All right, thanks everybody for joining. My name is Chris Nasson, Senior Director, Investor Relations team. We're joined on the call today by Jeff Lawson, co-founder and CEO of Twilio. I'll briefly provide a brief safe harbor statement, and then we can commence with the Q&A. During the course of this conversation, we may make forward-looking statements. These statements may involve risks and uncertainties and are subject to a number of factors that may cause actual results to differ materially. A description of these factors can be found in our SEC filings. Note these forward-looking statements reflect management's opinions as of today, and Twilio does not undertake to update these statements as a result of new information or future events. With that, I'd like to open up for Q&A for Jeff. Unless, Jeff, if you want to open with any statements yourself.
Yeah, sure. I'll open up. First of all, thank you everybody for taking time today to chat with us, and good to connect with folks, especially as we're rounding out the year, going into the new year. You know, I'll just open up by really pointing back to what we announced at SIGNAL, our customer conference back in October, because I really think what we are finally able to put on the table for our customers is the real vision of what our customer engagement platform is. It really starts with this idea that every company out there that I talk to, right? You know, I talk to a variety of executives at a wide variety of companies. I mean, pretty much every vertical you can imagine.
Every company out there seems to be coming to the same conclusion, which is that, you know, you look at the digital giants out there, Amazon, Google, Facebook, Apple, and they have such good relationships with all of us because of how we use their services. They have so much first-party data about us that they use that data incredibly effectively in order to hold our attention, to tailor and personalize every experience we have to our needs, and therefore, they are able to really capture our attention. Every company out there is worried that if Apple, Google, Facebook, etc., has this stronghold on our attention, that they then have to pay rent to those giant companies forever.
That could be the 30% Apple tax, paying a cut of your revenues to Amazon, if that's your channel to sell everything, buying ads on Facebook or Google to continually reacquire your own customers again. Every company out there is basically saying, "Look, how are we going to actually go back to the basics of business?" Which is, you know, earn a customer's business, make them happy, make them loyal, make them repeat happy customers. The answer to how you do that in the digital economy is by, first of all, looking at how customers use your product, looking at that first-party data, taking everything you know about them, and trying to understand how can I better serve them in the future. Then number two, applying that understanding of your customer to every touch point you have.
Now with Segment, we're able to, first of all, help companies to understand their customers 'cause they can now take all those signals of all the different applications that customers may use, whether it's web applications, mobile applications, e-commerce systems, etc. Take all that data and form a profile of the customer, and then use that understanding of the customer and express it in your marketing. That's where Twilio Engage comes in. Allow companies to build expressive journeys based on real-time click stream, volumes of data, and build omni-channel campaigns based on that. Also take that data and use it in things like your contact center. How do I better serve this customer? Use it in your sales process with Frontline. How do I better serve a customer because I understand them?
Use it to personalize assets like websites and mobile apps, and basically every one of those, touch points a company has with its customer, how can I use everything I know about the customer in order to build a better experience? This is more important than ever because of all the changes that have gone on with privacy. In fact, companies using their first-party data, not just letting it sit in a log file or throwing it away, but actually intelligently leveraging the first-party data that they get to see about their own customers is becoming more and more and more important. Because the companies who are using that first-party data are in a great position to understand and engage with those customers, send those relevant marketing emails or text messages, have a dynamically personalized web or mobile experience.
The companies who don't just are increasingly irrelevant, and therefore reliant on buying ads, which by the way, are less effective than they ever were before. Therefore, this whole act of earning, you know, acquiring a customer, serving them well, paying attention to them, and then earning their repeat business over time, I mean, that's the fundamentals of business. All the customers I talk to, like, that is the thing that is top of mind for them, and we're delivering the platform that enables them to do it. I've had a lot of folks ask me, like, "Well, how's this different from, say, CRM?" I think it's an entirely different category. No one has really cracked this nut yet.
Because if CRM is about salespeople typing in their notes, because that's where sales automation started, and that's still really the crux of the story for CRM, is B2B companies, how do they understand their customers? In B2B, it's an entirely different scale. You know, if the sum of everything you know about your customer is the sum of all the notes that salespeople have essentially typed in about the status of the customer, the deal cycles, and that kind of stuff. When I go to amazon.com, there's nobody filling out an opportunity. You know, what's the probability that Jeff's gonna go buy a plunger today? No, this is all data. This is all real-time streamed volumes, you know, terabytes and terabytes of data. No one has really built the ability to take that data and turn it into great customer engagement.
That's what the Twilio customer engagement platform is designed to do. We see this opportunity to go help, especially the B to C companies of the world, those companies that are dealing with large customer bases, huge quantities of data, and actually to build the services that allow them to compete for the attention and therefore the business of their direct customers. I think this is the biggest opportunity in software today, and that's why we're so excited to be launching this really the full force of Act Two of Twilio at SIGNAL this year. With that, why don't I hand it back to you, Chris, if you want to moderate the Q&A.
Yes. Thank you, Jeff. I appreciate it. If we can open it up now for questions.
You gonna moderate or you want me to? I'll go to Mike.
Sorry. Yeah. I'm actually asking Hayden to help support. I just lost power due to the snowstorm up in Tahoe right now.
Oh, no.
If investors can raise their hands, and then Hayden can call on each individual, as we see questions come up.
All right, Hayden, take it away.
Sounds good. Thanks, Chris. Mike Seidenberg, I see your hand's raised.
Great.
If you wanna go ahead.
Great. First of all, Jeff, thanks for your time. Appreciate it. You know, I listened to you articulately tell the story regarding Segment, and it makes total sense to me. I think we've been excited about the product since you bought it. I guess what I'm wondering, from an investor perspective, is when does it start to really show up in the numbers or from a customer perspective, giving us references that we're like, "Aha, that makes sense to me." You know, you have a big customer. That's my wife in the background running across. But at any rate, that's my question to kinda kick it off.
