

How Twilio Might Raise their 50M Series D - josh2600
http://thepbxblog.com/2013/05/20/how-twilio-might-raise-their-50m-series-d-round/

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orangethirty
Is Twilio profitable?

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hendzen
Probably not. There's a lot of competition (Plivo, Tropo, etc) in this space
now, so they have to keep their rates low.

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neya
Can you please give me a brief reason as to why not? I have no clue as to what
might be expensive for them and so forth. I know what they do and how their
service works, though. As a developer, I mean.

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hendzen
This is complete speculation by me, so take this with a grain of salt. Their
product has essentially been commoditized - there are so many companies
offering telephony APIs that they _probably_ cannot charge prices that are
high enough to offset the costs of paying ~100 developer salaries.

Companies with similar products:

\- Tropo

\- TelAPI

\- CallFire

\- SendFlow

\- Holio

\- Many more (see: <http://www.quora.com/Who-are-Twilios-competitors>)

If you look at the pricing of all these offerings, you will immediately notice
that they all are pretty much the same. What this tells me is that there is
enough competition in this space that the margins are likely very low.

Edit: fixed a typo (CalFire -> CallFire)

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orangethirty
That's a good point. They seem to be making the same thing. Didn't really see
much difference in the offerings. Though Twilio seems to have a better brand.
How much have they raised over time?

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josh2600
33.5M so far.

Twilio has the best documentation of any Communications API vendor, but their
issue when working with large operators is their inability to work inside the
corporate firewall. They're on AWS with a lot of servers and it is not a part
of their strategy to build a new infrastructure inside of someone else's
firewall. Voxeo does build inside the firewall, but they're a lot harder to
understand.

There's a lot of confusion about who does what in our industry, even Twilio is
what I'd describe as an access-innovator.

In Telecom the change that's happening right now is the exposure of underlying
communications services. Companies like Twilio are taking services like calls,
SMS and Video connections and creating APIs to consume these services. Right
now, there's no easy way to do these things programmatically.

Companies like 2600hz, where I work, take a different approach where we're
actually working on the underlying infrastructure (not so much on the API). In
this respect a company like Voxeo is much more competitive to Twilio.

Callfire is a call-application service and not really competitive to a Twilio
or a Plivo.

So yeah, lots of stuff going on, very complicated. Most folks are working on
the access layers or applications and not the underlying infrastructure.

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orangethirty
85.5 million in funding if this round is to be closed. Chump change to what
they are working on cracking open. Like you said, the work they are doing is
more on the industry than anything else. Who knows where they might pivot to
once telecoms open up a bit more.

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josh2600
Interesting point: what is Twilio's addressable market in your opinion?

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orangethirty
I don't know the market that well, aside from doing some analysis on some of
the telco securities (for my own use). Though they seem to be building
themselves to be a next-gen telco.

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josh2600
That's what I thought at first, but they're not. Next-gen telco has a lot more
hardcore infrastructure; Twilio is building next-gen DEVELOPER infrastructure,
which is a huge addressable market but < than all of Telco.

So how big is their market? Certainly >$1B but <$10B in the next 3 years.
After 3 years though it could start to eclipse the greater telco ecosystem.

It's tough; I'd say there's some potential for them to build next-gen Telco,
but I think they're more concerned with Next-Gen APIs than core
infrastructure. My $.02.

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orangethirty
Yes, exactly. A next gen telco will simply use the infrastructure that is
already there. No need to re-invent the wheel. It is paid off and profitable.
All the next-gen telco needs to do is simply open it through APIs. That would
allow them to circumvent a lot of the issues with doing a completely new telco
from the gound up.

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josh2600
Yeah, I don't know if I agree with that. There's a whole web of glass and
conduit that has to be maintained. Someone still has to link all of those
nodes together.

Twilio can consume the application business, but I'd be surprised to see them
consume the core infrastructure.

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orangethirty
That's what the infrastructure owner will do. It might be the old telcos, it
might be the government, or even a new type of utility company. The
infrastructure will be maintained. Though the new type of telco can operate
with the old ones. They will simply buy them out.

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josh2600
I don't know if you've noticed, but AT&T has a $200B market cap... Twilio
isn't going to be buying them out anytime soon...

I disagree with the concept of the government taking over the Telco grid;
that's not going to happen in the US.

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orangethirty
I meant AT&T or other buying twilio. In terms ogf government, the auto
bailouts set a precedent for others to follow.

