9 ms·

Here are some numbers I dug up: Mailchimp has ~13MM users and 800k paying customers. In 2019 they had revenues of $700MM. In 2020 they had EBITDA of ~$300MM.

by switz 5y ago

Here are some numbers I dug up: Mailchimp has ~13MM users and 800k paying customers. In 2019 they had revenues of $700MM. In 2020 they had EBITDA of ~$300MM. They are fully bootstrapped and have taken on zero outside funding.

gigatexal 5y ago
wow -- the founders are going to make out like bandits. No outside funding means no dilution.
- adventured 5y ago
  They're certainly not hurting: https://www.forbes.com/profile/ben-chestnut/ https://www.forbes.com/profile/ben-chestnut/ https://www.forbes.com/profile/dan-kurzius/ https://www.forbes.com/profile/dan-kurzius/
- williamsmj 5y ago
  Not so for the employees https://twitter.com/ekp/status/1437516618553192449 https://twitter.com/ekp/status/1437516618553192449
  - graeme 5y ago
    Giving employees equity is a form of funding. If a company is bootstrapped and profitable, they can just pay employees money instead. In theory this should mean Mailchimp employees were paid more money than employees doing similar work where they were given stock options.
    - robocat 5y ago
      Giving early employees equity is often a form of incentive. If giving an employee 1% of equity improves acquisition valuation by 2%, then it was probably a good move, as the remaining shareholders got 1% more than they would have otherwise. It gets less intuitive with multiple people: what to do if one founder owning a valuable small business adds a salesperson and a UI guru, each of whom adds 10x the valuation to the company? The main problem with equity is that it is extremely difficult to value how much a person will increase a future valuation by (ignoring complications with voting rights etcetera).
      - FredPret 5y ago
        It’s like funding in the sense that you can get an engineer who demands (for example) $200k in comp for $100k cash and $100k in stock options, saving the startup lots of cash in the beginning.
        robocat 5y ago
        Sure. An aside as an engineer founder, I have always thought of accepting stock instead of wages is more like gambling. 1. You are concentrating your risk instead of diversifying. 2. As a minority shareholder in a private company you have virtually zero choice over any critical decisions, and the other shareholders have financial incentives to screw you. 3. You may influence technical outcomes, but even there you often realistically have limited financial incentive to improve profits. Unless you are an early employee, the amount of work you need to do to increase valuation by 10% is probably actually not worth the extra effort you put in for the $ you might get out. 4. Most people grossly misprice equity - ordinary shares are worth much less than the preferential shares an investor gets. Even though you are investing the equivalent of cash, you don’t get preferential shares. This is misrepresented everywhere, and certainly a startup has no financial interest in telling you the truth. 5. It is a high risk investment. That is fine for a VC which can spread their risk over many investments to get the industry average. It is a bad bet individually because even if you could invest your time in 10 startups, your variation in profit is still high. (Assuming one in ten startups is successful, which I highly doubt). Even VC funds are OK with ‘high’ variance because LPs are usually looking for diversification (especially non-correlated diversification with the rest of their portfolio), and the VC partners still get their tidy 2% even if the fund tanks. 6. Engineers usually seem to believe that they can pick a winner to join. VCs with decades of experience fail all the time, so the majority of engineers are just fooling themselves (or more truthfully, being fooled).
        ddorian43 5y ago
        Everyone that thinks taking equity for a lower salary needs to compare the difference with DCAing (dollar cost average) the extra salary into TQQQ,UPRO,SOXL. Might be higher profit and less risk.
    - cmorgan31 5y ago
      What? You give stock as a way to manage retention of talent not funding. Mailchimp benefits from a market (GA) not saturated by competitive hiring.
      - graeme 5y ago
        Suppose you could pay an employee $200,000 or $150,000 + stock options. If the two options were rationally considered equal that would mean the missing $50,000 NPV of the employee’s salary would be paid by future investors once they bought the shares. Either in an IPO or in this case by the acquiring company. Options are also a method to retain and incentivize talent, but they’re certainly a form of funding.
        ipaddr 5y ago
