00:00:06 Hello everyone. Welcome to another lesson with the marketing technology Academy. Today's lesson is a very special lesson. If you're tuning in you'll know that last Friday, it was secretly announced that Twilio is acquiring segment a well known CDP in the marketing technology space. This is pretty big news, and I like a lot of other people had tons of questions about what it might mean for marketers and vendors alike. So I spent some time over the weekend gathering information and putting together this short lesson on what we know so far, what Twilio and segment both are, how they work and how their integration is working today. And then what it might mean for the market. I hope this lesson is useful for everybody out there listening. So with that, let's get started. Like I said, on Friday, October 10th of last week, it was revealed that Twilio is going to buy segment for $3.2 billion.
00:00:59 If you have taken some of the other lessons from the marketing technology Academy, you'll know that we actually haven't touched too much on Twilio. Um, and I can talk about this in a second, but we have touched a lot on segment, which is a CDP or customer data platform it's covered in MTA. Oh one, which is our practitioner course in sections two and four. If anybody out there is part of the practitioner course, you can listen to those sections to catch up on CDPs first, if you'd like to. So let's, let's quickly review what we'll learn. We do this in every lesson with the marketing tech Academy. I think it's important to lay out exactly what you can expect from the next couple of minutes. So in this community lesson, we'll learn what is Twilio, just for people who maybe haven't have never heard of Twilio or have never used Twilio before.
00:01:43 We'll talk about Twilio's capabilities and I'll even walk you through how to implement a really easy capability. Next we'll talk about Twilio and segment and what their integration looks like today. And then we'll talk about both why the Twilio integration is interesting as well as what it might mean for industry experts and marketers. So first, what is Twilio? Everybody seems to know what Twilio it is, but I think if you ask most folks, they can't explain in clear terminology exactly what term Twilio is used for and how their own company might use it. If we go back in time, Twilio was founded around I think 2008. I do remember at the time I was in college and I remember reading about how, uh, this company had Rick rolled a bunch of people at tech crunch. And I think that is, that is the Genesis of Twilio is Jeff Lawson.
00:02:32 One of the co founders built an application with Twilio to Rick roll. Uh, one of the co founders of tech crunch. Hopefully somebody out there with the history can validate if that story is true or not. Um, from 2008 to 2010, Twilio launched a bunch of APIs for voice and text specifically, they released the ability to make calls, receive calls, send text messages, receive text messages, all tied to two cell phone numbers and, um, and non landlines through a variety of APIs. And really, I think they were, and still are one of the first and most successful marketing and engineering developer centric brands. And what I mean by that is they were incredible at drawing both marketers and developers to their platform and set of tools. At the same time when I was working at branch, I actually remember our co founder Mada and I had spoken with one of the CMOs from Twilio about how they split their approach to marketing between Dell developers and marketers and how they really coined and pushed forth this idea of the developer evangelist, which is somebody who understands what marketers need, but also speaks code and can talk to engineers and evangelize or sell to developers in a non salesy way.
00:03:50 They just did a phenomenal job with this. And that is really, I think part of the culture that we even see today in most marketing tools that have APIs and SDKs is there's an element of what Twilio pioneered 10 years ago today. I think Twilio really classifies himself more as a messaging platform. Uh, you know, they started with voice text they've since expanded into authentication with the acquisition of offi and the acquisition of SendGrid, which is an email service provider. Uh, SendGrid is a phenomenal service provider for sending emails and they have a bunch of APIs they're very developer friendly. And one of the themes that we'll get into in this lesson is just the developer centric, modern API driven approach to a marketing suite, which I think is what Twilio is doing with their acquisition of segment. And we'll, we'll, we'll dive into this later.
