Thank goodness, not another overnight success story:
Mailchimp, named after their most popular e-card character, launched in 2001 and remained a side project for several years, earning a few thousand dollars a month. Then in 2007, when it hit 10,000 users, the two decided to commit full-time.
'unlikely tech unicorn' ....why is it unlikely? Someone was going to dominate the smb tier of email marketing and mailchimp have executed really well.
The whole valley 'unicorn' schtik is what's unlikely, it's just glib VC speak for fast bucks and easy money
Precisely the point of Aileen Lee (of Cowboy Ventures) when she coined the term.
But like "cloud" it's been gobbled up by people who didn't know what it meant and has been bent into a parody of itself.
(not to imply at all that a "unicorn firm" is as profound an idea as not caring how your packets are routed but rather connecting to a resource on the network)
MailChimp is perhaps the most "on brand" B2B startup I can think of. It's also perhaps the best case example of what a brand mascot can do for your business.
I can't make out the difference between all its competitors - Aweber, ConstantContact, iContact. But I can figure out MailChimp from a mile away.
> Chestnut and Kurzius have worked to keep that lifeline affordable: Mailchimp’s customers pay nothing for the first 2,000 subscribers or 12,000 emails sent, and then $10 a month after that. The low cost translates potentially into a big upside.
Hardly. Only the first part of that statement is true. It's $10 a month AND UP... and it goes up pretty fast: https://mailchimp.com/pricing/
We switched to phplist + Amazon SES several years back after calculating what our MailChimp bill would be for our list size, and are glad we did.
Longer-term, you may need to consider things like, "how easy is our email setup for Marketing to own" because it makes a lot more sense for an experienced email marketer to own things than an engineer at a certain level of scale, both from an experience and head count cost standpoint.
There's also the consideration of "should all emails live in one platform?" It may very well be that high-volume, low-impact transactional mail should absolutely go through something like SES, whereas higher value emails go through an actual marketing ESP like Mailchimp or something more robust.
Good on them, but they’ve completely flubbed their absorption of Mandrill, and these days Mandrill suffers frequent production outages unbecoming of a serious email provider, and their support is abysmal. I guess part of building a big business is squeezing your customers to boost your margin.
Has anyone migrated off of Mandrill in the past few years? Where’d you go, and how was the transition?
You are not kidding. We have had numerous issues with them lately. Their servers go down. API endpoints that are supposed to return json return cloudflare gateway error HTML instead... We are investigating moving to SendGrid right now. We REALLY need to find a reliable email service. It has been a shit-show and our clients are frustrated.
Not the post you were replying to, but one of our biggest gripes while trying to work around Mandrill outages was the lack of idempotency keys in their API. Presumed uptime improvements aside, what does SendGrid provide in terms of idempotent requests?
Not sure what you mean by "absorption" of Mandrill, to wit: Mandrill was always an in-house product of the mailchimp company, they just had it as a separate product vertical. My impression is that the effort to maintain the product wasn't financially viable and so it's effectively still run as a courtesy to mailchimp customers, but it's basically on life support.
As for where to go -- Sendgrid and Sparkpost are popular offerings in the same space:
Thanks for the links here, I'll check out Sparkpost in addition to SendGrid. Didn't realize Sparkpost was the sanctioned escape hatch from Mandrill's own blog postings.
Also I mean "absorption" because at some point Mailchimp required Mandrill users to start using Mailchimp credentials to log in. Even though they were the same company ultimately, the transition felt like an extremely sloppy acquisition!
We choose SendGrid long time ago to unify all our mail infrastructure under one provider and it was a significant mistake. Now, we're heavily relying on SendGrid but some systems still depend on Mandrill and we're slowly migrating those as we make changes to them.
Please elaborate on why SendGrid was a significant mistake for you. We are looking at moving to them from Mandrill, since their stability has been terrible for us.
Was it the migration strategy that was a misstep or having a single point of failure for transactional email? If you're looking to support multiple transaction mail providers, any best practices you've come across to ensure that your app has a common interface to different providers?