        An employee will pick $200,000 over 150,000+options.
        LeonB 5y ago
        I think you’re missing the point of the explanation, the figures are examples.
        jnwatson 5y ago
        That's not true at all. Lots of folks choose (IMHO incorrectly) to take the options.
      - elif 5y ago
        Above market salary is also a way to retain talent.
      - cortesoft 5y ago
        For retention, you can do deferred cash bonuses. Doesn’t have to be stock.
    - elif 5y ago
      This is accurate. TC was ~25% higher than I would get working in SF. Plus I got to invest it how I liked.
    - tclancy 5y ago
      Except that’s explicitly not how the free market works. Employees would be paid at the rate their services clear at in the open market. If you’re paying more than that, it’s because you want to attract people above the average/ clear.
      - graeme 5y ago
        No, I’m saying they’d pay more cash than a company paying cash + stock. Total comp EV should be same for same position.
  - notdang 5y ago
    Doesn't is say "$300m of “employee transaction bonuses” (or 2.5% of the deal)" ?
    - gkop 5y ago
      These may have strings attached that vested stock would not.
  - dvt 5y ago
    Ellen Pao still chasing clout, I see -- no better way than riling up the Twitter masses. So what if employees have no equity? The business was profitable enough to pay them a fair market salary, it's not like they were indentured servants. What stops them from building their own $12B exit? I hate this selective criticism; for goodness' sake, she was the CEO of reddit -- a company with ethical controversies every other week, but she attacks MailChimp? Give me a break.
    - arglebarglegar 5y ago
      eh, her reddit tenure is questionable for many reasons (not just of her making)
    - benatkin 5y ago
      This isn't reddit. A reddit villain isn't automatically a HN villain. Also, she wasn't universally disliked there, and it's been a few years since she left.
      - xwdv 5y ago
        Doesn’t matter. HN is simply a more well behaved Reddit with a higher average intelligence per user. From reading the room I’d say Ellen Pao is typically seen as a minor villain around here. Definitely not a hero.
    - fragmede 5y ago
      Ad homonym attack against the messenger doesn't address the substance of the objection. In this case, I'd rather get $3 million vs *not* getting $3 million (which seems like a not-unreasonable payout for an early senior engineer at a startup with a $12b exit). You can argue that they knew what they were getting into, but that's still gotta leave a bitter taste for some.
      - dvt 5y ago
        > Ad homonym attack against the messenger doesn't address the substance of the objection. There is no substance to the objection. They aren't entitled to anything, they didn't negotiate anything, and they shouldn't get anything. Her argument is akin to saying that the Uber driver that dropped me off at the gas station is entitled to part of my lottery winnings because the ticket I bought happened to have the jackpot numbers. The position is both logically inconsistent and severely asymmetrical—we are only talking about this because MailChimp did have a successful exit, not because they failed miserably (as literally hundreds of startups do on a yearly basis). Even as a staunch capitalist, I'll be the first to say there are plenty of problems with corporate tax law, offshore tax havens, money laundering, etc. But this ain't one.
  - bpodgursky 5y ago
    I'm not sure why I'm supposed to be upset about this. If they chose to work for a "startup" which didn't offer incentive equity, they don't have equity. Presumably they had good salaries to compensate.
    - sys_64738 5y ago
      This. Don't like the terms then don't work there. Startups are invariably setup for founders not later employees.
  - majani 5y ago
    The founders weren't really building the company with an exit as plan A, so stock option programs would have been a waste of time and full of lies.
  - rexreed 5y ago
    There are other ways of structuring bonus and non-salary compensation besides "equity" which honestly can get employees just as stuffed in an acquisition as firms without any equity. The silicon valley model is not the only way to frame success.
  - shruubi 5y ago
    If the company can afford to offer competitive and attractive salaries to its employees, why would they offer equity? If I am a business owner and can afford to pay my staff well, why would I give up a portion of my company to the employees when I don't have to? This is not some great injustice or a company acting in any kind of morally questionable way. In fact, it would be more accurate to say that in the grand scheme of things (not just the tech bubble), offering equity to employees is the exception, not the norm.
