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Segment launches customer journey tool to build fine-grained personal experiences
Twilio Segment announced a tool, which is available starting today, to help marketers create fine-grained customer journeys. Until now the company has enabled marketers to build buyer personas and broader audiences, but this enables users to have much greater control of their interactions with a customer.
Company co-founder and CEO Peter Reinhardt says that marketers have been craving the ability to build more customized customer journeys and this tool gives them that. “It’s basically taking the power that existed in personas and audiences and actually putting it fully in marketers’ hands to build their dream journeys across every channel with the best data,” he said.
This enables marketers to stitch together a whole sequence of audiences. “Say when someone comes to the top of the funnel, they want to do X, then if they want to branch it and use X or Y, then do two different things, and you can keep branching and personalizing via this whole journey to cover the whole lifecycle.”
He says this capability has existed in some tools, but the Twilio Segment offering enables it to be used in more than 300 tools in the Segment ecosystem. “This is the first time that we’re going to be able to really do that and orchestrate this way, not just for a limited subset of channels, but across all of the channels,” he said.
Marketers can build branching by dragging and dropping journey components to send people on different paths depending on things like if they are a regular customer or a first-time customer or just about anything you can think of. Reinhardt says that flexibility is a key attribute of the new feature.
While it’s competing with some major players like Adobe and Salesforce in this space, Reinhardt believes this capability really gives Twilio a leg up over the competitors. “I think if you look at more of the legacy journey builders, [their products] are not built on real-time data, meaning that they’re actually missing basically all of the interesting behavioral data that marketers actually build on,” he said.
Segment was acquired by Twilio last year for $3.2 billion, and part of the reason for that was to increase its customer engagement capabilities. Segment gives Twilio a customer data platform to build on top of its other communications tooling, and today’s announcement expands on that capability.
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June makes product analytics more accessible
Meet June, a new startup that wants to make it easier to create analytics dashboards and generate reports even if you’re not a product analytics expert. June is built on top of your Segment data. Like many no-code startups, it uses templates and a graphical interface so that non-technical profiles can start using it.
“What we do today is instant analytics and that’s why we’re building it on top of Segment,” co-founder and CEO Enzo Avigo told me. “It lets you access data much more quickly.”
Segment acts as the data collection and data repository for your analytics. After that, you can start playing with your data in June. Eventually, June plans to diversify its data sources.
“Our long-term vision is to become the Airtable of analytics,” Avigo said.
If you’re familiar with Airtable, June may look familiar. The company has built a template library to help you get started. For instance, June helps you track user retention, active users, your acquisition funnel, engagement, feature usage, etc.
Image Credits: June
Once you pick a template, you can start building a report by matching data sources with templates. June automatically generates charts, sorts your user base into cohorts and shows you important metrics. You can create goals so that you receive alerts in Slack whenever something good or bad is happening.
Advanced users can also use June so that everyone in the team is using the same tool. They can create custom SQL queries and build a template based on those queries.
The company raised a seed round of $1.85 million led by Point Nine. Y Combinator, Speedinvest, Kima Ventures, eFounders and Base Case also participated, as well as several business angels.
Prior to June, the startup’s two co-founders worked for Intercom. They noticed that the analytics tool was too hard to use for many people. They didn’t rely on analytics to make educated decisions.
There are hundreds of companies using June every week and that number is growing by 10% per week. Right now, the product is free but the company plans to charge based on usage.
Image Credits: June
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With the right tools, predicting startup revenue is possible
For a long time, “revenue” seemed to be a taboo word in the startup world. Fortunately, things have changed with the rise of SaaS and alternative funding sources such as revenue-based investing VCs. Still, revenue modeling remains a challenge for founders. How do you predict earnings when you are still figuring it out?
The answer is twofold: You need to make your revenue predictable, repeatable and scalable in the first place, plus make use of tools that will help you create projections based on your data. Here, we’ll suggest some ways you can get more visibility into your revenue, find the data that really matter and figure out how to put a process in place to make forecasts about it.
You need to make your revenue predictable, repeatable and scalable in the first place, plus make use of tools that will help you create projections based on your data.
Base projections on repeatable, scalable results
Aaron Ross is a co-author of “Predictable Revenue,” a book based on his experience of creating a process and team that helped grow Salesforce’s revenue by more than $100 million. “Predictable” is the key word here: “You want growth that doesn’t require guessing, hope and frantic last-minute deal-hustling every quarter- and year-end,” he says.
This makes recurring revenue particularly desirable, though it is by no means the be-all-end-all of predictable revenue. On one hand, there is always the risk that recurring revenue won’t last, as customers may churn and organic growth runs out of gas. On the other, there is a broader picture for predictable revenue that goes beyond subscription-based models.
