← How I Built This with Guy Raz
How I Built This with Guy Raz
(July 2021) Ben Chestnut: From Side Business to $12 Billion – The Accidental Triumph of Mailchimp
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- [00:00]
A
Wondery subscribers can listen to How I built this early and ad free right now. Join Wondery plus in the Wondery app or on Apple Podcasts. I recently stayed in an amazing Airbnb apartment on a trip abroad. And the apartment I stayed at was beautiful and just so centrally located. It was amazing. I would go there again and again. Have you ever been lying in bed at an Airbnb, maybe scrolling through your phone when you realize, wait a minute, could I do this too? Hosts Asking that question has allowed me to feel at home in beautiful places around the world. Your home is probably worth more than you think. Find out how much@airbnb.com host if you've started your own business, you know just how many challenges there are, big and small. I mean, look at how I built this building. This show came with a lot of trials, late nights, very, very early mornings. But even though there were challenges getting started, there is something that makes setting up a business easier. Getting connected with AT&T business it doesn't matter what your business is dealing with, AT&T business helps to make it much, much easier. And that's the point of a provider in the first place. Making building your dream easier. Wake up to the power of ATT business@business.att.com that's business ATT. If you've shopped online, chances are you've bought from a business powered by Shopify. You know that purple shop pay button you see at checkout? The one that makes buying so incredibly easy? That's Shopify. And there's a reason so many businesses sell with it. Because Shopify doesn't just make amazing buying experiences for customers, they're also the experts in helping small businesses grow big. Stop seeing carts going abandoned and turn those sales into Sign up for your $1 per month trial and start selling today at shopify.combilt go to shopify.combilt shopify.combilt 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 mailchim. 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 $12 billion. 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. I hope you Enjoy it.
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B
People were raising their hands, saying, so what's the strategy? You know, and my answer, you know, as a startup founder, is we don't need no stinking strategy. We've got this, you know, and half the audience would cheer and say, yeah, we don't need no strategy. And the other half would say, yeah, we do. 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 what in the world just happened to me.
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A
Welcome to How I Built this, a show about innovators, entrepreneurs, idealists, and the stories behind the movements they built. I'm Guy Raz, and on the show today, how Ben Chestnut and his partners used a monkey logo and guerrilla marketing to build Mailchimp, a B2B brand that grew into a big 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. But what makes Mailchimp 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 2001, long before the city became the tech center that it's becoming today. But perhaps most importantly, mailchimp focused on small businesses, 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, Mailchimp has grown into a company that did around $800 million in revenue last year. Ben Chestnut wasn't a particularly techy 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 Hephzibah back in the 70s and early 80s, not too far from a military base.
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B
The neighborhood I was in was just outside of the city limits of Hepzibah. 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 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.
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A
How did they end up there?
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B
That's just military families, you know, marrying into military families. Vietnam War. And then they came and they just sort of moved into this neighborhood.
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A
Your dad was, or mom, one of your parents was in the military? Was in the army?
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B
Yeah, my dad was in the army. He did seven tours in Vietnam.
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A
Wow.
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B
Yeah, he was committed. He was a man of duty. You know, he really loved his duty.
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A
Seven tours in Vietnam. And was he, from what I understand, he was a code breaker. Was that what he did in Vietnam? Do you know?
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B
You know, details are sketchy. He. He. He left with, you know, all of his secrets, but, yeah, in general, he was a code breaker. He listened in on the enemy and he cracked codes.
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A
Was he in any combat units?
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B
He was, yeah. He was First Cav.
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A
Wow. So did he ever talk much about Vietnam?
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B
You know, he. He only talked about it whenever I would watch movies or TV about war. He could see that I was sort of engrossed in it and everything. And he would take me aside and say, you know, it's not always that glorious. Yeah. You know, he would tell me things like that. And, you know, I could tell he was dissuading me from thinking about joining the military.
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A
And I guess he met your mom while he was overseas and serving, and she's originally from Thailand. And so what did she do when he brought her back with him to Georgia?
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B
Well, she had lots of odds and ends kind of jobs. She worked in some textile factories and that sort of thing. But eventually she just sort of became like a neighborhood nanny. We always had kids from the neighborhood running around her house. 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.
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A
Wow. So people would come and get their hair done?
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B
Oh, yeah, yeah. It's where I learned about entrepreneurship, watching my mom.
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A
Did your mom ever get a brick and mortar salon?
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B
No, 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 because I was so proud of her. But that, I don't know that that was ever her intention. But she, she did inspire my older sister to start her own salon that was a non kitchen based one, like you say, a brick and mortar one. She opened up a real salon that was very successful in the 80s and boy, she was just an inspiration for me as well. 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 just thought, you know, I want to run a business too when I grow up because this is, this is good for the family. And I remember I was too young to understand it at the time, but 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 Dan, my co founder, his. His father ran a bakery when he was growing up and he saw that.
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A
Business in Albuquerque, right?
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B
That's right, in Albuquerque. And it was thriving. And he saw, you know, how proud his father was and the same sort of deal happened, larger bakery opened down the street and. And put his dad's business out of business.
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A
Ben, when you were growing up, I mean, your mom is Thai, your dad is a white American, but it sounds like you were around kids who came from different backgrounds too, is that right?
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B
I would describe my neighborhood that way. You know, it was easy to go out and play with friends. And you know, my friends were just from all over the place. I think that when I would go to school, it was a different story. You know, inside the school where I was zoned, there were only a handful of Asians there. That was a little bit different. That was definitely. It probably influenced my whole outlook on life. Definitely kind of being the misfit.
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A
Here's the other thing that's actually quite unusual. You actually met your wife in high school. She was your high school sweetheart. Teresa.
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B
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 actually met her at Fort Gordon in karate class. She was another student 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 after karate class, I would wait for my dad to pick me up. And she. She would wait for her uncle to pick her up, 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 a little this and that. 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. That's what a gentleman does. And I said, oh, right. Thanks, dad. And, you know, I got out and I went and sat down next to her and we talked a little bit more. And that's how I really, really got to know her then. And, you know, one day she invited me to come over and meet her. Her. Her parents, her uncle and aunt. You know, I was a little bit nervous, and I didn't know what. What I was going to say to her, to her mother when I met her. And I rode my bike over there, and I noticed lots of cars in the driveway. I thought, this is interesting. This is familiar. And I walk in, and sure enough, her mother runs a hair salon in the kitchen. Her mother is a kitchentician, 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 got to know where all that hair hides right under the chair, right under that rubber gasket on the swivel. So I think we hit it off well, because I was familiar with this profession.
