Our fifth event in the SaaStr CoSelling Speaker Series featured Sameer Dholakia, CEO of SendGrid, and Ajay Agarwal, Managing Director at Bain Capital Ventures. If you missed this fun and informative hour (or just couldn’t take in all the great advice and need a replay), we’ve got you covered. By the way, did you know that CSS members get free access to Speaker Series events? That’s just one of the many benefits of working at the CoSelling Space. See more and apply here.


Jason:  I think this is the fifth event we’ve done here, plus one in New York. I think what I’ve learned is the secret sauce to them is when the speakers know each other well. I think these guys know each other pretty well.

Sameer and Ajay were kind enough to both speak at the SaaStr Annual 2016, and it was a pretty popular session. Ajay was super popular this year. I didn’t realize until recently, Ajay was your boss, right?

Sameer Dholakia:  First boss, I would call.

Jason:  First boss, when you were both out of college, right?

Sameer:  Yeah.

Ajay Agarwal:  We’re supposed to be [inaudible 0:34] .


Jason:  At least indirectly, you decide to work for Ajay again, right?

Sameer:  Multiple times.

Jason:  That’s pretty fun. I am pretty sure, if anyone in the room knows SendGrid. How many of you guys have actually deployed SendGrid or used it, any folks in the room?

All right, good.

Sameer:  [inaudible 0:50] .

Jason:  It would be a fun mix.

Ajay:  [inaudible 0:55]



Jason:  Ajay played some role as an investor. What did you invest, Series G, Series A, Series B? Which series? Series C, Series 7, which letter?

Ajay:  C and D.

Jason:  C, and D, OK. We learned a little bit about what it’s like to write a $22 million check, but more interestingly, it’s fun to hear the real stories. Did you recruit Sameer into SendGrid or…?

Ajay:  No.

Jason:  No? Coincidence? Did you invest before he joined?

Sameer:  No, actually the other way. I recruited him. I told him he was going to have to listen to me talk about SendGrid over beers anyway, so he may as well invest and get something out of it.

Ajay:  I told my partners, “Hey, Sameer wants to meet every night, so put some money behind.”

Jason:  Invest in great people you know. It’s hard to lose. That’s fun. I just want to give that. Maybe they were going to give that intro in the bio, but let’s put our hands up and let’s hear what they have to say about their decades together.


Ajay:  Hi, everyone. Thanks, Jason. Thanks as always for allowing us to be here. It’s a great event. Great to see so many folks tonight, and hopefully, we’re just going to try and keep this fun and entertaining since Sameer and I have known each other for almost 20 years now, long time.

Sameer:  More than that, 22.

Ajay:  22 years. Very quickly, I’m a partner of Bain Capital Ventures. We’re a multi stage firm, primary early stage, very active in SaaS. In addition to SendGrid, Optimizely, Gainsight, BloomReach, Clari, DocuSign, SurveyMonkey, LinkedIn, just to give you a sense of some of the companies that we’ve invested with.

You’ve probably heard of Bain Capital Private Equity, Bain Consulting, Bain Capital Private Equity’s sister division that owns hundreds and hundreds of large companies around the world. Certainly we in ventures take advantage of that to make introductions across a whole variety of verticals on behalf of our young companies.

Then most of us in our ventures group have been former operators. We came from the startup world. I myself came from Trilogy where Sameer and I know each other. That’s a quick intro on Bain, Sameer?

Sameer:  The quick intro on SendGrid. It is great to see so many hands go up on usage of what we do. The problem our founders set out to solve. Three founders got going eight years ago now. They had built software applications and websites. Every time they did they had to have the ability to communicate with the user of that application in an automated way.

No human involvements when you hit the, I forgot my password button. That button had to have code that sat behind it that would send email that allowed the person to reset. If I hit the Purchase button a receipt had to get triggered and sent to the user.

As developers they found that they were having to spend weeks and months trying to go setup email, infrastructure, and configure IP addresses, and learn about SMTP protocols and security protocols like DKEM. It was just a whole world that they did not want to learn about. They wanted to get back to building their app.

They were like, “We’re going to solve this problem for developers. We’ll build it as a cloud service, offer it out API exposed, and go see if there are any other developers out there that suffer from the same problem.” That’s the specific thing they were getting after.

It turned out. Here we are eight years later. Over a million plus developers have signed up on the SendGrid platform over the eight years. We have over 50,000 paying customers. We did just crossover the 100 million ARR, recurring revenue mark a couple months ago which we’re fired up about.


Sameer:  Which was super exciting and we just have the great fortune of building a great business. That’s the quick commercial on SendGrid, what we do.

Ajay:  Awesome. Thanks Sameer. I want to get to SendGrid, but I do want to start at the beginning which is your first job out of college. You can avoid any stories about me, but I want to hear more about those early days. Tell us more about Trilogy. You were 21, I think right out of Stanford, not technical. You join this crazy software company down in Austin, Texas.

Tell us about those early days. What was your first job? What were you doing? What were some of the things you learned and we’ll take it from there?

Sameer:  That sounds great. This is going to be fun, a trip down memory lane. Coming right out of school I had studied economics and organizational behavior.

I assumed that I’d go into management consulting, or the like. I found this very unique and special company called Trilogy that was in Austin, Texas, of all places, when I was up in school here in the heart of Silicon Valley.

Every person I met there, I just loved. They were crazy smart, they were fun people, great culture, [inaudible 5:43] values. I ended up joining as one of a handful in our class. We call the TU ’95, Trilogy University, 1995, which was a great program that was led by the founder/ CEO of the company.

He spent three months over the summer ingesting this cohort, a group of 50 kids, straight out of college across universities and business schools on a 50 person company. This was huge, about the company investment that he was making. That group was extraordinary. I think we probably had a handful, six or seven of us that were non technical.

Most of them were CS superstars out of MIT, or Carnegie Mellon, or Rice, or Stanford, etc. I remember being in week one going, “Oh, my God, what mistake did I just make?”


Sameer:  They’re talking in a language I do not understand. I knew nothing about running a software business. I had no idea. I said, “So Joe, what exactly am I supposed to do with this?” He’s like, “You’re gonna be the company’s first product manager.” I’m like, “What’s that to do? What’s a product manager do?” He’s like, “You’ll figure it out.”


Sameer:  That’s when I first got to work with Ajay. Ajay is responsible for figuring out how you took the company that was at that time a one hit wonder, had one product solution. Ajay was responsible as the leader of a bunch of us kids for figuring out how we’re going to go build out a whole suite of products.

Myself and two other guys got paired up as a little skunkworks team to build the company’s second product. It was absolutely a blast. Behind SendGrid, I think the most fun I’ve ever had in my career.