Well, if you think about it, the coming together of Segment and Twilio, like, we've got a lot of independent customers. You know, customers we have that they don't have or they have that we don't have. We've got customers who happen to be using us both, right? Those are always great. The actual motion of either us selling Segment into our customers, or their customers using Twilio is largely. Well, two things. I think one is the cross-sell. Selling Segment, so that starts with Connections and then up through Personas, and now with Engage sitting on top, selling Segment into our customer base. That cross-sell motion began at the second half of this year. We, you know, the first six months of the acquisition was just, hey, let's, you know, the basics.
We're not gonna try to do anything, right? We're just gonna get the teams integrated, and we're gonna make the plans, et cetera. At the midpoint of this year is when we said we were gonna start doing that cross-sell. We have started it, and I think it's off to a good start. In the coming years when we're gonna start doing that even, you know, in a fuller way. You'll start to see customers that are, like, kind of a basic cross-sell motion, which is, you know, it's always good to see. The real point of it isn't just cross-selling their product independent of ours. The real point is, like, things like Twilio Engage.
Exactly.
Which takes the best of Twilio, which is messaging and email and data, and delivers them as a product. That we announced at SIGNAL. We committed to customers that it will be GA early in 2022, and we're on track to do that. Then I think you'll start to see us really pushing Engage as, you know, one of the key ways that you really bring together the best of Twilio, the best of Segment. That's just the beginning. Obviously, we've got many other ideas for places where this data platform will reside at the center of all the communications and customer engagement that companies do. Engage is the very obvious, like, first step for us 'cause it's the marketer. The marketer has historically been the best customer segment for Segment, no pun intended.
Because the marketer is very motivated to bring together all the data they have about their customer because they are responsible for targeting customers, for building those journeys, and for driving customer behavior based on better understanding of those customers. That's really where we started by bringing Engage to market first, 'cause that's the takes that marketer motion and takes it to the next level.
Thank you.
Thomas with our next question.
Sure. Hey, Jeff, thanks for doing this.
Hey, Thomas.
You know, the vision you pitch is compelling. My question is around how much value will accrue to the developer layer and how much at kind of the marketing software layer. If I think about Twilio, obviously, historically, you extracted a tremendous amount of value in notification and messaging from that developer layer, right? Is what you're describing now a move up from developer into marketing? What do we make of, you know, Braze and Klaviyo and Attentive and all of these other now marketing companies, some of which are your customers, some of which may use others, but are also addressing this. Are you all now into conflict or help me understand a little bit the persona change potentially from developer to marketer. Can you be in both?
Do you have to kinda pick one in how you see the competitive landscape in what you're describing?
Absolutely. I'm going to reach down for my handy whiteboard here. What I'm gonna do is I don't want a Sharpie. That would be a mistake. I'm gonna really draw for you what our strategy is. This is what we've talked about inside the company and outside the company as sort of what Twilio's core strategy is. Let me turn on my selfie so I can make sure I'm showing you the whiteboard that I think I'm showing you. There we go. Basically, Twilio's strategy is pretty simple, which is we start with APIs. The idea here is we get developers on board with our APIs, and we like to say mind-blowing APIs developers love, and they adopt those APIs.
On top of them, what we've done is we've built out the applications that are really the applications behind why, like what categories of problems are those developers bringing in our APIs to solve? Most of the things that developers build with our APIs are contact centers, marketing, security, so, you know, account security, and a few others, but those are the major ones. I said, if you're coming to Twilio for account security solution, well, guess what? We've got Verify and Authy, our security products. If you're coming to us for a contact center, you can build it yourself and, you know, there's a lot of facets to that, or you can use Flex. If you're coming to us for marketing, you can use Engage.
You really take the things that developers are already tasked with solving for their companies, and you have those developers bring us into their companies, and what we do is we just march up the stack, and this is to our engagement layer. This is both taking the developer traction that we get at companies early on and turning those relationships into a bigger sale. It's also a literal moving up in the stack 'cause we're selling more of an application than we are an API. It's also a moving up in the org chart of our customers. Because developers often bring us in at a tactical level to solve a problem, and this is using the relationship they brought us into to go discover what's the bigger problem they're trying to solve.
Do they really want text messages, or do they really want more effective marketing? Developers are brought in to solve a problem, but then they can bring us in front of the business leader who's actually owning that problem, and we can then show them the full breadth of what we offer. That's the first of all, that's just the basics of the developers bring us in, and then we have an expanded relationship that we can sell to. I think it's very similar to what you see at like an AWS or an Azure. You know, that's what happened. Developers bring in those companies to, like, buy some CPUs or some storage, and then they turn it into a strategic relationship where there's a CIO who's the buyer. It gets started. I mean, it's kind of the classic, you know, bottoms-up adoption model.
The second thing actually was the marketer. The marketer is interesting, which is, the CMO is gonna buy the Engage, the marketing cloud in the same way that the service leader is gonna buy the contact center. Again, what we see is that the relationship that we build inside of the companies gives us essentially the foot in the door to go be able to have a credible conversation with those buyers about how Twilio can solve a bigger problem than they even have associated with us to date. If you think about it, that's what our sales cycles are going to increasingly turn into, which is expanding the footprint that we have up into these new solutions, but still, like, within the org chart to the parts of the company where we're already being brought in.
When I look for, you know, the signs of success here, it's like, are the developers bringing us in with a specific use case in mind? Do they sit in the org chart who's tasked with solving that problem? When you do, you're like, "Great. Take me to your leader," basically is the conversation because, hey, whatever you're tasked to solve, like we may have better ways for you to solve it. Like the situations that are maybe like less exciting for us are the ones where it's like an IT group 'cause they're not the business decision-maker, they're just implementing.
That's in, you know, not really been the buyer we've ever really dealt with 'cause at most companies, the developers tend to sit in businesses that are trying to solve a problem, i.e., product teams, marketing teams, product teams, et cetera. I think I said product teams twice. It's like the part of the business that is there to go serve customers, the forward-facing part, that's where software developers typically sit. Whereas IT, that aren't really builders, they sit in the back supporting things, and it's increasingly like back-end systems and stuff like that. What I see is all the signs that developers pull us into the right part of the business, where when we go in with a variety of solutions, we're able to then bring that fuller value proposition to the table.
