Sendgrid – Product Management Confabulation

September 30, 2021

Sinch acquires Pathwire, the company behind Mailgun and Mailjet, for $1.9B to add email into its API-based communications platform

Sinch, the Swedish company that competes with Twilio and others in the world of messaging and other communication APIs is making another big M&A play to build out its platform. It has acquired Pathwire, the cloud-based email provider behind Mailgun, Mailjet and Email on Acid. Sinch said it would pay $925 million in cash, with an additional 51 million new shares in Sinch. Based on yesterday’s closing price for Sinch (it’s traded on the Swedish stock exchange Nasdaq Stockhom and has a market cap of $13.7 billion), this works out to an enterprise value of $1.9 billion (SEK 16.6 billion).

The deal is very large in its own right, but also continues to set up Sinch as a (maybe “the”) key competitor to Twilio. The U.S.-based communications API giant acquired Sendgrid — another major email API provider that, like Pathwire’s products, is popular with developers — for $2 billion in 2018. That was an all-stock deal.

It also points to just how significant email is as a key part of the communications landscape, with services you may never even think twice about but use all the time — booking confirmations, receipts and password resets — falling under this umbrella. Quoting figures from Technavio, Sinch estimates the worldwide delivery market for email is worth $16 billion annually. This figure includes payments for email services, related investments and so on; and specifically “transactional email” (the area Pathwire covers) accounts for 60%+ of this amount.

It also underscores the massive consolidation at work at the moment in this sector. Even Pathwire itself is an example of that. Prior to this exit, it was owned by Thoma Bravo and was itself an acquirer of substantial businesses operating in the same general category of email-as-a-service, with its latest acquisition, of Email on Acid, announced as recently as June of this year. (Was that the spur that got Sinch to bite and buy Pathwire, I wonder?)

This is Sinch’s biggest acquisition to date, and it’s also a huge business. Collectively, Pathwire has shaped up to be a massive platform for those building email experiences within apps, marketing campaigns and other communications services. Today it counts more than 100,000 businesses as customers, which works out to millions of people using Mailjet, Mailgun and other Pathwire products (as well as the analytics and everything else that comes with this). That customer list includes Lyft, Kajabi, Microsoft, Iterable, and DHL.

“Every form of digital communications has its unique benefits, and delivering high quality at scale requires both extensive technical capabilities and deep subject matter expertise“, comments Oscar Werner, Sinch CEO, in a statement. “Together with Pathwire, we will be able to offer a best-of-breed product set, across messaging, voice and email, that empowers businesses and developers to craft an unmatched, digital, customer experience.”

This also gives Sinch a much bigger foothold in the U.S. market, where it has made other acquisitions, such as buying Inteliquent for $1.14 billion earlier this year. (Pathwire is based in San Antonio, TX.)

As with other services in the wider platform that Sinch has built out, the bigger concept that it is pursuing with the Pathwire acquisition is “embedded communications.”

Messaging, voice services, email and other communications tools are hard to build from the ground up, and for many of the companies that rely on them in their apps, websites, and other customer interactions, it’s not the essential core of their services, so putting resources into building them would be costly, distracting, and hard to keep updated and maintained in the longer term. APIs have changed the game here by letting developers or others integrate communications services built and powered by others, into these various experiences. The same API concept has been applied in other furiously complex areas of tech such as financial services and payments.

Pathwire’s products cover a few different bases, however, which is what makes it a compelling buy for Sinch. Mailgun is its big developer-focused API play in cloud-based communications. Mailjet, meanwhile is a little more accessibility for less technical people, giving them the option to use drag-and-drop functionality to integrate the email APIs. Email on Acid is another step in that low-code direction, giving its users further features to ensure consistency of appearance across different delivery platforms and so on.

“Sinch and Pathwire are a natural fit: both companies have built their businesses around product excellence, a commitment to positive results for our customers, and a focus on clear, measurable outcomes. I’m proud of what the Pathwire team has accomplished, and I’m tremendously excited about this next step on our journey and the many opportunities we can unlock together”, comments Will Conway, Pathwire CEO, in a statement.

