CPaaS Alone Doesn't Organize Customer Data with Jeff Lawson

The 2022 Season Finale of TalkingHeadz features Jeff Lawson, CEO and co-Founder of Twilio.  

Jeff is always clear, articulate, and friendly. I'm proud to say Twilio was born during my shift as a telecom analyst, and it's been exciting to watch it grow and transform. 

Jeff presented to analysts before the recent Twilio Signal Conference. He claimed that Twilio is always ahead of the industry. That's a bold (fighting words) statement, but he backed it up with a common sense observation. Twilio's customers create solutions that, in general, can't be purchased (yet). 

Lawson and Twilio more or less created the CPaaS category, an enterprise comms sector that is becoming a little crowded. That's probably one of Twilio's motivations to go broader and become a customer data platform (CDP) provider. 

CDP may seem totally unrelated to CPaaS, thus many perceive the change as a pivot. While there's some truth to that, Jeffs sees it as more of a logical extension. A lot of the CPaaS use cases support marketing, but they tend to be transactional rather than strategic. Twilio wants to better activate the information on customers that enterprises have, and the first step is to create a consolidated view.  

Regardless of how you spin it, this public, multi-billion dollar company is once again a startup that's defining (or converging) a new category. Check out this interview to get a better idea of what is on Jeff's mind. 

Episode Transcript

Dave Michels (00:00):
In this talk you will be talking with Jeff Lawson

(00:14):
of Twilio. But before thatheaven Happy Thanksgiving,

Evan Kirstel (00:17):
well, Happy Happy Thanksgiving one of my favorite
holidays as it involves food.

Dave Michels (00:22):
Is it the food? Or is it the football that you
enjoy? It's just

Evan Kirstel (00:26):
the food and then more food and then comatose kind
of fading into oblivion.

Dave Michels (00:31):
It doesn't really make sense of these holidays.
This holiday kind of existsbecause if it's a food holiday,
it's about food, which is ifit's a sports holiday, it's
about sports. But obviously thebest food was sports are things
like hotdogs and burgers andthat's not what you mean a
Thanksgiving.

Evan Kirstel (00:44):
Well, you're you're a bit of a food
connoisseur a cooker, a smoker,Midnight Joker or whatever they
say. So what's your regime? Doyou do one of those fryers or
some strange grilling of theturkey or what what's going on?

Dave Michels (00:57):
I have a new regime now that I'm an empty
nester and that is to go toEurope, which is where I am out
and completely avoid the wholething because Thanksgiving is
turkeys not that interesting.
You know, I'd much

Evan Kirstel (01:08):
rather eat sardines. There's lots of
sardines. Yes,

Dave Michels (01:12):
I happened to be in Portugal and it is indeed the
Serbian capital of the world.
And I am the handsomeyesterday's and but I had fried
sardines. And even though youcan do that,

Evan Kirstel (01:21):
okay, that sounds disgusting. You know, you stay
there and you're up there whilewe have a good old American
Thanksgiving. But let's get onwith the guests because he is a
one of our best guests on theshow.

Dave Michels (01:33):
That's what to say about every guest. But yes,
let's get to Jeff. Talking. It's

god (01:37):
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(01:58):
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L.

Dave Michels (02:05):
So today we're with Jeff Lawson, the CEO and co
founder of Twilio. And Jeff,we're not gonna waste any time
getting to what's on everyone'smind. I think you did your first
keynote at the recent Tulliosignal conference that didn't
have live coding, what's goingon?

Jeff Lawson (02:23):
Well, you're wrong, because I did do live coding.

Dave Michels (02:28):
today? Well, no.

Jeff Lawson (02:30):
I've done live coding on day two before Do you
remember the facts? One, wherewe get the fax machines? Now? I
remember that when we opened upday two at the big you know, the
year we launched IoT that wasalso on day 220 16. That was so
you know, the live coding, youknow, there's a lot going

Dave Michels (02:48):
on the warning flashing on the screen saying no
like

Jeff Lawson (02:53):
that, however, was different. Right. And you know,
it's sort of interesting, asTwilio has grown, what we've
seen is that we have both adeveloper audience, so the
people who are hands onkeyboards, building things with
Twilio, but also an executiveaudience, right. And it's hard
because, you know, developers,they want to hear about API's,
they want to hear about new whizbang things you can do with a
few lines of code. Andexecutives, right? They want to

(03:15):
talk about customer engagementand things like that, right. And
so we end up having to talk totwo different audiences. And
when a developer hears aboutcustomer engagement, they kind
of don't know what that's allabout. When you talk to an
executive about API's, and, youknow, JSON and stuff. They're
like, well, I don't know whatthat's all about. And so I think
we finally decided, You knowwhat, let's stop boring half of
our audience for half of thekeynote. And let's just divide

(03:38):
it into two keynotes. And so wedid the content warning this
year, the first day, we said,today, we're going to talk about
dollars and cents, we're goingto talk about how customer
engagement, understanding yourcustomer, and actually building
really meaningful interactionswith them makes you money,
because that's the 2022. That'swhat everybody wants to talk
about, right? How does it makeyou more efficient? How does it

(04:00):
add to your profit, when youbuild great customer
relationships, acquiringcustomers, and then having them
increase their lifetime value,because they spend more. And day
two, we're going to talk abouthow you go about doing that
hands on keyboard API's and allthat kind of stuff. And so we
basically told both audiences,like you're more than welcome to
sit in on the other one, infact, developers, I think that

(04:21):
you should really, especially ina time like this, you should
really understand the businessthat your company is in, and how
the work you're doing iscontributing to not just
building great products, butbuilding a great business. I
mean, you look at the number oflayoffs that have occurred in
the tech industry. You know, itwas sort of like for a long time
tech felt like, you know, allyou could do is hire, hire,

(04:42):
hire. And so now I thinkdevelopers are starting to say I
do want to understand thebusiness and my company and I
understand what I'm saying whatI'm doing is adding

