Why this startup chose a smaller town over the Valley
By Sarah Strauss on February 18th, 2016
SendGrid is a success story for many reasons. One of the biggest ingredients to their longevity and good fortune is location. The founders lived in California but chose a GAN accelerator, Techstars, in Colorado. After they graduated from their program they didn’t move to the valley, they stayed put in Colorado where their network was quickly growing. Even though it was a smaller market, the benefits of proximity to their investors, mentors, peers was undeniable and the cost of living, amount of talent, quality of life all urged them to stay. Their choice of location was probably one of the best decisions they made and set them on the course to being a growing and sustainable company. We asked Brandon West of SendGrid a few questions around the company’s history and what it has meant for them to have headquarters in Colorado.
1. What were the factors that led you to apply to an accelerator program?
The founders of SendGrid were all technical. They had a bit of startup experience but mostly their skills were technical. They knew they were on to a big idea, and they knew they could build a solution, but they needed help taking the idea to market and getting traction. Also they literally needed the equity to survive while they built the product. They used to get $5 foot-longs from Subway and have half for lunch and half for dinner.
2. What difference has Techstars made for you and your company?
Techstars has been an incredible part of our success, right from the beginning. SendGrid’s original name was SMTPAPI, which was quickly branded the worst name in the history of Techstars. There was no way Isaac would have been successful pitching SendGrid without the mentoring and training that was part of Techstars. And of course, being part of an accelerator makes you part of that accelerator’s family. A lot of the early doors that were opened by that family were critical to helping SendGrid establish a customer base and build partnerships with big companies.
3. As SendGrid has grown, it took you a few years to open an office in Silicon Valley. Why is that?
We didn’t really have a reason to go to the valley. We had everything we needed to be successful with our HQ in Boulder. We had access to capital, mentorship, office space, and engineering talent. One of our founders, Isaac, grew up in Mexico and learned English as a second language. We’ve known from the beginning that you often find success in unexpected places.
That said, we actually opened an office in Redwood City last year. There’s a lot of specific email expertise in the valley due to the long history of providers in that region.
4. What challenges have you faced by choosing to have your headquarters in Boulder, as opposed to somewhere else?
The biggest challenge is that everyone assumes we’re based in the valley or the bay anyway!
But seriously, for every challenge I can think of, I can think of an advantage that offsets it. For example, there are far more engineering candidates in the valley, but the upside is in Boulder wages are less expensive and employees get poached less often.
5. In general, what difference does location make for a startup? And specifically, what difference has SendGrid’s location made?
There are a few ingredients that are necessary for a successful startup ecosystem, and they take generations to establish. You need to have engineering talent, which you can find just about anywhere now. Then you need money, but that money has to come with value. Smart money usually means at least one successful exit for the area; when you have a big success in an ecosystem, the influx of experience and angel investment that can follow is fertile soil for success.
Our location has been great for us. Since Boulder is a bit smaller, I think the community is woven together a bit tighter. We’ve been supported by the community since the beginning and we’ve been able to contribute back to that community after we’ve had some success. We’ve had access to different talent pools than a lot of startups. We also have close proximity to some of our earliest and biggest investors, which is always nice to have.
6. A lot has happened since your startup was in an accelerator. In fact, you’ve come full circle. SendGrid is now a corporate sponsor of accelerators and you serve as a mentor for startups. What went right to get you to where you are today?
There are so many factors that have to fall into place for a business to be successful. For example, SendGrid received a pretty sizable acquisition offer soon after demo day that would’ve been pretty easy for the founders to say yes to. Luckily for me and the rest of SendGrid, the founders played the long game and we’re still around. I think the biggest thing that has contributed to SendGrid’s success is that the founders pretty much hit a grand slam with their product-market fit right out of the gate. They had an audience they knew, a problem born out of their own passion and frustration, and an elegant solution. Wrap that up in a solid pitch that makes your audience feel the pain point you solve, and the rest is history.
7. And for those that don’t know what SendGrid does, will you share a bit about the company?
SendGrid is a cloud-based email delivery platform that has delivered over 20B customer engagement emails each month for Internet and mobile-based customers like Airbnb, Pandora, Hubspot, Spotify, Uber and FourSquare as well as more traditional enterprises like Walmart, Intuit and Costco. For more information, visit www.sendgrid.com. If you’re a startup or an accelerator, check out sendgrid.com/accelerate to learn about the SendGrid Accelerate program.