6 ms·

I love Twilio, but I'm a little surprised they lost $35M on $166M rev in 2015. I thought they were very close to profitability.

runako 10y ago
They are not being managed for profitability; they are being managed for scale. They are growing at near 100% y/o/y, so management has decided to keep the pedal down until they win the market. Profitability comes in the out years, way down the line. Amazon is the most famous (successful) example of this. I don't work there, but I can assure you that nothing at Twilio is structured to be a profitable small company.
- toomuchtodo 10y ago
  But what moat? There are numerous competitors to Twilio who are either cheaper or provide more niche services. You can be Amazon when you're the 800lb gorilla. Twilio is not that gorilla.
  - pbreit 10y ago
    Telecom/communication services like Twilio's are =extremely= sticky.
    - sulam 10y ago
      Not by most standards of stickiness. They don't have my data. They don't have a monopoly. There aren't any network effects that I can think of (they've worked the one angle here as well as they can -- developer mind share). I'm not saying they aren't a good business, but I wouldn't call them particularly sticky, any more than Rackspace is sticky. Infrastructure is a hard business to be in.
      - Kliment 10y ago
        Developer mindshare is sticky though - much more so than monopolies (fragile, disruptible, unless protected by law).
        toomuchtodo 10y ago
        Your developers usually don't pay the bills, and CFOs are always looking for cheaper options that are just as good. Mindshare is silly in a commoditized space.
        sulam 10y ago
        Exactly. I didn't mention Rackspace idly -- they used to have huge developer mindshare back in the day. Didn't save them, and it won't save Twilio if they can't find something truly sticky to keep people on their platform.
      - ben_jones 10y ago
        I would argue that the stickiness is derived from enterprise. If you get Twilio in as a core dependency on a legacy application that check is never ever gonna stop coming in the mail.
  - runako 10y ago
    This is a great comment because it is almost verbatim what was said about Amazon. Actually, this is still frequently said about Amazon's retail operations. I remember talk that eBay was a better business than Amazon because they had network effects and were thus more defensible. Oops. Also worth noting: Amazon wasn't the 800lb gorilla when they filed their S-1 (valuation: $438mm).
    - toomuchtodo 10y ago
      Want to make a long bet? I bet you Twilio doesn't turn into that gorilla. AWS is a far cry different than Twilio.
      - runako 10y ago
        1) AWS != Amazon. Amazon went public 10+ years before AWS launched. AWS is a tiny part of Amazon's revenue today. You moved the goal posts! We were discussing a money-losing Internet retail pure-play; you're comparing to a heavily-subsidized (via start-up capital etc.) tech services pure-play. 2) Which is another key point: the prospects of the company at IPO are very different from the company today. A bet on AMZN today is largely a bet on AWS, which is very different than a bet on AMZN in 1997. If Twilio continues to succeed, it will be because they can use this investment to grow into a stronger long-term position. I don't know Twilio well enough to take a bet either way. I'm just pointing out that most smart people (you, even, perhaps?) didn't think Amazon would be that gorilla, either. And that was the correct bet, which just happened to turn out wrong. So if forced to bet, I bet with statistics (against Twilio). But only because building that gorilla is insanely hard (and depends on luck) and not for any of the reasons you've cited.
        deleted 10y ago
        [deleted]
        nopzor 10y ago
        He definitely moved the goal posts, but remember that AWS is most of Amazon Incs _profit_ today. Also, AWS is a small-ish part of Amazons _revenue_ but given the relative growth rates that is less and less true every year. The reason why AMZN stock is so high currently has a lot to do with AWS.
- karangoeluw 10y ago
  It's just absurd that a company can't be profitable with 28M paying users some of which include Uber and WhatsApp.
  - alex_sf 10y ago
    You're looking at it wrong. Twilio _could_ be profitable with 28M users, easily, but they'd rather not be profitable and spend more money on expansion.
  - wodenokoto 10y ago
    They can but choose not to, seems to be what the parent is saying. You can look at it like they are borrowing 35 million a year on top of their profits in order to fuel their expansion
  - bdcs 10y ago
    All nonprofitability means is they expect ROI on dollars spent today. In other words a dollar spent today will, in their model, increase their future (discounted) free cash flow. In even more words, profit is when a company runs out of investible ideas (within the assumptions of their hopefully convincing model). The size of the company has nothing to do with it (canonical example is Amazon where you can change the 28M users to at least 280M and rev in the billions).
  - afarquhar 10y ago
    it says "In thousands, except share, per share and customer data" - so it may be 28 thousand accounts. May have misread this though https://www.sec.gov/Archives/edgar/data/1447669/000104746916013448/a2227414zs-1.htm#dk43901_selected_consolidated_financial_and_other_data https://www.sec.gov/Archives/edgar/data/1447669/000104746916...
  - chrdlu 10y ago
    It's not that they can't be profitable. It's more along the lines that they are re-investing all of their profits to grow the business. The market Twilio is in has plenty of room to grow and Twilio has to aggressively capture it or else someone else will. If they wanted to become profitable, they can. They're just spending a lot to continue to double every year.
- eeeeeeeeeeeee 10y ago
  Isn't Amazon only profitable because of AWS? If you cut that out or put AWS into a separate company, Amazon still wouldn't be profitable as a company if I remember correctly.
deleted 10y ago
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runako 10y ago

