It was December 2012 and I was freaking out. My team and I came from Croatia to Silicon Valley just a month ago to build our API company, and already we were going bankrupt. What I learned years later, was that our product was nowhere near marketable capabilities at the time, and the $50k investment we got from 500 Startups disappeared practically overnight. $22k we immediately paid for our team to go through the 500 Startups accelerator program, $5k were various lawyer fees (including incorporating in Delaware), $5k for the roundtrip plane tickets, $4k was first-month rent in Mountain View and the list went on. If you ignore the most significant expense which is paychecks, there were many other expenses like, visas, hotels, rent-a-car, apartment furniture, food (hey, everything is expensive in California).
Now I know the mistakes I’ve made, and there are a hundred things I would do differently, but five years later, I have not choice but to say that’s water under the bridge. So anyway, I realized that I might as well start sending my team back to Croatia or fundraise like crazy. Being in Silicon Valley, I opted for the latter and reached out to the most influential investor that was closest to me, 500 Startups.
I explained WhoAPI’s situation, and one of them immediately emailed two founders of major API companies. Isaac replied instantly. Saying he will help out, and invest in WhoAPI. This happened in 20 minutes, and I was stunned, impressed and ecstatic at the same time. Might have been my high-temperature because I was sick at the time, but then again, I still think it was a spectacular move.
So that’s how I met Isaac. He was one of those two API founders. He immediately understood what we were trying to build at WhoAPI, and came up with a cool use case. So we created Domain Score API. (More on that, here.)
I spoke several times with Isaac, and during one of our mentoring sessions, I asked him how SendGrid got to the first 100 clients. Among other things, he told me that two of their resellers actually brought a large portion of the first 100 clients. I thought that was an important piece to the puzzle, so I asked Isaac to go deeper on how this happened. It turned out that this client was a startup, and they grew very rapidly. With this growth, they were able to send client’s SendGrid’s way as well. Today, there’s a good chance you’ve heard of this company; Heroku. Back in 2010, Salesforce acquired Heroku for $212 million.
My first reaction was that SendGrid got lucky, but after talking further with Isaac, and thinking about my experience, I realized otherwise. SendGrid had an incredible team and an incredible product that solved a genuine problem in the marketplace. They were ready and prepared for the massive traffic, clients, and requests that came their way.
As you will see in the interview, the company first started out as SMTP API but realized they needed a better name, so they rebranded to SendGrid. When they went public, I reached out to Foundry Group (a while back I interviewed Jason Mendelson) and I congratulated Brad Feld and asked how he felt now that SMTP API is now a public company. He replied that he used to tease them by calling them SMIT PAPI until they changed the name. Although Ryan McIntyre from Foundry Group was the lead investor.
“I called them SMIT-PAPI until they changed it. I’ve been investing in email for a long time so SMTP-API was not going last as a name.” – Brad Feld
Isaac Saldana is one of the co-founders of SendGrid, a Denver, Colorado-based transactional email delivery and management service. Isaac founded the company together with Jose Lopez and Tim Jenkins back in 2009 and afterward, they went through the acceleration process in Techstars. As of 2017, SendGrid raised over $81 million and went public in November 2017. As you will learn in the interview with Isaac, SendGrid is processing 36 billion emails per month! Without any further delay, here’s Isaac.
— SendGrid (@SendGrid) November 15, 2017
Goran Duskic from WhoAPI talks with Isaac Saldana from SendGrid
Goran: Isaac can you tell me a little bit about yourself the year before you started SendGrid? Were you working somewhere? Were you still in school? How old are you? How old were you then? And things like that. What triggered the idea for SendGrid?
Isaac Saldana: So before SendGrid I was doing consulting, and I was 28. And what triggered the idea of SendGrid was that I had observed in these companies is that we had email deliverability issues. When applications that would send emails their emails would end up in the spam folder. And researching that problem, I found that on average 20% of emails sent by way of applications either go missing or they get caught by spam. So that was exactly the same problem we were having with Yahoo at that time.
So I was doing consulting and I was also the CTO of some of these companies. I started consulting for the last company called NotPaul and eventually, I became a co-founder and the CTO of that company. And so that’s why I kind of mentioned consulting, founding and CTO and stuff like that. So we experienced that problem and in trying to fix that problem I saw that there was a huge problem that 20% of email is missing.
Goran: I found out that in earlier years SendGrid was actually called SMTP API. How did you decide to go with that name? Even though a lot of people didn’t understand what SMTP API.com is about?
Isaac Saldana: Yeah. So I’m a developer slash geek by nature. So to me, it’s really easy to understand the name SMTP API, I also knew developers were going to understand what we did. We were lucky enough that we went to an accelerator called Techstars in Boulder 2009. Telling our name we found that developers were able to pick it up but only a small percentage of the people that we were talking to were developers.
So we were talking to CTO’s and investors, CEO’s, CMO’s. And I wanted to get access to developers since they were the ones that would be able to tell what SMTP API is. CEOs would tell their CTOs about our company but if CEOs had a hard time remembering our name it was going to be an issue. And that’s kind of what we found out. So we decided to change the name to SendGrid.
Goran: I heard that one of your first investors said that for him as an investor he thought that one of the most exciting things was when you find mission-driven entrepreneur. So let me just repeat that. One of your investors described you as a mission-driven entrepreneur; and said that you were obsessed with solving the problem of sending emails in bulk. How does being mission-driven and obsessed help become successful?
