It takes guts, grit, and an uncommon dose of wisdom to lead a business team. Sameer Dholakia has all three qualities, plus two decades of leadership experience in enterprise software.
Dholakia is the CEO of SendGrid, one of the world’s premier email delivery services. SendGrid serves 50,000 customers and delivers 1.3 billion emails each day—more than double Twitter’s daily Tweet volume. In addition to its classic transactional email API, SendGrid more recently rolled out an email marketing product that has already been adopted by 5,000 users.
Dholakia is an experienced tech executive with a love of history and a passion for building strong teams and big businesses in the enterprise software industry. In our interview, he shares his most effective leadership habits, including the importance of humility, how to foster an outstanding company culture, and strategies for turning around a dire financial situation.
I’m so grateful Dholakia took the time to share so much of his knowledge and experience with the Powderkeg community, and I admire his resolve to always keep improving himself and his company. Connect with him on Twitter @spdholakia to share your appreciation, and enjoy the show.
In this episode with Sameer Dholakia, you’ll learn:
- How you can begin using email marketing tools for your startup (13:40)
- Strategies for launching a new product within your existing brand (21:27)
- The only mistake in business you can’t recover from (33:26)
- Why you should be a humble leader (36:30)
- How to dig yourself out of a bad financial situation (42:48)
- The two biggest challenges SaaS companies face (47:08)
- How to create an exceptional company culture (53:54).
Please enjoy this conversation with Sameer Dholakia!
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Sameer Dholakia Quotes from This Episode of Powderkeg:
Links and Resources Mentioned in this Episode:
Companies and Organizations:
McCormack & Dodge
Software and Apps:
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They’re describing their accomplishments off of their resume. Is it I? Or was it we? Literally just the pronoun difference? Yeah. As they are describing their achievements, tells you a lot about their mindset.
Hey there powderkeg fans, Nick here from the powderkeg team. This is episode 83 of powderkeg igniting startups the show for entrepreneurs, leaders and innovators building remarkable tech companies in areas outside of Silicon Valley. Today, we’re doing something a bit different. We’re revisiting an older episode of ours where Matt spoke with Samir Dholakia, CEO of SendGrid. The interview happened in March of 2017. And since then, SendGrid went public for $131 million in November 2017, making the boulder based company the first company to come out of the TechStars accelerator to have a successful IPO. And earlier this year, in 2019, SendGrid was acquired by Twilio in a $3 billion stock transaction. So we thought we’d bring this episode out of the archives to celebrate one of the latest big wins for tech between the coasts. So let’s get to the interview.
I’m so eager to dive into this conversation with our guests today. But first, let me give you a little bit of background, because I think it’s going to provide some helpful context for understanding the stories and advice that are shared in this particular interview. Our guest today, of course, is Samir Dholakia, who has over 20 years of experience in successfully bringing high growth, disruptive Cloud and Enterprise software products to market. He of course, is the CEO at SendGrid, which is a software platform that sends literally more than a billion emails per day through their technology. They have over 1.7 billion unique recipients and have more than 50,000 paying customers. Prior to joining SendGrid he served as the group vice president and general manager of the cloud platforms group at Citrix huge technology company. And prior to that he worked for 12 years at trilogy, where he held key leadership roles in sales, business development, product management, and help grow that company from a startup to a $300 million technology business. He’s got his bachelor’s and master’s degree from Stanford University, and an MBA from Harvard Business School. He’s got that technical training and sort of the more traditional training as well as literally decades of experience in the software world. In this interview, we talk a little bit about email and the state of email software, which is particularly interesting, because it’s a market you might not understand exactly just how big the implications are onto everything else from social media, to other marketing platforms, to just how we do business day to day. But we also talk a lot about building company culture and how to lead as an executive, whether it’s at a startup or at a high growth enterprise company. We are going to cover a lot. So I hope you guys are ready for this. Let’s set this thing off. Samir, thank you so much for taking time out of your day to connect with me here at we work in New York. Have you been here before?
I have not? I’ve not but this is cool. What a beautiful setup.
It’s pretty awesome, right? Yeah, yes, it’s great. This I think our fourth meeting room we checked out this morning for this interview. I think we found just right on it. Like if it’s Goldilocks and the Three Bears are porridge is good. Excited. Good. Well, I’m here to ask the tough questions, Samir. All right. So I’m gonna put you on a date. Right, right off the bat, right. Yeah. Clearly, email is dead. From everything I’ve seen from the headline, literally. How do you? How do you deal with that being clearly in a dying industry? And yeah, it’s struggling to take advantage of a dying industry. It’s so it’s so
challenging Excel? Yeah. It’s remarkable. Our email volume, year over year is only growing 50% It’s clearly dying. It’s remarkable that, you know that there’s no question that that perception is broad. I get it every time we talk about the business, to folks that are outside of the world of email. And it’s totally understandable. We all hear questions like, Well, gosh, you know, my, my teenage kids, you know, they only text them, they know what email is, or they’re on SNAP, or their messenger or whatever. And so, you know, email must die. And, you know, look, I think it’s still, particularly in the western world is still the online identifier. It is still the way when you sign up for services, by and large, it’s still your email address, the way you don’t change your phone number, you’re gonna change your email address as often as you change your phone number. So I think you probably don’t change your email addresses often as you change your physical home address, right? I mean, think about like I’ve had the same email addresses for 25 years now. You don’t right like it’s it’s not something you You’ve changed a lot so
well, you guys are sending more emails daily now than tweets on Twitter. Is that a correct stat that I
offer two times the
over two times? He sent not just over but more than twice
by a lot? Why factors? Yeah, so it’s 1.3 billion emails every day. What Just about two times more than two times the volume of Twitter about hat, which is about half a billion tweets a day. And we’re touching 1.7 billion unique email recipients, which is like, basically, you know, plus or minus half the world’s online population, you know, we’re doing that on behalf of nearly 50,000 paying customers.
