I posted this on the Twilio board, but I know Saul and some others hold the stock, so I thought I would post here as well.
Does anyone have an idea of Twilio’s total addressable market?
And two…the recommendation from The Motley Fool said that switching costs were high. How do we know that? Uber switched from another vendor to Twilio. What is keeping them, or anyone else for that matter, from changing to a different supplier?
Jeb
And two…the recommendation from The Motley Fool said that switching costs were high. How do we know that? Uber switched from another vendor to Twilio. What is keeping them, or anyone else for that matter, from changing to a different supplier?
Hi Jebbo,
Here’s how Tinker explains it. He knows a lot more about it than I do and you might want to ask him.
Saul
Twilio by far dominates in developers and user interest (something like 80% market share according to him). Every decision made to choose an API platform will have Twilio in it. There will be no such decision that this will not be the case for. Once you learn to use it, you don’t want to learn to use anything else. And frankly, why would you? Practically everyone is using Twilio, and taking the time to learn something else has less value. And if everyone is using it, it means that finding new developers will be much easier than if you use a competitor.
Twilio by far dominates in developers and user interest (something like 80% market share according to him). Every decision made to choose an API platform will have Twilio in it.
I saw this, and it is encouraging to have investors like Tinker (and you) owning the stock. I was wondering however, if they do have that much of the market already, how much room is there to grow?
The buy recommendation said they were “closing in on 35,000 accounts”. That is about a tenth of the customers that Shopify has and it would seem like there could be alot of overlap of users. So even if they do have alot of the existing market it is likely to soon grow.
Maybe Tink will stroll by and comment on TAM and switching.
Thanks Saul.
Jeb
Jeb,
We had a good discussion of this on New Paradigm, including an actual consulting developer who uses Twilio, and actually chose Twilio from amongst the alternatives for the project he discussed. I will see if I can find that thread or two or three that we had, or will recap it when I get some more time.
As for developers, keep in mind that most of those developers are still developing projects, and have not launched large scale or even viable projects yet. Others, like ZEN, as an example, are using Twilio to add call center capability, and they just started offering at to existing clients just a few months ago. So big growth there. It is early innings with much of the installed base, much less the development community at large.
Unlike say Mobileeye, where you can multiply number of cars x revenue per car x marketshare (and Intel has to be very desperate to have bought MBLY at that price) what Twilio’s TAM is, is not real definable at the moment. One industry insider saw Twilio as the futur of telecommunications, something akin to disrupting telephone calls themselves, which would be enormous. Moving to all calls going through apps, not traditional phones. Others see Twilio as some sort of stop gap technology. Not sure a stop gap to what though.
Definitely worth far more discussion, but no time to dig into it now, but something I plan on looking into as I will have some forced down time for the next month. I suspect I will keep my 3 iPads busy however during this period of time.
For now the biggest thing I see is Twilio disrupting call centers, and being a toll booth for calls going through call centers, which will move to apps like Salesforce and ZEN provide (that telecom and companies like Avaya and Cisco use to be toll takers on. TWLO can dramatically decrease infrastructure investment for call center deployment. The telecom company still gets paid, but instead of paying Avaya or perhaps Cisco for expensive call center hardware gear, you also pay TWLO’s toll for minutes of text, voice, and video used in the call center. TWLO is far more economical than Avaya is.
Just one barely dented market segment.
Tinker