They are not being managed for profitability; they are being managed for scale. They are growing at near 100% y/o/y, so management has decided to keep the pedal down until they win the market. Profitability comes in the out years, way down the line. Amazon is the most famous (successful) example of this. I don't work there, but I can assure you that nothing at Twilio is structured to be a profitable small company.

toomuchtodo 10y ago
But what moat? There are numerous competitors to Twilio who are either cheaper or provide more niche services. You can be Amazon when you're the 800lb gorilla. Twilio is not that gorilla.
- pbreit 10y ago
  Telecom/communication services like Twilio's are =extremely= sticky.
  - sulam 10y ago
    Not by most standards of stickiness. They don't have my data. They don't have a monopoly. There aren't any network effects that I can think of (they've worked the one angle here as well as they can -- developer mind share). I'm not saying they aren't a good business, but I wouldn't call them particularly sticky, any more than Rackspace is sticky. Infrastructure is a hard business to be in.
    - Kliment 10y ago
      Developer mindshare is sticky though - much more so than monopolies (fragile, disruptible, unless protected by law).
      - toomuchtodo 10y ago
        Your developers usually don't pay the bills, and CFOs are always looking for cheaper options that are just as good. Mindshare is silly in a commoditized space.
        sulam 10y ago
        Exactly. I didn't mention Rackspace idly -- they used to have huge developer mindshare back in the day. Didn't save them, and it won't save Twilio if they can't find something truly sticky to keep people on their platform.
    - ben_jones 10y ago
      I would argue that the stickiness is derived from enterprise. If you get Twilio in as a core dependency on a legacy application that check is never ever gonna stop coming in the mail.
- runako 10y ago
  This is a great comment because it is almost verbatim what was said about Amazon. Actually, this is still frequently said about Amazon's retail operations. I remember talk that eBay was a better business than Amazon because they had network effects and were thus more defensible. Oops. Also worth noting: Amazon wasn't the 800lb gorilla when they filed their S-1 (valuation: $438mm).
  - toomuchtodo 10y ago
    Want to make a long bet? I bet you Twilio doesn't turn into that gorilla. AWS is a far cry different than Twilio.
    - runako 10y ago
      1) AWS != Amazon. Amazon went public 10+ years before AWS launched. AWS is a tiny part of Amazon's revenue today. You moved the goal posts! We were discussing a money-losing Internet retail pure-play; you're comparing to a heavily-subsidized (via start-up capital etc.) tech services pure-play. 2) Which is another key point: the prospects of the company at IPO are very different from the company today. A bet on AMZN today is largely a bet on AWS, which is very different than a bet on AMZN in 1997. If Twilio continues to succeed, it will be because they can use this investment to grow into a stronger long-term position. I don't know Twilio well enough to take a bet either way. I'm just pointing out that most smart people (you, even, perhaps?) didn't think Amazon would be that gorilla, either. And that was the correct bet, which just happened to turn out wrong. So if forced to bet, I bet with statistics (against Twilio). But only because building that gorilla is insanely hard (and depends on luck) and not for any of the reasons you've cited.
      - deleted 10y ago
        [deleted]
      - nopzor 10y ago
        He definitely moved the goal posts, but remember that AWS is most of Amazon Incs _profit_ today. Also, AWS is a small-ish part of Amazons _revenue_ but given the relative growth rates that is less and less true every year. The reason why AMZN stock is so high currently has a lot to do with AWS.
karangoeluw 10y ago
It's just absurd that a company can't be profitable with 28M paying users some of which include Uber and WhatsApp.
- alex_sf 10y ago
  You're looking at it wrong. Twilio _could_ be profitable with 28M users, easily, but they'd rather not be profitable and spend more money on expansion.
- wodenokoto 10y ago
  They can but choose not to, seems to be what the parent is saying. You can look at it like they are borrowing 35 million a year on top of their profits in order to fuel their expansion
- bdcs 10y ago
  All nonprofitability means is they expect ROI on dollars spent today. In other words a dollar spent today will, in their model, increase their future (discounted) free cash flow. In even more words, profit is when a company runs out of investible ideas (within the assumptions of their hopefully convincing model). The size of the company has nothing to do with it (canonical example is Amazon where you can change the 28M users to at least 280M and rev in the billions).
- afarquhar 10y ago
  it says "In thousands, except share, per share and customer data" - so it may be 28 thousand accounts. May have misread this though https://www.sec.gov/Archives/edgar/data/1447669/000104746916013448/a2227414zs-1.htm#dk43901_selected_consolidated_financial_and_other_data https://www.sec.gov/Archives/edgar/data/1447669/000104746916...
- chrdlu 10y ago
  It's not that they can't be profitable. It's more along the lines that they are re-investing all of their profits to grow the business. The market Twilio is in has plenty of room to grow and Twilio has to aggressively capture it or else someone else will. If they wanted to become profitable, they can. They're just spending a lot to continue to double every year.
eeeeeeeeeeeee 10y ago
Isn't Amazon only profitable because of AWS? If you cut that out or put AWS into a separate company, Amazon still wouldn't be profitable as a company if I remember correctly.

deleted 10y ago

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