This is a typical cycle for a venture backed technology business. There’s just nothing else to say here other than this is 100% expected outcome if you decide to build a product on venture capital money, which requires an exit and an increasingly large exit to the point where you IPO.
Unless you avoid this structural pathway, you will be 100% guaranteed to do this.
I am unaware of a venture capital funded technology company that has maintained the core of what they do, and the value proposition, but didn’t push most of their money into paying for sales marketing executive compensation and eventually finally, stock buybacks, or other things that directly enrich investors at the cost of employees.
Having had a couple points with Jeff Lawson I believe he’s a good person who wants to do the right thing for the most amount of people and do it ethically, which is why he jumped into this thread. However, he faces the same pressures as everybody else, and so it’s honorable that he is attempting to find ways to mitigate the downside harms of this new direction but at the end of the day the arrow of history is clear.
Plenty of privately owned businesses IPO and become subject to the same forces. Less than 50% of publicly listed companies are VC backed.
If you avoid the venture investor route, you can avoid both outcomes (a) and (b), keep the company privately owned, just stay awesome and customer-friendly forever, and avoid being forced to eventually prioritize shareholders over customers.
They are (almost identical) to a dividend, which yes, enriches shareholders but
a) that's kind of the point of a business
b) especially in startups employees are often shareholders as well, and meaningfully so
c) even if they weren't, how do they hurt employees?
But it's not an entirely invalid viewpoint. There really is a lot of room for reasonable minds to disagree.
The public market is the idealized landing spot for VC and in fact is usually the default and desired pathway for all institutionally funded companies
To the extent that startup boards choose or heavily push a specific category of CFOs in order to drive company structure that would lead to an IPO.
Go look at the employee history of a lot of startups and you’ll see they either changed CFOs or got one for the first time, after a massive B but certainly not long after a C round.
I don’t think any CEO can be moral if your primary obligation is “shareholder value”. Or in plain language: making other people more rich at the cost of others.
I’m just happy the guy got out when the company didn’t align with his values anymore and he has the means to afford himself a conscience.
Not everything is zero sum. There is a reason that when you purchase something both sides say thank you.
I am really glad I am starting to see a lot more posts here on HN with regard to this fact. Capitalism is literally destroying everything and has proven itself not to be a viable system for long term sustainability and a healthy society and ecosystem.
Some of the smartest people on the internet aggregate on HN and some have still not figured this out. Either because 1) They haven't taken the time to look into the n-order knock on effects that are produced by capitalism in it's current form, or 2) they are too interested in self-enrichment to make any changes to behavior for their own comfort and convenience.
We should get of publicly traded corporations and Wall Street should disappear in my opinion. It is that publicly traded shareholder value that drives all the crimes against society/environment in this late stage. However, we are up against a severely selfish and entrenched minority with a ton of power who won't let that happen ... at the cost of everything.
As a former Twilio employee (and current stockholder), I have to disagree with this. Stock buybacks generally raise the stock price (or at least keep it from falling). Up until 2020 or so, Twilio was fairly generous with equity comp (at least for some of us; obviously I can't speak for all employees), so employees do indeed benefit from stock buybacks.
I suppose you could make the argument that, as a company spends cash to buy back stock, base salary raises get worse, since the company has less cash on hand to fund those raises. But I think you'd need evidence to back that up.
https://www.linkedin.com/in/jeffiel/
"CEO and cofounder of Twilio"
> and what thread did he jump into?
For all those interested in why we acquired Segment, and are focused on the integration of data and communications -- several years ago, we came to the conclusion that the world doesn't need more communications, it needs better communications. More relevant. More effective.
As a developer, I know that's really hard to pull all the threads together to make realtime personalization of every communication hard -- and Segment is so good at it.
So that's what we're focused on!
As an aside, the fraud and scam vectors of email, sms, and voice have grown a lot since we started the company 15 years ago. We are always fighting that cat and mouse game with the bad folks of the world. Are we perfect, no. But are we here to make money off those bad actors? Hell no. That's why we just launched fraud guard [1] for free to all Verify customers, and soon to all SMS customers as well. More to come like this.
