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Letter from our CEO

Thank you for spending the time to learn about our special company, SendGrid. You may not have heard of us, but you are likely interacting with us every day when you receive a receipt at the end of a ride share, when you book a reservation online, when you click on the “Forgot Password” button, when brands you love send you their newsletter or offers. We are likely in your email inbox—every single day.

We have been on an extraordinary journey over the past eight years, since our founders started SendGrid to find a better and simpler way to send email. We are in the early stages of creating a built-to-last company, and hope that you will join us on our journey.

Before we ask you to make a long-term investment, we feel obliged to share with you some background on Where We Came From, Where We Are Going, and How We Plan to Get There.

Where We Came From

Genesis Story

Our Founders—Isaac, Tim, and Jose—are software developers who were serial entrepreneurs. Each time they set out to build a new digital business, they found they had to build a software application or website that needed to communicate with users in an automated fashion. A few examples:

  • when users signed up, they needed to respond to a confirmation email in their inbox to confirm their identity;
  • when they lost or forgot their credentials, they needed a button to click to retrieve their user ID or password and to receive an email to reset it; and
  • when users submitted orders, they needed an online notification that their purchase was received.

Since the ubiquitous personal digital identifier has long been an email address, our founders realized they needed an email infrastructure that would automatically enable their applications to send these types of emails.

They spent months learning about email protocols (SMTP, DKIM, DMARC and other alphabet-soup-like email acronyms) and tens of thousands of dollars in servers and networking to set it all up...only to then see just 60% of their automated emails actually arrive in their users’ inboxes. Three sharp developers spent a lot of time and money, and still 40% of their email was not delivered successfully. They decided that to effectively use and deliver email, they had to learn more about the policies of the inbox service providers such as Google Gmail and Yahoo! Mail and really understand best practices in email list management.

Suffice it to say, this is NOT how developers want to spend their time when building a new digital business. No more so than developers want to build and maintain their own physical infrastructure (see Amazon Web Services success), understand global payment processing (see Stripe success), or learn about SMS or voice messaging (see Twilio success). Our founders set out to solve the pain associated with email infrastructure, and expose it as a cloud API service. They believed that others in the universe shared their pain.

That was 2009.

Eight years, more than 55,000 customers and one trillion emails later, our founders discovered that many folks did indeed share that same problem. And today, we have a rapidly growing business that touched 3.5 billion unique email addresses during the 12-months ended June 30, 2017.

Where We Are Going

It is important to clearly articulate where we are going and the belief set that we will use to inform our strategy and operations. Buying into our stock is tantamount to buying into our long-term journey. We want you to be as excited about our strategic direction and operating principles as we are.

I hope this letter outlines those beliefs for you.

Mission

By focusing on our Mission, to deliver customer communications that drive engagement and growth, we have successfully helped 55,000 customers around the world regularly communicate with their billions of users. We believe in keenly focusing on the business outcomes (engagement and growth) that we deliver for our customers, not simply on the technology we build or the services we offer.

Email, the primary form of digital communication, is our channel of focus. It often surprises people that delivering email is hard. As consumers, sending person-to-person messages, we do it every day. But for businesses to send email at scale—email that arrives successfully in a consumer’s inbox—delivery is quite complex. We believe deeply that email will remain the center of gravity for digital communications for years to come, and that our expertise in helping customers connect through this medium will be an enduring source of strength for our business.

We believe equally that the proliferation of emerging communications channels—like messaging/chat platforms, in-app messages, online ads, browser and push notifications, and SMS—creates further potential growth opportunities over time for SendGrid to help our customers optimize their communications across those channels.

Vision

Our vision is to build the world’s most trusted customer communication platform. Each word in that statement was carefully chosen:

  • “World,” because we believe there is as much opportunity outside the United States as there is within it. In fact, we have already built a significant global footprint, with customers in more than 100 countries around the world.
  • “Trusted,” because we believe we have an important responsibility to our customers, on behalf of whom we are delivering mission-critical business communications that they expect to happen in a utility-like fashion. When they “plug in” their application to our metaphorical email socket, it has to “just work.” We can’t fulfill our vision or meet customer expectations without extraordinary uptime performance, which, in 2016, measured better than 99.99%.
  • “Customer communication,” because we believe that today, while we focus on the email channel, ultimately, we expect to support the many channels of communication that our customers employ to engage with their consumers and users.
  • “Platform,” because we believe that companies of all shapes and sizes should be able to easily build their applications on top of our services, thereby driving broader usage of our system.

How We Plan to Get There

Formula for Success

We believe in a relatively simple formula to drive business success.

