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

0:00 Yeah. 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 twelve billion dollars. 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.

0:35 I hope you enjoy it. 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 stinkin' strategy. We've got this, you know? And half the audience would s would cheer and say, Yeah, we don't need no strategy and the other half would say, Yeah we do.

0:55 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 it.

1:09 What in the world just happened to me? Welcome to How I Built This, a show about innovators, entrepreneurs, idealists, and the stories behind the movements. They built. I'm Guy Roz, and on the show today, how Ben Chestnut and his partners used a monkey logo and guerrilla marketing to build MailChimp. A B to B brand that grew into a big business?

1:40 By focusing on small business. 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.

2:34 But what makes MailChimps 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 two thousand one. long before the city became the tech center that it's becoming today. But perhaps most importantly, MailChimp focused on small businesses.

3:09 Which turned out to be a stroke of great luck, because small businesses helped turn MailChimp into the giant it is today. 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,

3:35 MailChimp has grown into a company that did around 800 million dollars 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 Hepsiba back in the seventies and early eighties. Not too far. From a military base.

4:00 The neighborhood I was in was just outside of the city limits of Hepsiba, 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 uh lived in our neighborhood. Germans, Asians and when I say Asians, I mean Japanese, Korean, it's Philippines, Vietnamese, all over the board. African Americans as well.

4:21 How did they end up there? J that's just military families, you know, marrying into Yeah from the Vietnam War. Uh and then they came and they just sort of Moved into this neighborhood. Your dad was uh or mom, one of your parents w was in the military, was in the army. Yeah, my dad was in the army. He did uh seven tours in Vietnam. Wow.

4:39 Um yeah. He was committed. He was a man of duty, you know. He really loved his duty. Seven tours in Vietnam and and was he From what I understand he was a codebreaker. Was that what he did in in Vietnam? Do you know?

4:52 You know, um details are sketchy. He uh he he left with you know all of his secrets. But yeah, in general, um he was a codebreaker. He listened in on the enemy and uh he cracked codes. Was he in any combat units? He was. Yeah. He was the first Cav. Well.

5:10 So did did he ever talk much about Vietnam? You know, he he only talked about it Um whenever I would watch movies or TV about war. uh he could see that I was sort of uh engrossed in it and everything and he would s take me aside and say, you know It's not always that glorious.

5:31 You know, he would tell me things like that and um you know, I I could tell he was Dissuading me from thinking about joining the military. And I guess he met Your mom while while he was overseas in and serving and and sh and she's originally from Thailand, um And so what did she do when he brought her back?

5:50 uh with him to Georgia. Well she had lots of odds and ends kind of jobs. She worked in some textile factories and that sort of thing. Uh but eventually she just sort of uh became like a neighborhood nanny. We we always had kids from the neighborhood running around our house um 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. Hm.

6:16 Wow. So people would come and get their hair done. Oh yeah. Yeah, it's where I learned about entrepreneurship, watching my mom. Did your mom ever Get a a brick and mortar salon? No.

6:27 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,'cause I was so proud of her, but thou I don't know that that was ever her intention. She She did inspire my um older sister to start her own salon that was uh a non kitchen based one. Like you say, a brick and mortar one. Um she opened up a real salon that was very successful uh in the eighties and um Boy, she was just an inspiration for me.

6:57 um as well. And 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 s I know I just thought, you know, I want to run a business too when I grow up'cause this is this is good for the family. And I remember, um

7:14 I was too young to understand it at the time, but I 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 and Dan, my co-founder.

7:37 Um his his father ran a bakery. Uh when he was growing up and he saw that business doing it. And Albuquerque, right? That's right, N Albuquerque. and it was thriving and he saw, you know, how proud his father was and the same sort of deal happened. Um A larger bakery opened down the street and

7:56 And put his dad's business um out of business. Ben, when you were growing up I mean Your mom is Thai, your dad is is a white American

8:08 But it sounds like you were around kids. Who came from different backgrounds. Two, is that Is that right? I would describe my neighborhood that way.

8:18 You know, we I ca it was easy to go out and play with friends and you know, my friends were just From all over the place. Yeah. I think that when I would go to school it was a different story, you know, in s inside the school where where I was zoned There were only a handful of Asians there.

8:35 That was a little bit different. That was definitely um uh it it probably influen my whole outlook on life. De definitely kind of being the misfit. Here's the other thing that's actually quite Uh unusual. You actually

8:48 met your wife. In high school. She was your high school sweetheart, Teresa. 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.

9:04 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

9:15 after karate class, I would wait for my dad to pick me up, and she would wait for Her uncle to pick her up. Uh 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 little this and that.

9:36 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, and 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.

9:54 That's what a gentleman does and I said, Oh right, thanks, Dad And uh you know I got out and I went and sat down next to her and uh we talked a little bit more. Uh, and that's how I really, really got to know her then. And you know One day she invited me to

10:13 her her parents, her uncle and aunt. you know, I was a little bit nervous and uh I didn't know what what I was gonna say to her to her mother when I met her. And I rode my bike over there. And I noticed um lots of cars in the driveway. I thought this is interesting. This is familiar. And I walk in and sure enough

10:29 Her mother runs a hair salon in the kitchen. Her mother is a kitchen titian like my mother. 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, uh right under that rubber gasket on the swivel. Um so I think we we hit it off well'cause I was familiar with this profession. What about school? Were you a pretty good

10:56 Student? When you were a kid. Um no, I was an awful student, I think, looking great. Yeah, you know, going through my father's belongings, I got a lot of my report cards that he saved and uh In high school in my early years, I was just a poor student. I I made horrible grades and uh He sat me down and he said, um

11:16 I 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. I mean, was high school j was school just hard for you, or did you just not care, or what do you remember? I Remember being bored a lot. And what I wanted to do was just get out of Hepsiba. Yeah. I s you didn't go that far. You went to Atlanta. Well thanks a lot, guy. Yeah. But but but you did okay. I did okay. But you couldn't have been a terrible student'cause you got into college, you went to University of Georgia. I did, yeah.