The learning curve was like this, I had no idea of what I was doing. I also had no idea of the incredible amount of success that we had with that product, and how atypical it was. We built a 20, 30 million dollar business in three years.

We just didn’t know what we didn’t know as we were going through it. Some of the lessons learned I remember…This was 1995. In the day, we had these giant, very heavy laptop computers going out on our field sales calls. We could never convince the mainline Trilogy sales organization which, of course, at that time 10 guys, probably.

10 people that would never sell the second product, because they always wanted to go sell the first product, that was the thing that made all the money, why would I ever go sell the second thing? Two of us, out of the three skunkworks team, basically, I became the sales guy and the technical leader on it, became the pre sales, sales engineer.

We went and had to go sell the first set of deals ourselves. That was great learning. What’s it like go get in front of the customer, be as a product manager, know your product inside and out, understand it deeply, be able to get in front of the customer and answer any question they’ve got.

Build your own demos, if you had to, which we had to do a few times. It was great. We took the first deal at, remember P.H. Glatfelter?

Ajay:  Yeah.

Sameer:  It’s this paper company in rural Pennsylvania. Smelled like ass when you got there. It was awful. We sold that first deal for a whopping $115,000 perpetual license. The next deal we did was with Aeroquip. I remember these all because they were hard fought wins, all the guys and gals in here doing start ups.

They were hard fought wins. $200K deal with Aeroquip, aerospace parts manufacturer, then we got BMC Software in Houston for $400K. Then we went to Memphis, then we got Thomas & Betts, an electronics component distributor for the first seven figure deal. That was a million bucks.

Then we got Allegiance Healthcare up for two million. By the time we got to Whirlpool, around five million, the rest of the sales org went, “Hey, what are they doing over there?” It was a great lesson learned in a lot of ways about knowing your product deeply, understanding it.

Understand the value of it, how you drive value up in the conversations with customers, and how you extract more of that value for your company. It was great lessons learned. How hard it is to do enterprise selling? [laughs] That was hard.

Ajay:  Sameer, we’re going to contrast this when we get to SendGrid in a second, but talk a little bit about the model. The one story that was legendary at Trilogy. Sameer was probably 22 at this point and was running the pricing product, and he calls me up.

Sameer:  Which one is he going to tell? [laughs]

Ajay:  He calls me up, and he says, “I met this customer today, and I want to put him in the forecast for the quarter.” Now, the quarter, by the way, was 14 days away.

Sameer:  [laughs]

Jason:  I said, “NFW, there’s no chance a seven figure deal in 14 days,” and lo and behold. 14 days later, Sameer walks in with a fax into my office for a million dollars, and 14 days and a fax yeah, exactly. Just the [inaudible 10:52] .

Sameer:  [laughs]

Ajay:  It wasn’t the DocuSigned unfortunately. I wish it was the DocuSigned. In those days, we have to go fly at Christmas to someone’s house to get them signed up. Now, it’s all DocuSigned which is great, but that’s when Sameer became a legend inside the company.

Just talk about that model, what was good about, and what was bad about it? What are the pros and cons of the Trilogy sales model?

Sameer:  The Trilogy sales model, it was a consultative sell. You understood the company’s business, what their levers were. Then, you figured out how the thing you had of the problem it was solving, how much was it going to be worth to them.

As a result, you really you are going to monetize as much of that as humanly possible. As you go through that exercise, one, I think it just drives a deep customer orientation, because you’re there face to face. You cannot show up and not know your customers deeply and intimately.

The extraction of value in that model versus my current model, which I’m going to talk about later, is literally, I don’t know how many is that?, three, four orders of magnitude different from what we’re doing at SendGrid now. You could extract a lot of value. There’s a lots of good things about it.

The touch was fun. The energy is fun. For any folks in here that do get to engage with customers on a regular basis and sell. I think it’s one of those fun things that I’ve ever been able to do. The downsides are, they’re immensely unpredictable.

Those sales cycles…that one happened to work out, because they had this incredible pain point, and I knew they had a compelling event. They had to have it done and shipped by this date, and we convinced them that if they didn’t sign the contract by that date, there was no way we were going to get it deployed in time.

It’s just so unpredictable, and it’s very expensive. I think about the team that we had on the ground to sell that deal in those 14 days. Shit, that was a very expensive sales team. [laughs]

Ajay:  We made money.

Sameer:  We did. By the way, that would be one of the other upsides to that model is if you can extract a lot of money out of it, you can make a massively profitable business, which Trilogy was for a long, long time, and remains today.

Ajay:  That’s great. One last thing on Trilogy, and this is relevant now in your role as CEO of SendGrid, Trilogy is known for its strong culture, what are the lessons learned that that you took out of that experience at 21 joining this company? I think the average age by even when we got to 2,000 people is 25 maybe or 26.

What are some of the things you took from that culture? You don’t have to mention things you didn’t take from the Trilogy.



Ajay:  Because I’m sure there’s a long list as well, but what things you took from that culture?

Sameer:  Trilogy was world class on a number of fronts that have been immensely important to me throughout the rest of my career and I’ve tried to help bring it at SendGrid as well. By the way, one of the things that was already in place in SendGrid.

The first really was around the culture and how important it was to the founders, CEO, and the leadership team that we were going to have a very distinct culture.

One could argue with whether or not you loved all aspects of the culture, but that actually was the lesson for me, and I would offer up to any of you that are building your businesses, building a culture that has edge, that is unique, and is explicitly not for everyone.

If your culture, you define your culture, and I go everybody would want to work in a place like that, go back to the drawing board. There has to be some edge to it in a place where…I’ll tell you at SendGrid, I know some absurdly talented software professionals who would absolutely hate working at SendGrid.

It would be their seventh hell. We are so over the top collaborative. Humility is built into the DNA of the company. There are just aspects of the way we run and operate that would be antithetical to so many great people that I personally love.

It doesn’t mean that you’re trying to weed out people that you don’t like or wouldn’t want to have. It’s just there’s a large and massive talent pool out there in the world, be very deliberate and conscious in your choices about how you define your culture and make it have some edge to it.

Trilogy certainly had that. It had a lot of edge in its culture, and it was not for everybody, and everybody would joke about it being cult like. Literally the joke was, it was cult like. It was cult like. By the way, I aspire for people to be like, “That SendGrid culture is sort of cult like,” and we’re starting to get there.

I love that, where the people are so maniacal about the culture. They talk about the culture all the time. It’s manifested in umpteen different ways. It’s not just a set of things written up on a poster on a wall somewhere. I think Trilogy did an immense job with it, and SendGrid has as well.

I’ve been very grateful for that. The other thing that Trilogy was distinctive at, world class at, was recruiting and hiring. The talent bar was so extraordinarily high. It was just this mindset of every single — and again for all of you building companies please take this one to heart — every single seat, every single hire you make is critical.

