competes against you and tries to kill you.
But you'll notice this, all the marketing that that we did for Drip, we did disparage some competitors. I always thought Infusionsoft was a pretty poor product. There were some other ones that were poorly built.
We never disparaged MailChimp or HubSpot because I always had a lot of respect, both for you and Dharmesh. But also for the product. Yeah, there was never, and when I say disparage, I would point out flaws, right?
I would say this product is not very good or this is how we're better. It always felt like you guys were authentic to yourself and to your customers and you cared the most about them. But. But one of the things that I've always described, I'm curious if you agree with this. One of the reasons I think that MailChimp won, aside from being early and executing, was that you figured out freemium.
And no other email marketing platform has done that to the extent that you did. Now, am I right that it was nine years after you launched? That's right. Is that right?
That you then launched freemium. So we're talking 2009, 2010 maybe? Yep, yep. So why did it take that long? And was it a scary moment?
move when you made it? Hmm. It took that long because MailChimp was nothing but a side project meant to pay for our lunch. Our other real business was meant to be the real business, right? So it was like 2007 that we actually started focusing on MailChimp, looking at the pricing and everything.
And I should probably not tell you all this, but really we didn't want to do freemium. We wanted to charge the hell out of people. What we wanted to do was like make it free. to sign up for the email collection part of MailChimp.
You can embed a sign-up form on your website or your blog. But then if you wanted to send emails to your customers, that's when I would get you. I would charge you for that.
So there was really no freemium intention there. But the new programmer that we hired was looking through all of our old Frankenstein code, and he said, there's no way in hell I can get this done by the due date that I gave, which was December something something. So, you know...
you know, we had to hit the Christmas rush. So, so he said, here's what I can do for you. I can, I can, instead of making two products, I'll make it one, but we can make it free for a certain amount of time.
And I was like, well, we're running out of time. Do it. That's it. It was an accident.
It was an accident. And so, and so I told you before us gumped our way into this thing. So, so, you know, we said, okay, we'll call it the free plan or something.
That was our creative name for it. And I wrote a blog. blog post and I saved the draft and the weekend passed and on Monday morning I came in and somebody put a book on my desk and it was a book by Chris Anderson from Wired Magazine. It was called Freemium. And I didn't read it.
I still haven't read it, but I read the back cover and the summary described it. And I was like, that's what we're doing. So I just said Mailchimp's introducing Mailchimp's freemium plan. And then when I launched that, it's not like that changed the world for me. A guy named Charles Hudson.
Hudson, who was running a conference, called me and said, hey, will you come speak at my freemium summit? And I was like, oh, that book, freemium. And I went to this thing called the freemium summit. And I sat down next to this guy named Drew Houston, some little startup called Dropbox. And a dude named Mikkel from Zendesk was there.
And what's the elephant? Evernote. Yes.
So yeah, there were all these guys talking about freemium. And I had to make up some stuff. I didn't read the book.
But you have to play the... I spoke about the abuse of freemium, which I knew a lot about. Yeah, because spammers.
But you didn't want to play the Hollywood Silicon Valley story where every entrepreneur knows... Remember WeWork? So, and Facebook from day one, I knew where I was headed. You just told it like it was? You mean, you mean just now when I said we stumbled into it?
Yeah. Yes. Well, I mean, because I've been, I've been a micropreneur, I've been a startup entrepreneur, and I know that a lot of it is just like stabbing in the dark really, really fast though. So if you get up and you just hear people acting like they know it all, it's a lie.
We're all winging it. We're all winging it. I mean, I get invited to some pretty damn good conferences these days with top executives from huge companies. they're winging it. Like I came with my notepad right there.
I was, I was like, Oh shit, they don't know either. I love it. All right. So how would you, do you have thoughts on freemium then? I mean, having run it for 11 years, 12 years at, you know, there's early stage bootstrappers in here doing 10 K a month, doing a hundred K doing 300 K a month, whatever it is.
How do you think about that for other, other companies? It was radical when we started. Um, and, uh, because SAS was new, freemium was new, SAS, freemium and for small business was all radical. So it was a silver bullet for us.
I mean, we tripled in the next year and we kept tripling for a long time after that. Now I think it's kind of table stakes, you know? I don't know that it's the silver bullet anymore, but I mean, even my kids, every app they download is freemium. Everyone expects it. So if you're not doing it, you should be considering it for sure.
Especially if your brand is like a chimpanzee. Like no one trusts that. first.
Like if you're new, you, you know, no one's going to trust your brand. So freemium is got to do it. You heard it here first. So there's a, there's a lot of especially venture funded companies, Silicon Valley CEOs. They not so much these days, but it used to be the playbook of they go zero to one.
