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. 

Transcript

Dave Michels: 0:00

In this talk you will be talking with Jeff Lawson of Twilio. But before that heaven Happy Thanksgiving,

Evan Kirstel: 0:17

well, Happy Happy Thanksgiving one of my favorite holidays as it involves food.

Dave Michels: 0:22

Is it the food? Or is it the football that you enjoy? It's just

Evan Kirstel: 0:26

the food and then more food and then comatose kind of fading into oblivion.

Dave Michels: 0:31

It doesn't really make sense of these holidays. This holiday kind of exists because if it's a food holiday, it's about food, which is if it's a sports holiday, it's about sports. But obviously the best food was sports are things like hotdogs and burgers and that's not what you mean a Thanksgiving.

Evan Kirstel: 0:44

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? Do you do one of those fryers or some strange grilling of the turkey or what what's going on?

Dave Michels: 0:57

I have a new regime now that I'm an empty nester and that is to go to Europe, which is where I am out and completely avoid the whole thing because Thanksgiving is turkeys not that interesting. You know, I'd much

Evan Kirstel: 1:08

rather eat sardines. There's lots of sardines. Yes,

Dave Michels: 1:12

I happened to be in Portugal and it is indeed the Serbian capital of the world. And I am the handsome yesterday's and but I had fried sardines. And even though you can do that,

Evan Kirstel: 1:21

okay, that sounds disgusting. You know, you stay there and you're up there while we have a good old American Thanksgiving. But let's get on with the guests because he is a one of our best guests on the show.

Dave Michels: 1:33

That's what to say about every guest. But yes, let's get to Jeff. Talking. It's

god: 1:37

a semi monthly podcast with interviews of the top movers and shakers in enterprise communications and collaboration. Your host Dave Michaels and Evan Kirkstall, both of which offer extraordinary services including research, analysis and social media marketing. You can find them on Twitter, LinkedIn, or at talking points.com. That's points with a Z and Devon crystal.com. That's que ir S T E L.

Dave Michels: 2:05

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's mind. I think you did your first keynote at the recent Tullio signal conference that didn't have live coding, what's going on?

Jeff Lawson: 2:23

Well, you're wrong, because I did do live coding.

Dave Michels: 2:28

today? Well, no.

Jeff Lawson: 2:30

I've done live coding on day two before Do you remember the facts? One, where we get the fax machines? Now? I remember that when we opened up day two at the big you know, the year we launched IoT that was also on day 220 16. That was so you know, the live coding, you know, there's a lot going

Dave Michels: 2:48

on the warning flashing on the screen saying no like

Jeff Lawson: 2:53

that, however, was different. Right. And you know, it's sort of interesting, as Twilio has grown, what we've seen is that we have both a developer audience, so the people who are hands on keyboards, building things with Twilio, but also an executive audience, right. And it's hard because, you know, developers, they want to hear about API's, they want to hear about new whiz bang things you can do with a few lines of code. And executives, right? They want to talk about customer engagement and things like that, right. And so we end up having to talk to two different audiences. And when a developer hears about customer engagement, they kind of don't know what that's all about. When you talk to an executive about API's, and, you know, JSON and stuff. They're like, well, I don't know what that's all about. And so I think we finally decided, You know what, let's stop boring half of our audience for half of the keynote. And let's just divide it into two keynotes. And so we did the content warning this year, the first day, we said, today, we're going to talk about dollars and cents, we're going to talk about how customer engagement, understanding your customer, and actually building really meaningful interactions with them makes you money, because that's the 2022. That's what everybody wants to talk about, right? How does it make you more efficient? How does it add to your profit, when you build great customer relationships, acquiring customers, and then having them increase their lifetime value, because they spend more. And day two, we're going to talk about how you go about doing that hands on keyboard API's and all that kind of stuff. And so we basically told both audiences, like you're more than welcome to sit in on the other one, in fact, developers, I think that you should really, especially in a time like this, you should really understand the business that your company is in, and how the work you're doing is contributing to not just building great products, but building a great business. I mean, you look at the number of layoffs that have occurred in the tech industry. You know, it was sort of like for a long time tech felt like, you know, all you could do is hire, hire, hire. And so now I think developers are starting to say I do want to understand the business and my company and I understand what I'm saying what I'm doing is adding

Dave Michels: 4:50

that's a great explanation, and I'm really glad you shared that because I want to say you do great great keynotes, I want to say I really enjoy your keynotes and I always think that that is somebody's giving you like, it's like a rating system, you're saying, you know, this is R rated, and this is G rated. And that sets the tone. That's good. You know,

