Jeff Lawson, founder and CEO of Twilio, published a book last year: “Ask Your Developer”. As the name suggests, he provided a prescription on how to adapt and survive in the digital economy of the 21st century -you should simply ask your developers. Well, I am not your developer; neither are perhaps most of you reading this deep dive. So, why don’t we just ask a developer?
Enter Justin G. Justin is our developer who regularly appears on the front page of Hacker News. When he is tired of being a latex salesman at Vandelay Ventures (that’s his twitter bio; for the uninitiated it’s a Seinfeld joke), he dumbs down the complicated tech stuff for someone like me in his excellent newsletter: Technically. So, Justin and I teamed up to write this deep dive. He will mostly tell you the Twilio narrative in plain English whereas I will dig into the numbers behind the narrative. Effectively, Justin will wear the West coast hat whereas I will put my East coast hat on!
Here’s the outline for this month’s deep dive:
Section 1 What is Twilio: Justin first explains what API is and then goes on to elaborate what exactly Twilio does. Even if you don’t know much about APIs, no worries; Justin speaks to you as if you were a mildly intelligent five-year old.
Section 2 Acquisition engine of Twilio: Justin and I both highlight Twilio’s acquisition engine. I discussed Sendgrid, and Justin went deep on discussing the Segment acquisition.
Section 3 Twilio’s economics and competitive dynamics: Okay, enough narrative; now let’s look at some numbers. In this segment, I wrote about Twilio’s Total Addressable Market (TAM), key business indicators, and Twilio’s moats (developers’ mindshare, specialization, and scale). Finally, I discussed Twilio’s economics, and the bulls and bear concerns around the economics.
Section 4 Management and culture: I briefly discussed Twilio’s management and their culture.
Section 5 Valuation and model assumptions: Model/implied expectations are discussed here.
Section 6 Final Words: Concluding remarks on Twilio, and disclosure of my overall portfolio.