It is mission critical, and you can’t get those wrong. If you get somebody in there that’s OK, you should be replacing that person with somebody who is distinctive, because the differential between distinctive and OK is not linear.

It’s like five X ten X, to average. Trilogy was maniacal about that, and I think that worldview has always shaped the way I think about it.

Ajay:  I would add one more thing on the Trilogy piece is the training, both on the company and the culture was extraordinary. Sameer touched on it.

Every hire that we brought into the company, and we were primarily hiring from college, would start in the summer or fall, and they would not be allowed into the business until January one. They literally spent from August until December sequestered in a separate building.

Joe, our founder, would come to all of us in the business and take our best people to run Trilogy University, because he said, “Look, people are the number one thing in the company, and I’m going to take the best people in your business to go there.” In that time, he had teams work on things that would disrupt Trilogy.

He would come up with all the ways that Trilogy could lose, or get disrupted, or killed. He’d have startup teams work on that stuff within Trilogy University. Every year, one or two of those would get spun out as separate companies.

Then, the amazing thing was over the course of the six months you learn so much about each employee, and they learn so much about the business, so then the process of deciding where each person goes into the business was really unlike any other company I’ve been with.

Normally, you recruit, and you’ve already decided, “I’m recruiting this person to come in to my business unit into this role,” and for us, it’s a blank sheet. We didn’t know until the end of TU where certain individuals would go.

When you think about it, just the amazing cost that we undertook of six months of hundreds…at our peak the Trilogy University class is 300 people, so 300 people who are arguably not productive in the business for six months along with our best leaders in the company in TU. Joe took it to the extreme, but I think the focus on training, onboarding, culture building for the new class, that was a competitive management.

Sameer:  The other thing on the hiring front, just another key lesson learned from our Trilogy days that I think is super important for all of you as you build businesses.

If you start to scale rapidly, one of the things that can kill you in a heartbeat is if you’re not really super focused on who is doing your recruiting, who is allowed to do your recruiting.

The mental mindset at Trilogy was, “Hiring and recruiting is a privilege. It is not an obligation.” In most places, most companies, recruiting is like, “Oh, that’s one more thing on my plate. I got my day job. Shit, I got to go do five interviews this week,” etc.

It’s this obligation. It’s this thing I got to go do on the side. At Trilogy, it was a badge of honor if you were chosen and allowed to be put in front of the candidates, because it was an explicit understanding, “We put our best and brightest in front of the candidates, because that’s who we want to attract.”

It was a mental mindset that is totally different than in most places. If you get out over your skis, and you hire too fast without being crazy over the top explicit about who you’re…we call it the hoodies.

We at SendGrid, we have our blue hoodies, and who we’re giving the next hoodie to is the most important decision we make every week. If you’re not crazy focused on who you’re handing them out to, boy you could destroy your business, and, or your culture within 12 to 18 months.

Ajay:  Sameer, you left Trilogy, I think at this point, what, you were 25, 26.

Sameer:  [laughs]

Ajay:  Sameer took over one of our companies, a young company that at the time was going a little bit sideways. Sameer took it on as CEO and did a great job and ended up selling it to Citrix. At Citrix, Mark Templeton, the CEO there, took you under his wing, and became a mentor.

Here you went from this crazy culture of Trilogy, young startup, running your own startup even smaller and now at this large public company. Tell us about that experience, and again, your own leadership development. What did you take out of the Citrix world?

Sameer:  I was at Citrix for four years. I got the great privilege and opportunity to serve as general manager there over one of their software units. The thing that I took away most was just learning about scale. At Trilogy, we ended up a few hundred million.

This was a few billion, and let me tell you there’s a big difference when you add one more zero to that. Everything about it was so different in every process. The way you’d have to manage and lead people when you are at that scale. It was just remarkably different.

For me having, my eyes open to how you lead through ideas, that then lead through people, that then lead through teams, the cascading. [laughs] It’s just a whole different ball game that I hadn’t fully appreciated up until that point in time. Then the other bit was just again back to seeing a wildly different culture.

Mark Templeton is one of the most extraordinary business leaders I’ve ever got to work with. He built this company, Citrix, when I think it was $50, $70 million as the CMO and took over CEO when it was a million dollars and grew it through three billion in revenue.

The number of human beings I know that can scale through those different points in a business as life cycle is very, very short. He’s also, on the personality side, which of course define the culture of Citrix, he’s a deeply humble man. He’s very grounded, very down to earth.

He had accomplished extraordinary things and you would never know it, and that permeated, and he was very customer centric and had a demeanor to him that was about servant leadership. It’s a concept that I’ve taken to SendGrid.

I loved working under him, and the basic notion was, “It is not the CEO on a typical org chart down cascading.

It’s CEO at the bottom of an inverted pyramid, and your job is, and the executive team’s job is, to support all the people on the business that are actually doing the hard work of the business.” Mark was always very explicit about that understanding. Our job was to serve to have rudder in the water and steer the decisions.

We had to make were what markets to be in, what products should we have, which ones should we sunset, steering big decisions. Then, the rest of it was how do we get obstacles out of the way of the people doing the real work, so they can go to do their best work? I’ve tried to bring it to SendGrid.

I talk a lot about that, a servant leadership. We train our leaders on it. We measure them against it. We promote against it. That concept, I think, employees appreciate it. I look at Mike, and Mike, “I don’t know. Do you think?”

I think they appreciate when their CEO says, “Dude, I understand that I’m not taking the phone call from a pissed off customer about X, Y, and Z. I don’t have a quota to hit. I don’t have a deadline to make to ship this project. I don’t do the hard work of the company. I don’t, and I know that, and they do.”

Our job is to serve them because they’re doing the hard stuff. I think that mentality I certainly picked up from Mark. One canonical example that always is in my mind when I think of Mark and that humility and that servant leadership serving customers, we had our annual conference.

Thousands of people show up, and we had our customer advisory board, the top CIOs of the Fortune 50. Lunch break comes, and he literally would stand at the front of the buffet line and hold out plates to our customers.

He wanted to send that signal metaphorically and literally, “I and we are here to serve you.” Believe me, our customers heard it, they felt it, and every employee that saw it internalized, “We are here to serve our customers.”

I tell you, I believe that Citrix, was as successful as it was for 20 years, because the customers wanted Citrix to win. When you have a great culture, and the people and the customer centricity is that deep and that real, your customers want you to win. They want to find a way to get the next deal done for you.

Ajay:  Awesome, great story. Let’s move on to SendGrid, and I thought a good place to start with SendGrid is…Sameer you joined as CEO two and half years ago roughly, and Isaac and Tim the founders who built this amazing business model.

