> To investors, the math just didn’t check out. Why serve a highly fragmented, emotional, low-budget small business audience when 30% of them will be out of business in 2 years, and 50% of them will fail within the next 5 years? What Ben understood from personal experience was that even when solo-preneurs fail, they keep their email lists alive, and most of them start something new some time down the road.
Always encouraging to hear that you may be working on something worthwhile even if smart people still don’t get it. Even some smart friends of mine have been pretty unconvinced simply because they don’t understand the domain, or maybe they’re just not that interested. Investors are often pretty smart, but apparently those they spoke with were biased against the massive small business market. Conventional hurdles of selling and retaining such customers didn’t apply to Mailchimp but it was difficult for them to see that. Today, Mailchimp still has over half the market.
> Always encouraging to hear that you may be working on something worthwhile even if smart people still don’t get it.
People very rarely "get it" at first for things that become big. Anything obvious will already be attempted by larger corporations.
Google was initially so unappealing to investors they would go out the backdoor to avoid talking to the founders. AirBnB has a long, fascinating story of them struggling to get off the ground. Amazon was laughed at for competing with brick and mortar. Tesla was considered idiotic to compete with big auto, who presumably could put their weight behind electric and crush them. Likewise SpaceX was crazy to complete with legacy defense contractors. And so on.
Also, from personal experience, most investors aren't that smart. Investors are just people. How smart do you think the average person is?
Something most people have to learn the hard way is that bad investors are worse than no investors. This isn't just my opinion, I was originally taught that by YC. And while I don't normally agree with this guy, he says some salient things here.
Does anyone else find MailChimp's UX to be counterintuitive? Simple things like form building feel overly complex and its frequently unclear whether some actions will be destructive or not. It's a product I'm stuck using for a client but which I absolutely abhor each time.
Totally agree. I had to bail on it years ago because of how nervous I would get every time I built a new campaign. Every button-press you're walking on egg shells.
Between MailChimp and Basecamp, it seems like a few products have spun out of agencies. Is it a good idea to first start an agency to maintain reliable cash flow until a product strikes it big, or is it a distraction/time sink? Curious on the community's thoughts. In my opinion, it seems smart because you can float by indefinitely with a handful of clients until you have market fit with some product, though I wonder if statistically it would make more sense to just focus on the agency without the distraction of product.
If you have a specific product in mind, I don't recommend the strategy. Find investor funds and build the product.
If you don't have a specific product that you want to build, then I think it's a more viable path. Running the agency gives you a stable revenue and base to bootstrap a product when a product opportunity becomes available. Running an agency also gives you insight into pain points that multiple different companies are hitting.
So, an agency as a path to eventually developing a product makes some amount of sense but an agency as a path to develop a specific product vision probably doesn't.
FWIW - I've also seen a lot of SAAS companies come out of individual consulting engagements. I know of two services that started with "I'll give you a 25% discount on my normal rate if you're ok with me keeping the IP for this portion of the project" type negotiations.
I think this is a neat way to start as it's validation (someone is paying) and your first customer (which is the hardest to get) all in one shot.
Also puts a lot of back-office infrastructure in place to serve as a starting point for a transition rather than have the founder(s) have to manage that as well.
Hootsuite also started as an agency side project, and I'm sure there are more.
Intentionally following this model doesn't seem sensible though; with VC money so accessible if you have already put together a good team you might as well focus on the product itself. Agency work is not fun.
VC money takes time to get, it requires you to give up some part of ownership/control, and puts pressure on you to be a unicorn.
Fine for some; certainly not foolish to go a different route. Basecamp never wanted to be huge, just successful. I'm working on a project that our company funds through agency work, and it's fine.
Option three, create an agency which is building out its own product as the base for the projects you're taking on.
For example let's say You're building homes using a special process that you're developing in house. Your clients just want homes, but while you're building those homes you can and keep working on your process until you can sell the process to a conglomerate of some sort.
As a person that runs ISP SMTP servers, mailchimp and its ilk are nothing but another source of spam. If the entire thing was yeeted into oblivion, nothing of value would be lost to the internet.
Save you the click. MailChimp was a web agencie's internal project. It wasn't abandoned, it was just not the focus of their business. The pivoted from an agency to full time launching mailchip.
Thanks for mentioning this. Wish I'd read your comment before the article.
This article seems like a for-pay puff piece when it was originally published in December 2020, but the posting here and now when this company is going through a bit of negative PR is a bit suspect.
Thanks, absolutely ridiculous that the name of the main subject is not in the title. I already knew the story of MailChimp but this could have been about anything...
And, not so much a "wink & nudge" as a reminder to question why any particular company on any particular topic is getting coverage at any particular time. (And an awareness than many on HN care little about the issue.)
Always encouraging to hear that you may be working on something worthwhile even if smart people still don’t get it. Even some smart friends of mine have been pretty unconvinced simply because they don’t understand the domain, or maybe they’re just not that interested. Investors are often pretty smart, but apparently those they spoke with were biased against the massive small business market. Conventional hurdles of selling and retaining such customers didn’t apply to Mailchimp but it was difficult for them to see that. Today, Mailchimp still has over half the market.