Ross and his co-author, Marylou Tyler, outline three steps to predictable revenue: predictable lead generation, a dedicated sales development team and consistent sales systems. They wrote an entire book about it, so it would be hard to sum it up here. So what’s the takeaway? You shouldn’t base your projections on processes and results that aren’t repeatable and scalable.
Cross the hot coals
In their early days, startups usually grow via word of mouth, luck and sheer hustle. The problem is that it likely won’t lead to sustainable growth; as the saying goes, what got you here won’t get you there. In between, there is typically a phase of uncertainty and missed results that Ross refers to as “the hot coals.”
Before the hot coals, predicting revenue is vain at best, and oftentimes impossible. I, for one, remember being at a loss when an old-school investor asked me for five-year profit-and-loss projections when my now-defunct startup was nowhere near a stable money-making path. Not all seed investors expect this, so there was obviously a mismatch here, but the challenge is still the same for most founders: How do you bridge the gap between traditional projections and the reality of a startup?
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How Segment redesigned its core systems to solve an existential scaling crisis
Segment, the startup Twilio bought last fall for $3.2 billion, was just beginning to take off in 2015 when it ran into a scaling problem: It was growing so quickly, the tools it had built to process marketing data on its platform were starting to outgrow the original system design.
Inaction would cause the company to hit a technology wall, managers feared. Every early-stage startup craves growth and Segment was no exception, but it also needed to begin thinking about how to make its data platform more resilient or reach a point where it could no longer handle the data it was moving through the system. It was — in a real sense — an existential crisis for the young business.
The project that came out of their efforts was called Centrifuge, and its purpose was to move data through Segment’s data pipes to wherever customers needed it quickly and efficiently at the lowest operating cost.
Segment’s engineering team began thinking hard about what a more robust and scalable system would look like. As it turned out, their vision would evolve in a number of ways between the end of 2015 and today, and with each iteration, they would take a leap in terms of how efficiently they allocated resources and processed data moving through its systems.
The project that came out of their efforts was called Centrifuge, and its purpose was to move data through Segment’s data pipes to wherever customers needed it quickly and efficiently at the lowest operating cost. This is the story of how that system came together.
Growing pains
The systemic issues became apparent the way they often do — when customers began complaining. When Tido Carriero, Segment’s chief product development officer, came on board at the end of 2015, he was charged with finding a solution. The issue involved the original system design, which like many early iterations from startups was designed to get the product to market with little thought given to future growth and the technical debt payment was coming due.
“We had [designed] our initial integrations architecture in a way that just wasn’t scalable in a number of different ways. We had been experiencing massive growth, and our CEO [Peter Reinhardt] came to me maybe three times within a month and reported various scaling challenges that either customers or partners of ours had alerted him to,” said Carriero.
The good news was that it was attracting customers and partners to the platform at a rapid clip, but it could all have come crashing down if the company didn’t improve the underlying system architecture to support the robust growth. As Carriero reports, that made it a stressful time, but having come from Dropbox, he was actually in a position to understand that it’s possible to completely rearchitect the business’s technology platform and live to tell about it.
“One of the things I learned from my past life [at Dropbox] is when you have a problem that’s just so core to your business, at a certain point you start to realize that you are the only company in the world kind of experiencing this problem at this kind of scale,” he said. For Dropbox that was related to storage, and for Segment it was processing large amounts of data concurrently.
In the build-versus-buy equation, Carriero knew that he had to build his way out of the problem. There was nothing out there that could solve Segment’s unique scaling issues. “Obviously that led us to believe that we really need to think about this a little bit differently, and that was when our Centrifuge V2 architecture was born,” he said.
Building the imperfect beast
The company began measuring system performance, at the time processing 8,442 events per second. When it began building V2 of its architecture, that number had grown to an average of 18,907 events per second.
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How startups can shake up their first idea and still crush the market
When Quibi announced it was shutting its doors recently after raising $1.75 billion, it begged an obvious question: If the original idea didn’t work, why not adjust its model or do something completely different while it still had capital? It wouldn’t have been the first company to decide to shift gears. Perhaps because of the unusually large amount of money it burned through in just six months of public operation, pivoting wasn’t an option for Quibi, but it has been for countless other successful companies over the years. Sometimes an original idea simply doesn’t pan out, a market gets too crowded or a company’s founders stumble onto something they have built that is actually a better business than the original idea.
There are many such examples:
- Perhaps the most famous is Slack, which originally was a multiplayer online game before pivoting to be a communications company.
- Box launched in 2005 as a consumer storage product before deciding to take on content management in the enterprise in 2008.
- YouTube started life as a video dating service and when they didn’t get much traction they began letting people upload whatever videos they liked. Google saw enough potential to buy the company for $1.6 billion just a year after launching.