“We are proud of what we accomplished with Will and the Pathwire team over the past few years, investing in product initiatives, leadership, and M&A, including the acquisitions of Mailjet and Email on Acid,” added Hudson Smith, a Partner at Thoma Bravo. “Sinch is the perfect strategic partner to support Pathwire and continue to build on its market-leading position as the email communications partner of choice for developers and marketers.”

Pathwire, notably, was already profitable. Projected revenues for this year (ending December) are $132 million, with gross profit of $104 million, and adjusted EBITDA of $55 million in the same period.

October 13, 2020

Is the Twilio-Segment deal expensive?

The Twilio-Segment acquisition was the biggest story of the weekend, and in our current IPO lull, it is the most-discussed deal of the moment.

So it hasn’t been a surprise to see folks working to figure out if the $3.2 billion price tag Twilio expects to pay for Segment is cheap, reasonable or expensive.

The Exchange explores startups, markets and money. Read it every morning on Extra Crunch, or get The Exchange newsletter every Saturday.

We had the same question.

The all-stock transaction is another big deal from Twilio, which previously scooped up SendGrid. Some expected Twilio to be picked up by a larger company after it went public, I’ve been told. Instead, Twilio has become the acquiring entity, boosting its size and adding to its total addressable market (TAM) through dealmaking.

But a smart company can still overpay while executing a generally intelligent strategy. So, does the Segment deal look cheap, or expensive? While we don’t have all the data we’d like, a few useful VCs dropped hints about the size of Segment in my DMs.

Our hunt begins with Twilio’s own release on the matter. From there, we’ll bring in some historical data from the deal that Twilio compares the Segment transaction to, compare the resulting multiples to today’s market norms and close with a discussion of the acquiring company’s rising share price. The synthesis of all the elements will give us an answer. And we’ll have some fun at the same time.

The deal

A quick refresher on the deal: Twilio will spend $3.2 billion in shares of itself to purchase Segment. Per the company, the transaction is worth about 6% of the combined entity.

October 12, 2020

Twilio’s $3.2B Segment acquisition is about helping developers build data-fueled apps

The pandemic has forced businesses to change the way they interact with customers. Whether it’s how they deliver goods and services, or how they communicate, there is one common denominator, and that’s that everything is being forced to be digitally driven much faster.

To some extent, that’s what drove Twilio to acquire Segment for $3.2 billion today. (We wrote about the deal over the weekend. Forbes broke the story last Friday night.) When you get down to it, the two companies fit together well, and expand the platform by giving Twilio customers access to valuable customer data. Chee Chew, Twilio’s chief product officer, says while it may feel like the company is pivoting in the direction of customer experience, they don’t necessarily see it that way.

“A lot of people have thought about us as a communications company, but we think of ourselves as a customer engagement company. We really think about how we help businesses communicate more effectively with their customers,” Chew told TechCrunch.

Laurie McCabe, co-founder and partner at SMB Group, sees the move related to the pandemic and the need companies have to serve customers in a more fully digital way. “More customers are realizing that delivering a great customer experience is key to survive through the pandemic, and thriving as the economy recovers — and are willing to spend to do this even in uncertain times,” McCabe said.

Certainly Chew recognized that Segment gives them something they were lacking by providing developers with direct access to customer data, and that could lead to some interesting applications.

“The data capabilities that Segment has are providing a full view of the customer. It really layers across everything we do. I think of it as a horizontal add across the channels and extending beyond. So I think it really helps us advance in a different sort of way […] towards getting the holistic view of the customer and enabling our customers to build intelligence services on top,” he said.

Twilio acquires email API platform SendGrid for $2 billion in stock

Brent Leary, founder and principal analyst at CRM Essentials, sees Segment helping to provide a powerful data-fueled developer experience. “This move allows Twilio to impact the data-insight-interaction-experience transformation process by removing friction from developers using their platform,” Leary explained. In other words, it gives developers that ability that Chew alluded to, to use data to build more varied applications using Twilio APIs.