Dave Michels (04:50):
that's a great explanation, and I'm really glad
you shared that because I wantto say you do great great
keynotes, I want to say I reallyenjoy your keynotes and I always
think that that is somebody'sgiving you like, it's like a
rating system, you're saying,you know, this is R rated, and
this is G rated. And that setsthe tone. That's good. You know,

Jeff Lawson (05:07):
I always we always used to joke that like, you
know, most companies websiteshad like four developers click
here, right and in somewhere inthe navigation, and that Twilio
should have the four suits,click here, right, and we take
you through the, but you know,now I actually think it's been
quite successful in the sensethat we are now able to talk to
both audiences. And that'sreally important, it's been

(05:28):
important for us as we've movedinto the software stack with
things like flax and segment toknow engage our marketing
product, because those aredefinitely the check is paid by
a business owner. And we need totalk to those folks. But then
when you go to implement it,it's the developers, it's the
technical folks, productleaders, they're the ones who
are the ones who get to say,Yeah, this actually works. And

(05:49):
it's possible that they sold usor no, like, there's no way it
can do this, right. Like I don'tknow what they're talking about.
And that's why talking to bothsides, both the people who are
the economic decision makers whoare accountable for the business
outcomes of buying a new pieceof technology, but also the
implementers, the people handson keyboard have to go do the
work, when we can talk to bothof them. You just speed up these

(06:09):
projects, you de risk it, youknow, I can tell you about these
amazing customer conversationsI've had where you're in the
room talking to a line ofbusiness owner or someone in the
C suite. And they turn to theirtechnical folks. And they say,
Is this possible? And thetechnical folks say not only is
it possible, we've already builtthe prototype, let me show it to
you.

Evan Kirstel (06:31):
In addition to speaking those languages, you
also speak analysts languageslike CPAP, as I recall, you
never really embraced that term.
So can I ask you is or wasTwilio a CPAP? provider? You
know,

Jeff Lawson (06:44):
I remember when that term came out, and like
from my perspective, we kind ofinvented this, of course, and
the analyst community came outwith this see passphrase and
like I was thinking like thecloud. Isn't that what the sexy,
exciting real? It was like? Seehow many more letters can we add
to that acronym? And have itstill be pronounceable?

Dave Michels (07:05):
You don't understand analysts getting
answered a cloud? You don't needan analyst?

Jeff Lawson (07:11):
Yeah, that's right.
Right. You don't need to paysomeone to just tack the word
cloud on to things. Yeah. So Ifor a long time, I hated the
word see cast. And then a funnything happened. I just realized,
like, wow, everyone is callingit this now. Like, all right, I
guess they want I'll call it Ccast now. Or you know, seapass,
CCAFs, whatever. But but

Dave Michels (07:27):
not really, because now you're kind of
saying that's in your past? Isthe depression line zero?

Jeff Lawson (07:32):
We've now here's what's the interesting thing,
right? We so we started incommunications, let's make it
easy for developers to addcommunications, all those apps
that are building. And sureenough, they did. And the
interesting thing, we haven'tlooked at what everyone was
building, and yet, we sort ofthought about, like people could
have gone and built their newunified communications, there
are new video conferencing,their new PBX, like for the

(07:55):
office, right? Basically, no onewas building that stuff on top
of Twilio. Instead, whateveryone was building a some way
of talking to the customer,right. And generally, that
happens when you're selling to acustomer, when you're marketing
to a customer when they're usingyour product or when they need
service and support. Like, thoseare the four main places where
customers contact a company, orthe company contacts that

(08:17):
customer. And when you do areally good job of like tying it
all together, and making it aseamless, easy experience.
That's when customers reward youand say, Wow, that was amazing,
I'm gonna be an even bettercustomer. And that's the
universe of customer engagement.
And unlike internal stuff likePB X's and whatnot, where
companies really want tostandardize the fact that we all
use Zoom, or slack or whatever,it's like your new employee

(08:43):
joins, and they already know howto use it. That's a huge
benefit, like standardization isgood there. But when you're
talking to your customer, that'swhere when you do something
different when you do somethingnovel, your customer says, well,
they're better than all theircompetition. Fantastic. I want
to use more of them. And sothat's where differentiation
matters. And you can see thatthat's where companies look,
that's where they put all theirsoftware developers, they put

(09:04):
them not in the sort of backoffice stuff. I mean, sure,
there's some developers there,but most developers sit in the
front of house because that'swhere when you roll up your
sleeves, when you write somecode, when you build a better
experience. Customers reward youcustomers don't care about what
cloud system using, they careabout the things that touch
them. And that's what led us inthis whole world of customer

(09:26):
engagement. And so what we'rebuilding now is a customer
engagement platform.

Dave Michels (09:31):
When you kind of answered my question before I
got there, but I think about ourearlier conversations back when
you had hair back when Talia wasa Seattle company, you know, a
long long time ago, I was avoice guy and you were like
talking about digitalcommunications. And I was like,
Jeff, people talk over voiceit's not that that's the way it
works. You don't get it. Andobviously you were way ahead of
me and way ahead of most theindustry and nailing this

(09:52):
digital communications. I don'teven know that was going to
become so critical.

Jeff Lawson (09:56):
You know, it was sort of organic right in the
sense means that we're justfollowing customer need. And it
was not, there's a wholeindustry and obviously voice
communications had been going onfor give or take 100 years,
right. So there was nothing newthat we offered in terms of
technical capabilities. But whatwe did is we brought it to the
hands of a new type of personinside of accompany, which is

(10:19):
the software developer. Andthat's where you saw the notion
of like this is where voice canbe used in a whole bunch of new
ways that hasn't been usedbefore. But that's not all like,
because voice is just one toolin the tool belt of a software
developer. But in fact, the manydifferent ways in which a
developer might need tocommunicate with a customer.
That's the category of thingsthat where we were seeing

(10:41):
demand, this was a bit differentthan what I think traditional
like VoIP providers were seeing,because those companies sold to
like the same buyer. Largely, itwas like the people who bought
telco inside of large companies,the problem domain they had
access to was kind of always thesame. Whereas we opened up a
really different problem domain,which was that of what

(11:03):
developers are building theforward facing stuff that talk
to customers. And I think thatoftentimes, in business, the
core thing you do is solve aproblem that no one else has
solved before. And you caneither solve a new problem for
the same person, or you can gosolve a similar problem for a
new person who's never seen thesolution before. And we kind of

(11:23):
did the latter with the softwareworld and software developers.
And what that did is it broughtcommunications into a different
part of a company stack, thecustomer facing part the product
parts, as opposed to the moreinternally facing it side of
things.

