Mailchimp sells for $12B in one of the largest bootstrap exits ever

Email marketing company Mailchimp has been acquired by Turbotax maker Intuit for $12 billion in cash and stock, marking one of the largest-ever exits by a bootstrapped company.

The background: Founded in 2001 by Ben Chestnut, Mark Armstrong and Dan Kurzius, Mailchimp started as a web design agency called the Rocket Science Group. The Atlanta-based company pivoted until it built the small business email marketing service with which we’re all familiar — all without raising venture capital. Mailchimp grew by listening to customers’ yearning for “look pro and grow” products, adding features like digital ads, a CRM, shoppable landing pages, postcards, websites, and automation tools.

“With Intuit, we’ve found a shared passion for empowering small businesses. By joining forces with Intuit, we’ll take our offerings to the next level, leveraging Intuit’s AI-driven expert platform to deliver even better products and services to small businesses. This is an exciting new chapter for Mailchimp, our 1,200+ dedicated employees, and customers.” —Ben Chestnut, CEO and co-founder of Mailchimp

Why Intuit? Intuit, which makes popular tax and accounting software like TurboTax and QuickBooks, seems like an odd buyer for an email marketing company. Nevertheless, Intuit said Mailchimp will accelerate its goals of becoming the “center of small business growth” and “disrupting the small business mid-market.”

Mailchimp & Quickbooks: Intuit is keen to combine the power of Quickbooks and Mailchimp, which offers it a customer base of about 13 million users globally, 70 billion contacts, 250 partner integrations, and robust AI automation. QuickBooks serves about 7 million small and mid-market businesses around the world.

Adding value: Mailchimp notched $800 million in revenue in 2020, a 20 percent increase year-over-year. About half of that total comes from outside the United States. Intuit CEO Sasan Goodarzi said that Mailchimp will help small companies with their biggest barriers to growth: getting and retaining customers.

“Expanding our platform to be at the center of small and mid-market business growth helps them overcome their most important financial challenges. Adding Mailchimp furthers our vision to provide an end-to-end customer growth platform to help our customers grow and run their businesses, putting the power of data in their hands to thrive.” —Sasan Goodarzi, CEO of Intuit

Why it matters: Mailchimp’s exit is the largest ever by a bootstrapped firm in the Internet age, according to Axios. While it’s extremely rare and incredibly difficult, Mailchimp serves as an important example to bootstrappers everywhere that you can build a wildly successful business without venture capital.

Critiques: Mailchimp offered its employees profit-sharing instead of stock-based compensation — a choice that’s now drawing criticism as the company welcomes a multi-billion-dollar check. While its 1,200+ employees might not be enjoying the same windfall as founders, Mailchimp’s agreement with Intuit includes about $300 million of Mailchimp employee bonuses that will be issued in the form of restricted stock units over three years. If split evenly, that’s more than $230,000 in RSUs per employee over the next 36 months.

Profit-sharing: Mailchimp co-founder Ben Chesnut defended the company’s profit-sharing model, noting that Mailchimp had no intentions of selling for many years. What’s more, Chesnut added that employees will also receive undisclosed cash bonuses from Mailchimp.

A-town down? Another criticism of the sale is that Atlanta’s startup community won’t benefit from the massive exit. In some cases, a startup selling for billions would mint 100s of new millionaires that could reinvest their newfound dough into their community.

Why criticize? Other observers on Twitter noted that only rarely do equity options pay off for employees. Many noted that employees knew Mailchimp offered profit-sharing instead of equity and still decided to work for the company. Nira CEO Hiten Shah argued back in 2018 that "profit-sharing is the new IPO."

What’s next: Intuit expects the acquisition to officially close in mid-2022, presuming that the White House’s revved-up anti-trust regulators are OK with the deal. Mailchimp said it will retain its brand, products, and tools, as well as its 24/7 customer support.

What do you think about Mailchimp’s sale? Are you concerned with Intuit’s control over the product? Share your thoughts below.