(July 2021) Ben Chestnut: From Side Business to $12 Billion – The Accidental Triumph of Mailchimp

In 2001, three web designers built a quirky email tool called Mailchimp. It wasn’t their main business. It wasn’t even meant to make real money. For years, Ben Chestnut and his partners survived on web-design gigs, while Mailchimp earned just enough to cover lunch. Then…one surprising spreadsheet changed everything. In this episode, Ben reveals: The decision that tripled their revenue overnightHow a mispronunciation on the world's biggest podcast turned into a marketing masterstrokeHow a painful wake-up call about leadership reshaped the company’s culture Listen now to hear how guerrilla billboards, a monkey logo, and a string of improbable breaks built one of the most recognizable names in tech. Follow How I Built This: Instagram → @howibuiltthis https://www.instagram.com/howibuiltthis/ X → @HowIBuiltThis https://x.com/howibuiltthis Facebook → How I Built This https://www.facebook.com/howibuiltthis Follow Guy Raz: Instagram → @guy.raz https://www.instagram.com/guy.raz/ X → @guyraz https://x.com/guyraz Substack → guyraz.substack.com http://guyraz.substack.com Website → guyraz.com http://guyraz.com See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

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• 5:14Speaker 00

  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 to Intuit 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.

• 5:50Speaker 01

  People were raising their hands, saying, so what's the strategy? You know, and my answer, you know, as a startup founder is, 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 flopped. And I remember going back to my office, just sitting there alone, thinking about what in the world just happened to me.

• 6:28Speaker 00

  Welcome to How I Built This, a show about innovators, entrepreneurs, idealists, and the stories behind the movements they built.

• 6:39Speaker 00

  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.

• 7:01Speaker 00

  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.

• 7:44Speaker 00

  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.

• 8:28Speaker 00

  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 techie kid growing up. He spent hours playing football and basketball and exploring his neighborhood on his bike. He grew up in a small town in Georgia called Hebsaba back in the 70s and early 80s, not too far from a military base.

• 9:10Speaker 01

  The neighborhood I was in was just outside of the city limits of Hebsaba. And I don't really know how to describe it. It's not predominantly anything. It's highly diverse. Lots and lots of immigrant families lived in our neighborhood. Germans, Asians, and when I say Asians, I mean Japanese, Korean, Philippines, Vietnamese, all over the board, African Americans as well.

• 9:32Speaker 00

  How did they end up there?

• 9:33Speaker 01

  That's just military families marrying into--

• 9:36Speaker 00

  Military families, yeah.

• 9:36Speaker 01

  Yeah, from the Vietnam War. And then they came and they just sort of moved into this neighborhood.

• 9:41Speaker 00

  Your dad was, or mom, one of your parents was in the military, was in the Army?

• 9:45Speaker 01

  Yeah, my dad was in the Army. He did seven tours in Vietnam.

• 9:48Speaker 00

  Wow.

• 9:49Speaker 01

  Yeah, he was committed. He was a man of duty, you know? He really loved his duty.

• 9:55Speaker 00

  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?

• 10:02Speaker 01

  You know, details are sketchy. He, he left with, you know, all of his secrets. But yeah, in general, he was a codebreaker. He listened in on the enemy and he cracked codes.

• 10:17Speaker 00

  Was he in any combat units?

• 10:18Speaker 01

  He was, yeah. He was first Cav.

• 10:21Speaker 00

  Wow. So did he ever talk much about Vietnam?

• 10:24Speaker 01

  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.

• 10:40Speaker 00

  Yeah.

• 10:41Speaker 01

  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.

• 10:49Speaker 00

  And I guess he met your mom while he was overseas in, in serving and she's originally from Thailand. And so what did she do when he brought her back with him to Georgia?

• 11:02Speaker 01

  Well, she had lots of odds and ends kind of jobs. She worked in some textile factories and that sort of thing. But eventually she just sort of became like a neighborhood nanny. We, we always had kids from the neighborhood running around our 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, she ran a hair salon in our kitchen.

• 11:27Speaker 00

  Wow. So people would come and get their hair done?

• 11:29Speaker 01

  Oh, yeah. Yeah. It's where I learned about entrepreneurship, watching my mom.

• 11:33Speaker 00

  Did your mom ever get a brick and mortar salon?

• 11:37Speaker 01

  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 that I don't know that that was ever her intention. But she she did inspire my older sister to start her own salon. That was a non kitchen based one. Like you say, a brick and mortar one. She opened up a real salon that was very successful in the eighties. And, boy, she was just an inspiration for me as well. And partly because, you know, she would come home every couple of 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 this is good for the family.

• 12:22Speaker 01

  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 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.

• 12:53Speaker 00

  In Albuquerque, right?

• 12:55Speaker 01

  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. Larger bakery opened down the street and and put his dad's business out of business.

• 13:10Speaker 00

  Ben, when you were growing up, I mean, your mom is Thai, your dad is is a white American, but it sounds like you were around kids who came from different backgrounds too. Is that is that right?

• 13:26Speaker 01

  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.

• 13:54Speaker 00

  Here's the other thing that's actually quite unusual. You actually met your wife in high school. She was your high school sweetheart, Teresa.

• 14:03Speaker 01

  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, I 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, the 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 a little this and that.

• 14:46Speaker 01

  And my dad pulled up and I said, well, there's my ride. I gotta 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. He 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.

• 15:10Speaker 01

  And, you know, 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 then. And, you know, one day she invited me to come over and meet her, her, her parents, her uncle and aunt. And I was a little bit nervous and I didn't know what, what I was going to say to her, 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-tician like my mother.

• 15:48Speaker 01

  So you know, we got along real nice. I knew exactly what to do. Grab the broom, help her sweep up some hair. You gotta 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.

• 16:03Speaker 00

  Wow. What about school? Were you a pretty good student when you were a kid?

• 16:09Speaker 01

  No, I was an awful student, I think, looking back.

• 16:11Speaker 00

  Really?

• 16:12Speaker 01

  Yeah, you know, going through my father's belongings, I got a lot of my report cards that he saved. And 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. And he said, you know, 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.

• 16:35Speaker 00

  I mean, was high school, was school just hard for you? Or did you just not care? Or what do you remember?

• 16:41Speaker 01

  I remember being bored a lot. And what I wanted to do was just get out of HepsiB.

• 16:49Speaker 00

  Yeah. You didn't go that far. I mean, you went to Atlanta.

• 16:52Speaker 01

  Well, thanks a lot, guy.

• 16:54Speaker 00

  Yeah. But you did okay.

• 16:56Speaker 01

  I did okay.

• 16:57Speaker 00

  But you couldn't have been a terrible student because you got into college, you went to University of Georgia.

• 17:01Speaker 01

  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. And I shaped up and I became a A student for the next two years.

• 17:17Speaker 00

  You were eventually transferred 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?