Evan Kirstel (11:38):
And speaking of the internal IT side of things,
you know, with this boom, indigital, we've seen a decline in
the outsourcing of core, youknow, CX function. So are you
take responsibility for that?

Jeff Lawson (11:49):
Well, I don't think we take responsibility, but I
think we are I think we werekind of early ins in spotting
that. And at the real, like Isaid a minute ago, I think
that's the answer, right? Whichis that differentiation is
built, not bought, right?
Imagine your two companies havethe same products, like I often
think about banks, right? Thecore banking products of any

(12:11):
bank are largely the same,right? You've got checking,
you've got savings, interestrates are set by the Fed. I
mean, how do you differentiate,right? It's, is there a better
experience wrapped around allthat than your competitors. Now
imagine that every company in acompetitive set just went and
bought the same thing? Well,you'd end up with identical
products. And so then you haveto buy billions and hours of

(12:33):
advertising to prove to theworld that they should use you.
And instead in the world ofdigital, what you realize is
that you can actually go createa better product, if you have
the software skills, to godigitize these processes, build
them in an omni channel way, sothat wherever customers meet
you, you've got a differentiatedvalue proposition. And the core
act of building software is theact of listening to a customer,

(12:57):
hearing a problem they have thatnobody has solved yet. And then
go building it in softwarepretty easily actually, like
writing software is not hard.
The hard part is hearing theproblem that no one else has
solved. Once you hear that,figuring out a way to put it in
front of your customer veryquickly. That's the core essence
of software. And so you thinkabout a year problem. You build

(13:19):
a prototype you put out in froma handful of customers, and they
say you're on the right track,keep going or no, this isn't
really what I wanted. But Buthere's what I really want. And
that iterative process ofbuilding software is what's so
important, because that's whatmakes software such an
accelerant of competitivedynamics in every industry.

Dave Michels (13:38):
The way you manage a bunch of software developers
like that, as you just had themall submit code for your review.
I think that's

Jeff Lawson (13:44):
I actually have them printed out. Yeah. And
bring it to my office. Sorry,these are Elon Musk jokes,

Evan Kirstel (13:52):
you have to put it into the TPS report first. So a
new term that's been kind ofmaking its way around since
signal conferences, you know,customer acquisition costs needs
to be less than lifetime valueof the customer. I was never
like a math or quant guy. Soexplain that. That ratio or
rationale to me.

Jeff Lawson (14:11):
It's super, super hard and super technical. You
need a PhD in math to understandyou should spend less to acquire
a customer than you make fromthat customer. Right? Yes, yeah.
And I can draw the equation isCAC less than LTV. Now, I mean,
it makes a ton of sense. I mean,it's obvious when you think
about it, right? But the thingis, the reason why that equation

(14:34):
I would say runs the digitalworld runs the internet economy
is that it used to be that youknow before the internet you
spent a lot of money onmarketing, but you really had a
hard time correlating themarketing activity to the
specifics of customers earningtheir business right but with
the internet and all the directresponse that there is with you
know, you can buy ads on Google,Facebook, etc. Click the tie it

(14:58):
to a click tight to a customerconversion event, tie it to how
much they bought from you tuneyour marketing, to get even
better to narrowly target idealcustomers to give them a landing
page that has a high likelihoodof conversion, blah, blah, blah.
All this stuff leads you to theability to really finely tune,
how do I find new customers? Howmuch do I spend to get them in

(15:19):
my door, whether it's via salesand marketing, then once I have
them in the door, how do I usereally sophisticated marketing,
to target my messages at them,to give them the next step in
the journey to give them thenext recommended upsell. So that
I get more and more lifetimevalue out of the account. And
because you can do that with anamazing amount of precision

(15:40):
today, this notion of CAC versusLTV has become super important
in the internet equation becauseit basically says the difference
between a good business and anot so good business in the
internet. And the neat thingabout the internet is there are
so much tools in terms ofsoftware out there that allows
you to take a not so goodbusiness, and then really dial

(16:00):
it in. And that's the point weare trying to make with our
customer engagement platform isthat these are the tools that
you need to understand to findyour customers to onboard them
with little friction and to getmore value out of them by
marketing the right thing,selling them the right thing and
doing recommendations reallywell. So that your product
experience ultimately iscontinually driving customers

(16:22):
towards spending more, and thengetting that cost to acquire
them down because you'retargeting the right folks.

Dave Michels (16:27):
You say it's common sense. But one thing that
really resonated for me, and thereason conference is the you
know, customer acquisition cost,okay, I understand that lifetime
value, I understand that. But Ididn't really fully appreciate
the cost of reacquiring thecustomer with every transaction
without middlemen in theprocess.