Happy Father's Day (in the US) HN!
[1] https://www.twilio.com/docs/verify/preventing-toll-fraud/sms...
And to others reading: Miguel didn't say anything bad about Twilio really, just that the alignments for them aren't there - and that's ok. Maybe it back fires and Twilio adjusts back to its dev-focused strategy. Businesses just evolve as they need to. If Twilio ends up being "bad" it just means there's now a spot for someone else to form "The Good Twilio" :) See: the many Google competitors, the many smartphone competitors, the many VPN competitors, etc...
Probably my top issue with companies like Google which make a ton of money off of crime is... they keep the money from the crime! That's a perverse incentive to at least do a poor job preventing it.
I remember visiting the Twilio offices when it was still tiny during a Google Glass related thing. I still have the T-shirt.
For us, we typically work with customers who are victims of fraud and the first time, we give them advice on how to better protect themselves and then refund them ~ the amount of profit we would have made. Ie we recoup costs but that’s it. For the financially aware, this is bad for our gross margin and profit but we do it to help customers the first time. After that though we expect them do implement some defenses otherwise our incentives aren’t aligned. Now however, we have Fraud Guard rolling out which should prevent much of the fraud in the first place.
There are other forms of bad actors but that’s the most prevalent these days.
if you feel inclined, would really love your comment on OP's observation:
> Sadly, us developers are not at the center of everything anymore at Twilio.
it does seem the recent messaging has de emphasized that in favor of "Customer Engagement Platform". as the originator of "Ask Your Developer" (I read your book!) that has to sting a little bit. would love to hear your thinking on how Twilio continues to also engage developers in its next phase.
We can have good APIs and make a compelling case to the business why they should pay for it.
I agree that sometimes our engagement messaging isn’t quite right for developers. As a developer, I prefer more technical and matter of fact marketing of products. But interestingly, as a CEO, sometimes I need companies to simplify the message especially in a domain I’m not an expert in and don’t want to become an expert in!
For the entrepreneurs in the HN community, it’s talking features vs benefits. Developers love what a product does in a literal sense because they’re close to the implementation. Business folks tend to look for the benefit statements more as they’re not as close to the implementation. It’s a like to walk when you’re talking to both!
Well done!
Good to see that y'all are still pushing in the right direction! I left between the layoffs to pursue some innovation in the semiconductor space, but I look back fondly on my time at Twilio (Sendgrid)!
Building APIs into businesses is no easy task, but I'm glad that there are those still fighting the good fight, even if the field changes. Best of luck to the Twilio of the future!
I offer a virtual mobile number that does voice, txt and mms in Australia which could be globalised, interested in chatting?
If I understand the page for Fraud Guard correctly, this appears to cost money.
Seems like Twilio should be filtering spam (a) by default / auto-enabled for all and (b) at no cost to the user.
Much like how spam is included & auto enabled for all (and free) from Gmail/Outlook/etc.
Yes, fighting the good fight - doing god’s own work.
Common refrain from developers at SaaS companies who don't realize that the party they were enjoying all these years was directly funded by VC dollars, and these other people who they hate so much in fact do critical jobs and are necessary for converting all their work into a viable business.
Sure, you need sales, marketing and the rest of it; it does not mean that you need to forget what made you great in the first place.
The remainder of his post says only that their shift from focusing on one specialization (communications) to another (customer data and engagement) doesn't align with HIS values.
Now, that's ok. He doesn't have to be down for it. But it also doesn't prove how they're no longer for developers. They could still have the best API, documentation, and developer support in the game. They could pay developers well, respect their input, and their process.
And yet he doesn't speak to any of this. I want to know how Twilio is no longer for developers. What actually changed! That was his root proposition, and he doesn't address it or substantiate it ever.
Money doesn't magically show up at your doorstep even if your product is focused on developers. How do you think SaaS companies are able to hire developers? Do those $350k bay area salaries magically come from nothing? Yes, they often initially fueled by VC dollars, but eventually customer revenues pay for them.