'Cause you know, developers and the leaders that they report to see the full set of challenges they're trying to solve. Yeah, we're trying to provide better support using new channels. Yes. Well, let's look at this digital contact center that Twilio has. Are we trying to engage with customers using a full set of data? Developers are often people who bring in Segment first. You know, and so you get to go in and say, "Okay, well, why are you trying to assemble this fuller picture of your customer?" "Oh, we're trying to enrich our customer journey." "Well, check out our Journeys product, and then check out our Engage product." That's really the motion that we have.
I see it working across our products, even though the buyer you end up with in the contact center versus the marketing arena are gonna be different. The commonality is really that the technical folks who are there to do the more tactical work on the ground are the ones who bring Twilio in, and then we start the exploration of why are you bringing this in. Does that make sense, Thomas?
Yes. Maybe just a quick follow-up then around the competitive landscape and how you differentiate versus the pure marketing, and is there something about your platform that makes you better positioned to win versus some of these others?
Yep. Great question. In the marketing space, just like in the contact center space, there's a rich ecosystem and you're right, many of those people are our customers, and we continue to support them. The vision that we have, in the fullness of time, by the way, is that customers can mix and match. They can buy our solutions, our partner solutions, and really build on top of one platform. I think that's a powerful part of the ecosystem that we're building. In any customer scenario, you might say like, oh, a partner of ours or just a competitor who's not a partner of ours versus what we have, our competitive advantage, I think, is two things. Number one, the fact that we get brought in typically with less friction than a competitive solution.
If competitive solutions are just going in with a traditional top-down sales model, and we have the technical folks pulling us in, then we have a head start in being a proven entity inside that company 'cause they may already be using us for notifications for some of their marketing workloads, for some of their sales workloads. You know, the fact that we have, like, messaging can generate some nice-sized bills. That's both bad 'cause you get the attention of the CFO, but it's good because people know who you are. That gets you the meeting. We've got a natural advantage of already being in there, already being trusted, and if we navigate that conversation, we can elevate it as opposed to a cold call or, you know, other forms of outreach along those lines.
The second thing that I would say is that both in the data layer and in the communications layer, there are ways in which we can seamlessly bring these parts of the customer journey together in a way that independent siloed solutions cannot. I think this will end up being a really great way for us to do those cross sells over time. For example, when we are brought in to do notifications, you know. You know, 10 years ago, it would be rare that you get a text message from a company when your package ships or whatever, right? Now, of course, it's pretty commonplace because customers have brought in Twilio. If you go to those customers, and you say, "Hey, what happens when a customer replies to that text message?" They'll often be like, "Well, I don't know. Nothing happens.
It goes nowhere. You get some automated reply back. You know, if you need help, this is unmonitored. If you need help, email us," whatever. It's a horrible experience. That's a great conversation opener to say, "Well, guess what? Twilio has Flex for the contact center, has Frontline for your salespeople. We have a variety of ways for you to go handle those replies so that your customers actually aren't left in the lurch, so that they have a good experience, right?" If you're buying different solutions for each of these different parts of the company, you typically end up with these siloed experiences. What I found is that, like, getting one of these workloads on the platform then opens the conversation to like, well, then how does that bridge into the next experience you're trying to create?
I will tell you know, there is a financial services company that I happen to work with as a consumer, where they will send you alerts when you're, you know, when there's wires going out from your account. I happened to be chatting with the CEO of this company, and I said, "You know, do you know what happens when you get one of those alerts and you reply to it?" And the CEO said, "Well, I think you just get a great experience talking to one of our financial advisors." I was like, "No, actually, you get an automated message that tells you to email or call." The CEO was horrified and actually assembled their senior executive staff to come hear about this problem that demanded it get solved, right?
It's like, this is a classic example of when we have one workload, being able to bridge it into how it intersects with the next workload can allow us to go through the org chart and start to stitch things together in a way that siloed solutions struggle to do. The same thing I would say is true at the data layer. As we bring in Engage, built on top of Segment, and you build in order for, you know, a marketing solution to do its work, a growth solution like Engage do its work, you're gonna bring in all this clickstream data, all the data about what's done on the website and the mobile app, and what did they buy, and would they return, and all this data to build these profiles of the customers.
Once the marketer builds up that profile, then you get to say, "Hey, guess what, contact center? A lot of the work of assembling the view of your customer has already been done, so you can light up Flex and actually tap into that data stream. Actually, you can then augment that data stream, and the marketer gets value out of that." Same thing with Frontline or other products, right? I think at the data layer, you've got another place where the more of our products that customers adopt, the more utility they get adopting other of the solutions as well.
Both at the communications layer, sort of how these communications intersect with each other, as well as at the data layer, which is the data that one group is assembling, then adds more value to the other parts of the company. These are two different ways in which adopting more of Twilio's solutions actually benefit our customers versus buying a bunch of independent things, whether those are powered by Twilio or not.
Thanks, Jeff. Jonathan, you wanna go ahead with the next question?
Yeah. I'm gonna pull on that thread a little more. As you were answering Thomas's question, I was thinking about the developer persona and just how, you know, odd of a character that player can be. In a next generation company that player is like sitting like right at the top of the organization, a lot of influence. Then you come to maybe an organization like mine and, you know, he's buried somewhere. He or she's buried somewhere in the organization, doesn't have a lot of power.
I guess my question is: As you think about the journey that you're going on with Flex and trying to really sort of come at that customer service opportunity through two pathways, the head of customer service management and the head and maybe a developer, how have you learned to help empower that developer to become your advocate at maybe an organization that maybe isn't as forward-leaning? How are you taking those learnings over into the Segment opportunity, if you will? Thanks.