Jeff Lawson (16:45):
You know, it's so interesting, because when you
think about it, the biggestthreat, I think, to a lot of
companies is the idea thatthere's large technology
companies that sit between themand their customers. And I kind
of had this realization a fewyears ago, when we had the CTO
of Nike, at the time speak atour internal company kickoff.
And he said, You know, one ofour strategic goals at Nike is

(17:06):
to build an unbreakable customerrelationship, unbreakable
customer relationship. And atthe time, I remember thinking
like, oh, you know, that's likea, that's a good corporate thing
to say. But you know, just kindof sounds good, but you know,
whatever. And then a few monthslater, I saw on the news that
Nike had pulled all of theirproduct from Amazon. And they
basically said, we are no longergoing to sell our products via

(17:27):
Amazon, if you want Nike, youhave to come to Nike nike.com,
or Nike apps. And I was like,oh, unbreakable, I get it. The
idea that for every company outthere in the digital world, they
have to get really good atspeaking to customers in the
language that they understandtalking about things customers
care about, and being reallyrelevant meeting customers where

(17:50):
they are. And if you don't whathappens, customers click
unsubscribe, they click stop,they don't want to talk to you
anymore. They don't go to yourwebsite, they delete your mobile
app, whatever it is, right? Andif you think about the company's
do a really good job of takingthe large volume of data that
they have that companies haveabout us. And I'm not talking
about buying third party shadystuff, I'm talking about just

(18:11):
the data that you have thatnaturally we give to companies
like what do we click on? Whatdidn't we click on? What did we
scroll through? What are wescroll? What are we buying? What
do we return? Those are allreally interesting data points
about who we are and what we'reinterested in. Now, if you
ignore all that, and just keepsending us that same old
newsletter, then who cares. Butthe companies who do a great job
of this Google Amazon, thosekinds of companies think about

(18:35):
like Amazon, you're on myhomepage are completely
different. Google you and I cansearch for the exact same term,
and get completely differentresults. Because I've said, I
know more about Jeff, I knowwhere he lives, I know the kind
of stuff he's interested inversus Dave versus Evan. And
that makes us so much morelikely to want to use those
products, because they just getbetter for us all the time. Now,

(18:55):
if you think about if everyother company is not as good as
those folks, what happens when Iwant a new pair of shoes, where
do I go? Well, maybe I searchGoogle, maybe I go to Amazon.
And in that world, every othercompany has to keep buying
access to their own customers.
Right? If you're an Amazon, youpay a percentage of your sales
to Amazon, if you're on Google,you have to keep buying ads,
think about it. Companies haveto buy their own name to be at

(19:16):
the top of the search results.
Right, that is continuallyreacquiring repaying for your
own customers again. And so whata lot of companies have woken up
to say, you know, what, if Iwant to have a future if I want
to have a profitable future, Ican't just keep paying other

(19:37):
companies for access to my owncustomers. I need to build my
audience myself. I need thislike earned media. I need to be
able to talk to my own customersand have them listen. And in
order to do that, I need to knowwho my customers are and then
unbreakable. You need thatunbreakable relationship. And
that's what more as I talk tocompanies like more and more

(19:57):
companies are starting torealize Is that now look, people
are still going to buy ads,they're still going to acquire
customers on those channels forsure. But once you've acquired
the customer, do you want tokeep going back and having to re
acquire them? No, you shouldacquire them once, and then get
really good at engaging withthem through every part of the
journey. Re engaging with themafter they buy with new ideas,

(20:20):
new content, new suggestions,blah, blah, blah. And that way
they want to reopen your app, goback to your website, read your
emails, see your text messages,et cetera. And then you've got a
really low cost way ofcontinuing to get more lifetime
value out of those customers.

Dave Michels (20:34):
What is it with Twilio? And shoes, I don't know,
there's something going onthere. But in preparation of
this podcast as a plan to Evan,some of your architecture stuff.
And I have to say, I got totallyconfused. And so I got to clear
some things up here, because I'mnow lost again. Obviously, one
of the biggest things coming outof signal was Twilio engage
congratulations on a brand new,I don't know, product division.

(20:56):
I don't know what you call itbusiness unit. But we're gonna
get into your gauge here. Butit's a marketing solution that
combines a native customer dataplatform. Okay, I think you
know, that is that's, that wascalled segment last year, but so
combines a native customerinsight form, with a native omni
channel communications together.
And so I'm thinking what is omnichannel communications? Is that

(21:17):
C pas? Or is that flex?

Jeff Lawson (21:22):
So omni channel communication? Yeah, that's a
good question. The funny thingis omni channel means different
things to different people. WhenI think about, I'll tell you
quickly the journey that we'vebeen on, this is how I explained
it. And I would draw my likediagram, but we're on a podcast.
So like, good that's going todo, we started with
communications, we built outvoice and then text and then

(21:42):
chat, and then video. And thenwe bought SendGrid, the leading
email platform. And so we havethis communications platform as
a service seapass. For all ofthe channels, basically, the
companies used to meet theircustomers over there. After
doing all that, what we realizedwas what mattered more than
sending those communications andpowering those communications is
actually what they said, Didthose communications contain

(22:04):
something interesting, relevantand timely for the end customer.
And in fact, powering thecontent of those messages, not
just the messages, the transitof those messages, became what I
heard our customers saying, Iwant you to help me with. And so
the key to powering the rightmessage is the understanding is
the customer data. So weacquired segment the leading

(22:25):
customer data platform. So youput these two things together at
the core. So the core of ourcustomer engagement platform is
all the channels that you needto talk to your customers, and
all the understanding of yourcustomers that allows you to be
relevant. And then we wrap thatcore with the applications that
companies use to power thosecommunications. And if you think

(22:46):
about applications, what is anapp, an app is basically a set
of workflows for people insideof a company to do something. So
the contact center that's flex,that's a set of workflows that
allow agents to answer a calland contact center managers to
know what's going on, and allthat kind of stuff. And so we've
taken all the communicationschannels, and now the customer
data, ladder them up into acontact center platform, that's

(23:08):
flex. Similarly, we take allthose channels and all that
data, lead them up into amarketing automation platform
that's engaged, to be able todrive smart campaigns that you
cross all these channels withone tool built on top of real
time data, that's what engages,then you've got frontline for
mobile workers. So it's a mobileapp that allows workers on the
go to be able to talk to yourcustomers, again, having all the

(23:30):
data and all the differentchannels available to them. And
then the last one is Twilioverify or account security
product that allows you toverify the identity of customers
across all these differentinteractions. And so the way I
think about it, we've beenbuilding up but at the core of
every company, essentially a setof capabilities to talk to your
customers across the variouschannels that customers want.