11:53 I mean I I was a 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 and I I shaped up and I became a a student for the next two years. Um 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 that you wanted to do when you graduated? Yeah, I mean I just I wanted to design cars. I'm a car nut. I love cars. Um I thought that I would study this, um and maybe move off to Detroit. And be a car designer or something. Uh that w that was the idea.

12:29 Yeah. But I got an internship. At an appliance company. One summer. In uh Amana, Iowa. You know, my job as an intern was to scan about a thousand paint chips and they're all variations of white.

12:44 Egg shell white, cream white, off white, glossy white. Flat white. So that was my job and I actually finished that in a couple weeks and then I just started they let me do prototypes, they let me build models. of uh refrigerators and that sort of thing and um I learned that I'm really, really bad at building models.

13:05 And I guess that was You know, in retrospect so bad at that. Um 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. Um you should look into this new thing. It's called web design. It's all the rage.

13:21 Uh look into that as a career. Uh and that was You know, life changing advice. I went to the Cedar Rapids Barnes and Noble'cause there's nothing else to do at that time. I found some um Books on web design.

13:35 By uh Linda Weinman, Linda.com. And uh Yeah, I learned all about web design. Wow, and this is the late nineties, so like web design. Yeah. That commanded a premium because it was really like No one knew how to do it. If you knew how to do it

13:49 You could get a lot of work. You could be a complete goof off, but make a lot of money it because it was really, really a r a rare skill. You eventually got a job working for Cox Media Group. I think I think they're still the publisher of the Atlanta Journal Constitution. That's right. So so w what was the job they hired you? To do. They had a job opening for a web designer for the AJC.com.

14:11 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.

14:26 Design agency. And what she was trying to do was build an agency to design all of their banner ads. I 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

14:40 You know, four hundred sixty eight by sixty pixel. Ads that's beneath me. And then she told me the pay and the pay was three thousand dollars more than the web designer. And I said, You know what? I I can do these banner ads. If I can build a website I can build a banner ad. And

14:56 You know, at first I just thought, you know, I'll just kinda 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. Hm. w it became fascinating for me. And I

15:14 You know, that skill to like build Build something. an animation really quick and influence people in that way. I 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. How did you meet Dan Cursius. who w would eventually become your co founder at Mailchimp, but how did you

15:37 He he was a also at Cox, right? Yeah, well you know There was this thing that was invented called MP three's. uh with the Napster and everything. And uh 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. Um what if we teamed up with another startup called MP three dot com,'cause they have all of these uh musicians uploading their music. and they asked me to uh be their web design manager.

16:06 And one of the first people that I hired was Dan. you were like building An online music site or or a portal or something? Yeah, at the time the hypothesis was uh 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. You know, and so um that was that was the idea. So it's gonna be like a a streaming service? Yeah.

16:38 Yeah. And Dan was into music. He Dan's um he's into he 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 uh to write content about music. And halfway through his interview with he realized that it I was interviewing him to be a coder and he had no idea how to code HTML.

17:00 And so he totally lied. Uh totally lied to me and claimed that he he knew how to code. Um he took the job. And then he bought HTML for dummies.

17:12 And he crammed. For Whatever it was, two weeks before his first day on the job. And in his first day he was scared to death And his desk was right next to mine and he He thought he was gonna get busted by me.

17:25 Um 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 neatly. Now I know it's because He literally crammed from those books.

17:42 I I imagine a 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 l trying to g you know Right, plant its flag everywhere and probably spending money. Everywhere.

17:58 Was it was it like that? I think that they're big Th their goal was, I think, to merge with a search engine. And um it didn't pan out. You know, and I think that you know, that was the heyday things were

18:09 You know, we this was a time of fast company. Uh, what was the other magazine? Business two point oh So I think that this is literally how how business works. That whole dot com paradigm.

18:21 Right. That's all I knew. And This was nineteen ninety nine and what is it like? The next year. Two thousand. April two thousand.

18:30 is when everything came crashing down. The whole dot com bust happened and we were all laid off. And you know, like t for me, it was like the whole world had turned upside down. E everything that I knew to be true was not anymore. Yeah. Yeah. It came as a Total shock.

18:46 You know, um 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

18:59 The job. I will probably do very well. I will probably eventually become a vice president. Mm-hmm. But

19:08 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. Um you know, since I was young and so I just felt like I would regret it. It was the fear of regret. That that told me, do not take the corporate job.

19:26 Uh instead go my own way. So y you knew you knew that you were gonna Lose your job. And what did you approach Dan Curse and say hey, let's

19:37 Let's start something. Not quite. Um Me and my uh my friend Mark, we said hey Things are shutting down. How about we we go into business together?

19:47 And um And we had this we had like two weeks' lead time to think it think it all through. And um that's where we got the idea to start a web design company. This this is Mark Armstrong. Right? Yeah, Mark. And so um I started the business with Mark and Dan said, I'm gonna hold off. I I I need to get a job at Cox Corporate. And uh one year after Mark and I started we we teamed up with Dan. We convinced him to join us and um and the rest is history.