The "anti sales" drivel from engineers on HN who are largely some of the highest paid positions in the world always puzzles me.
It's OKAY to be okay with Sales & Marketing in companies. It isn't some evil function, and discounting it means future entrepreneurs are doomed to fail.
Just because someone is hired for a position of a sales rep/account manager/business people, that does not mean they walk over water. Those positions attract plenty of types whose primary skill is to leverage their soft skills talent to latch themselves to a organization while delivering no added value at all.
A developer run and developer focused business could absolutely be a viable business. But it wouldn’t be the 10x hockey stick growth company venture capitalists demand and ultimately they hold the power here. So we get the inevitable.
Price, promotion, product, and distribution. You need all four.
Its a common problem in tech and finding the balance between the two is arguably a big part of long-term success for an org in this industry.
With the product-market fit nailed, a solid offering out there, Twilio now occupies that later stage, and the buildboard reflects it. Everything changes at this point, because it's also not the top priority of the company to keep their own engineering happy at this point.
The “Lower your aquisition costs by 66%” resonates with the CFO, who will drive past the board every day until he remembers to tell someone in passing to “investigate this twilio thing”. From there the cogs of the org start turning and 6 months later out rolls a several million dollar order for Twilio.
To everyone’s surprise the bill is 20% higher a year after release, but by that point everyone responsible for it has already been promoted.
I feel like it was never technology, especially in SaaS.
Sure you need some initial technical chops to get a service up and running, but after MVP —> PMF, it’s all marketing, momentum, consumer trust, your brand, etc.
For every successful SaaS (take Notion for example) it’s easy to say things like they never had a real competitor, but the truth is they had a lot of competition but they were able to overcome it and build a moat initially propped up by really good usability, but now their usability could easily go to shit and they’d still do well with a traditional sales/marketing moat.
Twilio is has always been a very unprofitable company. Unlike their SaaS counterparts Twilio's PaaS model has significant costs in the form of fees which they pay to network providers. They're also loved by bad actors who can leverage their service for fraud (search "toll fraud" if you're interested) and the ongoing effort and investment needed to counter this growing fraud problem is significant. What's more there's very little moat in a communications API so Twilio has little pricing power which only compounds the cost issues they face since they cannot easily increase prices to offset growing costs of an already unprofitable business model.
Basically the business model sucks. I'd argue it's one that can only exist in a world where investors are not interested in profits. Now interest rates are rising it's becoming harder for companies like Twilio to attract investors by posting revenue growth alone.
I don't think Twilio wanted to shift their focus, they simply had to. They had to find something that had more of a moat, and therefore better margins. Segment is the answer, but ultimately it's a different product which understandably requires a different focus. If you sell a communications API then developers are the people whom you must evangelise, but Segment is a product used by business folks to grow their business.
I don't envy the position Jeff and Twilio's management team are in. They've had to make some really tough decisions, but if you like Twilio then I'd see this simply as them doing what they need to do to survive and continue providing the awesome developer focused products they provide.
I'll also note that unlike Facebook's mass layoffs Twilio's layoffs weren't simply done to increase profitability, but needed to right side a business that's currently burning over $1 billion a year.
And Twilio is wholly incompetent when it comes to battling this. Not only are they unable to keep bad actors off, they punish good actors. They require "approval" of what text messages you are going to send (never mind if part of it needs to be dynamic) and limit your sending ability to arbitrarily low levels. The company I work for just switched off them after high rejection rates and them randomly blocking us or limiting our send volume. They also bungled the whole number verification thing that recently went into effect, or at least dropped the ball on the communications side. Very glad to be off them and kind of sad, I remember when Twilio first hit the scene and it was truly amazing and so cool to work with.
I still have a Twilio account, for my steampunk Teletype setup. It's a pure reply system - you text to a phone number, that's printed on a Teletype machine, and the sender gets an acknowledgement back. It's inbound SMS. Years ago, at Twilio's request, I demoed this at a Twilio convention.