• 17:27Speaker 01

  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 Amena, 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 of weeks and then I just started, they let me do prototypes, they let me build models of refrigerators and that sort of thing.

• 18:11Speaker 01

  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 took me aside 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 Weinman, linda.com. And I learned all about web design.

• 18:51Speaker 00

  Wow, and this is the late 90s, so like-

• 18:53Speaker 01

  96.

• 18:53Speaker 00

  Web design-

• 18:54Speaker 01

  Yeah.

• 18:54Speaker 00

  That commanded a premium, because it was really, like, no one knew how to do it. If you knew how to do it, you could get a lot of work.

• 19:01Speaker 01

  You could be a complete goof-off, but make a lot of money doing it, because it was really, really a rare skill.

• 19:06Speaker 00

  You eventually got a job working for Cox Media Group. I think, I think they're still the publisher of the Atlanta Journal-Constitution.

• 19:14Speaker 01

  That's right.

• 19:15Speaker 00

  So, so what was the job they hired you to do?

• 19:18Speaker 01

  They had a job opening for a web designer for the ajc.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 the pay, and the pay was $3,000 more than the web designer. And I said, you know what, I, I can do these banner ads.

• 20:03Speaker 01

  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 it 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, build something and animation really quick and influence people in that way. I believe I carried that. That was a great skill for me to carry forward to to ultimately build Mailchimp where you know, I had to build an app that convinced people to buy things from me.

• 20:42Speaker 00

  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?

• 20:50Speaker 01

  Yeah, well, you know, there was this thing that was invented called MP3s with Napster 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.

• 21:20Speaker 00

  You hired him to work on this project? And the idea was you would, you were like building an online music site or a portal or something?

• 21:30Speaker 01

  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.

• 21:43Speaker 00

  Oh, wow.

• 21:44Speaker 01

  You know, and so that was, that was the idea.

• 21:46Speaker 00

  It was gonna be like a streaming service?

• 21:48Speaker 01

  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 then his first day, he was scared to death and his desk was right next to mine.

• 22:32Speaker 01

  And he, he thought he was gonna get busted by me. But he was an amazing coder. I, I used to come back and look at his code. I remember, you know, saying, this is remarkable. It's just 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.

• 22:52Speaker 00

  I, 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, right, plant its flag everywhere and probably spending money everywhere. Was, was it like that?

• 23:09Speaker 01

  I think that their big, that their goal was, I think, to merge with a search engine. And it didn't pan out, you know? And I think, you know, that was the heyday. Things were, you know, we, this was the time of Fast Company. What was the other magazine, Business 2.0? So I think that this is literally how, how business works. That whole dot com paradigm, right? That'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 bust happened and we were all laid off. And, you know, like for me, it was like the whole world had turned upside down. Everything that I knew to be true was not anymore.

• 23:53Speaker 00

  You, you were all laid off, just like it came as a total shock?

• 23:57Speaker 01

  You know, Cox being the good company that they are, you know, they, they, 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, that told me, do not take the corporate job. Instead, go my own way.

• 24:38Speaker 00

  So you knew, you knew that you were gonna lose your job? And what, did you approach Dan Kurzias and say, hey, let's, let's start something?

• 24:49Speaker 01

  Not quite. Me and my friend Mark, we said, hey, things are shutting down. How about we go into business together? And we had like two weeks lead time to think it all through. And that's where we got the idea to start a web design company.

• 25:06Speaker 00

  This is Mark Armstrong, right?

• 25:08Speaker 01

  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.

• 25:25Speaker 00

  So you and Mark start a web design business. And I guess you guys called it Rocket Science Group, right?

• 25:31Speaker 01

  Yeah, that's right. Rocket Science Group.

• 25:33Speaker 00

  And who did you initially target? Like, who were your clients?

• 25:37Speaker 01

  The idea at the time was something that we observed at Cox. There was an engineering team, geniuses, just rocket scientists, working on 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 beneath them. And so our target market was marketing departments, where we would help them build little microsites, websites that basically they didn't have to go to their engineering department to ask for.

• 26:21Speaker 01

  I guess we were sort of like a rogue team for marketing departments.

• 26:26Speaker 00

  I mean, you're in Atlanta at that time. You still are, but I mean, Atlanta is the capital of headquarters for tons of huge companies. Coca-Cola, UPS, CNN, Delta. Did you go after those companies?

• 26:38Speaker 01

  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 they would just subcontract with us.

• 26:54Speaker 00

  Yeah.

• 26:55Speaker 01

  But yeah, one of the tools that we ended up building Was a e-greetings website like BlueMountain.com at the time or Hallmark. And we figured out how to send HTML email and we started sending e-greetings. And they were, they were really, really cool e-greetings and no one cared about e-greetings anymore. And we thought we were going to get rich because Blue Mountain was sold for $600 million at the time. Uh, we just thought, oh my God, if we make an e-greeting site better than Blue Mountain, we might get $700 million. That was our business plan. So we build this thing and no one uses it. It's a flop.

• 27:32Speaker 00

  But you were, you were still doing web design, right? And, and, and that, that was going pretty well, right?

• 27:38Speaker 01

  Yeah, we're doing web design and turns out a bunch of our small business customers asked 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 company's software. It was so awful. Um, 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. Uh, luckily we didn't delete it and yeah, we used that to build, to build MailChimp. Actually, we called it WeMailer.

• 28:21Speaker 01

  Cause uh, we thought we could make it fun.

• 28:24Speaker 00

  And at the time, I mean, this is, cause 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?

• 28:35Speaker 01

  Yeah.

• 28:35Speaker 00

  But meantime, the bread and butter of what you were doing was web design.

• 28:39Speaker 01

  That's right. I mean, we thought, we thought that WeMailer might make, you know, enough money to pay for our lunch every day. That, that was our wildest, you know, fantasy for, you know, what, what kind of success we might get out of this.

• 28:52Speaker 00

  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, and you were, it was the same thing with the email product. Like people would say, hey, um, 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?

• 29:15Speaker 01

  Yeah. And then we record our time and it might be, you know, a hundred bucks for a couple of hours of work.

• 29:21Speaker 00

  Wow. So it was really.

• 29:23Speaker 01

  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 $10,000 to $30,000 a gig. And this little WeMail thing, you know, we were we were getting like $100 checks, $150 checks. Over time, we started to get like really big piles of $100 checks from our customers for WeMail. 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

• 30:03Speaker 01

  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.

• 30:26Speaker 01

  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, Ben. So I was always fascinated by them. You know, dreaming about how cool it would be to have a pet monkey. And then

• 30:47Speaker 01

  there was a phase that I went through, my Jim Henson years, where I really, really wanted to be a ventriloquist. And I got a monkey Wow. 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 monkey.

• 31:09Speaker 01

  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-greeters site and I noticed like the one e-greeters that I had of a monkey was the most popular e-greating 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, 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 they 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

• 31:53Speaker 01

  know, going delirious, working at 2am, we would just say, just put some monkeys in it. And so we said, hey, how about chimp mail? And so we decided to call it chimp mail and then of course, the domain was taken.