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A
What about school? Were you a pretty good student when you were a kid?
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B
No, I was an awful student, I think, looking back.
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A
Really?
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B
Yeah. You know, going through my father's belongings, I got a lot of my report cards that he saved. And in high school, in my early years, I was just a poor student. I made horrible grades. And he sat me down and he said, 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.
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A
I mean, was high school. Was school just hard for you, or did you just not care? Or what do you remember?
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B
I remember being bored a lot. And What I wanted to do was just get out of Hepzibah.
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A
Yeah, you didn't go that far when you went to Atlanta.
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B
Well, thanks a lot, guy.
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A
Yeah, but. But you did okay.
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B
I did okay.
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A
But you couldn't have been a terrible student because you got into college. You went to the University of Georgia.
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B
I did, yeah. 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, I shaped up and I became a. A student for the next two years.
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A
You were eventually transferred to Georgia Tech where you studied industrial design. And did you have sort of like a job in mind that, that you wanted to do when you graduated?
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B
Yeah, I mean, I just. I wanted to design cars. I'm a car nut. I love cars. I thought that I would study this and maybe move off to Detroit and be a car designer or something. That was the idea. Yeah. But I got an internship at an appliance company one summer in Amana, Iowa. You know, my job as an intern was to scan about a thousand paint chips and they're all variations of white, eggshell 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 refrigerators and that sort of thing. And I learned that I'm really, really bad at building models. And I guess I was, you know, in retrospect, so bad at that. 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. You should look into this new thing. It's called web design. It's all the rage. Look into that as a career. And that was, you know, life changing advice. I went to the Cedar Rapids, Barnes and Noble because there's nothing else to do at that time. I found some books on web design By Linda Weinman, lynda.com and I learned all about web design.
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A
Wow. And this is the late 90s.
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B
So like 96 web design. Yeah.
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A
That commanded a premium because it was really like no one knew how to do it. If you knew how to do it, you could get a lot of work.
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B
You could be a complete goof off, but make a lot of money doing it because it was really, really a rare skill.
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A
You eventually got a job working for Cox Media Group. I think they're still the publisher of the Atlanta Journal Constitution.
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B
That's right.
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A
So what was the job? They Hired you to do.
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B
They had a job opening for a web designer for the ajc.com and halfway through the interview I realized I, 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 design agency. And what she was trying to do was build an agency to design all of their banner ads. 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, you know, 468 by 60 pixel ads. That's beneath me. And then she told me to pay and the pay was $3,000 more than the web designer. And I said, you know what? I can do these banner ads. If I can build a website, I can build a banner ad. And you know, at first I just thought, you know, I'll just kind of 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 is. It became fascinating for me. And I, you know, that skill to like build, build something and animation really quick and influence people in that way, I believe I carried that. It was a great skill for me to carry forward to ultimately build mailchimp, where, you know, I had to build an app that convinced people to buy things from me.
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A
How did you meet Dan Curzias, who would eventually become your co founder at mailchimp, but how did you. He was also at Cox, right?
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B
Yeah. Well, you know, there was this thing that was invented called MP3s with Napster and everything and 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. What if we teamed up with another startup called mp3.com because they have all of these musicians uploading their music and they asked me to be their web design manager. And one of the first people that I hired was Dan.
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A
You hired him to work on this project and the idea was you would. You were like building an online music site or a portal or something.
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B
Yeah. At the time the hypothesis was 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. Oh, wow. Wow. You know, and so that was, that was the idea.
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A
It was going to be like a streaming service.
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B
Yeah, yeah. And Dan was into music. Dan's. He's into, 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 to write content about music. And halfway through his interview with, he realized that I was interviewing him to be a coder and he had no idea how to code HTML. And so he totally lied, totally lied to me and claimed that he knew how to code. He took the job and then he bought HTML for Dummies 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 thought he was going to get busted by me. But he was an amazing coder. I used to come back and look at his code. I remember saying, this is remarkable. It's just like the code that you would see in books. No one codes this neatly. Now I know it's because he literally crammed from those books.
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A
I imagine around this time, this was like the heyday of the dot com boom. And imagine a company like Cox, a media company, was trying to plant its flag everywhere and probably spending money everywhere. Was, was it like that?
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B
I think that their big, that their goal was, I think, to merge with a search engine and it didn't pan out, you know, and I think, you know, that was the heyday. Things were, you know, we. This was the time of Fast Company. What was the other magazine? Business 2.0. So I think that this is literally how how business works, that whole dot com paradigm, right? That's all I knew. And this was 1999. And what is it like the next year? 2000, April 2000 is when everything came crashing down. The whole dot com bust happened and we were all laid off. And you know, like for me it was like the whole world had turned upside down. Everything that I knew to be true was not anymore.
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A
You know, you were all laid off. Just like it came as a total.
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B
Shock, you know, 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 the job, I will probably do very well. I will probably eventually become a vice president, but 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, you know, since I was young. And so I just felt like I would regret. It was the fear of regret that told me, do not take the corporate job, instead go my own way.
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A
So you knew, you knew that you were gonna lose your job? And did you approach Dan Curzias and say, hey, let's start something?
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B
Not quite. Me and my friend Mark, we said, hey, things are shutting down. How about we. We go into business together? And. And we had this. We had like, two weeks lead time to think it, think it all through. And that's where we got the idea to start a web design company.
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A
This is Mark Armstrong, right?
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B
Yeah, Mark. And so I started the business with Mark, and Dan said, I'm going to hold off. I need to get a job at Cox Corporate. And one year after Mark and I started, we teamed up with Dan. We convinced him to join us, and. And the rest is history.
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A
So you and Mark start a web design business, and I guess you guys called it Rocket Science Group, right?
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B
Yeah, that's right. Rocket Science Group.
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A
And who did you initially target? Like, who were your clients?