20:14 So you and Mark start a web design. business. And I g you guess you guys called it Rocket Science Group, right? Yeah. That's right, Rocket Science Group. And

20:24 Who did you initially Target. Like who are your clients? The idea at the time was um It was something that we observed. At Cox, you know, there was an engineering team

20:34 geniuses, just rocket scientists. Working on You know, the cock servers doing hard things. We were working in the marketing department. And marketers needed

20:47 They needed stuff too, but the engineers were always too busy. And engineers kinda didn't want to stoop so low to do marketing stuff as well. It was like t it was beneath them. And so our our target market was marketing departments. Um where we would help them build little m uh micro sites. Um websites that basically they didn't have to go to their engineering department to ask for. I guess we were sort of like a rogue

21:13 Team. uh for marketing departments. I mean, you were in Atlanta at that time. You still are, but I mean Atlanta is is the capital of Companies Coca Cola, UP S, CNN, Delta, did you go after those companies?

21:28 That was the dream, um, but it never worked out that way. What we learned um pretty fast was it was easier for us to Go to ad agencies. who were really good at pitching to those big companies and we would they would just subcontract with us. Yeah. But yeah, um one of the tools that we that we ended up building was a uh eGreetings website like blue mountain.com at the time, or Hallmark, and we figured out how to send HTML email

21:56 And we started sending e greetings and they were they were really, really cool e greetings, and no one cared about e greetings anymore. I mean we thought we were gonna get rich because Blue Mountain was sold for six hundred million dollars at the time? Uh and we just thought, oh my god, if we make an e-greeting site better than Blue Mountain. we might get seven hundred million dollars. That was our business plan. So we build this thing and no one uses it. It's a fly.

22:22 But you were you were still doing web design, right? And and and that that was going pretty well, right? 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

22:43 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 companies' 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.

23:04 Um luckily we didn't delete it. And yeah, we use that to build Field Mail Chim. Actually we called it We Mailer. Mm-hmm. 'Cause uh we thought we could make it fun.

23:13 And at the time I mean this is'cause you built what would become Mail Chip early. I mean you guys started the web design company in two thousand and already by two thousand one. you had built this email system, right?

23:25 Yeah. But meantime, the bread and butter of what you were doing was web design. That's right. I mean we thought we thought that we mailer might Make. You know, enough money to pay for our lunch every day. That that was our wildest

23:37 you know, fantasy for you know, what what kind of success we might get out of this. And initially it w it worked like from what I understand, you guys were chart were billing people by the hour for web design. Which probably added up you were making And and you were it was the same thing with the

23:54 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? Yeah, and then we record our time and it might be, you know, a hundred bucks for a couple of hours of work. Wow. So it was really Could probably 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

24:21 uh between ten to thirty thousand dollars a gig and this little we mill thing Yeah, we were Yeah. We were do we were getting like one hundred dollar checks, one hundred fifty dollar checks. Um over time the we started to get like really

24:35 Big piles of one hundred dollar checks from our customers. for for we male. Um It got so bad actually, um I ran out of

24:46 check deposit slip. And I said, I do not want to go inside the bank. We've got to find a way to bill our customers. um online. And that was how we actually installed the credit card system. And that was when MailChim became an official Sass.

25:01 Business. Uh before that acronym was invented. How did you guys come up with a with a name? There were lots of reasons. So first of all, my parents, uh, when they were in Thailand, they actually had a pet monkey. 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.

25:26 um never ever have a pet monkey bend. So I was always fascinated by them. uh you know, dreaming about what it how cool it would be to have a pet monkey. And then um Yeah. There was a a phase that I went through, um my Jim Henson years where I really, really wanted to be a ventriloquist.

25:43 And I got a Monkey Wow Muppet. And I carry that thing everywhere I went and I had like little comedy shows for the family. Um you could not separate me from my My monkey.

25:59 So you know, I I I've always loved monkeys and I I always brought them into my designs as well. So, you know, we had our e greetings site and I noticed like the one e greetings that I had. Of a monkey was the most popular e greeting that you know the few users that we had actually sent to their friends. Even like when we're whenever we design websites for our clients, And we had three options to show them.

26:24 The one that we love, that we that we always hope 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

26:43 you know, going delirious working at two AM, we would just say, just put some monkeys in it. Uh and so we said, Hey, how about uh chimp mail? And so we decided to call it Chintmail. And then of course the domain was taken. The domain for chimp mail is taken, wow. A domain was taken. Yeah.

26:58 Um so we had to improvise and call it MailChimp instead. But there was a time I remember when people didn't want email. They're getting so many emails. What were people Doing with Mail chip. I mean h w were they using it to just contact their customers, like how are they using it?

27:15 Yeah. There was definitely a stigma to email marketing. Like if we if we went to tech conferences and told people what we did, you know, things would get quiet, they'd walk away. Um, 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. Right.

27:34 People were like, Oh you guys are spammers. That's right. That's right. And then like end of discussion, they'd walk away. Ha ha I was really popular at parties, yes. Absolutely. But there were some enough people who wanted

27:47 the service because they wanted to send a mass email out to their customers and they wanted it to look nice. That's right. I 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. Uh small businesses were constantly signing up, so it it I was never dissuaded from it. Was it just the three of you still?

28:13 Or we'd be able to hire a few more web designers. We had um 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.

28:24 Just just be a cockroach. Um what we meant was like cockroaches can survive a thermonuclear war. Mm-hmm. Um And so we just thought, you know, that's that's let's just strive, just let's just survive here.

