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Twilio to Acquire Sendgrid
- MichaelApproved 8y agoIt’s wild that the announcement of a $2 billion deal isn’t mobile friendly. The font is so small, I bet desktop customers also have trouble reading the press release.
- nodesocket 8y agoIt's interesting SendGrid is worth so much, while I believe they were one of the first players in the outbound space, competitors such as Mailgun, Amazon SES, and Postmark have very competitive products at lower prices. Seems like a heavily commoditized business. I'm guessing SendGrid just has a lot of "enterprise" clients and contracts that rake in revenue.
- StavrosK 8y agoThere's at least one big difference between Mailgun and SendGrid that I know of: Latency. I implemented an email-only authentication library based on random tokens for Django[0], and that's very sensitive to latency (you don't want the user to have to wait ten minutes for a login link). Unfortunately, Mailgun is pretty slow to deliver emails, so I use SendGrid to send emails for that. [0]: https://pypi.org/project/django-tokenauth/ https://pypi.org/project/django-tokenauth/
- wgerard 8y agoReally surprised to hear that - we use Mailgun and haven't had any issues with latency at all.
- StavrosK 8y agoHmm, that's very odd, I've had problems wherever I deployed it, and multiple users have reported the same. Switching to another provider fixed the problems completely, this is very surprising indeed.
- tyingq 8y agoThere is something of a moat in that brand new services will end up in the spam box. All of the services you mention did a lot of trial and error to see how many parallel connections they could make to big email domains, dealing with spam-marked ip addresses, etc. Perhaps not a huge moat, but there is some secret sauce.
- Angostura 8y agoA concealed, sauce-filled moat? Yum.
- kornish 8y agoThe word "just" implies that getting enterprise clients is easy. If they're established (i.e. old) enough and their support is good enough to justify the price point and support substantial enterprise revenue, that's a fine differentiator.
- tomasien 8y agoExactly. We use them because they have a robust feature set that works for our use case (highly regulated data, etc). That's not a trivial thing. It's not a "moat" but it's wall.
- twunde 8y agoI wish we could use them. Too bad they're not HIPAA-compliant (Mailgun is the only big provider that is, last time I checked)
- tomasien 8y agoThat's a smart move by Mailgun, I'm sure Sendgrid will get there. That's the kind of thing people don't think about with enterprise customers. - Compliance - Support - Security (not keeping things secure - offering custom security options. SAML, user roles, permissions, IP whitelisting, etc) - Customization Building to support big complex customers is hard and if you get it right from a product and sales perspective, the inertia you can build is massive.
- draw_down 8y agoRight, and Dropbox is just a feature.
- tomasien 8y ago$2b is definitely a "doesn't have a great moat but has a great business" valuation.
- spamizbad 8y agoMandrill (Mailchimp) changed their terms of use which resulted in an exodus of high-volume customers who refused to pay Mailchimp's exorbitant bulk email rates. Sendgrid was johnny-on-the-spot helping people migrate.
- brightball 8y agoSendgrid has always had that “top of the line” experience. You know you can always count on them. I’ve worked with them several times over the past 6 years sending 10 mil / month and about 300k / month with zero issues. Inbound did have a hiccup with their SPF/DKIM checks though. SES isn’t really comparable (a lot more work on your part). Mailgun has been doing some really good work though.
- Lazare 8y agoLast I checked Postmark is actually a fair bit more expensive, and SES is cheap and very, very, very barebones. After Mandrill exited the space in a fireball of burning good will, the remaining players in what I'd call the "full service but not eye-wateringly expensive" space are Sendgrid, Mailgun, and maybe Sparkpost, and there's not a lot of distance between them in terms of price and features. One thing Sendgrid is good at it letting people easily send emails (ie, receipts, confirmation emails, etc.) on behalf of their clients, while still passing SPF/DKIM checks, which Mailgun and Sparkpost make a bit harder. If you're working on a SaaS product that needs to send emails on behalf of your clients, Sendgrid is an obvious choice.
- awad 8y agoThe good thing about competing in the enterprise is that price is just one part of the overall criteria that you are judged on. Clearly, SendGrid has some winning value proposition that resonates if they are indeed more expensive and command their reported margins (I haven't personally checked).
- Ologn 8y agoWasn't Sendgrid rejected by Y-Combinator? I guess it can be hard to tell at the early stage.