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B
The idea at the time was it was something that we observed at Cox. You know, there was an engineering team, geniuses, just rocket scientists working on, you know, the Cox servers, doing hard things. We were working in the marketing department, and marketers needed. They needed stuff, too, but the engineers were always too busy, and engineers kind of didn't want to stoop so low to do marketing stuff as well. It was like it was beneath them. And so our target market was marketing departments, where we would help them build little micro sites, 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 team for marketing departments.
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A
I mean, you're in Atlanta at that time. You still are, but, I mean, Atlanta is the capital of headquarters for tons of huge companies. Coca Cola, ups, cnn, Delta. Did you go after those companies?
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B
That was the dream. But it never worked out that way. What we learned 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.
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A
Yeah.
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B
But, yeah, one of the tools that we. That we ended up building was a E. Greetings website, like bluemountain.com at the time or Hallmark. And we figured out how to send HTML email, and we started sending E. Greetings. And. And they were really, really cool. E. Greetings. And no one cared about E. Greetings anymore. I mean, we thought we were going to get rich because Blue Mountain was sold for $600 million at the time. And we just thought, oh, my God, if we make an E Greeting site better than Blue Mountain, we might get $700 million. That was our business plan. So we build this thing and no one uses it. It's a flop.
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A
But you were, you were still doing web design design, right. And that was going pretty well, right?
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B
Yeah, we were 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 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. 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. Luckily we didn't delete it. And yeah, we used that to build. To build mailchimp. Actually, we called it we Mailer because we thought we could make it fun.
- [25:29]
A
And at the time, I mean, this is because you built what would become mailchimp early. I mean, you guys started the web design company in 2000 and already by 2001, you had built this email system, right?
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B
Yeah.
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A
But meantime, the bread and butter of what you were doing was web design.
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B
That's right. I mean, we thought that we mailer might make enough money to pay for our lunch every day. That was our wildest fantasy for what kind of success we might get out of this.
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A
And initially it worked like, from what I understand, you guys were billing people by the hour for web design, which probably added up, you were making decent money. And it was the same thing with the email product. Like, people would say, hey, 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?
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B
Yeah. And then we record our time and it might be, you know, 100 bucks for a couple of hours of work.
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A
Wow. So it was really could probably. You couldn't charge as much for that as you could for web design. Probably.
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B
No. You know, a web design project might get us anywhere. You know, between 10 to $30,000 a gig. And this little we mail thing, you know, we were, we were, we were getting like $100 checks, $150 checks. Over time, the. We started to get like really big piles of $100 checks from our customers. For, for wemail, it got so bad, actually, I ran out of 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 online. And that was how we actually installed the credit card system. And that was when Mailchimp became an official SaaS business software as a service. Yeah, before that acronym was invented.
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A
How did you guys come up with a name?
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B
There were lots of reasons. So, first of all, my parents, 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. Never, ever have a pet monkey bed. So I was always fascinated by them, you know, dreaming about what how cool it would be to have a pet monkey. And then there was a phase that I went through my Jim Henson years where I really, really wanted to be a ventriloquist. And I got a monkey.
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A
Wow.
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B
Muppet. And I carried that thing everywhere I went. And I had, like, little comedy shows for the family. You could not separate me from my, my monkey. 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, whenever we designed websites for our clients and we had the three options to show them 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, you know, going delirious, working at 2am, we would just say, just put some monkeys in it. And so we said, hey, how about chimp mail? And so we decided to call it chimp mail. And then, of course, the domain was taken.
- [29:09]
A
The domain for chimp mail is taken. Wow.
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B
The domain was taken. Yeah. So we had to improvise and call it mailchimp instead.
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A
But there was a time, I remember, when people didn't want email, they were getting so many emails. What were people doing with mailchimp? I mean, were they using it to just contact their customers? Like, how are they using it?
- [29:31]
B
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. 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.
- [29:49]
A
Right. People were like, oh, stickers are spammers.
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B
That's right. That's right. And then, like, end of discussion. They'd walk away. I was really popular at parties. Yes, absolutely.
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A
But there were some. Enough people who wanted the service because they wanted to send a mass email out to their customers and they wanted it to look nice.
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B
That's right. 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. Small businesses were constantly signing up. So it's. I was never dissuaded from it.
- [30:25]
A
But, by the way, was it just the three of you still, or were you able to hire a few more web designers?
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B
We had 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. Just. Just be a cockroach. And what we meant was, like, cockroaches can survive a thermonuclear war. And so we just thought, you know, that's. That's. Let's just strive this. Let's just survive here.
- [30:52]
A
I mean, it was just the three of you kind of hunched over keyboards day in, day out, just, like, pounding the keys.
- [30:59]
B
Yeah. From morning until. Sometimes until 1 2am Wow. I mean, it was a real grind.
- [31:04]
A
I mean, how was your revenue or in cash flow? Was it okay?
- [31:09]
B
No, no. Let's see if I could. The best that I remember are our agencies. Business ever doing was something like between 2 and 300 grand a year.
- [31:25]
A
Wow.
- [31:26]
B
That was the best we had ever done. And that was through 2005 here, by the way. So we were always just barely scraping by.
- [31:36]
A
What. What explains that? Did it become more competitive? Was that it? There was just. There were more people doing that kind of work.
- [31:43]
B
You know, we would. We would get business, and then 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 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 just kept us from really breaking through. And I'll never forget, it was like 2005ish. There was something that totally changed. I, I was working at home in my apartment, coding something for sure. And it was sometime in the afternoon. Teresa, she was a night shift pediatric nurse, right.
- [32:24]
A
So she was presumably supporting you guys.
- [32:28]
B
Or she was, she was, yeah. Health insurance and everything from her really stabilized me, which, which, which allowed me to be an entrepreneur. 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 Oprah and I'm coding. I'm just like, oh, great, Oprah. I've got to listen to this, 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.
- [33:02]
A
Rich dad, Poor Dad.
- [33:03]
B
Yeah, that's right. He's selling this book, book. And I just remember, what I remember was how angry the audience was because 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 voice, he was like, and that's why you're not rich. That's the whole point of my book. And 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 Science Group. Meanwhile, we have this side thing that we built called, called mailchimp now we 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 going to 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 and the graph for our consulting business was, you know, pretty flat. And then for the first time ever, we separated mailchimp income from our agency income. Prior to that, mailchimp just dumped money into our bank account and we used it to pay for lunch.