It’s good to have a paying customer. Yeah. Which is
also helpful. But, you know, nearly 50, you know, you got a lot of organizations and companies who still recognize the incredible importance and efficiency of using email as a channel to reach your end users. I mean, so if you talk to, you know, the entrepreneurs and startup communities that are listening in here, you know, they know, you got a you want to keep people engaged, you want to, you want to send out your updates, and how are we doing, and hey, I got this new feature. And, you know, I got to make sure I’m building a community of people that care about what I’m doing. And email is always going to be one of at least one of the major mechanisms or channels through which you do that. And does that mean that new modes of communication, whether it’s, you know, push message to your phone or in app message in a mobile app, or a browser notification on a desktop? aren’t important? Of course not, you know, in our view, it’s an and not an order? Absolutely. No, but but if you were to ask most marketers, you know, what do you use? What’s the most ROI efficient channel for you to use to go reach your, your users, subscribers, customers, consumers, whatever they’re calling it, they’ll always say email? Absolutely. You know, it’s
definitely the most powerful channel for our community, I believe, so engaged who in your ecosystem, maybe they don’t even use SendGrid. But like, what emails? I don’t know if that’s possible, just seems like everyone uses SendGrid. Who in your ecosystem is doing email marketing? Right? It could be a startup, it could be enterprise company.
Yeah, you know, I love we have so many great customers to highlight, you know, some that I think do really well. Some of our music customers, Pandora, and Spotify, I think do an extraordinary job of leveraging technology to drive engagement and growth within their consumer base. And at the end of the day, like, if you look at the SendGrid mission statement, that would that’s what it says, you won’t see the word email in there, it’ll say, delivering customer communications, that drive engagement and growth. And because the email channel is just a channel, but the end goal that we want to orient the our tech company around is the reason we do what we do is to help our customers engage and grow their business. And so in the case of like a Pandora, and Spotify, what those guys do brilliantly, is taken a gazillion different data points. That’s a lot of data points a lot. I mean, gazillion, you know, it’s very technical term that a gazillion data points to figure out. The next email, I’m going to send the map about what he should listen to next is going to incorporate, you know, what you’ve been doing in their app, what songs you’re listening into, you know, what, who else does that look like? And what are they interested in, and then they tailor that email, specifically to you based on everything they know about you. And then they send that through SendGrid. And I just think they, you know, of course, everything about it is hrs the layout is beautiful, the imagery, the text, the taglines and the subject, the subject lines to get you to, to go into it in the first place. They do a great job with all that, but I think it was most compelling about it is that they’ve found a way to make it very personal and tailored. And at the end of the day, as we move forward and as to get the most out of this email channel in this generation, it is about being specific. It’s about feeling like you’re getting a personal conversation via that email. And you’re not one of a lot of people receiving the same generic message. I think the people that are using email marketing well are recognizing that. And I think those are two examples of people that are doing that one.
I really liked those examples, because you hit on a couple of things that are obviously important. The personalization, yeah. But then also the intelligence behind it meaning right time. Yeah. So it’s not too creepy. But because there’s that element there is right where it’s like I just was in a shopping cart, I abandoned it. And about 15 seconds later, it’s like, come back, maybe a little too, maybe a little too in your face. But if I got that same email the next day was say 10% discount. totally
fun. And that’s, you know, a lot of what we focus on with our customers is we’re like, look, we we believe in this channel. We think it’s highly effective. Digital Marketing Association cited a stat are like every dollar that you spend an email, you’ll get a $38 return on average, those returns highly, highly efficient throughout the channel, but that channel will get destroyed if people are getting spammed, right if you’re getting unwanted mail. You just stopped using the media, right? you’d stop checking. And so we’re really vigilant about our customer sending unwanted mail where We watch their engagement rates opens and clicks their unsubscribes. How many people are saying, Nope, I didn’t want this, what percentage of the time are the ISPs dropping the mail coming in into the spam folder? In those numbers get out of a very small tolerance, very, like single digit tiny percentages, we will actually terminate customers, we fire 15% of customers of a given cohort in a month, based on our view of the signals, you’re not demonstrating best practices and how you’re using email. It’s not engaged wanted, man. Yeah,
I want to make sure we dive in, right, because I’m sure you’ve got a ton of perspective. Yeah, from deliverability to engagement. But I’m curious to know, as a founder, right, it maybe you add a startup email, you’re saying is the most engaged marketing channel, I’ve would corroborate that. But as a founder, I’m making sure your payroll happens, I’m sure. You know, people are getting engaged with the company and making sure customers are taken care of, and you’re telling me I need to also do email marketing? Yeah. Talk to me about how startups can start to leverage email marketing, if they’re not doing it. Or maybe they’re barely doing it. Yeah,
just getting started. You know, one of the things we’re doing a lot, and SendGrid is a company that literally was built on startups, like that’s how we in they remain our lifeblood. So it came out of TechStars accelerator, I started as, as you know, obviously, a startup ourselves 2009 through TechStars, incredible kind of training program for our founders, who are three developers who face the same problem they’re trying to get started up and what this, the experience they had in previous companies that perhaps some of your listeners might have experienced back in the day was every single application you build every website, ecommerce, with anything you’re going to try to do, is going to have to communicate with the user in an automated fashion. And so these developers are like, you know, we wanted to build an E commerce business back in the mid 2000s. And I had to make sure that when they signed in, I could send them a confirmation email, if they forgot their password. When you hit that Forgot Password button, the app has to do something, it has to send an email back, or if they click Buy, it has to send them a receipt, right like and in order to do that they had to go set up the email infrastructure on the back end and a complexity that is just bizarrely, you would just wouldn’t think that that’s why would that be a hard thing to do? Can you kind of go set up servers and understand the SMTP protocol and understand what an SPF record is, and what is DKM signing me like, it’s like a random, you know, black art of email. The average developer to your point and founder that trying to build a business could care less about, learn all this random, esoteric email crap, I just want to get the email on Twitter, I just wanted to work. So the founders were like, Okay, we’re gonna get this right, we’re going to expose our API as a service so that founders and developers like your and startup CEOs, in your listener mentioned like, Okay, we got to make this simple. So that it’s just not I need to worry about all the other things you described. Yeah, not making sure that the email gets to the inbox, it at a basic level for transactions. And so where we start with startups always is plug our API in for the automated system generated emails, it takes no human involvement. And I know you’ve got an idea. Other things to do. So just make sure your developer plugs in our API back end, so that anytime they’re doing something on your site or in your