- joshmn 8y ago"Spam company"
- Alex3917 8y agoYes. I'm surprised this isn't on here with the headline "YC-reject company Sendgrid acquired by Twilio for $2B." Maybe that will be the TechCrunch writeup.
- nil_pointer 8y agoIs there a curated list anywhere of YC rejects that made it? That'd be neat.
- mikeyouse 8y agoVCs often call this their "anti-portfolio", some publish their lists. Bessemer's is super impressive: https://www.bvp.com/portfolio/anti-portfolio https://www.bvp.com/portfolio/anti-portfolio They were pitched & passed on: AirBnb, Apple, Ebay, Facebook, Google, Intel, Intuit, Paypal, Snapchat, Tesla..
- dhruvarora013 8y agoThis is a phenomenal list, and quite inspiring if you look at it in the right light. Hindsight is 20/20 and VCs make plenty of mistakes.
- nodesocket 8y ago> BVP had the opportunity to invest in pre-IPO secondary stock in Apple at a $60M valuation. BVP's Neill Brownstein called it "outrageously expensive." Wow, that has got to be hard to swallow now.
- sethbannon 8y ago
- ricokatayama 8y agowow, it's great to see a player from the modern era acquiring the bahamut from the past.
- kevindqc 8y agoIs there a modern/past player here? Both companies were founded within a year - 2008 and 2009
- 1_800_UNICORN 8y agoWow, this is a big deal! Great move by Twilio, bringing together the premier SaaS SMS provider and the premier SaaS transactional email provider under one roof. It's only too bad that SendGrid has struggled to get its marketing email solution off the ground in a meaningful way. If anyone was going to eat MailChimp's lunch, SendGrid would be my choice as top contender. And yet despite SendGrid releasing many iterations of their marketing email solution over the past 5 years they've never seemed to get a lot of success outside of their bread-and-butter transactional email vertical. Their marketing solution brings in less than 20% of total revenue last I heard.
- cheez 8y agoI don't know if MailChimp is on its way down or what. I recently reset my phone before realizing that 2FA would be affected. Now, I was encouraged to enable 2FA, but I can't get back into my account and MailChimp isn't getting back to me about what I can do if I don't have any backup codes. I know it's a tough situation, security-wise, but I can send my passport if they need it!
- Ataraxy 8y agoFrom my experience, mailchimp's transactional email story is a bit of a convoluted mess with mandrill.
- saana 8y agoI remember MailChimp/Mandrill removed their free tier, making me move to Sendgrid. Only because of that I hope they go under sooner than later.
- blacksmith_tb 8y agoOuch, that forced transition was certainly developer-hostile, but I don't want to see Mailchimp go bankrupt just because they pulled the plug on me (and switching to Sendgrid was basically an improvement for me, anyhow).
- jabart 8y ago
- jchw 8y agoI've had some negative experiences working with SendGrid a few years ago, but honestly I think they've improved a great deal in the last couple of years. Some stuff still could use some improvements (API, UI) but it felt a lot more stable and reliable last time I used it. Still, I miss Mandrill the most.
- tootahe45 8y agoThey put me on a spam IP 2 months ago & i wasn't able to deliver to outlook, account got disabled later that day for 'abuse'. Same for Mailgun without the account being disabled, although they quickly switched me to a different IP and it was fixed. It has given me anxiety about deliverability, even with domain and everything configured correctly you could just be put on a bad IP, especially for low-priced options.
- sitepodmatt 8y agoI thought Mandrill used a range of sending IPs so this wouldn't be an issue? It's seem very lame if they just shard accounts across a IPs.
- gscott 8y agoMandrill was amazing. Then they jacked up the price and tossed it into MailChimp.
- cjhanks 8y agoApprox $26 million of net profit fetched $2 billion in acquisition? A somewhere between 65 and 75x multiple? That doesn't seem right. Are my numbers wrong?
- joshu 8y agoEnterprise value is not the same as synergy value
- drinkzima 8y agoSaaS companies trade on revenue or free cash flow multiples for the most part: https://medium.com/@alexfclayton/how-much-is-your-saas-company-worth-82451bc44433 https://medium.com/@alexfclayton/how-much-is-your-saas-compa... https://www.bvp.com/strategy/cloud-computing/index https://www.bvp.com/strategy/cloud-computing/index
- cjhanks 8y agoYeah, btw I think I cited quarterly. Still I think the multiple is too high. I understand 15x for a private company and 10x for a public. But in an inflated market, higher than that? If I had internet other than my phone I would look it up.
