What does Twilio do?

Twilio is a cloud-based platform as a service company that provides developers building block tools to add communication services like messaging and phone in various applications.

Twilio’s tools help companies build various interactive ways to communicate with customers for eg. say text messages informing of the status of your order, any delays in flight, ETA for your ride etc. – all these use cases are enabled through the Twilio software.

Prior to Twilio, a company would need to hire trained engineering talent themselves to build this complicated infrastructure out, which could take upto a year and cost millions of dollars. Not to mention, company would just not have the bandwidth or flexibility to try out various digital strategies due to the high upfront costs. With Twilio, a company gets to focus on its core competency – for their communication, they just need to put in their credit card info and they can plug in their APIs and get started on a very small scale.

What can you really do with Twilio?

Twilio’s product portfolio includes the following

  • Programmable Voice/SMS/Chat/Wireless: Essentially APIs for each
  • Twilio Flex: Cloud-based contact center solution, all programmable
  • Understand: Analyzes texts based on natural language understanding
  • SendGrid: Email solution that is high-scale, high-reliable
  • Segment – adds a layer of intelligence to email

Who uses Twilio?

One of the earliest customers were Stripe, Lyft, Uber, WhatsApp. Essentially every customer-facing tech startups who needed an intelligent, direct communication channel with customers.

The use cases of Twilio are beyond the standard notifications and tracking messages.

Airbnb uses Twilio to send automated messages to hosts, who have not responded to booking requests within a time frame. These messages include details of dates of requested stay & other guest details. Why? Airbnb realized a lot of time hosts weren’t online and wouldn’t see the booking requests which would lead guests to cancel requests. Better guest experience through Twilio leads to better business outcomes for Airbnb

Allergan, a global pharmaceutical company realized a need to pivot form their traditional B2B2C business model to a B2C focused one, which required building a direct relationship with customers. Their legacy tools didn’t allow this pivot, and hence Allergan now uses Twilio Segment. Twilio collects customer data and builds accurate user profiles, as well as send transactional text messages to its loyalty program members in order to create seamless customer experiences.

What is Twilio’s usage-based model?

Twilio’s usage-based model has helped anchor Twilio’s almost viral revenue growth over years. What it means is that Twilio’s clients (startups and companies across the world) pay on a per unit basis  - per minute of voice, per sms message etc. This helps in developing a fairly symbiotic relationship where Twilio grows and benefits from the growth of its client’s business.

 

How did Twilio come into being?

Twilio was started in 2008 by Jeff, Evin and John, all developers.

Jeff started his first company in college in the academic content space, then became the first CTO of StubHub, then started a bricks and mortar retail store for extreme adventure sports. From there he went on to join Amazon as an early product manager in the AWS division. Jeff realized that all of his companies that he started and worked in – while very different – yet all used the power of software for building a customer experience and all needed a communications system to build a relationship with their customers.

However, when they started talking with developers to build out a communications system, they realized how massive an undertaking it was – a hugely collaborative project with the telecom carriers where external consultants would be needed to integrate the two tech stacks, lay out fibers, set-up servers etc. to launch even very simple features.

Hence the idea to take communication into the era of software. Twilio is complicated communication infrastructure and basically turn it to code.

 

How has Twilio grown?

Twilio positions itself as being able to build great digital experiences that enable companies to win customers. Every industry is becoming a software industry. Writing code was earlier considered a cost center – but now it is a source of competitive differentiation.

Thanks to what Twilio does and what Twilio ascertains are their real target market – the developers.

One of its most memorable campaigns was when Twilio rented a billboard off a crowded highway in Silicon Valley with a simple directive – Ask your developer. The nod to the developers got a very positive reception. It creates enough mystery, that people go ahead and research what Twilio was.

 

Twillio Billboard

One of Jeff Lawson’s main principles has been that the developers should be tasked with solving some of the complex business problems of the company. Developers who know the architecture of the product inside out, who know what the technology is capable of – if asked about business problems – could come up with highly creative solutions. Jeff says it often in his interviews – the current setup of product managers writing out PRDs and then breaking down tasks for engineers is essentially forcing developers to work in a boring, coal mine-like environment. Why do developers need to go on Hackathons to get an outlet to all their creative energy? Why not model your company’s core product building like a Hackathon.

The company has 1000x-ed its revenue in less than a decade, a feat few companies can stake claim to! And rightly so, Twilio trades at some of the highest EV/S multiples.

Twilio Marketcap