Hey everyone! Today’s interview is with Sameer Dholakia, CEO of SendGrid, a marketing and transactional email service that helps companies do a better job of delivering their e-mails.
Today we’ll be talking about tech debt and why it’s a good thing, the power of e-mail marketing (they send out 22 billion e-mails on behalf of their customers every month), and their 30-90 day sales cycle.
Sameer joined SendGrid a year and a half ago which, at its core, is all about delivering e-mail that matters. They serve over 60,000 Internet mobile-based customers—like Airbnb, Pandora, Spotify, Uber, Foursquare—plus more traditional enterprises, like retail (Costco), e-commerce (eBay), restaurants (Taco Bell). Usually B2C-oriented companies that need to engage with their consumers.
How SendGrid Acquires Customers
One of the great things about the core SendGrid model is how well they got the product market fit. They solved a very specific pain point initially, which was principally on transactional e-mails (or automated e-mails, or application-generated e-mails), and that was: in this day and age applications need to be able to connect with their users.
The simplest example of this is when you sign up for a new service they’ll ask you for your e-mail and password and then they’ll confirm you. That application needs to send that initial e-mail to you, and then later it sends you receipts, order confirmation, password resets, etc. Any developer of an application like this—and of course in this mobile-first cloud era, there are hundreds of thousands or millions of applications being developed all the time—would get very stuck on the complexities of doing what seems like a simple task. How hard can it be to send that e-mail, right?
Turns out that it’s actually very complex. You have to set up your own e-mail infrastructure, understand the SMTP protocol, understand spam traps, make sure the ISPs and the inbox providers like Gmail and Yahoo know your IP addresses, etc.
When SendGrid first introduced their transactional e-mail service in 2009, they hit on that very specific pain point and as a result the vast majority of sales are self-service—they never actually touch the customer, just simply educated them on the problems that they can solve. They do an awful lot of content marketing so people just find SendGrid on the Internet, use their credit card to sign up, and they’re off and running. Over 80% sign up without ever having talked with an employee.
More On Content Marketing
They do an extraordinary amount of education on how to solve the problem of transactional marketing, so when it comes to content marketing, they’re very active on their blogs, they hold webinars, they enrich their website like community forums—and basically just try to make sure there’s lots of information available so when people search for answers on the Internet and see how much SendGrid knows about solving this problem, they’ll (hopefully) want to become a customer.
Let’s Talk Numbers: Volume + Customers
Because of how broadbased the problem that they’re trying to solve is, they have an extraordinary install base. They have over 60,000 customers that range from tech-centric Internet mobile-based customers to more traditional enterprises, and on behalf of them they send over 22 billion e-mails every month and touch over 1.5 billion unique e-mail recipients every month. Just to get a sense of scale, SendGrid sends about 30% more emails every day than Twitter sends out Tweets.
What Does a Starter Plan Cost?
They have a free offering so you can test it out, get to know their service, and then when you want more capabilities you can upgrade to packages. Their most basic package is less than $10 per month, and a typical starter package for the startup that wants to focus on deliverability and have a dedicated IP address to protect their reputation starts at $80 per month.
How Sameer Wound Up Becoming CEO for SendGrid
SendGrid just hit that lifecycle stage where the skills and experience that you needed to be able to grow your company from $0-10 million in revenues are very different from a company that is growing its revenue from $10-100 million—and that’s the trajectory that SendGrid is on now. The company realized that they needed to bring people in to really capitalize on this growth, so that’s what motivated the change.
The initial leadership team at SendGrid was awesome and built a great company with a deep culture and got all the machinery in place. Now that they want to scale it, they needed to bring in someone to do that—enter Sameer. He also brought in new CFO, COO, CMO, etc. to add to the leadership team in order to get to the next chapter of SendGrid’s success.
What Process Sameer Implemented In His First 30 Days
The most important thing he did goes back to this old adage: God gave you two ears and one mouth, so use them in that proportion. So the most important thing you can do is listen. He set up 1-on-1 meetings, team meetings, lunches, breakfasts, happy hours—for the first couple months all he did was meet with all the employees because at the end of the day they’re the best folks to tell you what’s going well and where the company can do better and where they wanted Sameer to focus.