Jeff Lawson: 5:07

I always we always used to joke that like, you know, most companies websites had like four developers click here, right and in somewhere in the 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 sense that we are now able to talk to both audiences. And that's really important, it's been important for us as we've moved into the software stack with things like flax and segment to know engage our marketing product, because those are definitely the check is paid by a business owner. And we need to talk to those folks. But then when you go to implement it, it's the developers, it's the technical folks, product leaders, they're the ones who are the ones who get to say, Yeah, this actually works. And it's possible that they sold us or no, like, there's no way it can do this, right. Like I don't know what they're talking about. And that's why talking to both sides, both the people who are the economic decision makers who are accountable for the business outcomes of buying a new piece of technology, but also the implementers, the people hands on keyboard have to go do the work, when we can talk to both of them. You just speed up these projects, you de risk it, you know, I can tell you about these amazing customer conversations I've had where you're in the room talking to a line of business owner or someone in the C suite. And they turn to their technical folks. And they say, Is this possible? And the technical folks say not only is it possible, we've already built the prototype, let me show it to you.

Evan Kirstel: 6:31

In addition to speaking those languages, you also speak analysts languages like CPAP, as I recall, you never really embraced that term. So can I ask you is or was Twilio a CPAP? provider? You know,

Jeff Lawson: 6:44

I remember when that term came out, and like from my perspective, we kind of invented this, of course, and the analyst community came out with this see passphrase and like I was thinking like the cloud. Isn't that what the sexy, exciting real? It was like? See how many more letters can we add to that acronym? And have it still be pronounceable?

Dave Michels: 7:05

You don't understand analysts getting answered a cloud? You don't need an analyst?

Jeff Lawson: 7:11

Yeah, that's right. Right. You don't need to pay someone to just tack the word cloud on to things. Yeah. So I for a long time, I hated the word see cast. And then a funny thing happened. I just realized, like, wow, everyone is calling it this now. Like, all right, I guess they want I'll call it C cast now. Or you know, seapass, CCAFs, whatever. But but

Dave Michels: 7:27

not really, because now you're kind of saying that's in your past? Is the depression line zero?

Jeff Lawson: 7:32

We've now here's what's the interesting thing, right? We so we started in communications, let's make it easy for developers to add communications, all those apps that are building. And sure enough, they did. And the interesting thing, we haven't looked at what everyone was building, and yet, we sort of thought about, like people could have gone and built their new unified communications, there are new video conferencing, their new PBX, like for the office, right? Basically, no one was building that stuff on top of Twilio. Instead, what everyone was building a some way of talking to the customer, right. And generally, that happens when you're selling to a customer, when you're marketing to a customer when they're using your product or when they need service and support. Like, those are the four main places where customers contact a company, or the company contacts that customer. And when you do a really good job of like tying it all together, and making it a seamless, easy experience. That's when customers reward you and say, Wow, that was amazing, I'm gonna be an even better customer. And that's the universe of customer engagement. And unlike internal stuff like PB X's and whatnot, where companies really want to standardize the fact that we all use Zoom, or slack or whatever, it's like your new employee joins, and they already know how to use it. That's a huge benefit, like standardization is good there. But when you're talking to your customer, that's where when you do something different when you do something novel, your customer says, well, they're better than all their competition. Fantastic. I want to use more of them. And so that's where differentiation matters. And you can see that that's where companies look, that's where they put all their software developers, they put them not in the sort of back office stuff. I mean, sure, there's some developers there, but most developers sit in the front of house because that's where when you roll up your sleeves, when you write some code, when you build a better experience. Customers reward you customers don't care about what cloud system using, they care about the things that touch them. And that's what led us in this whole world of customer engagement. And so what we're building now is a customer engagement platform.

Dave Michels: 9:31

When you kind of answered my question before I got there, but I think about our earlier conversations back when you had hair back when Talia was a Seattle company, you know, a long long time ago, I was a voice guy and you were like talking about digital communications. And I was like, Jeff, people talk over voice it's not that that's the way it works. You don't get it. And obviously you were way ahead of me and way ahead of most the industry and nailing this digital communications. I don't even know that was going to become so critical.