app, and that can be a system triggered thing. Now, as you as the startup moves along, its lifecycle and CEO starts saying, You know what, the ideas taking fold, then it really is now, okay, now I can take advantage of this channel, how do I start to engage people in and around this business, my customer base, either for acquisition or retention? And that’s really how you can you know, kind of split it into those two buckets? Are you going to use the channel to acquire more customers? Or is it about those that have already been engaging with you, and you want to retain them and get them to come back and buy more or engage more? Obviously, we believe you ought to use email channel for both. And just question where you are in your lifecycle. First startup, you’re probably going to be very focused on the acquisition side, how do I get more people into the house to understand what I’m doing? And then over time, use retention. So we added a capability on top of our automated system generated API based infrastructure. That is a email marketing application. And so that thing is just super simple for developers. Sorry, CEOs and founders, like literally startup CEOs, we have a percent we everything we do is Senator we do by personas. Yeah, user personas, let’s build that person. So we have a persona named Jared, who is our startup CEO. That’s the way that we build and Jared is one of the profiles that we build this email marketing product for because we not only have 18 Other things we’re going to do Right, they can go into that tool and create simple buckets or segments of people that they want to message to and send campaigns to. And then the tool just makes it really easy to go look at who’s engaging and when and takes care of. It’s all dynamic. So it makes it easy so that a startup CEO, founder that’s got a lot on their plate. Doesn’t have to spend a lot of time on it, but I would encourage them to spend some time.
So I love that you have the email tools for Jerry. Yeah. When did you launch that part of SendGrid? Yeah. Historically, it’s been mostly email tools. Right? It’s mostly OPI based.
That’s right. So you’re absolutely right. So that by the way, that persona, do we we call Dewey, the developer? Nice. And do we the developer? literation? Yeah, do we, the developer was the has been the core of the business for many years around that API. So they plug our API into the back of their application. So it’s literally embedding in their code. And that really has been the history of the company, about maybe a year and a half ago now. Okay. We launched this email marketing products on top of this infrastructure.
I have to apologize. I’ve missed that when that happened. So it was only in researching this, you know, we didn’t do that. I discovered, yeah, wow. marketing stuff, too. And
we’ve been, you know, we’re just starting to dial up the noise around what we’ve done here. We’re really excited about it. We’ve already signed up over 5000 customers.
That’s great. Congrats.
It’s been great. I’m on top of on that new product. Yeah. And what’s even more remarkable is that the vast majority of those customers are actually net new to sankri. So it’s not that they were using our API product. And then this thing came along, like, oh, I use that too. That’s happening in reasonable percentages, also, yep. But the majority have never had, we’re not our new Decembrie. We’re not using the because they were, you know, the Dewey, the developer, they don’t know duty, the development developers down the hall, they don’t like marketing. So the marketers are finding this tool and saying, Oh, this is a beautiful, simple, easy to use product. It’s a great value. And because of Sen its heritage in the infrastructure side, we can do scale and reliability in a fairly unique way.
Right there just not that many too extreme. You kind of glossed over it. But that was really like the most important thing. All right. Yeah. Well, you’re our scale and reliability. deliverability being kind of synonymous. Well, and
yeah, absolutely. And we and we leverage all of that expertise, I would say that we’ve developed over the past seven years, all the relationships we have with the ISPs on the knowledge of what best practices are all the guardrails and defenses that we put in place against bad senders against spammers, and phishers. All of that is 100% leverageable into that new category around email marketing, best credit. And so we have for b2c marketers in particular, who want to be able to do scale? Yeah, we could do we could do scale for them, what they consider scale is typically very small for us. Right, right. Like we, we send over a billion emails every month. So you know, whatever list size they have is not going to turn out at all.
So going into a new product, in some ways is a new product, right? Because you’ve got a new customer it is. Absolutely yeah. And you’ve got to develop this brand awareness around entirely different thing where you used to see only SendGrid only, like hackathons are more developer oriented conferences. Yeah, in terms of marketing. I’m seeing, you know, SendGrid in some places, you know, it all makes sense. Now, why haven’t seen SendGrid more frequently? Because I’m I’m jarred, right, right? I’m not doing the developer. That’s right. And so there’s like, why that’s good. But what the challenge there being, you’ve got this really strong brand on the developer tools. Yeah. How How are you going about extending that into OBO are also good for marketers? Yeah,
it’s a great, it’s a great question. Because one, we it’s very important to the business that we retain the strength of our focus on and brand in the Dewey, the developer world, like that has always been synchronous bread and butter, and there’s no chance that we’re going to relinquish that that is the dance with the one that brung Yeah, yeah, we’re, we’re not going to forget who who got us here. Yeah. So we’re gonna continue to invest an extraordinary amount in the Dewey to the developer landscape. Now to your question, how do you then leverage that strength and that brand in with a different persona in a different buyer in a different market? Okay, that’s, that can be tough. The thing that we love about it is, as I said that the leverage we get one, the leverage in the brand is still there’s there’s a hate a brand halo around SendGrid and email. When people do when they think, well, here’s Senator the first thing they will think is email not developed. Yeah, it’ll probably be developer thinking. There’s a halo around the notion of email and even for the, you know, the 10s of 1000s of companies that use us when we go and meet with many of them. I’ll end up going in and meeting everyone when I first joined the company about two and a half years ago. Of course, first thing you do CEO, you say I’m gonna go talk to customers. Yeah, I hear how we’re doing, what are we doing great, what do we need to get better at? And they set up the meetings. And so I’m assuming I’m going to go step in and meet last. Gerrans wants to do these, right. And it turned out that I met lots of Olivia, Olivia is our multihazard. Marketer, person, okay. And I, we’ve had lots of lithiums. I was like, Oh, this is interesting. And they say, Well, we I do we set you guys up, when we were, you know, a Starbuck five guys in a garage. But ultimately, somewhere in the company’s lifecycle, they hired me Olivia, the marketer, because the business was taking off. And we needed to be more proactive about our marketing communications. And I said, Well, what are we doing to communicate with our end users? And they usually said, well, not much, but we are using sending these emails, system generated emails, yes. Through SendGrid. So they so the Libyans know who we are kind of in that hate brand. Halo? Yeah. Oh, yeah. I think are doing set you guys up. And it just works. And dude, there’s no better phrase to hear your customer say, oh, yeah, or other guys. And it just say, it just works. And that’s a beautiful thing. So you get this very positive disposition there. Now, in order to really leverage it, we clearly got to go we’re gonna have to do a lot more marketing. So we’re, we’re dialing up our spend our volume, our presence and language around the marketing persona. Like I’m I’m absolutely convinced that we’re building a multi 100 million dollar business with our Dewey, the developer API, transactional email business, we’re gonna build a multi 100 million dollar business around email marketing. Yeah, that is right on top.
