Mailchimp's Un-Silicon Valley Growth Strategy

While the main headline in the New York Times Mailchimp story was how Mailchimp has never raised money, the most interesting line in the story IMO was that the company will do $400M in revenue with 550 employees this year. Thats $727K per employee.

Compare that to HubSpot which has projected to end 2016 with $265M in revenue and close to 1500 (estimated) employees (thats $177K per employee) -- or Marketo which will likely end the year with $250M in revenue (estimate based on Q2 earnings and growth) and hovering at 1,000 ( employees (or $250K per employee). All three companies started around 2007.

All have built fantastic businesses, but these results highlight a few things related to growth and customer acquisition:

1. Some growth loops are far more efficient and powerful over the long term than others.

Mailchimp has primarily relied on the Casual Contact Viral Loop1 and recently layered on the Sales Loop with their business offering. Marketo and HubSpot have primarily relied on different forms of the B2B Sales Loopfrom the beginning requiring much more capital to fuel. As a side note, this is why I remain optimistic about Dropbox vs Box over the long term — if they can figure out the upgrade path to Dropbox For Business.

2. The Mailchimp numbers also highlight the concept of Channel-Model fit and Product-Channel fit.

While all three businesses have similar products, at the core they have molded their businesses not just around Product Market fit but also Channel-Model fit and Product-Channel fit.

Here’s a simple comparison (excuse the formatting):


Mailchimp -> Casual Contact Viral -> SMBs -> Touchless, Freemium, Lower Price

HubSpot -> Content Marketing + Inside Sales -> Mid-Market -> High Touch, Higher Price

Marketo -> Outbound Sales -> Enterprise -> Very High Price, Very High Touch

So, this begs the question:

Why doesn't every company follow a Mailchimp-style growth path?

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