• 32:04Speaker 00

  The domain for chimp mail is taken, wow.

• 32:06Speaker 01

  The domain was taken, yeah. So we had to improvise and call it Mailchimp instead.

• 32:11Speaker 00

  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 were they using it?

• 32:26Speaker 01

  Yeah. There was definitely a stigma to email marketing. Like, 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, 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.

• 32:44Speaker 00

  Right. People were like, oh, you guys are spammers.

• 32:46Speaker 01

  That's right, that's right. And then like, end of discussion, they'd walk away. I was really popular at parties, yes, absolutely.

• 32:54Speaker 00

  But, but you're, but, 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.

• 33:03Speaker 01

  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 chimpanzee 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, I was never dissuaded from it.

• 33:20Speaker 00

  But by the way, was it just the three of you still? Or were you able to hire a few more web designers?

• 33:26Speaker 01

  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, just be a cockroach. And what we meant was like cockroaches can survive a thermonuclear war.

• 33:42Speaker 01

  And so we just thought, you know, that's, that's, let's just strive, just, let's just survive here.

• 33:46Speaker 00

  I mean, was, it was just the three of you kind of hunched over keyboards? Day in, day out, just like pounding the keys?

• 33:54Speaker 01

  Yeah, from morning until sometimes until 1:00, 2:00 AM. Wow. I mean, it was a real grind.

• 33:59Speaker 00

  I mean, how, how was your revenue in cash flow? Was, was it okay?

• 34:04Speaker 01

  No.

• 34:07Speaker 01

  No. Let's see. If I could, the, the best that I remember our, our agency business ever doing was something like between 200 and 300 grand a year.

• 34:19Speaker 00

  Wow.

• 34:21Speaker 01

  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.

• 34:31Speaker 00

  What, what explains that? Did it become more competitive? Was that it? There was just more people doing that kind of work?

• 34:38Speaker 01

  You know, we would, 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'd have to go out and hunt for more business. So it was just like these constant ups and downs and ups and downs that just kept us from, from really breaking through. And I'll never forget, it was like 2005 ish. There was something that totally changed. I, 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?

• 35:19Speaker 00

  So she was personally supporting you guys or?

• 35:24Speaker 01

  She was, she was, yeah. Health insurance and everything from her really stabilized me, which, which, which allowed me to be an entrepreneur. So she's a pediatric nurse. She does the 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.

• 35:54Speaker 01

  And he's and he has this book called Rich Dad Poor Dad.

• 35:57Speaker 00

  Rich Dad Poor Dad, yeah.

• 35:58Speaker 01

  That's right. He's selling this book. And I just remember, what I remember was how angry the audience was. Cause he was trying to teach them about, if I recall correctly, recurring income, passive income. And you know, he was telling them in a, you know, almost condescending voices 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 it and just thinking, 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, called MailChimp now. We renamed it by then. And it's just making this recurring income. And you know, we were, we were having heart to heart meetings about whether or not we should shut down Rocket Science Group because it was just so gloomy.

• 36:40Speaker 01

  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 to 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. Uh, 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.

• 37:06Speaker 00

  Yeah.

• 37:06Speaker 01

  Um, so this was the first time we actually looked at the graph of MailChimp revenue and it was growing. We were like, look at that, up and to the right. Uh, what if we actually focused on just MailChimp? Um, and that's, that's what got us talking about becoming a software company.

• 37:22Speaker 00

  Wow. So 2005, you start to see the numbers and, and you know that, that MailChimp is, you can see it growing, but, but from what I understand, like it was still a tiny fraction of your overall business. Like most of the revenue, uh, was coming in through web design.

• 37:39Speaker 01

  That's right. That's right. And, 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, 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.

• 38:07Speaker 00

  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 Raz, and you're listening to How I Built This.

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• 42:06Speaker 00

  Hey, welcome back to How I Built This. I'm Guy Raz. 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.

• 42:33Speaker 01

  When we finally worked up the courage 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, we had decided that, oh, we, 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, lo and behold, go figure. And so we, we, we really kind of hit the ground running. We did not suffer at all from dropping the consulting business. And in fact, I remember us just thinking, we should have done this sooner.

• 43:15Speaker 00

  Did you change your business model when you made the pivot? From like, you know, pay per use to a monthly fee?

• 43:22Speaker 01

  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.

• 43:35Speaker 00

  Yeah.

• 43:36Speaker 01

  You know, remember that? Like, Apple was like the most famous version, the 99 cent song.

• 43:42Speaker 00

  Yep.

• 43:42Speaker 01

  I mean, and that was, that was really rare. It was 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 chunks of money, but to just do this little itty bitty micro payment. And so we, 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 to make these micro payments. Just charge us, bill us by the month. We were stubborn about it. We, we were too philosophical in retrospect. And it took us a whole year to decide to finally put in those subscription fees. And we did. And that's when business really, really took off for us, too.

• 44:26Speaker 00

  In those early days, from what I understand, you guys, 2007, you're full on into MailChimp. And there was a huge 800 pound gorilla in this space called Constant Contact. And 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.

• 44:51Speaker 01

  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 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 IPOed. They made a lot of money. We think you could be the next IPO. And, you know, I'd talk about our business and I would tell them how we helped small businesses. And they'd say, well, 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, that was just, I could do it, but something about it just felt wrong to me and Dan. We just, we just wanted to stay.

• 45:36Speaker 01

  It just felt, it felt really good to serve small businesses. It was just in our DNA.

• 45:41Speaker 00

  The investors were saying, you can make a lot more money if you focus on?

• 45:45Speaker 01

  The enterprise.

• 45:46Speaker 00

  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.

• 46:13Speaker 01

  You know, for the first two, I started to think about it because I really believed 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 just gonna peter out and die. And so, we just, I guess, more stubbornly than anything, just didn't want to take their money because of that. We never liked their approach.

• 46:37Speaker 00

  But how were you growing? I mean, you said you were 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?

• 46:48Speaker 01

  Yeah, yeah, that sounds about right.

• 46:50Speaker 00

  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.

• 46:58Speaker 01

  It's not a ton of money, no.

• 47:00Speaker 00

  And within a year or so of you guys making that pivot, your third co-founder, Mark Armstrong, he decided to leave and you guys bought him out.

• 47:08Speaker 01

  That's right.

• 47:08Speaker 00

  Was he just burned out?

• 47:10Speaker 01

  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. And I think he was just really discouraged.

• 47:21Speaker 00

  After you rejected the overtures, let's say, from investors, from what I've gathered, from what I've read, you could have come to the conclusion, soon after that, maybe they were right. Because I read that as more competitors started to enter that market, your customers were leaving for kind of bigger, better-equipped competitors.

