Why Startups Are Moving Away from Legacy Email Providers

If your email bill has been climbing for the past two years without the product getting noticeably better, that is not a coincidence. It is the business model arriving on schedule.

The dominant email platforms that most startups rely on were not built for startups. They were built to attract startups, capture their infrastructure dependency, and then restructure pricing once switching became painful enough that most would absorb the increase rather than leave. It is a well-worn playbook. And email, because it is wired so directly into how a product works, is one of the places it works best.

Mailchimp is the clearest example. For years, its pitch was simple: a free tool to send emails to your customers, up to 2,000 of them, no credit card required. By the time Intuit acquired the company in November 2021 for approximately $12 billion, Mailchimp had captured an estimated 60 percent of the email marketing platform market. Almost every startup that needed to reach customers by email started there.

Then, in August 2022, the free limit dropped from 2,000 contacts to 500. Six months later it tightened again: fewer emails per month, a new daily cap. In November 2023, paid plan prices rose across the board. By 2024, Mailchimp was billing customers for contacts who had already unsubscribed: people who had actively asked to stop receiving emails, and who could not legally be emailed again, but who still counted toward a business’s monthly bill.

Across Reddit threads, review sites, and migration guides, the same complaint appeared thousands of times. The bill kept climbing. Nothing in the product had changed to justify it.

The same story, a different platform

Mailchimp was not alone. SendGrid, which became the default choice for startups needing to send automated emails (the kind triggered automatically by a product when a user signs up, resets a password, or places an order) had its own version of the same story. Twilio acquired SendGrid in February 2019 for approximately $3 billion. For years afterward, a free tier remained. In May 2025, it was eliminated entirely. Users who had built their products around it were told to move to paid plans.

In February 2026, Twilio announced that SendGrid.com would be merged into Twilio.com, folding the brand into the larger platform six years after the acquisition closed. For longtime users, the announcement formalized what had been apparent for some time: the tool they had chosen because it was straightforward and independent had become a product line inside a company whose primary customers looked nothing like them.

Neither Mailchimp nor SendGrid did anything unusual. They followed a path that is by now standard in enterprise software: build market share with a generous free offering, get acquired by a larger company with different revenue targets, and gradually restructure pricing toward the customers who spend the most. The problem for startups is not that the path is surprising. It is that email is harder to leave than most software. A company’s email setup, the system that sends every receipt, password reset, and account notification its product generates, is wired directly into the product itself. Switching means unplugging something that is actively running.

The cost of staying put

That switching cost is what legacy providers have always relied on. And for years, it held. But something shifted around 2022 and 2023, as price increases accelerated and the accumulated frustration became harder to ignore. According to Validity’s 2025 Email Deliverability Benchmark Report, roughly one in five legitimate emails from software companies never reaches the inbox even under normal conditions, meaning the deliverability startups were paying for was already underperforming before any pricing grievance entered the equation. The math started to look different.

What the newer providers were selling was not a dramatically better product, technically speaking. They were selling a different deal. Most charge based on the number of emails actually sent, a cost that scales with usage, rather than the number of contacts stored, which grows over time regardless of whether those people ever open anything. Some have also drawn a sharper line between two things that legacy platforms bundle together: the emails a marketing team plans and sends on purpose (newsletters, promotions, announcements), and the emails a product sends automatically in response to something a user did. Those two categories have very different reliability requirements, and mixing them on the same infrastructure means a poorly received promotional campaign can affect whether a customer’s password reset email arrives.

The market that filled the gap

The discontent created space for a generation of companies built around a more focused proposition.

Amazon SES, the cloud giant’s email service, sits at the other end of the scale: extremely cheap, highly flexible, but built for teams that can manage their own infrastructure without much guidance. Brevo, formerly Sendinblue, went the other direction, expanding from a small-business marketing tool into a broader platform that now covers customer relationship management and SMS alongside email.

Mailtrap, a product of Railsware, a software studio founded in Ukraine in 2011, came to this market through a different origin. In 2011, the Railsware team accidentally sent 20,000 test emails to real customers while working on a client project. “Our product culture came from solving our own problems,” Sergiy Korolov, co-CEO of Railsware, said in a podcast interview with Code Story. “Our idea was simple: let’s make a trap of an inbox that will show all the emails that the app sends from development and staging environments. The product appeared, and then it started mutating and expanding.” The internal tool became a commercial product and grew from Email Sandbox to full email delivery platform.

Whether it lasts

The migration away from legacy providers is real, but the history of the market gives pause. Postmark was acquired by ActiveCampaign in 2022. Mailgun was acquired by Sinch in 2021. The pattern of consolidation that produced the current frustration has not stopped producing new consolidation. The pattern of consolidation that produced the current frustration has not stopped producing new consolidation. Some of the alternatives have stayed bootstrapped and independent, Railsware’s Mailtrap has operated that way since 2011, and for founders who have just lived through what an acquisition does to pricing, that distinction is starting to matter.

None of which means the answer is to stay. The point is narrower: when choosing infrastructure, it matters whether the company you are choosing was built around your problem or built to eventually graduate past it. The tools that have held up best for early-stage companies tend to be the ones whose founders started from the same place their customers are in, rather than the ones that built a free tier as a growth tactic and an acquisition as an exit.

The price increases are not going to reverse. The free tiers are not coming back. For founders still on platforms that have raised prices three times in two years, the question is not whether to move but when, and toward what.

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