And when you say that multi 100 million, or you’re talking about total valuation, like do you see this as a billion dollar company? Or do you see this, as you know, another metric that you’re shooting for?
Yeah, no, I believe that these are, these are big markets, that give us the opportunity to build towards and this is a decade long vision, for sure. Not, this is not the kind of thing that you expect to hit next year, it’s your B, it’s our B hag. But I told the company, we have our annual kickoff. Every year we go to Mexico, we take the entire company down and get everybody to both celebrate what we accomplished together in the last year and get aligned on the plan and the strategy and the initiatives, and we got to execute in the next year. And as part of that, that trip and that messaging, we’ve got to move beyond a view towards a B hag, there was let’s create a billion dollar valuation company towards a B hag of we’re gonna go create a billion dollar revenue company. It’s gonna take us a decade or more. Yeah, I don’t know how long it’s gonna take us. But that’s where we’re going. Because the markets that we played now, and that we can envision extending to over the future, we’ll actually be able to build a billion dollar revenue company, it’s on us opportunities there. And, you know, whether we get there or not, is entirely dependent on our execution. But the but the opportunity
is there. It’s an exciting goal. Yeah, I want to come back to the team team section of what you just talked about, because taking the whole team of what 350 employees to Mexico is, I don’t think every tech companies retreat. So I want to make sure we’re talking about that. Yeah, we talked a lot about the markets right now, how the market is moving? Are there other markets, maybe an entirely different industries? Maybe it’s not even in tech, that you could correlate to how email is evolving in the marketing world?
Yeah. So I’ll tell you the the macro storyline, or, I guess, a picture that I oriented, and again, shared with our, the whole company, when we talked at our kickoff was about the history of enterprise software. So you know, if I zoom out for a little bit, to your point about like, how other markets evolve, and how is that how can that be instructive to celebrate in our strategy? You know, in the macro. When I if you take a look at enterprise software over the last 3040 years, it has had a history of creating multiple multibillion dollar revenue businesses within every business function. Okay, so started off in, like, in the late 60s, when computers actually were becoming useful and not taking up whole rooms like this, right? Like, Hey, what are your company’s computer things good at? They’re pretty good at math. There’s zeros and ones, how can we apply that to business? What accounting is all about lots of math, and we got lots of people with pencils, binders, let’s go. Let’s go see if we can automate some of this stuff. And so every company started to build homegrown accounting software. And then this company called McCormick and dodge came along and late 60s And like, Hey, we’re gonna go build a single one. And it’s going to be great, because we’ll get feedback from all these companies. It’ll always our pace of innovation and will be faster than your homegrown thing and sort of the the business case for why enterprise software should exist that began the birth of enterprise software and they went through literally function by function. So back then was accounting was first. And then you know, Oracle Financials, you know, in number of years later becomes a multibillion dollar business. And it just goes in subsequent generations when you end up with the pay pals and the stripes and the ANA plans and adaptive insights. And yeah, there’s a whole, just the innovation continues. And generation after generation, that’s usually about every decade or every 10 to 15 years, a new crop of multibillion dollar businesses is created in these functions. So first, finance, then HR, right, so McCormick and dodge late 60s, then they’re like, Oh, hey, these computers are getting better at routine things like routinized tasks, and they can store data. Somebody said, Hey, how about payroll? That’s up like that’s a routine thing happens every month. And we can store this information instead of in files, filing cabinets, you know, we’re gonna put this in the computer. This is really nice. This is really cool. Yeah, can you defend an ADP tech company is born ADP and round, some Reynolds both become multibillion dollar companies. And then another guy named Dave Duffield comes along, you know, 15 years later, it’s like, hey, there are all these other HR processes. I’m gonna build a company around that called PeopleSoft. I think it’s quite important. He’s like, I’m gonna do this again, next generation, we’re gonna go create the workday, right, and so just generation after generation. So you go through function by function, whether it’s in finance, HR sales, is when I joined an enterprise software in the mid 90s, there were like hundreds of little salesforce automation tools. And a company called Salesforce,
the category not Salesforce, the competence, right?
Say, sales as a function, really, I should say sales as a function they looked at, and there’s a lot of Salesforce tools like a sales rep, being able to track their conversations, instead of them writing it down in a notebook. Now they’re going to store it in a little tool on on their giant desktop, which is what most people don’t have back then, out of that emerged, a company called Siebel. Siebel became a multi billion dollar revenue company. And then, you know, the guy over down the road and named Marc Benioff saw what they were doing and said, Hey, how about if I do that, but I’m going to do it as a rented thing from my own data centers, and they won’t have to worry about anymore? No, we’ll call that salesforce.com. So you build another multibillion dollar revenue company, and then you get to marketing. And then you’re okay. So who? What are the multibillion dollar revenue companies in the marketing function of business? Well, you could certainly say Google Facebook, right, in terms of advertising dollars. Yep. You know, first one would go down, by the way, biggest line item in marketing expense advertising share, not surprisingly, that that’s the one that went up first. And it’s sort of like the HR like, okay, so what about all the other marketing processes. And so you have lots of companies that have been going down that path, exact targets, responses Marketo, or HubSpot, fill in the blank, lots of m&a around this activity, Salesforce buys ExactTarget, and Oracle buys responses in Marketo, goes private to IBM by silverpop. And so this, you know, Adobe has picked up a bunch of assets. And so it’s not lost on people that this is where the the next major multibillion dollar enterprise software companies will come from. We just think there’s a great opportunity, over a decade long journey to create to create the book.
