
Twilio S-1 Amendment - coloneltcb
http://www.sec.gov/Archives/edgar/data/1447669/000104746916013776/a2228886zs-1a.htm
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gz5
Looking at their buy-sell margins, Twilio has successfully changed the telecom
paradigm, or at the least the vanguard of it. That is Big. APIs instead of
circuits. Microservices instead of canned products.

I say that because this shows Twilio is both charging a (small) premium
compared to traditional telcos, and have a less expensive operating model.

Most of their success is with startups and SMBs. It will be interesting to see
their enterprise traction because Twilio's model puts the enterprise software
developers and business units towards the front of the "buy" decisions, rather
than traditional enterprise IT and telco teams.

~~~
exelius
> Looking at their buy-sell margins, Twilio has successfully changed the
> telecom paradigm, or at the least the vanguard of it. That is Big. APIs
> instead of circuits. Microservices instead of canned products.

Telecom had already been headed that way for the better part of the last
decade. Twilio doesn't own any infrastructure, and the expensive part of
telecom has always been operating the legacy infrastructure.

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JumpCrisscross
From the first pages, a huge middle finger to new investors:

"We have two classes of common stock, Class A common stock and Class B common
stock. The rights of the holders of Class A common stock and Class B common
stock are identical, except voting and conversion rights. Each share of Class
A common stock is entitled to one vote. Each share of Class B common stock is
entitled to 10 votes and is convertible at any time into one share of Class A
common stock. The holders of our outstanding Class B common stock will hold
approximately 98.6% of the voting power of our outstanding capital stock
following this offering, with our directors, executive officers and
significant stockholders holding approximately 66.2%."

~~~
rst
Obnoxious, perhaps, but not unprecedented; Google and Facebook have similar
structures now, and it's not unprecedented outside the tech industry. (The
Ford family used this kind of structure to keep control of their Motor
Company.)

~~~
JumpCrisscross
> _[This is] not unprecedented; Google and Facebook have similar
> structures...[t]he Ford family used this kind of structure... "_

Alphabet's B shares hold 64% of its voting power [1]. Zuckerberg controls 57%
of Facebook's votes [2]. And Ford's Class B shares hold 40% of the voting
power [3]. Selling the public 10% of your company while retaining 99% of the
vote is a _huge_ red flag.

[1] [http://www.investopedia.com/articles/markets/052215/goog-
or-...](http://www.investopedia.com/articles/markets/052215/goog-or-googl-
which-google-should-you-buy.asp)

[2] [http://venturebeat.com/2012/02/01/zuck-power-
play/](http://venturebeat.com/2012/02/01/zuck-power-play/)

[3] [http://venturebeat.com/2012/02/01/zuck-power-
play/](http://venturebeat.com/2012/02/01/zuck-power-play/)

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ProfChronos
That gives a market cap of $1.15bn (82,200,793 shares*$14/share). Based on
public information, Twilio's revenue run rate would be around $150M, so that's
x8 for Revenue and x20 for EBITDA (40% margin seems reasonable in the telcos
industry). Fun fact: AT&T market cap is $248Bn, x5 EBITDA. Just thought it
would be funny to compare the two

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namenotrequired
Previous discussion, before the current amendment:
[https://news.ycombinator.com/item?id=11779453](https://news.ycombinator.com/item?id=11779453)

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btbuildem
$14/share @ 11.5M shares

Title of Each Class of Securities to be Registered: Class A common stock,
$0.001 par value per share

Amount to be Registered: 11,500,000

Proposed Maximum Aggregate Offering Price Per Share: $14.00

Proposed Maximum Aggregate Offering Price: $161,000,000

~~~
imaginenore
Twilio finished 2015 with a $35.5 million loss on revenue of $167 million. For
the year, it listed research and development costs of $42.6 million and a
combined $85.3 million in operating expenses.

I'm not sure if that justifies $161M market cap.

~~~
harryh
161M isn't the market cap. It's the value of the shares they plan to sell at
IPO.

With 82,200,793 shares outstanding after IPO if the price holds at $14 that's
a market cap of 1.15B.

~~~
sologoub
About 7x revenues. That's a pretty high multiple, but hopefully they can pull
it off.