- [34:11]
A
Yeah.
- [34:12]
B
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. What if we actually focused on just mailchimp, and that's what got us talking about becoming a software company.
- [34:27]
A
Wow. So 2005, you start to see the numbers, and you know that mailchimp is. You can see it growing, but from what I understand, like, it was still a tiny fraction of your overall business. Like, most of the revenue was coming in through web design.
- [34:44]
B
That's right. That's right. And, you know, the web design projects are like $20,000. By this time, we had gotten pretty good at sales. And so it was a really hard thing to convince my co founders, like, hey, let's abandon the web design business where we're making 20 grand, sometimes 35 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.
- [35:12]
A
When we come back in just a moment, how Ben and his team finally went all, all in on mailchimp and how its accidental twin male kemp became one of the best mistakes that ever happened to them. Stay with us. I'm Guy Raz, and you're listening to How I Built this. I just got back from vacation with my family, and I stayed at the most incredible Airbnb in Athens with a view of the Parthenon from the bedroom. It was just amazing. And we had such a great time as a family, cooking together and hiking together. And, you know, I remember thinking while I was there, I could have put my house on Airbnb while I was away. Hosting on Airbnb provides you with another stream of income, and who knows, your earnings could help offset the cost of your trip. Your home might be the perfect place for someone else's time away. The personal touches you've added, your favorite kitchen gadgets, the artwork, or all of that can make someone else feel right at home. Your home is probably worth more than you think. Find out how much@airbnb.com host listening on Audible helps your imagination soar. Whether you listen to stories, motivation, expert advice, any genre you love, you can be inspired to imagine new worlds, new possibilities, new ways of thinking. Audible has an incredible selection with over 1 million audiobooks, podcasts, and Audible originals all in one easy app. Find the genres you love and discover new ones. Explore bestsellers and new releases. Plus thousands of included audiobooks, podcasts, and originals that members can listen to all they want, with more added all the time. Enjoy Audible anytime. While you're doing other things, household chores, exercising. While you're on the road or commuting even you name it. Audible makes it easy to be inspired and entertained as part of your everyday routine without needing to set aside extra time. There's more to imagine when you listen. Sign up for a free 30 day Audible trial and your first audiobook is free. Visit audible.com built do you ever feel overwhelmed by how many options there are these days? Whether you're on vacation and trying to see all the sights or you're at a restaurant with a huge menu, finding something that's just just right can sometimes feel impossible. The same applies if you're a business owner who's hiring. It can be overwhelming to have too many candidates to sort through. But you're in luck. ZipRecruiter now gives you the power to proactively find and connect with the best ones quickly. How? Through their innovative resume database. And right now, you can try it for free@ziprecruiter.com Biltine ZipRecruiter's resume database uses advanced filtering to quickly show you the best candidates for your roles. And if you see a candidate you're really interested in, you can get their contact info instantly. Skip the candidate overload. Instead, streamline your hiring with ZipRecruiter. See why four out of five employers who post on ZipRecruiter get a quality candidate within the first day? Just go to this exclusive web address, ZipRecruiter.com Bilt right now to try it for free again, that's ZipRecruiter.com BILT ZipRecruiter the smartest way to Hire hey, welcome back to How I Built this. I'm Guy Raz. So it's early 2007, and Ben and his partners finally decide to mothball their web design business and focus full time on 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. But it turns out they're wrong.
- [39:20]
B
When we finally worked up the courage to do it, mailchimp revenue, if I recall correctly, almost tripled overnight. And it was because building up to that sort of day one for mailchimp, we had decided that, oh, we had to address a few major bugs that customers had been complaining about for years. And so we did all of these upgrades and fixes, and as soon as we finally invested time fixing problems in mailchimp, people started to pay us money. Lo and behold, go figure. And so we really kind of hit the ground running. We did not suffer at all from dropping the consulting business. And in fact, I remember us just thinking, we should have done this sooner.
- [40:01]
A
Did you change your business model when you made the pivot from like, you know, pay per use to a monthly.
- [40:08]
B
Fee that actually took another year? Like it wasn't until later in 07 because it sounds so silly now when you look back in hindsight, but at the time, there was a movement at the time for micropayments.
- [40:22]
A
Yeah.
- [40:23]
B
You know, remember that like Apple was like the most famous version, the 99 Cent Song.
- [40:28]
A
Yep.
- [40:29]
B
I mean, and that was, that was really rare. 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 micro payment. And so we kind of like attached to that movement. And philosophically we thought that's what mailchimp stands for. You know, mailchimp is 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 micro payments. Just charge us, bill us by the month. We were stubborn about it. 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.
- [41:12]
A
In those early days. From what I understand you guys, 2007, you're full on into Mailchimp. And there was a huge 800 pound gorilla in this space called Constant Contact. They were big, right? They were already huge. And from what I understand, like you guys started to attract investors, inquiries to, to fund and scale your business.
- [41:39]
B
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 asking me to go out for lunch. And they would tell me, you know, there's this company called Constant Contact. They just ipo. They made a lot of money. We think you could be the next ipo. And you know, I talk about our business and I would tell them how we, we help small business. And they say, well that's, that's cute, that's great. We can help, help you take our money and we can help you pivot and serve the enterprise because that's where the real business is. And I just thought you know, that was just, I could do it, but I, something about it just felt wrong to, 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.
- [42:28]
A
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. And I'm sure some of the investors that came to you said, listen, guys, if you don't scale fast, you're just going to get buried. You know, this is going to be. Because the big guys are out there and they're just going to crush you. Like, you need money to scale fast. Like, I'm surprised. I can't believe that no part of you didn't consider taking that money.
- [43:00]
B
You know, for the first two, I started to think about it because I really believe their pitches. And then by the tenth one one, I realized they were all saying the same thing. They were all using the same playbook. And it was always a scare tactic, like, if you don't take our money, you're just going to peter out and die. And so we just, I guess more stubbornly than anything, just didn't want to take their money because of that. We never liked their approach.
- [43:24]
A
But how are you growing? I mean, you said you sort of doubling your revenue, so I'm assuming in that first year, 2007, you're doing maybe more than half a million dollars in revenue.