Paul Greenberg, author of CRM at the Speed of Light, and founder and principal analyst at 56 Group, agrees, saying, “Segment gives Twilio the ability to use customer data in what is already a powerful unified communications platform and hub. And since it is, in effect, APIs for both, the flexibility [for developers] is enormous,” he said.

That may be so, but Holger Mueller, an analyst at Constellation Research, says the company has to be seeing that the pure communication parts of the platform like SMS are becoming increasingly commoditized, and this deal, along with the SendGrid acquisition in 2018, gives Twilio a place to expand its platform into a much more lucrative data space.

“Twilio needs more growth path and it looks like its strategy is moving up the stack, at least with the acquisition of Segment. Data movement and data residence compliance is a huge headache for enterprises when they build their next generation applications,” Mueller said.

As Chew said, early on the problems were related to building SMS messages into applications and that was the problem that Twilio was trying to solve because that’s what developers needed at the time, but as it moves forward, it wants to provide a more unified customer communications experience, and Segment should help advance that capability in a big way for them.

Twilio is buying customer data startup Segment for between $3B and $4B

September 14, 2020

Courier raises $10.1M Series A to help developers integrate multi-channel notifications

Courier is an API platform with a no-code twist that helps developers add multi-channel user notifications to their applications. The company today announced that it has raised a $10.1 million Series A funding round led by Bessemer Venture Partners. Matrix Partners, Twilio and Slack Fund also participated in this round.

Previously, the company raised a $2.3 million seed round led by Matrix Partners, with participation from Y Combinator. That round, which closed in April 2019, was previously unreported. Bessemer Venture Partners’ Byron Deeter and Matrix Partners’ Patrick Malatack, the previous VP of Product at Twilio, will join Courier’s Board of Directors.

“While at Twilio, I saw developers wrestling with integrating multiple channels together into a single experience,” says Malatack in today’s announcement. “Courier’s vision of a single platform for connecting and managing multiple channels really compliments the channel explosion I was seeing customers struggle with.”

Image Credits: Courier

Courier founder and CEO Troy Goode previously led an engineering group at marketing automation firm Eloqua, which was acquired by Oracle in 2012, and as the CTO and Head of Product at logistics software provider Winmore. Eloqua is clearly where he drew his inspiration for Courier from, though, which he built out during his time at Y Combinator.

“And one of the things that I noticed and became very frustrated by was that with Eloqua, Marketo, HubSpot, there were a ton of different tools for marketing teams to use to communicate with prospects and our leads,” Goode told me. “But as soon as somebody became a customer, as soon as somebody became a user, we weren’t using those platforms. All of a sudden, we were manually plugging in infrastructure level systems like SendGrid and Twilio.”

Twilio launches SendGrid Ads and new cross-channel messaging API

The idea behind Courier is to provide development teams with a one-stop service for all their notification and communication infrastructure needs without having to build it from scratch. As Goode noted, large companies like Airbnb and LinkedIn can afford to build and maintain these systems to send out transactional emails to their users, often with teams that have dozens of engineers on them. Small teams can build less sophisticated solutions, but there’s really no need for every company to reinvent the wheel.

Today, Courier integrates with the likes of Slack, Microsoft Teams, Facebook Messenger, WhatsApp, SendGrid, Postmark, Mailgun, MessageBird, Twilio and Nexmo, among others.

One thing that makes the service stand out is that it offers both a no-code system for users to build their massaging flows and templates, as well as the APIs for developers to integrate these into their applications. That means anybody within a company can, for example, build rules to route messages through specific channels and providers based on their needs, on top of managing the content and the branding of the messages that are being sent.

Image Credits: Courier

“You’ve got this broad array of potential providers,” Good said. “And what you need to do is figure out, okay, which provider am I going to use? And sometimes, especially at large organizations, the answer is multiple providers. And or email, you might need a backup email service in case your primary goes down, or you need to warm up an IP pool for SMS . You might have different providers per geography for both deliverability and price reasons. That’s really hard stuff to build yourself.”

