Twilio Stock Rockets Past IPO Expectations

June 24, 2016 | Raj Srivastav

As an app and custom software development company, we’ve worked with the Twilio API in countless projects. We’ve long respected the tech they’ve built, the services they offer, and the support they provide to us and our clients.

Which is why we have eagerly anticipated the Twilio IPO date – today. Before last week, Twilio expect their stock to open at a fair price of $12 to $14. Just a few days ago, they updated that to $15; but today when the IPO hit the market, it opened at 60% above that – about $24 a share.

At the time this post was written (just a few hours after the opening bell was rung) the stock is up another 5% or $24.71 a share[*edit* Stock was up 70% above expectations by noon]. That officially puts Twilio on the list of so-called “Unicorns.” These are startups with a valuation of over $1 billion (Twilio is now worth $1.2 billion). Twilio raked in about $150 million on the IPO alone!

Some of the entrepreneurs and SMB owners who read this blog may know of the Twilio API. But for the average joe, Twilio isn’t probably all that well known. It’s not in the public eye like Facebook or Oculus, or even like WhatsApp.

So why don’t we talk about what Twilio does and why nearly 1 million developers have an account with this Tech startup based in Mountain View (just a few miles from SDI’s Silicon Valley office!).

If you’re ready to move on, why not contact our development team to talk about how we can use the Twilio API to grow your app or software business? We know how to get the most out of Twilio, as well as other APIs & SDKs. Build your own WhatsApp-style SMS app in 30 days or less.

Communications and PaaS

Twilio is a Business-oriented Platform-as-a-service, or PaaS. More specifically, is a cloud-based Communications PaaS. To translate: Twilio is basically a platform which businesses use to communicate with their customers.

This is more than just a text/SMS message; Twilio enables businesses to have web-based phone calls and video calls. It’s not Whatsapp; it’s quite literally the tech upon which Whatsapp is built.

This fact is why Twilio is well known to the average gal and guy. You won’t find the Twilio app on your phone, because it doesn’t exist. But, as mentioned above, WhatsApp is a client of Twilio (accounting for about 17% of all Twilio’s revenue, in fact).

And the big name clients don’t stop there for this San Francisco-based Tech Startup:

♦ Uber;

♦ ZenDesk;

♦ Affirm;

♦ Polaris;

♦ Nordstroms;

♦ Coca-cola;

♦ Walmart;

♦ Alaska Airlines; and

♦ Home Depot.

And those are just some of the big accounts. Twilio supports hundreds of applications and software – many of those apps and programs built by SDI! The mixture of old-school companies like Home Depot and Nordstroms with tech companies like Whatsapp and Uber is what should really stand out here. Plus, the countless SMBs and Startups they support!

This indicates that businesses across all industries, old vs new, big vs small, see exceptional value in a service like Twilio. The fact that Twilio’s customers are primarily Developers is another good indication of a healthy company. Consumer-oriented businesses are drive-by communication and Twilio not only provides this service but they do a damned good job of it.

Twilio’s recent acquisition of Authy (February 2015), an end to end encryption service, will only serve to make Twilio even more useful. We are moving towards a society more concerned about protecting sensitive information transmitted over the internet (i.e. Digital encryption).

Obviously, this concern necessitates a rise in secure communication services – as Twilio has recognized. Their purchase of Authy will open up new industries for the PaaS company, from the Medical industry to B2B services.

Hopefully, we’re all a little clearer about what Twilio does and why it’s so important to developers and SMB owners. But that’s not the real story here. This is also the first IPO of a Cloud-based company and, more importantly, this is the first IPO of a Venture Capitalist-backed Unicorn.

What does that mean? This is the first real test to see if these rare billion-dollar startups are truly worth the money poured into them. So who is the lucky VC firm that decided to offer seed and later series funding to this startup? Bessemer Venture Partners.

The Real Winners …..?

For all intents and purposes, the Twilio IPO is a major test case for Tech Startup Investors. Bessemer has made a big risk with this company. Through Series B and Series C rounds, Bessemer has invested roughly $70 million in this company.

This gives Bessemer the domineering share of Twilio stocks at 28% – even engulfing Twilio CEO Jeff Lawson’s stock share of 11%. And up to this point, there has been some concern that, despite Twilio’s apparent popularity, this would turn out to be a costly mistake for Bessemer.

Why? When you look at some of the numbers, Twilio seems to be doing quite well. After all, they increased their revenue by a staggering 88% in 2015, to a lump sum of $166 million. As mentioned earlier, this IPO alone made them another $150 million.

But Twilio is currently not producing revenue. In fact, they are losing money; less and less every quarter but they still lost $35 million last year. Without the Venture and Angel investment support for Bessemer and others, Twilio would probably have folded before it launched.

In other words, this is a closely watched event. It will tell us market analysts if these ‘unicorn’ companies will make us as much money as we’ve been hoping. The good news is that so far the Twilio IPO has far surpassed expectations and is likely to validate the hopes and wishes of many an investor.

About Raj Srivastav and SDI

I built this company from the ground up nearly 20 years ago – and haven’t had a full night’s sleep since! SDI specializes in tech development, but we’re not here just to be a tech monkey. We’re here to be your partner; when our clients grow, we grow.

I have spent many years developing one of the most robust VC and Angel Investment networks in the Bay Area. I have trained my team on how to make an Investment pitch unlike any other. And I have trained my team to make fully functional demos to truly wow potential investors.

Want to learn more about how you can get some of that venture series round funding? Contact me or call at 408.805.0495 for a free consultation.

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