- [43:35]
B
Yeah, yeah, that sounds about right.
- [43:37]
A
Which is not enough. I mean, it's great, but it's not really enough to, it's not enough to acquire customers at scale.
- [43:45]
B
It's not a ton of money. No.
- [43:46]
A
And within a year or so of you, you guys making that pivot, your third co founder, Mark Armstrong, he decided to leave and you guys bought him out. That's right. Was he just burned out?
- [43:56]
B
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, the needle just wasn't moving. And I think he was just really.
- [44:06]
A
Discouraged after you rejected the overtures, let's say from investors, from what I, I've gathered from, from what I've read that you could have come to the conclusion soon after that they, maybe they were right. Because I, I, I read that as more competitors started to enter that market, your customers were leaving for kind of bigger, better equipped competitors.
- [44:30]
B
I mean, it got, it got rough for a while there, that's for sure. We started to 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 to separate mailchimp into two parts, into two products. One would be a list collection form. Right. 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 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.
- [45:11]
A
So it would be free to compile a list of contacts, but if you wanted to send an email out, you'd have to pay.
- [45:18]
B
Yeah, that's when I'd get you. So we hired 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. Before the holiday season hits and we get to the deadline. He says, you know what, guys? This is impossible. I cannot separate this. The code is atrocious. It's a mess. I cannot untangle this code into two products. I'll need another two years to get this done. But I do have a compromise. Just keep it one product and just make the whole thing free up until a certain list size.
- [45:54]
A
So, like, if you had 50 contacts or 100. Up to 100 contacts or whatever, what was. What was the number?
- [45:59]
B
I think it was 200, and if it passed 200, 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 to give away your product. Yeah.
- [46:10]
A
You had come from Cox Media, that had owned the Atlanta Journal Constitution. And their downfall, many newspapers downfall was they gave away their content for free on the web.
- [46:19]
B
Right. And we had never, up until this point, we never even had a free trial for mailchimp, you know, so this was a decent compromise. We had to hit our deadline before the holiday season started. So I said, okay, let's do it. 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 me just save it as a draft, think about it a little bit more, come back and rewrite it, and publish it later. And I guess 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. It was by Chris Anderson. It was called Freemium.
- [46:59]
A
Chris Anderson, the former editor of Wired?
- [47:01]
B
That's right. I didn't know who he was at the time, but I pick up this book and it says Free Me on the COVID I read the back of it. I'm like, huh? That's what we're doing. Okay. I said, I guess I'll. I'll change my blog post. I'll. I'll change the title. I won't call it mailchimp's Free Plan. I'll. I'll call it mailchimp Goes Freemium. It's a. According to this book, freemium is a movement or something. And I publish it 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, 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 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 and speak about freemium freemium. And I'm going to have other entrepreneurs. We've got a guy named Drew Houston. He's got this thing called Dropbox. Little guy, some other dude named Phil, he's got this thing called Evernote. A bunch of, Bunch of you can come and talk about this. And I went and I spoke at the freemium conference. My angle was how freemium is great, but it's rife with abuse and you better have some. Some good anti spam algorithms like mailchimp does. 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.
- [48:32]
A
People found out about it and start signing up.
- [48:34]
B
That's right. 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 of your emails. And so it went viral. People would click on that and sign up as well.
- [48:47]
A
So you've got the freemium model going. This is like, what, 2009? I think around then that was a game changer because all of a sudden you got all these users. But I wonder, I mean, you know, the thing with like a Dropbox is they make their money from enterprise users. You know, big businesses that are paying, but something like 90% of their users aren't. So I have to imagine the vast majority of people signing up were not paying you anything.
- [49:14]
B
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. You know, I think that, you know, when you're a small business, the odds. The odds are against you. 30% die in two years, 50% 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 50 bucks a month somewhere, and you didn't even know you were going to make it. So that was the appeal of mailchimp. You had this Runway to try new things and grow, and we only made money when our customers actually succeeded.
- [49:52]
A
So at this point, how quickly did you guys start to grow? How quickly were you getting more users?
- [50:00]
B
Well, when we launched freemium, it just exploded. So you're talking about having, you know, a few hundred thousand customers at the time after six years of business, and then within one year of launching freemium, we ballooned to a million users, and it just kept growing exponentially after that. And so that was just a really good kind of funnel for new customers to come in and convert down the road. It would take them 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 mailchimp 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. 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 mailchimp account, start their business again, and do well the second time around. So that's. You're talking about, like, a sales pipeline that was like seven to 10 years. Who has that kind of patience? Well, Ben Chestnut and Dan Kersey us have that kind of patience because we had nothing else to do.
- [51:03]
A
How were you? I mean, why would a. Why would somebody go to a service like mailchimp when they could go to a much bigger competitor that probably, you know, had much bigger staffs and maybe they were more sophisticated? What were you offering that they.
- [51:20]
B
That they weren't Personality. When you're serving small businesses, you're talking about entrepreneurial entrepreneurs with A dream. 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 say, we got you because we get you. So that's, I believe that that's why they came to us is because our unique brand showed that we understood what it was like to be an entrepreneur.
- [52:04]
A
Did you? You guys had kind of toiled away for six plus years on the web design service, then pivot to mailchimp and you know, you start to see steady growth. Was it pretty soon, like by 2010 where you were like, okay, this is gonna work. This is gonna be big.
- [52:23]
B
2010 is when, you know, we're at a million users growing to 2 million fast. Servers were dying constantly. We were having to constantly move from data center to data center just to keep things alive.
- [52:35]
A
And were you making money? Were you profitable?
- [52:37]
B
Yeah, yeah, we were making good money. I wish I could remember the timeline. It's been 20 years. You know, it's, it's all a blur now. But we were making probably 10 million, 15 million at the time. We were, we were doing really, really well.
- [52:52]
A
And you were able to grow and to hire and expand and. Right.
- [52:55]
B
Yeah, we were trying new things like, you know, fun branding stuff. Trying this new thing called Twitter in 2008. Yeah, it was, I'd say, you know, 2008.
- [53:07]
A
Ish.
- [53:08]
B
2010, I'd say, is when we, we think Twitter. Yeah, this is real. This is, this is going to be something and entirely.
