(Bloomberg) — In the early days of setting up his email marketing startup Mailchimp, Ben Chestnut was warned by venture capitalists of the company’s impending demise if he didn’t take their money and advice.
“A lot would give me the same pitch from the last man, always a semi-threatening pitch,” Chestnut said in a Zoom call. “Like an insurance agent, ‘You’re going to die.’ It was always doomsday scenarios.”
When some of his colleagues took on venture capital, Chestnut, 47, wondered if he was doing something wrong by not following the entrepreneur’s well-trodden path. But he felt that potential investors didn’t seem to understand his vision of supporting small business growth. Instead of listening to the bleak predictions, he eventually took them as a provocation: “Like, do you think I’m not going to make it?”
After resisting outside investors for nearly two decades for their Atlanta-based company, Chestnut and his co-founder Dan Kurzius, 49, sold the marketing automation platform for $12 billion to software company Intuit Inc., the developer of TurboTax and QuickBooks.
Chestnut said this isn’t just his payoff, but the start of a new chapter, which will leverage the QuickBooks accounting platform that helps small businesses function. He and Kurzius are paid in Intuit stock, each making a fortune worth about $5 billion (about the same as Intuit’s co-founder Scott Cook).
“I’m going to do what I’ve always done — sit here with my computer and build a great tool,” said Chestnut, who will continue to lead the Mailchimp team. “I don’t see this as an exit at all. It’s like refueling a fighter jet in the air.”
Growing up near Augusta, Georgia, Chestnut spent time during his childhood helping his mother in her hair salon which she ran from their family’s kitchen. He studied physics at the University of Georgia and then transferred to the Georgia Institute of Technology, where he focused on web design.
Kurzius meanwhile worked as a DJ and skateboarder before co-founding a web design agency with Chestnut called Rocket Science Group. They used severance pay from their dotcom jobs to get started, Chestnut said. But the co-founders soon discovered that their customers were having trouble sending their email newsletters. They took code from a failed digital greeting card product they made and modified it to launch Mailchimp in 2001.
The side project grew and they began testing pricing strategies, such as prepaid credits, before moving to monthly plans that made their earnings more predictable. Subscriptions now account for the majority of their $800 million in revenue.
The company now sends one billion emails every weekday. As the company evolved, so did monkey-themed branding. Its mascot, Freddie, gives users a high five when sending out a marketing campaign, and knitted monkey hats were used as swag at corporate parties.
Jeffrey Cornwall, a professor of entrepreneurship at Belmont University, said Mailchimp founders were able to maintain control of their business by not relying on venture capital, but also allowed themselves the time to be agile in the early stages of testing their business model.
“There are a lot of companies that assume they need to raise money,” Cornwall said. “Maybe not.”
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