Yeah. You know what, Jonathan? I think the crux of it really comes down to this. When you're engaged in a sales cycle, you can either empower the technical folks to go prove out the hypothesis of like, here's why we're choosing a new solution. Here's the problem we're trying to solve. With Twilio, you know, you can spin up a free trial of Flex. Developers get full access to go customize, play around. I mean, it's a full instance of Flex. I think they get 1,000 hours of free usage or whatever. That is designed to give them enough time to go build and even deploy at small scale the things that they're building in order to test out the hypothesis of what they're looking for in their next iteration of this solution.
Now, compare that to most products and most go-to-market motions, where what you need to do is trust the the slide deck that the salesperson is showing you. In two worlds, one where I have to trust the salesperson and the slide deck, and another world where actually my own technical team has been able to prove out and build the prototype of the solution we need, which of those things do you think they trust more? Which one do you think de-risks the decision more? The key indicator for us of success in an account, like when we're starting a sales deal for Flex, a really good sign for us is that they have already signed up for that trial. That there's code being written against it.
Not because those developers are going to make the decision and tell the head of contact center, "Guess what? I bought a new contact center. You're gonna retrain everybody now." No, of course, the head of contact center makes a big strategic decision like that. But it's more about how the developers can actually play their part in de-risking that decision and proving out the value they think they're gonna get from the solution they're buying is actually gonna be there. I think that's where developers play a role in our adoption cycle that really streamlines and gives us an advantage.
Our goal is to say, if a company is considering a new contact center, what we really love is to say, "Hey, look, let's just get your developers hands-on." The conversation starts with what is it you're trying to solve for in the next generation contact center that you need? Oh, I hear you said this. Great. Why don't we do a little hackathon with your developers where we go out and build this? You know, if it's this particular flow you're trying to optimize or this particular customer experience you're trying to build. You don't have to just trust our sales team. We can actually implement it. By the way, we can often implement it in, you know, very quick time, in a few days.
I think that's the kind of motion that where the developers really come to bear.
Yeah. Sorry, just a quick follow-up. Is there enough activity at top of funnel of people playing and experimenting with Flex, with Segment, et cetera, such that you don't need to go shove an uninspired developer to become your advocate for other parts of your product? Like, you've got enough activity of people already doing sort of warm, strong signal stuff in these new areas of growth for you, and you just have to go observe those and go lean into those.
It's a good question. I think most of the activity for something like Flex is driven more by the desire of the business to adopt a new solution. Sometimes those developers themselves are the ones doing that experimentation 'cause the business might be looking at a few alternatives, and the developers say, "Oh, well, we've got an eye on this thing." Other times it may be after we come in that we recommend, "Hey, you know, you don't have to just trust us in our slide deck. You actually can get hands-on. In fact, we'll do a session with you." It's a little less like messaging or email, which are like the fundamentals of like every application needs messaging and email. It's like developers just we're in their tool belt, and they pull us out, and they bring us in.
I don't think developers need a contact center in their tool belt in the same way they need like messaging and email, which are like primitives. I don't think the correct way to think about it is that every developer is excited to have contact center in their tool belt, and they're just gonna bring us out. When the business is interested in a new way of engaging with customers, the ability for us to have the developers lead us in or for us to use the developer strategically in that sales cycle is a little more what it's about.
Okay, thank you.
Thanks. Now over to Danny for our next question.
Yep, great. Thank you, Jeff. Yeah, I really appreciated in your most recent earnings call how you sort of re-articulated the mission of the company and unlocking the imagination of builders, and it really does seem like a step function change in terms of the aspirations of the company. I'd love to hear a little bit more about what you've had to do internally as you adjust the organization and reorient the employee base around the new mission of the company.
Yeah. Thanks, Danny. You know, it's sort of interesting, fueling the future of communications was our prior mission statement. While it felt accurate per what the company did, like our products and services, it never really felt like the thing, exactly the motivating force behind the company. The thing that I can imagine a hundred years from now are people still waking up every day and getting excited about. It served a purpose, and we went with it. You know, it never quite sat with me like, this is really the mission of the company. We revisited it again this year, and it was a lot of, you know, brainstorming and, you know, a lot of good discussion and all that kind of stuff.
what we really landed on is the thing that gets us excited the most is pointing to what people build using Twilio. Not literally just in the sense of, like, here's the code they wrote, and, like, here's the thing, but actually, like, the outcomes that people are able to unlock because of it. You know, like a great example, like, the things we celebrate, you know, we celebrate, you know, the doers at our conference every year. These are the people, and sometimes it's business executives, sometimes it's the developers, and sometimes it's other people, but ultimately, it's the people who say, "You know, the world the way it is, we don't accept this. We wanna go build something better." That's the spirit that Twilio was founded upon, and that's the spirit that really gets us out of bed in the morning.
We really anchored the mission of the company on that spirit, not on a particular product. I actually think that spirit is really representative of, like, our customer engagement platform. What we're really saying is companies out there, they're—they should not be content to be force-fed their future by Amazon, Google, Facebook, et cetera, right? They should be builders too. Just like those tech giants are, every company aspires to be builders. Now, some of them are further along in that journey than others, absolutely. But nobody says, like, "We shouldn't actually create our future." Right? Like, "We should be, you know, passive participants in the future of our company or my career or of society, right?" Everybody wants to believe aspirationally that they are going to build the future they wanna see for their career, for their company, et cetera.
It taps into, I think, this core fundamental human spirit. Our job becomes how do we make it so that we find that spirit in all of our customers in the right spot. You know, the thing that they were really focused on building today is in their marketing arena or in their product arena or in their. Like, we get to find the part of the thing that is really motivating them today that they know they need to build in order to unlock their future. Chances are we've got a part of our portfolio that can match what they need. That's from a business standpoint, it really well aligns. Like, here's what we're building.
