![Today we will be diving into Twilio. We'll cover Twilio's unique approach to distribution, how lower gross margins versus peers can actually be a moat, and why Twilio's revenue model aligns incentives with its customers. We closed with the bull and bear case for Twilio over the next five years and what investors and operators can take away from studying Twilio more closely. <br /> <br /> To help me break down Twilio, I'm joined by Ro Nagpal, a senior investment professional at the Holocene Advisors.<br /> <br /> For the full show notes, transcript, and links to mentioned content, check out the episode page here: https://www.joincolossus.com/episodes/50437644/nagpal-twilio-messaging-margins-and-markets<br /> -----<br /> This episode is brought to you by Tegus. We created Business Breakdowns to uncover the lessons and frameworks behind every business, and that's what makes Tegus our perfect launch partner. Much of the foundational prep for these episodes start with research on the Tegus platform. <br /> <br /> With Tegus, you can learn everything you’d want to know about a company in an on-demand digital platform. Investors share their expert calls, allowing others to instantly access more than 15,000 calls on Coinbase, Hinge Health, Farfetch, or almost any company of interest. All you have to do is log in. If you're ready to go deeper on any company and you appreciate the value of primary research, head to tegus.co/breakdowns for a free trial.<br /> -----<br /> Business Breakdowns is a property of Colossus, Inc. For more episodes of Business Breakdowns, visit joincolossus.com/episodes.<br /> <br /> Stay up to date on all our podcasts by signing up to Colossus Weekly, our quick dive every Sunday highlighting the top business and investing concepts from our podcasts and the best of what we read that week. Sign up here.<br /> <br /> Follow us on Twitter: @JoinColossus | @patrick_oshag | @jspujji | @zbfuss<br /> <br /> Show Notes<br /> [00:00:00] - Introduction<br /> [00:02:53] - [First question] - What is Twilio?<br /> [00:03:36] - How the world received text updates before Twilio<br /> [00:04:14] - The scale of Twilio today<br /> [00:05:02] - How expensive designing infrastructure of this magnitude can be<br /> [00:05:34] - How to use Twilio and gain access to its functionality<br /> [00:06:33] - The insight that led to developing the company<br /> [00:08:37] - Other aspects of Twilio’s services beyond SMS<br /> [00:09:50] - Unit economics of the business<br /> [00:12:01] - Case studies of likely and unlikely customers to use Twilio<br /> [00:15:17] - Original use cases and how they’ve evolved since<br /> [00:16:12] - Developer insights and what innovation it’s led to<br /> [00:19:19] - Twilio becoming a pioneer in the user software API space<br /> [00:22:15] - How big the TAM can be and why it’s bigger than people may think it is<br /> [00:23:38] - Why the API data and growth rate of Twilio separates it from its competitors<br /> [00:26:02] - How having a lower gross margin actually works to their benefit<br /> [00:27:28] - Who their competitors are and why Twilio beats them out<br /> [00:29:11] - Strategic acquisitions they’ve made like SendGrid, Segment, and Syniverse<br /> [00:31:18] - Unifying themes in their M&A strategy<br /> [00:32:08] - Fees associated with using iMessage and WhatsApp<br /> [00:32:43] - Improving margins as SMS becomes less pivotal in their operations <br /> [00:33:21] - Things about Jeff Lawson that makes Twilio so special<br /> [00:35:25] - What’s their bear case is<br /> [00:36:19] - Lessons for builders and investors<br /><br />#businessbreakdowns #twilio](https://media.thebusinessprofessor.com/wp-content/plugins/youtube-feed-pro/img/placeholder.png)
Today we will be diving into Twilio. We’ll cover Twilio’s unique approach to distribution, how lower gross margins versus peers can actually be a moat, and why Twilio’s revenue model aligns incentives with its customers. We closed with the bull and bear case for Twilio over the next five years and what investors and operators can take away from studying Twilio more closely.
To help me break down Twilio, I’m joined by Ro Nagpal, a senior investment professional at the Holocene Advisors.
Show Notes
[00:00:00] – Introduction
[00:02:53] – [First question] – What is Twilio?
[00:03:36] – How the world received text updates before Twilio
[00:04:14] – The scale of Twilio today
[00:05:02] – How expensive designing infrastructure of this magnitude can be
[00:05:34] – How to use Twilio and gain access to its functionality
[00:06:33] – The insight that led to developing the company
[00:08:37] – Other aspects of Twilio’s services beyond SMS
[00:09:50] – Unit economics of the business
[00:12:01] – Case studies of likely and unlikely customers to use Twilio
[00:15:17] – Original use cases and how they’ve evolved since
[00:16:12] – Developer insights and what innovation it’s led to
[00:19:19] – Twilio becoming a pioneer in the user software API space
[00:22:15] – How big the TAM can be and why it’s bigger than people may think it is
[00:23:38] – Why the API data and growth rate of Twilio separates it from its competitors
[00:26:02] – How having a lower gross margin actually works to their benefit
[00:27:28] – Who their competitors are and why Twilio beats them out
[00:29:11] – Strategic acquisitions they’ve made like SendGrid, Segment, and Syniverse
[00:31:18] – Unifying themes in their M&A strategy
[00:32:08] – Fees associated with using iMessage and WhatsApp
[00:32:43] – Improving margins as SMS becomes less pivotal in their operations
[00:33:21] – Things about Jeff Lawson that makes Twilio so special
[00:35:25] – What’s their bear case is
[00:36:19] – Lessons for builders and investors