(July 2021) Ben Chestnut: From Side Business to $12 Billion – The Accidental Triumph of Mailchimp

28:09Even like whenever we designed websites for our clients and we had three options to show them, the one that we loved, that we always hoped 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 2 a.m., we would just say, just put some monkeys in it. And so we said, hey, how about chimp mail?

28:42And so we decided to call it chimp mail. And then, of course, the domain was taken. The domain for chimp mail is taken. Wow. The domain was taken. Yeah. So we had to improvise and call it MailChimp instead. 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 were they using it? There was definitely a stigma to email marketing. If we went to tech conferences and told people what we did, things would get quiet, they'd walk away. They sort of thought of us as sort of like the dark underbelly of the internet.

29:22this was a time when spam there was no solution for spam right people were like oh so you guys are spammers that's right that's right and then like end of discussion they'd walk away i was really popular at parties yes absolutely but but you're but 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 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 uh small businesses were constantly signing up so it it i was never dissuaded from it but by the way was it just the three of you still or were you able to hire a few more web designers we had uh 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 um and so we just thought you know that's that's let's just strive just let's just survive here i mean it was it was just the three of you kind of hunched over keyboards day in day out just like pounding the keys yeah from morning until sometimes until 1 2 a.m wow i mean it was a real grind.

30:41I mean, how was your revenue and cashflow? Was it, was it okay? No, no. Um, let's see if I could, the best that I remember our, our agency business ever doing was something like between two and 300 grand a year. Wow. 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. What explains that? Did it become more competitive? Was that it? There was just more people doing that kind of work? You know, 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.

31:27And 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 2005-ish. There was something that totally changed. 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? She was presumably supporting you guys. She was, yeah. Health insurance and everything from her really stabilized me, which allowed me to be an entrepreneur.

32:13So 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 has this book called Rich Dad, Poor Dad. Rich Dad, Poor Dad, yeah. That's right. He's selling this 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.

32:52And he was telling them in an 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, we're going paycheck to paycheck chasing client business with Rocket Science Group. Meanwhile, we have this side thing that we built called MailChimp now, we renamed it by then and it's just making this recurring income and we were having heart-to-heart meetings about whether or not we should shut down Rocket Science Group because it was just so gloomy, it just didn't seem like it was ever gonna grow and we started to put the numbers in Excel, just to look at the numbers.

33:29We 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. Uh, 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. Yeah. Um, 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 into the right. Uh, what if we actually focused on just MailChimp. And that's what got us talking about becoming a software company.

34:04Wow. So 2005, you start to see the numbers and you know that MailChimp is, you can see it growing. But from what I understand, it was still a tiny fraction of your overall business. Most of the revenue was coming in through web design. That's right. That's right. And 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.

34:45And that is just a really, really hard sell. When we come back in just a moment, how Ben and his team finally went all in on MailChimp, and how its accidental twin, MailChimp, 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.

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38:38Hey, 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 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. 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.

39:25And 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. Did you change your business model when you made the pivot from like, you know, pay per use to a monthly 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.

40:03But at the time, there was a movement at the time for micropayments. Yeah. You know, remember that? like apple was like the most famous version the 99 cent song yeah 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 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 um 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 in those early days from what i understand you guys um 2007, you're full on and into MailChimp.

41:05And 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 fund and scale your business. 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 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, there's this company called Constant Contact. They just IPO. They made a lot of money.

41:47We think you could be the next IPO. And I talk about our business and I would tell them how we help small business. And they say, well, that's cute. That's great. We can 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 something about it just felt wrong to me and Dan. We just wanted to stay. It just felt really good to serve small businesses. It was just in our DNA. The investors were saying you can make a lot more money if you focus on the enterprise, big business.

42:21I'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. You know, for the first two, I started to think about it because I really believe their pitches. And then by the 10th one, I realized they were all saying the same thing. They were all using the same playbook.

42:57And 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. But how were you growing? I mean, you said you're 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. Yeah. Yeah, that sounds about right. 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. It's not a ton of money.

43:32No. And within a year or so of you, you guys making that pivot, your third co-founder, Mark Armstrong, he, he, he decided to leave and you guys bought him out. He was, was he just burned out? 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 needle just wasn't moving. And I think he was just really discouraged. After you rejected the overtures, let's say, from investors, from what I've gathered, from what I've read, you could have come to the conclusion soon after that maybe they were right. Because I read that as more competitors started to enter that market, your customers were leaving for kind of bigger, better equipped competitors.