Happy Customers + Engaged Employees = Financial Strength -> Investments in Innovation

We refer to each of these formula “variables” as our Enduring Measures of Success. The specific goals and metrics that belie them will change from year-to-year, but the categories themselves never will. We believe that executing and delivering against this formula will allow us to continue to build a durable company.

Happy Customers

We believe most great businesses focus intensely on customers, their experiences, and the value they derive. SendGrid obsesses over building products and services that our customers will love and value. We don’t allow any “hands on keyboards” (e.g. no coding) until we have done dozens of customer interviews both to validate a perceived problem and to confirm our solution design. We execute quarterly Net Promoter surveys. These surveys include having every company leader reach out personally to a few respondents to hear their qualitative feedback. We want our customers to know we hear them. We invest disproportionately in technical support, customer success and professional services, because we are committed to helping our customers be successful with our services.

Engaged Employees

We believe people are our most valuable asset. Highly engaged employees are a competitive advantage for any business, and we believe that SendGrid’s success to date has been due in no small part to our “Gridders.”

At SendGrid, we focus maniacally on our 4H culture—Happy, Hungry, Humble and Honest. We believe that those “values create value,” that having a deeply shared set of beliefs actually creates economic value. There is no greater compliment I hear from customers than the words, “you’re easy to do business with.” It’s only through the commitment of our 4H employees that we receive the high praise embodied in that compliment. Moreover, in the competitive battle for talent in the software industry, we believe a differentiated and compelling culture is perhaps our greatest weapon. We attract and retain great people because our teammates genuinely enjoy working together.

We believe also in the concept of “Servant Leadership,” in which we flip the organization chart on its head, to visually represent the executive team, leadership and managers all working to serve the individual contributors who do the hard work of our company every day. Our leadership team strives to choose the right markets, direct the right strategy, attract and retain the right people, implement the right processes, and ensure the right capital structure. However, we believe that providing direction is “necessary but not sufficient,” so we also push our leadership team to remove obstacles and create an optimal environment for every employee to do their best work.

Finally, we believe it’s critical that we ask all of our employees to act like the owners that they are (we use equity as an incentive lever for nearly every one of our Gridders). We often remind our employees: “You’ve never seen a rental car at a car wash,” because owners care more deeply. They sweat the little details. Ours certainly do.

Financial Strength

You will, appropriately, measure our success based on our financial performance.

  • Stockholder ValueWe believe that the goal of business is to create long-term stockholder value. We never lose sight of that truth. By executing well against customer satisfaction and employee engagement, we create that value.
  • Efficient GrowthWe believe that building a long-term sustainable business, and maximizing long-term stockholder returns, requires us to balance growth and profit aspirations. We are not a team that believes in “growth at all costs.”
    We believe that having profitability constraints forces us to make important trade-offs and ensures prioritization of those most critical investments. In the end, resource allocation is among our most important responsibilities, and we believe in doing so with discipline and rigor.
  • Business ModelWe believe that great businesses understand their business models and work hard to keep improving them. Our self-service customer acquisition model facilitates the easy and efficient adoption and integration of our services. Because our customers pull our services from us (rather than a traditional software company push model), we have been able to grow our customer base while avoiding the expensive customer acquisition costs typical of high-touch enterprise sales models.

Innovation

While we believe our focus on customers and employees will lead to financial strength, we must continue to innovate if we are to keep growing at high rates. The software industry is dynamic and fast-changing, creating both disruption risk and incredible opportunity.

  • We believe in imagining the future, spotting the trends, and building solutions to problems we believe our customers will have. This innovation cycle requires as much discipline—in our analysis and validation of our ideas—as it does courage and conviction.
  • We believe that we must not just look around the corner, but invest today to have the inside track and make the turn. We ring-fence a team, called SendGrid Labs, to work exclusively on these innovation projects that we believe will impact the industry and our business multiple years out.
  • We believe that innovation can come from anywhere, and we’re happy to bring that innovation into SendGrid inorganically. We abhor “not-invented-here,” as it runs counter to our Humble H core value. There are many companies in the marketing technology landscape that we believe would make great additions to our platform.
  • We believe that fulfilling our long-term vision of building the world’s most trusted customer communication platform will require innovation. The solutions our customers will need do not yet exist, and certainly not in a simple, affordable, and easy-to-use solution.

We want investors who are excited to join us on the long journey ahead. We believe more of you will embark on this journey with us if you appreciate our history, our mission and vision, and our operating philosophies for building and managing our business. I hope this introductory letter gives you insight into those items, and affords you the confidence that we’ll continue to build on the foundation that they set.

We believe we will.

Sincerely,

Sameer//