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This will continue until they figure out how to get more high value companies to sign contracts. So they can further concentrate their revenues? I'm sorry, no

This will continue until they figure out how to get more high value companies to sign contracts. So they can further concentrate their revenues? I'm sorry, no, that's exactly the worst thing they can do. I'll refer you to this piece: https://www.inc.com/magazine/201206/jason-fried/huge-accounts-make-me-nervous-it-takes-a-village.html https://www.inc.com/magazine/201206/jason-fried/huge-account... As mentioned in the TechCrunch article, this is precisely Twilio's problem. Revenue concentration is incredibly dangerous for long-term prospects of any operating business. Twilio needs to broaden their revenue base to stabilize it, not find a few more whales that will dictate their future.

sologoub 9y ago
Twilio's concentration problem is different from their volatility problem with these big players if there isn't a long-term contract with minimums in place. The revenue concentration problem is well documented and I don't think we add much to that discussion. The revenue volatility problem is inherent to how short-lived their actual product is - SMS and phone calls are ephemeral, measured in seconds to minutes. As the result, without contracts, the only thing that is stopping the outbound traffic from flip flopping providers are some business rules baked into the implementation. (Inbound traffic has phone number lock-in, which is why we don't change cell providers on a weekly basis.) For Uber, that business logic is pretty straightforward on their largest volume SMS, making multi-vendor flip flop based on rates fairly easy. Long term contracts with guaranteed minimums will absolutely protect Twilio from this volatility. It's not lock-in or concentration, but rather way to have more predictable revenues and manage working capital. In parallel to trying to get long term contracts/guaranteed mins, Twilio should be (and is) diversifying their customer base.
dkrich 9y ago
Problem is that it's the whales that make them a $3 billion company. Snag one Uber or Facebook and that's worth about a million small SaaS companies (I actually don't think that's an exaggeration). Yes, if they leave you're in deep trouble, but that's the business they're in. To acquire the number of smaller companies that would account for the number of SMS messages that Whatsapp sends would require so much time I think this stock would trade to zero long before that would ever happen, if it were even possible to do.
- deleted 9y ago
  [deleted]
- nebabyte 9y ago
  > Yes, if they leave you're in deep trouble, but that's the business they're in Yep, your job is then to ensure they don't leave. "All your eggs in one basket and WATCH THAT BASKET" and all that
- busterarm 9y ago
  We're probably spending close to $200k/year for another company's services that we're looking to build on Twilio to save money. We'd probably end up paying 1/3 of that on their service. We're just one company but there are many tens of thousands of companies with the exact same LeadGen problems that we have to solve that just don't have dedicated engineering teams attached to them yet like we do. There are many other things that we could do on Twilio that would increase our spend once that foundation is laid too that we can't do now and we would like to. We need zero touch from Twilio salespeople to make this happen -- it really only costs them in infrastructure. I would be willing to bet that Twilio spends huge amount of money wine & dine-ing Uber and WhatsApp. Our (big internet advertising company, you fill in the blanks) rep sure does take good care of us.
josh_carterPDX 9y ago
I believe they're doing that. They've introduced two new products out of beta these past two weeks. My hunch is that they'll continue to find paths to long-term and more predictable revenue to mitigate the anxiety we're seeing with the stock. A lot of people don't really understand what Twilio does and its value proposition within the investment community. It's tough to sell this as a viable investment option if you don't truly understand what the platform does. I do think this is just temporary. They'll bounce back. It'd be a good time to double down on the stock.

sologoub 9y ago

Twilio's concentration problem is different from their volatility problem with these big players if there isn't a long-term contract with minimums in place. The revenue concentration problem is well documented and I don't think we add much to that discussion. The revenue volatility problem is inherent to how short-lived their actual product is - SMS and phone calls are ephemeral, measured in seconds to minutes. As the result, without contracts, the only thing that is stopping the outbound traffic from flip flopping providers are some business rules baked into the implementation. (Inbound traffic has phone number lock-in, which is why we don't change cell providers on a weekly basis.) For Uber, that business logic is pretty straightforward on their largest volume SMS, making multi-vendor flip flop based on rates fairly easy. Long term contracts with guaranteed minimums will absolutely protect Twilio from this volatility. It's not lock-in or concentration, but rather way to have more predictable revenues and manage working capital. In parallel to trying to get long term contracts/guaranteed mins, Twilio should be (and is) diversifying their customer base.

dkrich 9y ago

Problem is that it's the whales that make them a $3 billion company. Snag one Uber or Facebook and that's worth about a million small SaaS companies (I actually don't think that's an exaggeration). Yes, if they leave you're in deep trouble, but that's the business they're in. To acquire the number of smaller companies that would account for the number of SMS messages that Whatsapp sends would require so much time I think this stock would trade to zero long before that would ever happen, if it were even possible to do.

deleted 9y ago
[deleted]
nebabyte 9y ago
> Yes, if they leave you're in deep trouble, but that's the business they're in Yep, your job is then to ensure they don't leave. "All your eggs in one basket and WATCH THAT BASKET" and all that
busterarm 9y ago
We're probably spending close to $200k/year for another company's services that we're looking to build on Twilio to save money. We'd probably end up paying 1/3 of that on their service. We're just one company but there are many tens of thousands of companies with the exact same LeadGen problems that we have to solve that just don't have dedicated engineering teams attached to them yet like we do. There are many other things that we could do on Twilio that would increase our spend once that foundation is laid too that we can't do now and we would like to. We need zero touch from Twilio salespeople to make this happen -- it really only costs them in infrastructure. I would be willing to bet that Twilio spends huge amount of money wine & dine-ing Uber and WhatsApp. Our (big internet advertising company, you fill in the blanks) rep sure does take good care of us.

josh_carterPDX 9y ago

I believe they're doing that. They've introduced two new products out of beta these past two weeks. My hunch is that they'll continue to find paths to long-term and more predictable revenue to mitigate the anxiety we're seeing with the stock. A lot of people don't really understand what Twilio does and its value proposition within the investment community. It's tough to sell this as a viable investment option if you don't truly understand what the platform does. I do think this is just temporary. They'll bounce back. It'd be a good time to double down on the stock.