- ksec 8y agoSo $100M Profit per year? $2B is only 20PE, sounds fair to me, in todays stock market where many are trading at 30 - 40+.
- chipgap98 8y agoIt seems like they paid paid 13x projected 2018 revenue [0] for the company. Sendgrid's products are a solid complement to their existing product lines and could probably be cross sold to many of Twilio's existing customers. Makes sense to me [0]: https://sendgrid.com/news/sendgrid-announces-second-quarter-2018-results-and-raises-outlook/ https://sendgrid.com/news/sendgrid-announces-second-quarter-...
- theCricketer 8y agoI'm not too knowledgeable on how these deals work, but figured someone on HN would know: A quick Google search shows that Twilio's market cap is currently $7.4 billion. Does this $2 billion "all-stock" transaction mean that they are giving away over a quarter of the company to pay for this acquisition? Or how else should I read this?
- drinkzima 8y agoThey will be creating stock to fund the purchase, so in essence, yes. The number of shares outstanding will rise by $2B (price) / $76 (Twilio price as of transaction agreement) = ~26M new shares of Twilio to Sendgrid owners.
- nemo44x 8y agoI haven't read the details but not entirely. They will likely dilute their own outstanding shares by adding the required shares needed to acquire the company at that value. This will lower the total ownership as a percentage that each share represents but now every share owns more stuff. So yes they are creating new shares making every other share worth less but it isn't a direct transfer of existing shares. You'll notice companies get board approval for setting aside a number of theoretical shares they could create if they wanted to for things like this or secondary offerings, etc.
- seanlinehan 8y agoMost likely this will be done by issuing new equity. The press release states that they will exchange Twilio Class A common stock per share of SendGrid common stock. They defined the exchange ratio (that's why the price is ~$2B and not a specific number) and will issue as many shares as they need to based on that ratio: > 0.485 shares of Twilio Class A common stock per share of SendGrid common stock Technically, issuing new shares dilutes every existing shareholders' ownership. But, if the market deems this to be an intelligent combination that was valued correctly, the market cap of the combined company should be ~$9.4B or (ideally) more. So the goal is for existing shareholders to hold, at worst, the same amount of value in dollar terms as before or, at best, hold more value as a result of the acquisition.
- mindgam3 8y agoSmart move. I used SendGrid and Twilio years ago, they basically solved the email and SMS dev-ops problem for more product focused engineers like myself. Two companies with a solid product consolidating, hopefully that will lead to better integration and more good news for devs moving forward. Congrats to SendGrid team!
- no1youknowz 8y agoFor those that use email for marketing. Is there anyone cheaper/better than Elasticemail? 1m emails/mo: elasticemail.com - $90 sparkpost.com - $474 mailgun.com - $515 sendgrid.com - $534.95 smtp.com - $900 Or is there anyone between elasticemail / mailgun worth considering? Thanks * Please don't suggest Amazon SES.
- jonstokes 8y agoWhat's wrong with SES? (Not a rhetorical question. I've played around with it and it seems ok, so looking to hear about downsides.)
- no1youknowz 8y agoMany of their IPs have been blacklisted by spammers. When I last tried to use them for marketing purposes with paying clients, it was really hit and miss. See below. They are old links, but serves my point. [0]: https://forums.aws.amazon.com/thread.jspa?threadID=233001 https://forums.aws.amazon.com/thread.jspa?threadID=233001 [1]: https://forums.aws.amazon.com/thread.jspa?messageID=538207 https://forums.aws.amazon.com/thread.jspa?messageID=538207 [2]: https://forums.aws.amazon.com/thread.jspa?threadID=220517 https://forums.aws.amazon.com/thread.jspa?threadID=220517
- coltonv 8y agoConsidering that those prices are for 1 million emails a month, I'd say price is so similar between all of them that you should just pick whichever one gives you and your customer the best experience. The hours saved for your employees will easily save more than they cost if you pick the one that saves them the most time.
- orliesaurus 8y agoThe developer-evangelist approach from both companies has been top-notch: Supporting a lot of smaller people/events/organizations. Kind of shocked that SendGrid didn't IPO but still this is a great victory for both teams!