We're building this platform for companies to be able to go innovate in the part of their business where they feel innovation is gonna differentiate themselves, and attach to that spirit. I think, like, I'm very inspired by, like, the Nike brand. You know, I don't know how many of you read Shoe Dog, you know, the Phil Knight book, but, like, it's like the spirit there of athletic potential. It's like their... I can't remember the exact words of their mission, but it's basically to... I'll just use ours and paraphrase it, but it's like to unlock the athlete in all of us. It's like and there's an asterisk that says, "If you have a body, you're an athlete." Right? I think a lot of the truth is for that builder spirit.
When I think about the mission that we're on, I see a lot of parallels to. It's a mindset. It is aspirational for all people. Even if you are not a great athlete, even if you're sedentary, do people, like, wanna see themselves as, like, a sedentary person, or do they wanna see themselves as an aspiring athlete? Sure. Anyway, I think that this mission statement really encapsulates the thing that gets Twilions out of bed in the morning, about what motivates us to go build for customers. From our customer standpoint, really, what is it that they want to believe about themselves, either personally or in their career or in their company, that is gonna help them unlock a better future for any of those things.
I think it's really well aligning with that, and I can see years and years and years of our marketing message and our products and the way we approach what we do being aligned to this idea of unlocking the imagination of builders. That I think that is really energizing for Twilio. I don't know if that answers your question, but that's a little bit of the why. Why do we go about establishing a new mission statement?
Great. Thank you.
Over to Emerson next.
Hey, Jeff. Thanks for doing this. Over the last 12-18 months, it's been a really active year in sort of the telco supply chain. A lot of the middlemen acquiring companies, so like Sinch making 12 acquisitions. They buy Syniverse, then you make the deal. Or they buy Inteliquent, then you make the deal with Syniverse. A lot of these middlemen are trying to move more into the API layer. The marketing message is mostly trying to be cheaper on SMS and then having direct connections for higher performance to the carriers.
I'm curious just how you think about the evolution here, whether or not there's any kind of supply chain risk for the Super Network, and then how to make sure that you maintain that competitive leadership for that part of the market that may not be interested in the higher up the stack functionality.
Yeah, absolutely. I mean, the thing I would say about it, Emerson, is we are no stranger to this type of competition. Since the company got started, we've had people mostly coming from the carrier-type background with, like, connectivity as the main thing that they have, and selling it as an alternative to Twilio with a lightweight veneer of software on top of it. You know, you're right. Like, the argument is usually it's like, you know, we're cheaper, and they're like, we're closer to the carriers. When I hear that, I usually, it's like, "You act more like a telco. Okay, great." The way we think about it is our job is to leverage all the variety of folks that are out there. Some of our connections are obviously direct to carriers.
Some of them are through other organizations around the world, and build an intelligent software layer, that's the Super Network, that is able to take the full inventory of connections that exist in the carriers of the world and to pit them against each other on a price-performance basis, and therefore to find the best performing networks. That is, by the way, not a static concept. That is a down-to-the-minute concept. So any moment in time, find the best performing networks in both cost and performance, and therefore provide our customers the best service while taking the folks who are close, who have the pipes, and making them, essentially compete for the business. I think that strategy has worked well. Look, our goal is not to be the carrier here.
Our goal is to use software to unlock the value in the network and then go build software on top of it, as opposed to really go deep, deep, deep into the carrier plumbing. Now, there are cases where we do go to that level, but for the most part, I don't think that's the business we're trying to build. I think there's other companies out there who are, and we often partner with them. We use them. Yep, they probably aspire to be more like us. If you looked at the business we're building, I would rather have our business too.
I think that the fact of the matter is the positioning, the marketing, you know, our brand, our product set, are all positioning us in a very different way than what the more telco-oriented folks are doing. I think that allows us, builds our ability to go reach into these accounts and reach up to the C-suite and build this much more strategic platform for our customers than a company who's really solely focused on pipes and price.
Thank you.
Nick, you're up next.
Thanks, Jeff, thanks for doing this. I guess maybe a similar question, but from a different angle and more from the Segment angle. It's pretty clear sort of your excitement around Engage, particularly at Signal. Part of that stems from the acquisition of Segment. I guess there's maybe been some people in the investment community that have been a little more skeptical of the recent M&A activity. Would love to sort of hear how you approach just the build versus buy versus partner decision matrix when evaluating future opportunities and incremental sort of markets to go after, and maybe how that's evolved since you started the business.
Absolutely. I mean, I think that we've got a pretty consistent way we think about these things, which is we have a roadmap of where we see customers pulling us to where we need to go. When we look at what we need to go build, whether it's the teams we need to build or the technology we need to build, we look at, okay, well, this is how we would think about it. This is how we would think about building a thing. If nobody has built it, we say, great, that's our job.
If somebody has built really what it is we would go do, we'd say, well, you know, we can go spend a bunch of time and energy building the team, building the product, go competing in the market, and five years from now have, you know, kind of resolved our leadership in that space, or we can buy our way in today and then jointly put our efforts towards, like, what's next in the industry, what's next for customers, then that's a win-win. That's how we tend to look at it. Obviously, you know, you can't build everything, nor you can't buy everything. It's gonna be a combination of both. We use buy where it's clear that buying our way into a market will be an accelerant upon versus building it ourselves.
I can think, you look at Segment is a great example. You know, data, while we have a bunch of data because we store call logs and message logs, all this kind of stuff, we are not known as a data company. We're known as a communications company. We can go build the product, we can go build the brand and reposition ourselves and get people thinking about us as more of a data-oriented company. Or we could buy the leading CDP. To me, when I think about the accelerant that provides, not just from the team and the technology standpoint, but also from the mind share standpoint, that's a pretty big deal. That would tilt us towards a buy in a scenario like that.
There's other scenarios where, you know, we do a tremendous amount of building. The other thing I look at is, you know, areas where we can really accelerate what we're doing for our customers. Like Zipwhip, you know, they have the exclusive relationships for all toll-free messaging in the United States. You know, that's a really neat position to be in. By working more closely with them as one company, it means we can accelerate a lot of things that we're doing in the world of toll-free messaging, which I don't know if you've noticed, has been taking off quite a bit lately. That's a really exciting opportunity. Then there's the things we're building, right?