One potential pitfall is keeping your blocked-email list synced between ESPs. You definitely don't want to repeatedly send to an address that has bounced or reported your email as spam, as that's a good way to get yourself into an ISP's spam filter for all its recipients.
When using multiple ESPs, the best approach is maintaining and enforcing your own block list. But if you're relying on your ESPs' own block list functionality to prevent additional sends to invalid/complaining addresses, you'll either need to sync their block lists, or somehow partition things so that the same recipient email always goes through the same ESP.
Nearly all transactional ESPs offer webhook notifications on bounces and complaints, but not all have an API where you can add an email to their internal block list.
Not the OP, but my personal experience has been that it was a mistake to rely on SendGrid. This is based on a 2016 incident [1] where SendGrid made unannounced changes to IP pools, resulting in sent emails being delayed for several hours or more while the new IPs warmed up. For many kinds of transactional email, several hours' delayed delivery quickly turns into multiple end users opening support cases. ("Where's my password reset?")
If this had been a simple mistake, fine (all ESPs have occasional issues), but to my knowledge SendGrid has never acknowledged this as an operational error. In fact, at the time SendGrid representatives repeatedly insisted the change was made intentionally for its (paying) customers' benefit.
(That said, SendGrid had some really nice tracking and segmentation dashboards, which I do miss at my new ESP.)
I moved my side project from Mandrill to SendGrid immmediately after the “absorbtion” (Mandrill/MailChimp policy changes). But then I had to scramble to move again after an incident where SendGrid apparently felt it was OK to delay sending transactional emails by a day or two, affecting many of their paying customers. [1]
Currently on Postmark, and have found them to be reliable, transparent about the very rare problem on their end, and helpful with problems on my end.
Following Mandrill’s policy changes, I started maintaining a package that simplifies moving Django projects between a number of full-featured transactional ESPs. Even if you’re not on Django, you may find the list of ESPs it supports helpful. [2]
Mandrill has been pretty reliable. I was certainly annoyed by the pricing and sending requirements change, but the actual cost didn’t increase much for us since we already had a Mailchimp account.
That said, we have a duplicate of Mandrill’s sending infrastructure at SES and use it enough that we know it is ready for migration. We have a lot of domains (agency.) Keeping track of domain sending security for two providers is occasionally challenging, but we could move everything to solely use SES in about a week if needed.
I have my own concerns about SES since my impression is that you have to do your own IP hygiene, and you can't get "pre-warmed" IPs, so if we were to slam SES with our email traffic, our deliverability would fluctuate greatly. We don't send unsolicited email however, and only to people who confirm their email.
Napkin math time. Assuming 30% profit (very achievable for a tech biz that size), thats $90M a founder per year (if they want). I would take that over the risk of trying to get to a $1B sale any day of the week. There aren't very many industries that can achieve something like this. What a time to be alive.
Note - I understand their are so many assumptions here, but I think my point still remains.
If they have $600MM revenue, then even applying a modest 5x multiplier would give them a $3B valuation right? And 10x might be closer to what they might actually fetch if they were to ever sell.
Also, standard multipliers are pointless on "unicorns". You have to figure out potential for future growth and the potential of the space itself.
Facebook bought instragam for $1 billion even though there was no significant revenue or income. But the potential for growth of instagram itself and the photo sharing social media space was immense.
With established companies like walmart in establish spaces like retail, you know what you are getting. With tech unicorns, it's a bit of a gamble.
15x is modest for a virtual-product company net earnings, in cases where there are earnings after the accountants are done. A 5x multiple of revenue would value Netflix around $60 billion.
And if Walmart had the assumed 30% margins, they probably could be a $2.5 trillion company. Their revenue is more than 2.5 times their almost-$1 trillion competitor.
It depends. For a mature business like Walmart, you'd look at EBITDA, and margins to arrive at a valuation. For a growth business, especially a SaaS business, revenue might be used until there's actual earnings.
