MailChimp’s founders built the company slowly by anticipating customers’ needs

The Atlanta tech scene is blossoming, just like our film industry. We have a couple of incubators, including a few that are funded&#x2F;supported by Georgia Tech. The cost of living here is super cheap, and there are brilliant and talented people everywhere.<p>We have satellite offices for tons of major tech companies, so there are traditional tech jobs too. Earning $200k here while the cost of living is so low is phenominal.<p>You can comfortably live in the city with a roommate and pay only $500-600 rent. Just outside the city, you can get a 1200 sqft apartment for $700.<p>Our music scene is amazing, and the local food is fantastic.<p>I try to convince my friends in SF to come out here and give Atlanta a look, but nobody bites. I think this city is an incredible opportunity, especially for an early stage startup that wants to focus on growth prior to investment. The talent is here, the city is amazing, and the rent isn&#x27;t absurd.

<i>&gt;In fact, it’s possible to create a huge tech company without taking venture capital, and without spending far beyond your means. It’s possible, in other words, to start a tech company that runs more like a normal business than a debt-fueled rocket ship careening out of control. </i><p>The author, Farhad Manjoo, is romanticizing a bootstrapped business as &quot;good&quot; and (via his prosaic examples of restaurants and dog walking) dismissing the VC-backed businesses as &quot;bad.&quot;<p>It should be obvious that the opposite can be true: a bootstrapped business can also be dysfunctional and a VC-backed firm can be disciplined with its money.<p>Bootstrapping is great strategy especially if you&#x27;re company that doesn&#x27;t benefit from &quot;network effects&quot; such as Mailchimp&#x2F;Sendgrid. You acquire customers one at a time and offer a good enough value proposition for them to subscribe or pay. A lot of SaaS&#x2F;enterprise companies and lifestyle businesses can grow that way.<p>Venture capital is really helpful when you need to deliberately grow exponentially faster than bootstrapping will allow because you&#x27;re trying to build a giant footprint for the network effects. Snapchat is a good example of this. It wouldn&#x27;t make sense to try to sell the Snapchat app on App store for $4.99 each so it can be cashflow positive and pay for programmer salaries. The first users of their apps were teens in high school and they can&#x27;t just purchase an app like that without their parents&#x27; permission. If Snapchat charged money for the app, they <i>wouldn&#x27;t even know</i> that teens were the leading edge of that trend. In that case, you need to wisely use vc funding to pay the bills while you grow the audience. Hopefully, Snapchat will end up profitable like Facebook instead of losing money like Twitter.<p>If you&#x27;re a &quot;network effects&quot; startup that insists on bootstrapping as the <i>only</i> funding, you will be beat by the competitors that are willing to live with $0 revenue for a few years while their equity financing allowed them to build their user base faster.

It&#x27;s called doing something kinda boring, consistently and doing it well. It&#x27;s hard to say in software when you really need huge capital if you can start with the following:<p>1. Some financial understanding of how to invoice, pay taxes and write contracts - the business side<p>2. Manage people, setting expectations and holding people accountable, while empowering them to be successful in there job as clearly defined when hired<p>3. Take action to address the immediate. Reds of the customer while always keeping an eye on the longer term needs - always be available and responsive to needs of the customer - email, phone, chat<p>4. Have a solid foundation in the technical aspects of what you are building and operating<p>If you have these 4 things and a product that is a good fit in an emerging market than raising capital is probably not necessarily needed because you have the resources and skills to make it happen. I think probably a 5th requirement is you have enough personal capital to pay for your living expenses until the business is making enough money. Also avoid hiring until you can pay for double the salary of the first hire... this way if you are wrong you have some padding and it&#x27;s proved you can work through hard times. I remember thinking before our first hire that this was way too much stress and it would be so much easier when we have more people. Now at 16 employees, it&#x27;s an order of magnitude harder but I&#x27;m much more prepared than I was back then. The children analogy is good I think. When you first have a child you think this is going to be hard but they grow with you and so it&#x27;s not so bad it&#x27;s even kind of fun

<i>“MailChimp’s path was circuitous, and it came without the glory of enormous funding rounds.”</i><p>It’s time to retire the idea that raising money equals “glory.” It’s not a measure of business success as much as it is a measure of founders being able to convince rich people to back them. As we know from the &quot;XX is shutting down&quot; stories that regularly grace HN, many if not most tales of massive fundraising success will eventually become business and investment failures. Yet the TechCrunch&#x2F;Fortune&#x2F;BI coverage angles—pushed relentlessly by the investment community and hired PR people—almost always emphasize the former over the latter.

