Ben Chest­nut and Dan Kurz­ius have built bil­lion-dol­lar for­tunes by help­ing save small busi­nesses the old-fash­ioned way: email.

Forbes - - CONTENTS - By alex Kon­raD

Ben Chest­nut and Dan Kurz­ius have built bil­lion-dol­lar for­tunes by help­ing save small busi­nesses the old-fash­ioned way: email.

Two years ago, Ben Chest­nut found a crum­pled piece of pa­per in the trunk of his Mercedes GL63 SUV, along­side the muddy shoes and hel­mets he uses while moun­tain bik­ing in the hills of north­ern Ge­or­gia. For­got­ten there for a year, the pa­per as­sessed how much a top pri­vate eq­uity firm in New York thought his com­pany was worth: $2 bil­lion. The CEO of Mailchimp stashed it in his per­sonal safe along with the busi­ness cards of some Amer­ica’s deep­est-pock­eted fi­nanciers—for his wife to shop a sale in the event of his death, but not a minute be­fore. “That’s my re­tire­ment plan,” Chest­nut quips.

The Forbes 400 new­comer has good rea­son not to rest. Chest­nut and his co­founder, Dan Kurz­ius, have both prof­ited richly from their pa­tience. With $600 mil­lion in rev­enue, Mailchimp is in the black and has more than dou­bled its es­ti­mated val­u­a­tion to $4.2 bil­lion in the last two years, giv­ing Chest­nut, 44, and Kurz­ius, 46, its sole own­ers, stakes worth $2.1 bil­lion each.

Mailchimp’s suc­cess is built on the backs of Amer­ica’s small busi­ness own­ers. Its most pop­u­lar ser­vice—email mar­ket­ing—might seem a low-tech, un­sexy medium in 2018. But small busi­ness own­ers usu­ally can’t af­ford mar­ket­ing teams or so­cial me­dia pros. To the 20 mil­lion peo­ple on Mailchimp to­day, the abil­ity to send a sleek, on­brand email with just a few clicks can mean the dif­fer­ence between bank­ruptcy and suc­cess.

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. At Stringjoy, a Nashville-based maker of cus­tom gui­tar strings, owner Scott Mar­quart says ev­ery dol­lar he spends on send­ing a weekly email through Mailchimp’s soft­ware is good for $20 in new sales. “Cus­tomers feel like they know me,” he says.

In Chest­nut’s of­fice at Mailchimp head­quar­ters, an old Sears ware­house north­east of down­town At­lanta, there’s a photo of a box­ing glove ac­com­pa­nied by an apoc­ryphal Mike Tyson quote: “Ev­ery­body has a plan un­til they get punched in the face.” Chest­nut is no boxer—though he met his wife in high school in karate class—but he rel­ishes the sen­ti­ment be­cause his ca­reer started by ab­sorb­ing a cou­ple fig­u­ra­tive jabs to the chin.

The son of a ser­vice­man and his Thai spouse, Chest­nut trans­ferred to Ge­or­gia Tech in 1994 to study in­dus­trial de­sign, only to re­al­ize he wanted to learn how to build web­sites—some­thing the school didn’t teach in the mid1990s. So he taught him­self by read­ing tech­ni­cal books in the aisles of his lo­cal Barnes & No­ble and even­tu­ally got

a job at Cox In­ter­ac­tive Me­dia. Once there, Chest­nut hired Kurz­ius, a part-time DJ and for­mer com­pet­i­tive skate­boarder who’d bluffed about his own cod­ing skills, to work with him on the com­pany’s dot-com-era MP3 mu­sic ser­vice. Af­ter just a few months, the unit folded in the tech crash.

Kurz­ius landed else­where at the com­pany, but Chest­nut was laid off, spend­ing the next few months as a free­lance web­site builder. He still re­mem­bers the sting of los­ing his job. “What a feel­ing that was, walk­ing out with a box in your hand,” he says. But Kurz­ius and Chest­nut kept tin­ker­ing to­gether, first on an e-greet­ings site and then a ser­vice that had per­sonal res­o­nance. It wasn’t just Chest­nut who had found him­self job­less in the spring of 2000. Kurz­ius had wit­nessed his fa­ther’s bak­ery go bank­rupt; Chest­nut’s older sis­ter lost her hair salon. What if a sim­ple site could al­low small busi­ness own­ers to eas­ily email their most loyal cus­tomers? It might not save them, but it cer­tainly couldn’t hurt in an ever nois­ier and more com­pet­i­tive en­vi­ron­ment.

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. Mind­ful of what can hap­pen when out­side in­vestors get con­trol, they shunned ven­ture cap­i­tal cash and boot­strapped from their prof­its in­stead, vow­ing to ship a new fea­ture each month to out­pace their bet­ter-fi­nanced com­pe­ti­tion.

Mailchimp pitched em­ploy­ees on profit-shar­ing over eq­uity stakes, and sta­bil­ity over rocket-ship growth. But it grew at a vi­ral clip any­way, on the strength of word of mouth and savvy mar­ket­ing, like its 2015 spon­sor­ship of the break­out pod­cast Se­rial. Email re­mained its bread and but­ter, but Kurz­ius started can­vass­ing cus­tomers about the fea­tures they wanted next, mak­ing eight to ten cross-coun­try trips each year to talk to small-scale en­trepreneurs. Iden­ti­fy­ing him­self as just “Dan,” he learned that store own­ers and small busi­ness op­er­a­tors wanted help ad­ver­tis­ing on Face­book, Twit­ter and In­sta­gram. So Mailchimp added sim­ple tools to run so­cial me­dia cam­paigns. Ease of use re­mains a high pri­or­ity.

“Mailchimp has made my life easy,” says Hrag Kale­b­jian, a third-gen­er­a­tion cof­fee roaster at Henry’s House of Cof­fee in San Fran­cisco. “It lets me fo­cus on the other parts of the busi­ness and not worry about leak­age of peo­ple go­ing out my back door.”

Now, af­ter months of be­hind-the-scenes work, Chest­nut and Kurz­ius are un­veil­ing what Chest­nut calls “Act Two.” Some new ef­forts are de­cid­edly low-tech, such as test­ing printed post­cards; their cus­tomers sent 25,000 this sum­mer. Oth­ers are much more so­phis­ti­cated. By track­ing a busi­ness’s cus­tomer base across ev­ery point of in­ter­ac­tion— Face­book, email or in-store, for ex­am­ple—Mailchimp wants to sup­ple­ment the email lists that gave the com­pany its start, adding more tar­geted groups: say, cus­tomers who haven’t made a pur­chase in the last six months. Such ca­pa­bil­i­ties are al­ready stan­dard with much more ex­pen­sive soft­ware, like Sales­force; Mailchimp is try­ing to make them af­ford­able for small busi­nesses. “We can de­moc­ra­tize that tech­nol­ogy,” says John Fore­man, Mailchimp’s head of prod­uct. “Like steal­ing fire from the gods.”

That new chal­lenge keeps Chest­nut and Kurz­ius locked in to what both see as life­time tours of duty with Mailchimp, even as they launch fam­i­lies. And fam­ily foun­da­tions: Chest­nut’s is first, al­lo­cat­ing $10 mil­lion to help Ge­or­gia non­prof­its. Go pub­lic? Not worth the headache, Chest­nut says. Sell? The founders look in­cred­u­lous. “To this day, it’s just a fun feel­ing that we can help,” Kurz­ius ex­plains. Chest­nut chimes in: “I want peo­ple to see that the past 17 years were just a warm-up.”

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