    - LeonB 5y ago
      Not giving equity to employees is fine by me - but it can certainly be “questioned” from a moral standpoint. (Though I think you mean “morally questionable” as euphemism for “morally wrong”) Selling to Intuit is not fine by me - and i consider it morally questionable in both senses of the term.
      - caoilte 5y ago
        Arguing over which part of late stage capitalism is morally questionable is a bit like arguing over the correct length of curl in your powdered wig. If they had gone public instead, Intuit could just as easily have bought up all the shares and reached the same end goal.
        gerdesj 5y ago
        OK, I'll bite. I am one of three owners of a roughly £1-1.5M pa t/o company in the UK (depends on the wind direction.) We've operated for 21 years now - it's IT Services, mainly consultancy. We've always offered a few Class B shares to time served employees in addition to salary. Not many shares but some. I'm not too sure what on earth "late stage capitalism" means but I do know that my little firm trundles on quite happily and works slightly better for the extra incentive that directly contributing equals directly earning. We have never insisted that shareholders need work extra hours or whatever. I kick people out of the office if they work too late. Work life balance is important. Is offering or not offering equity something that can be considered within the realms of "morally questionable"? A business is a business and a contract is a contract. When you take up employment within a business, you engage with a contract. If the contract offered is not one you like, you are not obliged to accept it. The last two sentences are rather polarised and I accept that the real world is rather more nuanced when you consider individual cases. Can you really call a mutually agreed equity arrangement as "morally questionable"? You might as well describe working for a salary as morally questionable too. Anyway, whose morals are we considering and what standards do they espouse? Morals don't live in a vacuum nor do morals stay attached to a single concept. Your "morals" may well not be the same as mine! We (my little company) are quite boring, rather small and won't ever feature in a how to take over the world, unless 10^-3 unicorn suddenly becomes exciting.
  - yibg 5y ago
    Netflix also doesn’t give much equity*, no one seems to complain about that. * they do allow employees to buy options with a portion of their salary and included a 5% stock option a few years ago.
- TuringNYC 5y ago
  Too bad they closed a bit too late. The proposed tax plan now has QSBS benefits limited to 50% of gain (vs 75% or all) if AGI is > $400k. Those founders will be happy, but not as happy as would have been a day or two ago. https://www.brownadvisory.com/us/theadvisory/qsbs-tax-exemption-valuable-benefit-startup-founders-and-builders https://www.brownadvisory.com/us/theadvisory/qsbs-tax-exempt... https://news.bloombergtax.com/daily-tax-report/bidens-proposed-tax-increases-qualified-small-business-stock-exclusion-even-more-important https://news.bloombergtax.com/daily-tax-report/bidens-propos...
  - timdorr 5y ago
    QSBS caps at $10m. That's a drop in the bucket, relatively speaking. If Ben and Dan split it 50/50, that's $6b each and they would each be looking at $1.2b in capital gains tax.
    - TuringNYC 5y ago
      It is up to $10 million or 10x your tax basis. Also, double that if you are married. More if you gift to children. Hopefully their bootstrapped funding has been carefully crafted to track tax basis!
- mbesto 5y ago
  They were already making out like bandits. They have near zero capital costs and their company is essentially running itself (im exaggerating, but you get the point). Assuming each of the founders had 33%, it means they are each essentially taking in $100M/year in salary with no end in sight towards that either slowing down or it decreasing. This is a simple math formula for them - cash out $4B now, setup a family office and then never work again or never work again and just bring in $100M/year. They'd get to that exit by ~50 anyway.
singularity2001 5y ago
about 1000$ per user? is that the value of our privacy? probably because each user uploaded their address book?
- trangus_1985 5y ago
  Not quite - many of their customers are paying $$ a month for medium to large marketing sends. Their biggest customers probably count for 30% of the overall revenue. It's unusual seeing a company that sells goods and services for money be valued highly in silicon valley ;)
- nacs 5y ago
  12,000,000,000 / 800,000 = $15000 per paying customer (12 billion purchase price / 800000 paying customers)