44:16I mean, 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 you would, 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.

44:58So it would be free to compile a list of contacts, but if you want to send an email out, you'd have to pay. Yeah. That's when I'd get you. Right. So we hired this engineer and he works his tail off to get this thing done. And And 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.

45:41So like if you had 50 contacts or 100, up to 100 contacts or whatever, what was the number? I think it was 200. And if it passed 200, then you'd have to start paying us. I said, yeah, I guess it's an okay compromise. I didn't like the idea at first, but we had a deadline. Because you were going to give away your product. Yeah. 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. 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.

46:14We had to hit our deadline before, 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 a little bit more, come back and rewrite it and publish it later. And I guess it might've been the weekend. I came back on a Monday morning and 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. Chris Anderson, the former editor of Wired. That's right.

46:49I didn't know who he was at the time. But I pick up this book, and it says Freemium on the cover. I read the back of it, and I'm like, huh, that's what we're doing. Okay. I said, I guess I'll change my blog post. I'll change the title. I won't call it MailChimp's free plan. And 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 much. And then out of the blue, a guy named Charles Hudson calls me up. And 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.

47:27Now 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. And I'm going to have other entrepreneurs. We've got a guy named Drew Houston. He's got this thing called Dropbox. He's been on the show. A guy, some other dude named Phil. He's got this thing called Evernote. A 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 good anti-spam algorithms like MailChimp does.

48:09And I went and talked about it and it got on TechCrunch. It started to hit the news. And that's when it was the rocket ship ride really started for MailChimp. People found out about it and start signing up. That's right. And importantly, if you signed up and sent an email from the freemium plan, the catch was our logo was in the footer of your emails. And so it went viral. People would click on that and sign up as well. So you've got the freemium model going. This is like 2009, I think, around then. Yeah. That was a game changer because all of a sudden you've 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.

48:55And so I have to imagine the vast majority of people signing up were not paying you anything. 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 are against you. 30 % die in two years, 50 % die in five years. And so 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.

49:30Like you had this runway to try new things and grow. And we only made money when our customers actually succeeded. So at this point, how quickly did you guys start to grow? How quickly were you getting more users? 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.

50:11It 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 ten years who has that kind of patience well ben yeah chestnut and dan currency has have that kind of patience because we had nothing else to do How were you, I mean, 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?

51:04What were you offering that they weren't? Personality. When you're serving small businesses, you're talking about entrepreneurs with a dream, right? 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 X, Y, Z. 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 tagline that we say, we got you because we get you.

51:42So 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. 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, OK, this is going to work. This is going to be big. 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.

52:21And were you making money? Were you profitable? Yeah, yeah, we were making good money. I wish I could remember the timeline. It's been 20 years, you know. It's all a blur now. But we were making probably 10 million, 15 million at the time. We were doing really, really well. And you were able to grow and to hire and expand, right? Yeah. We were trying new things like, you know, fun branding stuff, trying this new thing called Twitter in 2008. Yeah, I'd say, you know, 2008-ish, 2010, I'd say, is when we think, yeah, this is real. This is going to be something. And entirely cash flow was funding everything.

53:02It was funding hiring. It was funding innovation and the engineering. Just the cash flow was funding that. 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 were making plenty. But you saw an opportunity there because most businesses in America are small businesses, right? And that most people, I think, in the US are employed by small businesses. We saw the opportunity. We saw the inspiration too. It just felt more fulfilling. I mean, remember, we had a taste of serving big business. We knew what that was like.

53:36We 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. 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, we're serving thousands or millions of tiny customers who pay small amounts of money. You don't rely on anyone too much such that they're sort of too big to fail.

54:17We cannot survive without them. We're actually a very, very much more resilient company serving the long tail. But at the same time, I mean, there were still things you couldn't do, right? Like one of the things that's interesting that I read was that there were big companies out there, right? that were doing national ad campaigns that were, you know, 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. 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.

55:05And 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 a billboard is an interesting idea. They're cheap. Nobody uses them anymore.

55:40And 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. Uh, 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, uh, 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.

56:15They're 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. We just started to use billboards in all kinds of cities after that. And you guys did like merch too, right? Like you made t-shirts. I mean, you're the monkey mascot, like all over the place. 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.

56:49We 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, um, what if we just had like a t-shirt giveaway and, um, 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 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, one of our employees said, I listened to this thing called podcasts on my drive to work.

57:30And 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 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. 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?