Like Engage, we brought together the Segment team and the Twilio teams, and the SendGrid teams by the way. It was a very cross-functional effort among or not cross-functional, cross company, legacy company, whatever, between Twilio, Segment, and SendGrid. It really took all of our forces working together to deliver on a product like that. I think that's a great way to use our talent and the capabilities that Twilio has in order to deliver on a value proposition for our customers that we clearly see they need.
Thanks, Jeff.
Zara, please go with the next question.
Hey, Jeff. Thanks for taking the time. I want to ask about bi-directional event opportunity because I think it's really exciting, and you're already starting to enable it with your apps like Engage, Flex, and Frontline. What's really exciting to me is the breadth of use cases for bi-directional that aren't talked about as much, right? We're seeing a lot of companies in the private markets built on top of Twilio using bi-directional messaging for really cool use cases like text-based recruiting and onboarding, right? That's totally outside of the customer service and marketing use cases. I think that's what's exciting because I think Twilio's position as a builder product enables those use cases that out-of-the-box solutions can't.
I'm hoping, can you give us some examples of more bleeding-edge use cases of customers using bi-directional messaging outside of the traditional use cases to really help illustrate that opportunity? Help us paint a picture of what bi-directional might look like for you in terms of volumes over the next 5-10 years. You're already collecting all this data from customers replying to their companies, and getting these automated messages. I'm sure Twilio now with Conversations unlocks a ton of that opportunity.
Yeah, absolutely. Thank you, Zara. You know, I think we've only scratched the surface, right? I don't remember the exact number, but it's in the range of like low double digits of messages that are replies versus messages that are outbound. That's for Twilio, but that's also for the industry. That just shows you that the number of opportunities there are, 'cause if every one of those outbound messages is repliable and can create a conversation with the company, with the organization. Like, you think about the ultimate goal of most of these organizations is to actually be engaging with customers.
If I can reply, if I can handle a reply to that message, that is such a better way to earn a customer's you know loyalty than having to go buy more ads on Facebook or Google to go reacquire my own customer. The question is, how do you do it? It's been like a new domain for most companies because there's been companies out there like Twilio that will let you send a message, but replying, or allowing that reply, is like, well, okay, I need a human to answer it, or I need a bot that's very sophisticated to answer it. Both of those take development.
That's where we've put a lot of energy 'cause we look at if we can get it up to, you know, 50% of our messages are replies, then you create dialogue, which is ultimately better for customers because they're getting answers. It's better for companies. They're building those relationships. Imagine a friend who whenever you texted them, they never replied to you. Wouldn't be a friendship for very long. I think that's what companies are doing to their customers. That is a big software investment, whether it's in Twilio. There's also great stuff happening in our ecosystem, you know, companies like Front in the private space or, you know, a number of those are doing really cool stuff.
I think that is just over the course of the next 5-10 years, I think bi-directional messaging will become a much bigger part of the experience that we have with every company. I think it'll be considered an extraordinarily bad experience if a company tries to talk to you and they won't let you talk back to them. I just think that'll be like going to a website in, you know, 2000 where they say, "Mail us a check, and we'll send you your order." You're like, "Well, how is that even possible?" No. Like, there's no way I'm dealing with you if you don't take credit cards. I think it'll be a similar thing where just the norms of the Internet evolve.
As far as those cool use cases, I mean, you know, you named some of them already. I mean, some non-obvious ones like, you know, we powered contact tracing for half of the U.S. population last year, because they used Flex to do contact tracing, and a lot of that was via text messaging. You know, I love the clienteling examples of like, hey, I need, you know, I need. I'm looking for a new pair of pants, and I can just go browse online, or I can talk to an advisor at, you know, such and such clothing retailer to go help me walk through, like, what is it I'm looking for. They can look at my purchase history, they can make recommendations to me, and I can do that whole thing via text message.
You know, another example that I love, and you know, you're correct in saying there's a bunch of ISVs building on top of Twilio who are reaching into categories and verticals that we would not ordinarily see if we didn't have a great partner ecosystem as we have. You know, one of those examples is the automotive industry, where we've got several companies who are essentially CRM for auto dealers. What they do is they build a whole suite of software, like run your auto dealer on top of our software, and they'll do a whole bunch of services. Well, one of the things they've done is incorporate Twilio into it. Last year, I actually bought a car entirely over text message. This was, you know, powered by one of the ISVs in the automotive space on top of Twilio.
I saw an ad. I knew I was looking for a certain kind of car. I found the ad online. It was in Los Angeles, actually, of all places. The ad said, like, you know, "Call us, fill out this form, and we'll call you or text us." I'm like, of those three options, the one that seems least likely, like I have to talk to a car dealer, is texting. I'm like, I would love to not have to talk to a car dealer. I texted, and of course, over the course of like a week, I went back and forth with this car dealer, price, features, Can you deliver it to me? Sure enough, I ended up buying a car entirely over text message.
In fact, I never talked to a single human being at that car dealer until they drove the car up in front of my house, and I signed the paperwork, and they drove off. I'm like, that's pretty cool. That was all powered by an ISV built on top of Twilio. You see a number of these sort of verticalized cases of like CRM, people powering a specific industry. You know, we see that in, you know, salons and spas and yoga studios, and, like, there's a bunch of verticals along those lines that have incorporated Twilio into it, and I see that some of those are using two-way in a really, like, really interesting way.
Anyway, those are some of the, just off the top of my head, some of the use cases that come to mind that really is, you know, facilitating commerce, obviously. Support is the obvious one that, you know, you probably think of often. I think that when you think about I'm making a big ticket purchase, there's a whole category of things there, whether that's insurance, homes, cars, you name it. Then I think there's a whole category of automation that is still largely untapped, right? The bots solving customer service problems, low cost and at scale, we are still at the infancy of that. I think that every company wants to try to solve. Like, you think about companies operating at consumer internet scale, and can they staff human teams to go answer every question? No, it's not cost effective.
