◼ TECHNOLOGY Bloomberg Businessweek March 1, 2021
Twilio Enjoys a
Pandemic Boo
st
19THE BOTTOM LINE Twilio, a software company that sends
automated text messages for companies, is aiming to build on its
massive revenue gains during lockdowns.THE BOTTOM LINE After outmaneuvering deep-pocketed rivals
such as Alibaba and Yandex, Bakalchuk controls 14% of web sales
in Russia, double the share of her closest competitor.
company’s pickup stations, where they can try on
clothes and return items that don’t fit. In response,
Bakalchuk quickly hired 20,000 people to bring
goods to homes. She says the approach reduced
delays but was too expensive, so she trimmed the
delivery staff and again emphasized pickup points,
which today account for 90% of orders. “When your
sales are doubling but costs grow even faster, you
can drown,” she says.
Bakalchuk says she aims to keep expanding selec-
tion to include medication when regulations allow,
as well as more consumer electronics, kitchenware,
and liquor. And she just bought a small Moscow
bank as the line between e-commerce and finance
increasingly blurs, with the country’s biggest lender,
Sberbank, purchasing online retailer Goods.ru and
Yandex NV—Russia’s answer to Google— starting a
payment service. “The market has grown, and seri-
ous players are jumping in,” Bakalchuk says. “The
race in Russia is just starting.” �Ilya Khrennikov and
Jake Rudnitsky, with Alexander Sazonov
● After a stunning ascent, the software maker
prepares for the end of Covid
One of the stranger consequences of the pandemic
has been the emergence of a class of arcane tech
companies facilitating some small part of the stay-
at-home experience and that are now suddenly,
improbably hot: Shopify (for online stores not
named Amazon, market cap: $161 billion, as of late
February), Atlassian (for virtual workplace collabo-
ration, $60 billion), and Snowflake (for cloud-based
databases, $76 billion). But none of those have
seen their stock prices rise as quickly as Twilio,
which is worth $63 billion, up from just $10 billion
on March 16.
The technical services provided by Twilio
Inc., like those offered by its peers, are difficult to
explain to civilians. The company offers an “appli-
cation programming interface”—cloud-based
software, basically—that companies use to make
calls or send automated text messages to their
customers. The security alerts asking you to verify
your account on the digital payments service Stripe
come from Twilio, as do those from DoorDash
informing you that your dinner is on its way. Each
time a message is sent or received, Twilio charges
three-quarters of a penny. The company also offers
software that helps businesses manage email mar-
keting campaigns and operate call centers, using
the same pay-per-use model.
The money is adding up, especially as more
communications happen online. In mid-February,
Twilio announced $550 million in quarterly reve-
nue, a 65% increase over a year earlier. The surpris-
ingly high figure—almost $100 million more than
analysts had expected—sent the company’s stock
up 8% the following day to close at an all-time high.
“Every company is having to figure out how to use
digital technology to engage their customers,” Chief
Executive Officer Jeff Lawson says. “Covid acceler-
ated that, but it was already the trend.”
This has become something of a mantra for
Lawson, 43, who co-founded the company in 2008
and who’s the author of Ask Your Developer: How to
Harness the Power of Software Developers and Win
in the 21st Century. While nominally about motivat-
ing and attracting software engineers, the newly
published book has doubled as a way for the pre-
viously little-known company to generate buzz—
or at least what passes for buzz in the world of
business-to-business software. The title mirrors a
billboard Twilio rents in San Francisco that urges
executives to “Ask your developer” about Twilio.
Techie-focused marketing served the company
well even before the pandemic, but Covid-19, and
the shutdowns that followed, caused usage of Twilio
to climb and also brought new customers— including
telemedicine providers and health departments who
use it to run contact-tracing operations. The 2020
election didn’t hurt either, as campaigns and outside
groups using the service to call and text voters paid
out $23 million in the fourth quarter alone.
Of course, that strength could wane as more
people are vaccinated and life returns to pre-Covid
norms, but Lawson says Twilio will benefit from the
vaccine rollout since it operates vaccine hotlines in
several states. Moreover, big companies including
JPMorgan Chase & Co.—which Twilio announced it
had signed up in February—seem to be betting that
consumers will stick to their new digital habits. “Is
everyone itching to go back to their bank branch?”
Lawson asks. “No. This is a digital experience now.”
�Max Chafkin▼ Twilio share price1/3/20 2/19/21$4002000