• 47:43Speaker 01

  I mean, it got rough for a while there, that's for sure. We started to get more competitors entering the market, serving different niches. You know, 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 emailing tool.

• 48:24Speaker 00

  So it would be free to compile a list of contacts, but if you wanted to send an email out, you'd have to pay?

• 48:31Speaker 01

  Yeah, that's when I'd get you.

• 48:32Speaker 00

  Right.

• 48:35Speaker 01

  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, I'll need another two years to get this done, but I do have a compromise. Just keep it one product and just make the whole thing free up until a certain list size.

• 49:07Speaker 00

  So like if you had 50 contacts or 100, up to 100 contacts or whatever, what was, what was the number?

• 49:13Speaker 01

  I think it was 200. And if it passed 200, then you'd have to start paying us. I said, yeah, it's, I guess it's an okay compromise. I didn't like the idea at first, but you know, we had a deadline.

• 49:21Speaker 00

  You were going to give away your product?

• 49:23Speaker 01

  Yeah.

• 49:23Speaker 00

  You had come from Cox Media that had owned the Atlanta Journal Constitution and, and their downfall, many newspapers downfall was they gave away their content for free on, on the web.

• 49:32Speaker 01

  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, 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, let me just save it as a draft, think about it a little bit more, come back and rewrite it and publish it later. And I guess it might've been the weekend, I came back on a Monday morning and I sit down, boot up the computer and somebody had left a book on my desk. It was by Chris Anderson. It was called Freemium.

• 50:13Speaker 00

  Chris Anderson, the former editor of Wired?

• 50:15Speaker 01

  That's right. I didn't know who he was at the time. But I pick up this book and it says freemium on the cover. I read the back of it. I'm like, huh, that's what we're doing. Okay. I said, I guess I'll, um, I'll change my blog post. I'll, I'll change the title. I won't call it Mailchimp's free plan. I'll, I'll call it Mailchimp Goes Freemium. It's a, according to this book, freemium is a movement or something. And I publish it. And you know, it gets some traction, but not, not much. And then out of the blue, a guy named Charles Hudson calls me up and he's, and he's a guy that I think he was an ex-Gугler turning into an investor and he was starting to hold conferences at the time. Now he's, he's very famous now as an investor, but uh, these were his early years. And he calls me up. He says,

• 51:00Speaker 01

  I'm starting up a conference called the freemium conference and I'd love for you to come and speak about freemium. And I'm going to have other entrepreneurs. We've got a guy named Drew Houston. He's got this thing called Dropbox.

• 51:15Speaker 00

  He's been on the show.

• 51:16Speaker 01

  A guy, some other dude named Phil. Uh, he's got this thing called Evernote. Uh, a bunch of, a bunch of you can come and talk about this. And, uh, I went and I spoke at the freemium conference. My angle was, um, how freemium is great, but it's rife with abuse and you better have some good anti-spam algorithms like Mailchimp does. Um, and I went and talked about it and it got on TechCrunch. It started to hit the news. And that's when, that's when it was the rocket ship ride really started for Mailchimp.

• 51:45Speaker 00

  People found out about it and, and started signing up.

• 51:47Speaker 01

  That's right. And, and importantly, you know, if you, if you signed up and sent an email from the freemium plan, the catch was, you know, our logo was in the footer of your emails. And so it went viral. People would click on that and sign up as well.

• 52:00Speaker 00

  So you've got the freemium model going. This is like, what, 2009, I think, around then?

• 52:05Speaker 01

  Yep.

• 52:06Speaker 00

  That was a game changer because all of a sudden you, you've got all these users. But I, I wonder, I mean, you know, the thing with, with like a Dropbox is they make their money from enterprise users, you know, big businesses that, that are paying, but something like 90% of their users aren't. So I have to imagine the vast majority of people signing up were not paying you anything.

• 52:27Speaker 01

  Yeah, that's right. In fact, mostly when we had these freemium 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, the odds are against you. Thirty percent die in two years, fifty percent die in five years. And so they, they need a tool that kind of gives them a shot. And prior to that, I mean, you had to commit to paying fifty 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, when our customers actually succeeded.

• 53:05Speaker 00

  So at this point, how, how quickly did, did you guys start to grow? Like, how, how quickly were you, were you getting more users?

• 53:13Speaker 01

  Well, you know, when we launched freemium, 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 launching freemium, we ballooned to a million users. And it just kept growing exponentially after that. And so that was just a really good kind of funnel for new customers to come in and convert down the road. It would take them quite a while to convert. I don't think most businesses would have the patience to wait for these customers. Cause 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.

• 53:58Speaker 01

  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 10 years. Who has that kind of patience? Well, Ben Chestnut and Dan Curzio just have that kind of patience because we had nothing else to do.

• 54:17Speaker 00

  How were you, I mean, why would a, why would somebody go to a service like MailChimp? When they could go to a much bigger competitor that probably, you know, had much bigger staffs? And maybe they were more sophisticated. What were you offering that they, that they weren't?

• 54:34Speaker 01

  Personality.

• 54:36Speaker 01

  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, you know, with the chimpanzee mascot, we were weird and offbeat and quirky, just like all entrepreneurs. So now we have this sort of internal, internal tagline that we say, we got you because we get you. So that's, 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.

• 55:17Speaker 00

  Did you, you guys had kind of toiled away for six plus years on the web design service, then pivot to MailChimp and, you know, you start to see steady growth. Was it pretty soon, like by 2010, where you were, you were like, okay, this is going to work? This is going to be big?

• 55:36Speaker 01

  2010 is when, you know, 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.

• 55:48Speaker 00

  And were you making money? Were you profitable?

• 55:51Speaker 01

  Yeah, yeah, we were making good money. I, I wish I could remember the timeline. It's, it's been 20 years, you know? It's, it's all a blur now, but we were making probably 10 million, 15 million at the time. We were, we were doing really, really well.

• 56:05Speaker 00

  And you were able to grow and to hire and expand and, right?

• 56:09Speaker 01

  Yeah. We were trying new things like, you know, fun branding stuff, trying this new thing called Twitter in 2008. Yeah, it was, I'd say, you know, 2008-ish, 2010, I'd say is when we, we think, yeah, this is real. This is, this is going to be something.

• 56:26Speaker 00

  And entirely cash flow was, was funding everything. It was funding

• 56:29Speaker 01

  That's right.

• 56:30Speaker 00

  Hiring, it was funding. Innovation and the engineering, just the cash flow was funding that.

• 56:36Speaker 01

  We were totally self-funded. Investors still came and they would say, you know, take our money and we'd say, we can't, we don't know why we would need it. We were making plenty.

• 56:47Speaker 00

  But you saw an opportunity there because most businesses in America are small businesses, right? And that most people, I think, in the US are employed by small businesses.

• 56:55Speaker 01

  We saw the opportunity. We saw the inspiration, too. It just felt more fulfilling. I mean, we 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 would, 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 nine 11 or a pandemic or something.

