Photo by Phil Goodwin on Unsplash

Case Study: MailChimp

Perhaps the greatest bootstrapped startup story ever.

Bret Waters
5 min readJan 8, 2024


In 2001, Ben Chestnut and Mark Armstrong were running a marketing agency in Atlanta. Many of their clients wanted them to manage their email marketing, and as a marketing agency they were frustrated with how bad the existing email management software was. So Ben Chestnut dug up some old code from a failed e-greeting card company he had founded a couple years earlier, and decided to reincarnate that code as a new product for managing email. Their most popular e-card had featured a chimpanzee, so they decided to call their new email app “MailChimp”.

The leading brand in the email marketing space was Constant Contact, which had raised over $100 million in venture capital. Chestnut and Armstrong had no interest in trying to compete with a company that had raised that much money, so they mostly used MailChimp for their own clients, but slowly also offered it to others on a paid subscription basis.

They kept running their marketing agency as their primary business, using their new email app to manage email marketing for their clients. When a new client need came up they would add it as a new feature on MailChimp. This gave them, as Ben Chestnut would say, “a proximity to our customers that our competitors lacked.”

The MailChimp user base of paying customers slowly grew. One day in 2009 co-founder Ben Chestnut was in a Ben & Jerry’s ice cream shop and they offered him free samples. He tasted several and ended up being a loyal customer. “That, in a nutshell, was my inspiration and motivation in offering the freemium program at MailChimp”, says Ben now. So they launched a free plan, and used data to tinker with the pricing on upgrading to a paid plan. “Ever since inception, I’ve been fascinated with the art and science of pricing. We’ve changed our pricing models at least a half-dozen times throughout the years, and along the way we tracked profitability, changes in order volume, how many people downgraded when we reduced prices, how many refunds were given, etc. We’re sitting on tons of pricing data. When we launched our freemium plan in 2009, you betcha we used that data to see what would happen if we cannibalized our $15 plan. If we had started with freemium at ground zero, the story would’ve been different”.

Within a year of changing to a freemium model, MailChimp’s user base had grown from 85,000 to 450,000.

Once the flywheel started spinning, the network effects were significant. Every email sent from the free plan had the MailChimp logo at the bottom, and a link to sign up for your own free plan. The chimp mascot became a big hit, and the MailChimp team distributed free branded merchandise to customers who were active evangelists for the product. By 2012, their customer base had grown from 450,000 to 1.2 million and they were adding 5,000 new users every day. Their all-in Customer Acquisition Cost (CAC) was less than $100, and with a $20/month subscription, the pay-back period on that CAC was excellent.

With the flywheel now spinning and optimized, they continued to grow both the customer base and the feature set. Spending $100 on CAC that would come back in just a few months was a cash cycle they could finance themselves, so they were able to grow the venture organically, with no outside capital required. Eventually they shut down the marketing agency, as their “side hustle” required their full attention. What had started as an email platform for small businesses at $20/month was soon gaining large enterprise customers who would happily spend several hundred dollars a month for premium plans.

By 2014 the MailChimp platform was sending 10 billion emails a month for customers. As social media took off they expanded from simply being an email platform to a more comprehensive marketing platform that included lead tracking and retargeting on Facebook and Instagram.

The company was still completely bootstrapped — no outside capital. Their success got the attention of many venture capital and private equity investors who came knocking on the door of Ben Chestnut and Mark Armstrong, wanting to invest, but they stood firm. They liked being a bootstrapped company.

Finally, in 2021, they decided to cash out. They sold the company to Intuit, who rebranded it as Intuit Mailchimp. The deal was $5.7 billion in cash and $6.3 billion in Intuit stock. That’s right — founders who never took any outside capital and grew the venture organically, sold it for a total of $12 billion.

Key Takeaways:

  1. The number one takeaway is they built a product they used themselves, for their own marketing clients, they weren’t coming up with features in a vacuum. Every feature developed was one built to serve actual customer needs.
  2. Having data on which to make pricing decisions is huge. Too many founders are forced to come up with pricing out of thin air. The MailChimp founders announced the freemium plan after they already had lots of customers so they were able to see exactly to what extent it cannibalized paying customers, see upgrade/downgrade conversion data, etc.
  3. The viral nature of the product was huge (people who received an email from the free plan could click on the footer and sign up themselves), and the cash cycle provided by their LTV/CAC was very favorable. If it cost them $100 to get a $20/month customer, then CACD (the time it takes to make back 2x the CAC) was ten months. That’s very solid.
  4. By staying close to customers, they knew when customer needs were changing. When they launched in 2001, it was all about email marketing. Today email is still part of the marketing mix for many brands, but social media, SMS, and other channels are more likely to be where the big dollars are spent. MailChimp was able to make that transition along with the customers. Today, if you go to the website of Constant Contact (the gorilla in the space when MailChimp originally launched), the website looks like it’s stuck in 2008.

MailChimp is probably the most extraordinary example ever of a bootstrapped company — from launch to a $12 billion exit. Something on this scale may never happen again, but the lessons are timeless ones that every entrepreneur should take note of, especially we enter a new capital light era in Startup Land.



Bret Waters

Silicon Valley guy. Teaches at Stanford. Eats fish tacos.