Twilio now wants me to "register my marketing campaign" and pay an additional monthly "campaign" charge for the service. Their business model no longer comprehends a pure request-reply service. They now assume their customers want to spam.
On the surface you might think this is a good idea, but we used this service for sending investor updates. Most of our investors don’t open non-urgent emails within 24 hours. SIB claimed it was some legal requirement.
We switched to Gmass, which sort of hacks your Gmail account to send campaigns. We haven’t had any issue with Gmass blocking our campaigns, so I have doubts SIB was being genuine about the legal requirements.
So all these the legal requirements intended to curb spam and scams, are clearly ineffective.
Even my Twilio phone number wasn't immune to incoming spam, and Twilio itself couldn't block it. I had to create a studio workflow to combat the issue. Indeed, it's a puzzling world...
Also its technically not required for actually inbound only, but it sounds like this application also sends ack replies.
I can't help but fear for what congress will do to neuter generative AI.
Maybe the answer isn't SMS but someone working on constrained satellite internet?
Disclosure: I was at WhatsApp from 2011 to 2019, and worked on SMS and Voice verification. We started using twilio as an alternative voice provider, and only later added them for SMS.
Overkill I suppose, in the past for similar stuff I've used a microcontroller with a GPRS modem, but since the 2g switch off I'm not sure it can be done that simply.
Corporations simply are built to amass profits, and outcompete others. They do not care nor are they built to care about you.
Same for the companies - they vary, a lot. Working at a two-person startup can resemble a family to some extent (or, well, there are genuine family startups, where partners in life start business together, and some succeed), but large corporations are entirely different experience.
This was encouraged by helpful “hacker” blog posts and official howtos detailing integrations with alert systems and home automation, etc.
Twilio sold itself as useful infrastructure.
All of this falls apart next month when A2P (or whatever it is) begins.
Twilio polluted its own environment so completely that nobody can exist there anymore.
(Unless you’re spamming, which is what customer engagement is)
https://support.twilio.com/hc/en-us/articles/223133807-What-...
A2P 10DLC requires all senders to provide company/corporate information and register their "campaigns".
Which is to say, when I send a grocery list to my wife, that must be under the auspices of a business case that I have registered with twilio and the carriers and within the confines of a campaign that I have defined with example messages and an opt-out and unsubscribe mechanism.
There is a sole proprietor option which is hazily defined and it is unclear if twilio even understands the implementation of.
All of this to say:
Because of the horrible behavior of both twilio and their customers there is no longer any such thing as programmable, personal messaging.
Personal messaging is something you do with your thumbs, on your physical device and programmable messaging is spam. There is no third classification.
Twilio could have been a boring and useful telco infrastructure company providing plumbing for interesting use-cases - but there's no route to billions there so they had to somehow become a unicorn. That's where the "customer engagement" comes in.
Twilio's support has been absolutely dismal. They say things like "Your number is not attached to your campaign" and show a screen shot from their admin screen, but when I point out it is all connected in the console: they respond with the generic Twilio links about A2P implementation.
Has anyone figured out a solution? ... I'm happy to switch to another company at this point.
I get that scaling tech organizations is hard (Stripe is another company with abysmal bloat in their APIs) but jfc, get a competent chief architect who is opinionated, please, and aim towards coherency. If you launch a new API that's intended to replace older ones, then stop exposing the legacy APIs in the default SDK.
(That said, better than MessageBird, who don't even have SDK support for the APIs they're promoting as the correct way; on the other hand, their documentation is markedly better than Twilio's).
They might want to alienate and break things for many of their existing clients who use the older APIs. Plenty of companies contract out dev work until they have a working product and keep it as is. They don't have devs on hand to update them if they deprecate older APIs leading to a completely broken app despite all the old functionalities being perfectly adequate for the task.
1) really focusing and doubling down on existing product lines, less experiments outside core competencies
2) double down on focus on top 20% paying customers, pull back hands on support for smaller clients, focus on keeping (and upselling) existing large clients with less focus on the bottom 50th percentile
Which makes sense from a shareholder perspective as they look to leech as much return as possible. But, it also ensures that the company is not going to innovate anytime soon.