- [53:14]
A
Cash flow was funding everything. It was funding. That's right, Hiring. It was funding innovation and the engineering. Just the cash flow was funding that.
- [53:23]
B
We were totally self funded. Investors still came and they would say, take our money. And we'd say, we don't know why we would need it. We're making plenty.
- [53:33]
A
But you saw an opportunity there because most businesses in America are small businesses.
- [53:38]
B
Right.
- [53:38]
A
And that most people, I think in the US are employed by small businesses.
- [53:41]
B
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. We knew what that was like. We knew that it would fill the wallet. But serving small businesses, serving the underdog was always our thing. And it just felt better. And yeah, the volume was there. You know, 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 9, 11 or a pandemic or something.
- [54:10]
A
Yeah.
- [54:10]
B
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, you know, thousands or millions of tiny customers who pay small amounts of money. You don't rely on anyone too much such that, you know, they're sort of too big to fail. We cannot survive without them. We're actually a very, very much more resilient company serving the long tail.
- [54:38]
A
But at the same time, there were still things you couldn't do. Right. One of the things that's interesting that I read was that there were big companies out there that were doing national ad campaigns that were on national radio and on cable news. And I'm thinking even with 15 or 20 million in revenue, you probably couldn't do that kind of marketing campaign.
- [55:01]
B
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 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. 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, 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. I'm not proud to share this story, but, you know, fortunately, my staff just said, okay, we're not going to 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 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, but we said, you know what? Screw it. Let's just take it. And it turns out, you know, that's. That's a pretty popular building in San Francisco. It's where Apple holds used to hold their WWDC events. And so crowds of people would gather outside of the Moscone center, up and down the street there, waiting to get in. And they would use this new app called Instagram to take selfies. And what would they do? They would take a selfie with a winking chimpanzee in the background. So we kind of went viral that way. And then billboards just took off after that. Like, we just started to use billboards in all kinds of cities after that.
- [56:46]
A
And. And you guys did, like, merch too, right? Like, you made T shirts. I mean, you're. You're the monkey mascot, like, all over the place.
- [56:53]
B
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. What if we just had, like, a T shirt giveaway? And it went viral. We did a T shirt giveaway, and it just went berserk on Twitter. And, you know, we always had really lucky breakthroughs on new. New media, new channels, new networks, Twitter, Facebook, Instagram. It seems like since we were constantly tinkering, we were always there when those channels got big. I still remember the day 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. 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 podcasts. It was the Joe Rogan podcast. And so, like, we were always, like, really on the early cutting edge of all of these new inventions at the time. Eventually we did get the budget to do things like tv. And, you know, they were okay, but they're not all they're cracked up to be.
- [58:09]
A
Did you go through a period where you stopped listening to the Atlanta Public Radio station because you got sick of hearing the constant contact ads?
- [58:17]
B
Yeah, yeah, totally. Absolutely. But, I mean, eventually we. We started to do that. We were. We were sponsoring podcasts, public radio shows, and, you know that that is ultimately what led to us sponsoring cereal.
- [58:38]
A
Yeah, let's. Let's talk about that, because that show totally mainstreamed podcasts. Like, it was parodied on Saturday Night Live. It was like, you know, it was on the Tonight Show. Like, it got. It was on. It was in the newspapers, got so much attention, people were talking about it everywhere, that it actually. It was a rising tide for the rest of us who were around at the time.
- [58:58]
B
Yeah. And so we were the first sponsor. Genius.
- [59:04]
A
Sounds like a genius plan. But probably you get the theme giving yourself too much credit.
- [59:09]
B
Right.
- [59:09]
A
For being a genius.
- [59:09]
B
You're catching on to the recurring theme that is the story of Ben Chestnut, which is I basically Forrest Gump my way into luck. So, yeah, it was not a genius business move. We. We sponsored another podcast by the same people. I wish I could remember the name.
- [59:25]
A
Was a this American Life podcast. Yeah.
- [59:26]
B
Yeah. It wasn't like, a big commercial success for us to sponsor it, but I. I do remember that 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 email marketing or hats for cats and dogs, go to mailchimp. 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 asked for cat hats, so we made smaller versions for the cats.
- [59:55]
A
So we sold it on your website.
- [59:57]
B
We didn't even sell it. It was just a. It was just a gag. And 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. They said, well, let's just call it mailchimp. Because they had that quirky ad, and that's how they gave us first dibs.
- [60:23]
A
I know this just from inside information. It was very. I mean, it was shockingly cheap. Which you paid for that.
- [60:29]
B
It was shockingly cheap. Yes. And furthermore, they said, you know, what do you want us to say for the. What do you call it? The intro? And we said, you do it, you know, better. You know your audience better. We believe in your creative process. So we trusted them. And they. They did this intro where they interviewed people on the sidewalks of New York. Support for cereal comes from mailchimp. From mailchimp. Mail Cream.
- [60:53]
A
Chimp.
- [60:54]
B
Chimp. That delightful young woman mispronounced us and called us mailchimp. And I. And I remember, you know, Mark D. Christina, He. He walked into my office with this recording, and he was kind of sheepish about it. He was saying, like.
- [61:05]
A
And Mark was your. Was your marketing manager, right?
- [61:07]
B
Yeah. And, you know, he's like, you remember that thing we agreed to sponsor? They sent the first draft, and here's what it sounds like. And we listened to it, and he was like, the thing is, 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?
- [61:26]
A
I think I have a right.
- [61:28]
B
I think I have a right, and nobody in their right minds would agree to this. And I said, you know what? Screw it. Just go ahead and do it. And it just was a hit. It just went viral.
- [61:38]
A
Everyone knew what mailchimp was, and it.
- [61:41]
B
Really took our brand out of the entrepreneurial world and the tech world. For the first time, we had people telling us that their mothers or grandmothers were asking them about mailchimp. Just mainstream America was asking us about mailchimp, and it was so crazy. Like you mentioned, Saturday Night Live, they did a skit about cereal, and at the end, they had a Mail Camp ad as well. 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 Night Live.
- [62:13]
A
If ever there was a comprehensive history of ad campaigns, that's got to be in there, because, yeah, it was such a simple ad, but it was also. It was the ad before the show that you were anticipating.
- [62:25]
B
Yeah.