(23:51):
And then the understanding ofthe customer the data that
drives what are you going tosay? And how do you know this
customer? And what's going toresonate with them? And why are
you talking to them in the firstplace. And then we wrap that
with the apps that you know,aligned to the major buyers,
they had a marketing they had asales they had of service, etc.

Evan Kirstel (24:07):
Interesting. So do all these capabilities gauge.
Let's frontline verify, do theyall use the same core
capabilities? So are they acollection of products or brand
or stack separate stacks? Whathow do I think about?

Jeff Lawson (24:24):
So think of the Twilio platform. So the core
data and the core communicationswrapped around with four
applications. Now customers canbuy these parts individually.
Right? So they can buy corecommunications, they can buy
SMS, they can buy voice API's,they can buy all that stuff.
They can buy the core customerdata platform segment, they can
buy that as a standalone tosolve data integration problems

(24:45):
and build one profile of thecustomer. But now when you want
to activate that profile, dosomething with it. Well, then
you need communications and thenyou can lateral that up into
engage which leads you to thator flex which is the contact
center. And so if you thinkabout it more Almost every
customer facing function of acompany has a software app that
they use that combinescommunications and data. Like

(25:08):
think of what is a CRM, a CRM isbasically that. And so what
we've done is taken the coreessence of that, and build out
the applications that companiesmust frequently use. But because
we're a core platform, companiescan also build their own stuff
on it, right? They can say,well, you know what, there's a
specific part of our product,like, we want to send a
notification when the driversarriving at your door with your

(25:29):
food, right, no one's built thatit's not an app, that's the core
functionality of many of the ondemand delivery companies,
right. But when they reply tothat met, when a customer
replies that message, I wantthat to go to a contact center.
Now I can really easily pumpthat into, say, flex for a
contact center, or, actually,I'm going to send a message when
your food's arriving, but maybeon Tuesdays, I'm going to say,

(25:50):
hey, taste Taco Tuesday, andwe've got 25% off at local taco
joints. Well, that's a marketingcampaign that can be powered
with engage, the way I thinkabout it is, the world used to
be a world where you had todecide if you're gonna build
something, or you're going tobuy something, right. And when
you built something, you had tostart from scratch. But when you

(26:13):
bought something, you got asolution. And it kind of did
what it did. And when you wantedit to do something new is like,
well, that's not what it does.
And so you're kind of stuck. Themodern world, though, of API's
and platforms, is buying thethings that allow you to build,
that's interesting. And so ifyou think about our platform,
that way, it makes a lot ofsense that we have this core

(26:34):
upon which we build platformsfor the contact center, the
contact center allows you to docontact center things out of the
box. But you if you want to domore, you want to integrate it
with your own workflows or yourown data, you can go build that
quite easily on top of flex, itwas designed to do that same
thing with engage, right, it'sbuilt on top of this data
platform that can ingest data,we've got 400 connectors already

(26:55):
built all sorts of differentsystems, you can build your own
trivially in taken all this dataand drive super smart marketing
campaigns, that makes it fasterfor you to iterate on and build
interesting marketing campaigns.
Right. And then you kind of takeit to all those different areas,
our entire platform is designedso a customer can buy

(27:17):
capabilities that actuallyenable them to build even
faster. And I think that's theway I think about what we do as
this platform of platforms. Asopposed to most companies which
are selling solutions. They'resort of verticals that sort of
like they do what they do, theystart all the way at the top,
the end user and they go all theway down to the bottom of the
stack. What we're doing isbuilding a platforms on top of

(27:37):
platforms and customers canstart the adoption, in many ways
at any layer of that snack.

Unknown (27:43):
Got it? Dave? Know You're.

Evan Kirstel (27:46):
So let's get into Twilio and segment, you know,
both have been around for awhile as standalone entities.
Now that one company, there'sthis new default path that
customers can start with oneproduct or the other and then
expand. So do you still seecustomers starting with either
platform?

Jeff Lawson (28:05):
Absolutely. All the time, right? We've got, you
know, like I was mentioning,customers often will start with
a simple use case, like, hey,you know, I want to send text
notifications to my customer.
It's a relatively simple usecase provides a ton of value to
companies and they can get upand running very quickly. But
then they start asking like,what's next? Well, how am I
going to personalize thosemessages? How am I going to make
sure that they get open andread? What happens if people

(28:27):
reply to them. And that's whereyou start getting into, okay,
now we can take segment andactually make those
notifications smarter. Oh, nowwe can plug it into engage and
harmonize it with your variousmarketing campaigns, oh, we can
plug it into flex and actuallymake it so that you can have two
way conversations instead ofjust one way. We often see this
as the case. And the same thinggoes on with segment, customers

(28:47):
often start pulling in segment.
So like, look, I've got so manySaaS products that I've bought,
and even my homegrown stuff. Andthey all have a sliver of the
story about who my customer is.
But if I actually want to pullthat together into one profile
of the customer that I can makebetter decisions on I can build
machine learning models on, Ican actually put in front of an

(29:07):
agent just like that, like, Oh,that's so much work. And so
segments solves that problem ofpulling data out of all these
different places, and having oneprofile the customer, but then
you ask, Well, what good is theprofile if you don't do anything
with it? And that's where engagecomes in, which says, Okay,
great. Now you want to activatethat data, you want to go buy
smarter ads based on that data,you want to power internal

(29:27):
campaigns better, because thatdata, you want to make your
contact center better because ofthat data, that's activating the
data. And so no matter where youstart, you can see the path of
what companies are trying to doessentially is harmonize all
these touch points together intothe journey that an end customer
would say, Yeah, that makes alot of sense. Yeah, that company
knows me. Yeah. When I talk tothem, you know, on their

(29:50):
website, and then I walk into astore and then when I talk to
support, they all know who I amand I don't have to keep
repeating myself and I don'thave to explain that I don't
care. for washing machines, infact, I like dogs. I don't know
what store would sell both ofthose but

Evan Kirstel (30:06):
my store Yeah, right.