Jeff Lawson: 9:56

You know, it was sort of organic right in the sense means that we're just following customer need. And it was not, there's a whole industry and obviously voice communications had been going on for give or take 100 years, right. So there was nothing new that we offered in terms of technical capabilities. But what we did is we brought it to the hands of a new type of person inside of accompany, which is the software developer. And that's where you saw the notion of like this is where voice can be used in a whole bunch of new ways that hasn't been used before. But that's not all like, because voice is just one tool in the tool belt of a software developer. But in fact, the many different ways in which a developer might need to communicate with a customer. That's the category of things that where we were seeing demand, this was a bit different than what I think traditional like VoIP providers were seeing, because those companies sold to like the same buyer. Largely, it was like the people who bought telco inside of large companies, the problem domain they had access to was kind of always the same. Whereas we opened up a really different problem domain, which was that of what developers are building the forward facing stuff that talk to customers. And I think that oftentimes, in business, the core thing you do is solve a problem that no one else has solved before. And you can either solve a new problem for the same person, or you can go solve a similar problem for a new person who's never seen the solution before. And we kind of did the latter with the software world and software developers. And what that did is it brought communications into a different part of a company stack, the customer facing part the product parts, as opposed to the more internally facing it side of things.

Evan Kirstel: 11:38

And speaking of the internal IT side of things, you know, with this boom, in digital, we've seen a decline in the outsourcing of core, you know, 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 were kind of early ins in spotting that. And at the real, like I said a minute ago, I think that's the answer, right? Which is that differentiation is built, not bought, right? Imagine your two companies have the same products, like I often think about banks, right? The core banking products of any bank are largely the same, right? You've got checking, you've got savings, interest rates are set by the Fed. I mean, how do you differentiate, right? It's, is there a better experience wrapped around all that than your competitors. Now imagine that every company in a competitive set just went and bought the same thing? Well, you'd end up with identical products. And so then you have to buy billions and hours of advertising to prove to the world that they should use you. And instead in the world of digital, what you realize is that you can actually go create a better product, if you have the software skills, to go digitize these processes, build them in an omni channel way, so that wherever customers meet you, you've got a differentiated value proposition. And the core act of building software is the act of listening to a customer, hearing a problem they have that nobody has solved yet. And then go building it in software pretty easily actually, like writing software is not hard. The hard part is hearing the problem that no one else has solved. Once you hear that, figuring out a way to put it in front of your customer very quickly. That's the core essence of software. And so you think about a year problem. You build a prototype you put out in from a handful of customers, and they say you're on the right track, keep going or no, this isn't really what I wanted. But But here's what I really want. And that iterative process of building software is what's so important, because that's what makes software such an accelerant of competitive dynamics in every industry.

Dave Michels: 13:38

The way you manage a bunch of software developers like that, as you just had them all 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 of making its way around since signal conferences, you know, customer acquisition costs needs to be less than lifetime value of the customer. I was never like a math or quant guy. So explain 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 understand you should spend less to acquire a customer than you make from that customer. Right? Yes, yeah. And I can draw the equation is CAC 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 thing is, the reason why that equation I would say runs the digital world runs the internet economy is that it used to be that you know before the internet you spent a lot of money on marketing, but you really had a hard time correlating the marketing activity to the specifics of customers earning their business right but with the internet and all the direct response that there is with you know, you can buy ads on Google, Facebook, etc. Click the tie it to a click tight to a customer conversion event, tie it to how much they bought from you tune your marketing, to get even better to narrowly target ideal customers to give them a landing page that has a high likelihood of conversion, blah, blah, blah. All this stuff leads you to the ability to really finely tune, how do I find new customers? How much do I spend to get them in my door, whether it's via sales and marketing, then once I have them in the door, how do I use really sophisticated marketing, to target my messages at them, to give them the next step in the journey to give them the next recommended upsell. So that I get more and more lifetime value out of the account. And because you can do that with an amazing amount of precision today, this notion of CAC versus LTV has become super important in the internet equation because it basically says the difference between a good business and a not so good business in the internet. And the neat thing about the internet is there are so much tools in terms of software out there that allows you to take a not so good business, and then really dial it in. And that's the point we are trying to make with our customer engagement platform is that these are the tools that you need to understand to find your customers to onboard them with little friction and to get more value out of them by marketing the right thing, selling them the right thing and doing recommendations really well. So that your product experience ultimately is continually driving customers towards spending more, and then getting that cost to acquire them down because you're targeting the right folks.

Dave Michels: 16:27

You say it's common sense. But one thing that really resonated for me, and the reason conference is the you know, customer acquisition cost, okay, I understand that lifetime value, I understand that. But I didn't really fully appreciate the cost of reacquiring the customer with every transaction without middlemen in the process.