[laughs] Perhaps, the polar opposite of the Trilogy business model where you’re selling million dollar deals in 14 days. Describe maybe the start for the audience. Describe the SendGrid business model. How does it work? What’s the machine of flywheel founders have built before you got there?

Sameer:  It’s an extraordinary go to market model, and one of the magical elements of SendGrid is how different that go to market model is.

By the way, I’ll talk a little bit about how I believe there’s sort of an emerging class of companies and SaaS companies in particular that are going to demonstrate how incredibly powerful that model can be. We’re not the only ones doing it.

There are a handful of others, but by solving what I call product buyer fit, as opposed to product market fit, they got a solution that solves the particular pain point for a given persona who could put their credit card down and buy it.

Here we are at SendGrid. Of those 51,000 paying customers we have, we probably signed up on a direct basis maybe 500 of them at most over eight years. Which it means to say the 99 percent of those customers that came in, came in self service, untouched, never talked to a SendGrid employee.

They would find us on the site, and whether they came to our site, because they talked to a community evangelist that was at a hackathon, they talked to a developer friend who solved the problem using SendGrid themselves, they did a Google search and came to us.

It was a revenue marketing led model, so it’s a marketing led model as opposed to a sales led model. It’s literally ecommerce for SaaS, if I were to simplify it. You contrast those models. Trilogy was crazy high end enterprise selling, seven figure minimum deals, oftentimes eight.

Citrix built a multibillion dollar business on a channel model totally different, although it’s about the bars for the first 15 years of that company’s life. Then, SendGrid is a self service model. Fundamentally, it’s an ecommerce self service model. These are radically different ways to go to market.

What I would say is, and you see way more companies than I do. For the room and the audience I would just argue from what I have seen in my 20 something years now. Technology companies don’t fail because they didn’t build the right solution, they weren’t solving a real problem, or the code sucked.

That’s rarely the reason. The reason is they can never figure out the go to market model. They can never figure out the business model that is going to go efficiently acquire and serve customers. That’s where, I think, at least most of the companies I’ve seen fail.

Ajay:  I want to spend a minute just on this topic for a second, because I do think go to market is a big decision for all the companies in this room, for most young startups. The SendGrid model is very attractive.

We’re going to talk about more of that here in a second, but is it for everyone? Are there certain characteristics of types of problems, types of companies where the SendGrid model you think make sense, or there may be others where the Trilogy high end outbound model make sense?

Sameer:  As in all things, I would argue pick the model that works for the business that you are building. There is no one right answer. It’s about executing the model to the best of your ability that best matches your business.

I would tell you the things that are redeeming the attributes of SendGrid itself what I would describe the self service SaaS. It is extraordinary, and I love it. It’ll be hard for me to ever go back to a different one, but it doesn’t work in all places.

It works in our case, because we have focused on, actually in our case, now two personas. It started with the developer and has now extended to the marketer, so we did the API based infrastructure to send your email.

Now we’ve added a marketing application, so you can send promotional email, newsletters, offers, and  the like from the same system, from the same platform. In both cases, the developer and the marketer happened to be in a world where, A, there’s massive volume of them.

It’s a giant horizontal. Where there are literally millions of people that do this thing and are actively looking for solutions where they are comfortable self serving. If you’re saying, “Hey dude, I sell security solution for big banks.” Yeah, that’s not going to work.

This modeling is not going to work for you, but it just depends on your model, in our case, because it’s persona driven, and they are coming… a great litmus test go look at the volume of keyword search for the things that you are solving.

If the answer is this, “Yeah, I’m probably going to require a heavier footprint.” If it’s large and people are coming you can go and build a great self service business

Ajay:  Maybe another way to say that, Sameer, is it feels like in certain categories where there’s a known need, a known problem, as you said, “The keyword search.” because, I contrast with one of our other companies, Gainsight.

It’s not like people are searching for customer success software. They may have been searching for customer success or so forth, but it wasn’t defined in the minds of the buyer. Things like CRM, or help desk, or email, email marketing, transaction email, these are known problems that people are trying to solve.

Unfortunately, the ways that exist to solve them aren’t great and a company like SendGrid comes along with a better way. You can leverage the fact that there isn’t a market education that has to be done.

Sameer:  Which is an immense benefit and seems for us that take email marketing is a $5 billion TAM. It’s been around for 20 years. There are a hundred competitors. As our chief product officer likes to say, “It’s Wednesday and somebody is buying email marketing.” There’s always somebody out there buying it. It’s high velocity.

We launched this product 18 months ago and we’ve got thousands upon thousands of customers already signed up on it.

It’s extraordinary, it’s because five billion dollars TAM. It’s defined. It’s known. Every marketer on the planet has email marketing in there as a line item in their budget. You don’t have to create that, it’s already there. They’re just picking which tool to use.

Ajay:  Sameer, you mentioned the community managers and I think one of the strengths of SendGrid, certainly when we invested during 2014 was clear, is this amazing groundswell of support from the developer community. How do that happen? Did it just happen? I assume there are things that the founders did those early years to build and cultivate that.

Any both strategy or tactics that you can share on that front?

Sameer:  Yeah. I think the founders and the early management team. Mike is here, one of our VP’s been with us at the company for how many, five years now? Did an extraordinary job of being crazy focused on that persona and figured out all the ways in the world that we were going to go wrap SendGrid love around them.

Those SendGrid t shirts, Mike’s wearing one of them now, we hand out 10,000 of them a year via this army of community evangelists that show up at hackathons. They go to every accelerator on the planet. They go work with incubators. They go to VCs and say, “Let’s tell you about how your portfolio…”

Ajay:  They’ve been to SaaStr CoSelling before? Come on, where are those community managers?



Ajay:  Sure, exactly. They haven’t yet.

Sameer:  I think it’s things like that. It’s knowing where does your persona show up? In our case, they got very clear on these are the places that those developers go and we’re going to be all over the place. We’re going to go create a brand and I think the company did an incredible job executing to that.

Ajay:  That’s great. $100 million run rate, cross that mark, congrats, awesome. The other thing which I think is equally extraordinary is the fact that you have P which is profit. As a SaaS investor, it’s unusual for me to be on a board that generates profits.

As CEO, how did your management team think about that decision, because certainly you’ve access to capital. We’d give you more, lots of people’d  give you more to go spend, and so how do you guys come to this decision of, “Hey, we want to be profitable?”

Sameer:  I’d say it evolved. It evolved as we first got started. When I first arrived, our company was, we were probably about $40 million in revenue or so. Two and a half years ago, we were burning 13.5. We were negative 30 percent margin, for a SaaS company, not all that atypical to be burning.

Ajay:  That’s light.

