After pricing above its range at $15 per share, Twilio kept soaring and didn’t stop for several days. Now with the dust all settled, Twilio is trading at around a market cap of over $3.5 billion, just about three times its last private valuation.
And to hear Twilio CEO Jeff Lawson tell it, none of it would have been possible without the revolution in computing brought about by Amazon and its massively profitable Amazon Web Services (AWS) business.
Lawson should know — he was one of the first product executives at AWS before he started Twilio.
Lawson says there were two previous waves in computing: The first was ruled by companies like Oracle, where IT departments bought software in bulk and forced it on employees. The second was ruled by companies like Salesforce, where sales or marketing or finance departments bought their own services and IT departments helped manage them.
Now, we’re in what Lawson calls the “third age,” ruled by Amazon, where companies skip the IT department and users entirely, and instead sell technology straight to the programmers who build the apps and software that increasingly power our everyday lives.
In this new age, multi-billion dollar startups like Stripe and GitHub, alongside tech titans like Microsoft and Google, sell their product straight to software developers, with no middleman — a recognition that as software continues to eat the world, it’s programmers who are making and breaking new technologies.
This is where Twilio fits in. It provides the service that lets Uber text you when your car is arriving, and that big financial services institutions like ING are using to power their massive call centres. And any success it presently enjoys is because it rode that wave — before Silicon Valley even knew there was even a wave to ride.
“I think we had a hunch,” Lawson says.
To explain the tremendous opportunity of selling software straight to developers, Lawson goes back to his college years, circa the mid-nineties. Amid the first days of the dot-com bubble, Lawson knew that he had to hone his computer skills if he wanted to be a part of it.
“I wanted to learn this magical new thing called the internet,” Lawson says.
Being short on funds and resources, he downloaded a bootleg copy of Adobe ColdFusion, a popular platform for making early websites. Years later, when he was the first CTO of ticket-buying site StubHub, he was in a position to choose the technology that the whole company standardised on. And he chose ColdFusion, the one he knew best.
That’s exactly like what’s going on today, Lawson says, just at a larger scale. Twilio, Amazon Web Services, and practically all other services that sell straight to developers offer free levels for people who are just messing around with the platform, and pay-as-you-go plans beyond that.
“You just want to get people’s hands on it,” Lawson says.
The appeal for students, like Lawson once was, is immediately apparent.
But there’s also a tremendous appeal for big established companies: If one lone programmer has an idea, they can use this new class of technology to mock up a prototype in a weekend, without having to go through the IT department or any red tape.
“When it costs you a few dollars to build a prototype, the speed and iteration is much more valuable,” Lawson says.
If that prototype catches on internally, it greatly increases the odds that they will tap Twilio and whatever other technologies they used to build it, too. As the project gets bigger, so too does the check they write to Twilio.
“They’re going to be the ones who call us,” Lawson says.
This all seems obvious now that AWS is eating the world, but it “wasn’t common wisdom” when Twilio was founded in 2008, Lawson says, and investors were sceptical.
“‘What’s this? This isn’t a business,'” Lawson remembers investors telling him. “‘Developers don’t have a checkbook.'”
Lawson came up with the idea that became Twilio back in the early days at StubHub.
Someone had an idea for a system that would automate calls and texts between the people who ran to buy tickets at the box office, and the customers who would end up buying those tickets from StubHub.
Lawson talked to some vendors about the idea. They told him it would be possible at the scale StubHub needed…but it would also take two years and $2 million to run a line straight into the phone company’s systems. That was way too long and way too expensive for Lawson’s team at what was then a very tiny startup.
“That’s forever for a developer,” Lawson says.
That brief, aborted experiment would form the seed of Twilio, which performs exactly the kind of service that StubHub might have needed way back when. Now, Twilio is helping companies large and small build phone calls and text messaging features into all of their apps.
What seemed like a niche business to investors in in 2008 actually looks pretty smart in 2016, as the rise of chatbots, automated systems, voice commands, and the like start to take over the tech landscape, even as people begin to expect that banks, restaurants, and stores will be able to automatically text or call them.
With 650 employees, a $3 billion public valuation, and some big companies, Lawson sees this as only the start. And he says that they’re going to keep growing by focusing on attracting developers to the platform. With the capital raised by the IPO, Twilio can start to go international and keep growing.
“There’s a very long, very big opportunity in front of me,” Lawson says.
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