2. I tried to sign up for Twilio Sendgrid the other day to send some emails from a Heroku app but I couldn't complete the sign up because I never received the activation email. Classic!
Still all this was too slow and left a bad taste. And I already finished integrating a different and IMO simpler (and probably less powerful) solution. And as the pricing was ok it was just the Twilio brand that I missed...
I'm not saying this was bad thing for the business; Twilio's growth would have slowed well below what would have been acceptable for a VC-backed (and the newly-public) company without this move. I'd be lying if I didn't say I was happy with where the value of my equity went. On top of that, Twilio was life-changing socially: I have many dear friends who have remained dear friends well after we all left the company, something that's never really been that case for me at other companies. As for the work itself, there were many fun and challenging problems to solve over time as the company grew, despite our frustration with the growing pains.
In the end, I left for very similar reasons as OP: the company seemed more focused on helping brands increase engagement than on doing anything novel with communications. Sure, a lot of the older, interesting use cases (the ones that got me stoked about Twilio in the first place) were still running on the platform, but those kinds of things felt like a minuscule percentage of the business.
The change of the billboard to the "How can I reduce my acquisition cost" branding makes me feel sad any time I drive by it. "Ask your developer" was brilliant, but Twilio isn't that company anymore, and hasn't been for a while.
https://www.youtube.com/watch?v=P4VBqTViEx4
Twilio is now another Xerox.
MBA programs should be illegal. You can thank MBAs for spreading PFAS everywhere, single use plastic, profiteering from insulin, making every American a diabetic by adding sugar into everything, selling glyphosate for residential use, killing all the pollinators, moving all manufacturing to countries with no environmental laws, and other consumer and planet-fucking initiatives.
The number of extinct species, diabetic patients, number of employees on minimum wage with no health insurance, policitian revenue from lobbying activities, dead bees, cut trees, lost topsoil, former Roundup users with non-Hodgkins lymphoma, revenue from weapons, atmospheric temperature increase, ocean acidity, plastic waste, pollution, every form of ecocide and every other measure of things going wrong is directly proportional to the number of MBAs.
Why? because if shareholder value is everything, then the employee, the environment and society at large becomes irrelevant.
If you were calling the shots, what would your next growth move be? What should Twilio expand into?
In biology, tissue that keeps growing indefinitely is lethal to the organism.
What's wrong with glyphosate?
Especially if the company is using developer engagement to build. The day will come when they're too big for that, and all the stuff you liked will steadily fall away.
https://news.ycombinator.com/item?id=24781493
(Disclaimer: I was the author of the blog)
Twilio is still our go-to for US SMS.
Nexmo has great international deliverability but is more expensive than Plivo.
Plivo works fine when it works. When it doesn't, their support is horrible. Most times I don't even bother opening a ticket anymore. I just switch the customer to Nexmo.
I tried A2P 10DLC registration on Twilio when it first came out and our deliverability went to less than 50%. I quickly switched if off.
They're all going to start requiring A2P 10DLC registration for US SMS within a few months. It's going to be painful to get timely SMS delivered.
Twilio won at their niche. People often talk about “if we just get 1% of the market…” — is there a modern engineer on earth who hasn’t used Twilio’s API at least once?
They’re moving towards doing the same thing with other parts of tech companies, in this case it’s marketing. It’s not like their APIs change because of it, these are additional products they’re introducing. Engineers generally find anything marketing related icky, but they’re very happy to collect the checks which are funded through these icky distribution methodologies.
Reading this thread makes me feel like I'm taking crazy pills. Twilio is huge and is the leader, but they hold less than 40% market share in CPaaS and makes something like 60-70% of their revenue in the US. There are a lot of competitors and a lot of reasons to never use Twilio.
The author is upset for XYZ "other" reasons, I would have recommended they slept on it and not post that publicly.
