We saw a note in the press about a potential acquisition of MailChimp by Intuit for $10 billion. If the deal goes through, it will be a blockbuster in the local and small business space. Mailchimp — a 20-year-old company located in Atlanta — has had an incredible run.
It was just over two years ago when Mailchimp announced it would be moving from a single point solution — email — to a multiple solutions strategy. At the time the company had grown to 11 million active customers with an audience of 4 billion users. It was also on a trajectory to drive $700 million in annual revenue.
If we add two years to those metrics, we’d guess Mailchimp now has about 12 million active customers and nearly a billion dollars in annual revenue. If these are reasonable estimates, it suggests a current ARPU of $83 a year, or just under $7 a month. A quick look at the company’s website suggests that most paying customers are in the $14 per month “Standard” package.
We reacted to this news with a slight smirk. Not because Intuit ($150 billion valuation) isn’t a fantastic company. It absolutely is. We smirk because Intuit has tried to move beyond bookkeeping and taxes and accounting for small businesses at least a couple of times.
Its acquisitions of Homestead (a website business) and DemandForce (a marketing platform) are two examples of prior efforts by Intuit to broaden its value proposition for small businesses. We don’t believe either of these deals lived up to their billing. DemandForce was eventually sold off to InternetBrands, presumably at a deep discount of the estimated $500 million acquisition price.
Driven by the SMB Shift to the Cloud
But maybe times have changed sufficiently to where Intuit can enter the full-stack operational solution business. Or maybe times are such that Intuit feels it must offer a broader solution. And presumably, the strategy and corporate development people at Intuit are reading all of the analyses pointing out the rapid small-business adoption of cloud-based tools and solutions during the pandemic. Perhaps those same people are seeing in their own data the generational shift to the cloud that we often write about on these pages.
Some of you may remember a presentation at an industry event (remember those) a few years ago by Eric Groves. He was an early leader at ConstantContact. In that presentation, Eric detailed how relentlessly Mailchimp disrupted the space, taking thousands if not millions of customers from ConstantContact. As we recall, much of Eric’s story was about the freemium model and removing barriers that would trip up the small business customer. That story is certainly worth a fresh look today as this potential acquisition moves forward.
So regardless of Intuit’s motivation, the $10 billion price tag — should it happen — will deliver Mailchimp’s owners a massive payday. Having taken no outside money, the team that has done the hard work of building the business will be the sole beneficiaries. That itself is a feel-good story. And we’d expect lots of that money to flow into the Atlanta tech scene down the road.