- [62:25]
A
And everybody was waiting for the next episode to drop. And. And it could have just been like, support for serial comes from mailchimp, your email marketing, blah, blah. And then. And then that would be it.
- [62:35]
B
That's right.
- [62:35]
A
It wasn't. They did. They really. And they actually. That show created the kind of template for creative podcast ads.
- [62:45]
B
Yeah. The price went up.
- [62:49]
A
For season two.
- [62:50]
B
For season two, the price went up significantly. They wised up to it, but what a lucky break that was for us. And I. I mean, to this day, we look at our quarter 4 results, and, you know, it. It's just like a bummer because the cereal. The quarter where we sponsored cereal did so amazingly well. It's hard to beat it. Every year, it's like, darn it, that cereal makes it too hard. Yeah, it's. It's a. It was an amazing quarter for us.
- [63:14]
A
All right, so you're now on the map. And I think by 2014, you had grown to 300 employees, still entirely privately owned, self funded. And that's a lot of people. I mean, you'd gone from the three of you kind of working hunched over keyboards to a company of 300 people in a pretty short period of time. And I imagine that's odd names to remember.
- [63:40]
B
Yeah. I mean, it for me as a founder, I was really good at that point. Running, like a small squad.
- [63:46]
A
Yeah.
- [63:47]
B
But when it got to hundreds of people, it got really hard for me. I. I remember a meeting that we called. We. We were doing these like little, little all hands, we called them coffee hour meetings. They were maybe 20, 40 people. We would meet on one floor and talk about everything we had planned 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 in a while. Let's just get. 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 going to have an all hands this Friday.
- [64:20]
A
All 300 employees.
- [64:21]
B
Yeah, yeah, why not?
- [64:23]
A
But in all hands, that can set off alarm bells.
- [64:25]
B
Yeah, it can. We didn't think about that. And then so, like a couple of days go by. 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 serving customers and really be present. 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. 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 mailchimp 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. 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. 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 amazing. And the front row, I remember it was just like all murder clowns. 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. Whatever I was about to announce.
- [65:43]
A
What did you do? You stood in front of them and said and said, what?
- [65:48]
B
Things are great, we're awesome. Who knows? I barely remember. And, you know, are there any questions? And we had People, the questions that, that were coming were, you know, 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 into the right. It's amazing. And people were raising their hand saying, so, so what's the strategy? You know, and my answer, you know, as a startup founder, is, we don't need no stinking strategy. We've got this, you know, and half the audience would cheer and say, yeah, we don't need no strategy. And the other half would say, yeah, we do. And they were just. I remember the person asking me that, 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, 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, what? Why are you hiding things from us? And so the whole meeting just completely flopped. It was, it was, it was an awful meeting and I was just 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.
- [67:15]
A
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.
- [67:21]
B
Yeah. And business is going through the roof. What do I need to have a strategy?
- [67:25]
A
What do you mean?
- [67:25]
B
I might have said the strategy. 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, 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. Wow, that was really bold of her to come into my office and say that. Her name was Kate Lee. She's now our chief comms officer at mailchimp.
- [67:51]
A
And at the time, I mean, this is like you'd already been running the company for 14 years. That must have been pretty hard to take. I mean, I'm sure it's true, but hard to take.
- [68:01]
B
It's like an identity crisis. Sort of like you don't know who you are anymore. Like, I thought I was a pretty decent leader. 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.
- [68:23]
A
Because you were self conscious.
- [68:24]
B
I was completely self conscious and worried that anytime I opened my mouth I would just make things worse. It was really one of the worst times of my life.
- [68:34]
A
When we come back in just a moment how Ben tried to build a happier work environment and how his leadership was tested again 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. As a founder, you're moving fast toward product market, fit your next round or your first big enterprise deal. But with AI accelerating how quickly startups build and ship, security expectations are higher earlier than ever. Getting security and compliance right can unlock growth or if you wait too long, stall it. With deep integrations and automated workflows built for fast moving teams, Vanta gets you audit ready fast and keeps you secure with continuous monitoring as your models, infrastructure and customers evolve. Fast growing startups like LangChain, Rider and Cursor trust Advanta to build a scalable foundation from the start. I love that over 10,000 companies, from startups to huge enterprises, trust Vanta because it makes me trust them. Go to vanta.combilt to save $1,000 today through the Vanta for Startups program and join over 10,000ambitious companies already scaling with Vanta. That's V a n t a dot com bilt to save $1,000 for a limited time.
- [70:21]
B
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- [71:12]
A
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.
- [71:28]
B
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 just weighed very heavily on my mind. I remember my wife sitting down next to me and just saying, you know what? I think I'm gonna take the kids and move out from for a while. Leave you alone. And I remember looking at her, like, shocked. I was just thinking, why in the world would you do that? You know? And I guess it had affected me so much that she thought 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. Let me tell you what's going on at work. And that was for the first time, I started to talk to her about 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. And we. Life is just so much better now that I've opened up and talked to her.
- [72:27]
A
What did the staff want you to. I mean, they wanted a strategy. So what did. What. What did you think they wanted to.
- [72:33]
B
Hear from you at that time? I. I thought that they just wanted me probably, you know, to coddle them, 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?
- [72:48]
A
So how did you resolve it? Did you. Did you seek help?
- [72:52]
B
I did. I went searching online and I actually, I remember I was listening to NPR driving around in the country somewhere, and Truett Cathy, the founder of Chick Fil a, had passed away. And someone at npr, I believe, was doing interviews with people who knew him as a friend, and they were telling stories about Truett Cathy. And a guy came on, and his name was Clay Mattel. And they talked about how he ran his company, sold it, and he started and a school for founders. It was in Dayton, Ohio. And this guy, he sold his business for multiple billions of dollars. And he just wanted 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, 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 and.
- [73:52]
A
You went to Dayton, Ohio?
- [73:54]
B
I went to Dayton, Ohio, yeah.
- [73:55]
A
And it's for how long?
- [73:57]
B
Maybe two or three days. So it was built this school I, I haven't talked to anyone about this. The school is built for the locals. You know, this was his hometown, Clay Matilda'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 2 million in revenue. And, you know, we were like maybe at 200 million or something by this time.
- [74:20]
A
Wow.
