
Twilio to Acquire Sendgrid - coloneltcb
https://www.twilio.com/press/releases/release_twilio_acquires_sendgrid
======
tim333
Ah, YC's one that got away - [https://www.quora.com/Why-was-SendGrid-rejected-
from-YCombin...](https://www.quora.com/Why-was-SendGrid-rejected-from-
YCombinator)

>Apparently, only one partner, Robert Morris, reviewed the SendGrid
application, and he gave it a highly negative score, calling it a "spam
company."

~~~
ttul
A 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.

~~~
hannasanarion
The purpose of y-combinator is not to make tons of money, neither should that
be the default purpose of a company. "Business ethics" is a thing.

~~~
marcus_holmes
Hmm, really?

In a capitalist society (such as we live in, like it or not), we express value
in money. IF your company isn't making money, is it adding value? If people
aren't willing to pay for it, is it actually any use to them?

The notable example for this is Facebook. We don't pay for it. Advertisers do.
That shows where the value is...

~~~
bmiller2
Phillip Morris makes money, where’s its value add?

~~~
marcus_holmes
I smoked for 20 years. I loved driving with a Marlboro Light hanging out of
the window. I chose to do that to my body from my own free will, and willingly
paid to do it. I'm glad I stopped, but I enjoyed it while I did it.

Things that are bad for you can still be valuable. I still willingly buy beer,
even though I know it's bad for me.

Value isn't what you think it is, if you think that smoking provides no value.

------
mindgam3
Smart 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!

------
usaphp
I’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)

~~~
quintin
But postmark is only transactional. Not mass mailing.

~~~
samwillis
That’s the point, it helps keep the reputation of their servers high and
ensures fast delivery of transactional email.

------
jchw
I'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.

~~~
gscott
Mandrill was amazing. Then they jacked up the price and tossed it into
MailChimp.

~~~
disiplus
I kinda love that they jacked the price up so the delivery is great. The only
thing that i hate is (i use the SMTP endpoint) is that the BCC does not work.

~~~
beckler
BCC is probably disabled to discourage you from using mandrill for
mass/marketing emails.

~~~
disiplus
no, it kinda works, but not like a regular email. like when i send some email
with to: contact@abc.com with bcc: we@def.com the receiver of the bcc sees the
full email header and sees who the original receiver is. but with mandrill you
simply get two emails, one for the original receiver and one for bcc, both
send with to fields, the bcc recipient does not see who the original recipient
is

------
theCricketer
I'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?

~~~
seanlinehan
Most 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.

~~~
panarky
SendGrid is up 17% while Twilio is down 3%.

------
cjhanks
Approx $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?

~~~
drinkzima
SaaS companies trade on revenue or free cash flow multiples for the most part:

[https://medium.com/@alexfclayton/how-much-is-your-saas-
compa...](https://medium.com/@alexfclayton/how-much-is-your-saas-company-
worth-82451bc44433) [https://www.bvp.com/strategy/cloud-
computing/index](https://www.bvp.com/strategy/cloud-computing/index)

~~~
cjhanks
Yeah, 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
So $100M Profit per year? $2B is only 20PE, sounds fair to me, in todays stock
market where many are trading at 30 - 40+.

------
no1youknowz
For 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.

~~~
maltalex
What about setting up your own SMTP server? I’m genuinely curious.

Just configure SPF and DKIM, and send email basically for free, no? Is there
some back magic that these services perform to avoid getting blacklisted?

