The Un-Silicon Valley Way

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MailChimp and the Un-Silicon Valley Way to Make It as a Start-Up

“The typical start-up fairy tale goes something like this: You begin with young entrepreneurs from Stanford or Harvard who have come up with some novel idea for disrupting restaurants or dog walking or whatever else. After creating a prototype, the guys (they are almost always men) enter start-up boot camps like Y Combinator, recruit a group of early investors, and perhaps launch a Kickstarter with a slick video. If the initial plan succeeds, the founders go into heedless expansion mode, which usually means selling off huge chunks of their company in exchange for gobs of money from venture capitalists. …

In fact, it’s possible to create a huge tech company without taking venture capital, and without spending far beyond your means. It’s possible, in other words, to start a tech company that runs more like a normal business than a debt-fueled rocket ship careening out of control. …

There is perhaps no better example of this other way than MailChimp, a 16-year-old Atlanta-based company that makes marketing software for small businesses. … Under the radar, slowly and steadily, and without ever taking a dime in outside funding or spending more than it earned, MailChimp has been building a behemoth. According to Ben Chestnut, MailChimp’s co-founder and chief executive, the company recorded $280 million in revenue in 2015 and is on track to top $400 million in 2016. MailChimp has always been profitable…. The company … now employs about 550 people, and by next year it will be close to 700.

As a private company, MailChimp has long kept its business metrics secret, but Mr. Chestnut wants to publicize its numbers now to show the road less traveled: If you want to run a successful tech company, you don’t have to follow the path of ‘Silicon Valley.’ You can simply start a business, run it to serve your customers, and forget about outside investors and growth at any cost. …

Start-ups fueled by venture capital often need to figure out how to run like ordinary businesses; they embark on unsustainable growth, they forget about earning money, they don’t learn how to weather tough times. …

‘One of the problems with raising money is it teaches you bad habits from the start,’ said Jason Fried, the co-founder of the software company Basecamp, who has written frequently on the perversions of the venture capital industry. ‘If you’re an entrepreneur and you have a bunch of money in the bank, you get good at spending money.’

But if companies are forced to generate revenue from the beginning, ‘what you get really good at is making money,’ Mr. Fried said. “’nd that’s a much better habit for a business to work on early on, to survive on their own rather than be dependent on money people.'”

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