Well, it’s cool that you’re paying attention to trends outside of marketing, to see, you know, how is this market moving in similar patterns? Are there certain books that you’ve read, or people you’ve talked to that have kind of instilled this interest and knowledge in the history of software?
You know, I’ve been blessed to have had great mentors. My first CEO and mentor, the company, I joined straight out of college is called trilogy, and the founder CEO there a guy named Julian bonds, a brilliant businessman, best software operating man, executive I’ve ever, ever seen, by far, and
why what made what made him such a good operator
of coming back, that’d be a long conversation. But he he, but he was a he was a student of history he have in a student of enterprise software history, knew a lot and so when we were, you know, 21 years old, coming into enterprise software in the mid 90s 1995, he would give us talks lectures on let me tell you about the history of these other companies that came before us. And that’s really cool. And so I’ve you know, I’ve always had that great luxury of learning from software leaders generations ago that would then explain what happened before and what they think is gonna happen next and then you live through the rest of it and you start to kind of form your form your opinion, but you know, the things that made me Joe and Distinctive Software operator, I think you He was he’s all began as a businessman in particular, because Joe always had a great quote. And I hope this is one that many of your listeners will take to heart, which was smear profitability is a choice is not an outcome. And he was incredibly disciplined about building a great business. And
I thought was all about just user growth at all?
Well, that’s, you know, this, and that is some of the differences in the way that software and tech companies have been built. And, you know, look, there are certain situations where I guess, user growth, and eyeballs matter if it’s going to get monetized via an ad model, maybe that’s the right approach in traditional enterprise software, businesses, keeping your eye on your acquisition costs, sales and marketing spend relative to your profitability and not burning a ton of cash in that process. But it’s just good business. It’s just, you know, is it a more conservative way to build a business? One might say, yes, tell you I saw I’ve seen lots of people do that very, very successfully. And what that allows you to do if you’ve been through a couple cycles, you know, yeah, I don’t know how many of the of your listeners went through the the Great Recession of 2008, or were there for the.com bust in 90 90,000, or 2001. You got to be able to weather those cycles. That’s not a, those aren’t ifs. Those are winds. Yep. When is the next one? And is your business prepared to withstand that? You know, I had one of the guys on on Joe’s team and mentor, the CFO, and he said, you know, smear. building businesses is really hard. We will make mistakes, lots of mistakes, because you’re you’re in a world of unknowns, your your listenership, I’m sure will relate to that. He said, there’s only one mistake in business you cannot come back from Do you know what that is? And I thought long and hard. I said, What is the one mistake in business you cannot recover from? I couldn’t think of any said running out of cash. Every other mistake you made you can fix to it. Yeah. But you run out of cash. And it’s game over. Cash is king and cash is king. And so anyways, I learned a lot of the great lessons from Joe and my trilogy days. And many mentors subsequent to that, but But anyways, that’s where the the history of enterprise software and that passion came came from Jeff.
Well, I think that’s fascinating. Do you have? Do you have a favorite history book? It doesn’t have to be about software, or documentary or
car? I love them all. Yeah, like some of the like, the Ken Burns, documentaries are awesome. I love you know, I do I love reading the stories of leaders and like biographies of various kinds, you know, so like one of our own reading right now that I highly recommend to people. I haven’t even quite finished it yet. I’ve got a couple more chapters is Shoe Dog. Yes, the memoir of Phil Knight,
I’m gonna share a little bit on myself.
Those are just great. They’re just instructive. Yeah, you hear from people who have been fortunate to have accomplished great things. And I think that anyone in the can, one of the things about it that I love and reading those histories, is that the best among them will invariably talk about how they were fortunate that these other external factors, all came together in a confluence of events that they couldn’t have orchestrated themselves, they were outside of their control. But thank goodness that they did it because it was a platform for us to go and accomplish X, Y, and Z. There’s a deep humility that I find in reading the bios of the greatest leaders, because they all recognize it wasn’t just them. As a great leader, as they were, it wasn’t them.
Why else do you think it’s important to be humble? Whether you’re a leader or a teammate or an investor?
Well, you know, gosh, I tell you, I think with experience, the life humbles us all share, we find, we will all all hit challenges, personal or professional, that you realize how, how little you do control, how things do are outside of your control how sometimes, despite best efforts, things will play out your way. I think that the humility that that comes with that is important. Recognition, I think one for sanity, frankly, you know, I was when I did my first startup was as a CEO of 2030 person company that later got acquired. But when I tell you there were some dark days in the middle of that, if that effort, and it was really important to not internalize that as I suck. I am as failing, right? And because you feel that way, and I’m sure your listeners that have been started or are or had been startup CEOs and founders will will relate to this is it it can it can lead to depression, it can lead to scary places, and you’ve got to have a humility to understand that you’re placing the office. Yeah, you’re you’re trying to create change in a world of chaos, lots of things that you don’t control. So I think that’s one dimension. So the humility that I think is helpful for co founder, another is just I do, I believe it engenders the right kind of culture and team dynamics. At least for me, for me, this is a personal choice. You know, different people have different personalities, there’s no one right way to build culture, there’s no one right way to build a company. For me, and like at SendGrid, you know, the, the humble age is literally a built into our value system, we call them the four H’s. Happy, hungry, humble, and honest, are there are four ages. And I think our humble age, as a company, frankly, is the most distinctive characteristic of the company of all the people that we hire into the company. And I think they appreciate that. They are leaders, from the CEO, to the executive team, to the senior to the VPs, and the senior directors that everyone understands that we actually are there to serve them, that the individual employees of our company, 350 of them, you know, there are probably 20 or 30 of us, that are what I described as we’re not at the top of the org chart, we’re at the bottom of the pyramid, right, we’re we’re there to support them doing their best work.