Sameer:  [laughs] That’s light and it didn’t cause anybody to bat an eyelash. From our Trilogy training, this guy that we worked with, Joel Lehman, and one of the many lessons that I took away from our years of Trilogy, one of them was around profitability. He had a great tagline. It was simply, “Profitability is a choice. It is a decision, not an outcome.”

What he meant by that was, you can build your model. [laughs] However, it’s that you’re making that conscious choice and you can decide whether what your expense profile is.

By the way, you can always spend more as the year goes along and your numbers are beating your conservative estimates. If you build your plan to be aggressive, then you over hire and you got to let go of people. I mean, and by the way, if anybody in here has ever had to let somebody go, that is the absolute worst feeling on the planet and should be because it was our fault that that happened.

We allowed that situation to occur. Anyways that profitability mindset was drilled into us so early in our careers. I remember and I showed up at SendGrid first and I thought I was being crazy at the time. I remember when we first talked about. I was like 13.5 and like, “Let’s take out of these 25 or 30. Let me get it down to like 10 million.” Ajay said, “I get it to single digit. just mentally.” You remember this conversation?

I remember vividly. I was walking through the airport, you said, “Just get it to single digit. Even if you get it to 9.9999, it will mentally be different for you and it will change the way you think about it.” I’m like that’s a great idea.”

We ended up taking the burn rate from thirteen and a half to three in one year, but it evolved. As we started to get into it, you started to see all the difference. Once you start looking for it, let’s try to get this thing down, and there was travel stuff and there are some vendor renegotiations.

There is headcount. We still hired in the year that we slashed that burn rate. We still hired 50-some-odd people. It was like we were starving the company. [laughs]

By any stretch, it meant we we’re going to get your expense growth in control relative to your revenue growth. Not a very complicated or sophisticated insight, I wish I had, but it was literally that basic. We were going to spend a little bit less than we are growing and by doing that, we took the break.

Once you get on that, once you see the trajectory and every month would go by and it’s like, “Holy shit, we’re going to be break even here. We could do that by early next year.”

Then it starts to be a galvanizing force across the whole company and you start to highlight the examples. One of our founders, and one of my close friends, Isaac, we said, “Isaac, there’s this piece of code over here in the system. It’s crazy inefficient. Can you rewrite that thing?”

He’s like, “Dude, I’m all over it.” Comes back, literally saved us half a million dollars a year by refactoring the code on this one piece because when you’re in go go, like everything’s ramping crazy fast, you don’t worry about optimizing anything.

You’re trying to hold on to the tail of the tiger and not have things fall over, so he goes and optimizes it and literally saves us half a million bucks a year, also, on the other end you start celebrating that, of course.

Other engineers like, “Hey, where else can we go find some dollars?” You create a culture of, “Hey, we’re going to go, we’re going to make this thing.” Unlike most software companies, SaaS companies around. We’re going to go be unique. We’re going to be both high growth and profitable. This is right around the time when we started to attach to that Rule of 40 construct. That was a powerful and helpful regulator for us.

Ajay:  You want to describe that for the audience?

Sameer:  Yeah. Rule of 40, simply put, was take your growth rate as a percentage year over year, take some profitability metric whether it’s free cash flow or EBITDA percentage, etc. add those two numbers together and they should add up to something on the order of 40 percent. If you’re growing at 20 percent year over year, you better be 20 percent profitable.

If you’re growing at 60 percent a year, maybe you could burn up to 20, but it’s guiding your investing for outsized growth returns. It’s a good barometer for us. When I joined, as I said we were negative 30 percent margin, we were growing in the low 40’s, so we were on a Rule of 40 of 13. We took that from 13 to the high teens, to the low 20’s, to the mid 20’s, to the high 20’s, to the low 30’s, we ended last year right around on a run rate.

On a trailing basis, we’re at about 34, 35 and this year will be well north of 40. We are at 43, 45 and we are pushing. We’re coming up with our 2018 plans on, screw this Rule of 40s shit, let’s go for a rule of 50, because we think we can keep driving leverage in business.

Ajay:  One thing you didn’t mention, which certainly is tied back to the model, on how attractive the model is, can you share what percentage of revenue you spend on sales because this is different than a lot of my other portfolio companies.

Sameer:  I mean, it’s an extraordinary model, so all of you, it’s helpful to benchmark and you want to think about if you take your revenue line, percentage it out and go, how much do I spend on GNA as a percent of revenue? How much on R&D as a percent of revenue? How much on sales marketing as a percent of revenue?

The typical SaaS company spends about between 50 and 75 percent. Sometimes more than that in sales and marketing, the notion is, “Hey I’m going to get a three year lifetime value.”

Ajay:  I think we can say 150 percent.

Sameer:  [laughs] In some cases, and SendGrid’s is 25. It’s literally half of what is probably median and that is what allows us is that incredibly efficient go to market model.

It’s interesting, when I first joined, our spend in sales and marketing by the way was about 15 percent. [laughs] We’ve spent way more in sales and marketing, which has allowed us to take what was a decelerating growth rate, flatten it, and then actually reaccelerate it.

We’re actually spending almost two times as much in sales and marketing and it’s still 25 percent. It’s immensely efficient model and it’s because it’s a self service model but that…incredible leverage.

Ajay:  One last question before we open up to the audience for questions, so one of the other initiatives that you’ve put some real energy behind is this push towards your marketing campaign’s profit.

You have this amazing engine, it’s going gangbusters. You have accelerated the growth, you’ve driven profitability, but you also made this decision to take a set of resources and dollars and put it behind as you call it second act, talk about that and was that a hard decision? What were the implications for the company when you’ve got such a phenomenal engine working so well?

Sameer:  There are a lot of dimensions to when you have a great first product solution. Back to our Trilogy days, I think I was shaped by that and that notion of we don’t want to be the one hit wonder. What’s our act two and act three going to be?

We adopted a three horizon product strategy and said, act one should be the thing that is throwing off cash for us. That’s the cash machine that allows us to invest in other things.

Act two has got to be a growth engine and a growth engine for now. Then horizon three and this is what Mike and the SendGrid labs team are working on are the bets for the future. These, we are not expecting growth out of them now, but they’re going to become our growth engines of act two at some point in the next two or three years.

When we made the decision to expand, it was a very difficult decision, because if you think about everything that had made this company successful was a deep and maniacal focus on the developer persona.

We had a big strategy debate at the company, were we a developer services company that happened to start with email or are we an email company that happened to sell by first selling to developers?

By the way, we had a lot of heated debate about it. You could argue both sides to that equation. We were headed down the we’re a developer services company that happened to start with email when I arrived and I think we all got conviction that our brand and the platform and the domain, the expertise, the people we have in this company, it really is about it’s an email company today.

Once we got clarity on that, we were like, “We’re doing these transactional email, the automated ones that the app triggers.”