• 57:23Speaker 00

  Yeah.

• 57:24Speaker 01

  You lose a big anchor client, you can't pay your bills and you have to lay people off. It's horrible. You know, you have to depend on just a handful of customers. With the long tail, you know, we're, we're serving, you know, thousands or millions of tiny customers who pay small amounts of money. You don't rely on anyone too much such that, you know, they're sort of too big to fail. We cannot survive without them. We were actually a very, very, much more resilient company, serving the long tail.

• 57:51Speaker 00

  But at the same time, I mean, there were still things you, you couldn't do, right? Like, like one of the things that's interesting that I read was that there were big companies out there, right, that were doing national ad campaigns that were, you know, on national radio and on cable news. And I'm thinking, even with 15 or 20 million in revenue, you probably couldn't do that kind of, of marketing campaign.

• 58:15Speaker 01

  Yeah, we had to be, I mean, we had to be super creative, right? So I remember, I remember one of our biggest competitors announcing that they were opening up an office in San Francisco to be, you know, with all of the other tech companies and show, you know, that they had a presence there. And I just remember being, you know, just like really jealous, you know, just being honest.

• 58:37Speaker 00

  Yeah.

• 58:38Speaker 01

  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 this story. But fortunately, my staff just said, okay, we're not going to do that. You know, they secretly went off and they said, but 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, you know, 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 this building called Moscone.

• 59:22Speaker 01

  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, you know, that's that's a pretty popular building in San Francisco. It's where Apple holds, used to hold their WWDC events. And 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 kind of went viral that way. And then billboards just took off after that. Like, we just started to use billboards in all kinds of cities after that.

• 59:59Speaker 00

  And you guys did like merch too, right? Like you made T-shirts. I mean, you're you're the monkey mascot, like all over the place.

• 1:00:06Speaker 01

  I had, you know, the typical kind of cafe press, you know, stick the logo in the upper left, you know, 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. We'll make it something that people would want to wear. And so he created these and then we decided, you know, what if we, 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, you know, we always had really lucky breakthroughs on new, 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.

• 1:00:50Speaker 01

  I still remember the day when someone told, one of our employees said, I listen to this thing called podcasts on my drive to work. And I think we should sponsor a podcast. And I thought it was, you know, just a weird idea. I'd never heard of podcasts. But I said, screw it. Here's some money and go 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 new inventions at the time. Eventually, we did get the budget to do things like TV and, you know, they were okay. But they're not all they're cracked up to be.

• 1:01:23Speaker 00

  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?

• 1:01:30Speaker 01

  Yeah, yeah, totally. Absolutely.

• 1:01:37Speaker 01

  But I mean, eventually, we started to do that. We were sponsoring podcasts, public radio shows. And you know, that is ultimately what led to us sponsoring Serial.

• 1:01:51Speaker 00

  Yeah, let's talk about that because that show totally mainstreamed podcasts. Like, it was parodied on Saturday Night Live. It was like, you know, it was on The Tonight Show. Like, it was in the newspapers, it got so much attention, people were talking about it everywhere, that it actually, it was a rising tide for the rest of us who were around at the time.

• 1:02:12Speaker 01

  Yeah, and so we were the first sponsor. Genius.

• 1:02:15Speaker 00

  How did that, it sounds like a genius plan, but probably...

• 1:02:19Speaker 01

  You get the theme.

• 1:02:20Speaker 00

  Giving yourself too much credit, right, for being a genius?

• 1:02:23Speaker 01

  You're catching on to the recurring theme. That is the story of Ben Chestnut, which is I basically forced Gump my way into luck. So yeah, it was not a genius business move. We sponsored another podcast by the same people. I wish I could remember the name of it.

• 1:02:38Speaker 00

  Was it This American Life?

• 1:02:39Speaker 01

  Yeah, it wasn't like a big commercial success for us to sponsor it. But I do remember that the producer said that we ran an ad during their podcast, and the ad was really quirky and weird. And it basically said something like, "If you need emo marketing or hats for cats and dogs, go to MailChimp." And that was because we had these funny little knit hats that, you know, they were meant for humans, but people started putting them on their dogs. And then people asked for cat hats, so we made smaller versions for the cats.

• 1:03:09Speaker 00

  And you sold it on your website?

• 1:03:10Speaker 01

  We didn't even sell it. It was just a gag. And apparently their phone lines were flooded. People kept calling in, asking where they could get those hats for their cats and dogs. And this...

• 1:03:22Speaker 01

  This made an impression on the producer, I guess. So when they came up with cereal, they just said, who should we approach to run ads for this? And I said, they said, well, let's just call it MailChimp because they had that quirky ad. And that's how they gave us first dibs.

• 1:03:36Speaker 00

  I know this just from inside information. It was very, I mean, it was shockingly cheap what you paid for that.

• 1:03:42Speaker 01

  It was shockingly cheap, yes. And furthermore, they said, you know, what do you want us to say for the, what do you call it, the intro? And we said, you do it. You know better. You know your audience better. We believe in your creative process. So we trusted them and they, they did this intro where they interviewed people on the sidewalks of New York.

• 1:04:01Speaker 02

  Support for cereal comes from MailChimp. From MailChimp. Mail.

• 1:04:06Speaker 02

  Chimp.

• 1:04:08Speaker 01

  That delightful young woman mispronounced us and called us MailChimp. And I, and I remember, you know, Mark DiChristina, he, he walked into my office with this recording and, and he was kind of sheepish about it. He was saying like,

• 1:04:18Speaker 00

  And Mark was your, was your marketing manager, right?

• 1:04:20Speaker 01

  Yeah.

• 1:04:20Speaker 00

  Marketing.

• 1:04:21Speaker 01

  Yeah. And, and you know, he was like, you remember that thing we agreed to sponsor? Um, they sent the first draft and here's what it sounds like. And we listened to it. And he was like, the thing is, I think it's kind of funny and we should go with it. And, you know, I hesitated for just a second, just thinking, should I demand that they actually pronounce my name correctly?

• 1:04:39Speaker 00

  Yeah.

• 1:04:40Speaker 01

  I think I have a right.

• 1:04:41Speaker 00

  It's your brand.

• 1:04:41Speaker 01

  I think I have a right. And, and no, nobody in their right minds would, would agree to this. And I said, you know what? Screw it. Let's go ahead and do it. Um, and it just was a hit. It just went viral.

• 1:04:52Speaker 00

  Everyone knew what MailChimp was.

• 1:04:53Speaker 01

  And, and, and it really like took our brand out of the, um, the entrepreneurial world and like the tech world. Like for the first time, we had people telling us that like their mothers or grandmothers were asking them about MailChimp. Like just mainstream America was asking us about MailChimp. And it was so crazy. Like you mentioned Saturday Night Live, they did a skit about cereal. And at the end, they had a MailChimp ad as well.

• 1:05:18Speaker 00

  Yes.

