Ben Chestnut and Dan Kurzius are often asked why they refused to use venture capital for email marketing firm MailChimp. This week the answer was revealed.
On Monday, tax software company Intuit announced that it would buy MailChimp in cash and stock for $ 12 billion. This is an extraordinary achievement for start-ups that have never received a dime from investors.
The sale brought billions of founders overnight. They never sold the company to venture capitalists and never gave employees stock options, so each invested in the company was about $ 5 billion.
For Atlanta-based founders, the deal was proof that they didn’t necessarily need a venture capital or Silicon Valley address to create a huge tech business.
“I feel like I’ve bowed down, tweaked things, improved things, and then looked up and bummed. It’s a $ 12 billion company,” Chestnut tells FT.
Both founders point to their parents’ small businesses as inspiration. Growing up in the rural Georgian town of Hephzibah, 47-year-old chestnut remembers having her hair wiped at her mother’s salon. Kurzius, 49, a vintage skateboard collector who grew up in Albuquerque, New Mexico, talked How his father’s bakery struggled to compete with the larger chains.
The first two roads to cross at mp3radio.com, a dot-com era venture related to Atlanta’s media conglomerate Cox Enterprises. Chestnut had no coding experience and hired Kurzius as a software developer after bluffing in the middle of an interview.
Gregg Lindahl, former Chief Operating Officer of mp3radio.com, says Chestnut is committed to design talent, even in everyday tasks.
“I had the best PowerPoint on the planet. I’m pretty sure of that,” says Lindar.
When the venture collapsed, Chestnut and Kurzius attacked on their own and launched a design agency. They started working on dot-com company websites and continued until their jobs were exhausted and airlines and real estate companies became their biggest customers.
Eventually, the duo started thinking about pivoting. It turns out that another part of the company was growing quietly. It was an email marketing service called MailChimp, which was offered for a small fee.
In 2007, Chestnut and Kurzius decided to focus on MailChimp. Investors began to take an interest in believing that selling to a large company, which is expected to frustrate the founders, could lead to rapid growth of the company.
Around this time, the company’s public face, Chestnut, said he was also thinking about selling MailChimp for nearly $ 4 million. The company began to stagnate while he was struggling to sell or not before he finally abandoned the idea.
The service began to grow even faster after adopting the business model of offering basic MailChimp products for free and attracting paid users to additional features.
Now, Chestnut says he has begun to imagine a future beyond MailChimp. “I love what it does, but it’s not me. I’m human, right?”
Pamela Walker, CEO of Atlanta-based non-profit ArtsNow, donates money to an organization assigned to Hephzibah’s art-based education and technology research that Chestnut and his wife Teresa met in high school. I say I did.
“They don’t want recognition,” Walker said. “They don’t want praise.”
Meanwhile, the founder of MailChimp has become a hero in the so-called bootstrap community. This community avoids venture dollars to better manage their profits and business.
Wade Davis, CEO of software company Zapier, which is affiliated with MailChimp, said he was surprised that the founder decided to sell, but suspects it might have something to do with money. “There were probably other reasons they felt this was a good result for MailChimp, customers, and everyone.”
MailChimp did not reward employees with stock options, so they are not in a position to profit from the multi-million dollar payday associated with Big Tech sales. The transaction includes a total of $ 500 million in equity-based compensation, and MailChimp has paid up to 25% of its annual profits to employee retirement accounts since 2012.
“If you haven’t been interested in exiting as a privately held company for over 21 years, it makes much more sense to share your profits now,” says Chestnut. The company also pays employees cash bonuses.
MailChimp says he never had to prepare a formal financial report because he had never received money from investors. Last year, MailChimp generated $ 800 million in revenue, comparable to some public software companies with even greater market value.
“I would like to look at my previous balance and then this month’s balance to make sure this month is bigger than last month,” says Chestnut. “That’s all I’ve ever done.”
Ben Chestnut and Dan Kurzius, the men who made MailChimp Source link Ben Chestnut and Dan Kurzius, the men who made MailChimp