Each year in March, Baydin takes a little bit of time to review the past year and plan for the future. This year, I wrote a letter to all of our investors, advisors, and employees to describe our thoughts on email productivity and more. When the letter was complete, we realized we’d like to share these thoughts with our customers as well. We hope you’ll enjoy reading it, and we’d love to hear what you think.

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I have an enormous amount of respect for what Jeff Bezos has accomplished at Amazon. One of his most insightful practices is to send a letter to all Amazon shareholders each year. In this letter, he articulates the vision of the company, a high-level overview of what Amazon accomplished and learned from the previous year, the trends that impact Amazon, and the medium-term plan to remain ahead of those trends.

Mr. Bezos writes these letters because they provide a unified message about the company to everyone involved. They also provide a vehicle to clarify his thoughts and reflect on the path of the company each year. I believe this kind of reflection will be a powerful tool for me and valuable for you.

This year marks the first of what I hope will be many years of writing this letter.

2011 Overview

Baydin achieved many milestones in 2011.

This time last year, Baydin was a three person startup, new to Silicon Valley. We had two products on the market, Boomerang and The Email Game, and we were splitting our time 65/35 between them. Boomerang had roughly 300,000 downloads, no payment system, and had just added response tracking to the list of features. We had brought on a fantastic team of investors, but were just learning how to unlock the value of the network you all provide.

Last year, we were tenacious and fortunate enough to see many of the events that significantly move the needle for an early stage startup:

• In July, we transitioned Boomerang to a freemium SaaS product. Our conversion from active-to-paid users is ~10%, which is an incredible rate, and far above the SaaS average.
• Baydin has the option to be a profitable company in 2012, including all salaries and expenses. We are likely to eschew this option in favor of faster growth, but it is amazing to have it on the table.
• Boomerang crossed the million-download mark, and between The Email Game and Boomerang, our systems handed over four million messages in 2011.
• We closed all of the committed funds from our seed round, ending up at a $400,000 raise in May.
• We explicitly chose to focus on Boomerang as our core product last year. Although focus remains a test of willpower for us, spending 95% of our time on Boomerang allowed us to establish a significant early lead in mindshare in the email enhancement space.
• Our interns made some significant enhancements to The Email Game. The Email Game is much further from achieving its potential than Boomerang, and largely received benign neglect from the Baydin team last year.

We are very pleased with the results of 2011, and we look forward to an even more successful 2012.

Trends from 2011

Last year was a significant year for the email development ecosystem. Several new trends emerged, and Boomerang was at the forefront of many of them.

• Baydin showed the world a path to making substantial, sustainable revenue in the horizontal consumer-facing email market. Venture capitalists have invested millions of dollars in email over past decades, with significant returns in infrastructure and marketing companies, and significant hemorrhaging in consumer-facing investments. Baydin has established that it is possible to build a SaaS business on top of a major email platform and achieve traction.
• Gmail is becoming a more significant development platform, and one that is easier to build on. In part due to requests from us, Gmail’s APIs now provide richer, easier to use functionality for integrating client and server interfaces. Adding interface elements to Gmail has gone from a difficult technical challenge to one that many developers can conquer, thanks to improving browser extension functionality. In short, the technical integration challenges that prevented anyone from building features like Boomerang’s for the last 18 months are disappearing. As a result, our technical barriers to entry will need to become broader and more universal, rather than platform-specific.
• The trends above mean that the copycat services will begin to arrive in 2012. One service recently launched as a clone of Boomerang’s send later feature, all the way down to the menu text. A company adding CRM to Gmail copied our Send Later interface as roughly half their service. Fortunately, the quality, user experience, and reliability of Boomerang dramatically outstrips both these services. Another email service, better funded and currently focused on salespeople, will launch a pro product in 2012. Their customer development survey indicates that it will be a ripoff of Boomerang from top to bottom, with the same feature set and at the same price point. None of these services have a high quality product or a significant user base yet, but the increased ease of development means that they likely will, before the end of this year. We will be aggressive about growing our market share while these companies’ products remain nascent.
• These trends also mean that in addition to outright copies, several companies are introducing email products that seek to achieve different goals. We will consider partnerships with some of these companies.
• The idea of email as a user interface started to emerge last year as well. Movable Ink announced raising a fortune to create email that will load images that can change based on the time it’s opened. Many tools in which reading and replying to an email replace a web interface were introduced.

