“Our greatest weakness lies in giving up. The most certain way to succeed is always to try just one more time.” – Thomas A. Edison
Patience is hard to hold in a business world that is increasingly defined by quarterly profits and rapid results.
In a time when companies like Twitter and Instagram have become overnight successes, people now tend to believe in virality, which is far from the truth.
This is the story of Mailchimp, which actually took 17 years of arduous work, and finally found success.
The story began when Mailchimp’s founders, Ben Chestnut and Dan Karzius, lost their jobs. They thought of starting their own business to avoid relying solely on a monthly salary.
They founded “The Rocket Science Group,” a CRM company. While running their not-so-successful CRM, Ben and Dan started Mailchimp to assist their clients with sending emails. They created the email marketing service Mailchimp to help their customers.
Ben Chestnut and Dan Karzius had somewhat similar childhoods.
Ben Chestnut was born and raised in Augusta, Georgia, and attended high school in Hephzibah, Georgia. His mother ran a hair salon from the family kitchen.
Ben mentioned in an interview that he can still remember the scent of cigarettes, hairspray, perms, and perfume wafting through his mother’s hair salon when he was a young boy growing up in a small Georgia town.
On the other hand, Dan Kurzius’ father ran a bakery deli in Albuquerque, New Mexico, which was ultimately forced out of business by big bakery chains. Soon after, when Dan was just 14 years old, his father died of a fatal heart attack.
Both Dan Karzius and Ben Chestnut credit their parents’ small businesses as sources of inspiration.
The two met for the first time at MP3Radio.com, a dotcom-era project connected to the Atlanta media corporation Cox Enterprises.
Ben was a typical teenager who was unsure of his interests. He studied physics, and industrial design, and eventually ended up working in web design. He had to teach himself the basics of HTML and CSS, though, to work on the web because his major was industrial design.
He got an interview at Cox Media’s startup one day, but it wasn’t for a website. It was related to the banners. Ben nevertheless decided to take the offer to work directly with web development.
Dan Kurzius, a competitive skateboarder and part-time DJ, moved to Atlanta at the same time. Dan applied for a writing position at a music startup supported by the same Cox Media in the year 2000.
Ben, who had worked his way up the corporate ladder at startup MP3Radio to become a project manager and web developer, conducted the interview. Dan realized during the interview that the position involved writing code not writing music reviews, which was what he had assumed.
He had no idea what coding was. However, he lied because he wanted the job. And got the job! Dan used the two weeks he had to learn the fundamentals of coding before reporting to the office. He spent his first day living in constant fear of being exposed as a fraud.
He proved to have natural talent but it didn’t matter. A few months later, MP3 Radio was shut down.
Ben started Rocket Science Group (RSG), a web design and development firm for major tech companies, with the help of Mark Armstrong, a former coworker. Amazingly, they also called Dan; they just liked the man.
They initially built websites for dotcom businesses, but as soon as those jobs stopped flowing, airlines and real estate firms emerged as their primary customers. They were forced to change route once more after 9/11, this time into real estate. That also did not go over very well.
Dan claimed that large crops were pushing them and requesting excessive amounts of white glove services that we are unable to provide.
However, focusing on small businesses was also not a good idea as they desired email marketing. A $300,000 fee was also charged at the time for email marketing firms to send promotional emails to their email databases.
That means the emails must be really good quality. For small businesses, email was prohibitively expensive and complicated.
Ben and Dan enjoyed working with these customers because they have a natural love for small businesses: Ben spent his childhood helping his mother run the hair salon and Dan’s parents owned a bakery.
Chestnut and Kurzius began looking for a solution out of a desire to help small business owners succeed. Chestnut stepped forward with a solution he’d been thinking about for a while.
He had a brief run of a greeting card company before the Rocket Science Group. That business failed, but he had already written some code for it that could be used to build an email marketing solution for Rocket Science Group’s customers.
FUN FACT: Ben Chestnut saw a chimp on one of his previous company’s greeting cards and chose to make that chimp the iconic symbol of what we now know as Mailchimp.
They designed Mailchimp in the early 2000s. The company operated MailChimp as a side business for several years.
One day, Ben sat down to compile the agency’s figures and was shocked to discover that it was slowly failing. Their email business was the only thing keeping them alive. As a result, they went all-in.
By 2007, they were working full-time on Mailchimp. They had 10,000 consumers and were barely profitable. To increase revenue, they switched from charging per email sent to monthly fees (that was the standard back then).
It had become a traditional SaaS by 2008. The third partner, Mark, was at his wits’ end. Ben and Dan had to purchase his shares. They had 80,000 paying customers by September 2009.
It was not a simple trip. Mailchimp faced many obstacles to overcome, some of which seemed impossible to overcome at the time. The company’s success has been built on perseverance and patience.
Their vulnerability to being absorbed by larger, more formidable businesses was one of their biggest challenges. Keep in mind that Mailchimp had limited resources and declined to accept investors.
Therefore, industry titans in email marketing like Constant Contact frequently posed a threat to their business. However, Chestnut and Karzius persisted to remain in business and expand.
Their in-depth understanding of how small businesses function and what they require made them an effective weapon against firms like Constant Contact.
Their secret weapon was knowledge, which they used to fend off larger, more formidable competitors and draw in small businesses to Mailchimp.
Another significant challenge they faced was the risk that emails would eventually become defunct. And, given that their company was built on the consistent use of emails, it was a valid concern.
They dealt with the issue by expanding their service offerings to include additional marketing channels like social media. They were able to have those as value-added services in their line of work.
MAILCHIMP BEGAN TO GROW
When Mailchimp decided to make the service free to use, things started to change for them as well. This decision fit in well with their passion for assisting small businesses, which they were all too familiar with in their early stages.
The decision to switch to a freemium model paid off greatly as membership increased rapidly. Although it was a risky wager, linking their customers’ success to their own was a game-changer. Profit increased that year by 650%!
Every month, MailChimp adds 30,000 new users. By September 2010, they had 450,000 users and a revenue of slightly more than $2 million. From there, it was all uphill. The company attained 2 million users by September 2012.
Every month, they grew by 10-15%! In 2013, the number of users more than doubled, reaching 2.4 million. They reached 5 million users in early 2014 before going mainstream.
Mailchimp is based on three fundamental principles. Freemium pricing, customer proximity, and endearing branding (they practically invented using fun copy in tech). They are reliable, satisfy their clients, and address their issues.
Mailchimp identified an issue and built its entire business strategy around resolving it. They knew how crucial it was to stay true to their roots and continue serving their core customers because they came from families who owned and operated small businesses themselves.
The marketing strategies used by MailChimp are now covered in college marketing courses. But everything they did at the time was novel. And it paid off partly because of that.
Since 2001, Mailchimp has grown through perseverance and hard work. After 17 years, it became a profitable business.
If MailChimp teaches startups anything, it is not to offer a free product. It’s not that your business should be enjoyable, because that doesn’t work for everyone.
The true takeaway is that having a great product that people want to use, along with persistence and hard work, is the single most important predictor of success.
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