Agora ($API) was brought up a couple of times on the board, initially by muji I believe. I’ve written a deep dive on it on my Substack where I provide an overview of its platform, customers, competition, market opportunity, financials, and risks. I’m long Agora in my personal portfolio and it’s a company I’m really excited about as it has most of the criteria I look for in a potential multi-bagger: hypergrowth, huge TAM, small market cap (under $5B), strong margins, and capable management.
A simple way to describe it is it’s like a Chinese Twilio focused on video, and more specifically live streaming. Although many on this board are understandably hesitant about Chinese companies, my confidence is a bit higher in this one given founder and CEO Tony Zhao’s history of working in the US (he was a founding engineer at WebEx), that Agora has dual headquarters in China and the US and only expanded to China a year after it was founded, their impressive customer list with giants like Xiaomi and ByteDance, and some famous investors like Coatue that reportedly decided to invest after just two weeks.
My Agora thesis also ties in with the future I see for Twilio and Zoom, and I go over it in the market opportunity section. Namely, I believe we will be seeing a gradual unbundling of Zoom. Here’s a nice quote by JJ Oslund, who’s article I reference: “Companies like Zoom that achieve massive growth and ubiquity lose one important competitive advantage: the ability to focus on a particular user… Zoom has become the lowest common denominator that works for everyone, yet it is not perfectly suited for anyone.”
ZM has already made significant inroads into education and telehealth but there is significant opportunity to chip away at their moat by focusing on serving specific user needs. The real competition isn’t WebEx, Meet, etc, it’s the 250+ companies carving out their own verticals. “The endpoint for the verticalization of Zoom will be a no-code tool that gives users the power to design highly custom video apps for their particular needs.” And that’s exactly what Agora is building.
The other part of my thesis, which may be of interest to Twilio owners, is that I believe some revolutionary businesses will be ideated in the current environment. Some of the greatest innovations came during periods of the greatest turmoil and with the advent of the API economy, companies like Twilio and Agora are well-positioned to help the new wave of start-ups, such as the ones that are competing against Zoom in specific verticals, scale up fast. In my opinion, the most exciting vertical for Twilio is healthcare. They became HIPAA compliant in February, and they’ve since seen more than a 100 percent increase in active healthcare customers using its video product. I think as traditional healthcare systems digitize then TWLO can do really well here even though this vertical is non-material to their growth right now. This plays into my TDOC thesis that I’ve outlined in previous posts.