Tue. Oct 19th, 2021


Ben Chestnut and Dan Kurzius are often asked why they refused to take venture capital for their email marketing business, MailChimp. The answer became clear this week.

The tax software company Intuit announced on Monday that it will acquire MailChimp for $ 12 billion in cash and stock, an extraordinary outcome for a startup that has never taken a penny from investors.

The sale effectively turned the founders into multimillionaires overnight. Because they never sold any of the company to venture capitalists – or granted stock options to employees – their stake in the business is about $ 5 billion each.

For the founders in Atlanta, the agreement was proof that it does not necessarily require venture capital or an address in Silicon Valley to produce a major technology venture.

“I feel like I’m getting my head down, adjusting things, improving things, and then I look up and bam, it’s a $ 12 billion business,” Chestnut told the FT.

Both founders cited their parents’ small businesses as inspiration. The forty-seven-year-old chestnut, raised in the rural town of Hephzibah, Georgia, recalls memories of her hair in his mother’s salon. Kurzius (49), a collector of vintage skateboards who grew up in Albuquerque, New Mexico talked about how his father’s bakery struggled to compete against larger chains.

The two first crossed paths on mp3radio.com, a dotcom-era company affiliated with Atlanta media conglomerate Cox Enterprises. Chestnut hired Kurzius as a software developer after barking through the interview and having no previous experience in coding.

Gregg Lindahl, the former chief operating officer of mp3radio.com, says Chestnut has a flair for design, even for everyday tasks.

‘I had the best PowerPoints on the planet. I am absolutely sure of that, ”says Lindahl.

When the business folded, Chestnut and Kurzius struck out on their own and started a design agency. They started working on websites for dotcom businesses, until the work dried up and airlines and real estate companies became their biggest clients.

Eventually, the duo began to consider a turn. It seems that another part of the business is growing quietly: a mail marketing service called MailChimp, which offered them at a nominal fee.

In 2007, Chestnut and Kurzius decided to focus their full attention on MailChimp. Investors became interested and believed that the business could grow rapidly by selling to large companies, a prospect that upset the founders.

“It felt like they were more like aliens from another era who wanted to tell me how to run my business,” Chestnut said. tell the founder and venture capitalist of LinkedIn Reid Hoffman on a podcast.

Around this time, Chestnut, who is the public face of the business, says he has also started thinking about selling MailChimp for almost $ 4 million. The business began to stagnate while worrying about the sale, before finally abandoning the idea.

After the adoption of a business model in which the basic MailChimp product was given away for free and seduced paying users with extra features, the service started to grow even faster.

Now Chestnut says he can imagine a future outside of MailChimp. “I like what it does, but it’s not me. I’m a human, you know. “

Pamela Walker, CEO of the nonprofit ArtsNow based in Atlanta, says Chestnut and his wife Teresa donated money to the organization earmarked for work on arts-based education and technology in Hephzibah, where they met in high school.

“They do not want the recognition,” Walker said. “They do not want the awards.”

Meanwhile, MailChimp’s founders have become heroes of the so-called bootstrapping community, which avoids dollars in favor of profit and greater control over their businesses.

Wade Davis, CEO of Zapier, a software company that worked with MailChimp, says he was surprised the founders decided to sell, but doubts it has anything to do with money. ‘There were probably other reasons why they felt it was a good outcome for MailChimp, for the customers and for everyone.

Because MailChimp did not reward employees with stock options, they could not benefit from the $ 1 million payday associated with large technical sales. The deal includes a total of $ 500 million in share-based rewards, and since 2012 MailChimp has paid up to 25 percent of the annual profits in employee pension accounts.

“If you’ve been with us for the past 21 years as a private company with no interest in an exit, then it makes a lot more sense to share profits in your hands now,” says Chestnut. The company will also pay out cash bonuses to employees.

Because MailChimp has never taken money from investors, Chestnut says it has never had to prepare formal financial reports. MailChimp generated $ 800 million in revenue last year, comparable to several public software companies with even greater market values.

“I’ll look at the previous balance, and then the balance of this month, and I want to make sure this month is bigger than last month,” Chestnut said. “That’s all I’ve ever done.”

miles.kruppa@ft.com



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