Archaeology of 0 to 1: Mailchimp breakdown

Introduction: The purpose of this research is to understand how a now well-established product like Mailchimp was able to emerge in the market in the first years of its life. We will try to uncover the channels and the choices that were made to take the company and the product where they are today. And which of them can be repeated to bring a new product to the market.

Mailchimp was born in 2001. Google was born in 1998. Social media wasn’t even...just wasn’t. Now, this is not a breakdown about Google or social media but you can easily imagine how much harder things were back then. Which puts everything in perspective for me. From now on I’m gonna try to pause before complaining!

This also means that I’m gonna have huge problems pulling this breakdown together :D
PS: It wasn’t easy indeed!

The other thing to notice, a bit like with Canva last week, is that here we are not showing an overnight success. MailChimp was sold to Intuit after 20 years of bootstrapped hard work from the founders.

I read this tweet yesterday morning

Something to always keep in mind. There are exceptions to this. Yes, there are but if you are not...well keep going. It might be that you just don’t belong to the exception category and have to wait a little longer for success to happen :)

2001: Everything starts with a cute monkey

This is how the website looked like. The first thing I thought is that it is so cute! Honestly. Super simple but so effective and the little monkey up there waves its hat once in a while. It’s really nice.

The copy is focus on what the tool does while instead on what the problem is and then present the tool as the solution.
But hey! This is 2001. Things work differently. The 3 second attention span probably had not even been developed yet. So I’m sure  it did not matter :)

Interesting that in an interview in 2019 Ben Chestnut said that Mailchimp started as a side gig. When  it turned out to be something serious instead, he wanted to change the logo and the brand and kill the monkey because it wasn’t corporate or safe enough. The other founders stopped him saying that the monkey, called Freddie, was the reason they were there in the first place.
In their words: “You can have fun with your brand and it will go a long way.” And they stuck to that decision because Mailchimp is a whole world of funny animations and very informal copies.

This is not an assumption but it is surely a learning. When starting a business, we all go through that phase. “The look” phase. What are people going to think? Is it professional enough? Well, it clearly doesn’t matter. Mailchimp proved that you don't have to be super serious to be way successful. We should always go for a look that makes us and our business feel good!

In the end as it turned out, people liked Freddie and that the brand was so cheerful. So spontaneous. So fresh if you wish.

Our first assumption is that their cheerful brand did play a very important role in their success. That people created a connection with the brand because somehow they could relate to it.

Two of its founders, Mark Armstrong (who was bought out in 2008) and Ben Chestnut, had already started working together a few years earlier by founding a web design agency called Rocket Science Group and where Dan Kurzius, the 3rd cofounder, was a consultant.

The fact that they run a web design agency explains the nice choice of the colors and the well thought logo. 
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The mission of the Rocket Science Group is simple and clear. They define very well the market and the user personas they are targeting. They are going to take this over to MailChimp as well.
A very well defined market.
If you have read my previous archaeology of 0 to 1, haven’t you started to notice a pattern? I have.
And well-defined user personas and markets are in all of them. So maybe when we hear about picking a specific target market, it isn’t such a bad idea :)

And now the brand makes even more sense. They target the Creative Community. I can’t think of a better way than speaking their language: Colors and Cartoons.

My second assumption is that their first users were coming from The Rocket Science Group business. 
That’s an easy one.

They were already offering services and email marketing tools. And actually this is how they found the problem to solve. Because their clients had that very same problem.

We can safely assume that Mailchimp is actually a spin-off of their web agency. I wouldn’t consider it an evolution like Fusion Books and Canva, but literally, they took a piece of the business and made it a stand-alone if you wish. 

The third assumption is that they used the money made by the web agency to support Mailchimp which was bootstrapped.

The web agency business was good at the time. They had a good list of corporate clients (and these are the ones that pay more usually) so they could afford to bootstrap a side business.

And now it comes the very hardest part of this research. How did they distribute their tool after they acquired the first users? I have to tell you that I spent hours digging and I can’t come up with a concrete answer. But let’s see what I found.