You know, one customer service interaction might destroy the lifetime profit of that customer for some of these companies. They need automated ways to answer those questions. I think from a two-way perspective, that is still very much a big opportunity that is unsolved in the industry yet. It's like the state of ML is almost there, but not quite still.
Thanks, Jeff. Over to Bryce next.
Hey, Jeff, it's good to see you. Different sort of line of questioning, but I'm curious if you kind of were to do a 360-degree sort of assessment of Twilio heading into 2022. You know, you thought about sort of the external factors, demand, environment, competition, and then your internal kind of, you know, product velocity, go-to-market organization. I'm curious kind of where the kind of factors you think you were sort of executing at a very high level, and then where, you know, in your candid assessment you think needs sort of some work.
I maybe ask this in a little bit of the context of you guys coming off an earnings report where maybe the growth was a little kind of softer than maybe folks on this call at least, who are very bullish on the company expected. Obviously, George, you know, who is highly admired, sort of leaving the company as well. Just curious on your assessment of the company heading into next year.
Yeah. Thanks, Bryce. Good question. I would say, look, I think that the growth of our core products continues to be second to none. Like, that's the thing that has been. Like, we've got really powerful products in the bag that continue growing at pretty, you know, record-breaking pace. While we're layering software on top, it is also, you know, the challenge, if you will, that our core products are growing as fast as they are. You know, in some ways, it's classic innovator's dilemma stuff, but it's also, you know, a lot of folks have asked, in fact, I think, you know, we talked about a little bit earlier of like, well, when are some of the, you know, software products gonna poke through and raise the gross margin? Like, I get it. We want that to happen.
It's just with the scale products that we have growing as fast as they are, it's kind of a good problem to have. That's where I'd say, like, the state of the business is we are layering software products. We're really happy with where Flex is at. We're really happy with introducing Engage. Obviously, it's too early. It's, you know, not even really in customers' hands yet until it goes, you know, until we hit the new year. I think it's a great product, and I think our execution there has been very good. I also am really excited. I know, you know, there's some swirl around George, and George is a fantastic executive.
This was also a very thoughtfully executed transition. I know there was some feedback after the earnings call that it was like, oh, it felt like it was like he just quit today or something like that. I'm like, couldn't be further from the truth. I think maybe the lawyers were too involved in the drafting of our earnings statements 'cause of the nature of named officers and all that kind of stuff. Sorry, Maria, I know she's an attorney on the call. I'm not blaming you. The matter of how we did that transition was very thoughtful, because, you know, a while ago, George indicated to me that he thought that one day he'd want to be a, you know, go onto the bigger role, right?
There's only one bigger role from COO, and I'm like, "Well, you know, I'm not going anywhere." We started executing a thoughtful contingency plan for the day when that might happen. That included promoting Marc Boroditsky into the Chief Revenue Officer role, giving him more responsibility, as well as bringing him onto the E-Team over a year ago, as well as starting to transition COO responsibilities over to Khozema and putting more of the operational responsibilities of the company on his plate so that when the day came that it was time to make that announcement, we had a revenue leader and a COO, an operational leader ready to go that we've been investing in for a while. I feel really good about that transition.
I also feel tremendously good about Eyal Manor joining the company as our Chief Product Officer. Eyal is a tremendously thoughtful leader, has seen scale, in terms of he led engineering for YouTube. He was, like, the founding engineering leader of the Google Ad Exchange, and most recently, he led all of product R&D and basically full business ownership over about half of Google Cloud, including their whole Kubernetes multi-cloud strategy, which from everything I have seen from the outside, has been the lifeblood of Google Cloud. Like, it's a thing that has gotten their foot in the door 'cause they were losing big time to Microsoft and Amazon.
When Eyal started on the initiative six years ago, you know, he basically came up with this strategy of like, well, we need to be the multi-cloud company because if we're the uni-cloud company, then we're third. I've seen him execute incredibly well as a product leader, as an engineering leader, and as a thoughtful executive. I'm really excited by the team we have at the table going into 2022. If I think about things we need to up-level, I think there's been a little like we've grown a lot in terms of people during the pandemic. We've more than doubled the headcount in the time that we've all been basically working from home, and that's challenging for a company.
I'm sure you've seen it in many of your firms. I'm sure you've seen it in other companies that you follow. Just from a cultural standpoint, from a building human connection standpoint, like when I look around, I see human relationships are frayed, you know, and people who should be on the same team starting to feel like, you know, we're on different teams, and that's a challenge. We're making a big effort to try to get people together. We're starting at the executive level of, you know, trying to get out of our habits of, oh yeah, we just wake up and walk downstairs every day to like, no, we get out, we go to the office. We get out, we are doing off-sites.
To the extent we can do that, of course, safely, you know, in order to do that, people have to be vaccinated. You know, we recently did a leadership summit and, you know, we did daily rapid testing and things like that, made people feel very comfortable, even amid Omicron, that it was safe. But to me, that's the big challenge we have going into 2022. I think that's why you see the Great Resignation happening, you know, just generally, which is people feel. Look, Zoom meetings are transactional. You join a meeting for an agenda, you leave. There's not a lot of humanity in that. I think that's what everybody is struggling with.
I think solving that for Twilio. I think a lot of companies are in this boat, helping teams be on the same page, helping them to come together, and helping them to, like, get that spirit of like, we're doing a human thing together. We're not just attending Zoom meetings. I think that's the big opportunity, and the challenge that companies have to overcome. Because even the distributed companies before the pandemic, you know, there was a handful of companies that were distributed. Those companies would regularly get people together. That was a part of what made those cultures work.
The fact that a lot of companies have really not been able to get their teams together for almost two years now, I mean, that just means, as human beings, we're starved of connection, and that becomes an institutional problem if folks can't solve it.
