Hot startup Twilio: infrastructure for developers to build telephony apps in the cloud

So who are you? I'm Jeff Lawson, co founder and CEO of Twilio.

And what the heck is Twilio?

So Twilio is infrastructure for developers to build telephony applications in the cloud. We provide APIs for phone numbers, for voice calls, and for SMS messages that any developer can get up and running in minutes, building applications that communicate. So it's all designed to be very easy, yet powerful, and all pay as you go.

So if I wanted to compete with Skype and take on Microsoft, use Twilio's.

Yeah, you go from zero to, we'll say 9 billion in just a few minutes with Twilio.

Okay, and can you give me a sense of who's using you and what these APIs look like?

Yeah, absolutely. I can step through here. Right. So the whole idea is we empower developers to build communication applications and there's a wide variety of things. And the way we like to think about it here is if you think about how the Internet developed, right, you started off with Copper, right? There was Copper connecting these computers, right? And then, well, you had the switching layer that let the networks connect to each other. And then on top of that you had the World Wide Web, HTTP, HTML. And because you had all this infrastructure built up, that's where the party happened, that's where all the innovation happened at the very top. And if you look at telecom, telecom is similar, right? Started with Copper laid down at the bottom, right? Then you had switching that allowed phones to communicate with each other. And then on top of that you had nothing. There's nothing on top of that. That's called the phone company, essentially, that Copper, and that switching layer is what you buy from the phone company. And really that's where it ends for most people. And so Twilio is all about adding this layer on top of the existing telecom system that enable the party, enable all the innovation on top of it, all of the applications that people need to essentially conduct business as well as integrate communications into all the apps. And where all the innovation is happening in the web, with web applications, integrate communications.

Where would we see this? What kind of apps are using it already?

Yeah. So I'll give you a bunch of examples. One of my favorite examples is Intuit. So Intuit wanted to add second factor authentication to their web applications to protect things like bank accounts and secure information. And so a product manager signed up for Twilio and built the prototype herself. She had taken one programming course about 10 years ago at Stanford, signed up for Twilio, built a prototype herself in an Afternoon and then handed it over her engineering team to build a production version and then called us up and said, hey, I need an enterprise contract. And we said great. Her engineering team got building the production version, we got her an enterprise contract and a month later they're live with a solution. And it's amazing because by enabling developers to get busy and in this case even a product manager, not even a full time developer, she was able to build the solution she needed very quickly, build that proof of concept, understand that it works and get to production very quickly.

How do developers pay you then?

So it's paid on a usage model. So you pay per minute for phone calls, per message for SMS messages and per month for phone numbers. And these are essentially the primitives that we have for those three things.

And do those prices change on quantity?

Yeah, so at volume the prices go down. So volume pricing, that's out of the gate. So that developers whose apps take off and do a lot of volume end up paying us less.

Is that all easily figure out? Is it all on your website?

It's on our website. Toyota.com pricing I think it is. And one of the neat things that we've done here is telecom has historically been back to our sort of enabling innovation. One of the key things about it is that telecom's typically been very opaque. So if you need to deploy an application, well, there's actually two pieces of it. Oh, that's actually a different slide. There's two.

That's why I usually don't use slides.

Yeah, that's fine. There's like two pieces to the application. For people who want to deploy a telecom application, you think about one of these applications. Well, they could be IVR applications, they could be PBX applications, they could be call centers, they could be notifications, they could be workflows, all sorts of different applications that people build. But the common things about how they used to deploy them in this sort of on prem model, which is first you go to a carrier and you wire up capacity and that's just connections into the telecom system.

Yeah, that's why I asked you about price because, you know, usually when you dealt with, you know, like the San Francisco giants had to put a phone line in to hook up their pbs.

Yeah, exactly. So you go to a phone company and you wire up capacity, but they wire it up and it, and it. You get one of these, right? Yeah. Literally there's copper coming to your wall or your data center or your phone closet and it doesn't do anything. You're paying a Big monthly bill. Yeah. And you pay a big monthly bill and all this kind of stuff before.

You even start using it.