Jeff Lawson: 16:45

You know, it's so interesting, because when you think about it, the biggest threat, I think, to a lot of companies is the idea that there's large technology companies that sit between them and their customers. And I kind of had this realization a few years ago, when we had the CTO of Nike, at the time speak at our internal company kickoff. And he said, You know, one of our strategic goals at Nike is to build an unbreakable customer relationship, unbreakable customer relationship. And at the time, I remember thinking like, oh, you know, that's like a, that's a good corporate thing to say. But you know, just kind of sounds good, but you know, whatever. And then a few months later, I saw on the news that Nike had pulled all of their product from Amazon. And they basically said, we are no longer going to sell our products via Amazon, if you want Nike, you have to come to Nike nike.com, or Nike apps. And I was like, oh, unbreakable, I get it. The idea that for every company out there in the digital world, they have to get really good at speaking to customers in the language that they understand talking about things customers care about, and being really relevant meeting customers where they are. And if you don't what happens, customers click unsubscribe, they click stop, they don't want to talk to you anymore. They don't go to your website, they delete your mobile app, whatever it is, right? And if you think about the company's do a really good job of taking the large volume of data that they have that companies have about us. And I'm not talking about buying third party shady stuff, I'm talking about just the data that you have that naturally we give to companies like what do we click on? What didn't we click on? What did we scroll through? What are we scroll? What are we buying? What do we return? Those are all really interesting data points about who we are and what we're interested in. Now, if you ignore all that, and just keep sending us that same old newsletter, then who cares. But the companies who do a great job of this Google Amazon, those kinds of companies think about like Amazon, you're on my homepage are completely different. Google you and I can search for the exact same term, and get completely different results. Because I've said, I know more about Jeff, I know where he lives, I know the kind of stuff he's interested in versus Dave versus Evan. And that makes us so much more likely to want to use those products, because they just get better for us all the time. Now, if you think about if every other company is not as good as those folks, what happens when I want a new pair of shoes, where do I go? Well, maybe I search Google, maybe I go to Amazon. And in that world, every other company has to keep buying access to their own customers. Right? If you're an Amazon, you pay a percentage of your sales to Amazon, if you're on Google, you have to keep buying ads, think about it. Companies have to buy their own name to be at the top of the search results. Right, that is continually reacquiring repaying for your own customers again. And so what a lot of companies have woken up to say, you know, what, if I want to have a future if I want to have a profitable future, I can't just keep paying other companies for access to my own customers. I need to build my audience myself. I need this like earned media. I need to be able to talk to my own customers and have them listen. And in order to do that, I need to know who my customers are and then unbreakable. You need that unbreakable relationship. And that's what more as I talk to companies like more and more companies are starting to realize Is that now look, people are still going to buy ads, they're still going to acquire customers on those channels for sure. But once you've acquired the customer, do you want to keep going back and having to re acquire them? No, you should acquire them once, and then get really good at engaging with them through every part of the journey. Re engaging with them after they buy with new ideas, new content, new suggestions, blah, blah, blah. And that way they want to reopen your app, go back to your website, read your emails, see your text messages, et cetera. And then you've got a really low cost way of continuing 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 on there. But in preparation of this podcast as a plan to Evan, some of your architecture stuff. And I have to say, I got totally confused. And so I got to clear some things up here, because I'm now lost again. Obviously, one of the biggest things coming out of signal was Twilio engage congratulations on a brand new, I don't know, product division. I don't know what you call it business unit. But we're gonna get into your gauge here. But it's a marketing solution that combines a native customer data platform. Okay, I think you know, that is that's, that was called segment last year, but so combines a native customer insight form, with a native omni channel communications together. And so I'm thinking what is omni channel communications? Is that C pas? Or is that flex?

Jeff Lawson: 21:22

So omni channel communication? Yeah, that's a good question. The funny thing is omni channel means different things to different people. When I think about, I'll tell you quickly the journey that we've been on, this is how I explained it. And I would draw my like diagram, but we're on a podcast. So like, good that's going to do, we started with communications, we built out voice and then text and then chat, and then video. And then we bought SendGrid, the leading email platform. And so we have this communications platform as a service seapass. For all of the channels, basically, the companies used to meet their customers over there. After doing all that, what we realized was what mattered more than sending those communications and powering those communications is actually what they said, Did those communications contain something interesting, relevant and timely for the end customer. And in fact, powering the content of those messages, not just the messages, the transit of those messages, became what I heard our customers saying, I want you to help me with. And so the key to powering the right message is the understanding is the customer data. So we acquired segment the leading customer data platform. So you put these two things together at the core. So the core of our customer engagement platform is all the channels that you need to talk to your customers, and all the understanding of your customers that allows you to be relevant. And then we wrap that core with the applications that companies use to power those communications. And if you think about applications, what is an app, an app is basically a set of workflows for people inside of a company to do something. So the contact center that's flex, that's a set of workflows that allow agents to answer a call and contact center managers to know what's going on, and all that kind of stuff. And so we've taken all the communications channels, and now the customer data, ladder them up into a contact center platform, that's flex. Similarly, we take all those channels and all that data, lead them up into a marketing automation platform that's engaged, to be able to drive smart campaigns that you cross all these channels with one tool built on top of real time data, that's what engages, then you've got frontline for mobile workers. So it's a mobile app that allows workers on the go to be able to talk to your customers, again, having all the data and all the different channels available to them. And then the last one is Twilio verify or account security product that allows you to verify the identity of customers across all these different interactions. And so the way I think about it, we've been building up but at the core of every company, essentially a set of capabilities to talk to your customers across the various channels that customers want. And then the understanding of the customer the data that drives what are you going to say? And how do you know this customer? And what's going to resonate with them? And why are you talking to them in the first place. And then we wrap that with the apps that you know, aligned to the major buyers, they had a marketing they had a sales they had of service, etc.

