The Side Project That Became More Valuable Than the Business That Created It

In Mailchimp’s early days, Ben Chestnut and Dan Kurzius worked from a small office on the west side of Atlanta.

Chestnut later remembered sketching possible logos while Kurzius sat nearby writing code and talking with customers. The company they were building was not yet the main business.

Their main business was web design.

Mailchimp was the thing on the side.

Chestnut and Kurzius had started a web-design agency called the Rocket Science Group after being laid off from corporate jobs. Their agency concentrated largely on bigger corporate clients. Alongside that work, they began developing an email-marketing service for smaller businesses. Mailchimp says the tool was intended as a simpler alternative to the oversized and expensive email software available in the early 2000s.

At first, there was no dramatic announcement that the side project would become the company.

There was simply a recurring problem.

Small-business clients needed an easier way to send email newsletters.

So Chestnut and Kurzius built something to help them do it.

Years later, that small piece of software would be acquired as part of a $12 billion deal.

The web-design agency that created it would be gone.

The small tool solved a more repeatable problem

Service businesses grow one client at a time.

A web-design agency has to find the client, understand the project, design the site, revise the work and deliver it. Then another client arrives with a different project.

The email tool worked differently.

Once the software existed, another customer could use it without Chestnut and Kurzius having to design an entirely new product for that customer.

Mailchimp was initially an internal tool the agency used to help small-business clients send newsletters. As more clients showed interest, the founders made it self-service and opened it to the public.

The contrast between the two businesses became harder to ignore.

During the day, the founders were working with larger organizations and selling web-design projects.

Outside that work, they were helping smaller companies use the email product.

Chestnut later described the difference plainly. The agency work depended heavily on billable hours and selling projects. The email product had the potential to scale in a way the design business did not.

That did not make the decision automatic.

The agency was the established business.

It had customers.

It produced revenue.

Mailchimp was still the side project.

Walking away from the known business meant betting more heavily on the smaller one.

By 2006, though, the money coming from the email product was becoming difficult to dismiss. Inc. reported that side-project checks of $10,000 or $20,000 were beginning to add up. Chestnut and Kurzius decided to concentrate on email and small businesses.

They did not simply close the agency overnight.

Fast Company reported that the transition away from web development began in late 2005. When the founders decided to commit to Mailchimp, they spent about a year saying goodbye to agency clients and helping them find other vendors. By 2007, Mailchimp had become their full-time pursuit.

The side project had become the work.

Customers had been pointing toward the opportunity

It is tempting to describe Mailchimp as a clever pivot conceived in a strategy meeting.

The story was messier and more useful than that.

The founders did not begin by deciding that email marketing was a better market than web design.

Customers kept needing help with email.

Chestnut later recalled that business clients repeatedly asked the agency for email-marketing help, so he built a small tool to solve the problem. In the beginning, the ambition was modest. He described hoping the tool might generate enough revenue to cover lunch.

That small request from customers contained information.

The agency could finish a website for one company and move on.

The email problem kept returning.

Other businesses had it too.

The same basic tool could solve it repeatedly.

This is one reason side projects can be difficult for founders to judge. They often look smaller because they begin with fewer resources, fewer people and less revenue.

But size at the beginning does not reveal how easily the idea can repeat.

A service that earns more money today may still require the company to start much of the work again tomorrow.

A modest product may be used by the next customer with very little reinvention.

Mailchimp gave its founders evidence of that difference while they were still operating both businesses.

The side project was not important because it was new.

It was important because the same problem kept appearing.

The company eventually became much larger than the experiment

Mailchimp continued expanding after the founders left web design behind.

For a long period, the company remained focused closely on email marketing before adding broader marketing tools. Chestnut later wrote that the company had spent years concentrating on doing one thing well before customers began asking for help across other channels.

The scale eventually became difficult to reconcile with the project's modest beginning.

In September 2021, Intuit announced an agreement to acquire Mailchimp for approximately $12 billion in cash and stock. The deal closed that November, with Intuit reporting total consideration of $12 billion.

Twenty years had passed since Mailchimp began beside the web-design agency.

The extraordinary part of the number is not simply that the company became valuable.

It is what the founders had to stop doing for that to happen.

They had already built a functioning business.

They had paying web-design clients.

They could have treated Mailchimp as a useful extra service and continued doing both.

Instead, they eventually noticed that the smaller operation worked differently from the larger one.

One depended heavily on their time.

The other could be turned into something customers used themselves.

One solved different projects for different clients.

The other kept solving a similar problem for more and more businesses.

The difficult decision was not coming up with the side project.

It was recognizing when the side project had stopped being the side project.

A company can become attached to the business that created its new idea because that business feels established, important and safe.

Sometimes, though, the most valuable thing the original business produces is not another sale.

It is evidence of a better business hiding inside the first one.

Chestnut and Kurzius spent years designing websites.

Along the way, their customers kept asking for help sending email.

They built a small tool to answer them.

Eventually, they closed the business around the tool and kept the tool.