- objektif 8y agoIs this worrisome for the future of twilio? Now it sounds like they are entering yet another low margin commoditized business. What could be the synergies with the existing business areas?
- moritzplassnig 8y agoSendgrid [1] has better margins than Twilio [2] (75% vs. 54%). [1] https://www.sec.gov/Archives/edgar/data/1477425/000155837018005996/send-20180630x10q.htm#Item1FinancialStatements_390372 https://www.sec.gov/Archives/edgar/data/1477425/000155837018... [2] https://www.sec.gov/Archives/edgar/data/1447669/000110465918050514/a18-14039_110q.htm#Item1_FinancialStatements_121916 https://www.sec.gov/Archives/edgar/data/1447669/000110465918...
- vertex-four 8y agoBoth sending SMSes and emails require relationship management with the other companies involved - the mobile networks and the large email providers - and, related, large-scale sender-side spam prevention. Aside from that, Twilio can now act as almost a one-stop shop for your outbound communication needs - all that’s left is physical letters.
- jonknee 8y agoIt seems like a perfect fit for Twilio, if they were expanding into something well outside their core offering that would be concerning. If you're a customer of Twilio there's a good chance you'll also find Sendgrid useful and vice versa.
- Lazare 8y agoMy employer is a customer of Twilio and Sendgrid, and for the exact same reasons: Sending notifications to customers via SMS and/or email, depending on circumstances. I suspect we represent a core customer type for both firms, and I rather suspect they have a pretty extensive overlap in their client list, so some obvious synergies will be around support, APIs, account management, etc. Fundamentally, their business is about running APIs that let them accept incoming requests from people like me, processing it, and then passing it on to some very ugly external services that will (eventually, hopefully) display a text message to someone at the far end. That's a lot of overlap!
- lquist 8y agoMakes a lot of sense, and really smart to do it all-stock even if they're paying a premium to do so. This late into a bull market it offers Twilio significant downside protection on the deal.
- tim333 8y agoAh, YC's one that got away - https://www.quora.com/Why-was-SendGrid-rejected-from-YCombinator https://www.quora.com/Why-was-SendGrid-rejected-from-YCombin... >Apparently, only one partner, Robert Morris, reviewed the SendGrid application, and he gave it a highly negative score, calling it a "spam company."
- callmeed 8y agoWell Twilio is "phone spam" when abused so I guess its a good match.
- ttul 8y agoA spam company. Not a terrible analysis. But perhaps what he missed is that the company that figures out how to send email well despite having horrible spammers as customers will make millions.
- kolderman 8y agoWhat makes you assume YC has no ethical basis for investment?
- abc-xyz 8y agoTheir expansion to China.
- AsyncAwait 8y agoAre you using Slack, Uber, Docker etc.? Because if yes, then you're not the most ethical either, as these have investors from Saudi Arabia to the CIA. China is easy to pick on, (and am not saying it shouldn't be picked on), because it is a competitor to the U.S, however if it is such an ethical concern for you, there are earlier partnerships you should be concerned about.
- abc-xyz 8y agoChina is easy to pick on because it's the greatest evil the world is facing today. There are plenty of other shitholes around the world, but only China is capable of forcing almost every country and company into their submission. Also, there's a big difference between using a free product and working for a company that supports China/Saudi Arabia/etc. Or in YC's case, bringing billions of dollars worth of investment into a country that sends Muslims to concentration camps, and helping them build a dystopian surveillance state that will force everyone to spread their propaganda and fall in line; while being completely helpless as hundreds of millions of lives are destroyed.. That being said, I do try to avoid using products of unethical companies, and I would resign without a second's hesitation if I found out my company was involved with these evil governments.
- sergiotapia 8y agoI reach for these any time a client asks for SMS and transactional email. Their UX is miles better than any AWS offering so I am very excited.
- dirtylowprofile 8y agoThe site is not responsive. I can’t read on my mobile.
- andyfleming 8y agoWhat potential downsides should SendGrid customers brace themselves for?
- kernx16 8y agoNothing. So far the details of what SendGrid will look like with the acquisition is yet to be determined, but it's pretty obvious that SendGrid will be SendGrid. If anything, you'll probably be able to integrate with SMS and voice send and receive at a discounted price.