Isaac Saldana: Like I mentioned I personally experienced this problem. So after spending some time and looking at it, I am talking about months here, I couldn’t fix it, and because I couldn’t fix it I decided to do something about it. I decided not just to say, “Well I will NOT let someone else fix it. I want to fix it myself because it’s my own problem.” And what I later found out is that there are many other problems associated with email. So we want to create a company that focuses on solving email problems starting with email deliverability. So that, in turn, would make people like me, developers, lives easier. And that’s actually what I still do on a daily basis. I’m really passionate about making developers’ lives easier starting with email.
Techstars accelerates SendGrid
Goran: So at this point let’s say you have a problem, you’ve decided to solve it. And when exactly in that course of time was the first investment that you got? And can you tell me a little bit more about how that happened? Was it with Mark Solon in Techstars?
Isaac Saldana: Yeah so we started; I decided to spend my life fixing email issues; starting to fix email issue around November of 2008. I started developing a solution early 2009. And around March 2009, I got the first data customer to start using our service and provide feedback. Soon after that I started getting some traction and I pitched the idea to the co-founders Tim and Jose. And then we started developing. We had the opportunity to also apply to Techstars and we got in. This is around May 2009.
Went through the Techstars program and it ended in August 2009. During demo day which was early August soon after that we got an offer; a Term Sheet from Highway 12 Ventures -Mark Solon who still sits on our board. And we decided to go with that maybe early September. I may be wrong on when we decided to commit to the Term Sheet and we ended up closing around November. So money was in the bank in late November 2009, almost a year after.
Goran: Was it difficult for you to convince the other two co-founders that this was the biggest idea they’ve heard of so far in their lives? (chuckles) I mean what was the key point that you used to get them in?
Isaac Saldana: It didn’t take me that much effort to convince the co-founders. I think one thing that helped is that it wasn’t a full commitment right away. I think they had the time to see traction and get excited about this because I could always be wrong. And you have to mitigate some risks and the way we started it started little by little.
They didn’t quit their jobs immediately so I think one thing that helped is that I already had a relationship with one co-founder for 10 years and the other one with 4 years. So there was some trust initially and also risk mitigation meaning they didn’t have to quit their job immediately and go in right away. So it’s like it was a way for them to explore given that there was already some trust from previous experience and from working together for a long time.
Building an API company at the right time
Goran: What was actually happening behind all those large investments? What were the triggers that got you additional investments and that got your investors on board?
Isaac Saldana: One of the things that we’ve been able to do is that we started SendGrid at the right time and I’m so lucky to be a part of SendGrid. So some of that is luck, right. We started my life in a really positive way, and I still continue to learn from all these people. Lately, I work a lot with the executive team, with developers and the board, in addition to family related things. And right now I’m so passionate about making developer’s lives easier. And it has been an influence maybe for where I graduated, the time I graduated and the people I’ve been able to meet in the way.
Goran: So how many emails does Sengrid send today? Do you have any metric from the top of your head like per day or per month?
Isaac Saldana: We process 36 billion emails per month!
Goran: Mm-hmm. Wow! That’s crazy. So what’s next? I mean earlier you mentioned that you started with email deliverability but basically you’re solving all the problems with emails. So what’s really next on the path for SendGrid?
Isaac Saldana: So there’s so much to do. There are a few things that we have going on at SendGrid. I mentioned the email and from there we’ve seen a lot of innovation on the web. We’ve seen a lot of innovation on mobile; social and now internet of things, but we haven’t seen so much innovation with email. And there’s the problem. Count the number of companies in the world that are trying to make it better. So we would like to help bring innovation to email. We want to make it easier for developers to integrate on email. And SendGrid is obviously making deliverability way better. I’m biased but I would say that we’re the best in the world in email deliverability. So improving email deliverability, continue with the high skill ability but continuing making it better. That’s one of the things I want to focus us on.
Goran: Do you have anything to add to your journey and story? I’ve read that you actually turned down an acquisition much earlier when you were about to close another round of investments. So I’m pretty curious about what direction your company goes from here.
Isaac Saldana: Yeah we turned down an acquisition earlier. One of the things that we realized was that it’s hard to actually think about what the future is gonna be 5, 10 years from now when you’re building something because you’re so focused into the everyday execution. And one of the things that we wanna do right; all those are options; things that you mentioned are potential options in the future for SendGrid. Things like when we’re going public, funding, acquisition – all those things are options. One of the things that we focused on is on building a great company; because if you think about it those things may never happen.
But one of the things the Jim Franklin was able to do great at SendGrid is to set up a great culture. He calls it the 4 h’s- Humble, Hungry, Happy, Honest. And our CEO, Sameer Dholakia is a dedicated champion of our 4H culture. This actually creates satisfaction and not only that but the culture at SendGrid is great. If you go to our office and even if you don’t know anyone, the first thing that you’re gonna get probably from someone is a smile. That’s actually really contagious. So now you have a great mission, something that is really motivating to do on a daily basis. And then you have great people that help you do that.
Goran: I fully understand, and agree completely and 100%. I just wanted to hear it from you because just recently I had a question from one of my Facebook followers. How do I feel about my investors? Aren’t I concerned when will they get back their investment? And I replied that I simply have to focus on building a product and building a team and building a company and hope for the best. So I don’t want you to think that I asked the question because I feel differently or that I have a different opinion.
That’s pretty much it unless you have anything to add?
Isaac Saldana: No, not really. I just want to thank you for taking the time to go through all of this and interviewing different people. I know it’s going to benefit a lot of us so that we learn from your findings. So thank you on behalf of the startup ecosystem and thank you for making this available to everyone.
Goran: Thank you, the pleasure is all mine.