If you recognise this picture, it’s likely that you are a small business owner who have been using MailChimp to communicate with your fans and following, or you have received an email from MailChimp before.
But did you know that MailChimp actually qualifies to be a Unicorn?
I say “qualify”, because MailChimp is technically NOT a Unicorn – it has never received a single cent from venture capitalists, and unlike most other in the group, it is actually… … profitable…
Growing quietly in their corner, without much public stunts other than their famous mascot, Mr Chestnut and his co-founder, Dan Kurzius, repeatedly decided to keep their business private, away from prying venture capitalists and the typical blitzscaling strategy the industry has become synonymous with, choosing instead to grow organically right from the start.
The choice to grow organically – This means MailChimp’s growth has always been fuelled by internal resources, from the small payments they receive from their loyal entrepreneur-customers, and/ or debt financing from banks, and the duo never had to issue new shares to private investors. On top of these, the duo actually has a say in the direction the company goes, the way they interact with their loyal fan-customers, and how they want to grow the business.
This is exactly the kind of virtuous cashflow cycle we espouse – a self-sustaining money-tree, literally! Just give them money one time and get out of the way.
But the obvious question is why do such businesses need investors then, since they can just grow on their own? And there is heavy truth in this question!
Some probable answers are 1) we can only hope they would pity us and sell us a small stake, hopefully because they see the values we stand for and how we intend to be long-term investors to grow alongside them. 2) they need external capital to grow this profitable venture to a greater scale.
These are weak answers, and you may think such occurrences are highly improbable. But they are possible. And possible is all we need.
Let’s invert the equation – why should the economy as a whole invest our hard-earned money with any company that cannot run sustainably with the virtuous cashflow cycle described above? Isn’t that tantamount to financial ruin over the long-term, even if they may sell for sexy prices now? Sure, some people will get rich, some others not, some others may even want to be the road guides, ushering people in for a fee, but eventually what has been created? Temporary “employment” before the entity crash and burn to the ground? What is the purpose of investing this way as a whole?
Coming back to the possibility – Imagine if Lego, one of the most, if not the most profitable toy business in the world, calls you and like you to invest with them in their business in producing toys for the billions of children (and overgrown kids) globally? I would jump at the chance!
Think Lego, Ikea, Aldi, Decathlon, Tetra Pak etc… these are organic businesses that grew sustainably and strongly without going public. These are the ones that belong to category one, where if we have to, we will beg them to sell us a small stake out of sympathy – they are the holy grail of said virtuous cashflow cycle and simply do not need investors.
Meanwhile, there are many others in category two, where some similar and parallel businesses are publicly listed, these are the ones we can invest in one time and get out of the way, and allow them time to grow and grow and grow. Truly, possible is all we need.
When we spotted the public listed “Lego” recently, which we codenamed it “Go-le” for our brief childhood game, the Investment Research Lab went crazy, because they are truly re-electrifying brick-and-mortar gaming while fully embracing new-age mobile gaming, i.e. the best of both worlds. In our watchlist are also other public listed “Ikeas”, “Aldis”, “Decathlons” and “Tetra Paks”.
Oh, what a paradox, to invest in exactly the kind of companies that do not need investors’ money…