Jeff Lawson (30:08):
I mean, my favorite example is, you know, I tend to
wear like a black shirt everyday. And I bought them all from
like the same kind of

Dave Michels (30:13):
senior closet. I know why you wear the same shirt
every day. It's like, all youhave,

Jeff Lawson (30:18):
you know, I changed. You know, when the when
the pandemic, I used to wear thesame wardrobe every day, I just
didn't want decisions in themorning, when the pandemic came,
I'm like, I'm not wearing acollared shirt at home every day
for a year. So I changed mywardrobe to something a little
more informal. But the fact ofthe matter is, I just buy the
same shirt from this company.
And the funny thing is, theysend me these marketing emails,
like and now marketing emailsthey send you like every other

(30:38):
day, it's like talking to them.
And they keep trying to sell melike women's hats and stuff. And
I'm like, have you noticed thatthe only thing I ever buy are
men's t shirt size medium? Whydo you think suddenly I woke up
today, and when a woman's hat.
And you just see this, you seethis from companies all the
time. And that's what we'retrying to fix where the left
hand of a company and the righthand know what they're doing. So

(30:59):
that it makes sense to thecustomer who's like, I don't
care what departments you have,I don't care what software you
bought, I don't care what feudyour executives are having about
this than that. I just careabout the experience I'm having.
Why can't that make sense? Andthat's what we're trying to
provide for folks.

Dave Michels (31:16):
You mentioned CRM earlier, and even you and I
didn't hear any disdain when youmentioned it. But somebody had
told me I won't say who somebodyat Twilio said that, that
companies in America in theworld are spending $69 billion
on CRM software, and it doesn'twork. Now, that's a pretty bold
statement. And it's particularlybold, because I thought you and

(31:38):
Marc Benioff are like buddies.

Jeff Lawson (31:41):
Well, it's true that companies have spent $69
billion last year on CRMsoftware, yet how many companies
that you talk to and you say,Wow, they've really got this
nailed. In fact, we did asurvey. And I came into the
executive, I think was 82% ofrespondents to the survey said,
Yeah, companies are horrible andengaging with them. So you're
like, where is $69 billion ofthe software? Like, what is it

(32:02):
doing? And I think the answer islike, CRM is a great solution
for b2b companies. That's whereit got started. Right? It was
your salespeople typing in theirnotes about a customer and

Dave Michels (32:13):
hate that birthdays? Yeah, right.

Jeff Lawson (32:16):
I mean, that's, that's the genesis of CRM is it
was sales automation. And inthat world, the fullness of what
a company knew about itscustomers, what it salespeople
typed in is notes, right? Whereare they in the sales cycle, are
they like the buyer, who's thedecision maker, yada, yada,
yada. But we did a back of theenvelope calculation. And we
calculated that, worldwide.
Globally, every salespersontyping in every note at every

(32:37):
company was approximately 10,000writes per second. That's b2b
scale. But for consumercompanies, it is a whole
different story. Nobody istyping in notes, nobody is
keeping track of you by likehaving a sales conversation with
you, B to C companies have acompletely different problem. In

(32:59):
fact, there are trillions ofwrites per second for a consumer
companies. So I just made thatup. Nobody knows exactly how
many there are. But it's, I cantell you this, that we have one
customer, a fox sports, who usessegment during the Superbowl to
instrument what's going oninside their web apps and mobile
apps. And they reported thatthey did over a million writes a

(33:22):
second, a million data points asecond during the Superbowl
Power BI segment. So think aboutthat orders of magnitude more
for one customer versus thewholeness of b2b, it is a
completely different problem. Imean, you think when I go to
amazon.com, a little bit up theweb browser, I go to amazon.com,
that like there's a salespersonsomewhere saying, Oh, I wonder

(33:43):
if you're gonna buy a spatulatoday. And it's like creating an
opportunity object in their CRMabout the sales cycle. Now, of
course, not in b2c. This is justthe story of data, massive
quantities of data about each ofus that allow company to then
draw conclusions about who weare, what we're interested in
how they can better serve us.

(34:04):
And that's the problem thatwe're solving. So to sum it up,
CRM is great. It was designed 20Some years ago, for b2b scale
problems. Fantastic. There's awhole different problem that's
emerged, which is internet scaleconsumer businesses that need a
completely different solution.
That's what our customerengagement platform is here to
solve. And when CRM company isclaimed to solve the problem,
when I talked to customers, whenthey dig in, they're like, no,

(34:27):
they don't they don't solve thisproblem. The challenge

Evan Kirstel (34:30):
is, a lot of CC companies are talking about
customer engagement and CX, butyou talk about a virtuous cycle
of customer engagement. Thatsounds so lovely, but what what
exactly does that mean? How's itdifferent?

Jeff Lawson (34:43):
Absolutely. I'm gonna go back to Amazon, Google,
etc. Right? Think about it, themore they understand you and the
more they tailor your searchresults or your Amazon
recommended things or whatever,like the more that's tailored to
you, the better the productgets, and the more you want to
use it and the more you want touse it, the more Data, they're
able to gather about who you areand what you want, and the
better they can make thoserecommendations in those

(35:05):
personalizations. For you,that's the virtuous cycle. And
so what we're helping companiesto do is to build virtuous
cycles of their own because ofAmazon, Google, etc, building
virtuous cycles, getting reallygood and understanding us.
Meanwhile, everybody else issitting at a standstill, not
really knowing who theircustomers are, that Who do you
think's gonna win. So what we'rehelping every company to do is
really build their own customerdata stack that allows them to

(35:29):
finally understand who theircustomers are, and not just as
like, focus groups or surveys,but actually, Jeff, Dave, Evan,
and actually get really good atserving each of us in a unique
way such that we build that samekind of loyalty where the
experience I have with thatcompany gets better and better
and better every day, as opposedto I go to Amazon, when I want
to buy something, I go to Googleand search for something. The