- ErikAugust 8y agoWhat are the benefits of using SendGrid over AWS SES? I take it the overall API ease-of-use / UX is a real factor. I ask, as I believe that SendGrid is now built on top of AWS: https://sendgrid.com/blog/sendgrid-joins-amazon-web-services-partner-network/ https://sendgrid.com/blog/sendgrid-joins-amazon-web-services... There are people who can confirm or deny this better than I can.
- SargeZT 8y agoUX is huge. Sendgrid is absurdly easy to use, and at least 3 years ago, SES was an impenetrable mass to me. I got my company up and running on Sendgrid in like 20 minutes. Maybe it's easier nowadays, but at least a few years ago it was a night and day difference.
- racl101 8y ago> SES was an impenetrable mass to me AWS UX in general is kind of a mess. Vast in its services, no doubt, but just messy.
- village-idiot 8y agoUsing it today, still complete garbage UX wise. My least favorite aspect is that the API always claims a success even if that address is in the global blocklist, the only way to learn about bounce backs is to subscribe via SNS. Also the UI is effectively useless.
- praneshp 8y agoI have an anecdote, email me if you care! Your profile doesn't have one.
- idunno246 8y agolets say an email bounces so the address gets blacklisted, but its a legit email address from a real customer. customer emails in and asks why they arent getting their emails, and customer support should have the tools to handle. sendgrid: search email address, find the bounces, click the button that says allow and user gets emails. ses: set up an sqs queue. Pipe all bounces into a db. manage said db. Make a service with ui to search for emails. include a ui to unblock address.
- soneca 8y agoCompletely off-topic, but it is intriguing me: why is this post remaining #1 on HN for some time if the post about Paul Allen has 3x more votes and is one hour younger. Both with an ordinary number of comments. My assumptions about HN's algorithm seem to be way off
- usaphp 8y agoI’ve used sendgrid for a while but had issues with deliverability. Then I moved to postmarkapp [1] and have not had any issues so far. 1 - https://postmarkapp.com https://postmarkapp.com
- tappleby 8y ago+1 for postmark. Had deliverability issues with mailgun which were resolved once switching.
- kevinyun 8y agois deliverability purely based on the email server, or is it a combination between your domain/etc? I always wondered if it was YMMV for everyone saying different things about the different EMS out there (SendGrid, Mailgun, etc)
- jtmcmc 8y agodeliverability is actually incredibly complicated. Every mailbox provider (gmail, yahoo, hotmail/office365, comcast, etc... being the main ones) has their own algorithm for determining what is or isn't spam and includes things from user interaction to IP sending reputation to domain reputation to various types of authentication techniques (dmarc, dkim, spf, etc...)
- quintin 8y agoBut postmark is only transactional. Not mass mailing.
- hiram112 8y ago$2 Billion for an emailer... Anybody know the valuation pre GDPR?
- buybackoff 8y agoProbably due to "send" in their name incoming email parsing was terrible for years and my two very specific tickets was ignored. Some crazy mess with encoding parsing, while MailGun does all the dirty job and gives clean UTF8. After moving to MailGun cannot find any difference in sending simple emails for apps (email confirmation /pass recovery)
- alliecat 8y agoComment; I find myself using Nexmo and Mailgun a lot. Perhaps there's an acquisition that needs to happen there, too?
- g8oz 8y agoCongratulations to the Sendgrid team. We've been very happy with the service. Sending emails is not our core competency and with Sendgrid we don't have to worry about deliver ability. If I ever get around to hosting my personal email I would definitely use them for SMTP so that I can focus on having my inbox under my control. The free tier is 100 outbound emails a day which is more than enough for me.
- rsync 8y agoWhy is it so hard to email from twilio ? Let me explain ... The easiest way to do things with twilio is to use a 'twiml bin' because you don't need any external hosting or any third party - you code the twiml bin right in the twilio interface and it resides there. The end. However, there is no email "verb" or any email functionality of any kind available - not even in the new twilio functions. Let's say you want to cc: an incoming SMS to an email address in addition to its phone destination, you need to host code somewhere. Why isn't there an email verb for twiml bins ? I don't want a sendgrid account. cc'ing an SMS is a very, very simple and obvious use-case and I should be able to do it right in a twiml bin (or, at least, in a function ...)