• 1:05:19Speaker 01

  Yeah. And that night, you know, my Facebook messenger just lit up with all of my friends saying, oh my God, you're on Saturday Night Live.

• 1:05:26Speaker 00

  If ever there was a, a comprehensive history of ad campaigns, that's got to be in there because

• 1:05:31Speaker 01

  Yeah.

• 1:05:32Speaker 00

  It was such a simple ad. But it was also, it was the ad before the show that you were anticipating.

• 1:05:38Speaker 01

  Yeah.

• 1:05:39Speaker 00

  And everybody was waiting for the next episode to drop. And, and it could have just been like, support for cereal comes from MailChimp, your email marketing, blah, blah. And then, and then that would be it.

• 1:05:48Speaker 01

  That's right.

• 1:05:49Speaker 00

  But it wasn't. They, they, they really, and they actually, that show created the kind of template for creative podcast ads.

• 1:05:58Speaker 01

  Yeah, they, they, the price went up.

• 1:06:01Speaker 00

  I'm sure it did.

• 1:06:02Speaker 01

  For the second.

• 1:06:03Speaker 00

  For season two.

• 1:06:04Speaker 01

  For season two, the price went up significantly. They wised up to it. But what a lucky break that was for us. And I, I mean, to this day, we look at our quarter four results and, you know, it, it's just like a bummer because the cereal, the quarter where we sponsored cereal did so amazingly well. It's hard to beat it every year. It's like, darn it, that cereal.

• 1:06:23Speaker 00

  Oh, wow.

• 1:06:24Speaker 01

  Makes it too hard. Yeah, it's, it's a, it was an amazing quarter for us.

• 1:06:27Speaker 00

  All right. So you're now on the map. And I think by 2014, you had grown to 300 employees, still entirely privately owned, self-funded. And that's a lot of people. I mean, you, you, you'd gone from the three of you kind of working, you know, hunched over keyboards to a company of 300 people in a pretty short period of time. And I imagine like, that's a lot of names to remember.

• 1:06:53Speaker 01

  Yeah. I mean, it, for me as a founder, I was really good at that point, running like a small squad.

• 1:06:59Speaker 00

  Yeah.

• 1:07:00Speaker 01

  But when it got to hundreds of people, it got really hard for me. I, I remember a meeting that we called, we, we, we were doing these like little, little all hands. We called them coffee hour meetings. There were maybe 20, 40 people. We, we'd meet on one floor and talk about everything we had planned. And we had stopped doing them for a while. And then one day, my co-founder, Dan and I, we're like, let's, let's have another coffee hour. We haven't done in a while. Let's just get, let's, let's get the band back together. We send out an email to everybody saying, hey, we haven't done this in a while, but we're going to have an all hands this Friday. All 300 employees. Yeah, yeah, why not? But in all hands, that can set off alarm bells. Yeah, it can. We didn't think about that. And then so like a couple of days go by, we're like,

• 1:07:43Speaker 01

  you know, we need to be considerate because the customer service team, they've complained in the past that when we hold all hands, they can never quite disconnect from serving customers and really be present. So let's tell them that they can shut down chats. So we sent an update saying furthermore, during this all hands chats will be closed.

• 1:08:06Speaker 01

  We think we're doing them a favor. Right. Unbeknownst to us, rumors are swirling that we're shutting down, something is really awful, or maybe, maybe somebody's buying Mailchimp or something. We had no idea. Dan and I have no idea, walking into this all hands, that people are basically completely terrified of what we're about to announce. The other thing, you know, just to make things interesting was that day of the all hands was Halloween and we had a costume contest going. So everybody was in costumes when we all met.

• 1:08:36Speaker 01

  And I have, we have some creative people at Mailchimp and their costumes are really elaborate and amazing. And the front row, I remember it was just like all murder clowns. And they were horrifying, right? I mean, like, I remember just like constantly looking down at them, just like mortified at them. And they were probably just as terrified of me, whatever I was about to announce. What did you do? You stood in front of them and said, and said what? Things are great. We're awesome. Who knows? That was it? I barely remember. And, and, you know, are there any questions? And we had people, the questions that, that were coming were, you know, totally unexpected. So, you know, we were talking about how successful things were growing.

• 1:09:19Speaker 01

  You know, we were on a tear. Things were looking like up into the ride. It's amazing. And people were raising their hands saying, so, so what's the strategy? You know, and my answer, you know, as a startup founder is 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 they were just, I remember the person asking me that, you know, raising his hand and saying, why do you feel the need to keep it a secret?

• 1:09:48Speaker 01

  And I remember thinking, oh, my God, there actually is no strategy. You know, you know what I remember? I remember looking out at this audience and I remember half of it being kind of old guard, you know, sort of like the typical startup pirates. And the other half of people like being really concerned like, what, why are you hiding things from us? And so the whole meeting just completely flopped. It was, it was, it was an awful meeting and I was just shell shocked from the whole thing. And I remember going back to my office, just sitting there alone, thinking about what in the world just happened to me.

• 1:10:28Speaker 00

  And in fact, you had no strategy. Your strategy was everything's going fine. We've got this email marketing product and we're good to go.

• 1:10:34Speaker 01

  Yeah, business is going through the roof. What's, what do I need to have a strategy for?

• 1:10:38Speaker 00

  What do you mean?

• 1:10:39Speaker 01

  I might've said the strategy, I might've said the strategy is no strategy. I might've actually foolishly said that. But you know, when I went back to my office, a young woman knocked on the door, came in, sat down in front of me and very politely said, you know, I think you could use some leadership training.

• 1:10:56Speaker 00

  Wow.

• 1:10:57Speaker 01

  That was really bold of her to come into my office and say that. Her name was Kate Lee. She's now our chief comms officer at Mailchimp.

• 1:11:04Speaker 00

  And at the time, I mean, this is like, you'd already been running the company for 14 years. That must've been pretty hard to take. I mean, I'm sure it's true, but, but hard to take.

• 1:11:14Speaker 01

  It's like an identity crisis sort of, like you don't know who you are anymore. Like I, I thought I was a pretty decent leader.

• 1:11:20Speaker 00

  Yeah.

• 1:11:21Speaker 01

  And, and I remember subsequent meetings, you know, we would have an event of some sort. And I remember just not being able to talk to anybody anymore. I just remember being, I stopped talking. I would just sit in the corner and I would only talk to people if they came up to me, but otherwise.

• 1:11:37Speaker 00

  Cause you were self-conscious?

• 1:11:38Speaker 01

  I was completely self-conscious and worried that anytime I opened my mouth, I would just make things worse. It was really one of the worst times of my life.

• 1:11:46Speaker 00

  When we come back in just a moment, how Ben tried to build a happier work environment and how his leadership was tested again when a bunch of key employees walked off the job. Stay with us. I'm Guy Raz and you're listening to How I Built This.