Towards the end of 2001, there is an interesting change at least for me

They are now offering a free trial. It wasn’t there at the very beginning. You had to pay. Now they are offering 25 free emails and they added testimonials which tells me that users might not come from strong referrals anymore but might find them differently. Organically so to say.
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2002 - 2005 : A slow growth

I would like to really understand what is "organically" in the first years of this story. So I keep looking.
I finally get something. In 2002 they are featured in a magazine! A paper magazine. 
The scan of the article is still there. Such a time machine! It’s really bringing me back to times that were so different.

And look at this one!!
Ben Chestnut is soo young here!! :)

In the article, we can read that they focused on small companies (and they confirmed that in many  interviews later on,) that they focused just on distribution not on the building of the newsletter itself or on the email list, and they do that way cheaper than competitors. The article says that before companies like Mailchimp showed up the only alternative was going to high-end very expensive firms that were accessible by corporations only.
Not bad as a value proposition no?
From a small company to other small companies.
They understood them because they were like them (not to underestimate! People connect to similar people. And people buy following the same principle. There is a whole psychology but we don't need psychology. It's enough to look at ourselves and the way we behave.) They brought an affordable solution to an existing problem, taking away the burden from the shoulders of the business owners for a small amount of money.

In the magazine Chestnuts also says that they have hundreds of users at that point with a profit of $50-to-$250 minimum entry. For me, it’s difficult to quantify what’s “hundreds”, but these are also times where I don’t think “high-growth” was a thing.

Assumption 4: The channels they used were mainly offline. And still today this is not bad. We are so "online" that sometimes we forget it. Especially if you are at the beginning and you can come up with a precise profile, nobody stops you (except Corona maybe...) from reaching out to your potential customers locally as well.

To see things change we need to fast forward to 2005

First of all, they changed their name from Mail Chimp to MailChimp (at some point later on they also drop the C to become simply Mailchimp), they offer a lot more features and they have a blog.

They also won a web award (more visibility and credibility coming their way).
You can see it in the screenshot but if you are curious you can see it here:

2009: The beginning of the hyper growth

In 2007 they shut down the web agency and go full in with Mailchimp. So the business has taken off. I would normally stop here, but a very interesting twist comes in 2009 when Mailchimp entered the fremium world in very much Mailchimp style.

Such much time wasted with just paying users when they could go for the free ones!!
This was clearly a calculated move and a smart one because it sent MailChimp in hypergrowth.
They have almost 100000 paying users. But they also have data. Data collected in 8 years of business where they had played with different price schemes to see which one was more appealing.

The intelligence on the data (they knew exactly that they could afford to cannibalize their model) and the freemium (where they would append the logo at the end of each email for free advertisement) brought them to grow to 450000 users in just one year.
And the growth continued for the years to come.

In conclusion, this is probably the biggest advantage of bootstrapping and growing slow. If your finances allow you, you can grow together with your customers. Get to know and understand them. Nothing beats this approach in my opinion.

The founders also said that bootstrapping was a choice of "ignorance". Simply they didn't know anything about possible investments. But I also read that when things were taking off, investors themselves approached them with various offers which they denied. At that point the numbers were already telling them they didn't need anything from anyone.


So let’s recap what we learned from the first years of the life of Mailchimp:

1. It might take years to be truly successful. If success doesn't arrive in the first years, it doesn't mean that it will never come. 
2. The best brand is the one that represents you and your company at the best. Don't be afraid to play with it.
3. Make your potential customers resonate with you, your business and your value proposition. This is going to be one of the strongest reasons they will come back to you again and again.
4. Offline is still a good distribution channel. Not to be forgotten when building a strategy.
5. Collect data and learn from it as much as you would from a user interview. Both can give you great insights.
6. Bootstrapping is hard! And takes time but you can use that time to get the most out of your experience. To learn from your customers, to tune your product at your own time and customers' needs. And in this time you are your own master. I wouldn't underestimate the power of it.

Archaeology of 0 to 1 is a special column of TILT where I regularly research the early history of famous products trying to summarise repeatable learnings.

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