- [74:20]
B
And so I, I didn't tell, I didn't tell them that. I said, submitted the form and I said, you know, Yes, I make 2 million in revenue. And I went out to Dayton, Ohio and I learned a lot out there. I needed it. You know, it was a lot of humble pie that I ate out there.
- [74:35]
A
How do they describe it? Like a leadership training?
- [74:38]
B
Yes, there was a lot of that kind of stuff. Right. So talking about strategy, talking about culture and stuff like that. But the most helpful stuff was like, they, they make you get out of this mode 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. That's like the 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 more psychological stuff like that that kind of helped me get out of my rut and think about leadership in a different way.
- [75:21]
A
So how did you start to change the culture of the company?
- [75:25]
B
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 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, talking to some local professors at Emory University, and they said, yeah, we can absolutely help you with that. But first we need to know something about your culture. 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 to kind of help us maintain that culture. That's how the whole process came to be.
- [76:09]
A
And so as you started to develop a so called culture, did you also start to develop a strategy of what you wanted to be?
- [76:17]
B
Eventually it took a few more years after that actually. I mean, here's the thing about early years of a startup. You, 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. 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 2018 is when things had to get way more sophisticated and we started to see that we needed to hire eventually what we have now a chief strategy officer. Because man, it is, it's a thing now. It's real. I can safely say we do have a strategy now.
- [77:05]
A
Yeah, I mean now, since then, I mean you guys kind of went on an acquisition tear from 2019 to 2021 and you're no longer an email marketing service. 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, that greets you. It's not, hey, set up an email marketing account.
- [77:28]
B
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. 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, 2017ish 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.
- [78:26]
A
About what?
- [78:28]
B
Entrepreneurialism. Sometimes it's not even about entrepreneurialism. It's about, you know, a parent having, you know, some kind of an argument with his son who really wants to be a musician. I mean, it's like, interwoven in there are stories of entrepreneurs, entrepreneurialism.
- [78:43]
A
You are not going to be surprised about what I'm going to ask you next because it was covered by a few publications. But there was an article that came out earlier this year about what was described as an exodus of mainly women and women of color, senior women at the company, like seven or eight or maybe more than that. I'm sure you read the articles and are aware of it. And one. One of them, you know, said, I dealt with sexism and bullying there and mailchimp, and I wouldn't recommend my female friends to work there. What did you think? I mean, first of all, were you surprised by seeing that?
- [79:24]
B
Yeah. You know, when you're a founder and something like that comes out, it's a real. It's a real gut punch. We learned a lot from that, and I am grateful for what we learned from it. And, 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 mean, we hired a chief culture officer. I would say that we were really good with our culture. And what can happen to a founder, you know, 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, 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 kind of 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 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 culture as well, because that's what drives everything else.
- [80:39]
A
With 1200 people, you can't know everything happening. Right. You can't have your finger on the pulse at all times, but you are expected to, in a sense, because you are the leader at the helm. What did you do to respond?
- [80:54]
B
Well, we made our response public. You know, we have our six big commitments. We have a whole strategy on. It's called our Culture Reset Plan. So we actually published that. But it came from. The very first thing we did was I just held 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 were people. People weren't feeling, 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, 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 someone said the headline should be mailchimp leaned in. We didn't shy away. We leaned in and we changed the culture for the better.
- [82:00]
A
When you. The company today, easily, if you wanted to, 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 consider doing that? Selling it?
- [82:15]
B
I've had offers. The thing is, I love what I do and I don't know, it's one of those things you learn over time. After 20 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 having meaningful work is just the most important thing, I think.
- [82:40]
A
And I mean, down the road, you may decide that you don't want to be the CEO and you hire somebody else to do that.
- [82:47]
B
That's possible. That's possible. You know, we. The other thing is, like, early on we talked about VCs knocking on my door, just saying, take my money. We can help you flip to enterprise, all yada, yada. But nowadays, you know, the tone has changed. I get private equity companies coming in and they. They don't ask me to take their money and grow it. They. The first thing they ask me is, how's your health? 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 are.
- [83:23]
A
Bmi.
- [83:24]
B
Yeah, right. Exactly. It's. It's creepy. So it makes me think, you know, like, oh, maybe. Maybe there There is going to be. There is going to be a time where, you know, I need to step back and maybe have a situation, succession plan and have someone take over running it day to day. I do see that as a possibility, but right now, I'm just so happy running this thing.
- [83:44]
A
Do you. I mean, obviously you worked extremely hard making this happen, but I think you did have some incredibly fortunate breaks that you couldn't control, like mailchimp. 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?
- [84:06]
B
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 over my 20 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 than my wildest dreams. I don't know. I always had in my mind that I was just a bumbling idiot from Hephzibah, Georgia, who stumbled into business. And somewhere out there, someone knew the right answer of how to run my business. Right. And these days, these days, you know, mailchimp is much bigger and I get invited to ritzy events with some really great business leaders. And I remember being involved 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. You know, he didn't say it that way, but he's like, we're still experimenting, 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 or horrifying, but that's what I've learned.
- [85:30]
A
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 $12 billion. Ben stepped down as CEO in 2022, but he stayed on as an adult 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 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 and lessons from some of the world's greatest entrepreneurs, please sign up for my newsletter@guyraz.com or on substack. This episode was produced by Liz Metzger and J.C. howard, with music composed by Ramtin Arablouei. It was edited by Neva Grant. Our production staff also includes Alex Chung, Casey Herman, Rommel Wood, Noor Gill, Carla Estevez, Sam Paulson, Carrie Thompson, Andrea Bruce, Kathryn Cipher, and Elaine Coates. I'm Guy Raz and you've been listening to How I Built this. If you like How I Built this, you can listen early and ad free right now by joining Wondery plus in the Wondery app or on Apple Podcasts. Prime members can listen ad free on Amazon Music. Before you go, tell us about yourself by filling out a short survey@wondery.com survey imagine being on a vacation for a very long time. Now imagine saving money nightly while you do it. Sounds pretty great, right? With vrbo's Long Stay discounts, you can stay longer and save more. Our customers save an average of 10% when they book select properties for a week or longer. Just in case you needed another reason to extend that vacation, book the Perfect Summer Getaway today with VRBO Private Vacation Rentals. Your future self will thank you later.