There’s this whole other TAM over here, this big giant pile of email. Our customers would talk to us all the time about, “Hey, I start with you on day zero. I have to plug your API in when I launch the site or the service.” At some point in my life cycle, we get successful, we hire a marketer and now I need an email marketing tool. Can’t you guys have one?

Because then I can put it on the same platform and if you don’t, I got to go use somebody else. If I get an unsubscribe request from a customer, I go to go to SendGrid and I got to go to fill in the blank, whoever my email marketing provider is.

We were getting a lot of that requests from the customers. Once we got ourselves over the hurdle of who we are as a company, you get clarity on your mission and vision which we did and wrote down and were very specific about what that was.

Then it got a lot clearer and then it was easy because you say, let me get this right. We’ve got this great brand halo around email. There’s a TAM that is perfectly adjacent to ours where we can go do some TAM stacking and it’s literally two to three times larger a TAM than the one that we’re currently in.

The average price point is somewhere between four and five times more than the thing that we’re currently doing, and all the things you would have to go do to be great at that second act are things that you would have to have done in your first one.

You’d have to have great relationships with the inbox providers. You’d have to build a sending infrastructure that could send lots of emails. You go through this list. You have to be able to fight spammers and phishers.

You come up with this list and you’re like, “Holy shit, we’ve done 85 percent of these things already, let’s go tackle that market. I deeply believe we’ve built the first $100 million franchise around our email infrastructure business. We are going to build another multi hundred million dollar franchise around the marketing category.

Another thing that we get excited about, that Mike and the labs team is working on is taking that from an email marketing platform and making it a multi channel marketing platform, a growth platform that works across all the channels.

Ajay:  One last thing I want to ask is about email, because I think when a lot of people in Silicon Valley tech posts your emails, they think that’s 1990’s.

Sameer:  It’s dead.

Ajay:  It’s not chat box or text or messaging or what have you. My kids don’t respond to my emails to them. Why email?

Sameer:  Why email? It’s one of those great things. I believe email will outlive us all. It’s going to be here forever. Remember when Google…

Ajay:  It’s going to kill us all before that.

Sameer:  It might do that, too. Our inboxes are all overflowing, I know that. Anybody remember Google Wave? I mean, email has tried to be replaced by some other better medium so many times in history, and I’m willing to bet every day and twice on Sunday, email is going to be here a long time, the volume that we send today, the number of people that continue to actively engage, just to give you a sense of scale.

We send 35 billion emails every month, over a billion emails every day. That’s more than two times the volume of Twitter, as a relative. Let me give you a sense of scale, we touch 1.7 billion unique email recipients every month. Email as a channel is massive. It is the most used by the marketer. It is the most used because it’s also the most efficient, so the ROI, for every dollar you spend in email marketing, you get $38 back.

Every marketer knows there’s a reason that there are in 2017 thousands upon thousands of email marketers around the world that do nothing but figure out how to get into your inbox and get a message that you’re going to respond to.

Think about this, the difference between an email and an online advertisement is literally the placement. Both imagine them visually, you get an ad on the site of a website and email in your inbox.

There’s a picture, there’s some words catchy, there’s a link to try to get you to click on it to go back somewhere. The only difference is the placement. One’s in an inbox, one’s on the side of a website. Marketers are going to continue to try to find ways to get in front of their consumers and email remains the most cost effective way of doing that. I don’t see that changing.

There’s a lot of discussion when mobile explosion or mobile is going to kill email. It turns out the email client remains one of the top five used apps on mobile. If you look at emails read, when we send 35 billion emails a month, we know better than virtually anybody on the planet, 70+ percent of them are read on a mobile device.

Ajay:  Everyone at the Whole Foods checkout is reading their email while they’re waiting.

Sameer:  [laughs] That’s right. How many people here wake up and first thing in the morning, roll over their phone, grab their phone and check their email? How many people bring their email in places they shouldn’t be bringing them? [laughs]

Ajay:  I think the other thing that’s amazing about email is that even though the inboxes are controlled by Google and Apple and a handful of folks, it’s totally an open platform.

I mean, outside of spam, there’s no gatekeeper. Unlike platforms like Facebook or WhatsApp or Snapchat where you’re beholden to those platforms, with email, the consumer’s gotten used to the fact that, “Hey, this is mine. I’m in control.”

Sameer:  I don’t think a lot of consumers are going to be willing to give that up any time soon.

Ajay:  That’s great. Why don’t we open up to questions from the audience.

Audience Member:  Sameer, a question about your sales team super capital efficient, but you talked about a lot of developers coming to your website and signing up, how much of your sales team, like have you structured it likes SDR’s, AE, [inaudible 49:05] , contact with sales people? Is it purely marketing spend trying people on doing it really [inaudible 49:11]?

Sameer:  We’re missing in sharing some of the specifics. Over 100 million in AAR scale, we have nine quota carrying reps. They’re all inside sales. We don’t have a single field sales person and won’t. We’re sort of Atlassian-like in our religion on this topic. Know your business, so we explicitly do not sell to the enterprise and don’t want to.

To be clear, until they are ready to adopt cloud services at scale, there’s no point in me wasting time trying to convince JP Morgan & Chase that they should be willing to use more public cloud services.

Three years from now, five years from now, it’s a pull model, not a push, and so at some point they will. We have a very small inside sales team. 80 percent of what that team is doing is responding to when somebody pushes the button that says, contact sales.

It is an inbound driven model and we have an SE and they’ll help close deals, but it’s an inbound model. We have a handful of SDRs that are now we work with that 20 percent of their time are starting to knock on doors of people that we think are good fits. In particular vertical industries, their digital native tech savvy businesses, but that’s all SDRs and inside sales only.

Audience Member:  Sameer, it seems like your average customer pays $2,000 a year or $170 bucks a month, what is it your business it handles subscription plan versus a month to month subscription?

Sameer:  It’s an extraordinary business, so 51,000 paying customers. It’s highly polarized across what we call high volume centers and low volume centers. There’s a couple thousand in the high volumes and a long tail, 49,000 little ones, so the bigger ones do spend.

We do have lots of customers that are spending hundreds of thousands of dollars a year with us. As you imagine, tens of thousands that are paying us on average 1,000 to 1,500 bucks in a year. We have 95 percent of the customers are on MRR, monthly credit card bill runs. We have a very tiny percentage of our revenue that we put under AAR multi year contracts.

We’ll probably do a little bit more of that at the tippy top, at the high end of our customer base that are paying us hundreds of thousands.

With the first five percent, we’re like, “Dudes, seriously, we’re writing you a check for like $800,000. Can’t you send us an invoice?” They’re like, “OK, that seems reasonable. We’ll do that, we’ll break the model there.”

