As we gear up for SaaStr Europa 2023 in London on 6-7 June and SaaStr Annual 2023 in the SF Bay Area on 6-7 September, we needed to have a look again at a few of our most iconic audio system and periods from over the yr, that we will nonetheless study from at the moment.
At SaaStr Annual 2020, for the primary time, we have been in a position to get Ben Chestnut CEO of Mailchimp to hitch us for a really open and trustworthy dialogue of the highest challenges actually constructing the #1 100% bootstrapped SaaS of all time. At the least to this point.
Quick ahead one yr, and 100% bootstrapped Mailchimp was acquired by Intuit for a surprising $12 Billion. It appeared a very good time to revisit my Prime 10 Learnings from my chat with Ben, with a number of updates:
My prime 10 learnings:
1. Sure, bootstrapping actually does take 3-4 years longer. We’ve talked about and written about this many occasions earlier than, however Ben vigorously agreed. Mailchimp took years to transition from an company to a software program enterprise, after which years till it lastly took off after they added freemium. In truth, actually, it took 2 years to get going and 4 years to hit Preliminary Traction. Bootstrapping is much less a way of life than one thing we simply do when it’s the one or best choice. Extra right here.
2. It’s possible you’ll not want a moat. Possibly allow them to go in the event that they aren’t completely satisfied. Happiness is a moat. I’ve had a number of discussions over time on what constitutes a “moat” for a lot of SaaS merchandise. Ben confirmed there isn’t a moat at Mailchimp. He stated in truth, he doesn’t need moats. If a buyer desires to depart, he desires them to depart. And hopefully earn them again later. “Buyer happiness is a moat”. You don’t get that should you make it laborious to depart.
3. Part 2 may take 12 years to get to. It’s OK. Discuss to extra prospects to know when you find yourself prepared. Mailchimp up to now 2 years has grown from an electronic mail firm to a advertising automation firm. That’s a giant change, and their very own model of lastly going upmarket. However boy — they waited! Nearly 20 years. They waited till $1b in ARR to go upmarket extra, so as to add a a lot richer and broader product suite that took them out of “simply” electronic mail. So go on the proper tempo. A bit extra right here.
4. It could take 24+ mos. to get to actual Product Market Match. Mailchimp didn’t actually have product-market match till it went Freemium a full 2 years in. We’ve talked for years on SaaStr on how it’s important to funds 24 months to actually get one thing off the bottom in SaaS. Right here’s one other case examine. It additionally took Mailchimp 24 months, and a tilt to freemium (which they initially resisted), to even get to $1m in ARR. A bit extra right here.
5. Existential threats by no means finish. Even at the moment, a GDPR kind enterprise mannequin menace (or world pandemic) occurs recurrently. Ben clearly even at $1b in ARR seems like issues are at all times a bit fragile. He agreed Mailchimp can’t be killed now — it’s method too massive. But it surely recurrently encounters large threats. He likened it a bit to “doom”. Doom looms, even at $1b+ ARR. Undecided this made me really feel higher, however it was actual. It by no means will get simpler. You simply get higher. And maybe, solely the paranoid survive, even in SaaS.
6. Model issues, even very early. Be true to it. For Mailchimp, it was being enjoyable. Many people are sluggish to study the ability of name, even dismissive of it within the early days. However Ben got here from a model advertising background and strongly believed in model from Day 1. Being “enjoyable” was an necessary a part of their model. I do keep in mind it, partly, attracting me to Mailchimp as an early-ish buyer. Ben relayed a narrative of when he briefly thought of taking an edgier method to a competitor and taking out a taunting billboard throughout from their workplaces. His advertising staff nixxed it. It wasn’t enjoyable, and it wasn’t true to their model. A associated put up right here.
7. Bootstrapping isn’t a magical selection. Nobody would fund them. We hit this level above, however Ben wasn’t dogmatic about bootstrapping. They only had no selection. A bit extra right here.
8. Went from company -> software program firm solely as soon as that they had sufficient cashflow to help it. It took them years. We once more hit this above, however it was fascinating to listen to simply how conservative they have been switching from working an company to a software program firm. They took years, and didn’t absolutely swap over till they might pay their 3 salaries. Maybe that also works at the moment. However issues additionally transfer quicker at the moment.
9. They begged their completely satisfied company prospects to purchase software program. The shoppers have been mad in regards to the change, however it labored, as a result of their prospects stayed with them through the tilt. This was an fascinating level. Their company prospects didn’t actually wish to purchase electronic mail software program from them. They needed the design company to maintain doing what that they had been doing. However as a result of belief had been constructed up for years, they nonetheless purchased the brand new product from the staff.
10. Thinks we’ll be again to the place we have been, not quickly, however prior to we notice. We’ll be again within the workplace, again constructing collectively IRL. With a distributed taste. Okay, this one turned out to not fairly be the case!
And quick ahead 2.5 years later, Ben got here again to SaaStr Annual 2022 to mirror, in a calmer temper, on the deal, the journey that obtained them there, and what metrics do and don’t actually matter in the long run right here:
Actually loved at the moment, Jason! Thanks once more for having me. https://t.co/uc3UfCUR76
— Ben Chestnut (@benchestnut) September 2, 2020