He thinks that traditional org charts with the CEO at the top have it all wrong; actually the CEO should be at the bottom of the pyramid/org chart because he’s there to listen to and support the employees. That’s how he got clarity on what to focus on.
Other Ways To Acquire Customers
Besides content marketing, Sameer believes in the power of e-mail marketing as an extremely cost effective way of both nurturing and acquiring cross-selling new customers. They just introduced a new product called Marketing Campaigns, so they use that to get the word out. Historically they’ve been all about transactional e-mails and automated application-generated e-mails and really extended their footprint just in the last 60 days with this new marketing product.
They started to do more with targeted vertical marketing, so they pick industries or segments of the market where they’ve seen great success and do customer success stories and case studies, and drive those out via webinars where the customer talks with them or they put it in writing and do e-mail marketing around it. Whichever they do, they make sure that the message (success story) gets out there so people know what SendGrid can do for them.
What a Typical Sales Cycle Looks Like
Sameer says that they are blessed with a fairly short cycle at the higher end of the business. The vast majority of customers are self-service (people who find them and sign up on their own) and those close within 30 days. But even those that are more considered purchases—they’re on bigger packages, they’re higher volume senders, and they reach out via an inbound lead—those close in less than 60 days.
They are also adding more of an outbound channel—with an SDR (sales development reps) team that is prospecting into particular segments and types of companies that they think they can add value to—even those are less than 90 day sales cycles.
Sameer comes from a fairly traditional enterprise sales background and he’s used to 6-12 month sales cycles, so he’s very grateful for this!
One Big Struggle He Faced While Helping to Grow the Business
One of the biggest challenges he faces is around “tech debt.” Technical debt is when you’re growing really fast and your software engineers are just trying to keep up with making sure your platform is scaling as quickly as your new customers are coming on board, and when you’re a hyper-growing company as SendGrid has been for so many years, you’re often having to make suboptimal tradeoffs in perfectly architecting the solution in the most elegant way for something that is sufficient and solves the problem.
But over time as you continue to scale you have to go back and re-architect and clean up some of those things and prove that things that were good enough to get the job done back then are no longer good enough for when you’re five times as large.
The reason people in the software world use that phrase is because you can quickly get to a place where the “interest payment” on your debt becomes so large that you can’t do anything new until you pay off that debt, so you have to go back and clean it up. They’ve had to invest a fair bit of time this past year addressing that technical debt so that they can increase the speed in which they add new capabilities and new features.
He often will tell new entrepreneurs in the software segment, “The funny thing about technical debt is that I wish it upon all of you!” The reason Sameer says that is because the only way you end up with technical debt is if you’ve found a great problem to solve for which many customers want to buy your solution. And that happens really quickly. If you have a product that is not catching fire in the marketplace, your engineers will have plenty of time to architect the most elegant, beautiful, perfect solution—but that’s not a really good sign for your business.
You should be so lucky to have tech debt because if you don’t have tech debt you’re probably over-engineering the solution. If you have tech debt, you have to focus on when it’s time to get after it. For example, SendGrid has been around for 6 years and they needed to get after it 2 years ago—that’s still 4 years into the lifecycle of the company, which is to say don’t worry about that too much too early—focus on the business and your customers.
One Piece of Advice He’d Give To His 25-Year-Old Self
On the personal side: go live in New York while you’re young! He’s always loved NYC—it’s vibrant and makes you feel alive and there’s so much to do. Or he would say: propose to your wife sooner, because having kids when you get older is harder—the younger you are to deal with your kids the better!
On the professional side: in terms of the way you think about your career, always focus on the mentors that you are learning from and growth (being in growth-oriented businesses) because growth always creates opportunities.
How Does He Structure An Ideal Day?
For Sameer, an ideal day:
One of His Favorite Tools
One Must-Read Book
Only one? How about 3!
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Eric Siu (@ericosiu) is the CEO at Single Grain, a digital marketing agency that focuses on paid advertising and content marketing. He contributes regularly to Entrepreneur Magazine, Fast Company, Forbes and more.