Some trends we identified last year have continued or accelerated since

• Google Apps continues to cannibalize Exchange at roughly the same pace Exchange cannibalizes Lotus Notes. Google Apps is making inroads into large corporations, which means greater opportunities for Boomerang to sell to enterprises. To date, we are working on deals with two of Google Apps’s five largest customers that may or may not come through.
• Email as a whole is becoming an interesting development ecosystem. From services seeking to replace email (doomed projects, in my opinion) to the growth and proliferation of infrastructure services like SendGrid, Mailgun, and Context.io, to the burgeoning add-on space, things are getting crowded. This trend works to our advantage (more legitimacy, more general awareness of products like ours) and to our disadvantage (lots of companies fighting for low-differentiation market space)
• Naïve gamification is reaching the mainstream, but the leading edge is starting to look for something else as the effectiveness of points and badges proves fleeting.
• Social networks and text messages have begun to displace personal email, and will continue to do so, especially among students. There has been no similar shift for business email, since Facebook messages and text messages are not conducive to high-information-density communication.

Baydin will keep a close watch on these trends through 2012.

Baydin Mission

We are still much closer to the beginning of this journey than to the end. We are very happy that you have chosen to embark on it with us. In 2011, we were finally able to stop worrying about how we were going to pay rent and buy food each month, allowing us to clarify our thinking about the longer view of the company’s development.

Today, Baydin helps its customers focus on email that matters, when it matters. Our tools allow for reading and responding to messages faster and more decisively than before. These achievements mark only a small part of how we envision the company growing.

Our mission is to make productivity software that encourages people to be more productive. Some
of the beliefs that will guide us as we work toward this mission include:

• Context-aware. The next revolution in productivity software will come from software that analyzes the context of what we are working on and adds value on top of it. Leading the shift will require technical skills that few teams have. Fortunately, we have these skills, and cloning the functionality will remain difficult for years to come.
• Sensible defaults. Context-aware systems will not be perfect, and spending time trying to make them so is a task for academic researchers. Instead, the system needs to supply an easy way for users to change mistakes, without imposing too heavy a burden on them. Designing this interaction properly will be a major challenge, which our team is well suited to conquer.
• Persuasive Software. Research in practical psychology continues to uncover surprising truths about how our minds work. Our productivity software will incorporate the results of that research into broad, horizontal products. Designing these interactions will require significant skill and discretion, as we have learned from The Email Game.
• Communication first. Applying our core productivity themes to communication and collaboration software will result in the greatest impact. We will not make the mistake of trying to build a competitor to all of Microsoft Office in one fell swoop, and we will likely never make a spreadsheet.
• Data-Driven. We believe that data is the closest approximation to the truth. We will base our decisions, wherever possible, on the results of statistically-significant measured data.
• Respectful software. We will not make software that helps one party profit at the expense of another. There is a fundamental conflict in the email space. Some companies seek to profit by increasing the effectiveness and intrusiveness of gray email, to the detriment of our privacy and our ability to choose how we spend our attention. We seek to profit by increasing the effectiveness of everyone else.

2012 and Beyond

In 2010, we built Boomerang and achieved product/market fit with it. In 2011, we channeled Boomerang’s momentum into meaningful revenue. In 2012, we will focus on scaling the business and making it more robust against adverse events.

[Section on detailed 2012 plans removed. Sorry, competitors!]

The past two years have been a wonderful experience. It’s an incredible privilege to be able to work on these problems with such a great team. I’m grateful for the hard work that the team put in this year, for all our customers who have chosen us, and for all of your support over the last year. We look forward to accomplishing great things in 2012.

-Alex
March 2012