SendGrid to hit $100 million in revenues, plans to be IPO ready by 2017
SendGrid has scaled from an email delivery platform to an email marketing giant which handles nearly 30 million emails per month and reported $60 million in 2015 revenues. MarTech Advisor spoke to SendGrid CMO Scott Heilmes about how they plans to achieve $100 million in revenues this year and plans to be IPO worthy in 2017.
SendGrid started off in 2009 raising seed funding with the idea to enable bulk email delivery via an API, and manage the deliverability for clients as a service. Their bet on the demand for email delivery paid off, with strong year on year growth helping them to drive revenue of $100million in 2016, representing a 40% increase this year. CMO Scott Heilmes says this will also set them up for a IPO sometime in 2017.
The two main solutions they offer are, an Email Infrastructure solution for transactional emails, and a marketing platform for email campiagns. Customers like Spotify and Ebay depend on them to run sophisticated, highly targeted email marketing campaigns via their API. It serves an array of customers from SMBs to large enterprises. The Marketing Campaign Toolset solution is a competitive offering in the email marketing space — a UI-based tool along the likes of companies like MailChimp. It allows SMBs to run email marketing campaigns with advanced features like segmentation, A/B Testing, analytics.
In terms of scale, SendGrid is one of the largest deliverers of email in the world today with close to 30 million emails in this month alone. They have 120,000 global customers today, 42,000 of which are paid while the rest are on a freemium model. In terms of regions, 30% of their revenue comes from non-US countries (India based strtups like Flipkart and Ola are some of their biggest customers). CMO Scott Heimes who joined from Digital River in Nov 2015 talks to us about the companys expansion as a email engagement platform and into new markets.
Where are the big opportunities for SendGrid, in terms of regions and industry verticals?
In the future, SendGrid will be looking at using data to its advantage in terms of not only scaling it but also efficiently leveraging it. To enable more predictive sending of emails, applying engagement scoring methodology to the process to help customers get smarter and focused. Opportunities that we see are to continue to get more efficient with their demand generation engine, to acquire self-service users through their direct marketing efforts which has proved to be a successful strategy for them until now.
We are also looking at leveraging an outbound sales methodology which will help to penetrate high volume markets, and look for ways to deliver value to the customers acquired. They see a lot of opportunity in utilizing their existing data and providing incremental services up and above that to serve them better in terms of deliverability, consulting, strategy and design which will in turn build up their service engine.
The other opportunity we see is in building a stronger channel partnership as a solution-provider — apart from their existing channel partners like Azure, Mozu, Google Cloud platform. We aim at partnering with system integrators, digital agencies which will help them to resell their solutions into their customer set. Furthermore, expanding in the global market and serving more international customers is a big opportunity. The first move is going to be setting up an office in London in October this year and we expect to open an office in Asia Pacific in mid-2017.
What are the biggest challenges you face from a technology perspective?
Like most SaaS and Technology companies in the market, we are looking to advance the solutions, make it easier to use, smarter and contiously improve features. In terms of leveraging data and enabling predictive analysis to help customers do their job better. We do not foresee a big problem in scaling services from a SMB customers to larger enterprises.
How do you plan to approach product development? Any upcoming product innovations?
They are very close to publishing a first global email engagement index in which we will have snapshots of vertical elements, open-rate response comparisons, and drive insights across various industries in terms of what strategies work and which ones don’t. Through it, they will identify proactive and practical ways to make recommendations in the market.
We are launching a data-driven engagement score API service which will allow customers to score potential senders with likelihood to open, send-time frequency, send-time optimization features. This will in turn enable us to drive the features which will be exciting for the customers and make data-driven enhancements in our offerings by leveraging our scale to differentiate in the market.
As companies start to leverage more data, privacy and security is a top priority for customers, and we want to ensure through best practices that they can optimize sending the emails without getting any of them black-listed or face any problems in the process. We have made tremendous amount of investments towards updating our technology to all the advanced statutory compliances.
How do you see the future of email evolving, given the emergence of messaging platforms such as Slack?
Email marketing is a complex task and managing a sophisticated email marketing program involves focusing on a lot of key areas like content optimization, design, setting optimal elements for global delivery and deliverability itself- ensuring the email lands in the inbox. Customers often struggle to manage complex segmentation, setting up the right level of automation and deliverability when running campaigns on larger scale. So it’s important to have tools which have a simpler User experience, comparable value offering as against our competitors.
In spite of the challenges, Email will remain a core marketing tool for decades. It is a very effective, simple and intuitive tool and second most effective tool after search in driving conversions. Certainly, other messaging channels will continue to evolve but Email will remain a key channel in a multi-channel communication strategy for a very long time.
As a CMO, what are the key considerations when it comes to building a marketing technology stack?
Driving the direct response, self-service revenue channel is important in a CMO role like his. We acquire about 75% net new revenue for the company through our self-service ecommerce channel. And we have a very sophisticated tech stack, highly focused on search engine marketing, SEO, display retargeting and leveraging affiliate channels. We are right now in the process of building our own digital buying desk. On a B2B side, Marketo is our marketing automation platform and Salesforce is the sales automation tool. These along-with an array of other tools help us to not only nurture leads, but also upgrade and convert freemium customers to paid customers.
What is your take on the fragmented marketing technology ecosystem, and how do you see SendGrid fit into the martech players?
There are about 4,000 to 5,000 companies in the martech landscape currently and there will definitely be some consolidation in the next 5 to 10 years to come. We will see a lot of stronger platforms acquiring smaller companies under their belt to increase their scope in terms of array of services. It’s a recipe for rightful consolidation but not every company is going to make it.
From a M&A perspective, SendGrid is actively participating in the market, looking at lots of different opportunities as we see M&A or consolidation as one of the available growth channels for their business. We also have a vision for going beyond just email and growing to be a broader, extremely trusted channel to drive engagement at multiple levels. We do see an opportunity in the B2C space to consolidate and offer a platform of choice vis-à-vis the B2B space and becoming a preferred provider.