by switz 5y ago

gigatexal 5y ago

wow -- the founders are going to make out like bandits. No outside funding means no dilution.

adventured 5y ago
They're certainly not hurting: https://www.forbes.com/profile/ben-chestnut/ https://www.forbes.com/profile/ben-chestnut/ https://www.forbes.com/profile/dan-kurzius/ https://www.forbes.com/profile/dan-kurzius/
williamsmj 5y ago
Not so for the employees https://twitter.com/ekp/status/1437516618553192449 https://twitter.com/ekp/status/1437516618553192449
- graeme 5y ago
  Giving employees equity is a form of funding. If a company is bootstrapped and profitable, they can just pay employees money instead. In theory this should mean Mailchimp employees were paid more money than employees doing similar work where they were given stock options.
  - robocat 5y ago
    Giving early employees equity is often a form of incentive. If giving an employee 1% of equity improves acquisition valuation by 2%, then it was probably a good move, as the remaining shareholders got 1% more than they would have otherwise. It gets less intuitive with multiple people: what to do if one founder owning a valuable small business adds a salesperson and a UI guru, each of whom adds 10x the valuation to the company? The main problem with equity is that it is extremely difficult to value how much a person will increase a future valuation by (ignoring complications with voting rights etcetera).
    - FredPret 5y ago
      It’s like funding in the sense that you can get an engineer who demands (for example) $200k in comp for $100k cash and $100k in stock options, saving the startup lots of cash in the beginning.
      - robocat 5y ago
        Sure. An aside as an engineer founder, I have always thought of accepting stock instead of wages is more like gambling. 1. You are concentrating your risk instead of diversifying. 2. As a minority shareholder in a private company you have virtually zero choice over any critical decisions, and the other shareholders have financial incentives to screw you. 3. You may influence technical outcomes, but even there you often realistically have limited financial incentive to improve profits. Unless you are an early employee, the amount of work you need to do to increase valuation by 10% is probably actually not worth the extra effort you put in for the $ you might get out. 4. Most people grossly misprice equity - ordinary shares are worth much less than the preferential shares an investor gets. Even though you are investing the equivalent of cash, you don’t get preferential shares. This is misrepresented everywhere, and certainly a startup has no financial interest in telling you the truth. 5. It is a high risk investment. That is fine for a VC which can spread their risk over many investments to get the industry average. It is a bad bet individually because even if you could invest your time in 10 startups, your variation in profit is still high. (Assuming one in ten startups is successful, which I highly doubt). Even VC funds are OK with ‘high’ variance because LPs are usually looking for diversification (especially non-correlated diversification with the rest of their portfolio), and the VC partners still get their tidy 2% even if the fund tanks. 6. Engineers usually seem to believe that they can pick a winner to join. VCs with decades of experience fail all the time, so the majority of engineers are just fooling themselves (or more truthfully, being fooled).
        ddorian43 5y ago
        Everyone that thinks taking equity for a lower salary needs to compare the difference with DCAing (dollar cost average) the extra salary into TQQQ,UPRO,SOXL. Might be higher profit and less risk.
  - cmorgan31 5y ago
    What? You give stock as a way to manage retention of talent not funding. Mailchimp benefits from a market (GA) not saturated by competitive hiring.
    - graeme 5y ago
      Suppose you could pay an employee $200,000 or $150,000 + stock options. If the two options were rationally considered equal that would mean the missing $50,000 NPV of the employee’s salary would be paid by future investors once they bought the shares. Either in an IPO or in this case by the acquiring company. Options are also a method to retain and incentivize talent, but they’re certainly a form of funding.
      - ipaddr 5y ago
        An employee will pick $200,000 over 150,000+options.
        LeonB 5y ago
        I think you’re missing the point of the explanation, the figures are examples.
        jnwatson 5y ago
        That's not true at all. Lots of folks choose (IMHO incorrectly) to take the options.
