This is a great comment because it is almost verbatim what was said about Amazon. Actually, this is still frequently said about Amazon's retail operations.
I remember talk that eBay was a better business than Amazon because they had network effects and were thus more defensible. Oops.
Also worth noting: Amazon wasn't the 800lb gorilla when they filed their S-1 (valuation: $438mm).
1) AWS != Amazon. Amazon went public 10+ years before AWS launched. AWS is a tiny part of Amazon's revenue today. You moved the goal posts! We were discussing a money-losing Internet retail pure-play; you're comparing to a heavily-subsidized (via start-up capital etc.) tech services pure-play.
2) Which is another key point: the prospects of the company at IPO are very different from the company today. A bet on AMZN today is largely a bet on AWS, which is very different than a bet on AMZN in 1997. If Twilio continues to succeed, it will be because they can use this investment to grow into a stronger long-term position.
I don't know Twilio well enough to take a bet either way. I'm just pointing out that most smart people (you, even, perhaps?) didn't think Amazon would be that gorilla, either. And that was the correct bet, which just happened to turn out wrong.
So if forced to bet, I bet with statistics (against Twilio). But only because building that gorilla is insanely hard (and depends on luck) and not for any of the reasons you've cited.
I am taking that long bet. I am a Twilio system integrator and have been a super fan for almost 5 years. I believe they will become that gorilla. In their growth strategy from the S1 their goal is to expand focus on the enterprise which from where I sit is going to be the way they turn into that gorilla.
As they move into that enterprise market their competition is not the telcom API providers https://www.quora.com/Who-are-Twilios-competitors It will be the large monolithic (on prem or in cloud) products like Genesys, Aspect, Avaya, Cisco, etc which represents a huge market.
If you believe the logical market trends they lay out, and I do, that:
- agility in the way software is developed and deployed (the move towards continuous integration) drives innovation
- the availability of services like Twilio that provide easy to integrate building blocks of functionality make it easier to build
- building rather than buying can allow enterprises to differentiate service
Then you can see how Twilio will start eating into that $45B market while staying way out in front of those other telcom API providers who may see the same trends. Going public with all the scrutiny that comes with it I am sure is part of that strategy. Even if the big guys start buying the smaller API providers as Cisco did with Tropo they are not going to cannibalize their existing monolithic communication business.
So I believe if Twilio can help drive those trends specifically in the communication software space then I believe they will win big. Just like AWS started selling a means to provision and scale servers out quickly but today sell a whole suite of tools to transform the way infrastructure is managed and software is deployed Twilio will go from automating calls and sms to transforming how enterprise build and deploy software to communicate with customers.
Not by most standards of stickiness. They don't have my data. They don't have a monopoly. There aren't any network effects that I can think of (they've worked the one angle here as well as they can -- developer mind share).
I'm not saying they aren't a good business, but I wouldn't call them particularly sticky, any more than Rackspace is sticky. Infrastructure is a hard business to be in.
Exactly. I didn't mention Rackspace idly -- they used to have huge developer mindshare back in the day. Didn't save them, and it won't save Twilio if they can't find something truly sticky to keep people on their platform.
I would argue that the stickiness is derived from enterprise. If you get Twilio in as a core dependency on a legacy application that check is never ever gonna stop coming in the mail.
You can be Amazon when you're the 800lb gorilla. Twilio is not that gorilla.