Twilio's Growth Story

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Found this link on one of TMF’s premium boards and wanted to share. https://www.forbes.com/sites/miguelhelft/2016/09/14/the-wiza…

Bottom Line Up Front (BLUF):
Twilio has an impressive “let me show you by doing” culture which comes from founder Jeff Lawson. The founder and company seem to have a humble, but confident approach which I believe is part of what differentiates them. They also seem to have a high-performing, collaborative company culture. The article talks about new Twilians (employees) getting a Kindle w/$30 credit to encourage them to invest in themselves. A small but purposeful gesture.

Glassdoor Ratings:
Twilio has a 4.1 rating on Glassdoor which is pretty good and Jeff Lawson has a 98% approval rating which is VERY good. These are just subjective data-points and have their flaws, but I still like to look at Glassdoor.

Article takeaways:

  1. Twilio’s first “big land” was with Uber (this board knows this already). But what’s important to me, is the way it happened. Uber’s SMS provider was having an outage so their B2B and B2C communications were significantly affected. Lawson capitalized and soon after, Twilio was fully integrated into Uber’s core business functions – I believe this grass-roots approach will continue to resonate well with innovative companies trying to improve how they communicate internally and externally.

2015 Annual Rev 167M vs 399M in 2017. Up 139%

  1. Their TAM appears to be industry and technology agnostic. The article references the American Red Cross, ING, Match.com, Airbnb, Whatsapp, Lyft, Expedia, Netflix, Coca-Cola, Salesforce, and the New York Times as customers. I believe the trend towards a “Gig economy” and remote working will continue to gain momentum. I can’t think of a company that wouldn’t have some type of use case for a Twilio-like solution.

In the Forbe’s article, Salesforce CEO Marc Benioff said “He’s built a fantastic business." “This is something that every company will build into their applications, like we have.” – I wonder if SF (or anyone) has tried or might try to acquire Twilio. Not a reason to invest, but an interesting thought.

  1. Twilio has an approach that requires very little Sales & Marketing. From the article: “Twilio is exceedingly simple to use and charges no upfront fees, so programmers often use it to test an idea or product. Pretty soon that product scales and turns into a six- or seven-figure account that required no traditional sales process. “We onboard developers like consumers and let them spend like enterprises,” Lawson says. Like others that have embraced developer-driven marketing—Amazon for computing services, Stripe for payments, New Relic for analytics—Twilio benefits as companies increasingly turn to software for differentiation. “As that happens, and companies hire more developers, they come in with Twilio in their tool belt,” Lawson adds.”

Interesting note on New Relic in there.

Sales and Marketing Expense as a % of Annual Revenues:
2015: 30%
2017: 25%

  1. Lawson experienced the .com crash and lost everything he had gained after his first startup (Versity.com) was acquired by CollegeClub.com for shares, which eventually become worthless as the company went bankrupt. He was also on the team that helped develop and launch AWS in 2004.

  2. Competition: there is definitely competition from legacy providers (Avaya, Genesys, and others) trying to defend their market share. There’s also a very attractive opportunity which is sure to attract new competition as well. However, I believe Twilio is out to a very strong lead and this is a type of platform that becomes very sticky once organizations start to shift their processes over to Twilio enabled communications.

Conclusion:
I really enjoyed this article. It’s a couple years old, but after reading I’m even more confident in Twilio’s leadership, execution, and market opportunity.

I am long TWLO. I’m not nearly as experienced as many on this forum but TWLO is about 12% of my portfolio making it my 3rd or 4th largest holding behind PSTG, NKTR, and possibly NVDA (need to check).

  • Austin

Shopify (SHOP) Ticker Guide

For information on all of my current holdings view my profile here: http://my.fool.com/profile/CMFAleeb/info.aspx

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ABOUT A YEAR AFTER LAWSON and two friends founded Twilio in 2008, Lawson was invited to introduce it at a popular networking mixer called the SF New Tech Meetup. Rather than talk about an inherently difficult-to-explain technology, Lawson decided to let the Twilio software speak for itself. In front of a thousand people Lawson began telling his story while simultaneously coding a Twilio app—a simple conference line. In just a few minutes he opened an account and secured a phone number, and after writing a handful of lines of code that everyone in the room could understand, his conference line was up and running. Lawson then asked everyone to phone in, and just like that a mob of developers was on a giant conference call. Lawson then added some more code, and his app called everyone back to thank them for participating. As phones throughout the room began buzzing, the crowd went wild with enthusiasm. “He is the let-me-show-you-what-we-can-do type of exec,” says Byron Deeter, of Bessemer Venture Partners, an early backer who has become Twilio’s largest shareholder. “There’s no bravado and no ego, and that gives him a special charisma and authenticity.”

Today customers can build a call center entirely out of software building blocks rather than having to purchase expensive equipment or prepackaged communications solutions. What once required pulling copper wires into a data center and costly investments in carrier contracts and infrastructure can now be done by a small team of programmers with no upfront cost. Twilio charges only for usage.

"The things they made possible were crazy,” says Sacca, who worked on various telecommunications projects at Google GOOGL -0.02%. “The idea that someone with no telecom engineering experience could build a call-center flow by dragging and dropping was amazing.” Today Twilio connects to the global telecommunications network through 22 data centers in 7 regions and has agreements with most of the major carriers that allow it to deliver a message to pretty much any phone on the planet. Lawson calls this Twilio’s “super-network.” “As our business grows, the super-network becomes more difficult to replicate over time,” he recently told investors. Many analysts agree. “Twilio is a company that is light-years ahead of their competitive field,” says Mark Murphy, an analyst at JPMorgan.

Wow, now I get it. Thanks for posting Austin.

Kindest Regards,
Steve

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No problem Steve!

  • Austin

Shopify (SHOP) Ticker Guide

For information on all of my current holdings view my profile here: http://my.fool.com/profile/CMFAleeb/info.aspx