00:04:37 I think overall, if you take one thing away from this lesson, it's that Twilio is on a road to build a really incredible modern developer centric and API friendly marketing cloud, which is not something that I think currently exists very well today. So I think it's important before we get into the details about the acquisition and we talk more about the market. It's important for those out there, tuning in to understand what Twilio's capabilities are at a slightly deeper level. So we'll talk about those. So again, early two thousands, Twilio is a developer platform for voice and SMS. They pioneered the use of voice and text in a programmable fashion. They have a bunch of API driven use cases, texting voter's voice callbacks website to call center, transitioning text-based customer service. Pretty much every situation where you can imagine a bunch of people are texting or calling and need to handle it in a programmatic way.
00:05:30 That's where Twilio comes in and you can see on the screenshot on the right, this is just some of their use cases. You know, omni-channel notifications, meaning notifying people by text and email click to call. So you click and then it automatically calls. If a lead comes in, it sends a notification to assist them and then allows a call center to connect to that person. All of these are programmatic engineering driven applications of Twilio's backend platform. They've built a of really great products and with their acquisition, they're getting now to a position where they're focusing more on omni-channel communications, which when you think about that, they are then becoming more of a marketing and technology platform and suite, just as one example of how I'm thinking about using Twilio in a company I'm consulting with a company called runway. We're thinking about building a small UI in the right hand corner of the web app.
00:06:24 And I won't get into the details about the company or the application, but we want to be able to have somebody click on a button and have that text message, the cofounders of the company so that they can respond with product feedback and sales. So you imagine this is kind of like what Intercom has done except Intercom pushes to a UI and a platform and a website. But imagine if you wanted to just have somebody enter a message with their phone number, it starts a text chain and those text messages are then relayed to Slack or another, or even maybe the cofounder cell phone. And when they respond, it doesn't come from their exact cell phone number. It comes from another number that masks their number. This is a direct application of Twilio where you're sending an API request to transmit a message and then you receiving it.
00:07:10 And then you're allowing a response through the same API. So since 2010 Twilio's capabilities have expanded far beyond, you know, SMS and voice, but something that has stayed with them is this concept of being very developer centric and their products. And I'm going to use this term throughout this lesson. And I use it a lot in the marketing technology Academy to underlying culture of building great products. And, and, and what I mean by that is amazing APIs and SDKs, super clear documentation with code examples, sample apps and out of box prototypes that allow developers to build really, really quickly without having to, you know, screw around with the API. And on top of all that really clear, friendly, and easy to use UI with developer features that a typical marketer might need not realize, but certainly if you've gone through the, some of the courses that we have, web hooks, integrations, API keys, programmatical options, all these things, they make standing up a programmatic use case, very easy.
00:20:48 Providers, email providers, engagement and retention providers, push notification providers, attribution, and deep linking providers. Um, and they have features built into the UI that allow marketers as well as technical marketers and engineers to create audiences control their data, which I, I like to refer to as transferring, blocking, collecting, or transforming their data. So we talk about CDPs very often in our marketing technology practitioner course and throughout all of our lessons as a core function of a highly scalable marketing technology stack. And then we talk about some of the most common providers segment being one of them in section four of our MTA. Oh one course. So let's, let's actually dig in a little bit deeper and talk about the actual integration between segment and Twilio, because I think it will explain where the product roadmap is going, or at least where I hope it will go.
00:21:40 Um, so first segment and Twilio have an integration that segment calls a source, meaning data flows from a source Twilio into segment. And I included the link for the docs. If you want to follow along here, the limitations here is that it's not a destination, meaning you can't trigger an event like somebody clicks a button and then send that data to Twilio and then have Twilio trigger something else. That's not how this works. In fact, it's the opposite. So Twilio does something and has some data, and that data is sent into segment. And additionally, and although it's not listed here, it's in the documentation. Segments, integration is built on a completely different data model. So they don't use the same user ID and event, a taxonomy or data structure that Twilio uses. And so what segment is doing here is they're really just capturing the Jason or schema of Twilio's events, and they're passing that in the same way that it comes in to your data warehouses. So it's just a really easy way to take the data you have in Twilio and get it into a data warehouse. Now, peeling back the layers here, I just, I provided an example and I want to walk through it. They have this idea of collection support and collection is the, Speaker 3 00:22:52 The, uh, the model that
00:22:54 Twilio has for their data. If you're looking down here, maybe towards the bottom, the data model is collections. And then within collections, there's addresses calls, conferences, transcripts messages, and call feedback. And these are all different objects within the higher object of collections. And so when segment says they have collection support, what it means is they're supporting the data model that Twilio has already, and they're capturing that data model and they're sending it in state to the data warehouse of your choice. So you can imagine all of your data that's in Twilio, you could send it into segment and then segment can send that along with the exact schema into AWS or Azure or Google cloud. Now, this is comparable to what I consider a data enrichment, which is where if they did data enrichment, they would have the ID of the user. So in this case, if looking on the right hand side, there is this too.