Yeah. And you get these dumb minutes that just sort of sit there. So you plug in some kind of smart box and that's where all the intelligence lives. Right. There's a lot of companies who make gear to implement the intelligence of a PBX or IVR or whatever it is. So you take these dumb minutes that you pay for every month, you take a smart box that you pay for up front and a lot of money, as well as support and maintenance and all that kind of stuff. Plug those two together and that's how you get applications today. So by contrast, Twilio is about this migration from on prem to the cloud. Right. And just the same way that, you know, in CRM we went from Siebel to Salesforce, it's a fundamentally better way to deliver software. That's what Twilio is about.

And can you get your own phone numbers and all that fun stuff?

Yeah, Exactly. We have APIs to get your own phone numbers that can then receive calls or make outbound calls, or send and receive text messages, all with a simple pay as you go pricing.

So what's different between you and Google Voice? Google Voice isn't really an API, is it?

Yeah. So Google Voice is one application that you can build with Twilio, but that's sort of a solution, right? Targeted consumers. But Twilio is more focused on business applications. In fact, we open sourced what we call sort of Google Voice for business, an application called OpenVBX, which you can see more about at openvbx.org and it's essentially Google Voice for business. So what does that mean? It's got multiple users, it's got administrators, it's got groups of users together. And then for each phone number that you buy, you can drag and drop your way to. Well, what happens when people call that number? So does it you get an automatic prompt? Does it ask you to enter an extension number? Does it actually enter you into a conference call? You can really build sort of all these different applications by just sort of dragging and dropping. And that was an application that we open sourced for the business community and for developers who were building phone systems for their company and just wanted to install a simple PHP application. Just like they might install a wiki or they might install any other application like WordPress. You can now install an open source PHP application that runs your whole phone system.

Could I build something like Viber or maxroam using Twilio or do I need something else?

Which, what was that like Viber or.

Any of these, you know.

What's Viber?

On your iPhone you can make long distance phone calls.

Oh yeah, yeah, yeah, totally. So Twilio's got long distance, you can call anywhere in the world. Our rates are pretty low. They're close to Google Voice, Skype type prices. And that is. Yeah, if you wanted to build your own, you can take a local phone number and wire it up using simple, simple APIs and have it dial out. And it's really neat. Is our entire programming language. We call it twiml Twilio Markup language. It's comprised of really five verbs that are the fundamental building blocks, like the primitives. What are the. Of any voice application. So you start off with say and you give us some text and that's text to speech. And we say it play, playback some audio. Just give us the URL of say an MP3 or a wave or anything like that. We'll play it back over the call, record, record audio from the caller, gather says get digits from the keypad and after they're entered, send them to my app so that I can decide what to do next. And the last is dial. And dial says call one or more other people and when they answer, bridge them together.

Oh, very cool.

So you can do conference calls and you can do sort of call forwarding, all sorts of use cases.

So I could build a whole conferencing system using Twilio APIs.

Yeah. And a lot of people have. And it's really neat because it's very cheap and you can completely customize the experience. Right. So people have private conference lines where you give out the number and it's your own personal conferencing line. And everybody sits in the waiting room. And then when you call in from your cell phone, the conference begins. So you get rid of all the PIN codes, access participant IDs, moderator codes, you get rid of all that crazy stuff. You just make it, oh, just call this number.

Very cool. What about sms?

Yeah, so we started when we launched Twilio about two and a half years ago with phone numbers and voice calls. And the number one feature request we had was add sms. We want to be able to use Twilio for not just voice, but also for sms, just like we use our cell phones and we can do both voice and SMS from it. Can we do the same thing? So we added SMS as our second major product line a little over a year ago. And with Twilio sms, it's really neat because you can get a phone number from Twilio, we have an API for it. So a few milliseconds later, you've got yourself a new phone number in your area code and you can start sending and receiving text messages right away. And so it's really neat. A whole crop of group texting companies like GroupMe and Beluga sprang up because we made it really easy to build text messaging applications. And so what's interesting is that previously it took a lot of time and a lot of money to get up and running with text messaging. And with Twilio, we reduced the barriers so that you can really get started in just a few minutes. And our idea is if you reduce the costs and you reduce the amount of time it takes to build applications, that's how you enable innovation and that's how you give people the ability to experiment, try out new things. And as it turns out, GroupMe has done a great job and Beluga has done a great job of building a business and building a really useful application on top of Twilio. Sms.