Evan Kirstel: 24:07

Interesting. So do all these capabilities gauge. Let's frontline verify, do they all use the same core capabilities? So are they a collection of products or brand or stack separate stacks? What how do I think about?

Jeff Lawson: 24:24

So think of the Twilio platform. So the core data and the core communications wrapped around with four applications. Now customers can buy these parts individually. Right? So they can buy core communications, they can buy SMS, they can buy voice API's, they can buy all that stuff. They can buy the core customer data platform segment, they can buy that as a standalone to solve data integration problems and build one profile of the customer. But now when you want to activate that profile, do something with it. Well, then you need communications and then you can lateral that up into engage which leads you to that or flex which is the contact center. And so if you think about it more Almost every customer facing function of a company has a software app that they use that combines communications and data. Like think of what is a CRM, a CRM is basically that. And so what we've done is taken the core essence of that, and build out the applications that companies must frequently use. But because we're a core platform, companies can 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 drivers arriving at your door with your food, right, no one's built that it's not an app, that's the core functionality of many of the on demand delivery companies, right. But when they reply to that met, when a customer replies that message, I want that to go to a contact center. Now I can really easily pump that into, say, flex for a contact center, or, actually, I'm going to send a message when your food's arriving, but maybe on Tuesdays, I'm going to say, hey, taste Taco Tuesday, and we've got 25% off at local taco joints. Well, that's a marketing campaign that can be powered with engage, the way I think about it is, the world used to be a world where you had to decide if you're gonna build something, or you're going to buy something, right. And when you built something, you had to start from scratch. But when you bought something, you got a solution. And it kind of did what it did. And when you wanted it to do something new is like, well, that's not what it does. And so you're kind of stuck. The modern world, though, of API's and platforms, is buying the things that allow you to build, that's interesting. And so if you think about our platform, that way, it makes a lot of sense that we have this core upon which we build platforms for the contact center, the contact center allows you to do contact center things out of the box. But you if you want to do more, you want to integrate it with your own workflows or your own data, you can go build that quite easily on top of flex, it was designed to do that same thing with engage, right, it's built on top of this data platform that can ingest data, we've got 400 connectors already built all sorts of different systems, you can build your own trivially in taken all this data and drive super smart marketing campaigns, that makes it faster for you to iterate on and build interesting marketing campaigns. Right. And then you kind of take it to all those different areas, our entire platform is designed so a customer can buy capabilities that actually enable them to build even faster. And I think that's the way I think about what we do as this platform of platforms. As opposed to most companies which are selling solutions. They're sort of verticals that sort of like they do what they do, they start all the way at the top, the end user and they go all the way down to the bottom of the stack. What we're doing is building a platforms on top of platforms and customers can start 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 a while as standalone entities. Now that one company, there's this new default path that customers can start with one product or the other and then expand. So do you still see customers 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 use case provides a ton of value to companies and they can get up and running very quickly. But then they start asking like, what's next? Well, how am I going to personalize those messages? How am I going to make sure that they get open and read? What happens if people reply to them. And that's where you start getting into, okay, now we can take segment and actually make those notifications smarter. Oh, now we can plug it into engage and harmonize it with your various marketing campaigns, oh, we can plug it into flex and actually make it so that you can have two way conversations instead of just one way. We often see this as the case. And the same thing goes on with segment, customers often start pulling in segment. So like, look, I've got so many SaaS products that I've bought, and even my homegrown stuff. And they all have a sliver of the story about who my customer is. But if I actually want to pull that together into one profile of the customer that I can make better decisions on I can build machine learning models on, I can actually put in front of an agent just like that, like, Oh, that's so much work. And so segments solves that problem of pulling data out of all these different places, and having one profile the customer, but then you ask, Well, what good is the profile if you don't do anything with it? And that's where engage comes in, which says, Okay, great. Now you want to activate that data, you want to go buy smarter ads based on that data, you want to power internal campaigns better, because that data, you want to make your contact center better because of that data, that's activating the data. And so no matter where you start, you can see the path of what companies are trying to do essentially is harmonize all these touch points together into the journey that an end customer would say, Yeah, that makes a lot of sense. Yeah, that company knows me. Yeah. When I talk to them, you know, on their website, and then I walk into a store and then when I talk to support, they all know who I am and I don't have to keep repeating myself and I don't have to explain that I don't care. for washing machines, in fact, I like dogs. I don't know what store would sell both of those 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 every day. 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 you have,

