Twilio vs. Bandwidth?

[SageWren]

I’ve followed this board from the beginning but haven’t had anything useful to post in a long time so I’ve been pretty quiet. Unfortunately I wasn’t following closely enough earlier this year and was late to catch on to the tech stocks Saul and others here are heavily into now. While I do now own several of these companies, TWLO is one that I still hadn’t paid attention to very much and I’m not even sure why.

I’m not sure I have anything really useful to offer still, but will offer the following for those interested who might want to investigate further.

My wife works for a small (around 60 people) private company that mostly provides software/web services to apartment leasing companies. Not too long ago she mentioned that they use Twilio. I think mostly (or only?) for sending text messages from the software. That increased my interest a bit and started thinking about buying some shares if/when I decided something else I wanted less. Then, very recently she told me that they were switching from Twilio to Bandwidth. Naturally that raised a red flag for me. She is only involved with Twilio, and now Bandwith, in that she uses the APIs in some of the software she works with and not in any decision making. I did just a little bit of investigation to see how the two compare and if there might be any significant impact to Twilio. I didn’t spend a lot of time and have no real answers as to the level of impact. Apparently several other companies are deciding to delve some of the services that Twilio provides. In the case of Bandwidth it looks like they can provide some services for a significantly lower price than Twilio because they have their own network. I think they saw the opportunity to develop some software to do what Twilio does to take advantage of that.

It’s not a lot to go on, but it does make me wonder if others might also be making a switch away from Twilio and it could eventually have an impact on growth.

Steve

[brittlerock]

I’ve never heard of Bandwidth before reading your post and I have so far done zero research, so temper my reply with that caveat. But here’s my observations.

A small company such as the one your wife works at will most likely have limited requirements and therefore be satisfied with basic functionality. They will also find it much easier to transition to a different product in order to get some cost savings due to the fact that by definition a small company serves a small number of clients, the less there is to transition the easier it is.

I recently spoke with a vendor at a craft fair who was able to accept CC payments with no physical network connection. I asked if she was using Square. She replied no, she had a different service provider (I’ve forgotten the name, it was one I had never heard before) as she got what she needed at a lower cost. Should I abandon Square because they have a lower cost competitor that better fits the needs of a one person business? I think not.

Like I said, I know nothing about Bandwidth so my comments may be off base, but I am unimpressed by the fact that they offer a similar product at a lower cost. In fact, I’m not even confident that the cost advantage would remain in place if you scale up the business, if they are even able to address the needs of enterprise scale. Twilio’s revenue is not subscription based, rather they charge based on usage. I do not know if they have a declining scale such that the more you use the cheaper each subsequent transaction is. And of course, I have no idea how Bandwidth charges.

A lot of unknowns, but I don’t see the need to press the panic button.