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• 1:13:56Speaker 00

  Hey, welcome back to How I Built This. I'm Guy Raz. So it's 2014 and Ben is still reeling from a very difficult and awkward all-staff meeting at MailChimp, which basically has him questioning everything about the company.

• 1:14:11Speaker 01

  And it was so bad, I didn't know it, you know? I guess I was coming home and not really talking much about it. It just weighed very heavily on my mind. I remember my wife sitting down next to me and just saying, "You know what? I think I'm gonna take the kids and move out for a while. Leave you alone." And I remember looking at her like shocked. I was just thinking, "Why in the world would you do that?" You know? And I guess it had affected me so much that she thought it had something to do with her.

• 1:14:40Speaker 01

  That's how bad it was. And I had no idea that it was like emanating from me, right? Those vibes. And I remember I just, I told her, you know what? It's, it's not about you at all. Let me tell you what's going on at work. And that was for the first time I started to talk to her about everything. Now she's probably sick of hearing me talk about work. But every day I talk to her about work and what I'm thinking and what problems I'm having. And we, life is just so much better now that I've opened up and talked to her.

• 1:15:10Speaker 00

  What did the staff want you to? I mean, they wanted a strategy. So what, what, what did you think they wanted to hear from you?

• 1:15:17Speaker 01

  At that time, I, I thought that they just wanted me probably, you know, to coddle them. You know what I mean? That was my attitude at the time. Like, what do you want from me? Like, why do you need me to tell you what to do?

• 1:15:31Speaker 00

  So how did you resolve it? Did you, did you seek help?

• 1:15:35Speaker 01

  I did. I, I went searching online and I, actually, I remember, I was listening to NPR, driving around in the country somewhere. And Truett Cathy, the founder of Chick-fil-A had passed away. And someone at NPR, I believe, was doing interviews with people who knew him as a friend. And they were telling stories about Truett Cathy. And a guy came on and, and his name was Clay Matiel.

• 1:16:07Speaker 01

  And they talked about how he ran his company, sold it, and he started a school for founders. It was in Dayton, Ohio. And this guy, he'd sold his business for multiple billions of dollars. And he just wanted small business leaders to learn the lessons that he learned the hard way and learn how to scale their businesses and become better leaders. So I just thought, you know, let me jot this guy's name down and go look him up. And, and that's what I did. I went to his school.

• 1:16:35Speaker 00

  You went to Dayton, Ohio?

• 1:16:37Speaker 01

  I went to Dayton, Ohio. Yeah.

• 1:16:39Speaker 00

  For how long?

• 1:16:40Speaker 01

  Maybe two or three days. So it was built, this school, I haven't talked to anyone about this. The school is built for the locals. You know, this was his hometown, Claymatil's hometown. And it was really built for like, small family businesses. And, you know, I remember it said like, the minimum revenue had to be 2 million revenue. And you know, we were like, maybe at 200 million or something by this time. And so I didn't tell, I didn't tell them that. I submitted the form and I said, you know, yes, I make 2 million in revenue. And I went out to Dayton, Ohio and um, I learned a lot out there. I needed it, you know, it was a lot of humble pie that I ate out there.

• 1:17:19Speaker 00

  How do they describe it? Like a leadership training?

• 1:17:21Speaker 01

  Yes, there was a lot of that kind of stuff, right? So talking about strategy, talking about culture and stuff like that. But the most helpful stuff was like, they, they make you get out of this mode where it's all about me. And it's really all about the team. It's all of, you know, it sounds cheesy, but you know, you have to understand like, what's going through everyone's minds when they're talking to you is I am not good enough. That's like the self-conscious thing that's this tape that's playing through everyone's mind. And you have to remember that as a leader and you've got to like shake that out of them, make them feel confident, make them work as a team. You know, it was more psychological stuff like that, that kind of helped me get out of my rut and think about leadership in a different way.

• 1:18:04Speaker 00

  So how did you start to change the culture of, of the company?

• 1:18:08Speaker 01

  Yeah. So we, what we cared about most was actually our employees who had been with us for so many years. We wanted them to become good managers and progress through leadership at MailChimp. So we started to think about like, what would it be like if we had like a MailChimp school or a MailChimp academy? We started to inquire about that, talking to some local professors at Emory University. And they said, you know, we can absolutely help you with that, but first we need to know something about your culture. You know, we were like, well, what's that? I don't, I don't know what that means. And they said, oh, well, you know, it starts off with your core values. And we said, we don't, what is that? So yeah, that's, that's how the whole journey began and we, you know, I hired a chief culture officer to kind of help us maintain that culture. That's how the whole process came to be.

• 1:18:52Speaker 00

  And so as you started to develop a so-called culture, did you also start to develop a strategy of what you want it to be?

• 1:19:00Speaker 01

  Eventually, it took a few more years after that, actually. I mean, here's the thing about early years of a, of a startup, you, the, the idea of strategy just gets more sophisticated the older you get. So in the early years, yes, I think we did have a strategy. In retrospect, it was nothing but a product roadmap. It was just, we will build these three things this year. So yeah, we did eventually have these strategies and we, we made a conscious effort to always keep it simple. No more than three themes. You know, it had to fit on a sticky note was always my philosophy. So many years later, I think 2018 is when things had to get way more sophisticated and we started to see that we needed to hire, eventually what we have now, a chief strategy officer. Cause

• 1:19:43Speaker 01

  man, it is, it's a thing now. It's real. I can safely say we do have a strategy now.

• 1:19:49Speaker 00

  Yeah. I mean, now, since then, I mean, you guys kind of went on an acquisition tear.

• 1:19:53Speaker 01

  Yeah.

• 1:19:54Speaker 00

  From 2019 to 2021 and you're no longer an email marketing service. You offer all kinds of things. I mean, including an e-commerce platform like Shopify. I mean, that's one of the first things that, that greets you. It's not, hey, set up an email marketing account.

• 1:20:12Speaker 01

  Exactly. And you know, by the way, you know, when I was out there in Dayton, Ohio at this leadership school, they had a little exercise to make founders think about what is the real essence of their brand. It's not the product. It's like, what is the brand all about? And by then everyone knew that I was the founder of Mailchimp. And so they just came to me and they said, I'll tell you right now what your brand is. And to a T, every single student in that class told me, you need to get out of email marketing and expand into other channels. So I got the idea from Dayton, Ohio, let it be known.

• 1:20:42Speaker 00

  Wow.

• 1:20:42Speaker 01

  You know, that was like, I don't know, 2017 ish is when I came back and told the company, we, we have permission, you know, our brand has earned the right and the permission from customers to expand beyond just email. So yeah, we have been since 2017, adding social media channels. We also started Mailchimp Presents where we produce video content for people too, because YouTube is like, is now like the world's number two search engine after Google. We're out there producing documentaries and movies as well.

• 1:21:10Speaker 00

  About what?