I bet a lot of people who haven't heard of you or dealt with you before are wondering, how reliable are you? How big are you? How much staying power do you have? Because if I'm going to bet a business on you and put you underneath my app and my brand name, I want to make sure you're going to stay around. Absolutely. Not just go out of business next year because some venture capitalist was making enough money.

So providing telephony as an infrastructure service is always. We do. That's our entire business. Every dollar we make is based on our ability to service phone calls and SMS messages and phone numbers that we sell to our customers. So we're very proud of our operating metrics. So we have a zero downtime goal. We don't believe in scheduled maintenance. Right. We don't believe in sort of anything that would reduce from 100% availability. So we have a live dashboard@status.toio.com that is actually powered by an open source project that we made called Stashboard. Our idea was provide a status dashboard for any company and then we open sourced it. We also have publicly published availability metrics monitored by a third independent third party. So it shows our availability. And in 2010 I believe it was four or nines of availability, pretty good, total of seven minutes I think, of service issue. And that was on our HTTP APIs as well as our phone service and everything like that. And so it's really, we take our reliability as paramount the other thing is Twilio is not free. We were born in 2008. We said we provide a valuable service for which customers pay us. And that's the fundamentals of business. And so we've had a price tag on what we do since day one. And you know, so there's no notion of, you know, hey, we're giving it away for free because we're going to invent some crazy business model later. Nope, it's standard business model. Right. We have a profit margin on everything we do and that fuels the growth of the company as well as you know, we have raised venture capital from Founders Fund, you know, that's the PayPal guys, as well as Union Square Ventures, who's it, you know, who's invested in. And Twitter and Foursquare and Zynga and a lot of interesting companies like that, as well as Bessemer Venture, who does a lot of enterprise software as well as software as a service type companies. Right. So we have a really unique DNA to the people behind Twilio.

Yeah. You have nice office and a lot of people here.

Thanks. Yeah, yeah, we're about 50. You're not just a fly by name.

Not two guys in a garage like Instagram or something. Now there's six guys in the garage.

But we're also, interestingly enough, we're also really frugal about what we spend money on. Yeah. And actually I'm really proud of the. You should show the table. We designed this ourselves. It's four doors, so people call it the Sedan. Yeah.

So you're trying to copy Jeff D. Says, right?

Oh, yeah. Well, I came from Amazon before starting Tulios at Amazon and I love.

Anytime I see doors is desk. I think of Amazon.

I love door desks, both because they're functional as well as inexpensive, but also because what they stand for, which is spend money on that what matters. And I think that's interesting and I'm actually really proud that I think I went off to Bezos with our Sedan conference room too.

Eat your heart on Jess.

Cool.

Well, we should stop and we're going to talk about what's next for.

We also talk about, like, where we're at. So We've got over 35,000 developers using Twilio now. Yeah. And accelerating every month and over 10,000 live production apps that people have built.

Do you see a list of some of them? I know you mentioned a few that are using it.

Yeah. Yeah. So Intuit's a great example. I also love.

Well, let me pull up 35,000 or whatever it is.

Yeah, a lot.

But some customers don't want to tell you, don't want to talk about what they, you know, what, what's the infrastructure they're using underneath this? I work for Rackspace. I know that all the time. If I told you every famous brand name that was using that space, you'd.

Be amazed and you would lose a bunch of customers if you bought everybody. That's my job, more than that. So it's a really cool use case. I love this use case of how ebay uses us, which is. And it's actually interesting. I was the first CTO of StubHub.com and when we were starting StubHub, we had this problem. We said, we want to let people buy tickets right up until the last minute. And so how do we get the ticket from. From the seller to the buyer just in time for the event? And so we said, well, wouldn't it be neat if when the ticket sells on the website, we automate a phone call out to the seller? Say, hey, seller, this is StubHub calling. Congratulations, your ticket just sold. We need to dispatch a courier to pick it up from you, because, hey, the event starts in two hours. Press 1 if we should send them to your office. Press 2 if we should send them to your home, then automate a phone call out to a courier. Hey, Courier, this is StubHub calling. We have a new job for you. We need you to go to this address, pick up a ticket, deliver it to AT&T field by 6pm tonight. Press 1. Technology going to do this. We said, wow, that's a really neat workflow for how to do logistics. And then we looked at our team. They're a bunch of web developers. What do we know about telecom? Right? And so when we were starting StubHub, this is one of the examples of, like, where we needed Twilio. So after we started Twilio, jump ahead a bunch of years, I went back to my friends at StubHub and I said, hey, how are you solving this problem today? And they said, we have a team of six people who sits at the phone all day and makes calls to customers when we don't know the status of a ticket fulfillment. And I said, huh, that's really interesting. And they were able to automate a lot of that using Twilio by inserting Twilio into a workflow that said, hey, we've got a ticket. We don't know if it's confirmed. Let's automate a phone call out and find out.