>As you all know, we are committed to becoming an Anti-Racist/Anti-Oppression company. Layoffs like this can have a more pronounced impact on marginalized communities, so we were particularly focused on ensuring our layoffs – while a business necessity today – were carried out through an Anti-Racist/Anti-Oppression lens.
Hacker News discussion:
They do way more than just DNS
Once it becomes a viable business, growth and departments that support it become equally important. Devs are one of the important departments.
Smart devs grow up and seize the opportunity to grow with the company. For most devs it is a rude awakening and accept the reality quickly.
This thread coming to the surface means there are a lot of such devs in the YC community surprised or curious about this phenomenon.
There will be a growing focus on security, process, reporting, testing, documentation, reliability, etc. And a shrinking focus on new feature development, prototyping, experimentation.
For many that might be something to embrace. Maybe you’re 35 now and have kids and wouldn’t mind a more boringly reliable employment. Otherwise you might want to find a new job.
But, yeah, nobody’s being wronged here. It’s just what happens. Like my kids growing up and needing me less and less.
> What is digital greatness?
Has no-one in Twilio ever seen Parks and Rec? This is definitely a Ron Swanson thing.
How is this in any way "news" worthy.
I think developers have been treated extremely well--justifiably, I might add, given the profit some of these tech companies are making--but at the same time developers expect things from their companies that no one else would. Could you imagine your local barista complaining that Starbucks isn't giving them a free gym, free meals, transportation expense reimbursements, and making them heroes?
Again, I'm not saying I like it.
Twilio doesn't make billions in profits. Twilio has been losing money for years. I'm not sure if Twilio was ever profitable?
Companies don't generally have the same long term goal to stop earning revenue and ride out their savings until they die.
Good luck
The only (ONLY) motive is profit. Growth, growth, growth above all costs at the expense of people and the environment. Jeff jumped into this thread to try to color it with verbiage such as:
> we came to the conclusion that the world doesn't need more communications, it needs better communications. More relevant. More effective.
This is another way to habituate and legitimate the exploitation of users for those few who profit. An example, is the A2P 10DLC registration that is being forced on users of the product that will charge a registration fee, a vetting fee, and a recurring monthly cost. From what I can tell, there is no legal basis forcing this. The Telco cartel got together and came up with a way to make more money off of you. Sure they will talk about it in terms of "improving your experience" and "stopping spam texts". While there may be a kernel of truth in there, that is not the main reason. Go back to rule number 1: profit, profit, profit.
It is a shame that the Telcos are strong arming the CSP middlemen to make them abide by these rules or not deliver their messages. And of course that rolls down to the end users.
But I think the bigger issue here is that they need to know exactly who you are in terms of registration. Blocking VOIP numbers for OTP verification, etc etc. Why do you think this is? Because they will take all of the data you provide, the metadata you produce and sell it to third parties for profit at your expense and without your consent (or otherwise wrapped up in a "privacy policy" that is too long that no one reads).
None of what I am saying is new, it is the same old playbook that most people are ignorant of. I suggest reading The Age of Surveillance Capitalism by Shoshana Zuboff for a deeper study of this topic.
If you would like to refute any of this @jeffiel I would welcome it. I find the forced registration of A2P 10DLC absolutely horrifying. The trend for everybody is to put them into a "pre-crime" bucket. In doing so, we lose all privacy on the web, and with it the web itself.
Edit: I don't know Jeff and I am not making my comment about a personal attack or a character (mis)representation. My point is to look at trends in general, at the decline of privacy for the growth of profit, and how language is used to characterize it as something else selling it as you are getting a better experience through personalization, relevancy, effective, etc. Zuboff touches on this in her book and it is recently in my mind so my comments are coming through the lens of this recent discovery. However, the larger anti-privacy trend and centralization across the web is not new, and I stand that we are all losers if we allow this trend to continue.
do I though?
I think the point is that developers are (or were) the customers. Twilio got adopted because they targeted and excited developers. Now they don't care about targeting the developers, they're targeting executives and marketing professionals.
I did not down vote you, and I don't think you deserve the down votes.