58:04Yeah. Yeah, totally. Absolutely. But I mean, eventually we started to do that. We were sponsoring podcasts, public radio shows, and that is ultimately what led to us sponsoring Serial. Yeah, 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 in the newspapers. It 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. Yeah. And so we were the first sponsor. Genius. How did that, how did that, sounds like, sounds like a genius plan, but probably.

58:52You get the theme. Giving yourself too much credit, right, for being a genius. You're catching on to the recurring theme that is the story of Ben Chestnut, which is I basically forced Gump my way into luck. So, yeah, it was not a genius business move. We sponsored another podcast by the same people. I wish I could remember the name of it. Was it This American Life podcast? Yeah, yeah. It wasn't like a big commercial success for us to sponsor it. But 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 emo marketing or hats for cats and dogs, go to MailChimp.

59:31And 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. And you sold it on your website? We didn't even sell it. 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 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? And they said, well, let's just call it MailChimp because they had that quirky ad.

1:00:08And that's how they gave us first dibs. I know this just from inside information. it was very i mean it was shockingly cheap which you paid for that it was shockingly cheap yes and furthermore they said you know what do you want us to say for the uh what do you call it the intro and we said you do it you know better you know your audience better uh 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 came chimp that delightful young woman mispronounced us and called us mail camp and i and i remember you know mark t christina he he walked into my office with this recording and he was kind of sheepish about it he's saying like and mark was your was your marketing manager yeah yeah marketing yeah and and you know he's like you remember that thing we agreed to sponsor um 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?

1:01:13I think I have a right. I think I have a right. And no, nobody in their right minds would, would agree to this. And I said, you know what, screw it. Let's go ahead and do it. Um, and it just was a hit. It just went viral. Everyone knew what mail camp was. And, and, and it really like took our brand out of the, um, the entrepreneurial world and like the tech world. Like for the first time, we had people telling us that like their mothers or grandmothers were asking them about MailChimp, like 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.

1:01:49And at the end, they had a MailChimp 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. If ever there was a comprehensive history of ad campaigns. That's got to be in there because it was such a simple ad, but it was also, it was the ad before the show that you were anticipating. And everybody was waiting for the next episode to drop. And it could have just been like, support for Serial comes from MailChimp, your email marketing, blah, blah. And then that would be it. But it wasn't. And they actually, that show created the kind of template for creative podcast ads.

1:02:31Yeah, the price went up. I'm sure it did for season two. For season two, the price went up significantly. They wised up to it. But what a lucky break that was for us. And I mean, to this day, we look at our quarter four results and it's just like a bummer because 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 just makes it too hard. Yeah, it was an amazing quarter for us. 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.

1:03:14I mean, you'd gone from the three of you kind of working, you know, hunched over keyboards to a company of 300 people in a pretty short period of time. And I imagine like that's a lot of names to remember. Yeah. I mean, for me as a founder, I was really good at that point running like a small squad. Yeah. But when it got to hundreds of people, it got really hard for me. I remember a meeting that we called. We were doing these like little all hands. We called them coffee hour meetings. They were maybe 20, 40 people. We'd meet on one floor and talk about everything we had planned. And we had stopped doing them for a while.

1:03:52And then one day, my co-founder, Dan and I, we're like, let's have another coffee hour. We haven't done it in a while. Let's just 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. All 300 employees. Yeah, why not? But an all hands. That can set off alarm bells. Yeah, it can. We didn't think about that. And then so like a couple of days go by and 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 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 mailchip 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 were about to announce.

1:04:57The 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, 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 like all murder clowns and 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 uh whatever i was about to announce what did you do would you stood in front of them and said and said what things are great we're awesome who knows you know i i barely remember and and you know are there any questions and we had people the questions that that were coming were you know So totally unexpected.

1:05:49So we were talking about how successful things were growing. We were on a tear. Things were looking like up and to the right. It's amazing. And people were raising their hands saying, so what's the strategy? And my answer as a startup founder is we don't need no stinking strategy. We've got this. 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, 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.

1:06:27You know what I remember? I remember looking out at this audience and I remember half of it being kind of old guard, sort of like the typical startup pirates and the other half of people being really concerned, like why are you hiding things from us? And so the whole meeting just completely flopped. 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. 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.

1:07:07Yeah, and business is going through the roof. What do I need to have a strategy for? What do you mean? 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, a 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. And at the time, I mean, this is like you'd already been running the company for 14 years.

1:07:44That must have been pretty hard to take. I mean, I'm sure it's true, but hard to take. 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, you were self-conscious. I was completely self-conscious and worried that anytime I opened my mouth, I would just make things worse.