28:36 I mean Just the three of you kind of hunched over Keyboards. Day in, day out, just like pounding the keys. Yeah, from morning until sometimes until one, two AM.

28:47 I mean it was a real grind. I mean how w how was your revenue in cash flow was it was it okay? No. No. Um let's see. I if I c the the best that I remember our our agency business ever doing was something like

29:06 Between two and three hundred grand a year. Well. That was the best we had ever. Done. And that was through two thousand five here.

29:17 By the way. So we were always just barely scraping by. What what explains that? Did it become more competitive? Was that it? There was just the more people doing that kind of work. You know, we would we would get business and then

29:30 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'd it would basically be like hitting the reset button we'd have to go out and hunt for more business. So it's just like these constant ups and downs and ups and downs that um just kept us from from really breaking through.

29:50 And I'll never forget, it was like two thousand five ish. Uh there was something that totally changed. I um I was working at home in my apartment. coding something for sure. And it was sometime in the afternoon

30:04 Teresa, she was a night shift. Pediatric nurse, right? presentally supporting You guys. Or She was she was yeah. Health insurance and everything from her really stabilized me, which which which allowed me to be an entrepreneur. Uh 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

30:32 Oprah. And I'm coding, I'm just like, Oh great, Oprah, I've gotta listen to this. Um Roll my eyes, and there's some episode on with a guy named Robert Kiyosaki. And he's and he has this book called Rich Dad, Poor Dad Poor Dad. That's right. He's selling this book.

30:49 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 uh 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.

31:15 Meanwhile we have this side thing that we built called called MailChimp now. We've 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. You know, it just didn't seem like it was ever gonna 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.

31:41 And the graph for our consulting business was You know, pretty flat. Uh, and then for the first time ever we separated mail chimp income. from our agency income. Prior to that, MailChimp just dumped money into our bank account and we used it to pay for lunch. Yeah. 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.

32:03 Uh what if we actually focused on just MailChimp? Um, and that's that's what got us talking about becoming a software company. Wow. So two thousand five, you start to see the numbers, and and you know that that male chimp is you can see it growing, but

32:20 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. That's right. That's right. And and you know, the web design projects are like twenty thousand dollars by this time. We had gotten pretty good at sales. Mm.

32:36 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 twenty grand, sometimes thirty five 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.

32:57 When we come back in just a moment. How Ben and his team finally went all in on MailChimp. And how its accidental twin Male Kemp became one of the best mistakes that ever happened to them.

33:11 Stay with us. I'm Guy Raz and you're listening to How I Built This. Hey, welcome back to How I Built This. I'm Guy Raz. So it's early 2007 and Ben and his partnally 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.

33:49 But It turns out They're wrong. When we finally worked up the courage to do it MailChimp revenue, if I recall correctly, almost tripled overnight.

34:01 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. Um and so we did all of these upgrades and fixes.

34:16 And as soon as we finally invested time fixing problems in MailChimp. People started to pay us money, lo and behold. Um go figure. Uh and so we we we really kinda hit the ground running. We did not suffer at all from dropping the consulting business. And in fact I remember I was just thinking we should have done this sooner. Did you change your business model when you made the pivot from like

34:39 you know, pay per use to a a monthly fee. That actually took Another year. Like it wasn't until later in oh seven because

34:47 It sounds so silly now when when you look back in hindsight, but at the time There was a movement at the time for micro payments. Yeah. You know, remember that? Like Apple was like the most famous version, the ninety nine cent Song.

35:02 Yep. I mean, and and that was that was really where 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 micropayment. 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 micropayments. Just charge us, bill us by the month. Um, 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. In those early days, from what I understand, you guys, um two thousand seven, you're full on and into MailChimp.

35:53 And There was a huge eight hundred pound gorilla in this space called Constant Contact. I'm they they were And

36:04 From what I understand, like investors inquiries to To fund. and scale your business.

36:13 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 you know, fancy pants people from the West Coast started knocking on my door and um asking me to go out for lunch.

36:28 And they would tell me You know, there's this company called Constant Contact. They just IPO'd, they made a lot of money, we think um you could be the next IPO. And you know, I talk about our business and I would tell them how we um we help small business and they say, Well that's 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 um I just thought you know, that was just

36:51 I could do it, but I something about it just felt wrong to um to me and Dan. We just we just wanted to stay. It just felt It felt really good to serve small businesses. It was just in our DNA. The investors were saying you can make a lot more money if you focus on The enterprise. On the enterprise, big business. I'm curious because constant contact was huge. Still is.

37:13 And um I'm sure some of the investors that came to you said listen Guys, if you don't scale fast, you're just gonna get buried. Because the the the big guys are out there and they're just gonna crush you. Like you need money scale fast. Like I I'm surprised I I can't believe that n no part of you didn't consider taking that money. You know, for the first two I started to think about it because I really believe their pitches, and then by the tenth one

37:40 I realized they were all saying the same thing. They were all using the same playbook. Uh and it was always a scare tactic. Like if you don't take our money, you're you're just gonna peter out and die. And so we we just I guess more stubbornly than anything uh just didn't want to take their money because of that. We never like their approach. But how were you growing I mean, you said you c sort of doubling your your revenue, so I'm assuming In that first year, two thousand seven, you're doing maybe more than half a million dollars.

38:08 And revenue. Yeah. Yeah, that sounds about right. Um, which is not enough. I mean it's great. But it's not really enough to

38:15 It's not enough to acquire customers. At scale. It's not a ton of money, no. And w within a year or so of you You guys making that pivot.

