Mailchimp just Screwed over their Employees
Software giant Intuit has recently acquired MailChimp for a whopping $12 billion — a record setting transaction, set to be finalized by 2022. This sale has turned into a massively profitable undertaking for MailChimp stockholders, netting them around $11.7 billion to be split evenly. And therein lies the problem.
The most attractive part about working for a VC-backed tech company, or a blossoming start-up, is receiving part of the ownership of the company in the form of employee equity and stock options plans. Giving employees a piece of the pie is probably the only way to get them to dedicate their entire lives, and their entire being towards the success of the venture (as is required from Silicon Valley employees in a saturated market in 2021).
However, MailChimp sought to break free of the norm, and adopted a different approach from the get go. Founded in 2001, MailChimp had chosen to break the mold as to how exactly a tech start-up would function. Since the company’s inception, MailChimp employees were painted an extremely rosy picture of the company and its philosophies.
According to accounts from former and current employees, MailChimp saw itself to be the underdog, in an ever-expanding software space, and chose to put their philosophy and loyalty to their business plan over all other attractive means of personal enrichment. This meant — never selling out to any external bidders, never giving in to attractive potential investors, and focusing exclusively on the product and service they provided. This would have been an extremely noble and functional approach, if not for the recent acquisition.
To put matters into perspective, here’s what the average long-term MailChimp employee probably went through in the past few years. You sign up to work at this successful start-up, with their creative attitude and game-changing business philosophy. You decide to forego equity options (despite it being a norm in tech companies valued at over $1 billion) and fully buy into the company’s rebellious culture, and give the company your all. You work tirelessly, optimize the software and tasks you’ve been working on, go beyond your obligations and do everything in your power to make MailChimp a massive success. You don’t care about seeing a piece of this progress in your bank account, as Ben Chestnut and Dan Kurzius promised you that they would never ever sell. You enjoy mountains of praise and virtual applause from your peers from other companies and revel in the success of generating over $600 million in revenue per annum.
Everything is going phenomenally, until Ben and Dan both sell their 50% stake, netting a cool $5 billion each, leaving you $300 million to spread amongst you and 1200 other employees. Doesn’t seem fair, does it?
To be clear, this is by no means an assault on big tech acquisitions, or executives selling their stakes in companies for massive amounts of money. Almost every entrepreneur dreams of being in the position of either selling their start-up idea for billions, or leveraging their valuation for more funding from investors. In fact, pop culture and society in general celebrate such minds and such people.
However, in the case of MailChimp, employees were deliberately pushed away from ownership stakes in their own company, in pursuance of a noble idea — a caricature of what Dan and Ben thought was a good and engaging corporate culture. When you’ve lured in employees with the falsified promise of a game-breaking corporate culture, abandoning this corporate culture means you’ve been manipulating your employees all along. So in the end, MailChimp employees have all worked to bring in massive amounts of revenue, helped in increasing the functionality of the product itself, and have undoubtedly contributed towards increasing the value of the company in the end. But none of them have anything to show for it now, following the acquisition by Intuit.
Sure, $300 million is a lot of money to be spread across in the form of employee benefits, but it pales in comparison to how much Dan and Ben have accrued from this one deal. The acquisition has definitely lined the pockets of all its shareholders, and both of them are probably extremely happy today.
MailChimp employees are entitled to be outraged at this massive acquisition. After being instrumental in bringing MailChimp’s valuation up to $12 billion, employees have essentially no ownership stakes to cash in, and have arguably been exploited for all their labor, only to be cast aside like an expendable resource.
Furthermore, according to this open letter, the acquisition seemed attractive for Dan and Ben since it gave them access to a whole slew of services and data that would help them help out small and medium businesses, to a much larger degree than before the acquisition. This also seems like PR-manufactured jargon, as Intuit’s products and software platforms are notorious for making simple tax payments unnecessarily complicated and hard for individuals and small businesses.
Almost any other company would be unanimously applauded for selling at a monumental $12 billion. However, in the context of the promises made to employees, and the corporate attitude maintained by MailChimp, this entire transaction reeks of greed and labor exploitation. Regardless of who benefitted the most from the Intuit acquisition, it is clear that MailChimp and other such entities represent the hypocrisy of Silicon Valley at its finest.
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