Establishing a successful business is viewed by many as a hard, nearly impossible task. This is especially true for those who decide to start their businesses on their own, without involving external investors. It is therefore no surprise that bootstrapped startups are the exception rather than the rule in many places around the world.
Mailchimp – A Bootstrapped Success Story
Mailchimp is one of the few outstanding bootstrapped businesses. It is an email automation service company based in Atlanta that initially targeted SME’s, but has since grown to be the defacto choice for thousands of companies across the globe. It has been in existence for about 16 years now and has grown considerably during this time.
The business was founded in 2001 by two web- designers: Ben Chestnut and Dan Karzius. In fact, it was a side project to their main web design consultation business named the Rocket Science Group.
Ben decided to start a company that developed emails as a marketing channel for his customers for one main reason: the demand for such software. Often, their customers would ask how they could reach their own customers with ease, and the best solution was to use emails.
Initially, he wanted to name the service Chimpmail, but the domain name was already taken so he settled for Mailchimp.
Mailchimp remained a side hustle for nearly six years. It wasn’t until 2007 that they both decided to focus solely on the email service.
They gave up web design for two main reasons. First of all, they had lost the passion they once had for designing websites. Secondly, the market for web design was growing, but not quite as fast as they had both anticipated.
Choosing To Bootstrap
When they started their company, they had already made up their minds that no external investors would be involved in funding their company. They chose to bootstrap their business, even when everyone around them was seeking capital from already well established companies or sponsors.
From the very start the two determined that their business would earn them revenue right from the onset. This was no surprise given that the two were raised in families that embraced and encouraged entrepreneurship.
Another factor that contributed to the exponential growth of their business was the fact that they chose their market well. They decided to help improve the marketing channels for small businesses.
They understood that only they could appreciate the challenges that small businesses encounter, and thus had in their hands the power to address those challenges aptly. From tiny beginnings, the company grew to become one of the largest email marketing providers in the world.
Today, the company grosses revenue in excess of $400 million annually and employs more than 700 people. Mailchimp has also grown from 85,000 to more than 12 million customers, and shows no sign of stopping.
But all this did not come easy. The young company had to battle a lot of challenges, some of which seemed insurmountable. It is only through resilience that the company has become what it is today.
One key challenge that it faced along the way was the danger of being overshadowed by bigger, more powerful companies. Remember that Mailchimp chose the road less traveled and did not have much in terms of capital. Big companies such as Constant Contact often threatened to extinguish the existence of the company, but it strived to remain in the market and still grow.
The company’s secret weapon against such big companies was its deep understanding of how small businesses operate. It was only through this knowledge that Mailchimp was able to ward off giant companies and establish itself as a favorite for small companies.
The second most threatening challenge the company faced was the fear that emails would eventually become extinct. Given that the existence of the company was built around the existence and continued use of emails, this was indeed a serious issue.
So how did they address the problem? They decided to diversify their services to offer more than just email marketing services. They looked into other marketing channels such as social media and found a way to incorporate them into their business.
Besides, with the passing of time it has become evident that emails are here to stay. It actually seems like their importance is growing by the day.
Lessons From Mailchimp’s Journey
What can you learn from Mailchimp’s journey? The first and most important lesson is that you must remain in control of your business. Getting capital from investors might appear to be the easiest way to scale your business, but easy is necessarily good.
Capital from investors makes it easy for you to spend money, and can be a great distraction from your money making goals. If your purpose to make money using your own business, you become really good at making money, not spending it.
Secondly, as soon as you get investors involved in your small business, you relinquish some control to them. If you relinquish enough control over time (through multiple rounds of capital raising) then you may find that you are no longer in charge of running the company. Obviously this is not a given, but if your future direction for the company differs from that of your investors then they may decide that someone else is more suited to running the company.
Also, make it a priority to monetize your business as soon as you launch it. Create a business plan that ensures you get revenue in the early days of launching your business so that it can sustain both itself and your needs too.
Finally, set goals that you can achieve. Have a time frame for achieving your goals, and work as hard as you possibly can to attain them. It is the only way you will see progress in your business.
Also published on Medium.