Recent IPOs weren't nearly as aggressive, but of course different industries.
Will be interesting to see how investors react to lack of long term customer
commitments and instead relying on tech integration stickiness to drive repeat
spend.

~~~
elsewhen
investors primarily care about future profits. trailing twelve month revenues
are just one of many potential indicators of future profit. a 7x multiple of
revenue _is_ very high for a slow or no-growth company, but for a high growth
company, it can be very reasonable.

~~~
sologoub
Not saying it couldn't be, but as of late the overall market seems to be more
pessimistic and therefore discounts prospects of future earnings more than
usual. That said, I'm no expert.

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tacos
Excellent. I shall re-send them an undisputed invoice they haven't managed to
pay since 2011. Great tech, total amateurs running the business side. Proof
anyone can IPO if you pay the right people the right fees.

Edit: downvote away, boys. Doesn't change the facts.

I apologize if this real world example of how Twilio runs their business is
out of place in this Twilio thread where they're asking the general public for
$160 million to fund a business that doesn't make money.

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overcast
Serious question, what does Twilio need to go public for? They have a solid
business model, with huge companies using them. Is this just so venture
capitalists can get paid out? Edit: I guess this has been asked, and answered
in the previous thread.

~~~
pbreit
One of the few companies that can benefit in a non-financial way. For a core
service like telecom, the scrutiny in being public is comforting to
prospective enterprise customers. Company is almost 10 years old so pretty
reasonable, if late, timing.

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gloves
It's purely subjective, but I really wish Twilio well for this - something
about Patio11 speaking highly of them probably.

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treve
Resident of Canada here with 0 experience in investing. What steps can I take
to invest in this company right from the onset of their IPO?

~~~
kasey_junk
It will be virtually impossible for you to be involved in their IPO. You can
contact your brokerage and see if you can be involved but usually there is
either a restriction based on how much money you have in your brokerage
account or how many transactions you have participated in. As a new investor
they are likely just going to say no.

That said, if you can wait until _just past_ the IPO you will be able to
purchase shares just like any other symbol.

~~~
treve
Thanks a lot! I'm going to assume I just have to wait a little bit and figure
out how I'd purchase shares the regular way.

~~~
zymhan
Well the IPO has to actually happen before you can buy the shares on a normal
exchange. This is just a filing with the SEC for a proposal to have an IPO.

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abpavel
I like how the SEC filings now contain slides like from a round pitch. "Here
is a graph. Here are reference. Buy our stock. Go technical! Underlying?,
meh... we chose not to"

~~~
rpedela
A good pitch deck is like a prospectus summary. So yes, there should be
similarities.

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martinshen
I have a very difficult time understanding how Twilio can justify such a high
flying IPO ($1B+ mkt cap). This is a classic business (Enterprise PBX and
Services) with lipstick on it. Look at Polycom, Mitel and Alcatel-Lucent as
their comps and try to justify these multiples.

That said, I respect Twilio a lot. They've been a great innovator.

~~~
jMyles
> This is a classic business (Enterprise PBX and Services) with lipstick on
> it.

In this case that "lipstick" is one of the most popular APIs in the startup
world - you'll need to face the fact that this is a big selling point.

~~~
dexterdog
They have great APIs, but from what I have seen and used them for they wrap a
bunch of services that have no stickiness. If I am using their API today and a
competitor comes out tomorrow that will save me 10% it will make total sense
to switch as it will be seamless to my users. I also don't get their pricing
models at all. For the tiny guy, it's free. For the slightly larger guy it is
the most expensive per use and then it tapes off so that the big users pay a
fraction of that. Why should text message number 1 billion cost 1/8 what text
message one costs. They are either losing money on their big accounts
(doubtful) or they are severely overcharging most customers.

~~~
aviv
No need to wait until tomorrow. ALL of Twilio's existing competitors (and
there are many, and many more coming especially from the big telcos) will save
you much more than 10% for essentially the same range of services.

~~~
dexterdog
I'd be surprised if the telcos offer everything Twilio offers, but I would
expect them to be able to offer the biggest line item for me (SMS) more
cheaply.