But in addition, different recipients also have different preferences, too, and while users can build rules around that today, the company is looking at how to automate this process over time so that it can, for example, automatically ping users on the channel where they are most likely to respond (or purchase something) at a given time of the day.

Goode noted that it may be hard to convert big businesses to move to its platform given that they have already invested a lot into their own systems. But like Stripe, which faced a similar problem given that most potential users weren’t waiting to rip out their existing payment infrastructure, he believes that partnering with companies early and having patience will pay off in the long run.

Twilio closes acquisition of email specialist SendGrid in all-stock deal now worth $3B

January 24, 2020

Most tech companies aren’t WeWork

Shin Kim Contributor

Shin Kim is working on a new SaaS startup and is also chief of staff to entrepreneur Elad Gil . Previously, Shin was at Oak Hill Capital and J.P. Morgan and earned a Master’s in EECS (data science) from UC Berkeley.

With the recent emphasis on Uber and WeWork, much media attention has been focused on high-burn, “software-enabled” startups. However, most of the IPOs of the last few years in tech have been in higher capital efficiency software-as-a-service startups (SaaS).

In the last 30 months (2017 2H onwards), a total of 21 U.S.-based, VC-backed SaaS companies have gone public, including Zoom, Slack, Datadog and others¹. I analyzed all 21 companies to understand their fundraising and revenue-generating trajectories. A deep dive into the individual companies’ trajectories can be found in this Extra Crunch article.

Here are the summary takeaways from this data set:

1. At IPO, total capital raised² was slightly ahead of annual run-rate revenue (ARR)³ for the median company

Here is a scatterplot of the ARR and cumulative capital raised at the time each company went public. Most companies are clustered close to the diagonal line that represents ARR and capital raised matching each other. Total capital raised is often neck-and-neck or slightly higher than ARR.

For example, Zscaler raised $148 million to get to $146 million of ARR at IPO and Sprout Social raised $112 million to get to $106 million of ARR.

It is useful to introduce a metric instead of looking at gross dollars, given the high variance in revenue of the companies in the data set — Sprout Social had $106 million and Dropbox had $1,222 million in ARR, a 10x+ difference. Total capital raised as a multiple of ARR normalizes this variance. Below is a histogram of the distribution of this metric.

The distribution is concentrated around 1.00x-1.25x, with the median company raising 1.23x of ARR by the time of its IPO.

There are outliers on both ends. Domo is a profligate outlier that had raised $690 million to get to $128 million of ARR, or 5.4x of ARR — no other company comes remotely close. Zoom and Datadog are efficient outliers. Zoom raised $161 million to get to $423 million of ARR and Datadog raised $148 million to get to $333 million of ARR, both representing only 0.4x of ARR.

2. Cash burn is a more accurate measure of capital efficiency and may diverge significantly from capital raised (depending on the company)

How much capital a company raised tells only half of the story of capital efficiency, because many companies are sitting on a significant cash balance. For example, PagerDuty raised a total of $174 million but had $128 million of cash left when it went public. As another example, Slack raised a total of $1,390 million prior to going public but had $841 million of unspent cash.

Why do some SaaS companies end up seemingly over-raising capital beyond their immediate cash needs despite the dilution to existing shareholders?

One reason might be that companies are being opportunistic, raising capital far ahead of actual needs when market conditions are favorable.

Another reason may be that VCs that want to meet ownership targets are pushing for larger rounds. For example, a company valued at $400 million pre-money may only need $50 million of cash but could end up taking $100 million from a VC that wants to achieve 20% post-money ownership.

These confounding factors make cash burn — calculated by subtracting the cash balance from total capital raised⁴ — a more accurate measure of capital efficiency than total capital raised. Here is a distribution of total cash burn as a multiple of ARR.

Remarkably, Zoom achieved negative cash burn, meaning Zoom went public with more cash on its balance sheet than all of the capital it raised.

