Thread by @MichaelMartocci

1/ There’s been a lot of talk on here about the @Mailchimp (MC) exit and the relative fairness of it to their employees

As a founder/CEO of a bootstrapped company approaching 9 figures in revenue, I wanted to share my thoughts and approach as someone going through similar

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2/ First, before diving in I wanted to preface with a few points

1 - Mailchimp objectively is likely top 5 startup execution of all time from founders perspective

2 - We don’t have the full picture

3 - They achieved what they did with the team comp they had

3/ So let’s dive in…

I think it’s first important to provide some of MC’s historical context

MC, like many bootstrapped companies stumbled into its eventual model over time

They first set out as a marketing agency

4/ Started in 2001, They provided agency level services focusing on setting up email campaigns on behalf of their clients

It was an unsexy, barely profitable, slow growing slog of a business

Eventually they built tools internally to help them meet demand scalably

5/ They had basically built the early MVP for MC as an internal tool

By 2007, 6 years later, they had decided to make the tool itself their core business and shit down the agency, focusing on a self serve SaaS model

After some trial error and some luck, they landed on a

6/ freemium model with some embedded viral loops, such as mailchimp branding to help spread the product quickly

From that point on, about 7 years into the business, they finally had achieved PMF and were off to the races

7/ I bring this up because this is often times how successful bootstrapped companies come about

Most times, the founders don’t have a grand vision for what they want to build, the idea of being VC-backable or a large exit is largely inconceivable

8/ This impacts things in a few ways

1. First time, bootstrapped founders are largely ignorant to the best corporate structures, how to properly comp employees, how ESOPs work, 409a’s, C vs S vs LLC (especially not in SV)

2. You aren’t able to attract the best talent at start

9/ Given the context, having already grinded out the business for close to 10 years before hitting some sort of escape velocity, and ESOPs not being part of the equation by that point, it’s pretty understandable as to how it all played out

10/ As MC scaled, hired too talent, and grew profits, they landed on employee comp package that were base, benefits, and bonus heavy (via profit sharing) - this worked for them and allowed them to build a world class team

I think it’s also important to try and out yourself

11/ In these employees shoes at the time

First, these are smart people (as evidence of what they achieved) - MC was still largely a 1 product SMB co and had been slow rolling for 10+ years

Equity options come with associated risk and they are mostly considered

12/ as part of a total comp package

Also important to get out of today’s context when analyzing this

The market for talent today is tighter than ever - great talent can command crazy packages - go back 5-10 years and that’s not exactly the case + making the switch later is hard

13/ additionally it was basically unheard of for bootstrapped companies to achieve 10 figure,let alone 11 figure exits

So you have founders with a profitable bootstrapped company that may never sell it, rendering options basically useless

In this case profit sharing makes sense

14/ When you look at total comp packages online they seem pretty strong and when you read threads on Blind, people seem genuinely happy to be there, for the most part

Fast forward today and you have a $12B exit to Intuit

The founders will walk with billions

15/ And the (1200) employees have a pool of up to $500m to be allocated over the next few years (keep in mind the founders will also have to earn out over several years)

So the question…is it fair?

Overall, I think so

16/ If anything, I think the people that posisbly lose out here are the employees that were around from around 2010-2015 who may no longer be with the company who you’d assume don’t participate in the upside

At the same time, if they had options that needed to be excercised

17/ not long after they left, with no clear exit in site and no developed secondary market, it’s posisble those shares just get forfeited

Now, if I’m @benchestnut I may go back to some of those early team members and thank them for the dedication early on w/ a nice gift

18/ and possibly throw an extra few hundred k (on average to each employee personally by end of year)

But overall, I think this was a good outcome for all and one of the greatest entrepreneurial stories of our time and should be applauded

19/ I’ll share another thread in the future about how Inthink about employee comp @swaguphq but for now, hopefully that helped provide some added context to this situation

Like @agazdecki says, I’m rooting for all entrepreneurs to win 🚀