Jeff Lawson: 30:18

you know, I changed. You know, when the when the pandemic, I used to wear the same wardrobe every day, I just didn't want decisions in the morning, when the pandemic came, I'm like, I'm not wearing a collared shirt at home every day for a year. So I changed my wardrobe to something a little more informal. But the fact of the matter is, I just buy the same shirt from this company. And the funny thing is, they send me these marketing emails, like and now marketing emails they send you like every other day, it's like talking to them. And they keep trying to sell me like women's hats and stuff. And I'm like, have you noticed that the only thing I ever buy are men's t shirt size medium? Why do you think suddenly I woke up today, and when a woman's hat. And you just see this, you see this from companies all the time. And that's what we're trying to fix where the left hand of a company and the right hand know what they're doing. So that it makes sense to the customer who's like, I don't care what departments you have, I don't care what software you bought, I don't care what feud your executives are having about this than that. I just care about the experience I'm having. Why can't that make sense? And that'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 you mentioned it. But somebody had told me I won't say who somebody at Twilio said that, that companies in America in the world are spending $69 billion on CRM software, and it doesn't work. Now, that's a pretty bold statement. And it's particularly bold, because I thought you and Marc Benioff are like buddies.

Jeff Lawson: 31:41

Well, it's true that companies have spent $69 billion last year on CRM software, yet how many companies that you talk to and you say, Wow, they've really got this nailed. In fact, we did a survey. And I came into the executive, I think was 82% of respondents to the survey said, Yeah, companies are horrible and engaging with them. So you're like, where is $69 billion of the software? Like, what is it doing? And I think the answer is like, CRM is a great solution for b2b companies. That's where it got started. Right? It was your salespeople typing in their notes 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 in that world, the fullness of what a company knew about its customers, what it salespeople typed in is notes, right? Where are they in the sales cycle, are they like the buyer, who's the decision maker, yada, yada, yada. But we did a back of the envelope calculation. And we calculated that, worldwide. Globally, every salesperson typing in every note at every company was approximately 10,000 writes per second. That's b2b scale. But for consumer companies, it is a whole different story. Nobody is typing in notes, nobody is keeping track of you by like having a sales conversation with you, B to C companies have a completely different problem. In fact, there are trillions of writes per second for a consumer companies. So I just made that up. Nobody knows exactly how many there are. But it's, I can tell you this, that we have one customer, a fox sports, who uses segment during the Superbowl to instrument what's going on inside their web apps and mobile apps. And they reported that they did over a million writes a second, a million data points a second during the Superbowl Power BI segment. So think about that orders of magnitude more for one customer versus the wholeness of b2b, it is a completely different problem. I mean, you think when I go to amazon.com, a little bit up the web browser, I go to amazon.com, that like there's a salesperson somewhere saying, Oh, I wonder if you're gonna buy a spatula today. And it's like creating an opportunity object in their CRM about the sales cycle. Now, of course, not in b2c. This is just the story of data, massive quantities of data about each of us that allow company to then draw conclusions about who we are, what we're interested in how they can better serve us. And that's the problem that we're solving. So to sum it up, CRM is great. It was designed 20 Some years ago, for b2b scale problems. Fantastic. There's a whole different problem that's emerged, which is internet scale consumer businesses that need a completely different solution. That's what our customer engagement platform is here to solve. And when CRM company is claimed to solve the problem, when I talked to customers, when they dig in, they're like, no, they don't they don't solve this problem. The challenge

Evan Kirstel: 34:30

is, a lot of CC companies are talking about customer engagement and CX, but you talk about a virtuous cycle of customer engagement. That sounds so lovely, but what what exactly does that mean? How's it different?