(35:50):
thing to think about that isit's it's kind of really
surprising when you think aboutit, take Procter and Gamble, now
they're a segment customer. ButProcter and Gamble for I don't
know, give or take was like 150years, they've been around
forever, like 150 years, theyhad no idea who their customers
were, think about it, theymanufactured a ton of toothpaste

(36:10):
or laundry detergent, theyshipped off to, you know, a
retailer, the retailer sold itto somebody, I didn't even know
who it was either you justcheck, you took off the shelf,
you put it your cart, you boughtit, you walked out the door,
nobody knew who the customerwas. Now, along came the
internet and all these direct toconsumer companies who were
like, we're gonna have asubscription, you're gonna put
in your credit card, you can putin your name and your address,

(36:30):
and we're gonna like send youyour box every month, and we're
going to add things to the box,we're going to learn about you
and we're going to expand andexpand and expand. And that set
this whole stage for like, waita minute, how can we do business
with like half the world andnever know who any of them are,
and not know what they need moreof and what they want less of.
And that whole direct toconsumer movement now is taking
over pretty much every industryin every business. And I think

(36:53):
about like, I can't even thinkof an industry that isn't
getting taken over by thisnotion. Like I think about
travel, for example, think abouttravel, you got airlines, you've
got hotels, you got Bumble, andwhat are they all say they like
No, no, come to my website.comwith Guaranteed lowest fares,
right? Instead, if you go to oneof the travel aggregator sites,

(37:16):
what do they do, they reallyunderstand you, they build you,
they guide you to the types oftrips, and they guide you
different airlines every timedifferent hotels every time to
like meet your needs. And thatis an existential threat to a
hotel or an airline, because nowthey've lost control of that
customer. And the same thing isplaying out industry after
industry, where digital providesthis opportunity to either be

(37:37):
disintermediated, or to knowyour customer. And given those
two choices. I'm pretty sureevery company wants to build
that virtuous cycle, knowingyour customer getting better at
engaging with them beingrelevant, and then building that
loyalty

Dave Michels (37:49):
in. All right, I got another hard one for you,
Jeff, there's a report outthere. And maybe you've heard of
the Gartner puts out this thingcalled the magic water in the
sea casts. And it doesn'tinclude Twilio. Now, that made
sense to me for a while becausewhat I'll cook used to describe
as monolithic applications werein that in that report, and then

(38:09):
that's not what you're doing.
But now they include othercompanies that are doing more of
services contexts under Servicesin that report. How do you feel
about not being the report? Isthat a mistake? Or what's your
position on this?

Jeff Lawson (38:21):
You know, interestingly, I don't have a
position on it. I don't know whywe we haven't been in Gartner
for context Center as a service.
You know, I do remember in theearly days, Al saying, you know,
look, when you're doingsomething fundamentally
different, you don't want tojust get put up against the
legacy, because they're going tobasically point out that you
don't have every bell andwhistle. And they're not going
to understand the ways in whichyou're changing the market and

(38:42):
the ways in which you're doingsomething that's different. And
so they're just gonna saywhatever the quadrant is for you
sock. And so I think in theearly days, that was the
approach, I can't tell you ifnow's the right time, or if we
should be changing thatapproach, or if the analysts of
the world have kind of, if we'vebeen able to prove out the
hypothesis of like, the worldneeds something different. And
this is the right time to do it.

(39:02):
So I can't answer the question.
I'm not the expert on that. Butwhat I will say I think it's
true, you know, I think aboutthe migration to the cloud. And
think about the early companieswere doing cloud migrations of
other stuff. We just talkedabout Salesforce. Salesforce was
the canonical early cloudcompany, right? And when they
first launched, were they tryingto replicate every feature that
Siebel had in CRM. Now? No, youcan do that. You can't do that

(39:24):
in day one. But really, what youcome up with is one thing that
is so different, and soimportant, that actually makes
buyers say, You know what, allthat other stuff turns out to
actually it wasn't thatimportant. And for the early
days of the cloud, it was, hey,can you be up to date? Can you
stop having like, upgrade hell,every time the vendors released
a new version? Can it be secure,reliable, scalable, and can you

(39:45):
even put it on a credit card tobe up and running in a week?
Those things it turns out wereway more important than some
feature list that was 12 mileslong from the legacy folks, that
cloud just took over that youknow what we can do without that
feature list that's a mile longLong because you don't really
care. But by the way, we weren'teven using most of those
features. But what we reallycare about here is it like
agility and getting up andrunning and speed, all this kind

(40:06):
of stuff. Well, I think the samething is true in the contact
center. Contact Centers do havea feature list that's a mile
long. You know, we don't haveevery one of those features, for
sure. But I think the importantones we have. And more important
than that is we've changed theparadigm we have allowed
companies with big sophisticatedworkloads, to finally bring
those workloads to the cloud.

(40:27):
And for the longest time, when Italked to customers about what
they were doing for theircontact centers, they'd say,
Look, you know, we've had theselegacy contact centers, a bunch
of stuff sitting in the closetin our own data center. And this
is one of the last things thatwas still in the data center,
but we can't move it. And it'slike, why they're like, Well,
look, the old stuff was great,because we could really

(40:49):
configure tune it, customize it,we got it dialed in for our
workflows, and when you've got20,000, contact center agents,
you need all that customization,right? You need all that
optimization, because I canshave one minute off of every
interaction, that adds up tohuge dollars. Yep, that's it.
Okay. So then why don't you juststay on, I'm probably like,
because I hate it. I'm stuck andso fragile. You know, it's like,

(41:12):
we're stuck in somethingversions ago. There's like, just
like one guy in the cornercubicle, who knows how it all
works. And we're just trying tokeep them alive. And they're
like, and so and that's what wecan't innovate, we can't do
anything. We're just trying tokeep the damn thing running. And
so we want to move to the cloud,we want to get those benefits.
But nobody has allowed us tobring all that ability to