The median company’s cash burn at IPO was 0.77x of ARR, quite a bit less than the total capital raised of 1.23x of ARR.

3. The healthiest SaaS companies (as measured by the Rule of 40) are often the most capital-efficient

The Rule of 40 is a popular heuristic to gauge the business health of a SaaS company. It asserts that a healthy SaaS company’s revenue growth rate and profit margins should sum to 40%+. The below chart shows how the 21 companies score on the Rule of 40⁵.

Among the 21 companies, eight companies exceed the 40% threshold: Zoom (123%), Crowdstrike (119%), Datadog (76%), Bill.com (56%), Elastic (55%), Slack (52%), Qualtrics (44%) and SendGrid (41%).

Interestingly, the same outliers in terms of capital efficiency as measured by cash burn, on both extremes, are the same outliers in the Rule of 40. Zoom and Datadog, which have the highest capital efficiency, score the highest and third highest on the Rule of 40. And inversely, Domo and MongoDB, which have the lowest capital efficiency, also score lowest on the Rule of 40.

This is not surprising, because the Rule and capital efficiency are really two sides of the same coin. If a company can sustain high growth without sacrificing profit margins too much (i.e. score high on the Rule of 40), it will over time naturally end up burning less cash compared to peers.

Conclusion

To apply all of this to your favorite SaaS business, here are some questions to consider. What is the total capital raised in multiples of ARR? What is the total cash burn in multiples of ARR? Where does it stack compared to the 21 companies above? Is it closer to Zoom or Domo? How does it score on the Rule of 40? Does it help explain the company’s capital efficiency or lack thereof?

Thanks to Elad Gil and Denton Xu for reviewing drafts of this article.

Endnotes

¹Only includes U.S.-based, VC-backed SaaS companies. Includes Quatrics, even though it did not go public, as it was acquired right before its scheduled IPO.

²Includes institutional investments prior to the IPO. Does not include founders’ personal capital investment.

³Note that this is not annual recurring revenue, which is not a reporting requirement for public companies. Annual run-rate revenue is calculated by annualizing quarterly revenue (multiplying by four). The two metrics will track closely for SaaS businesses, given that SaaS revenue is predominantly recurring software subscriptions.

⁴This is a simplified definition as it will capture non-operational uses of cash such as share repurchase from founders.

⁵Revenue growth is calculated as the growth rate of the revenue during the last 12 months (LTM) over the revenue during the 12 months prior to that. Profit margins are non-GAAP operating margins, calculated as operating income plus stock-based compensation expense divided by revenue over the last 12 months (LTM).

What’s the right pace for raising capital?

January 24, 2020

What’s the right pace for raising capital?

Shin Kim Contributor

A common question in the minds of many SaaS founders is the pace of raising capital. How much is too much too early? What amount of capital raise is typical for comparable peers? How capital-efficient are the best-in-class companies?

In the last 30 months (2017 2H onwards), a total of 21 SaaS U.S.-based, VC-backed companies have gone public, including Zoom, Slack, Datadog and others¹. To answer the above questions, I analyzed all 21 companies to understand their fundraising and revenue-generating trajectories.

The charts below show each company’s annual run-rate revenue (ARR)² and cumulative equity funding³ over time. Read endnotes for details on data source⁴ and methodology⁵. The backup for the full analysis can be accessed here.

I divided the companies into four patterns:

November 27, 2019

TechStars’s new CEO on the state of the famed accelerator and what’s next for 2020

Like another famous accelerator program founded around the same time, Techstars has grown considerably since its 2006 launch in Boulder, Colorado.

In fact, the brand seems to be in so many places that it’s hard to keep track of its reach, along with its impact. Where is Techstars, exactly? Who funds it? And how many startups have passed through its program?

We caught up yesterday with co-founder and CEO David Brown, who shared CEO duties with co-founder David Cohen until recently, and he got us up to speed while getting his family out of town for the upcoming Thanksgiving holiday.