Jeff Lawson: 34:43

Absolutely. I'm gonna go back to Amazon, Google, etc. Right? Think about it, the more they understand you and the more they tailor your search results or your Amazon recommended things or whatever, like the more that's tailored to you, the better the product gets, and the more you want to use it and the more you want to use it, the more Data, they're able to gather about who you are and what you want, and the better they can make those recommendations in those personalizations. For you, that's the virtuous cycle. And so what we're helping companies to do is to build virtuous cycles of their own because of Amazon, Google, etc, building virtuous cycles, getting really good and understanding us. Meanwhile, everybody else is sitting at a standstill, not really knowing who their customers are, that Who do you think's gonna win. So what we're helping every company to do is really build their own customer data stack that allows them to finally understand who their customers are, and not just as like, focus groups or surveys, but actually, Jeff, Dave, Evan, and actually get really good at serving each of us in a unique way such that we build that same kind of loyalty where the experience I have with that company gets better and better and better every day, as opposed to I go to Amazon, when I want to buy something, I go to Google and search for something. The thing to think about that is it's it's kind of really surprising when you think about it, take Procter and Gamble, now they're a segment customer. But Procter and Gamble for I don't know, give or take was like 150 years, they've been around forever, like 150 years, they had no idea who their customers were, think about it, they manufactured a ton of toothpaste or laundry detergent, they shipped off to, you know, a retailer, the retailer sold it to somebody, I didn't even know who it was either you just check, you took off the shelf, you put it your cart, you bought it, you walked out the door, nobody knew who the customer was. Now, along came the internet and all these direct to consumer companies who were like, we're gonna have a subscription, you're gonna put in your credit card, you can put in your name and your address, and we're gonna like send you your 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 and expand and expand. And that set this whole stage for like, wait a minute, how can we do business with like half the world and never know who any of them are, and not know what they need more of and what they want less of. And that whole direct to consumer movement now is taking over pretty much every industry in every business. And I think about like, I can't even think of an industry that isn't getting taken over by this notion. Like I think about travel, for example, think about travel, you got airlines, you've got hotels, you got Bumble, and what are they all say they like No, no, come to my website.com with Guaranteed lowest fares, right? Instead, if you go to one of the travel aggregator sites, what do they do, they really understand you, they build you, they guide you to the types of trips, and they guide you different airlines every time different hotels every time to like meet your needs. And that is an existential threat to a hotel or an airline, because now they've lost control of that customer. And the same thing is playing out industry after industry, where digital provides this opportunity to either be disintermediated, or to know your customer. And given those two choices. I'm pretty sure every company wants to build that virtuous cycle, knowing your customer getting better at engaging with them being relevant, and then building that loyalty