38:25 co founder Mark Armstrong, he he he decided to leave and you guys bought him out. He was was he just burned out? 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 m the needle just wasn't moving and I think it's just Really discouraged.

38:41 After you rejected the Overtures, let's say, from investors. From what I I've gathered from from what I've read You could've Come to the conclusion.

38:53 soon after that they maybe they were right because I I I read that as more competitors started to enter that Market. Your customers are leaving for kind of Bigger, better equipped competitors. I mean it got it got rough for a while there, that's for sure.

39:07 Um it we sort of get more competitors entering the market, serving different niches. You know we We had this idea. You know, blogs were big at the time. And we had this idea.

39:19 Two Separate MailChimp into two parts, into two products. One would be a list collection form, right? You you put this embed a 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. So it would be free to compile

39:47 A list of contacts, but If you wanted to send an email out, you'd have to pay. Yeah. That's when I'd get ya. Right. Um so we hire 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

40:02 Before the holiday season hits. And um We get to the deadline, he says, You know what guys? This is impossible. I cannot separate this. The code is atrocious.

40:13 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.

40:24 And just make the whole thing free. Up until a certain list size. So like if you had fifty contacts or hundred con up to a hundred contacts or whatever, what was the what was the number? I think it was two hundred. And if it passed two hundred, 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 different thing.

40:44 Yeah. You had come from Cox Media that had owned the Atlanta Journal Constitution, and and their downfall, m many newspapers' downfall, was they gave away their content for free on on the web. Right. And we had never up until this point, we never even had a free trial for MailChimp. Okay. You know, so This was a

41:01 A decent compromise. We had to hit our deadline before before the holiday season started, so I said okay, let's do it. Uh 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 and rewrite it and publish it later.

41:20 And I guess uh it might have 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. Uh it was by Chris Anderson. It was called Freemium. Chris Anderson, the former editor of Wired.

41:35 That's right. I didn't know who he was at the time. But I pick up this book. And it says Freemium the cover, I read the back of it and I'm like Huh. That's what we're doing. Okay. I said I guess I'll um

41:48 I'll change my blog post. I'll I'll change the title. I won't call it MailChimps. free plan I'll I'll call MailChimp goes freemium. It's a According to this book. Freemium is a movement or something. And I publish it.

42:01 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 Googler 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, I'm starting up a conference called the Freemium Conference. And I'd love for you to come.

42:26 and speak about freemium. And I'm gonna have other entrepreneurs. We've got a guy named Drew Houston, he's got this thing called Dropbox. Uh guy, some other dude named Phil. Uh he's got this thing called Evernote. Um a bunch of bunch of you can come and talk about this.

42:44 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. people find out about it and and start signing up. 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.

43:16 uh of your emails. And so it went viral. people would click on that sign up as well. So you've got the freemium model going. This is like what, two thousand nine I think then. That was a game changer because all of a sudden you you 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.

43:41 But something like ninety percent of their users aren't. So I have to imagine the vast majority of people signing up were not paying you anything. 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

43:57 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.

44:15 And you didn't even know you were gonna 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. So at this point, how How quickly did did you guys start to grow? Like h how how quickly were you Where you're getting more users?

44:34 Well, you know, when we launch Freemium It just exploded. So you're talking about having, you know, a few hundred thousand after six years of business and then within one year of launching Freemium, we ballooned to a million users. And it just kept growing ex exponentially.

44:52 After that. Um, and so that was just a really good kind of uh funnel for new customers to come in and convert down the road. It would take'em quite a while to convert. I don't think most businesses would have the patience to wait for these customers because you'd see them come in and start a business, set up a MailChim 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.

45:15 They'd get a job somewhere. They would learn how business actually runs. Then they'd quit again after three years or so, go back to their NailChimp account. Start their business again. And do well the second time around.

45:27 So it's you're talking about like a sales pipeline That was like Seven to ten years. Who has that kind of patience? Well then Chestnut and Dan Cursius have that kind of patience'cause we had nothing else to do. How were you I mean, why would a Why would somebody go to a a service like MailChimp? When they could go to a much bigger competitor.

45:46 That probably You know had m much bigger staffs and maybe they were more sophisticated. What were you offering that they When you're serving small businesses, you're talking about entrepreneurs with a dream.

46:01 Right? They 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 we we say um we got you because we get you. So that's I I believe that that's why they came to us is because our unique brand

46:34 uh show that we understood what it was like to be an entrepreneur. Did you um you you guys had kind of toiled away For six plus years. on the web design service, you then pivot to MailChimp and You know, you start to see steady growth. P was it pretty soon, like by two thousand ten, where you were you were like, Okay, this is gonna work. This is gonna be big.

46:57 Two thousand ten is when You know, we're at a million users, growing to two million fast. Servers were dying constantly. We were having to constantly move from data center to data center just to keep things alive. And were you making money? Yeah, yeah, we were making good money. I I I I wish I could remember the timeline. It's it's been twenty years, you know? It's it's all a blur now, but we were making probably ten million, fifteen million at the time. We were we were doing really, really well. And you were able to grow and to hire and expand and right? Yeah. Um We were trying new things like, you know, fun branding stuff. Trying this new thing called Twitter in two thousand eight. Yeah, it was I'd say, you know, two thousand eight ish, two thousand two thousand ten, I'd say, is when we we think

47:44 Yeah, this is real. This is this is gonna be something. And y entirely cash flow was was funding everything. It was funding hiring, it was funding Innovation and And The engineering Just the cash flow was funding that. We were totally self funded. Um

47:59 Investors still came. And you know, 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 we're making plenty. But you saw an opportunity there because most businesses in America are small businesses. Right. And that mo most people I think in the in the US are employed by small businesses. 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. Right. We knew what that was like. We knew that it uh would fill the wallet.

