Pretty incredible if true - from the article, revenue was at 700 million with around 300 million EBITDA. That's a 14x multiple on ARR, which seems to be on the high side?
Though a lot of these acquisition/sale strategies seem to be leaking info to the media in order to publicly plant a marker in the ground ("anchoring" in persuasion/negotiation).
> That's a 14x multiple on ARR, which seems to be on the high side?
For small private companies, yes. Mailchimp is not in that set. Better comps likely to be public SaaS companies, since Mailchimp is certainly large enough to trade on the Nasdaq.
I anchor valuation around Snowflake on the high end (117x sales), but a lot of it is really about growth rate. Here are price/sales for some other public SaaS companies:
HubSpot: 29x
DocuSign: 36x
Asana: 47x
Atlassian: 40x
DataDog: 50x
Shopify: 49x
Twilio: 28x
Okta: 40x
Workday: 13x
A case could be made that a buyer could spiff up the Mailchimp app/company and prep for an IPO in the ~$30B range in a couple of years.
Thanks for sharing that. Looking at Shopify[0], their revenue growth rate has been between 50% to 100% (!!) per year - didn't look at the rest but what you say makes sense with that information.
Just fishing out the api keys is a feat in and of itself. Then there's like what, 3 to 5 different ways you can set up a mailing list, all using slightly incompatible methods/datastructures/layouts/whatever. By the way, I'm calling it a mailing list because that's what they are. But mailchimp has different unique terminology for each way. And that's just the tip.
MailChimp was great until it wasn't. I decided to use aweber for my last project after previously using MailChimp to manage over 100k subscribers.
That said, I highly respect the fact they've been bootstrapping. And I don't that bootstrapping has anything to do with the lousy choices made after they reached significant scale. You can't win them all.
None. No "Email service" (let's say newsletters specifically, because obviously gmail exists) has a strong brand - that's my point, it was a blank canvas to start and they've spent a ton on paint with little to show for it.
> Why would an email platform for business be a household name any more than would the top HR software?
Businesses are made up of people. Look at Salesforce, Workday, Zoom...
Let's say you tried that. At best, you'd have a company similar to 2021 Mailchimp at some point in the future (when Mailchimp will be even bigger). So in some sense you'd still end up behind versus buying Mailchimp.
Then you'd have to compete against Mailchimp and other established brands to get there, which means high competitive and execution risk factors. That means your $10B investment in NewMailCo is at risk of loss, with (say) odds of 50% of building a success like Mailchimp. Further, you run the very real risk of losing all of it if you try to start from scratch. Most startups fail, regardless of available capital (Quibi, Juicero, etc.).
The parent comment said “less than that” not the same amount - clearly it wouldn’t make sense if you expected to spend the same. (That said, the parent comment is classic HN “that seems easy” and is likely to be wrong.)
Do MC employees get any equity? I think there is a profit sharing compensation strategy, so, this huge potential sale, will MC share any of those “profits”?
> It's crazy to me to think that a company that facilitates sending emails could be worth 10B.
"that facilitates sending emails"...ha.
Sounds so simple doesn't it? If that's what the market is dictating and its so simple then why not just build a clone yourself? You can be a billionaire too.
These hot takes coming from engineers on HN are getting boring and old. Technology AND business at scale is very different. I'll humor you guys with some stats for a second:
- According to the statistics, more than 600 million emails are sent through the platform every two days.
- Later in 2019, the company announced its annual revenue would reach $700 million
> If that's what the market is dictating and its so simple then why not just build a clone yourself? You can be a billionaire too.
There's a tons of competition in this space.
I think the biggest component in the valuation here is that they have enough cashflow that private equity can saddle the company with $9.99B in debt and be reasonably assured that they can service the debt for the foreseeable future.
At my company, email is by far the largest online revenue channel besides organic search. Email marketing software is absolutely critical for customer relationship management.
Without these tools, we have no idea whether someone is opening our emails or not. If they're not opening several of our past emails, we remove them from our list. It's good for them, and for us, as we don't want Gmail or Hotmail flagging us as a spam domain.
We want our email list to consist of qualified leads, not just random people who signed up for a white paper and will likely never actually buy anything from us.
By removing non-engaged subscribers, we can then create customer segments to do things like A/B test different offers. Or set up a one-time offer to only a segment of the email list that hasn't previously engaged with us.
Building a brand in that space is difficult, acquiring competent staff isn't that easy either. After that, you need massive amounts of work for warming new IP ranges up, spend lots of time on abuse management (because spammers will attempt to abuse any new competitor within that space), and probably spend a lot of money on marketing. Because, you know, otherwise people will just go to Mailchimp.
Mail platforms like Sendgrid and Mailchimp are pretty standard purchases for any company that does anything with email (i.e. pretty much every real-world company).
It's crazy to me that Reddit has the same valuation. Frankly, I feel like I live on a different planet from much of the HN hype crowd sometimes.
The HN crowd is vocal about tech paradigms they are familiar with, like social media, online shopping and streaming video.
But when it comes to the actual commercial infrastructure underpinning large swathes of the digital economy, the knowledgeable ones are drowned out by the uninformed bloviators.
This is clear when you look at the comments for stories related to Google/Facebook Ads (the ad product itself), Shopify, Mailchimp/Marketo or Salesforce/Dynamics CRM.
They have really steady cashflow, some measure of lock-in, a strong brand, and access to a gigantic amount of small business customers that would be difficult to replicate. The right acquirer could cross-sell some related market products and make a healthy return in a few years.
The email space has a ton of cash. Frankly I’m surprised it’s as low as 10B. Probably due to the fact that social media is “new” while email is “old.” Hype matters.
$300mm in earnings
Average SP500 P/E ratio is 35: https://www.multpl.com/s-p-500-pe-ratio (People get very different numbers for this, but let's go with it for now)
300 x 35 = $10.5B (assuming no debt or cash on the balance sheet, which I don't know about)
So makes sense back of the envelope assuming it is growing as fast as the "average" SP500 company.