We are doing that a little bit more for the tippy top, but otherwise it’s MRR, it’s monthly recurring. We kind of like that, it keeps us on our toes. We’ve got to earn our customers’ business every month, month in, month out.

Ajay:  It makes sense. A question over here?

Audience Member:  What scares you? I look at MailChimp and [inaudible 52:04] in their office, and then [inaudible 52:09] . Does anything scare you [inaudible 52:11]?

Sameer:  I don’t know a leader in this room that isn’t scared and kept up at night on a whole array of things, no matter how great things are going. You know, the old “Only the Paranoid Survive”? [laughs] Andy Grove, I believe, is right.

We worry about lots of stuff. One of the ones to keep top of mind…Frankly, the biggest thing that I worry about right now is all the people stuff. I am so excited and so confident in the businesses that we have, in the markets that play in, around the email infrastructure and developers, email marketing and the marketers.

We can go build a multi hundred million dollar businesses in each of those two, and our language internally now is, “We want to go build a billion dollar revenue company, not a billion dollar valuation company.”

We want this thing to be an iconic, built for the ages, built to last type business, and we’re fortunate that the two that we’re already operating in are great markets with great unit economics. We can go scale them for a long time.

The thing that we absolutely could screw up is the people, and by the way, lots of companies screw that up as they are scaling and scaling fast. When I say it, how do you screw up the people?

You let your culture get away from you. You change the bar on how you’re doing your hiring, how efficiently are you onboarding them. Are you continuing to build and retain that special culture that allowed you to get where you are today?

Audience Member:  [inaudible 53:36] ?

Sameer:  I believe it will be people, yeah. I really do. It has been today. [laughs] In my two and a half years, and I’m sure Mike would agree, our inability to recruit as many people as we would like at the caliber we would want has absolutely been a regulator. I believe we’d be growing in the 50s or 60s if we could hire more great people.

Audience Member:  Can we move them out? Can we move them geographically? How we can do that geographically.

Sameer:  Yeah, physically relo them. The company is headquartered in Denver, Colorado. Our center of gravity is there. We’ve got about 300 people there. About 50 people are down in Orange County because our founders were from Southern Cal. I joined the company. We opened an office here in Silicon Valley, down in Redwood City. There are about 30 or so people there.

To date, we basically say we will relo great talent from anywhere. This is back to that maniacal focus on great talent from our Trilogy days. We’ll bring them wherever. As long as they want to go to one of those three places, we’ll relo them. Absolutely.

Audience Member:  Your CEO at Trilogy, he sounds like an extraordinary person.

Sameer:  He was, is.

Audience Member:  Was he born this way? Did he learn this? Did he grow up in another culture [inaudible 54:54] ?

Ajay:  Joe, he’s a brilliant entrepreneur. I had the fortune of meeting Joe in college. His father had run a software company. Joe grew up as a GE family. His father was an executive at GE. He ended up ascending to be the number three executive at GE, he ran GE Information Services.

Joe’s mentor and godfather was Jack Welch. As a young person, he’s hanging out with Jack Welch. That certainly, I’m sure, didn’t hurt. In high school, Joe’s…

Sameer:  Picked up a few lessons.

Ajay:  Yeah, exactly. Joe’s dad [inaudible 55:32] ended up taking over a software company down in Dallas, which he ended up turning around and selling for $400 million, which back then, 1988, was a huge number. Joe would hang out there in high school.

When I met him in college, he was a junior, I was a sophomore. He said to me, “I want to build an enterprise software company.” I said, “What the hell is enterprise software?” I had no idea what it was.

He said, “Have you heard of SAP?” I said, “No.” “Have you heard of Baan?” I said, “No.” “Have you heard of Oracle applications?” I said, “No.” He knew all that stuff even as a college student.

That certainly helped him quite a bit, but he’s also wired in a way, incredibly brilliant, visionary. A lot of the things you see in Silicon Valley over the last 10 years in places like Google in terms of how they built the company, the culture, the recruiting, the kitchens, all that stuff, Trilogy did 10 years prior.

Joe was at the forefront of a lot of the things that have become normal in Silicon Valley. If you think about the ’90s, almost every other enterprise software company that was being built at the time, certainly companies we competed with, were being run by folks in their 40s and 50s, yet Trilogy was all 20 year olds, which today is very normal.

Now it feels like if your company is not all 20 year olds, you’re out of touch or you’re not modern. [laughs]


Ajay:  It was very innovative. The “Forbes” cover story they did on Trilogy was they keep getting younger. There’s a picture of the founders of the company who are all 25 years old at the time. That was unusual back in that era.

Joe’s an extraordinary entrepreneur. I’ve been in the venture business 14 years, probably one of the best I’ve ever met. We both had the good fortune of working there, learning from Joe, and I think the other thing we all got out of Trilogy is the relationships that came outof  it, incredible group of people.

Audience Member:  This is a question about [inaudible 57:41] hiring [inaudible 57:45] for their hard skills or did you [inaudible 57:47] ?

Sameer:  [laughs] Yes, it’s different, by the way, by stage of company. At SendGrid scale now, swim lanes get narrower, by definition. When you’re a startup, you’re wearing seven different hats as we did when we were getting things off the ground in Trilogy.

That’s part of the fun of it. It was super. It was great. As we scaled, our roles all necessarily got a little bit broader in scope and narrower in what you did. As you get narrower in a swim lane, your depth of expertise in that swim lane has to get deeper, and so as SendGrid made our transformation, we had a bunch of awesome generalists in the first stage of the company, and as we got bigger, we had to go find people that were not good at seven things, but were world class at one thing. That’s a stage of a company decision. For where were are now, for any given role, they do have to be deep hard skills in what the thing is we’re trying to do, and they have to be great culture fits.

The culture’s value system that underpins our culture in SendGrid, we call the four Hs    happy, hungry, humble, and honest. Every candidate is interviewed against those four, and we have turned away tons of awesome hard skill folks that didn’t align to those four Hs.

Audience Member:  You talk about your 40 rule, 25 percent of sales are ultimately going to sales reps. Do you have a cap ratio rule, otherwise you cap ratio would be [inaudible 59:31] what would it be now?

Ajay:  We’ve made things a little bit more complicated on this front. Lots of people talk about CAC, LTV, payback periods, etc. Because our customers, once you get past a handful of months, they stay on with us virtually forever, the churn rates are incredibly low once you get past a certain point, then their organic growth.

Because we have a transactions based pricing model, the more you send, the more you pay us. It’s hard to put a terminal value on it, so we have a fairly convoluted CAC IRR is what we call it, and it’s trying figuring out internal return that’s north of 150 percent, based on the customer acquisition cost in any given month for a given cohort.

