Rackspace has acquired Mailgun, a San Francisco-based Y Combinator startup that has developed an API for creating and managing online email inboxes for apps and websites.

Rackspace, a managed hosting provideracquiring Mailgun sounds simple on its face, but Mailgun's ease of use and sophisticated routing can provide a number of new functionalities to web apps and web pages that is all done programatically. Terms of the deal were not disclosed.
The company was part of the 2011 winter Y Combinator class. In May of that year, it received $1.1 million in funding. Investors include SV Angel, Yuri Milner; Maynard Webb; Y Combinator Partner Paul Buchheit, who created Gmail; and Geoff Ralston, who built and launched Yahoo Mail back in 1997.

Rackspace will make Mailgun available to its Rackspace Hosting customers for integrating cloud-based email services into applications and websites. CEO Ev Kontsevoy said the company's six employees will join Rackspace and move into the hosting providers San Francisco offices.

At its core, Mailgun provides a service for creating elastic email servers on the fly. It abstracts the complexity of setting up email inboxes and simplifies the routing of email messages in apps and web pages. The service allows developers to send, receive, parse, store, and run search queries on email programmatically.

For most young developers, creating email inboxes is an archaic task that they do not understand: email predates the Internet. The process to configure email has pretty much remained unchanged since that time. Mailgun provides a service that brings out email's value, giving young developers an API with new functionalities that they know how to implement.

For example, Mailgun  is used by Picplum to parse photos that customers send to their accounts. Mailgun reads the incoming emails and routes them to the appropriate place. Everyblock uses Mailgun to help send emails to its users and to track the analytics behind all of the outgoing messages.  Other customers include 37Signals, Parse and the Financial Times.

Kontsevoy said Meteor, the hot new web framework, is adding Mailgun to provide developers  the capabilities to add more functionality. Mailgun is also integrated into platforms such as Heroku, AppFog and Engine Yard.

Mailgun charges on a per user basis. Prices decrease as users scale email usage. Prices range from $1 down to 10 cents per thousand emails delivered. Sendgrid and CloudMailin are two services similar to Mailgun.

Rackspace's challenge is to integrate Mailgun smoothly into its organization and show the value that email provides app developers. Email is not well understood by the younger set but APIs are part of every day work.  Adding email makes sense in this respect as long as it can be accomplished programatically.

"Awesome products should be and will be integrated with open cloud platforms," said Pat Matthews, senior vice president of corporate development at Rackspace. "We want to make it easy for hundreds of thousands of customers to use Mailgun."