Depends on what you mean by &#x27;making it&#x27; as a startup - is it the revenue growth? burn rate? profit growth? Number of users? Number of employees? A SF office? How well funded you are?<p>It&#x27;s hard to grow a business without going the conventional SV route and getting VC funding. Unless you have a revolutionary product, the bigger competition will likely stomp over you unless you have resources to grow your team and product and marketing. Or if you are comfortable with a small market share but a profitable one.<p>Not saying it is impossible, but just hard. I know a few SaaS out there like Roninapp and Reamaze that like Mailchimp are not VC funded and are growing well and are run by a small but effective team, but the question is would startups like these benefit from funding and be in a better position with regards to growth and user base than without vc funding?<p>More often than not when startups receive funding they move away from satisfying the customers to making investors happy. As the company starts to hire, get a nice office, increase spend on things like office perks, ads, marketing etc while it might contribute to growth it doesnt necessarily work well for the end user. You go from lean to bloat more often than not. I guess that depends on how you manage resources but it isnt exactly easy with investors breathing down your neck<p>I have a company that is bootstrapped and while there are well funded competitors out there, i&#x27;m perfectly fine with my startup running lean and being profitable, albeit slowly. At least I am my own boss and I answer to myself, and that in my world is &#x27;making it&#x27;.

I&#x27;m curious if there&#x27;s interesting data, information, or anecdotes about bootstrapped, well-intentioned, well-executed startups being utterly floored by VC-funded competitors. Particularly if the &quot;average&quot; or most common reason behind a bootstrapped failure diverges significantly from the &#x27;common sense&#x27; reason, i.e., &quot;bootstrapped startup couldn&#x27;t move fast enough&#x2F;expand quick enough&#x2F;hire great talent because bootstrapped startup didn&#x27;t have the money&quot;.

And then somehow they managed to totally disregard their customers&#x27; needs and screw everyone with the Mandrill changeover. Seriously, has everyone forgotten that fiasco?<p><a href="https:&#x2F;&#x2F;news.ycombinator.com&#x2F;item?id=11170713" rel="nofollow">https:&#x2F;&#x2F;news.ycombinator.com&#x2F;item?id=11170713</a><p>I&#x27;ll never trust them or use them again, after that. No way no how.

Too bad. After the Mandrill&#x2F;MailChimp price hike, every company I&#x27;ve worked with is moving off of them as fast as possible, towards Mailgun&#x2F;Sendgrid.

I don&#x27;t see why this is a surprise. From my observation, there are typically two types of startups out there.<p>1. Startup with a clear revenue model created by generating tangible value for businesses.<p>2. Startup without a clear revenue model that is doing something interesting and will probably be acquired if successful.<p>The first is a successful business like MailChimp that can grow itself from it&#x27;s own revenues and doesn&#x27;t need funding. The second is the type of business that needs funding because they are essentially investing in building technology to sell to a larger company OR are building a large pool of users to sell to a larger company.

A similar message is in <i>Getting Real</i>, a free PDF by the makers of Basecamp: <a href="https:&#x2F;&#x2F;gettingreal.37signals.com&#x2F;" rel="nofollow">https:&#x2F;&#x2F;gettingreal.37signals.com&#x2F;</a>

Interestingly in the marketing space (in particular, email-based marketing), all the tools I gravitate towards have been bootstrapped rather than funded:<p>Mailchimp, ConvertKit, Drip (altho lead pages bought it, and is actively funding it&#x27;s growth), curated.co (I&#x27;m not 100% sure on Curated - is that funded?), Edgar<p>These types of apps can actively and easily translate into $$ for businesses, so it&#x27;s no wonder they can bootstrap rather than take on funds - individuals and businesses are willing to pay to make money!

Then it&#x27;s not called a start up, but a normal company. How is that a revelation?

We really need this contrarian view of startup creation. In a way, having a few millions in profits can&#x27;t be called a lifestyle business, your business can&#x27;t scale more and you are happy with what you created and control. Also, only the process to get initially funded is very time consuming (e.g. look at the kickstarter videos).

As a regular user of all the main email marketing services:<p>I feel Mailchimp is missing the boat by focusing entirely on email and not offering a way to contact customers via:<p>1. In-app messages 2. SMS 3. Push notifications<p>It&#x27;s also difficult &#x2F; impossible to set up advanced automation sequences with it. For example, if Customer X does Y on your site, direct them to another branch with a different sequence.<p>Of course, their main target customers are small businesses so they may not need these advanced features but these customers would benefit tremendously from being able to for example text certain messages to customers instead of only being able to email them.

Another example of a company that has grown quite large without using venture funding is Zoho.com - based out of Chennai, India. They are even larger than Mailchimp in terms of revenues - clocking over $1 Billion and with over 3000 employees.<p>[1] <a href="https:&#x2F;&#x2F;pando.com&#x2F;2014&#x2F;10&#x2F;14&#x2F;anti-burn-how-bootstrapped-zoho-survived-two-tech-bubbles-and-became-a-massive-success&#x2F;" rel="nofollow">https:&#x2F;&#x2F;pando.com&#x2F;2014&#x2F;10&#x2F;14&#x2F;anti-burn-how-bootstrapped-zoho...</a>

I think such a story is difficult now unless its a niche small market. Lets say someone start a company and stumble-upon a massive market but decides to grow slow financed by revenue. The problem is others are going to copy the idea and grow fast with VC money and crush the original company. May be possible in the next downturn when VC money dries up<p>Read Blitzscaling by Reid Hoffman - <a href="https:&#x2F;&#x2F;hbr.org&#x2F;2016&#x2F;04&#x2F;blitzscaling" rel="nofollow">https:&#x2F;&#x2F;hbr.org&#x2F;2016&#x2F;04&#x2F;blitzscaling</a>

Glory to the company but shame to modern internet — you have to use one of few &quot;email providers&quot; instead of just installing Postfix otherwise all your emails go to spam folder.

