In some cases, weirdness wins the race. The lovably off-beat “weird” marketing automation platform Mailchimp was recently acquired by Intuit for $12 billion. At SaaStr Annual 2022, Mailchimp Co-Founder Ben Chestnut sat down with SaaStr Founder Jason Lemkin to answer questions about the two-decade journey to $1 billion in annual recurring revenue (ARR).
The Deal With Intuit
Chestnut began by discussing the ins and outs of the acquisition by Intuit. Mailchimp had been in conversation with several potential buyers. But when none of them offered a good deal, Mailchimp walked away, convinced they wouldn’t entertain any more talks on acquisition.
That changed with a phone call from Alex Chris at Intuit. Chestnut knew it was a good sign when he felt a connection with Alex, who also had started a small business and had been through the acquisition process as well. It took a year to build the relationship before the deal went through.
Chestnut describes the process from his point of view: “We both kind of hit it off very fast –– Alex and I –– and the common vision that we had was to have one great platform for a small business.” Because they shared a common vision, they knew they could combine front-office and back-office solutions to give small businesses a complete business suite.
The Brand, the Breaking Point, and the Bootstrapping
Mailchimp has always garnered attention and interest with its off-the-wall, standout branding strategy. Chestnut states that the weirdness has a point –– to stand out and reach marketers and SMB owners: “The first couple of iterations of our brand were a little bit weird and funny in a ‘monkey’ kind of way…[the customers] just loved it, and we just sort of rolled from there.” The appeal comes from the ‘we get you’ attitude that Mailchimp demonstrates to its target customer, the small business owner.
As successful as Mailchimp was and continues to be with the SMB target, they realized they needed to adjust their strategy for their customers as their business grew. One step was introducing a CS team to support growing customers with questions and troubleshooting.
Customers’ growth introduced a new challenge for Mailchimp: how to serve larger customers or their SMBs who began to flourish, hire larger teams, and grow using their product. They learned that they needed to create a next-level experience to serve their large business customer segment: “For 21 years, we built one culture very well for the self-serve SMB market, and when you try to serve a completely different kind of customer set, you have to learn some new tricks.”
Fortunately, since 2000, Mailchimp has been able to autonomously succeed and fail on its own terms. Up until the acquisition, the company was 100% founder-owned and operated. Yet, Chestnut comments that this type of bootstrapping is harder to do in today’s climate. He describes a cycle of bundling and unbundling that repeats over time. “In 2000, everything was unbundling from desktops…and going to the cloud. Everyone was willing to pay for all of these different unbundled point solutions, and now I think we’re at a different time when people want it bundled back together again.”
The bundling concept underlines the brilliant timing of the acquisition by Intuit, which offers Mailchimp marketing services along with the financial and business side of Quickbooks and Intuit’s other business software.
In the end, whether a SaaS business is able to bootstrap or is looking to raise capital, the most important thing is to continue to power up your product and serve your customer base. And don’t worry about nailing everything perfectly the first time. Chestnut describes his successful SaaS product strategy: “Make small bets. I didn’t want moon shots –– they were too expensive. Make small bets, fail fast, then recalibrate.”
- Trust your gut when raising capital, buying, or selling a business. You must share a vision and connect with a potential buyer, investor, or partner.
- Listen to your customers, and do what makes them happy.
- Understand that your business may need to evolve alongside your customers to retain them.
- Always be tinkering with your product and make small bets until you discover what pays off.
Go to Publisher: SaaStr
Author: Amanda Beaty