And then at a certain point they get exited out or adult supervision gets brought in. You obviously didn't need to do that because you didn't have investors, but how does one go from from managing a small design agency to, you know, you stumble in, you build a SaaS. And I believe when you exited, you had somewhere around between 1,000 and 1,200 employees. How did you learn to run a company of that size?
I don't think you had any experience with that before it got big. Forrest Gump. Yeah.
You know, what I learned later on is, like, the thing you're good at, that's probably going to be the thing your company sucks at. You can't, because you... you can't you don't scale it because you're you still got your hands and I was good at design Creativity and branding and that team after you know ten years in I noticed that that team wasn't scaling like the rest like support Customer service operations I sucked at that So I always hired the best people I could find for that and that side of my business had scaled and was very very efficient So I I think because I didn't have experience it kept my mind very open to always hire opera operational people. I always called them that, those operational people over there. And my passion was not just creativity, but fostering a creative culture.
That's the thing that I focused on the most. And so, yeah, we got to 1,200 people, I think mostly because I wasn't the one actively managing them all. I always had great COOs. Yeah, it makes a huge difference. I'm going to mix up a little bit.
It's my understanding that you... obviously MailChimp had customer support, but that you never had a customer success team, meaning folks who help folks get onboarded and do hands-on white glove stuff. And, you know, what we know today as customer success. Was that an intentional decision? And do you feel like, did you ever tap out the market of where you thought, you know, we should add customer success because we could grow faster or get bigger?
Yeah. I mean, I think for us, what we learned the hard way was we were serving small businesses and. And I used to tell all new employees, I used to draw this diagram on a sticky note.
It was two mountains. And I would say, in our business, you have small business mountain or enterprise mountain. If you want to be king of the mountain, pick one of those two.
And in the middle, I drew Death Valley. I said that was mid-market. Mid-market is Death Valley.
You have basically clients who have the ambitions of a large business and the budget of a small business. And a lot of those managers that are running are being... running the marketing in those mid-sized companies, they're not exactly your cream of the crop with a lot of experience in marketing.
They don't know how important marketing is as an investment. And so, you know, they're very picky, choosy customers. They're high maintenance.
And so we focus really on just the bare bones smallest of the small customers. And you will just lose your shirt if you have customer success. managers trying to help them, give them any kind of, you know, service.
So it was all about self-serve for us when we were serving those small businesses. I mean, these are people who would sign up for an account, a free account, run it for like 10 months, shut down, shut their business down, go get a job. Two years later, figure out, oh, that's how you run a business. Start up a new business, revitalize that old MailChimp account, and then pay us money.
Like that's like a, you know, three, four year sales pipeline. You don't make money with customer success for that kind of clientele. Then we served enterprise for sure, but we chose to serve them through the API.
Like if you're an enterprise, you have an engineer, read our API docs, build it yourself, we'll give you a volume discount. And that was the way that we chose to do it. We experimented with customer success.
It's also a cultural thing. We could not quite get that culture into our business. If you look at like HubSpot, like they've got that nailed, but it's a very different culture at their company versus ours. All right, AI.
You and Dan, your co-founder, were pioneers, obviously, with SaaS, with freemium, other areas. AI seems to have kind of been a wave after you sold, you know, so it hasn't been something necessarily I think you've had to tackle yourself. But do you have any thoughts for entrepreneurs in the room of this new frontier?
Like how, if you were starting today or, you know, getting it going today, how would you think about approaching opportunities in AI specifically related to SaaS? By the way, we were using AI before I sold. We rolled into it. There's a really good article out there, I forget who wrote it, but it was about how Apple rolls into technology. I would find that if I were you.
It was Daring Fireball was the blog, and he talked about how Apple just rolls into new innovation. That's how we did it. But the mentality that we always had, because we serve small businesses, they want cool stuff but they don't have the money to buy it.
So we could never be on the bleeding edge of technology selling that, we kind of had to wait until technology got cheap and commoditized. We would take it, we would know that it was cheap and commoditized when it was available through an API somewhere. So we would get the API and then we would put it into a beautiful, easy to use interface.
That was kind of our shtick. We had a cool brand and we always made everything very easy and fun to use. Kind of like the Apple model almost, except cheap. So we would take that.
We could never really sell AI to our small business. customers. We believed in sort of like taking it and using it internally. So we would always have our engineers tinkering with new things like AI or whatever the new technology might be.
Use it for internal purposes. For us it was always like combating spam. Having the most reputable IP range.
And then wait. You wait for the technology to get cheap enough to offer to small businesses. And then once it's ready, since the engineers have been tinkering with it. inside, in-house, we would then be able to pounce and roll into that new technology.
