Photo: Jim Franklin
“Email deliverability” might not sound sexy. But it’s important. And it’s big money, as SendGrid is proving. SendGrid works with tons of startups to make sure their automated emails (things like “So-and-So is now following you”) get to their users’ inbox in a timely way, without getting caught in spam filters, and with analytics.
Not sexy. But vitally important, and a hard technical problem to solve at scale. Which means people are willing to pay good money for it.
The TechStars Boulder startup got started in 2009 and has been on a roll since. It now sends 2 billion emails per month and has over 30,000 customers. We spoke with CEO Jim Franklin to learn more about the company.
SendGrid was founded by three engineers who had done startups together before and had been frustrated when their emails to customers didn’t get through. So they built an app for email deliverability. SendGrid has been growing since, mostly via word of mouth–the company’s customers are web developers who are a gregarious bunch and like to trade tips on which email providers to use.
Franklin says: “Our cost to acquire customers is zero, our lifetime user value is substantial and our churn low. It’s just a magical business model.”
Amazon has launched a Simple Email Service which takes aim straight at SendGrid, but Franklin isn’t worried. He says SendGrid has a service culture Amazon doesn’t have — you can reach their customer support team for free via email, chat or phone, whether you’re a customer or not. And it’s no coincidence that SendGrid got a big partnership with Amazon competitor Rackspace right around the time Amazon announced its email service.
“Amazon has been great for us,” Franklin says. “Our metrics accelerated after their announcement. Why? Because we had zero marketing budget and hadn’t even created awareness of the category. With Amazon, suddenly there was awareness. When the developer communtiy became aware that they didn’t have to create their own email services, they looked at the category and we are clearly the leader. Even Amazon says so. They job postings say ‘join us and help us to become the leader.’ … We are focused on this; whereas they have one person dedicated to email who has to coordinate resources to get anything done.”And now SendGrid wants to move beyond “transactional” (i.e. automated) emails to the other juicy half of the email market: marketing emails, where companies like MailChimp rule. In fact, SendGrid’s goal is to become a platform that “solves the email problem”, and that other companies can build on top of to provide more specialised services. And customers are clearly buying it; Franklin told us exclusively that they’d just signed up Spotify as a customer.
Guess that’s why Franklin brushes off suggestions that SendGrid might get acquired by Amazon or someone else. The company has a big opportunity ahead of it.