(41:33):
customize along with it to thecloud. In fact, the thing that
makes the cloud great SAS gradeis like it's one code base, it's
multi tenant, right? Those arethe things that made it so easy,
and so reliable. Those are thevery same things that prevented
context on our workloads frommoving to the cloud, because
we're like, well, because it'sone code base, it's multi
tenant, you can do all thismonkeying around with it. But
now you can, because that's howwe built flex, we built flex so

(41:54):
that customers could take, theycould write code, they could
write front end JavaScript, theycould use our API's on the back
end. And they could deploy itall into one application where
we host it. We've got ourplatform that we're moving ahead
every day shipping new versionsof modern, adding new
capabilities to while customerscan build plugins that are
seamlessly integrated, compileit all hosted in the cloud in a

(42:17):
multi tenant environment, andget all the benefits of sass
without having to give up on allthose customizations. And that's
why we're seeing these majormigrations. You know, we
reported a fortune I think wesaid fortune 100 insurance
company last quarter had adoptedflex, we had before that a
fortune 100 retailer had adoptedflex the quarter before. So

(42:37):
that's what we're seeing thesehuge workloads finally moving
into the cloud, because we'veunlocked that core value
proposition. I don't thinkthat's something that the
analysts were necessarilythinking about in the early days
of this migration. Yeah,

Evan Kirstel (42:50):
speaking of cloud your alma mater up in Seattle,
Amazon now has this the PAs andand CC application as does
Vonage, a number of others. Sodoes it is it logical that
Twilio might acquire contactcenter player like talkdesk or
someone else? Well, I

Jeff Lawson (43:06):
think that we've got flex and we're really come
on

Dave Michels (43:09):
Jeff, and tell us who you're gonna acquire next.
Come on.

Jeff Lawson (43:13):
I'm very happy with Flex, we've got an amazing
customer base. And we're takingdown the kinds of deals we want
to take down. And so we'rereally pleased with the progress
that we're

Dave Michels (43:22):
all. One last question here I want to ask you
about is RCS it came up brieflyat siddell conference, RCS
hasn't gotten anywhere, althoughI'm here in Europe, and I was
using normal SMS on my Androidphone and I realized I was
getting typing indicators. So Iguess I was using RCS without
even realizing it. But so myquestion is, were you as a
messaging giant as somebodywho's been you know what you're

(43:44):
doing? You're doing SMS, you'redoing WhatsApp you're doing now
you're doing Google Businessmessaging? Where's RCS? But in
your in your worldview?

Jeff Lawson (43:52):
You know, RCS is it's so confused, to be honest
with you, right? Like becauseconsumers don't know if they
have it. Just like the story.
You're saying, Dave? They don'tknow if they have it. They don't
know if they want it. They don'teven they don't even know what

Evan Kirstel (44:05):
know what it is.

Jeff Lawson (44:07):
And, look, we continue to stay close to
everybody in this ecosystem. Weare close to Google. We've done
things with Google. We've donebusiness messenger deals, we
work with WhatsApp, we provide athe API for WhatsApp. We do all
this stuff. But WhatsApp isdifferent, like WhatsApp.
Customers in many parts of theworld only use whatsapp
basically, this if you want toreach your customer, WhatsApp is

(44:29):
the channel to use. So thatmakes a ton of sense. But RCS
it's like the same app, theconsumer behavior didn't change.
SMS still works, right? RCS isreally spirally rolled out. And
so until that gets figured out,I think it'll struggle to get
mass adoption. And so while wedo support RCS, and that's
basically what Google Businessmessenger is to. We haven't seen

(44:52):
consumer or business demand forit. I think in the early days
when Google started investing init, we saw businesses asking
about it because Google istalking to And they're like,
What is this RCS thing? And do Ineed it? And I kind of told him
the same thing. I'm like, Wellwait and see if it gets rolled
out ubiquitously and consumersvalue it, then there may be some
cool things we can do. Butthere's a long path to get
there. Because carriers areinvolved, handset makers are
involved, consumers areinvolved. It's a long road, and

(45:15):
Apple. And I think that it'strue, here we are five years
later, and it's still basicallyin the same spot it was five
years ago. So you know, Icontinue to say it's an option
for us, we'd stay close toeverybody. We do support it in
some of a limited way today. Butas it evolves, we continue to
evolve. But meanwhile, we've puta lot more attention on to, for
example, WhatsApp, because thatis a place where consumers have
clearly spoken in a lot ofmarkets and said, This is where

(45:35):
we went on cable companies. Andwe said, great, and that's where
we see a lot of traction fromfrom customers as well.

Evan Kirstel (45:41):
Wonderful. Well, thanks so much, Jeff. We really
appreciate your time and yourenthusiasm. And as always, and
we'll be watching with interest,your continued journey onwards
and upwards.

Dave Michels (45:50):
Very exciting times. Thank you.

Jeff Lawson (45:52):
Thank you. Thanks for having me on again. Thank
you. Happy holidays. Everybodytake care.

Evan Kirstel (45:58):
Well, I have the feeling we could have let Jeff
talk for about three or fourhours, but unfortunately, he had
to go. One of his, you know,better appearances on Talking
Heads.

Dave Michels (46:08):
Yeah, he's a returning guest. And we got a
lot out of them. This time. Hereally, he really shared a lot
of his thoughts. I thought thatwas great. It's really an
interesting time for Twilio, thecompany is if you listen to the
whole episode. I mean, you'vegot the core Twilio and then
you've got the new Twilio, whichis this customer data platform.
A lot going on there.

Evan Kirstel (46:28):
Yeah, it's a shame that the market is punishing
every Silicon Valley softwarecompany. But I think Twilio is a
buy. I have no interest inpromoting the stock but

Dave Michels (46:38):
my financial advisor if I didn't hear you say
you weren't

Evan Kirstel (46:42):
I'm not but I did stay at a Holiday Inn Express
last

Dave Michels (46:44):
night. All right, well, until next week, for what

Evan Kirstel (46:49):
you will buy FTX All right. Thanks

Unknown (46:53):
you awesome information conversation gotta get out of
the phone. Don't Don't don'tread your phone. No man knows

(47:19):
me.