    - elif 5y ago
      Above market salary is also a way to retain talent.
    - cortesoft 5y ago
      For retention, you can do deferred cash bonuses. Doesn’t have to be stock.
  - elif 5y ago
    This is accurate. TC was ~25% higher than I would get working in SF. Plus I got to invest it how I liked.
  - tclancy 5y ago
    Except that’s explicitly not how the free market works. Employees would be paid at the rate their services clear at in the open market. If you’re paying more than that, it’s because you want to attract people above the average/ clear.
    - graeme 5y ago
      No, I’m saying they’d pay more cash than a company paying cash + stock. Total comp EV should be same for same position.
- notdang 5y ago
  Doesn't is say "$300m of “employee transaction bonuses” (or 2.5% of the deal)" ?
  - gkop 5y ago
    These may have strings attached that vested stock would not.
- dvt 5y ago
  Ellen Pao still chasing clout, I see -- no better way than riling up the Twitter masses. So what if employees have no equity? The business was profitable enough to pay them a fair market salary, it's not like they were indentured servants. What stops them from building their own $12B exit? I hate this selective criticism; for goodness' sake, she was the CEO of reddit -- a company with ethical controversies every other week, but she attacks MailChimp? Give me a break.
  - arglebarglegar 5y ago
    eh, her reddit tenure is questionable for many reasons (not just of her making)
  - benatkin 5y ago
    This isn't reddit. A reddit villain isn't automatically a HN villain. Also, she wasn't universally disliked there, and it's been a few years since she left.
    - xwdv 5y ago
      Doesn’t matter. HN is simply a more well behaved Reddit with a higher average intelligence per user. From reading the room I’d say Ellen Pao is typically seen as a minor villain around here. Definitely not a hero.
  - fragmede 5y ago
    Ad homonym attack against the messenger doesn't address the substance of the objection. In this case, I'd rather get $3 million vs *not* getting $3 million (which seems like a not-unreasonable payout for an early senior engineer at a startup with a $12b exit). You can argue that they knew what they were getting into, but that's still gotta leave a bitter taste for some.
    - dvt 5y ago
      > Ad homonym attack against the messenger doesn't address the substance of the objection. There is no substance to the objection. They aren't entitled to anything, they didn't negotiate anything, and they shouldn't get anything. Her argument is akin to saying that the Uber driver that dropped me off at the gas station is entitled to part of my lottery winnings because the ticket I bought happened to have the jackpot numbers. The position is both logically inconsistent and severely asymmetrical—we are only talking about this because MailChimp did have a successful exit, not because they failed miserably (as literally hundreds of startups do on a yearly basis). Even as a staunch capitalist, I'll be the first to say there are plenty of problems with corporate tax law, offshore tax havens, money laundering, etc. But this ain't one.
- bpodgursky 5y ago
  I'm not sure why I'm supposed to be upset about this. If they chose to work for a "startup" which didn't offer incentive equity, they don't have equity. Presumably they had good salaries to compensate.
  - sys_64738 5y ago
    This. Don't like the terms then don't work there. Startups are invariably setup for founders not later employees.
- majani 5y ago
  The founders weren't really building the company with an exit as plan A, so stock option programs would have been a waste of time and full of lies.
- rexreed 5y ago
  There are other ways of structuring bonus and non-salary compensation besides "equity" which honestly can get employees just as stuffed in an acquisition as firms without any equity. The silicon valley model is not the only way to frame success.
- shruubi 5y ago
  If the company can afford to offer competitive and attractive salaries to its employees, why would they offer equity? If I am a business owner and can afford to pay my staff well, why would I give up a portion of my company to the employees when I don't have to? This is not some great injustice or a company acting in any kind of morally questionable way. In fact, it would be more accurate to say that in the grand scheme of things (not just the tech bubble), offering equity to employees is the exception, not the norm.
  - LeonB 5y ago