So it's sort of like a pickaxes and shovels mentality. You know, we would rather sell the tools instead of like getting rich from the gold rush. Just sell the tools, the pickaxes and shovels to the miners instead.
That's what we always had to do with serving small businesses and entrepreneurs. Was it Omnivore that had the AI in it? That's right. We call it, yes.
We came up with that name Omnivore. I mean, we had so much data in our system. And this was before you could really even parse it.
So they called that problem big data. And so we figured out big data. We were using graphic processing cards, you know.
Now everybody's using that for Bitcoin, apparently. We got those things and we were parsing the data and then they called it, what do you do with that? Well, they called that data science. We rolled into data science.
And then we had so much data that we could do so much with. It was so easy to roll into AI. Plug into that. MailChimp will write your emails for you. It'll write your subject lines.
It'll take graphics for you and design them. It did really, really amazing stuff. And now Intuit's taking it to the next level.
So I am going to ask Ben one more question, but I wanted to save time for maybe one or two audience questions. So if you have a burning question, this might be your only chance to ask Ben. He doesn't do a ton of public appearances, and I really do appreciate you coming out.
Only for the people who try to kill me. Only for the people. Only for the people who... No joke. I started emailing him probably around 2012, and I would say, hey, Ben, I'm Rob Walling, and I run...
He's like, oh, yeah, I read your blog. And I was like, really? And then, do you want to come speak at MicroConf?
And he'd be like, I'm busy. But every year, it was very respectful, and it got to the point where he said, oh, hey, Rob, is it MicroConf o'clock already? Like, it was just a recurring thing. So I believe I've emailed him more than any other potential guest, and it's great to finally get out here with him.
Yeah. So my last question for you before we turn it over to an audience question or two is, what one topic... if it came up at a dinner party. Would you not be able to stop talking about? I think it would be...
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and apply today at microconf.com slash connect. What one topic, if it came up at a dinner party, would you not be able to stop talking about? I think it would be creativity.
Creativity and creative cultures. I mean, that was the one thing, you know, that if anything is said about me in MailChimp, it would be the one thing that I would hope would be said is that all I care about was... was creating a company that had the most creative and innovative culture.
I mean, I was fascinated. I read every single book I could about companies staying creative and innovative. I felt like stagnation was a cancer that was creeping up on me every day. and it was my job to just fend it off for as long as I possibly could. And I did everything in my power inside of my company to keep it as creative as possible for as long as possible.
And I look back, and I think I did a pretty darn good job of that. I think you did too. Got to enjoy what you do every day.
All right. Any questions? Question is, during your 10 years of working in the company, was there any one problem that was so interesting or something you were... fascinating that you still remember to this day? I mean, other than the big problem I just talked about of like maintaining a creative and innovative culture, which is a big gnarly problem.
I think technical problems maybe might be what you're, I would say abuse. I used to say death, taxes, and spam. Like if there's a way to exploit your system, they will find it. And so that kept me up all night, every night until the very end was like people.
ready to abuse our system. And we found all kinds of ways to learn from them, hire our own spammers to attack us. To white hack it?
Yeah, we had white hats. I mean, I had Kevin Mitnick constantly penetrating MailChimp. I caught him in our company elevator one day trying to hack our elevator.
I mean, that guy was a nut. He was a beast at that stuff. And he never got in, actually.
He never penetrated. And he had to stop. We were the only client that he never penetrated during the project. And he got in, though, because the invoice he sent had a virus. Son of a...
Really? Yes. Animal.
Which we maintain is cheating. Animal. Wow. So anyways, I think the problem of abuse, it's not just spammers, but just hackers in general.
I mean, everyone should be worried about that. I see. I always thought it got easier because, you know, for context, like I sold Drip and we were at $10 million. 10 people and doing a few million a year, but we didn't have anyone full-time at the time. So it was me and my co-founder just trying to figure out how to do deliverability and trying to keep spammers out.
And then when we got acquired, they had a bunch of venture funding. And so we did, we hired a full-time person, but I still got pulled in once a week into something. And I kept thinking, once I get to MailChimp size, I'm not going to have to worry about this at all. I'm going to be insulated, but apparently that's not the case. It just gets worse.
It just got worse and worse and worse. I think I'm probably... around where you were when you started. So if you could go back 23 years and give yourself one piece of advice that you think would be most impactful, what would it be? Most impact...
I mean, look at me. Things turn... turned out okay. I probably keep my mouth shut. Don't want to screw it up.
Don't F with anything. Just keep going. Ladies and gentlemen, Ben Chestnut.
Thank you all. Thanks, man.