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Comment by nodesocket | Hacker News Reader

It's interesting SendGrid is worth so much, while I believe they were one of the first players in the outbound space, competitors such as Mailgun, Amazon SES, and Postmark have very competitive products at lower prices. Seems like a heavily commoditized business. I'm guessing SendGrid just has a lot of "enterprise" clients and contracts that rake in revenue.

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Last I checked Postmark is actually a fair bit more expensive, and SES is cheap and very, very, very barebones. After Mandrill exited the space in a fireball of burning good will, the remaining players in what I'd call the "full service but not eye-wateringly expensive" space are Sendgrid, Mailgun, and maybe Sparkpost, and there's not a lot of distance between them in terms of price and features.

One thing Sendgrid is good at it letting people easily send emails (ie, receipts, confirmation emails, etc.) on behalf of their clients, while still passing SPF/DKIM checks, which Mailgun and Sparkpost make a bit harder. If you're working on a SaaS product that needs to send emails on behalf of your clients, Sendgrid is an obvious choice.

Mandrill (Mailchimp) changed their terms of use which resulted in an exodus of high-volume customers who refused to pay Mailchimp's exorbitant bulk email rates. Sendgrid was johnny-on-the-spot helping people migrate.

Sendgrid has always had that “top of the line” experience. You know you can always count on them. I’ve worked with them several times over the past 6 years sending 10 mil / month and about 300k / month with zero issues. Inbound did have a hiccup with their SPF/DKIM checks though.

SES isn’t really comparable (a lot more work on your part). Mailgun has been doing some really good work though.

The word "just" implies that getting enterprise clients is easy. If they're established (i.e. old) enough and their support is good enough to justify the price point and support substantial enterprise revenue, that's a fine differentiator.

Exactly. We use them because they have a robust feature set that works for our use case (highly regulated data, etc). That's not a trivial thing. It's not a "moat" but it's wall.

I wish we could use them. Too bad they're not HIPAA-compliant (Mailgun is the only big provider that is, last time I checked)

That's a smart move by Mailgun, I'm sure Sendgrid will get there. That's the kind of thing people don't think about with enterprise customers.

- Compliance - Support - Security (not keeping things secure - offering custom security options. SAML, user roles, permissions, IP whitelisting, etc) - Customization

Building to support big complex customers is hard and if you get it right from a product and sales perspective, the inertia you can build is massive.

There's at least one big difference between Mailgun and SendGrid that I know of: Latency. I implemented an email-only authentication library based on random tokens for Django[0], and that's very sensitive to latency (you don't want the user to have to wait ten minutes for a login link).

Unfortunately, Mailgun is pretty slow to deliver emails, so I use SendGrid to send emails for that.

[0]: https://pypi.org/project/django-tokenauth/

Really surprised to hear that - we use Mailgun and haven't had any issues with latency at all.

Hmm, that's very odd, I've had problems wherever I deployed it, and multiple users have reported the same. Switching to another provider fixed the problems completely, this is very surprising indeed.

There is something of a moat in that brand new services will end up in the spam box. All of the services you mention did a lot of trial and error to see how many parallel connections they could make to big email domains, dealing with spam-marked ip addresses, etc.

Perhaps not a huge moat, but there is some secret sauce.

A concealed, sauce-filled moat? Yum.

The good thing about competing in the enterprise is that price is just one part of the overall criteria that you are judged on. Clearly, SendGrid has some winning value proposition that resonates if they are indeed more expensive and command their reported margins (I haven't personally checked).

$2b is definitely a "doesn't have a great moat but has a great business" valuation.

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