• 1:21:11Speaker 01

  Entrepreneurialism. Sometimes it's not even about entrepreneurialism. It's about, you know, a parent having, you know, some kind of an argument with his son who really wants to be a musician. I mean, it's like interwoven in there are stories of entrepreneurialism.

• 1:21:27Speaker 00

  You are not going to be surprised about what I'm going to ask you next because it was covered by a few publications, but there was an article that came out earlier this year about what was described as an exodus of mainly women and women of color, senior women at the company, like seven or eight or maybe more than that. I'm sure you read the articles and are aware of it. And one of them, you know, said, I dealt with sexism and bullying there at MailChimp, and I wouldn't recommend my female friends to work there. What did you think? I mean, first of all, were you surprised by seeing that?

• 1:22:07Speaker 01

  Yeah, you know, when you're a founder and something like that comes out, it's a real, it's a real gut punch. We learned a lot from that. And I am grateful for what we learned from it. And, you know, in retrospect, I think we were always intentional about our culture at MailChimp, right? I mean, we got people to help us codify it. I mean, we hired a chief culture officer. I would say that we were really good with our culture. And what can happen to a founder, you know, this is, this is my warning to other entrepreneurs out there is when you're good at culture in the early years, sometimes you can kind of lull into like an autopilot, right? Like, we were good and we were attracting people

• 1:22:52Speaker 01

  because of our culture. People were doing stories about our culture. So as a founder, you know, you can kind of just think, well, we've got that down. I don't have to worry about that right now. Let me just focus on growing the business. And so that's what I did. I just focused on growth and not enough on nurturing the culture. I mean, you can be fooled into thinking growth and strategy is your only job as a CEO. But no, it's culture as well because that, that, that's what drives everything else.

• 1:23:22Speaker 00

  With 1,200 people, you can't know everything happening, right? You can't have your finger on the pulse at all times, but you are expected to in a sense because you are. You know, the leader at the helm, what did you do to respond?

• 1:23:37Speaker 01

  Well, we made our response public. You know, we have our six big commitments. We have a whole strategy on, it's called our culture reset plan. So we actually published that, but it came from, the very first thing we did was I just held constant office hours where I just listened to anybody who wanted to talk to me. And I just took notes and people from every department, every rank, they came and just told me what they were experiencing. And it was heartbreaking to hear that some people weren't feeling, you know, that MailChimp was what I thought it was. You know, and I listened to it all and I came back to the, to my leadership team and they were holding office hours too. And we compared notes and we put together a plan to change

• 1:24:18Speaker 01

  the culture. And the thing that we said was like, one year from now, what do we want the headline to be? We have this awful headline that's out now, right? That we're dealing with. But one year from now, what do we want the headline to be? That was how we started our meeting. And someone said, the headline should be MailChimp leaned in. We didn't shy away. We leaned in and we changed the culture for the better.

• 1:24:43Speaker 00

  When you, the company today easily, if you wanted to, you could easily sell it and probably have been offered lots of money for it. I mean, you own half of it. Would you ever consider doing that, selling it?

• 1:24:59Speaker 01

  I've had offers. The thing is, I love what I do. And I don't know, it's one of those things, you know, you learn over time, after 20 years of running a business, you learn, never say never. Right? I think I have an open mind about it, but I can say, really, honestly and truly, like having meaningful work is just the most important thing, I think.

• 1:25:23Speaker 00

  And I mean, down the road, you may decide that you don't want to be the CEO and you hire somebody else to do that.

• 1:25:30Speaker 01

  That's possible. That's possible. You know, we, the other thing is like, early on, we talked about VCs knocking on my door, just saying, take my money. We can help you flip to enterprise, all yada, yada. But nowadays, you know, the tone has changed. I get private equity companies coming in and they, they don't ask me to take their money and grow it. They, the first thing they ask me is, how's your health? It feels like they're just waiting for me to keel over.

• 1:26:00Speaker 01

  They're like, well, here, just hold my business card, just in case, you know, in case you keel over and your wife needs to contact us.

• 1:26:06Speaker 00

  What's your BMI?

• 1:26:08Speaker 01

  Yeah, right, exactly. It's creepy. So it makes me think, you know, like, oh, maybe, maybe there is going to be, there is going to be a time where, you know, I need to step back and maybe have a succession plan and have someone take over running it day to day. I do see that as a possibility, but right now, I'm just so happy running this thing.

• 1:26:27Speaker 00

  Do you, I mean, obviously, you worked extremely hard making this happen, but I think you did have some incredibly fortunate breaks that like you couldn't control, like MailChimp. Do you, are you a believer in luck? Or do you think that what happened really has to do with just how strategic and smart you guys were?

• 1:26:49Speaker 01

  I totally believe in luck. I mean, but I think it comes from constantly striving and looking for that silver bullet. When I look back over my 20 years, it felt like I was always looking for the answer, always looking for, what is the playbook that I'm missing? You know, I was constantly searching and then all along the way stumbling upon something that actually does better than my wildest dreams. I don't know. I always had in my mind that I was just a bumbling idiot from Hepsborough, Georgia, who stumbled into business. And somewhere out there, someone knew the right answer of how to run my business, right? And these days, these days, you know, MailChimp is much bigger. And I get invited

• 1:27:32Speaker 01

  to ritzy events with some really great business leaders. And I remember being in one recently where a head of one of Microsoft's cloud units, he was, he was speaking about his, how he hosts executive leadership team meetings. And he says, we're still winging it. We have no idea. You know, he didn't say it that way, but he's like, we're still experimenting, you know, and this is Microsoft. And they've been around a very, very long time and they know what they're doing. So, you know, it was that moment I realized, oh my God, nobody has the answer. We're all just winging it. Every one of us is just winging it. I don't know if that's hopeful or horrifying, but that's what I've learned.

• 1:28:14Speaker 00

  That's Ben Chestnut, co-founder of Mailchimp. And as I mentioned at the beginning, a few months after this episode first ran in 2021, the software giant Intuit announced it was acquiring Mailchimp in a deal worth $12 billion. Ben stepped down as CEO in 2022, but he stayed on as an advisor until last year. In a LinkedIn post on his last day at the company, Ben said that he gets lots of questions about what he's doing next, with most people assuming he'll start a new business. But his answer, for now, been there, done that. Hey, thanks so much for listening to the show this week. Please make sure to click the follow button on your podcast app so you never miss a new episode of the show.

• 1:28:56Speaker 00

  And if you're interested in insights, ideas, and lessons from some of the world's greatest entrepreneurs, please sign up for my newsletter at guyraz.com or on Substack. This episode was produced by Liz Metzger and J.C. Howard, with music composed by Ramtin Arablouei. It was edited by Neva Grant. Our production staff also includes Alex Chung, Casey Herman, Ramel Wood, Noor Gill, Carla Estevez, Sam Paulson, Carrie Thompson, Andrea Bruce, Catherine Seifer, and Elaine Coats. I'm Guy Raz, and you've been listening to How I Built This.