That’s interesting reframe, we
have to, you know, camera, the name of the book off handout, but the concept of servant leadership,
yeah, is that just because certainly,
that concept is very powerful. And I think, I think is the right way for leaders again, for me, whichever works for me, yeah, to think about your job. And your role is, you know, you got to have, you know, at the bottom, you got to have the rudder, the order that you know, your your steering, you got to make sure you’re putting it pointing the ship and to the right. And then to the right markets, you’re making the strategic decisions, you’re making sure you got the right financing, you’re not gonna run out of cash, you’re building the right unit, economic model, all those things are on you as as the leadership team, but but the people that do the real work everyday in your company, are the people that are picking up the phone and dealing with an unhappy customer on a support call. It’s the sales rep that’s got a quota to hit, to bring in new customers. It’s the the marketing team that’s got to go get the word out about, hey, we got a new product and the world doesn’t know that yet. They’re the ones who do the real work of the company every day. And our jobs got to be how do we remove obstacles that get in their way? How do we support them? How do we get them the resources they need? The work environment, they need the culture that they want to be in, so they can go and have a career high, so they can go do their best work so that if you do that, as a leader, the rest of the ship takes care of itself. Right. And, you know, the bill Walsh, you know, great football, quote, coach said, the scoreboard will take care of itself. If you do those types of things, if you have great excellence at the individual level, that will lead to excellence at the team level that will lead to excellence at the program level. And that’s I think that is every bit as true in business as it is in sports. I like to
focus and intention around the team. I imagine in some of those moments when you mentioned some of your darker days in that early startup 20 to 30. People. Yeah. Was there a can you remember a specific moment when you’re humbled and maybe a little less happy? In that first startup?
Oh, for sure. You know, we’re looking at a specific example we’re is 2007 companies taken off? New customers sign in like, well, you know, we’re coming out of the gates, new customers are adopting quickly, lots of interest from partners, and strategics. Around what we’re doing. We’re building this disruptive technology. This is back in the virtualization software. Okay, market and things, everything was up in the right, just everything was exactly as we had planned, you know, we’re hitting our numbers, everything’s feeling great. And we are in negotiations, a meet like literally nine months in to get acquired by a company that could give us incredible distribution. And it’s the summer of 2008. And we’re negotiating the deal. And for anybody who remembers their history back to history, or remember, Lehman Brothers happening in September of Oh, eight, and, and everything falls apart. Now, we had built our plan, assuming, you know, we were then investing. That contingency wasn’t built into the plan. I had forgotten Joe’s very important lesson. Yeah, I hadn’t internalized it deeply enough. And so also now we’re in a financing crunch of because it was the great recession and our cash we we could, we still had enough because I learned it enough to not it wasn’t gonna happen in the next few months, but it was going to happen in the next nine to 12. If we didn’t come up with a solution. That’s scary. And, and it was a it was a Those were dark days because, you know, again having lived through the.com bust in 2001 2002. I knew when Lehman happened and this in the fall of oh eight, I’m like, Oh, this is not going to be short lived. This is not that we’re going to be in this for a while I gotta figure out an answer. And it wasn’t clear what the answer was going to be. We figured out an answer. It worked. It ended up working out great. But But talk
to me about that it’d be a lot of times you you see point A Yeah. Scared humbled. Yeah. And point be happy. We found that an answer and a solution. Yeah. Well, what were some of the mental games that you saw as an operator? Yeah, to get out of that?
Well, you know, it’s the two things you have to do, I think in a situation like that, that we were fortunate enough to be able to execute. One was, you get very disciplined on your costs and their spend and everything about that, which we did. And then the other as you get very creative, and you try to find Okay, what else can What else could we do? There’s no PC, in the fall of 2008, there was going to find anything, right? Like, there’s no, there’s a VC market shut down, the doors are closed. And so now you got to figure out how else you’re going to do it. You can drive your car, you know, cost containment is going to help you drive towards a cash flow neutral situation, but not You’re not going to get there overnight. Unless you’re willing to do something really dramatic, which we still believed in the business. So we weren’t. And in our case, we got creative. So in our case, we went back to the strategic acquire, we were talking to and said, Hey, we both want to get married. We can’t get married now. So let’s get engaged. And our need right now is capital. Your need remains interest in our product and technology. Instead of a marriage, we’ll do a pre paid, royalty based OEM software deal, you can white label our product and send it through your distribution channels every time you do. But you’re gonna give us capital upfront, and then we’ll decrement how the prepayment
Oh, that is kind of aristocracy
get you get creative, you figure out ways to do it. But but there, but it’s not easy. And I’ll tell you in between those, you know, I just summarized that in three minutes, there’s probably about six months, nine months of pain and dark days
to get out of the valley. It didn’t. It did.
And I’ll tell you when when I talk about life humbling you, it makes you appreciate the good times all the more. Yeah, that much happier that much happier that much happier. So when things are, you know, everything is up into the right, you’re like, Wow, this is really special. I’m going to enjoy this. Yeah, because you know, but there’s possibilities always around the corner. So you better keep it keeps you both enjoying it and keeps you with a healthy bit of paranoia and to make sure that you’re looking for what could be around the corner. This time that I wasn’t prepared for the last time?
Well, I’m sure that your experience and your studying of history, and everything you’ve done to prepare yourself for this particular venture that you’re leading. And this has a lot to do with Senator grid being up into the right.
Well, I appreciate that. I wish I would say the company I this is why I feel fortunate to have joined a company that had so many of the fundamentals right
long before I got here, what were the fundamentals that they had, right?
