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Best of Bootstrapping: Mailchimp Bootstraps to $600M Revenue

Posted on Thursday, Mar 28th 2019

According to a Transparency Market Research report, the worldwide market for email marketing is expected to grow at a CAGR of 19.6% from $4.51 billion in 2016 to $22.16 billion by the end of 2025. Mailchimp is a bootstrapped business that provides email marketing services targeting small businesses.

Mailchimp’s Journey

Mailchimp was started by Ben Chestnut and Dan Kurzius in 2001 as a web design firm called Rocket Science Group. The firm then focused on big, corporate clients but started an email marketing service called Mailchimp for their smaller clients.

Ben and Dan loved serving the small business users. They had a keen understanding of the nuances in running a small business. Ben grew up helping his mom around her hair salon that she ran from their family kitchen, and Dan’s parents ran a bakery. With Mailchimp, they found that working for small businesses gave them the freedom to be more creative and adapt quickly to their needs. In 2007, Ben and Dan decided to shut down the web design firm and focus exclusively on Mailchimp and small business owners.

Mailchimp saw a five-fold jump in its userbase after it introduced a freemium option in 2009. In 2014, it hit the milestone of 10 billion emails per month. In 2017, Mailchimp launched its marketing automation service with a slew of new channels: Instagram, Facebook, and Google ads, landing pages, and more. That year, it was reportedly signing up 14,000 customers per month.

Today, Mailchimp serves over 16 million customers around the world. The company is headquartered in Atlanta with additional offices in Brooklyn and Oakland.

Mailchimp’s Offerings

Mailchimp follows a freemium pricing model. The service is free for up to 2,000 emails. Premium plans start at $10 per month. It also has a pay per use plan for occasional email senders.

Using the Mailchimp platform, subscribers can send emails as well as create email campaigns, landing pages using custom domains, pop-up forms, postcards, and Google, Facebook, and Instagram ads. It also helps automate marketing, welcome emails, product recommendations, order notifications, and abandoned cart emails. It also offers optimization tools for segmentation and tagging, A/B and multivariate testing, and data analysis and reports.

MailChimp integrates with other popular applications and systems such as Salesforce, Eventbrite, Google, Twitter, Facebook, Shopify, and SurveyMonkey.

Mailchimp’s Financials

Mailchimp is a bootstrapped success story. It has not raised any outside financing and is still 100% founder-owned. It doesn’t reveal details of its financials, but it is estimated to profitable with revenue of $600 million in 2018.

Mailchimp’s customers include East Fork, Chronicle Books, Fader, Sweat, and Magnolia Bakery. About 20% of its business comes from e-commerce businesses followed by nonprofits and educational organizations.

Its competitors include Campaign Monitor, Constant Contact, AWeber, AcyMailing, Mailjet, VerticalResponse, Robly, iContact, Zoho, SendinBlue, OmniSend, Moosend, Act-On, Iterable, and Mad Mimi.

Mailchimp’s Acquisitions

Mailchimp has made two acquisitions so far. In 2011, it acquired newsletter platform TinyLetter, which continued to remain a standalone unit. Founded in 2010, Atlanta-based TinyLetter was founded by Philip Kaplan and was bootstrapped. It is eventually expected to merge with Mailchimp’s newsletter service.

Last month, Mailchimp acquired another bootstrapped startup called Sawa. Sawa uses automated design technology to design commonly-needed brand communication materials. Sawa was founded by Francis Tao in 2017 and is estimated to have $1 million in revenue. In 2018, Sawa joined Ocean Accelerator, which typically backs companies with a seed investment of $50,000. It went on to join Techstars Atlanta in July 2018.

Mailchimp’s bootstrapped success story is a source of inspiration for other startups. Mailchimp is now on the next step where it is providing exit for other capital-efficient or bootstrapped startups. What other capital-efficient businesses can Mailchimp acquire?

This segment is a part in the series : Best of Bootstrapping

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