1:08:16It was really one of the worst times of my life. 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.

1:08:58Hey, 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. 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 going to take the kids and move out 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?

1:09:34You 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.

1:10:13What did the staff want you to? I mean, they wanted a strategy. So what did what did you think they wanted to hear from you? At that time, I thought that they just wanted me probably to coddle them. You know what I mean? That was my attitude at the time. Like, what do you want from me? Why do you need me to tell you what to do? So how did you resolve it? Did you seek help? I did. I went searching online. 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.

1:11:04And a guy came on, and his name was Clay Mateel. And they talked about how he ran his company, sold it, and he started 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 that's what I did. I went to his school. You went to Dayton, Ohio. I went to Dayton, Ohio. Yeah. For how long? Maybe two or three days.

1:11:44So 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 claymanteel'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 two million revenue and you know we were like maybe at 200 million or something by this time and so i i didn't tell i didn't tell them that i submitted the form and i said you know yes i make two 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.

1:12:21How do they describe it? Like a leadership training? 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 make you get out of this mode where it's all about me. And it's really all about the team. It's all of it. You know, it sounds cheesy, but you know, So 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.

1:12:55And 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. So how did you start to change the culture of the company? Yeah. So 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 what would it be like if we had a MailChimp school or a MailChimp academy? We started to inquire about that, talking to some local professors at Emory University.

1:13:32And 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 know what that means. And they said, oh, well, you know, it starts off with your core values. And we said, we don't, what is that? So yeah, 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. 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? Eventually.

1:14:04It took a few more years after that, actually. I mean, here's the thing about early years of a startup. 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 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.

1:14:40And 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. 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 greets you. It's not, hey, set up an email marketing account. Exactly. And by the way, 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?

1:15:25It'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 2017 ish 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.

1:16:00We also started MailChimp Presents where we produce video content for people too, because YouTube is like, it's now like the world's number two search engine after Google. We're out there producing documentaries and movies as well. About what? 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 entrepreneurialism. You are not going to be surprised about what I'm going to ask you next because it was covered by a few publications.

1:16:35But 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 of them said, I dealt with sexism and bullying there at 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? Yeah, you know, when you're a founder and something like that comes out, it's a real gut punch. We learned a lot from that. And I am grateful for what we learned from it.

1:17:23And, 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.

1:18:03I 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. With 1 ,200 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, you know, the leader at the helm. What did you do to respond? Well, we made our response public.

1:18:42We 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 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.

1:19:18And 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. When you, the company today, easily, if you wanted to, you could easily sell it and probably been offered lots of money for it.

1:19:56I mean, you own half of it. Would you ever consider doing that selling it? I've had offers. The thing is, I love what I do. And I don't know, I it's one of those things I you know, you know, 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 like having meaningful work, uh, is just the most important thing I think. 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. 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.

1:20:41Um, we can help you flip to enterprise, all the, yada, yada. But nowadays, you know, the tone has changed. it. I get private equity companies coming in and they don't ask me to take their money and grow it. 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 keel over and your wife needs to contact us. Here you go. What's your BMI? Yeah, right. Exactly. It's creepy. So it makes me think, you know, like, oh, maybe there is going to be a time where I need to step back and maybe have a succession plan and have someone take over running it day to day.

1:21:24I do see that as a possibility, but right now I'm just so happy running this thing. 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 mail camp. 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. 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?

1:22:06You 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 Hepzibah, Georgia who stumbled into business. And somewhere out there, someone knew the right answer of how to run my business, right? And these days, MailChimp is much bigger, and I get invited to ritzy events with some really great business leaders. And I remember being in one recently where a head of one of Microsoft's cloud units, he was speaking about how he hosts executive leadership team meetings.

1:22:52And 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. 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.

1:23:30Ben stepped down as CEO in 2022, but he stayed on as an 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 lessons from some of the world's greatest entrepreneurs, please sign up for my newsletter at GuyRoz.com or on Substack.

1:24:08This episode was produced by Liz Metzger and JC Howard with music composed by Ramtin Erablui. It was edited by Neva Grant. Our production staff also includes Alex Chung, Casey Herman, Ramel Wood, Noor Gill, Carla Estevez, Sam Paulson, Carrie Thompson, Andrea Bruce, Catherine Seifer, and Elaine Coates. I'm Guy Raz and you've been listening to How I Built This.

1:24:40If 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 at wondery.com slash survey. Thank you.