Ben Chestnut is the CEO of MailChimp, a successful company that helps its customers design exceptional email campaigns. MailChimp has found great success by going freemium. Read on to learn how MailChimp funds creativity to help developers create interesting integrations with their product.
Curt: Your company is not funded with venture capital money, correct?
Ben: Right, no funding whatsoever.
Curt: Along with writing for Inc, I run a software company called Journyx. We sell timesheet software and resource management software. We automate payroll, billing and cost accounting, and help companies see which resources are available for projects down the road. We’ve also never had any venture capital money. I’m really curious about the freemium model. How is that model working for MailChimp?
Ben: It’s working brilliantly! I see the freemium model more as a marketing strategy rather than a business model. Freemium is great for publicity. Some of our competitors will include their logo in the footer of every single email their customers send out. We’ve always felt uncomfortable doing that, especially with a paying customer.
Curt: I agree. It’s very annoying if I’m paying a company money and they’re advertising themselves on my content.
Ben: Exactly, it’s really annoying. But you can’t deny the viral effect of doing that either. Freemium is one way we have engineered a way around that problem in an ethical way. If we give it to you for free, then we have a right to share a little bit of the space. So we put our logos in the footer for all of our free users.
Curt: That seems totally fair.
Ben: Yes. Sometimes I joke that this was all just a big, elaborate way to get around the ethical dilemma of including our advertising in the footer. From that point on, the growth has been absolutely amazing. I think we’re now averaging 3,000 new signups everyday. Freemium has resulted in substantial momentum for our company, which gives us time for development. We’ve been investing a lot in our API (application programming interface) and trying to get tighter integrations with as many mini-applications as possible. For example, your time tracking app could be integrated with MailChimp through the API, and then your customers could email their customers there. This growing momentum has also resulted in other companies wanting to build on top of our platform. We had so many developers that wanted to integrate that we’ve launched a one million dollar integrationfund to pay people to do this. We’re swamped with proposals for integrations and we simply don’t have time for all of the proposals as well as potential partnerships. The fund seemed like an easier way to deal with the volume.
Curt: What are your favorite integrations that have come out of this fund?
Ben: There is one integration that is ideal for speakers. Let’s say you’re speaking at a conference and your last slide asks the audience to subscribe to your newsletter. An easy way to subscribe that people have been requesting for quite some time is to sign up through texting. It sounds simple, but it’s not. We’ve considered buying the hardware ourselves but the complexity of the reseller channel keeps this from being an efficient option. This has kept us from doing the integration ourselves.
Then an integrator came to us and made texting sign-up happen. He won’t let us use any of his numbers because he doesn’t want his competitors to jump into this. He told us that since the integration, he is getting more customers than ever.
Another integration that is really great takes your subscriber list and puts the subscriber’s name on a customizable product, like a T-shirt or a street sign. The image of the customized product appears in the email, so the subscriber sees a high-quality image of a T-shirt with their name on it. It’s a great option!
Stay tuned for Part 2 of this interview where Ben discusses how freemium is an ideal model for marketing.