All that translates, roughly speaking, to less than a year is our payback period. That’s how we think about it. It’s got to be less than a year. I would say the new product line is a little bit more than that. The old product line is way less than that.

Audience Member:  I’ve been living in Austin and working here for the last four years [inaudible 60:40] …

Ajay:  Awesome.

Sameer:  Great town.

Ajay:  It’s a great town.

Audience Member:  [inaudible 60:44] great culture [inaudible 60:53] assuming that [inaudible 56:03] think about those trade offs, how did you [inaudible 61:11] ?

Sameer:  There’s probably 20, 30 percent of the savings came from just basic locking and tackling stuff.

The vast majority, as all of us know, in building tech companies, comes from head count, and so it wasn’t nearly as complicated as it sounds in some ways, because you just said, “OK well, if we’re going to spend at a growth rate that is lower than our top line growth rate, that necessarily means you can only hire this many people,” and that was a significant regulator on the spend of the business.

I should also mention, we do have the luxury of scale, so you get economies of scale where all of a sudden now the same number of people or the same amount of infrastructure…the volume grows by 50 percent.

You don’t need to grow the infrastructure or the engineering team by 50 percent, you grow that by 10 percent. Our gross margins went from the low 60s when I started to the mid 70s. It’s a lot of just conscious focus on like, “OK, how do we drive leverage out of this place?” and that thing, so it’s decisions like that.

Ajay:  Jason, how much time do we have?

Jason:  What do we have Jayne?

Jane:  Maybe like two more questions

Jason:  I’m going to get the last one, so three.

Sameer:  OK, three more questions, how about in the back there.

Audience Member:  [inaudible 62:37] . What is the right time to really [inaudible 62:47]?

Sameer:  Yesterday.


Sameer:  I say that sincerely. You get the great privilege of building a company. It’s your company. You get to define it the way you want to, but I would strongly advocate for being very deliberate and intentional from day one, day zero.

Whatever day you’re on, start tomorrow, the sooner the better, because defining that will help you in the…it’s a giant labor market. You want to attract the people that are going to be the kind of folks you want to work with day in and day out, because what you are embarking upon is fucking hard. [laughs]

It’s hard to build a business, and so you want to be doing it with people that you love, that you fit with, that you’re going to have fun doing it with, and you just can’t do that if you’re not deliberate about it from the outside.

Jason:  How about over here?

Audience Member:  Two questions.



Audience Member:  What is the inflection point where you [inaudible 63:54] we have to go through this transition [inaudible 63:59] company that’s [inaudible 64:03] versus [inaudible 64:08] ? The second question…


Jason:  …which of the two.

Audience Member:  [inaudible 64:20] ?

Sameer:  C and D.

Audience Member:  Did you have [inaudible 64:26] of what the company’s going to look like, go through this transition?

Ajay:  Let me answer that one, because it’s a quick answer which is SendGrid, great company, we’re excited about it. The moment Sameer took the job, we were writing the check, so plain and simple. I’ve had the pleasure of knowing Sameer for 22 years.

I’ve seen him in action in a whole range of scenarios, as CEO one of our companies, as a colleague and teammate in the trenches, in the foxhole. We were fighting some tough wars over the course of the time of Trilogy.

In my view, Sameer, and I said this to my partnership, is one of those individuals that it’s a blind check. It’s a blind check, Sameer, tell me the maximum I can give you and it’s yours. That’s why we invest in you.

Great company, great platform, but to be honest our first investment in 2014 was the day after this superstar took the job.

Sameer:  Have you ever seen a brown guy blush?


Sameer:  Cut that out, man. Obviously, the converse is true. When you have a mentor that’s been with you since you came out of school, you want that advisor. By the way, that’s strategic discussion. To answer your question, I had that strategic discussion with others, “What do you think on these two things?

And you had a very strong point of view. We had a lot of discussion and debate about it. That’s what you want in a mentor, in a friend, in an advisor, and in our case, a board member. It’s somebody that you can bounce ideas off of and know you’re going to get great sound strategic and analytical thinking. It’s a no brainer.


Jason:  …is really easy, both of you. You’ve been doing this software [inaudible 66:15] for a few years. From 1 to 10 how good are the times today?

Sameer:  You probably have a better view on it from across. SendGrid is 11.


Sameer:  I think there are very good times. I do, but all the conversations we’ve had with private investors, public investors…

Jason:  Has it ever been better?

Sameer:  Sure.

Jason:  [inaudible 66:45] .

Sameer:  I think the dot com days were stupid, so maybe that’s worse…


Sameer:  …but in terms of valuations, yes better, but stupidly bad. I think it feels now that they’re based on at least some economic fundamentals, but they’re definitely very favorable. It feels like the markets are being more generous than normal.

Jason:  Ajay, where is that level, 1 to 10? The holistic view of [inaudible 67:16] SaaS, software, where are you?

Ajay:  I would say we’re close to 10. I think surely from a founder perspective, number one, there’s lots of money, so that’s good, and unlike the dot com days, the money is still rational, but there’s lots of it, and it’s a good valuation, so it’s not stupid.

I think cloud is here, and it’s opened up so many new opportunities, verticals, segments of the market that could never be addressed before. I think the cost to get a product out the door has come way down. I think the fact that in this day and age you can build a bottoms up model, self service.

You don’t necessarily have to have the feet on the street in order to build a software company. I think all of that is positive. The reason I probably don’t give it a 10 is that I think that also means lower barriers to entry for all those reasons.

More money, easier start of the company needs more companies, and it’s more crowded. You see it in every landscape, the HR tech landscape, the AI landscape, the security landscape, the market landscape.

Each one of those, they have to make smaller and smaller logos, because it’s literally like 5,000 companies per landscape, and it’s crazy. It’s only growing. The good news is if you get to scale like SendGrid has, you can sort of drive [inaudible 68:40] , you can consolidate, etc.

When you’re early, I think the bar is even higher now to make sure you have that distinctive culture that Sameer talked about, and a distinctive product market fit, really knowing exactly why you’re unique and why you’re different.

It’s a much higher bar I think in that regard than it was. SaaS has some good and bad. I think the good certainly is it is a fundamentally more sound business model. It’s a better business model. It’s a more sustainable business model.

I will tell you I do miss the days when at Trilogy we closed a $30 million deal and literally two days later we get a check wired for $30 million into our bank account. Versus having that dribble over five years. The cash flow characteristics, Trilogy raised $3 million, never spent it and is today throwing off $200 million of cash flow a year. That’s the benefit of perpetual license.

The downside is in 2001 everyone stopped buying software and our bookings went from $300 million to $150 million in one year. Pros and cons to everything, but overall it’s a great time.

Jason:  Nine five.


Sameer:  Yeah, nine five.

Jason:  All right, let’s put it out for…



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