Ben Chestnut and Dan Kurzius are often asked why they refused to take venture capital for their email marketing firm, MailChimp. The answer became evident this week.
On Monday, tax software company Intuit announced it would acquire MailChimp for $ 12 billion in cash and stock, an extraordinary result for a startup that had never taken a dime from investors.
The sale effectively turned the founders into multibillionaires overnight. Because they never sold any part of the company to venture capitalists – nor granted stock options to employees – their stakes in the company were around $ 5 billion. dollars each.
For Atlanta’s founders, the deal was proof that it doesn’t necessarily take venture capital or a Silicon Valley address to produce a huge tech company.
“I feel like I got my head down, tweaking things, making things better, then I looked up and bam, it’s a $ 12 billion business,” Chestnut said. at FT.
The two founders were inspired by the small businesses of their parents. Chestnut, 47, who grew up in the rural town of Hephzibah, Georgia, remembered brushing her hair in her mother’s living room. Kurzius, 49, a vintage skateboard collector who grew up in Albuquerque, New Mexico, explained how his father’s bakery struggled to compete with the bigger chains.
The first two crossed paths on mp3radio.com, a dotcom-era company associated with Atlanta media conglomerate Cox Enterprises. Chestnut hired Kurzius as a software developer after bluffing throughout the interview, having no previous coding experience.
Gregg Lindahl, the former chief operating officer of mp3radio.com, says Chestnut stood out with his flair for design, even for mundane tasks.
“I had the best PowerPoints on the planet. I’m absolutely sure, ”says Lindahl.
When the business came to an end, Chestnut and Kurzius went it alone by creating a design agency. They started working on websites for dotcom companies, until that job dried up and airlines and real estate companies became their biggest clients.
Eventually, the duo began to consider a pivot. It turned out that another part of the business had grown quietly: an email marketing service called MailChimp, which they had offered for a small fee.
In 2007, Chestnut and Kurzius decided to focus all of their attention on MailChimp. Investors began to take an interest in it, believing the company could grow quickly by selling to large companies, a prospect that upset the founders.
“I felt like they were more like alien beings from another era trying to tell me how to run my business,” Chestnut told LinkedIn founder and venture capitalist Reid Hoffman at a podcast.
Around this time, Chestnut, who is the public face of the company, says he also began to think about selling MailChimp for almost $ 4 million. The business began to stagnate as he debated whether to sell, before finally giving up on the idea.
After adopting a business model in which the basic MailChimp product was offered for free and paid users were drawn to additional features, the service began to grow even faster.
Now Chestnut says he’s started to envision a future beyond MailChimp. “I like what he does, but it’s not me. I’m a human being, you know.
Pamela Walker, CEO of ArtsNow, an Atlanta-based nonprofit, said Chestnut and his wife Teresa donated to the organization intended for arts education and technology work in Hephzibah, where they met in high school.
“They don’t want recognition,” Walker said. “They don’t want distinctions.”
Meanwhile, the founders of MailChimp have become heroes of the so-called seed community, which shifts risk dollars in favor of profits and greater control over their businesses.
Wade Foster, managing director of Zapier, a software company that has partnered with MailChimp, says he’s surprised the founders decided to sell, but doubts it has anything to do with money. “There were probably other reasons why they thought this was a good result for MailChimp, for the customers and for everyone.”
Because MailChimp hasn’t rewarded employees with stock options, they don’t benefit from the million-dollar salaries associated with big tech sales. The deal includes a total of $ 500 million in stock-based rewards, and MailChimp has paid up to 25% of annual profits into employee retirement accounts since 2012.
“If you’ve been with us for 21 years as a private company with no interest in an outing, then it makes a lot more sense to split the profits in your hands now,” says Chestnut. The company will also pay cash bonuses to employees.
Because MailChimp never took money from investors, Chestnut says it never had to file formal financial reports. MailChimp generated $ 800 million in revenue last year, comparable to several public software companies with even larger market values.
“I would look at the previous balance, then I would look at the balance for this month, and I would like to make sure this month was higher than last month,” says Chestnut. “That’s all I did.”
This article has been updated, correcting the last name of Zapier CEO