A 15X ARR multiple at this level is high but not unheard of.
You can ask my co-founder of TinySeed, Einar Vollset, who is in that space and knows so much about SaaS exits because he’s been part of advising so many SaaS founders in exiting. Obviously, it’s higher than the 4–6 or 4–10 multiple you might commonly see in SaaS apps that are growing and doubling each year in between $130 million and $140 million.Īs you get bigger, the multiples tend to increase. That’s a nice, healthy multiple, I would say. If you say Mailchimp’s revenue is around $800 million and they sold at $12 billion, that’s a 15 times ARR multiple, which is good. It’s almost another order of magnitude larger. If all of that is true or in the ballpark, Mailchimp is the next level.
They’re throwing off-Jason Fried said from the MicroConf stage-tens of millions of dollars in net profit per year. There are no confirmed numbers on this, but the best estimates I’ve heard on Basecamp’s revenues is that they are low nine figures, that they’re $100 million, $150 million, and highly profitable because they only have 50 employees. As many startups we hear about these days, growth of $800 million, $1 billion in valuation, and still doing literally $10 million, $20 million, and $30 million in ARR, what an incredible feat to reach that level of revenue without taking any substantial outside funding. I just want to pause there for a moment and think about that. While I had thought that they crossed $1 billion in annual recurring revenue, it turns out the most recent numbers-I believe-from Forbes are $800 million in revenue. No fewer than a half dozen people have reached out to me over the past few days asking for my opinion, not only because I’ve been a long-time fan of Mailchimp, but because I started Drip and entered the ESP (email service provider) space.Įssentially, people say Mailchimp is a competitor of Drip, and I would always say that Drip is a competitor of Mailchimp because let’s be honest, Mailchimp was sending a billion emails every weekday.
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Companies like Mailchimp were really the early drivers of this lower monthly subscription fee software. The companies that grew big selling these contracts were Oracle, Microsoft, Adobe, and other companies that charged literally seven figures or eight figures for multiyear contracts.
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This is such a testament to the profitability and the scalability of not only software but subscription software because software before-let’s say Mailchimp, Basecamp, the other SaaS models that we see today-was a really expensive on-prem software. Y Combinator was the first one of course in 2005 or 2006, and Mailchimp was born in 2001. Did they raise friends and family? Did they raise a fund-strapped round? Certainly, they didn’t take money from accelerators because they launched before accelerators existed. I am curious about the stories behind that. I saw it mentioned in several places that the cofounders of Mailchimp, Ben and Dan, didn’t raise any institutional funding. Not that we aspire to grow to this level, but to know that we have potential to get to this level without raising institutional funding. This is truly an incredible day for not only bootstrap founders. My understanding is it’s a 50-50 breakdown of stock and cash. It’s the largest exit for a bootstrapped company ever-at least from what I can find. This week, I’m talking about Mailchimp selling for $12 billion to Intuit. Welcome back to Startups For The Rest of Us. Subscribe & Review: iTunes | Spotify | Stitcher Transcript If you have questions about starting or scaling a software business that you’d like for us to cover, please submit your question for an upcoming episode.
Not that all founders aspire to grow to this scale, but it’s truly an incredible day for bootstrapped founders to know that we have the potential to get to this level without raising institutional funding. In Episode 568, Rob Walling talks about MailChimp selling for $12 billion to Intuit, the largest exit for a bootstrap company, ever.
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