What’s the benefit of using one of these services besides a nicer API and a
dashboard?

~~~
_pob
At a previous company I worked at we used to manage our own email
infrastructure before finally switching over to a dedicated service. There are
a few problems if you are sending over bulk email that is customized per user
when running your own SMTP service.

1\. IP address reputation - Keeping your IP addresses reputable is not a
simple task. It requires balancing your emails for popular destination domains
(gmail.com, aol.com, yahoo.com, etc.) across multiple external IP address. It
requires you to deal with many different conflict resolution departments, who
don't care about email, when a dispute comes up. It's practically a
requirement to use a service like ReturnPath to maintain your reputation.

2\. Throttling - When doing it yourself you need to throttle yourself. This is
problematic on "big" days, especially when your marketing department wants to
send many millions of emails for a big product push, promotion, or on days
like black friday/cyber monday.

3\. Hiring - A lot of people think sending email is easy. When you get up to
the multiple million per day mark things start to fall apart. Do you have
someone(s) on staff who really know sendmail/postfix/qmail inside and out?

4\. Monitoring - sendmail/postfix/qmail are often times hard to monitor. You
have to put together all of your stats. You have to put together all of your
alerts. If you aren't really experienced with bulk email, you won't know what
to look for and that can impact your reputation. Also consider your logging
infrastructure. sendmail/postfix/qmail are noisy.

5\. Cost - All of the points above play into the cost aspect of it. Is it
cheaper to run it yourself, pay for all of the services and salaries, etc. Or
is it actually cheaper to just use sendgrid/mailgun/etc. IP address reputation
services are not cheap. Infrastructure cost is also something to consider. AWS
IPs all have pretty terrible reputations so running this in AWS (and maybe
other cloud providers) is a non-starter since no one will accept your email.

If you've got the expertise and you are sending a massive amount of emails
then it might be worth it to run your own infrastructure, but at the end of
the day, a single developer consuming an API is often easier and less
problematic.

~~~
jcalabro
The other important one, at least in the US, is unsubscribe/CAN-SPAM
compliance [0]. You've got 10 days to comply or you'll be at risk of up to a
$41k fine per email!

[0] [https://www.ftc.gov/tips-advice/business-
center/guidance/can...](https://www.ftc.gov/tips-advice/business-
center/guidance/can-spam-act-compliance-guide-business)

------
1_800_UNICORN
Wow, 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
I 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!

~~~
saana
I 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
Ouch, 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).

------
orliesaurus
The 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!

~~~
zbruhnke
SendGrid did IPO, its traded under SEND on the NASDAQ

~~~
kernx16
NYSE not NASDAQ

------
ErikAugust
What 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...](https://sendgrid.com/blog/sendgrid-joins-amazon-web-services-
partner-network/)

There are people who can confirm or deny this better than I can.

~~~
SargeZT
UX 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.

~~~
village-idiot
Using 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.

------
nodesocket
It'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.

~~~
kornish
The 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
Exactly. 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
I 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
That'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.

------
sergiotapia
I 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.

------
Ologn
Wasn't Sendgrid rejected by Y-Combinator? I guess it can be hard to tell at
the early stage.

~~~
nil_pointer
Is there a curated list anywhere of YC rejects that made it? That'd be neat.

~~~
mikeyouse
VCs 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
This 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.

------
g8oz
Congratulations 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
Why 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 ...)

------
buybackoff
Probably 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)

------
lquist
Makes 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.

------
andyfleming
What potential downsides should SendGrid customers brace themselves for?

~~~
kernx16
Nothing. 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.

------
objektif
Is 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?

~~~
vertex-four
Both 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.

~~~
mooreds
I bet twilio buys lob.com next :)

------
alliecat
Comment; I find myself using Nexmo and Mailgun a lot. Perhaps there's an
acquisition that needs to happen there, too?

------
dirtylowprofile
The site is not responsive. I can’t read on my mobile.

------
hiram112
$2 Billion for an emailer...

Anybody know the valuation pre GDPR?

------
soneca
Completely 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

------
MichaelApproved
It’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.

~~~
h1d
I just wonder what these people think in terms of designs when their fonts are
way too small for anyone but teens to figure without getting closer to the
screen.

------
ricokatayama
wow, it's great to see a player from the modern era acquiring the bahamut from
the past.

~~~
kevindqc
Is there a modern/past player here? Both companies were founded within a year
- 2008 and 2009