00:23:48 If you look in the very bottom here too, is the phone number that the message in the one 64 format was sent to now, if they wanted to do enrichment, what segment would do is they would look at that field in something like messages or addresses or calls, and they would match that with a trait on the user profile of a customer in segment. So you can imagine what's what would happen if they did an enrichment integration is, is that when Twilio sent data into segment segment would look up certain values of the user in those messages, and then correlate it with an existing user in the segment system. So you can imagine they're enriching the profile of your user that you have in a segment. And that's not actually how the integration works right now. The integration with segment and Twilio is more of a pass through entity where segment receives the data in the exact schema that it is getting sent from Twilio.
00:24:44 And it passes that onto a data warehouse. It's really about getting data from point a to point B. Now, certainly if you have the engineers, you know, in hand, you could take the data. Once it's sent from Twilio to segment segment to your data warehouse, and you could match it against a key and send it back into segment against that key and enrich the user profile in segments. So it's not impossible to do, but it does require an another step. And I think this is really an example of both how segment has different types of integration supports. So they have some integrations that support this concept of enrichment, where they match against a key in the data schema. And then that data becomes part of the user profile and segment, but a large number of segment integrations are data pass throughs, which are very useful for engineers and not as useful for marketers because it's just passing data in the schema that it's getting sent it's.
00:25:37 That means that in order to make use of it, it requires a step back from the warehouse into segment. It would be really, really cool. And I think this is probably where they're going. I imagine this is where they will go is it would be cool if they, or if they standardized the Twilio model or integrate the Twilio model with the user and event, model of segment and traits and events became enriched as they were sent into segments. So you can imagine if there was a message that was sent from Twilio, again, they would look up the user based on that two number and then match that to a customer profile and segment so that all your Twilio data gets mixed and merged with your segment data. And then you can imagine since segment has integrations with lots of ESPs and customer life cycle tools, you could send those messages out to something like an email provider like SendGrid and trigger an email based on a text message that was sent or call that was made.
00:26:30 And this is really getting at the potential of this Twilio and segment, and now send grid integration by tying all these disparate, but programmatic relationships together. You can, you can get to a place where the total ecosystem is actually really, really powerful. So we'll talk a little bit about why this is powerful and interesting. So first segment raised $283.7 million they got acquired for, we think is 3.2 billion. So that's a 11.2 X multiplier on their total raise, but that's not often the way that, um, VCs or, uh, or acquirers think about it. They often think about it as a function of the projected revenues at the time of acquisition. So in this case, we think that segment is somewhere between a hundred and 150 million in revenue based on sources that I've talked to. So that means that their multiplier is a function of their annual recurring revenue is 20 to 30 X.
00:27:25 And this is actually quite insane. I think, you know, there's a, a guy that I talked to from the venture capital world that typically says a good target for a SAS acquisition as five to 10 X of ARR. And so this is in the 20 to 30 range. So the natural question is why the heck would Twilio do this? And then I'm sure also some people would say that it was a bad deal for segment, but I don't actually agree with that. I think that with the way the world is, and the calamity of that, that COVID has taught us it's that the time is, is never going to be perfect. And so the best time is when it makes sense for the company, the CEO, the co founders, and the employees anyways, why would truly would do this? So, first of all, Twilio stock is valued three times higher in the last 12 months than it was 12 months ago.