Agree, Bloomberg was a tech company long before it was a media company. And Bloomberg himself would probably be in the top five of the richest list if he ever took it public (he owns 88% of the company).
Matt Cohler should probably be on the list. $2b+ for sure, especially with Benchmark's 30% cut on fund profits and being one of the GPs in the fund that had Uber.
Always been a fan of MailChimp, kudos to them for bootstrapping all the way to this point. Few can say the same. They started out building a product for their website customers and brought some wit and life to an unsexy market.
Yes, I use one called Sendy (https://sendy.co/). Subscription-free, one time payment of $59 and emails sent through Amazon SES. As a small business owner, I have no idea why someone would use MailChimp over this.
Sendy looks cool (thanks for the link) but you have to install it, host it, maintain it and from the looks of it, purchase it again every new major version. Most small biz owners (from my exp) are not looking for that sort of involvement. If you're a startup/small tech co. it makes sense.
What you'll find is that as features and reporting and business user-friendly UI becomes more important, there's overhead that comes with the company to provide those things, so their CPMs (or other pricing) tends to go up.
SES is for all intents and purposes a "dumb pipe" that will send email, and provide APIs for things. AWS Pinpoint is a step up from that, but I personally found some features lacking at this point aside from basic usage compared against more full-featured ESPs.
There's a whole range of products catering to different market segments though. Mailchimp is what I'd consider more in the SMB tier in many ways, and then you go all the way up to things like ExactTarget, Responsys, etc. at the Enterprise level. Even then there's considerations around pricing models that depends on whether you're more of a low-volume, high-touch B2B business, or high-volume B2C for example.
Definitely helpful to demo several providers and compare them against a business/technical needs assessment matrix, of which pricing is probably just one factor (and perhaps not even the most important).
I use mailchimp at work, it's feature full, but seems to be struggling with our list size, and isn't the cheapest.
Are there any cheaper solutions out there that have similar feature sets (including split testing campaigns), and are designed to scale to list sizes greater that 1m?
Good on them. Now, as someone who deals with end users and e-mails with links on a regular basis, could they--and all of the other mail sending services out there--PLEASE invest some of that money in making click-tracking links less terrible?
It is so, so, so very difficult to get my users to stop clicking on phishing links when they, correctly, point out that legitimate links in real e-mails look virtually identical. Why does
Most enterprise-level email marketing software will allow (or even require) senders to have subdomains that then get used for things like click tracking links.
Mailchimp is pretty far from enterprise and is heavily geared towards small businesses and click tracking links aren't that big of an issue for small businesses.
They're a big security issue for users regardless of MailChimp's customer base. It's an area that MailChimp could assist with by encouraging their clients to clean up click tracking links.
"click tracking links aren't that big of an issue for small businesses"
False. Source: Work with small business owners daily. Email click tracking has been a feature they use for years, and now rely on to help guide content decisions.
Sorry, I wasn't clear with what I meant. Click tracking is important to anyone doing email marketing. What's less important for small businesses is branded link-tracking domains.
Part of this is on them, another for example is in enterprises with Outlook Safe Links. Personally, I think the net benefit for at least Safe Link is great as they can protect against phishing, but on the other hand I wish I could just see the original URL. I feel like whatever functionality fixes this problem could be used in that same realm too.
I feel your pain - it's challenging to have users be vigilant by checking URLs when these things happen.
That involves their customers - remember, small business owners - to set up GA and copy a load of gobbledygook through loads of forms and charts and whatnot. How's that helping their business?
It doesn't address the original problem: you want users that receive a mail claiming to come from A.com not to click on a link to B.com.
The only advantage that routing clicks through MailChimp has, is clicktracking. Clicktracking can easily - trivially - be handled serverside. Just embed per-recipient unique ids in the url.
If MC is worried about customers lying about #clicks, they coukd easily make all urls point to A.com/mailchimp?mailid=xxx&linknum=yyy.