Thanks, Jeff. Sebastian, if you want to please go ahead with your question.
Yeah. Hey, Jeff. Thank you. Thank you for doing this. I was hoping you could help me understand a little bit how to think about how closely tied Segment and Engage are, right? Obviously, when you announced Engage, I think you kind of called it a combination of your digital channels and the CDP, which obviously suggests they're very closely related. But should we think about that as a customer needs to kind of commit to Segment first? They need to commit to even buying a CDP first, and that has to be you know, Segment in order for Engage to really work. Like, how critical is the success of Segment for the success of Engage and some of the other software products you're building?
You know, it's interesting because I think about it as a gradation of concerns from transactional notifications that can be done over email or messaging. Those are pretty straightforward. Into the more batch and blast, so simplistic marketing use cases where it's like, I want to send this message to my 100,000 subscribers, up to dynamic growth marketing, which is everyone's on their own journey, informed by tremendous amounts of data. Each one of those ones unlocks more essentially like complexity, but also more value. Because we carry all three of those workloads, right, we can march companies up from a variety of different places. There are companies who start with Twilio for their transaction notifications. Honestly, there's a lot of companies who have come to us. Sorry, my doorbell's been ringing for the last minute.
I don't know if you can hear that. There are companies who come to us say, "Well, Twilio, can you just do the mass text for us?" It hasn't actually, because when you start to wade into those waters, there's a lot of things you have to go do. We've kind of always said, "No, like, we don't do that. Or, you know, we've got customers to do that. We've got ISVs to do that." Now we have that capability. It allows us to take customers who are like, I can send more than one off, I can move into mass, and then I can move into smart," we've got a journey along those lines.
The second journey you have is the company who's already said, "Hey, look, we need smarter marketing, therefore we're investing in a CDP." We land them a Segment, and then we merge them up. Okay, so what are you trying to do? you're trying to really add more channels. Well, guess what? We've got email, we've got messaging, we've got more coming in Engage, and we can merge them up our stack this way. I think you can start with messaging or email transactionally and move them up the slope to more sophisticated solutions. I think you can start with the data layer and merge them up the stack towards more of a solution. Then I also, you know, we're taking our Marketing Campaigns product, which is a part of SendGrid.
SendGrid had a Marketing Campaigns product, which is a simple batch and blast product for email, and that product is now also a part of this story. We can take customers who are like. And that's like a self-service adopted product. It is sold, but it's mostly self-service. A customer can come on and say, "Okay, self-service, I just need to send my monthly newsletter. Great, I'm on board." You know, that's like a Mailchimp style feature set. And then from there, go and say, "Oh, now I wanna make this thing smarter. Okay, now I can invest in the data side to make a smarter solution and move up into there." We've got a number of different ways, depending on where customers are starting, whether it's transactional notifications, batch and blast across channels or the smart thing, and move them up into Engage.
I think that's what's really interesting. As we bring the product to market in the coming months and start executing these go-to-market motions, I think we'll figure out which ones are the, you know, best performing and most promising motions. We have a number of options there, and I think they all have a lot of merit, but we'll see. Usually, it turns out that, you know, some of them are performing better than others, and you just double down on those. That's what we do.
I know we're coming up on time, but Jeff, maybe if you have, if you can go over for a minute, we have one last question, if that works.
Yeah, sure thing.
Michael, go ahead.
Yeah. Thanks, Hayden, and thanks, Jeff, for doing this. I thought this was great. Maybe just, you know, thinking more about the evolution of messaging over the next 5, 10 years, it's clear that sort of as a response to the success of WhatsApp, that a lot of the carriers and Google have coalesced around RCS as sort of a new alternative to SMS, maybe more so on the peer-to-peer side, but also on the A2P side. I'd love to just get your perspective on how Twilio is positioned in that trend and anything you can share with us about the timeline or perhaps just from a supply chain perspective with Google acting more as the aggregator. You know, where does Twilio fit into that relationship?
Yeah, great question. You know, I don't know if you know the cross carrier initiative for RCS was led by a guy named Doug Garland, who now works at Twilio. You know, he's brought about a lot of those relationships and a lot of that context with him. Look, I think it continues to be a very dynamic environment. You know, a few years ago, we had a lot of companies coming to us saying, "We're really interested in RCS." Sort of asked them, like, "Why?" They're like, "We're not sure. We just heard about it. We think we're supposed to be interested in it." The value proposition has been vague but exciting, which is like do more over messaging.
You have this problem of the carriers have to support it, the handsets have to support it, and even Google doesn't control all the handsets, and so you've got a very fragmented ecosystem. Over here you've got Apple Business Chat, which is, you know, also a, you know, is a proprietary only for Apple world, but also a very constrained set of use cases. It is mostly, it is all customer-initiated. Discovery is a little wonky still. They're figuring it out over there. Google and the carrier ecosystem are figuring it out over here. You've got WhatsApp over here, right? It's a very dynamic ecosystem. Instagram just announced their messaging. I think what you see is most companies honestly aren't sure what to make of it yet.
I think that to the extent SMS, with the whole transition to 10DLC, which then is like a prerequisite to, I think, success in RCS world and other worlds, it's like, it's just a messy transition, and therefore we're in a good position to take the workloads today that work over SMS and to give our customers maximum future optionality. Yes, we're working with the Google folks, you know, and we're in talks with everybody, as you might imagine. It's just the question is, are these channels ready for revenue yet, or are they mostly marketing and PR vehicles? We just kinda treat them as such. We prioritize them as such based on customers' need, readiness for product, productization, and for basically what our customers are telling us they need.
If that makes sense. I mean, it's kind of a non-answer 'cause RCS is a lot of PR, if you will, in a lot of ways, but it's also like we do think there's a there there. It's just a slow rollout. That's the challenge.
Got it. Thank you.
All right. We're up on time. Really appreciate everybody joining and your time and continued support. Have a happy holidays.
Yeah. Thank you, everybody, for taking the time. Great to see you all. Happy holidays.