    Not giving equity to employees is fine by me - but it can certainly be “questioned” from a moral standpoint. (Though I think you mean “morally questionable” as euphemism for “morally wrong”) Selling to Intuit is not fine by me - and i consider it morally questionable in both senses of the term.
    - caoilte 5y ago
      Arguing over which part of late stage capitalism is morally questionable is a bit like arguing over the correct length of curl in your powdered wig. If they had gone public instead, Intuit could just as easily have bought up all the shares and reached the same end goal.
      - gerdesj 5y ago
        OK, I'll bite. I am one of three owners of a roughly £1-1.5M pa t/o company in the UK (depends on the wind direction.) We've operated for 21 years now - it's IT Services, mainly consultancy. We've always offered a few Class B shares to time served employees in addition to salary. Not many shares but some. I'm not too sure what on earth "late stage capitalism" means but I do know that my little firm trundles on quite happily and works slightly better for the extra incentive that directly contributing equals directly earning. We have never insisted that shareholders need work extra hours or whatever. I kick people out of the office if they work too late. Work life balance is important. Is offering or not offering equity something that can be considered within the realms of "morally questionable"? A business is a business and a contract is a contract. When you take up employment within a business, you engage with a contract. If the contract offered is not one you like, you are not obliged to accept it. The last two sentences are rather polarised and I accept that the real world is rather more nuanced when you consider individual cases. Can you really call a mutually agreed equity arrangement as "morally questionable"? You might as well describe working for a salary as morally questionable too. Anyway, whose morals are we considering and what standards do they espouse? Morals don't live in a vacuum nor do morals stay attached to a single concept. Your "morals" may well not be the same as mine! We (my little company) are quite boring, rather small and won't ever feature in a how to take over the world, unless 10^-3 unicorn suddenly becomes exciting.
- yibg 5y ago
  Netflix also doesn’t give much equity*, no one seems to complain about that. * they do allow employees to buy options with a portion of their salary and included a 5% stock option a few years ago.
TuringNYC 5y ago
Too bad they closed a bit too late. The proposed tax plan now has QSBS benefits limited to 50% of gain (vs 75% or all) if AGI is > $400k. Those founders will be happy, but not as happy as would have been a day or two ago. https://www.brownadvisory.com/us/theadvisory/qsbs-tax-exemption-valuable-benefit-startup-founders-and-builders https://www.brownadvisory.com/us/theadvisory/qsbs-tax-exempt... https://news.bloombergtax.com/daily-tax-report/bidens-proposed-tax-increases-qualified-small-business-stock-exclusion-even-more-important https://news.bloombergtax.com/daily-tax-report/bidens-propos...
- timdorr 5y ago
  QSBS caps at $10m. That's a drop in the bucket, relatively speaking. If Ben and Dan split it 50/50, that's $6b each and they would each be looking at $1.2b in capital gains tax.
  - TuringNYC 5y ago
    It is up to $10 million or 10x your tax basis. Also, double that if you are married. More if you gift to children. Hopefully their bootstrapped funding has been carefully crafted to track tax basis!
mbesto 5y ago
They were already making out like bandits. They have near zero capital costs and their company is essentially running itself (im exaggerating, but you get the point). Assuming each of the founders had 33%, it means they are each essentially taking in $100M/year in salary with no end in sight towards that either slowing down or it decreasing. This is a simple math formula for them - cash out $4B now, setup a family office and then never work again or never work again and just bring in $100M/year. They'd get to that exit by ~50 anyway.

singularity2001 5y ago

about 1000$ per user? is that the value of our privacy? probably because each user uploaded their address book?

trangus_1985 5y ago
Not quite - many of their customers are paying $$ a month for medium to large marketing sends. Their biggest customers probably count for 30% of the overall revenue. It's unusual seeing a company that sells goods and services for money be valued highly in silicon valley ;)
nacs 5y ago
12,000,000,000 / 800,000 = $15000 per paying customer (12 billion purchase price / 800000 paying customers)