The two that I would focus on, I would say are the business model slash unit economics, okay, and the two and the second one is the culture. So and these are two things that I remember when I when I was doing diligence on whether or not I should join the company. Because when you do when you become the CEO of a company like this, as you as you know, for anytime you’re that CEO spot, it becomes personal, it becomes a thing that you’re taking on. So you do a lot of homework before you sign up. And I fell in love with SendGrid with head and heart. The head of the analytically the business was extraordinary, that the thing that it makes the model remarkable one, of course, it’s a SaaS based business, which is dramatically better than the enterprise software, perpetual license and maintenance model of what I grew up in for the first 20 or so. So that was improved unto itself. But But moreover, even better than that, sin grids business model enjoys a couple aspects of it that solve for the biggest problems of most SaaS companies. So most SaaS companies struggle with two challenges. One is CAC your customer acquisition cost, the percent of your revenue that you have to spend in sales and marketing is oftentimes half like 50% some some more, maybe some a little bit less, but that’s probably around 4040 to 50% is probably the median spend healthy companies, pillows, healthy companies. And and that leads to a very difficult situation because now it’s hard to be profitable if you’re spending that much in sales in Marketing, you know that that’s a tough place. The second problem that most SaaS companies wrestle with is a leaky bucket problem. Tell me about that. So on the sales and marketing problem, and I’ll explain how singer is different on both of those dimensions. So on this on the CAC, and the sales and marketing spin center, it is spending probably half of what the average SaaS company does. And it’s been in sales and marketing. And it’s because our model is a self service one, like our developers, and now even our marketers, they come and find our solution.
They got a pain point, they’re out searching for a solution. Exactly. You guys are one of the first in that market is to really service that. That’s right.
And they still they come and find us, we’re not doing expensive field sales organizations, six to 12 months sales cycles, you know, the traditional stuff that in that, even SAS companies today selling into the enterprise often deal with, because we’re serving SMB mid market, we don’t. So our costs are dramatically lower. And so that allows us to be on our allow us to achieve profitability at a very early stage, relatively low SAS companies. On the second one, that leaky bucket from the leaky bucket problem for SaaS companies. If you take any given cohort say I signed up this many customers in the month of January of 2016. A year later, January 2017, the metrics that most SaaS companies would look at is a what percentage of those accounts logos are still with me. And how many have churned? Yeah. And then of those that are still there? How much are they spending with us relative to how much they were spending with us a year prior? The leaky bucket problem is that on $1 basis, most SaaS companies are making a little bit less from that cohort, a year later. And so then what you’re trying to do is you’re trying to either cross sell them or upsell them, or get them to expand in some way to get it back to breakeven, because otherwise, the only way to make up for that leaky bucket is I just have to keep spending more in sales and marketing to get more people in at the top of the bucket, right to make up for what’s fallen out of the bottom of the bucket SendGrid, by virtue of a transaction based pricing model doesn’t have the same challenge. Yeah, because those customers we do have and plenty of people, customers who leave the system either because we ask them to back to my original determination of bad senators comments, or because of, you know, their startup doesn’t work out or they get merged or acquired, and they’re using some other thing, etc. But those who stay are sending so much more in volume. And they’re thus paying us more because our pricing is tied to how much they’re paying, or how much they’re sending, that we actually on $1 basis are making more, not less. That’s a beautiful thing. And that is a beautiful thing, because you have efficient backs acquisition with an inherent growth vehicle for your cohort, it just builds a there’s an inherent growth model built in business,
one of the users in your email marketing tools, your product is actually helping them spend more money with you. Absolutely, by helping them grow as a company. Absolutely. And sending more transactional emails since this
great virtuous cycle. And so, so it kind of analytically I love the business. Yeah, I love the business model. And that was right before long before I got here. And I’m very grateful to our founders and the the initial management team that took the company from 2 million in revenue to 40. When I joined, yeah, they did an extraordinary job for those things. The other thing they got incredibly right, which I was happy to join, and frankly, I wouldn’t have come to the company if I didn’t so deeply believe in the culture. And it’s the heart and that’s the hard part head and heart. You know, I fell in love with I fell in love literally fell in love with a company. Because of those four values, those those H’s and happy, hungry, humble and honest, each of those resonated with me. We were talking about mentors. Earlier, I had a mentor at Citrix. The company I was at just before I joined SendGrid he was the CEO there named Mark Templeton and Mark was a deeply is extraordinary business leader can take built the business from 50 million in revenue to a two and a half $3 billion company over this last two decades. Like in there are so few human beings on the planet who can scale through all the different challenges that occur through those different life cycles. So incredible businessman, incredible leader, but also just an incredible human being. And, uh, he was a deeply humble person. And I’ll never forget the you know, the example that always just is so stark in my mind was and he would never even probably remember this, but we’re at our annual customer events, you know, 5000 people come in to hear about the future of the company and we have our customer advisory board, you know, the top CEOs of Fortune 500 companies that we’re serving, and he’s standing at the buffet line at lunch, handing them their plates as they were coming through the line, and he never had to say, what was obvious to everybody, which was, I am here to serve you. Well, not just, you know, physically metaphorically in every way, we’re here to serve you as customers. And that humility permeated our company. This is by Citrix was a 7000 person company at the time. Yeah, it permeated the company. And I, and I assure you that essentially, the company’s success was in no small part. Due to that culture, and channel partners and customers wanting Citrix to be successful, because they appreciated the humility. It was the antithesis of so many other tech software companies who thought it was all about them. Yeah. And that it was about their growth and what a rocket ship they were and it wasn’t about serving the customer. So anyways, these these values that that my predecessor and the Phantom founding management team imbued in the into this company, just deeply resonated with me, I saw the power of how humble, ah, can matter to a business and to a company that I wanted to work at, how do you try
to teach or cultivate or empower the leaders at seminary? And to be more humble?