First, some stats: TechStars is now in 49 cities around the world, including across the U.S., as well as in Europe, Australia, Singapore and South Korea, among other countries. Each accepts 10 companies each year that pass through a three-month-long program that ends in a so-called demo day. This is typically at a physical hub, though, like YC, Techstars began to experiment with virtual batches a couple of years ago. Two weeks ago, for example, it launched a program in partnership with the U.S. Air Force, the Netherlands Ministry of Defence, the Norwegian Ministry of Defence and the Norwegian Space Agency called the Techstars Allied Space Accelerator. Beyond its focus on startups that operate, the programming is almost entirely remote.

Altogether, 2,000 companies have now gone through the Techstars program. Dome of its better-known alums include email service provider Sendgrid, which went public before being acquired last year by Twilio; and the pharmacy company Pillpack, which sold last year to Amazon. Other high-fliers that have yet to exit include drone delivery company Zipline, cloud infrastructure startup DigitalOcean, and password manager LastPass.

August 19, 2019

Uncork Capital cracks open two new funds

Uncork Capital, the now 15-year-old, early-stage venture firm formerly known as SoftTech VC, has closed up two new pools of committed capital totaling $200 million: $100 million for its sixth early-stage fund, and $100 million for an “opportunity” fund so it can stuff a little more capital into those of its portfolio companies that start to break away from the pack.

The firm had closed its first opportunity fund with $50 million in mid 2016. It closed its fifth early-stage fund at the same time with $100 million.

We talked on Friday with Uncork founder Jeff Clavier about the firm, which is currently writing first checks that range from $750,000 to $2 million. He told us that as with Uncork’s most recent set of funds, the idea is to invest in roughly 35 companies across three years, taking 10 percent ownership on average, and up to 12 percent of a portfolio company when it is the lead investor.

Clavier also said that while fully half of the fund will go into startups that sell cloud software to businesses, Uncork plans to invest roughly 10 percent of the fund in consumer marketplaces; roughly 10 percent in hardware; roughly 20 percent in so-called frontier tech — whether it be augmented reality or virtual reality or space of robotics or blockchain-related deals; and roughly 10 percent in bioinformatics and synthetic biology.

That last area of interest is brand new to Uncork, so we asked if the firm — which counts Stephanie Palmeri and Andy McLoughlin as partners — was perhaps planning to hire a biotech investor. Clavier said that isn’t, that instead it will rely on external resources to help with due diligence and to learn along the way. “In the same way that I looked at 30 investments in space tech and invested in Loft Orbital [a company that’s assembling a constellation to carry payloads for customers who don’t want to operate their own satellites], my expectation is that I’ll look at a bunch of [synthetic bio] deals and we’ll end up with one or two,” he said.

Uncork has enjoyed a steady stream of exits in recent years, including, mostly newly, the sale of ad tech company Vungle for a reported $750 million last month to the private equity firm Blackstone. [Clavier declined to confirm or correct its sale price.]

Uncork is also an early investor in the food delivery company Postmates, which is reportedly on track to go public this year. And Uncork was an early backer in the email service startup SendGrid, which sold to the publicly traded communications platform Twilio earlier this last year for $3 billion in stock.

Some of the firm’s other high-profile bets include Fitbit, which went public in 2015; Brightroll, which was acquired by Yahoo in 2015; and Eventbrite, which went public last fall (though its shares almost immediately fell below their IPO price and have remained below it).

As for its first opportunity fund, the startup that has received the biggest check from Uncork — $5 million — is the fashion resale marketplace Poshmark, which is also reportedly eyeing an IPO in 2019.

August 6, 2019

Twilio launches SendGrid Ads and new cross-channel messaging API

At its annual Signal developer conference, Twilio today announced a couple of new features for developers on its core messaging platform and users of its recently acquired SendGrid email service. The new Twilio tools now allow developers to create multi-channel messaging tools and to get real-time streams of conversations in order to run them through transcription services, a translation tool or other machine learning models.

