How Small Businesses Grow - Slack and Mailchimp

All companies have to start somewhere. It is fascinating to chart how companies evolve. In this article we dig deeper into two companies that started out small and then achieved exponential growth.

1. Slack

What is Slack?

Slack is a collaborative, channel-based messaging platform. Recently, Slack was acquired by Salesforce for $27.7B.

Founded by Stewart Butterfield, Slack has its origins in the working culture of a web-based multiplayer game called Glitch (also founded by Butterfield). Glitch didn’t have much success beyond a point and had to close down. While at Glitch, Butterfield and his employees used an internet-based chat system to communicate. After the company closed, they realized its value over e-mail and started to develop it. Slack was born.

What did Slack do that was different from its competitors?

When starting out, Slack had several competitors, including Microsoft’s Yammer. But compared to Yammer, which wasn’t adopted by senior clients, Slack was easier to use. It had a great freemium model (boasting a 30% conversion rate to premium users) and had an interface that was attractive. Where Yammer failed, Slack succeeded in being adopted by employees of varying positions within a company.

Slack’s approach to branding and marketing

Compared to other project management and collaboration tools, Slack used a fun and playful color scheme. The designers referred to the use of their color scheme as ‘the color scheme of a video game’. Their user interface attracted more and more users every month and the gamified look of the brand had a lot to do with it.

Slack’s approach to marketing has also been interesting. They put a lot of importance on customer experience, feedback and word of mouth marketing. Their ‘Wall of Love’ Twitter account, is a collection of retweets of compliments that people pay Slack. Not only does it reinforce positive sentiment about the product, but it also introduces users to tips and tricks they can try in Slack.

How Slack maintains sustainable growth with a freemium model

Slack's approach to pricing has been really effective so far. They start by offering several core services for free and make the product indispensable for users. The pricing is easy to understand, just like the product. As a free user, you have access to most services such as searchable messages, sharing documents, etc. Storage is limited but once you reach the point where you require more storage, you are used to using the tool and are naturally more inclined to upgrade.

2. Mailchimp

What is Mailchimp?

Mailchimp is a company based in Atlanta, GA that provides an automated email service. Founded in 2001 by two web designers Dan Karzius and Ben Chestnut, it started as a side project. Originally, they wanted to name their startup, ‘Chimpmail’ but the domain name wasn’t available so they chose Mailchimp.

What did Mailchimp do that was different from its competitors?

The founders of Mailchimp liked to collect ideas. Their idea for an emailing service came out of a discarded idea pile while they were running an e-greeting business. They also stayed dedicated to their singular passion which was to help small businesses grow. A majority of their customers are small businesses.

Mailchimp’s approach to branding and marketing

Mailchimp’s ‘Freddie’ is a recognizable brand mascot (this chimp even has a full name -- Frederick von Chimpenheimer IV). Having a chimp for a mascot sends out the message on what kind of brand Mailchimp is -- creative and fun.

The company aspires to make their communication enjoyable right from the start -- using gifs, high fives, animations and other interesting ways to engage customers. They also offered some really unusual giveaways -- such as mascot based hats for pets!

They have been clever with how they use marketing too. One of their smart and successful campaigns is capitalizing on people misspelling the brand name. They used email, video and search marketing ads to create witty and memorable ads. They also created some short films like JailBlimp, and KaleLimp and even other products such as the chips, FailChips.

Experimenting with pricing

Mailchimp did a lot of experimenting with their pricing so they could arrive at the most profitable and consistent model. They prioritized small business owners because the founders were passionate about helping them. They didn’t just start with a freemium plan from the start, they tried different things, analyzed all their pricing data and then found a model that worked for them.

What set Slack and Mailchimp on the road to growth?

・A great idea that answers a specific problem

・Using tailored branding strategies and tactics in line with their brand identity

・Building up the company with a strong foundation, then scaling and ensuring sustainable growth

・Experimenting with different pricing models