That forces A.com to run the one thing MC sends them to sort out the clicks... which of course does the clicktracking and hides the useful info from their customers.
It would be interesting if they could work with Cloudflare, AWS, big small business web hosting providers, etc. and other people in line in processing the click to make special casing the clicktracking URL easy.
Have you ever gotten an email from Synchrony Bank (the Amazon credit card)? Everything about it looks like phishing designed to steal your Amazon ID and login. But nope, it's real. Way to go guys.
Synchrony Bank is the shittiest banking vendor I have ever encountered; cancelled my Amazon Store Card because of how horrible they are. (also the Amazon Prime Chase card gives the same 5% benefit)
That's going to take a lot of processing power to be able to handle their amount of customers on a single domain. Even loadbalanced behind the domain to multiple servers, even running kafka, probably could bottleneck it through a single domain. Regardless, even if you did A.com, you have to redirect the customer to whatever actual link they originally wanted to go too from MailChimp's server, instead of the customers server.
Sorry for not being clear.
My idea was a small file on A.com/mailchimp that takes the arguments and passes them on to mailchimp's servers (possibly already spreading, e.g. mailing1.a.com.mailchimp.com/clicktrack?click=...)
This would redirect to A.com's targeted link.
The processing power would still be needed on mailchimp's side. All the customer (A.com) does, is add a tiny redirecting script on their site.
It's similar to how one fingerprinter for android works.Get your client to forward you the user details. User only sees the client (so nothing suspicious, no 3rd party to be blocked), while encryption ensures that your client has to forward you the data - they cannot parse it themselves.
It's really not a problem to handle any number of users on a single domain, you can load balance, serve from different geos, etc.
Case in point: google.com
The real reason they don't do this is because it's a more involved set-up from the customer's side. As people mentioned, enterprise-oriented mail services will do this kind of thing but MailChimp is a long tail solution.
That'd involve subdomain delegation to Mailchimp, or some kind of server-side thing installed on a customer's site - not possible for a lot of small businesses (and a lot of large ones, too).
Why is creating a single arbitrary DNS record not possible (or even difficult)? SMB’s already have to do this when validating ownership of their domain for e.g. Google services, SSL certs, etc.
I don't know, so please correct me if I'm wrong. But isn't DNS record creation now handled automatically, and in the background, with the standard one-stop-shop site systems like Wix, Weebly, and SquareSpace?
If so, and they decided to further support integration with senders like MailChimp by auto-creating subdomains as needed, and it worked perfectly, that would make it all easier. But anything less than perfect, and users (ie small business owners) would be hopelessly lost.
If the one-stop-shop handles your domain registration, then yes.
Regardless, whoever handles the registration should have an interface to add records. For example, you'll need to add MX records to use Google or Office365 for your mail service. You'd also need to add TXT/CNAME records to prove ownership of the domain for Google Webmaster Tools, etc.
Mailchimp doesn't have to make this a requirement. They can offer it as an option for businesses who are concerned about making their mail not appear phishy, and have the competence to create DNS records.
Also, there is precedent for service vendors telling companies how to configure the appropriate DNS records (with a variation for each common domain registrar). Example: https://support.google.com/a/answer/33353?hl=en
solving that issue (providing human readable click tracking links for potentially millions of emails) would be at best very complicated.
How much do you think companies would pay for it? I think they might like it but not pay much for it.
Do you have have a suggestion as to how to fix it because everything I am thinking becomes horribly complicated?
Looking at the link destination is pretty much Anti-Phishing 101. Sure, many users don’t inherently care about this, but enterprises are trying hard to change that. Mailchimp and similar platforms totally undermine those efforts.
So do link shorteners. I don't think you can really know what link you're going to in general until it's in the address bar on the actually opened page.
At the same time google and apple do everything they can to deemphasize the url in the browser, which doesn’t help less sophisticated users learn to watch and understand what they click on.