Dave Michels: 37:49

in. All right, I got another hard one for you, Jeff, there's a report out there. And maybe you've heard of the Gartner puts out this thing called the magic water in the sea casts. And it doesn't include Twilio. Now, that made sense to me for a while because what I'll cook used to describe as monolithic applications were in that in that report, and then that's not what you're doing. But now they include other companies that are doing more of services contexts under Services in that report. How do you feel about not being the report? Is that 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 why we we haven't been in Gartner for context Center as a service. You know, I do remember in the early days, Al saying, you know, look, when you're doing something fundamentally different, you don't want to just get put up against the legacy, because they're going to basically point out that you don't have every bell and whistle. And they're not going to understand the ways in which you're changing the market and the ways in which you're doing something that's different. And so they're just gonna say whatever the quadrant is for you sock. And so I think in the early days, that was the approach, I can't tell you if now's the right time, or if we should be changing that approach, or if the analysts of the world have kind of, if we've been able to prove out the hypothesis of like, the world needs something different. And this is the right time to do it. So I can't answer the question. I'm not the expert on that. But what I will say I think it's true, you know, I think about the migration to the cloud. And think about the early companies were doing cloud migrations of other stuff. We just talked about Salesforce. Salesforce was the canonical early cloud company, right? And when they first launched, were they trying to replicate every feature that Siebel had in CRM. Now? No, you can do that. You can't do that in day one. But really, what you come up with is one thing that is so different, and so important, that actually makes buyers say, You know what, all that other stuff turns out to actually it wasn't that important. 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 even put it on a credit card to be up and running in a week? Those things it turns out were way more important than some feature list that was 12 miles long from the legacy folks, that cloud just took over that you know what we can do without that feature list that's a mile long Long because you don't really care. But by the way, we weren't even using most of those features. But what we really care about here is it like agility and getting up and running and speed, all this kind of stuff. Well, I think the same thing is true in the contact center. Contact Centers do have a feature list that's a mile long. You know, we don't have every one of those features, for sure. But I think the important ones we have. And more important than that is we've changed the paradigm we have allowed companies with big sophisticated workloads, to finally bring those workloads to the cloud. And for the longest time, when I talked to customers about what they were doing for their contact centers, they'd say, Look, you know, we've had these legacy contact centers, a bunch of stuff sitting in the closet in our own data center. And this is one of the last things that was still in the data center, but we can't move it. And it's like, why they're like, Well, look, the old stuff was great, because we could really configure tune it, customize it, we got it dialed in for our workflows, and when you've got 20,000, contact center agents, you need all that customization, right? You need all that optimization, because I can shave one minute off of every interaction, that adds up to huge dollars. Yep, that's it. Okay. So then why don't you just stay on, I'm probably like, because I hate it. I'm stuck and so fragile. You know, it's like, we're stuck in something versions ago. There's like, just like one guy in the corner cubicle, who knows how it all works. And we're just trying to keep them alive. And they're like, and so and that's what we can't innovate, we can't do anything. We're just trying to keep the damn thing running. And so we want to move to the cloud, we want to get those benefits. But nobody has allowed us to bring all that ability to customize along with it to the cloud. In fact, the thing that makes the cloud great SAS grade is like it's one code base, it's multi tenant, right? Those are the things that made it so easy, and so reliable. Those are the very same things that prevented context on our workloads from moving to the cloud, because we're like, well, because it's one code base, it's multi tenant, you can do all this monkeying around with it. But now you can, because that's how we built flex, we built flex so that customers could take, they could write code, they could write front end JavaScript, they could use our API's on the back end. And they could deploy it all into one application where we host it. We've got our platform that we're moving ahead every day shipping new versions of modern, adding new capabilities to while customers can build plugins that are seamlessly integrated, compile it all hosted in the cloud in a multi tenant environment, and get all the benefits of sass without having to give up on all those customizations. And that's why we're seeing these major migrations. You know, we reported a fortune I think we said fortune 100 insurance company last quarter had adopted flex, we had before that a fortune 100 retailer had adopted flex the quarter before. So that's what we're seeing these huge workloads finally moving into the cloud, because we've unlocked that core value proposition. I don't think that's something that the analysts were necessarily thinking 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 and and CC application as does Vonage, a number of others. So does it is it logical that Twilio might acquire contact center 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 taking down the kinds of deals we want to take down. And so we're really 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 briefly at siddell conference, RCS hasn't gotten anywhere, although I'm here in Europe, and I was using normal SMS on my Android phone and I realized I was getting typing indicators. So I guess I was using RCS without even realizing it. But so my question is, were you as a messaging giant as somebody who's been you know what you're doing? You're doing SMS, you're doing WhatsApp you're doing now you're doing Google Business messaging? 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 because consumers don't know if they have it. Just like the story. You're saying, Dave? They don't know if they have it. They don't know if they want it. They don't even 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. We are close to Google. We've done things with Google. We've done business messenger deals, we work with WhatsApp, we provide a the API for WhatsApp. We do all this stuff. But WhatsApp is different, like WhatsApp. Customers in many parts of the world only use whatsapp basically, this if you want to reach your customer, WhatsApp is the channel to use. So that makes a ton of sense. But RCS it's like the same app, the consumer behavior didn't change. SMS still works, right? RCS is really spirally rolled out. And so until that gets figured out, I think it'll struggle to get mass adoption. And so while we do support RCS, and that's basically what Google Business messenger is to. We haven't seen consumer or business demand for it. I think in the early days when Google started investing in it, we saw businesses asking about it because Google is talking to And they're like, What is this RCS thing? And do I need it? And I kind of told him the same thing. I'm like, Well wait and see if it gets rolled out ubiquitously and consumers value it, then there may be some cool things we can do. But there's a long path to get there. Because carriers are involved, handset makers are involved, consumers are involved. It's a long road, and Apple. And I think that it's true, here we are five years later, and it's still basically in the same spot it was five years ago. So you know, I continue to say it's an option for us, we'd stay close to everybody. We do support it in some of a limited way today. But as it evolves, we continue to evolve. But meanwhile, we've put a lot more attention on to, for example, WhatsApp, because that is a place where consumers have clearly spoken in a lot of markets and said, This is where we went on cable companies. And we said, great, and that's where we see a lot of traction from from customers as well.

Evan Kirstel: 45:41

Wonderful. Well, thanks so much, Jeff. We really appreciate your time and your enthusiasm. 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. Everybody take care.

Evan Kirstel: 45:58

Well, I have the feeling we could have let Jeff talk for about three or four hours, 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. He really, he really shared a lot of his thoughts. I thought that was great. It's really an interesting time for Twilio, the company is if you listen to the whole episode. I mean, you've got the core Twilio and then you've got the new Twilio, which is 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 software company. But I think Twilio is a buy. I have no interest in promoting 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't read your phone. No man knows me.