48:26 But um serving small businesses, serving the underdog was always our thing and it and it would it just felt Better. And yeah, the volume was there, you know, the 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 eleven or a pandemic or something. Yeah. 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

48:55 you know, thousands or millions of tiny customers who pay small amounts of money. You don't rely on anyone. uh too much such that you know they're sort of too big to fail. We cannot survive without them. We we we're actually a very, very Much more resilient company serving their long tail.

49:12 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 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 fifteen or or twenty million in revenue,

49:32 You probably couldn't do that kind of of marketing campaign. 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 um 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.

49:52 And I just remember being, you know, just like Really Jealous. You know, just being honest. And I remember telling my team, my marketing team

50:02 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.

50:15 I'm not proud to t share this story. But you know, fortunately My staff just said, Okay, we're not gonna 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 um 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. And we had no idea what that was.

50:45 Uh but we said, You know what? Screw it, let's just take it. And it turns out, you know, that's Yeah. That's a pretty popular building in San Francisco. It's where uh Apple holds used to hold their WWDC events, and so crowds of people would gather outside the Mosconi Center, up and down the street there waiting to get in, and they would use this new app called Instagram to take selfies. Uh and what would they do? They would take a selfie with

51:10 a winking champanzee in the background. So we we kinda went viral that way, and then billboards just took off after that. Like we s just started to use billboards in all kinds of cities after that. And and you guys did like merch too, right? Like you made T shirts. I mean you're I 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 and make it something that people would want to wear. And so he created these and then we decided, you know, what if we um

51:46 What if we just had like a t-shirt giveaway? And um it went viral. We did a T shirt giveaway and it just went Berk on Twitter. And you know, we always had Really lucky breakthroughs?

51:57 Um on new New media. New channels, new networks, Twitter, Facebook. Instagram it seems like Since we were constantly tinkering

52:07 We were always there when those channels got big. I re I still remember the day um when someone told me one of our employees said, I listened to this thing called podcasts on my drive to work. And I think we should sponsor a podcast. Um, and I thought it was, you know, just a weird idea. I'd never heard a podcast, but I said, screw it, here's some money and go go sponsor the podcast. 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.

52:36 Um we eventually we did get the budget to do things like T V and you know, they were okay. But but they're not all they're cracked up to be. Did you go through a period where you stopped listening to the Atlanta public radio station'cause you got sick of hearing the constant contact ads. Yeah. Yeah, totally.

52:53 Absolutely. Ha ha ha. But I mean eventually we um We started to do that. We were s we were sponsoring uh podcasts

53:04 Um public radio shows and um You know, that that is ultimately what led to um us sponsoring Serial. Yeah, let's let's talk about that because that show totally mainstreamed podcast. Like

53:17 It was parodied on Saturday Night Live. It was like Like it got s it was on It was in the newspapers got so much attention, people were talking about it everywhere. But it actually It was a rising tide.

53:30 For for the rest of us who are around. At the time. Yeah. And so we were the first sponsor. Genius. How did that how did that w sounds like sounds like a genius plan, but probably You you get giving giv giving yourself too much credit, right? For being a genius. You're catching on to the the recurring theme Uh that is the story of Ben Chestnut, which is I basically force gumped my way into luck. Um so yeah, it was not a genius business move. We we sponsored another podcast.

53:56 uh by the same people. I wish I could remember the name of it. Yeah, yeah. It wasn't like a big commercial success for us to sponsor it. But I I do remember um The 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. Uh go to MailChimp.

54:19 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 ask for cat hats and we made smaller versions for the cats. So we didn't sold it on your website? We didn't even sell it. It was just a it was just a a gag. And

54:35 Apparently their phone lines were flooded. People kept calling in asking where they could get those hats for their cats and dogs, and this This made an impression. on the producer, I guess. So When they came up with serial, they just said, Who should we approach to run ads for this? I said

54:52 They said, Well, let's just call it MailChimp because I had that quirky ad. And that's how they gave us first dibs. I know this just from inside information. It was very I mean, it was shockingly cheap, which you Pay for that. It was shockingly cheap, yes. And furthermore, they said, you know, what do you want us to say for the uh what do you call the intro?

55:10 And we said, You do it. You know better. You know your audience better. Uh we believe in your creative process. So we trusted them and they they did this intro where they interviewed people on the sidewalks. Uh, New York. Support for cereal comes from MailChimp from Mail Chip. Mail Okay.

55:28 Shim. That delightful young woman mispronounce this and called us mail camp. And I and I remember, you know, Mark DiCristina, he he walked into my office with this recording and and he was kind of sheepish about it. He's just saying like And Mark was your was your marketing man. Yeah. Marketing. Yeah. Yeah. And and you know he's like, remember that thing we agreed to sponsor? Um they sent the first draft and here's what it sounds like when we listen to it. And he was like, The thing is

55:50 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. I think I have a right. 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 it just went viral. Everyone knew what Mail Camp was. And and and it really like took our brand

56:17 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. Oh, was asking us about Mailchip. And it was so crazy, like you mentioned Saturday Night Live, they did a skit. About cereal. And at the end they had a MailCamp ad as well.

56:39 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 Live. If ever there was a a a comprehensive history of ad campaigns, that's gotta be in there because Yeah. It was such a simple add.