While I agree these links look dumb (to those who take the time look), I'm quite happy as a user I can see I'm very indentifiably (?) being tracked. Also your solution you could do yourself by providing traceable links for every campaign, and not using mailchimp's stuff?
What you are suggesting is actually quite complex. Mailchimp would have to install a bunch of stuff on customers servers (which are probably run by a third party) and/or control some of their customers subdomains.
Maybe you just need to invest some money in better spam filters, and user education.
This year the Canada Revenue Service is running an ad campaign saying they aren't calling/emailing Canadians and demanding they go buy gift cards at Rexall/Shoppers Drug Mart/Sobeys in order to not go to jail for tax fraud.
I'm sorry but there is no level of user education that will protect a large organisation from phishing links. The attack surface is way too large and safety depends on how the user is feeling on any given day when a random email turns up. There are no high reliability systems that require manual user interaction on a frequent basis especially on low-effort low-concentration tasks.
I agree about the insufficiency of user-education.
I think we need go further: what we need to do is kill the idea that email is an good vector for notifications inside of big organizations (or maybe even outside of them). I should have a dedicated app with a whitelist based system that official notifications go through. This could be not only a security improvement, but also a stab at better UX, better productivity, and avoiding notification fatigue.
Perhaps I'm alone in this, but when a tech company is solely owned by a small group of execs, that's a huge red flag as a potential employee. In my mind, it says they truly only care about themselves in a very tangible way.
As a person who works in tech and uses it, when I see a tech company is vc funded that’s a huge red flag as a person who would have an interaction with that company because more often than not their business model will involve whoring out my personal data before closing down after a few years either because no one wanted to keep throwing money at them or because someone threw a lot of money at them, bought the company and closed the service down.
In my mind it says the founders truly only care about getting their pay day in a very tangible way.
I’m no fan of any X-as-a-Service company, but I trust a bootstrapped and privately owned one a fucking lot more than I trust one built on VC dollars.
You're probably not alone, but I'd rather have a company owned by its founder than a mystery group of very rich people whose main goal with the business is getting more money out of it. If my boss works for himself rather than his funding overlords (who are multiplying the money they invested 100x by doing fuck-all) I'd vastly prefer that.
(disclaimer: I work for a successful privately owned company)
Their employees get a share of the profits (like many regular businesses). They are also quite firm in their goal to stay private, so why would equity be relevant to an employee any way?
What share of profits though? The most recent article I can find (https://mailchimp.com/culture/investing-in-people-through-pr...) boasts of contributing "up to 19%" of annual salary to employees' 401k. While obviously not a bad deal, it's a far cry from options/RSUs and other standard annual bonuses offered at other tech companies.
Shares are often a much more tax efficient way of rewarding employees and having an actual share has numerous advantage's in term of morale retention and so on.
Also shares keep on producing income after you have left a company.
“Also shares keep on producing income after you have left a company.”
If I was making $120k per year working at MailChimp the last thing I would want is 30% or more of my net worth tied up in private shares. What employee wants that much exposure? It’s a private tech company with no plans for liquidity potentially ever.
It is severely limiting. You can’t sell private shares on the open market to buy a condo, pay off college debt, invest in your own company, quit and travel the world, etc. It could be decades before you receive the full share value. If hypothetical employee is working full time it’s probably because they don’t have enough assets 2M+ to live off passive income and need to work. Let’s say they are frugal and save $40k per year. If you have comp like a public co and receive $40k+ per year in shares does it really make sense to have 50%+ of your net worth in a single private tech company? It would probably work out great but 10 years is a long time to wait. I’m pretty sure there is issues with tax too but I don’t know the math.
Shares are worthless unless you can convert them to something. If the company is not public or doesn't have a secondary market, you're just getting paper money that you can never spend. Morale will definitely tank once people figure that out.
The other tech companies are vastly outside the norm and have severely affected the entire industry with inflation. And if people cared and wanted to work at those other companies, then they would. Don't assume to know what's best for everyone else.