00:28:10 And so that means they actually have capital to spend, uh, they can use their heightened stock price in order to make strategic acquisitions that would help them catch up in essence to Adobe and Salesforce. And then we talked a lot about developers centricity before, and I think segment is an extremely strong culture fit from this perspective, if you've ever reviewed segment, if you've ever used Twilio you'll know that they're both very developer friendly tools. They have developer centric UIs, they build for the developer in mind. And so segment very naturally is just an extension of Twilio. In that regard. There's also strong overlap in the audience who they target for and build for. And I think this also matters a lot when you consider who the potential customers could be. Twilio has a, uh, uh, try it free, then go to enterprise model. And that's exactly what segment has.
00:29:01 Anybody can sign up for a segment account or a Twilio account get started using the tool, start sending analytics events and user requests start sending SMS and calls, and then they can convert to an enterprise account when it makes sense. And so they really buy into and believe in the developer first approach. And this is baked into the DNA of Twilio. It's baked into the DNA of segment. It was also baked into the DNA of SendGrid SendGrid. You can actually sign up an account for, you can choose an existing IP configured your DNS records and start sending emails. And as little as an hour, I actually use SendGrid for emails that I send for the marketing tech Academy. And I think it took me all about two hours to stand up. And so all of these things really play into this developer centricity, which I think makes segment a really good fit.
00:29:47 Last. We had talked a little bit about the integration and how it's more of a data pastor model, but because it would be so easy to expand it and enrich data coming from Twilio into a customer's profile. This makes the opportunity to become an incredible marketing suite really, really easy and clear. And I don't think it would actually be all that much effort from either Twilio or segment or their combined teams to expand their integration from Twilio into segment, to enrich the customer profile with Twilio information. And likewise, you know, now that Twilio will control segment, they very likely could build a custom integration where you can send event triggers into Twilio and have that trigger different types of SMS marketing messages, or directly into SendGrid, where you can trigger emails, which I'm very, very excited to see how that plays out between these tools.
00:30:38 So in the next couple of minutes here, we're going to imagine exactly what a Twilio SendGrid and segment MarTech stack will look like. This is the MarTech consumer MarTech architecture that we talk about in the marketing technology practitioner course. And you can see that every piece of the stack is broken up into its own set of providers. And so we're going to use this here as a model to show you what a Twilio MarTech stack could look like potentially in as little as 12 months. So I've moved over to my whiteboard where we can talk a little bit about what a Twilio marketing architecture might look like. So, first of all, let's highlight the areas where Twilio is playing. They have SendGrid and their core infrastructure to send and receive voice texts and other voice related products. And now they have segment, which is the CDP.
00:31:26 I believe a lot of the infrastructure is either built on AWS or Azure. So you can imagine they're effectively trying to tie together the ingestion of data, because segment actually has a product that competes directly with these schema validation tools called protocols. They have data outputs already. They have direct integrations with snowflake and a variety of other data warehousing providers. And now that they have SendGrid, they actually can tie all these tools together. SendGrid is, is one of the major ESPs that, um, underwrites, braise, Iterable, and other CRM retention tools. So you can imagine a, you know, Twilio stack is servicing two to three core components of a modern MarTech stack today. And the natural thinking here is what happens if they add something like attribution? What happens if they add something like, um, product analytics at that point, they really have a hyper competitive solution for, um, for modern marketers to buy a single tool and have everything integrated in one.
00:32:38 So you can imagine event collection and data hygiene, and that's all within the segment realm. And then they're going to have a pipeline out to various ways of communicating or messaging. And there'll be the, the core Twilio product, which is SMS voice. They'll have the core SendGrid product, which is email. And if they add one or two other products like a data visualization suite or attribution, they've built a very, very strong competitor to, well, actually I would, I wouldn't even say a strong competitor. I would say they would have built any, you know, something that doesn't really exist today, which is a modern infrastructure based marketing tech cloud. So that's it for the white boarding part of this. I didn't want to go too deep. I just wanted to show you how all of these pieces are connected and what the future of a Twilio based MarTech stack could look like.