The company’s $3 billion acquisition of SendGrid closed less than half a year ago, so it doesn’t come as a surprise that Twilio would use its biggest event of the year to showcase the service to its developer community.

It’s a bit of an odd one, though. See, SendGrid already announced the beta of SendGrid Ads back in November 2018. As best as I can tell, Twilio SendGrid Ads, which is now launching in beta, is the same product, but a Twilio representative tells me that the ads product is now more deeply integrated into SendGrid Marketing Campaigns, and also got a bit of a redesign. A form of this integration already existed in the previous version, though.

The general idea here is to allow SendGrid users to run multichannel display ad campaigns on Facebook, Instagram and Google from their SendGrid accounts. The advantage of this, the company argues, is that marketers will be able to use data from their email campaigns and website data to then retarget users on other channels. Similarly, they can use lead ads on Facebook to get potential customers to sign up for their SendGrid mailing list.

SendGrid Ads will cost $50 per month, plus the cost of the ads. SendGrid will also take its own cut of 5% of any media cost over $500.

The new developer tools are pretty straightforward. Twilio Conversations, now in public beta, is a new API that allows developers to create solutions that integrate various messaging channels like SMS, WhatsApp and other chat tools.

“Over the last two decades, we’ve watched businesses evolve their communications with customers from the phone call, to website chat, to native mobile apps,” said Chee Chew, chief product officer at Twilio. “Leading companies have figured out that the next evolution of great customer experience is through messaging. Twilio Conversations empowers businesses to build personal, long-lived connections with their customers on the channels they prefer.”

Twilio Media Streams does exactly what it promises to do. Previously, you could get a recording to a call. Now, you can tap into the real-time call to analyze that stream in real time. That’s useful for all kinds of AI tools that aim to help call center agents, for example. This service is now also in public beta and will cost $0.004 per minute, in addition to the rest of the fees associated with the call.

July 30, 2019

DigitalOcean gets a new CEO and CFO

DigitalOcean, the cloud infrastructure service that made a name for itself by focusing on low-cost hosting options in its early days, today announced that it has appointed former SendGrid COO and CFO Yancey Spruill as its new CEO and former EnerNOC CFO Bill Sorenson as its new CFO. Spruill will replace Mark Templeton, who only joined the company a little more than a year ago and who had announced his decision to step down for personal reasons in May of this year.

“DigitalOcean is a brand I’ve followed and admired for a while — the leadership team has done a tremendous job building out the products, services and, most importantly, a community, that puts developer needs first,” said Spruill in today’s announcement. “We have a multi-billion dollar revenue opportunity in front of us and I’m looking forward to working closely with our strong leadership team to build upon the current strategy to drive DigitalOcean to the company’s full potential.”

Spruill das have a lot of experience, given that he was in CxO positions at SendGrid through both its IPO in 2017 and its sales to Twilio in 2019. He also previously held the CFO role at DigitalGlobe, which he also guided to an IPO.

In his announcement, Spruill notes that he expects DigitalOcean to focus on its core business, which currently has about 500,000 users (though it’s unclear how many of those are active, paying users). “My aspiration is for us to continue to provide everything you love about DO now, but to also enhance our offerings in a way that is meaningful, strategic and most helpful for you over time,” he writes.

Spruill’s history as CFO includes its fair share of IPOs and sales, but so does Sorenson’s. As CFO at EnerNOC, he guided that company to a sale to investor Enel Group. Before that, he led business intelligence firm Qlikto an IPO.

It’s not unusual for incoming CEOs and CFO’s to have this kind of experience, but it does make you wonder what DigitalOcean’s future holds in store. The company isn’t as hyped as it once was and while it still offers one of the best user experiences for developers, it remains a relatively small player in the overall cloud game. That’s a growing market, but the large companies — the ones that bring in the majority of revenue — are looking to Amazon, Microsoft and Google for their cloud infrastructure. Even a small piece of the overall cloud pie can be quite lucrative, but I think DigitalOcean’s ambitions go beyond that.