How Twilio made it easier for Nike and Uber to chat with you

In this weekly series, CNBC takes a look at the companies that made the inaugural Disruptor 50 list 10 years later.

The rapid shift to digital customer engagement was already underway.

Then the pandemic hit.

With physical locations closing or foot traffic lessened, there were suddenly fewer ways to connect with consumers, leading companies to further accelerate this pivot to put digital engagement at the forefront of the commercial strategy.

It’s a landscape that former CNBC Disruptor 50 Twilio built itself towards.

Speaking to CNBC in 2014 when the company was named to the Disruptor 50 list for the second time, co-founder and CEO Jeff Lawson said Twilio was “migrating a 150-year-old hardware industry into its future in the software,” comparing what it was changing the way companies communicated with their customers versus what Amazon did for technology infrastructure and Salesforce did for CRM.

Founded in 2008, the San Francisco-based company spent its early years convincing developers to use its application programming interface to add calling, voice, text and picture messaging to their apps, among others.

Delivering this level of communication enhancement won early support from customers like Airbnb, Home Depot, Uber, and Walmart. It also helped Twilio raise nearly $240 million from investors like Bessemer Venture Partners and Redpoint Ventures, resulting in a valuation of nearly $1 billion by 2016.

The promise of digital customer engagement led to the company’s IPO in June 2016 after making the Disruptor 50 list four times.

“This is literally day one of converting communications from its legacy in hardware and physical networks to its future, which is software-based,” Lawson said on CNBC’s Squawk Alley on the day of the IPO. . “Where software developers, if they can figure out how we can communicate better – maybe with a company that we do business with – that developer can start from Twilio. And if it works, scale it.”

The six years since have brought a massive transformation, perhaps none accelerated more by the pandemic. Speaking to CNBC’s Jim Cramer on “Mad Money” in 2020, Lawson said “the trends that have already played out in our society around digitizing these processes, streamlining them with this technology, and transforming so many digital interactions, these trends have all become accelerated by the Covid.”

Overall, Lawson said, the pandemic has accelerated digital communications strategies by about six years for companies.

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This led to a massive rally in Twilio shares from $99.43 at the end of 2019 to over $400 in February 2021.

Lawson told CNBC in January 2021 how Nike, which uses its products, had rotated some of its sales associates in stores to serve customers on its digital channels. “Now when Covid has arrived, those stores have closed and Nike has gone 100% e-commerce, that product knowledge and way of serving customers has become absolutely essential to helping customers online,” a- he declared.

But as the world has reopened, there has been some skepticism about the digital economy’s ability to continue growing at the same rate, a trendline that has been further impacted by rising inflation and falling prices. consumer spending. Twilio, while its revenue continues to grow, has seen its stock price drop 74.8% in the past year.

Barclays analyst Ryan MacWilliams recently wrote in a note that Twilio could be at an inflection point, possibly embarking on “higher profitability, lower growth.” The company had said it expected to make operating profit on a non-GAAP basis in 2023. Lawson, speaking on CNBC on June 6, said the company was “laser focused” on become profitable.

But just as Twilio is now focused on his bottom line, he sees an even stronger case for this transformation of digital customer communication, a world he believes delivers more personalization and trust, and ultimately a better customer. Twilio research suggests that there is an average 70% increase in revenue from investments in digital customer engagement.

“In an environment like this where every business is focused on profits right now, there’s a period of time where understanding the ROI of your investments, looking at the bottom line – that’s what every business , technological or otherwise, is focused in an environment like this,” Lawson said on June 6. “Once you’ve acquired that customer, reconnect with them through messaging, better campaigns, and better marketing, all personalized with what that customer wants — that’s the equation that makes the internet work.”

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