56:55 But it was also It was the ad before the show that you were anticipating. Yeah. And everybody was waiting for the next episode to drop. And and and it could have just been like support for serial comes from MailChimp, your email marketing law, and then and then that would be that would be it. But it wasn't. They they really and they actually That show

57:14 created the kind of Template for creative. Podcast ads. Yeah, they they they the price went up. For season two. For season two, the price went up significantly. They wise that 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 it's just like a bummer because the cereal the the quarter where we sponsored cereal did so amazingly well. It's hard to beat it every year. It's like darn it, that's cereal just makes it too hard. Yeah, it's it's a it was an amazing quarter for us.

57:48 On the map. I think by two thousand fourteen you had has grown to three hundred. employee still entirely

57:58 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 three hundred people in a pretty short period of time.

58:10 And I imagine like That's a lot of names to remember. Yeah, I mean it For me as a founder I was really good at that point.

58:18 Running like a small squad. Yeah. Uh 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 call them coffee hour meetings. They were maybe twenty, forty people. We we'd meet on one floor and and talk about everything we had planned.

58:38 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 it in 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 gonna have an all hands this Friday.

58:54 All three hundred and Yeah. But in all hands. That can set off alarm bells. Yeah, it it can. We didn't think about that. And then so like a a couple of days go by and we're like, 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 from serving customers and really be present.

59:15 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.

59:27 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 mail chip 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. Hmm. 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 on. So everybody was in costumes when we when we all met. And I have We have some creative people at Mailchimp and their costumes are really elaborate and a amazing. And the front row, I remember it was just like all murder clowns.

1:00:07 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, uh, whatever I was about to announce. What did you do? And said what? Things are great. We're awesome. Who knows? I I I barely remember and and you know, are there any questions? And we had people

1:00:30 The questions that that were coming were You know I Totally unexpected. So, you know, we were talking about how successful things were growing, you know, we were on a tear, things were looking like up and to the right, 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 start up founder is we don't need no stinkin' strategy. We've got this, you know, and half the audience would would cheer and say, Yeah, we don't need no strategy and the other half would say

1:00:58 Yeah, we do. And and they were just I re I remember the the person asking me that s you know, raising his hand and saying Why do you feel the need to keep it a secret? And I remember thinking, Oh my God.

1:01:12 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

1:01:29 What? Why are you hiding things from us? Um and so th the whole meeting just completely flopped. Uh it was it was It was an awful meeting and it and I was just um

1:01:41 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. 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. Yeah, business is going through the roof. What's what do I need to have a strategy? I might have said the str I I might have said the strategy is no strategy. I might have actually foolishly Said that. But you know, when I went back to my office

1:02:09 Um 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. Well. That was really bold of her to come into my office and say that.

1:02:21 Her name was Kate Lee. She's now our chief comms officer at MailChimp. And at the time, I mean this is like you'd already been Running with Company for Fourteen years.

1:02:31 That must have been pretty hard to take. I mean I'm sure it's true, but but hard to take. It's um 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. Yeah. 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. I was completely self conscious and worried that any time I opened my mouth I would just make things worse.

1:03:04 It was really One of the worst times of my life. When we come back in just a moment. Haben tried to build a happier work environment. And how his leadership was teste again.

1:03:17 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.

1:03:46 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. 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 w it just weighed very heavily on my mind. I remember my wife sitting down next to me and just saying, You know what? Um I think I'm gonna take the kids and move out for a while, leave you alone.

1:04:16 I remember looking at her like shocked, I was just thinking, why in the world would you do that? You know, and I I I guess it had affected me so much that She thought

1:04:28 It had something to do with her. 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. L let me tell you what's going on at work. And that was for the first time I started to talk to her about

1:04:48 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. Uh, and we life is just so much better now that I've opened up and talked to her. W what do the staff want you to I mean they wanted a strategy, so what it what did you think they wanted to hear from you? At that time.

1:05:08 I I thought that they just wanted me Probably You know, to Coddle them.

1:05:16 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? So how did you resolve that? Did you What did you seek? Help.

1:05:25 I did. I I went searching online Yeah I Actually I remember

1:05:32 Uh, I was listening to NPR. Driving around in the country somewhere. And Truett Cathy, the founder of Chick-fil-A, had passed away. Mm-hmm. And someone at NPR, I believe, was doing interviews with people who knew him.

1:05:47 As a friend. And they were telling stories about Truet Cathy. And a guy came on and and his name was Clay Matheal. And um they talked about how he ran uh his company, sold it, and he started a school

1:06:04 Four Founders. It was in Dayton, Ohio. Uh, and this guy he sold his business for multiple billions of dollars and he just wanted uh 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

1:06:20 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. Yeah. You went to Dayton, Ohio. I w I went to Dayton, Ohio, yeah. And it's for how long? Maybe two or three days.

1:06:32 So it it was built the school, I uh I haven't talked to anyone about this. The school is built for the locals. You know, this was his hometown, Claymateel'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 two million. revenue and you know we were like maybe at two hundred million or something by this time. Wow. And so I I didn't tell I didn't tell them that. I submitted the form and I said, you know

1:06:58 Yes, I make two million in revenue. And I went out to Dayton, Ohio and um I learned a lot out there. I I I needed it. You know, it was a lot of humble pie that I ate out there. W how do they describe it? Like a leadership training? Yes, there was a lot of that kind of stuff.

1:07:14 Right, so talking about strategy, talking about culture and stuff like that. But um the most helpful stuff was like they they make you get out of this mode or where it's all about me. And it's really all about the team. It's all a bit 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.