00:33:28 We'll get back to the main slides now. So let's re let's wrap up by exploring what this all means. So Twilio is building a modern developer centric, marketing tech stack, pretty smart and interesting since marketing is inherently becoming more technical and they're really building the tools for a technical marketer to build and buy all in one spot, the standard acquisition and pricing multiples that we saw from this acquisition, I would apply to other competitive CDP and other similar marketing technologies. So I would be very eager to see what happens with tools like mixed panel, amplitude, braise, iteratively, branch, AppsFlyer some of the core, uh, competitors in each of the marketing verticals that we talk about as, as being essential to a modern MarTech stack. Next one can kind of predict Twilio's moves based on this. Uh, we showed you what the Twilio MarTech stack is going to look like after this segment acquisition and where missing pieces might be.
00:34:24 So it'd be really interesting to see how they build or buy and then integrate different tools to complete their stack for marketers. This is a future where an all in one marketing suite could actually make sense. And I can't believe I would be the one saying this cause I, I tend to lean strongly, uh, away from all in one marketing suites because the ones that exist today are often a collection of tools that were acquired many years ago before mobile existed. And so they tend to lag behind in their development of APIs and STKs that can solve modern problems. Uh, and that's not to say Adobe and Salesforce and Oracle aren't really phenomenal comp companies cause they are, but they've had to play a lot of catch up in order to build in the same way that many of these modern companies have, have built.
00:35:08 And so historically, a big complainant, for example, of Adobe, I've heard is that it's just a hodgepodge of tools that don't all speak the same language and APIs and SDKs. And again, all of this has been improving, especially in the last few years, but you can imagine that if Twilio strategically acquires tools or the integrations already make sense, and they're developer friendly and they have really strong API APIs, then there's not much overhead and or Lyft in order for them to integrate these tools into an entire. And then last but not least, I think the fact that Twilio, SendGrid and segment were all built in a mobile and post advent of mobile age is a huge advantage. That really can't be understated because they were built from the ground up with API APIs and SDKs in mind. And again, because they heavily leaned into and embraced the developer friendly developer first model of selling as well as their whole sales motion, which is built around, try it free, grow to enterprise.
00:36:05 Uh, it just gives them an extreme advantage in building a suite of tools that can really be used by all types of teams. So that's it for today's lesson. Uh, I hope this information was interesting. I hope that for marketers out there, you leave this lesson feeling a little bit more in the know about what's happening with this big acquisition and how to plan for it. And I hope for engineers and industry experts, you found this interesting as well. I'll do a quick recap of Keith concepts before we sign off. So first we talked about how Twilio is very developer centric. They launch with video and SMS as a platform and have diversified recently and other marketing verticals, often email service provider as two examples next and most important to this lesson. The acquisition of segment shows a couple of things. First, the strength of, of Twilio stock and purchasing power, which I think, you know, is something that can't be overstated, uh, their continued commitment to develop our first marketing technology and their interest in building a modern MarTech suite that could actually greatly outperform those that are currently offered by Salesforce and Adobe.
00:37:09 And then last but not least, we talked about some of the industry impacts. It's all speculation, of course. And I want to, I want to asterisk, uh, everything I said today, which is that this is obviously my own opinion based on the experiences I have, but I do think this, this will have a big impact, whether it's how integrations continue to be developed between segment and others, how, um, marketing, existing marketing, retention, engagement tools, approach working with Twilio and segment, I think there will be a big impact. And I'm also excited to see what Twilio does next. So that's it. That's everything covered in today's lesson. I hope you guys found this useful and stay tuned for more lessons from the marketing technology Academy.