We talked about it a lot. It sounds
funny, you brought it up before you’ve been brought up the before ages. So
yeah, you know, it’s just so so core to what we do, I think it gets so picked in from everything in our interviewing process, we have people that are assigned to interview for each of the ages. And so we are questions that will try to suss out, or they are kind of humble each or not, you know, they’re describing their accomplishments off of their resume. Is it I? Or was it we literally just a pronoun difference? Yeah, as they’re describing their achievements, tells you a lot about their mindset of where they where they are, we hand out at our monthly meetings, all hands meetings, with our four h awards, and the four h awards are the agenda, the origins of them, our peers nominating their, their peers, of people that they believe are exhibiting those four h values. And we do and they do we do videos of the nominations of the people that are saying, hey, you know, Carolyn, exhibited, let me tell you an example of how Carolyn exhibited our for ages. And I just love working with her for these reasons. And this is she’s has been a great steward of our culture. And, and we play those videos for the entire company to see and so they realize, this isn’t lip service. Like we believe in these values deeply. We interview against them, we celebrate them, we use them in math and language in our meetings, we will fire against them. Like you know, one of the things of the humble apes, it’s hard as we will lose very talented people who are not humble. He,
they’re, they’re very typical in the software industry that don’t have the bubble the
way they you know, they’re very talented. And frankly, they know it. Yeah, they know. And that’s a hard thing. And so, you know, we’ve had some very, very talented people, that it’s like Oregon rejection inside of Sacramento. Yeah, yep. Now, this is just not gonna work. Yeah.
But I probably equally doesn’t work for you as it doesn’t work
in that. And by the way, that is the key for all of all your listeners, I believe around around culture, is that it has to have some edge to it. If the culture you have defined would be awesome and amazing for everyone, you know, then it’s motherhood and apple pie. You’ve put no edge around it, you haven’t carved out a culture that is distinctive. And you can’t think of a company that is world class that doesn’t have a distinctive culture. Think of out think about Apple’s culture. Think about Amazon’s culture, think about Nike culture. Those are cultures that are distinctive, and frankly, there are lots of people who would hate them polarizing, very polarizing. I believe me, I know very lots and lots of very talented software professionals who would hate sent working at SendGrid. It would be seven health promotion. And that’s good. Yeah. Because that means it there’s a self selection mechanism towards this is the kind of environment we want to be in. Yeah. And I think that’s that’s usually important to set up in, in any any culture you’re building.
Well, it’s clearly you got a powerful culture and just crazy momentum behind what you’re doing. What’s next for you. And what’s next. For extending right I will ask the question that I’m sure you get asked in every interview, but what are you most excited about right now?
I am most excited about the fact that we’re hitting on all cylinders right now. We have a team that genuinely loves working with each other. You I’ve just tried like falling in love with it hadn’t hard. The hard part. I’ve been in places where, where people view their job as a job. And I view and they’re the people they work with our co workers, or colleagues. And I’ve been in places where people come in and view their work as a joy, and the people they work with as teammates, and friends. And I’ll tell you the difference between a and b. 90 day. Yeah. So I love that we have that is that is working and scaling. And I’ll tell you this fast. The hardest part is scaling a culture. And so far, you know, we’re scaling that culture and really excited and proud of that. What gets me most excited, I guess, is all the things we haven’t done yet. You know, like we all these things, we’re hitting all these cylinders. And yet, I wake up every morning, jumping out of bed thinking about the other eight things we can go do. Man, we gotta go faster. Yeah. And that’s I get fired up. I do if there’s lots we can go do stuff.
And the focus there eight other things you can do that day? Yeah. And as an executive, I think I’d almost like to close on this. Get an idea of how you’re starting your day and plotting your day because you could do eight different things. But you probably can only do a handful, if you’re lucky. How are you going through that that process? And how might some of our listeners whether they’re a CEO or not, yeah,
by the way, this is this was a, a, a tip that another mentor of mine, who’s actually currently a board member, my first boss out of college is now one of our VCs. That’s pretty cool. Pretty great. Yeah. And, but I really wouldn’t, you know, very, in my early 20s, as a first product manager of the software company, and same thing, even that, like in any role you’re on, there’s always more you can do how you prioritize your time, that’s the most important thing that you can
do. I appreciate you sharing that. Because from afar, sometimes the executive at the top of the mountain, it seems like they got it all together. And we’ve got so ugly, I also struggled with that, but on a much smaller scale, as it were, we’re still a small company. But it’s good to hear that there’s some similarities in terms of focus, honestly, it’s not gonna go away.
It’s all the same. I’m not kidding from when you’re an individual contributor, I’m 22 years old to when you’re an executive of a company is how do I focus on the highest impact things that I can do for my role? And making sure you’re doing that and spending your time in those places? Saying no to the stuff that isn’t that is, is that is true in every stage in your career. And it doesn’t go away. When you’re when you’re leaving the company big or small. It’s
so important to build that habit now. Absolutely. And just get better at it. And well, thank you, Samir, so much for taking the time to connect and share your story, personal and then the story of Senator as well, as is pretty exciting.
Thank you, man. I love the time. Thanks for having me.
Thanks, man. That’s it for this week’s conversation with Samir Dholakia at SendGrid. I hope you enjoyed it as much as I did. You know, for me, it not only inspired a greater focus on our email communications, but it also helped us talk more as a team about our core values. This particular conversation has also inspired a greater focus on the business economics, our own particular business economics. I’m sure it has for yours as well. I found that particular part of the conversation really, really interesting. But I’m curious, you know, what did you get out of this conversation, please reach out to me or even reach out to Samir directly and let him know, on Twitter, it would be a great place to do that. He’s just at SP Dholakia. That’s S P as in Paul Dholakia, which is D as in dog, H O L. A Kia. Make sure you hit him up. Let them know what you learned from this conversation. Or if you have any follow up questions. Twitter is a great place to continue the conversation. I hope to see you there.
Thanks again for listening to today’s episode. If you have any thoughts or feedback on the conversation with Sameer, let us know in the comments. We’d love to hear your thoughts. And as always, to be among the first to hear the stories about entrepreneurs, investors and other tech leaders outside of Silicon Valley. Subscribe to us on iTunes App powderkeg.com forward slash iTunes. We’ll catch you next time on powderkeg igniting startup