1:07:37 That's like this 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 it was more psychological stuff like that. that kinda helped me get out of my rut and think about leadership in a different way. So how did you start to change the culture of 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

1:08:05 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. uh talking to some local professors at Emory University And they said, Yeah, we we can absolutely help you with that, but first we need to know something about your culture.

1:08:25 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's it starts off with your core values and we 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.

1:08:39 To kind of help us maintain that culture. That's how the whole process came to be. And so as you started to develop a c so called culture, did you also start to develop a strategy? Of what you want it to be.

1:08:50 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. Um 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 uh twenty eighteen

1:09:25 is when things had to get way more sophisticated and we started to see that we needed to hire uh eventually what we have now a chief strategy officer. Cause man, it is it's a thing now. It's real. Uh I can safely say we do have a strategy now. Yeah, I mean now. Since then, I mean you guys kinda went on a an acquisition tear from two thousand nineteen to two thousand twenty one and

1:09:47 You're no longer and email marketing. 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

1:09:57 That greats you. Hey, set up an email marketing account. 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.

1:10:19 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. You know, that was like I don't know, two thousand seventeen 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.

1:11:00 I about what? entrepreneurialism. Sometimes it's not even about entrepreneurialism. It's about, you know, a parent having You know, some kind of an argument with a son who really wants to be a musician. I mean it it's like interwoven in there. are stories of entrepreneurialism. You are not gonna be surprised about what I'm gonna ask you next, because it was

1:11:21 Covered by a few publications, but there was An article that came out. earlier this year about what was described as a an exodus of

1:11:30 Mainly women. And women of colour. senior women at the company. Like seven or eight or maybe more than that.

1:11:39 I'm sure you you read the articles and are aware of it. Um and one one of them you know, said I dealt with sexism and And bullying there and and MailChamp and I wouldn't recommend My female friends to work there.

1:11:52 Um What did you think? I mean first of all Were you surprised? I've seen that? Yeah, you know when

1:11:59 When you're a founder And something like that comes out it It's a real It's a real gut punch. We learned a lot from that.

1:12:07 Um And I I am grateful for what we learned from it. 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 mm we hired a chief culture officer.

1:12:23 I 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

1:12:40 We were good and we were attracting people because of our culture. People were doing stories about our culture. So as a founder, you know, you can kinda 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.

1:12:59 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 it's culture as well,'cause that That um that's what drives everything else. Well with twelve hundred people, you can't know everything happening, right? You can't

1:13:17 Have your finger on the pulse at all times. But you are expected to in a sense,'cause you are You know, the leader at the helm. W what did you do? to respond. Well we we made our response public.

1:13:29 You know, we have our six big commitments. We have a whole strategy on It's called our culture reset plan. Uh so we we actually published that, but it came from The very first thing we did was I just held

1:13:42 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

1:13:57 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 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.

1:14:16 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 uh someone Said.

1:14:26 The headline should be Mailchimp Leaned In. We didn't shy away, we leaned in and we changed the culture for the better. When you um The company today Easily.

1:14:38 if you wanted to could 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 um

1:14:47 Consider doing that, selling it? I've had offers. Um The thing is I love what I do.

1:14:54 And um I don't know, I I it's one of those things I d you know, you never you learn over time, after twenty 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.

1:15:10 Uh it's just The most important thing, I think. And I mean down the road you you may decide But you don't want to be the CEO and you hire somebody else to do that. That's possible.

1:15:21 as possible. You know, we The other thing is like Early on we talked about VCs knocking on my door just saying, Take my money, um, we can help you flip to enterprise, a yada yada, but Nowadays.

1:15:34 You know, the tone has changed it uh I get private equity. companies coming in and they they don't ask me to take their money and grow it. the first thing they asked me is, How's your health?

1:15:45 It feels like they're just waiting for me to keel over. They're like, Well here, just hold my business card just in case, you know. In case you you keel over and your wife needs to contact us. Here you go. Uh Yeah, right. Exactly. It's it's creepy. So it it it makes me think, you know, like oh maybe maybe there there is gonna be there is gonna be a time where, you know, I need to step back and maybe have a succession plan and have someone take over

1:16:11 running it day to day I do see that as a possibility, but right now I'm just so happy running this thing. Yeah. Do you um I mean obviously work Extremely hard.

1:16:21 Making this happen. But I think you did have some Incredibly fortunate. Um breaks. that like you couldn't control like Mail Camp.

1:16:30 Um, do you are 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. 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

1:16:46 Or my twenty years. it felt like I was always looking for the answer, always looking for What is the playbook that I'm missing? You know, it's constantly searching and then All along the way stumbling upon something that actually does better.

1:17:00 Than my wildest dreams. I don't know it it I I I always had in my mind that I was just a bumbling idiot from Hepsiba, Georgia, who stumbled into business and somewhere out there someone knew The right answer.

1:17:14 of how to run my business. Right. And um These days these days, you know, MailChimp is much bigger, and I get invited to Ritzy events.

1:17:25 Uh with some really great business leaders. And I remember being in one recently where Ahead 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.

1:17:42 Yeah. 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.

1:18:00 Or horrifying. But that's what I've learned. 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$1 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.

1:18:36 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. 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 guyros.com or on Substack. This episode was produced by Liz Metzger and JC Howard with music composed by Ramteen Arablui.

1:19:01 It was edited by Neva Grant. Our production staff also includes Alex Chung, Casey Herman, Ramel Wood, Nor Gill, Carla Esteves, Sam Paulson. Carrie Thompson, Andrea Bruce, Cather, and Elaine Coates. I'm Guy Raz, and you've been listening to How I Built This.

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