If you can continue growth and profitability without taking outside investors, great for you and I recommend it. The reality is, a lot of times founders are faced with the problem of funding&#x2F;paying bills and are left with no other option than to take VC money. If you go down that route, just make sure that everyone on-board has the interests of your users in mind.

The article seems to acknowledge Silicon Valley is good and prolific at startups to the point of metonymy. SV is the standard way, and so you get descriptions like &quot;Un-Silicon Valley Way&quot; instead of say the &quot;Atlanta Way&quot; (another startup from Atlanta called Coca-Cola appears to be doing OK too ;))<p>But why does this article have this tinged negativity toward SV? Why not just highlight MailChimp&#x27;s success without the jab on VCs? Clearly both VC or bootstrapping approaches can work for a company (though both approaches fail in the majority of cases and journalism is in love with survivorship bias).<p>I&#x27;m not in SV, but it&#x27;s obviously the place important innovation has&#x2F;is&#x2F;will be coming from (and some crap too). Innovation and growth is needed and should be encouraged in this economy.<p>Just frustrating to see big journalism knock SV for no reason.<p>Better story: &quot;Chimps and the Un-Silicon Valley Way to Make it as a Primate&quot;.

&quot;Believe it or not, start-ups don’t even have to be headquartered in San Francisco or Silicon Valley.&quot;<p>Lol. This was a great read. But yeah, don&#x27;t take money unless you literally cannot finance your growth. A real business builds itself.

Isn&#x27;t VCs needed for building such company not in 16 years but in 2-3?

What a lot of people miss (including the author) is the time factor. Yes you can bootstrap a business and grow things organically once you have found decent product&#x2F;market fit. The problem is that it will just take a much longer time until you reach certain milestones than with a VC-based approach.<p><i>&quot;There is perhaps no better example of this other way than MailChimp, a 16-year-old Atlanta-based company that makes marketing software for small businesses.&quot;</i><p>This just kind of proves the point. If you have a company with great product&#x2F;market fit and lots of VC in the bank you would either reach their numbers much quicker or have higher numbers after 16 years of operation.

&gt; <i>a tech company that runs more like a normal business than a debt-fueled rocket ship</i><p>Most tech startups are funded with equity, not debt.

Spam is profitable.<p>(And yes, Mailchimp is a spammer, based on the Spamhaus definition of spam.[1] It may be legal, but it&#x27;s still spam.)<p>[1] <a href="https:&#x2F;&#x2F;www.spamhaus.org&#x2F;consumer&#x2F;definition&#x2F;" rel="nofollow">https:&#x2F;&#x2F;www.spamhaus.org&#x2F;consumer&#x2F;definition&#x2F;</a>

Works better in a market that is not &quot;winner take all&quot;.

and my buying ad space on every podcast ever.

Mail...Kimp?

I&#x27;m looking to write a powershell script for creating lists and updating subscribers for mailchimp api v3. However, Im kind of lost. I only found old code samples. <a href="http:&#x2F;&#x2F;poshcode.org&#x2F;3479" rel="nofollow">http:&#x2F;&#x2F;poshcode.org&#x2F;3479</a> <a href="http:&#x2F;&#x2F;poshcode.org&#x2F;3351" rel="nofollow">http:&#x2F;&#x2F;poshcode.org&#x2F;3351</a> Does anyone know any new code samples for mailchimp v3 api for powershell.

You know what word doesn&#x27;t appear in that story?<p>Spam.<p>Mailchimp is a company that provides lots of unsolicited commercial emails. In other words, spam. You can dress it up and call it &quot;marketing software for small businesses&quot; but that doesn&#x27;t change the essential fact: Mailchamp is a spammer. Is it any surprise that spamming is profitable?<p>I&#x27;ve received hundreds of Mailchimp emails. Not once did I sign up for any of those lists.<p>Does Mailchimp make it easy to unsubscribe? Sure. But that doesn&#x27;t change the fact that they are spammers, and that if you want to send spam with some semi-plausible deniability that you&#x27;re a spammer, Mailchimp is probably a good choice.<p>Of course, this story, like nearly all &quot;business news&quot; stories, is very likely the work of a highly paid public relations agency. That is one more reason that the word &quot;spam&quot; does not appear in this story.