Don't just tell us that you are suspicious. It would be more interesting to describe the experiences you've had that have led you to cultivate this suspicion.
There's a camp of people (which I consider myself a part of) that see small group or solo ownership as potentially a very good thing (provided the right people are at the helm).
It enables a company to do what's best for the company/employees/customers in the long-term vs. only needing to be focused on the short term or some unreasonable expectation of an overpriced exit.
Please consider not painting all such companies with the same brush.
I think it's better that the founders have a sizable equity but at the same time it's probably a lot harder to grow a company without other investors. But I don't think it would matter in its actual day-to-day business. Dishing out profits as bonuses instead of equity is just a personal preference to them.
Maybe they won't get as dedicated personnel but at the same time if they have kept the company owned by themselves to this point I guess it's a valid choice in continuing doing so.
Is it greedy or not, well to me it shows that the founders are shrewd for sure but.. Are they doing this for the benefit of the company or just to maximize their own profits? Hard to tell. I feel giving up equity isn't such a big deal and it would make me more satisfied having my best employees part of the company. Paying only bonuses sounds a bit cheapskate.
Really cash bonuses sounds a cheapstake? There are many many companies who will gladly give you a percent of there business provided you are vested for 4 years and they are successful and there is a window opportunity to cash out.
Stock options are the cheapskate way to go. Lotto tickets for the newbies.
Many rapidly growing companies that already generate profits? Even if the price of the stock would stay the same it would still make sense to get the extra profits as stock as you would pay much less taxes. Granted you'd have to have a way to sell them when you want out.
And vesting isn't always a bad option, don't you agree? In the case of many successful start-ups like Facebook and Google you'd have earned and probably still will earn a lot more from the stock than from any bonuses they could have given you.
The chances of finding the next google and getting in the ground floor is about 0.
Vesting is bad for everyone. The company buying yours gets to keep you around but you are the least motivated employee. You get to waste a few years as they figure out how to replace you. That's the best case.
Usually you leave and are given the option to buy the shares within 30 days at some price without a way to cash out.
Will these shares go up? perhaps but not really. What happens is new investors money will reduce your percentage. Your shares will be put in a non-protected group while the founders/investors take preferred shares with 10x the voting power.
If they gave you cash you buy google shares you sell when you want and you have the choice to put the money anywhere.
Fair enough. There's no clear-cut answer which is better. You're painting vesting in more darker light than I assume it's but you made your point across. =)
If the founders and investors want to screw you over I'm sure they can and will do so, nothing much you can do with that. If they're concerned with their employee happiness I doubt they'd do it just for pure greed. However as you said the lottery-ticket will probably keep the best employees around much longer than they'd otherwise so it's probably not all bad? Not everything can be valued by its monetary value only.
And also I'd argue that the hottest start-ups aren't for sale in stock markets or at least they are already highly priced when they enter them. It's a lottery-ticket for sure but as with all companies you can never be 100% sure how they're going to end up.
No, they care about the company. Because if they cared about themselves, they would have sold the company and retired happily ever after.
The cool thing about solely owned companies is that they can think long term, as in > 1 year. CEO's of an externally funded company don't have that luxury.
I wish they made it easier to manage the lists I'm subscribed to because I didn't ask to be on most of them. In their defense, unsubscribing works, but I wish I had a view where I could see all the lists I'm on and be able to unsubscribe from there.
More power to them! MailChimp is more deserving of unicorn status than vast majority of unicorns. It solves real world problems and helps real world businesses communicate with real world market. A happy MailChimp user here!
I'll never hate on another company's success but I remember one of their engineers speaking at an event back in like 2013 and it was really politically incorrect. Made me uncomfortable and I'm not exactly squeamish. Doesn't seem like the type of company I'd like to work for.
Mailchimp, named after their most popular e-card character, launched in 2001 and remained a side project for several years, earning a few thousand dollars a month. Then in 2007, when it hit 10,000 users, the two decided to commit full-time.