In 2019, Ben Chestnut told TechCrunch that Mailchimp would “make $700 million this year, give or take, in revenues and are highly profitable.” The company had never taken outside money. Two years later Intuit agreed to buy it for about $12 billion. This profile is about how a company founded in Atlanta in 2001, with no investors, ended up as the largest bootstrapped exit of its time, and about the decision Chestnut says he most wanted to avoid: going public.
A side product, paid for by a severance cheque
Fortune traces Mailchimp to the Rocket Science Group, a web design agency founded in 2001 by Chestnut and Dan Kurzius. Chestnut told TechCrunch where the money came from: “I got a severance paycheck and we used that to start the business.” The email tool started as a way to solve a problem the agency’s own clients had, and it grew while the consulting work stayed flat.
For years it had no free plan. According to TechCrunch, the free tier arrived in 2009, when Mailchimp had about 300,000 customers, with paid plans starting once a list passed 2,000 contacts. Wikipedia, citing Mailchimp’s own 2010 blog post, reports that the user base grew from 85,000 to 450,000 within a year of the change. The two outlets count different things (customers versus users), so treat them as direction rather than a single series.
“We never needed the funding”
The bootstrapping is the part of the story most often repeated, and the sources disagree on the motive. PitchBook, quoted by Fortune, says the company “has no outside funding or venture capital backing.” Chestnut’s own explanation to TechCrunch is the least dramatic one: “We have never needed the funding because there was just a big need for small businesses to have something like this.”
Other tellings are less flattering to the legend. SaaStr’s write-up of a Chestnut talk is headlined “No one would fund them,” and describes him as “not dogmatic” about bootstrapping. In February 2021 Chestnut himself tweeted a reference to the “12 flaming hoops of VC” and added, “It all worked out in the end!” (as quoted by Business of Software). The defensible reading: raising money from Atlanta in the early 2000s was hard, he did not need to, and he never changed course once the business was profitable. We found no source that dates a specific refused term sheet, so this profile does not claim one.
Multi-billion-dollar offers, and “no greater hell”
By 2019 the offers had arrived. Chestnut told TechCrunch: “I’ve had multi-billion-dollar offers, but it’s not about the money.” On the alternative to selling, he was blunt: “I can think of no greater hell than being a public company.” A company with no investors has no one forcing an exit, and that was the leverage that mattered in 2021.
The Intuit deal, in documents
Intuit announced the deal on September 13, 2021. The company’s press release is the primary source for the scale it bought: about $12 billion, including roughly $300 million of employee transaction bonuses issued as restricted stock units, with 800,000 paid customers, 2.4 million monthly active users, 13 million total users and more than 1,200 employees. Fortune reported it as Intuit’s largest deal to date, to be funded with cash on hand and $4.5 billion to $5 billion of new debt. Chestnut’s statement in the release: “By joining forces with Intuit, we’ll take our offerings to the next level.”
Intuit’s annual report for fiscal 2022 (a filing with the SEC) gives the hard numbers. It states that Intuit acquired Mailchimp on November 1, 2021; that the purchase consideration totalled $12.0 billion, “which included $5.7 billion in cash and 10.1 million shares of Intuit common stock with a value of approximately $6.3 billion”; and that results for the twelve months ended July 31, 2022 “included $762 million of revenue attributable to Mailchimp,” counted from the acquisition date. Intuit also recorded $63 million of professional fees on the deal.
Two things are not public. Intuit does not disclose how the proceeds were split between Chestnut, Kurzius and other holders, and Fortune says only that the sale “represents a windfall” for the founders. We have not reported a figure for anyone’s stake.
What founders can take from it
The lesson is narrower than “never raise money.” Chestnut’s company was profitable early, which removed the need for outside capital, and an absence of investors then left the exit decision with the founders. SaaStr’s account says reaching traction this way took years longer than a funded path would have. The record shows a trade: slower early growth, in exchange for choosing the buyer and rejecting a public listing. Whether that trade is available depends on having a product small businesses will pay for from day one, which not every startup has.