So I got my World serious tickets through StubHub. So I was using Twilio yesterday.

Well, did you get an automated call? Well, it was probably the other side. Right. If somebody was not didn't ship you the tickets, you know, it's gold plated.

Yeah, yeah, yeah. Electronic printed ticket. I could print them out at home, which is really interesting as well.

Yeah, yeah. So another really cool use case is the Democrats are actually a customer of ours. Yeah. So the people who run BarackObama.com right. The Democratic National Commission Committee, and what they do is really cool because every election cycle they run a. What they call the voter fraud hotline, which is if you're experiencing voter fraud, like someone's impinging on your right to vote, they have a nationwide hotline. You can call 1-800-311-VOTE and you can call it and describe what is happening. And they connect you with a lawyer local to your state who can help you sort of assess if that's something needs to be escalated. And they've done this for 20 some years. And every two years that they run this, they have a vendor who sets up the system that year, and they spend hundreds of thousands of dollars. And every time they do it, it falls over under the load of election day and the thing breaks and it doesn't work. And then two years later, they have to find a new vendor who charges them a few hundred thousand dollars and it breaks. And so it was really neat because in 2010, the web development team, the people who run BarackObama.com said, no, no, no, we got it this year we're gonna use Twilio. And so in a day, they designed the interactions of the ivr of how it's gonna work, published the code, ported the phone number 100311 vote over to Tulia, and on election day, not only did it scale flawlessly, the they had no technical issues. Right. Because we had the whole power of the cloud behind us. They also spent an order of magnitude less.

Yeah.

It's an amazing story. Are they building.

They had a really interesting phone banking system too, where you could call in and say, I can volunteer an hour. And they would just start making calls for you. You would just start talking to people around the world or around the United States saying, hey, you know, can you vote for Barack Obama?

Yep.

Was that easy.

They have a number of applications built on top of it. Very cool. What's the challenge for you?

What's the business challenge? Now you've gotten to this point, you've gotten 35,000 users what's keeping you up right now?

Well, it's interesting, right, because there's a variety of use cases, how people can use Twilio, right? So IVRs, PBXs, notifications, workflows, all these things. And so the hard thing for us is, number one, how do we tell everybody? Because people come to Twilio saying, I've got a problem I need to solve, which is X. And so our job is to let people know. Yes, here's how you can use Twilio to build an IVR system. By the way, the Democrats built the system so you can learn from how they built it and you can learn from how they scaled it and everything like that. So it's messaging to people. We're a very broad horizontal platform that can be used for all sorts of things. And the hard part for us is letting people know, yeah, here's how you can use it, here's how to use it, here's how to build that. That's also the fun of it though, right? Having a Swiss army knife.

It's very cool. Awesome. Any tips for developers who are building these kinds of apps? Things that they should think about or interaction styles like on an iPhone or things you see people do wrong and then they have to work on it.

Mostly just iterate just try stuff out because it's now cheap, easy and fast. So iterate try things out and see what works. But use the same methodology you'd use to build a web app. You test it with people. So if you have, say you're notifying people or you have an IVR or you want people to call in a B test. Does play this greeting work better than playing that greeting? Are people happier? If I have a customer service line, does routing someone to a customer service agent or doing something else first? What makes people happier? There's all sorts of things. You can now a B test because you can use the same tools that you use when you build websites. So it's really neat.

Very cool. Thank you.

Thank you, Robert.

Twilio, obviously. And are you on, you're on Twitter as well?

Yeah. I'm Jeffel J, E, F F, I, E L and we are Twitter or we are, we're not Twitter, we are Twilio on Twitter. Cool. That's the first time everybody says, does this have something to do with Twitter? And I'm like, no, no. And then I just screwed it up for the first time ever. Marvelous. Well, thanks. Thank you, Robert.