How to build a $12B side hustle being a non-technical founder
September 2021, MailChimp got an offer from Intuit for $12B. The crazy part? It has no real technical founders. What’s the secret?
Nothing promised their success. A project manager and a failed DJ. Both lost their job because the company they worked for went out of business. They decided to do some web design. They failed. But it was not the end of the story.
Ben Chestnut was the son of an army codebreaker and an immigrant entrepreneur. His mom ran a home salon. Nothing fancy. As millions of teenagers, Ben was hesitant about his future. He bounced of several majors and settled down on industrial design — only to find out that he wanted to do web by the end of his college years.
After the graduation, he decided to teach himself the basics of HTML and CSS — just in case he manages to get the job in web. He got lucky and landed the interview at Cox Media — not for websites, though. For the banners. Still, Ben chose to accept the offer, hoping to learn more about web development from other employees.
Dan Kurzius was born in Albuquerque, working at his family’s bakery. When Dan was 12 the big chain pushed the family out of business. The Kurzius struggled and could not provide a proper education to their son. So Dan had to make his way through life as a part time DJ and a skateboarder doing some gigs here and there.
He finally settled down in Atlanta, got married and had 2 kids. It was time to find a “real” job, wasn’t it? So, around 2000, Dan responds to an offer at a music startup backed by — what do you think — Cox Media.
The trick was that the offer was about “writing”, Dan presumed it was somethibg to deal with music reviews, and applied. Halfway through the interview he realizes “writing” was actually about writing code. Obviously, he knew nothing about it. But he lied that he did. And landed the job!
By the way, Dan was interviewed by no one else but Ben who had become a project manager at that same “startup” — MP3Radio.
After the offer arived, Dan used 2 weeks he had before showing up in the office to learn the basics of code. He spent his first day terrified he would be found out as a fraud. He turned out to be a natural talent, but MP3Radio shut down a few months later anyway. Thoughing Dan, Ben and their third coworker Mark Armstrong on the street.
The failed agency
Three of them were upset. But not really. It was a dotcom era and three friends were curtain they would be able to make millions just by serving all those numerous startups. Everyone needed a website, after all. So they decided to use whatever they have saved to start a web design agency. Rocket Science Group (RSG) was born to cater to the needs of big tech companies.
It was a great plan, and it could work out if not for one detail. In less than a year a dot com crash happened. The agency did not have too many customers to begin with. But after the crash they felt they needed a pivot to stay alive. What did they choose? Airlines, from all things. 2 months before 9/11.
They started jumping from industry to industry. It was a crazy run — they could not use “templates” created for one customer to simpily their delivery to the other. Everything had t be done from scratch. Besides, big corps were very demanding and needed a perfect service on every step.
But targeting small businesses was an absurd idea — they did not want $30K websites, did they?
But it tured out they wanted something else.
MailChimp goes all in
Even before that Ben had the idea of a simple email app — some HTML and scrapping. Nothing fancy like for big corps. The trio decided to launch a service as a side hustle and see how it would go.
It was just a line on their agency’s website.
Until one day Ben put together the agency numbers and was shocked by the realization: the agency was slowly failing. The only reason they were still alive was their email business. So, they went all in.
It was not a walk in the park, though. By the end of 2007 they managed to get 10,000 users mostly through Google ad campaigns. To boost revenue, they switch to monthly fees from charging per send email (that was the standard back then).
By 2008 their web agency turned into full fledged SaaS business. Mark, the third partner, was tired of the endless pivots and offered Ben and Dan to buy out his shares out. Probably, it was a mistake. Because two partners agreed and went further without Mark.
By Sept 2009, they reached 85,000 paid users. And then they introduced Freemium.
It was a game-changer. No one else in the industry did it back then. Profit skyrocketed 650%, 30,000 users vere added every month. By Sept 2010, they had grown to 450,000 users and just over $2MM ARR. It only went upwards from there.
By September 2012, the company had reached 2 million users, over doubled in 2013 and added 2.4 million new users. MailChimp had 5MM users at the beginning of 2014 and became a market leader.
What obviuosly helped was creative marketing. As nor Ben not Dan were professional marketers they did not limit themselvs to the obviuos solutions. Now, their marketing choices are a part of the marketing education program in colleges. What did they do NOT like others:
— Freemium. As mentioned above, no one did it. This model brought MailChimp huge success. Now it is a standard for SaaS services.
— Sponsoring podcasts and shows. Again, hard to beleive it but it was terra incognita in 2010. Mailchimp was one of the first to spot this marketing channel. It sponsored “Serial” — a true crime story told in tantalizing weekly installments by the producers of This American Life.
While recording the ad Dana Chivvis and Julie Snyder, the show producers, mispronounced the service name, and the mistake went life. It became viral, and brought MailChimp 8 million users that year.
— Content marketing. Mailchimp was one of the first to adopt this strategy. Their educational videos, newsletter and posts with guidelines for users with are now considered to be an example of how it should be done.
— SWAG. Mailchimp uses swag a lot to make their customers feel special. All items are shipped for free. Read here my article on how to build a successful tech business on SWAG without coding skills.
MailChimp swag is funny, unique and remarkable. Like these funny cat hats — a part of 2012 Facebook campaign.
— Use every trendy topic as a reason to be heard. In 2018 a black hole was a trendy toic. To piggyback on it, Mailchmp made videos “Mailchimp vs a black hole” where they explained how to use marketing budgets . Result — more word-of-mouth, better search ranking, more users, higher revenue.
Over the years, Mailchimp received several acquisition offers ($2B, $4B) that tey consistently declined. In 2021 Intuit offered $12B and Mailchimp accepted. By then it had 62% market share and around $1B in revenue.
— two non-technical founders
— 20 years
— lots of pivots
— and tons of crazy ideas that just worked.