$ 12 billion for Mailchimp: lessons for entrepreneurs
Recently, Intuit agreed to shell out $ 12 billion for Mailchimp, which is one of the leading email marketing companies. “Mailchimp is the most successful private bootstrap startup in the cloud,” said Jason Lemkin, CEO and Founder of SaaStr.
Mailchimp’s origins date back to 2001. At the time, the founders of the company operated a web design agency and they created some of their own websites. One was for e-greetings, but it was unsuccessful. But oddly enough, it wasn’t a complete loss. One of the most popular characters on the online host site was a chimpanzee. So yes, the founders used it for Mailchimp. Although, until 2007, the site was mainly a side project.
Today Mailchimp has a global base of 13 million and there are 2.4 million MAUs (Monthly Active Users). Of these, there are 800,000 paying customers and half of them are outside the United States. In terms of revenue, they hit around $ 800 million last year, up about 20%.
OK, so what are the takeaways here for entrepreneurs? Well, let’s take a look:
AI (Artificial Intelligence): Mailchimp may seem like a simple product, but there are actually some sophisticated automation processes built into the platform. Then again, the company has been smart about taking advantage of its massive dataset (this was one of the main reasons Intuit bought the company). Consider that there are 70 billion contacts and Mailchimp has AI-powered automations that generate 2.2 million AI-based predictions every day.
Priming strategy: With venture capital funding at record levels, seed money may seem irrelevant. But the reality is that a relatively small number of companies are suitable for this type of financing. It’s actually common for entrepreneurs to waste precious time chasing VCs.
“Most of the software categories are expected to be seed opportunities and are not venture capitalists due to the size of the total global market available,” said Matt Holleran, who is a general partner at Cloud Apps Capital Partners .
Business model: It can certainly be a differentiator. But it can also change as the market changes.
“Mailchimp is a testament to the power of the freemium model and the fact that you don’t have to start there,” Lemkin said. “Mailchimp has been slow to become freemium, but once it did, it exploded.”
Keep in mind that the freemium model has proven to be disruptive to the market. At the time of transition, the category was quite mature and there was a dominant player, Constant Contact.
Be annoying: It’s tempting to focus on hot market categories. Growth is certainly attractive and it is generally easier to obtain financing as well as to recruit talent. On the flip side, a hot market category will also be a magnet for competition, which can make it difficult to stand out from the noise.
In other words, it might be better to go against popular belief. But of course it should be based on an unmet need in the market.
And that was certainly the case with Mailchimp.
“There is always talk that emails are dead, but like any good Halloween movie, emails survive every fatal headline they receive,” said Murat Bicer, general partner. at CRV. “Email is a vital part of your toolbox and huge sums of money are spent on it every year. Savvy CEOs and marketers, just like skilled craftspeople, know they need more than a hammer to create meaningful communications with their diverse audiences.
To M (@ttaulli) is an advisor / member of the board of directors of startups and author of Artificial Intelligence Basics: A Non-Technical Introduction, The Robotic Process Automation Handbook: A Guide to Implementing RPA Systems and Implementing AI Systems: Transform Your Business in 6 Steps. Hhas also developed various online courses, such as for the COBOL.