These examples — and many more — show that when your first approach doesn’t work, pivoting may be the the only logical course, but it takes courage from founders and patience from investors.
We spoke to several founders and VCs who have been through this to find out how pivots happen, and how all the parties involved adjust to shifting priorities.
Sometimes it’s a long and twisting road
A big part of founding a company is having vision. You need to believe in your idea of course, but that doesn’t mean it’s the right way to go. Sometimes it pays to move on. The king of pivots might be the aptly named Pivotal, which changed direction several times and even swapped owners before it went public and got acquired, all in the span of about 20 years. Ed Sim, co-founder at boldstart ventures was part of Dawntreader Ventures in the late 90s when his firm invested in an early version of the company called Metapa. Sim had a front row seat to every twist and turn in the company’s long and intricate history.
“Greenplum, which was sold to EMC and eventually became Pivotal Software, was initially called Metapa. Metapa was in the Akamai space and as the markets cratered in 2001 for funding infrastructure projects, Scott Yara (the company’s founder) and team bought a small company called Didera and turned it into Greenplum, the first petabyte scale data warehouse built on top of open-source technology,” Sim told TechCrunch. It didn’t end there though as Sim continued, “Once again, years later, Scott recruited his replacement CEO, Bill Cook, and they paired together to sell Greenplum to EMC and eventually spin back out and take the company public as Pivotal Software.”
It’s worth noting that Pivotal eventually ran into financial problems when its stock tanked last year, but fellow Dell/EMC family member VMware saved the day by acquiring it for $2.7 billion.
Sometimes you stumble onto an idea
Segment, the customer-data platform company that was recently sold to Twilio for $3.2 billion was originally a college lecture sentiment platform, according to CEO and co-founder Peter Reinhardt. “Our first idea was a classroom lecture tool, ClassMetric, which gave students a button they could press in class to let professors know, in real-time, that they were confused. I like to think of it like a pulse monitor for class confusion,” Reinhardt told TechCrunch
That idea quickly failed when professors testing it found that inviting students to open their laptops to test their sentiment just led them to start playing Solitaire or checking Facebook. Professors weren’t thrilled and they moved on. The founders, who were MIT students at the time, decided they wanted to build an analytics tool instead, but it turned out that competition from Google Analytics and Mixpanel at the time proved too steep.
“We spent a year on development, but it was a crowded market and we struggled to carve out our own niche. We were rapidly running out of capital and the pressure was on to find something new,” he said. They were actually considering simply packing it in, but they had developed a tiny open-source tool called analytics.js, which they used to get data into their failed analytics product. At that point, desperate for an idea, one of the founders suggested posting the open-source tool on Hacker News.
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Twilio wraps $3.2B purchase of Segment after warp-speed courtship
It was barely a month ago we began hearing rumors that Twilio was interested in acquiring Segment. The $3.2 billion deal was officially announced three weeks ago, and this morning the communications API company announced that the deal had closed, astonishingly fast for an acquisition of this size.
While we can’t know for sure, the speed with which the deal closed could suggest that it was in the works longer than we had known, and when we began hearing rumors of the acquisition, it could have already been signed, sealed and delivered. In addition, the fact that Twilio CEO Jeff Lawson and Segment CEO Peter Reinhardt knew one another before coming to terms might have helped accelerate the process.
Regardless, the two companies are a nice fit. Both deal with the API economy, providing a set of tools to help developers easily add a particular set of functions to their applications. For Twilio, that’s a set of communications APIs, while Segment focuses on customer data.
When you pull the two sets of tooling together, and combine that with Twilio’s 2018 SendGrid acquisition, you can see the possibility to build more complete applications for interacting with customers at every level, including basic communications like video, SMS and audio from Twilio, as well as customer data from Segment and customized emails and ads based on those interactions from SendGrid.
As companies increasingly focus on digital engagement, especially in the midst of a pandemic, Twilio’s Lawson believes the biggest roadblock to this type of engagement has been that data has been locked in silos, precisely the kind of problem that Segment has been attacking.
“With the addition of Segment, Twilio’s Customer Engagement Platform now enables companies to both understand their customer and engage with them digitally — the combination is key to building great digital experiences,” Lawson said in a statement.
In a recent post looking at the reasoning behind the deal, Brent Leary, founder and principal analyst at CRM Essentials, saw it this way: “This move allows Twilio to impact the data-insight-interaction-experience transformation process by removing friction from developers using their platform,” Leary explained.
With the deal closed, Segment will become a division of Twilio. Reinhardt will continue to be CEO, and will report directly to Lawson.
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Is the Twilio-Segment deal expensive?
The Twilio-Segment acquisition was the biggest story of the weekend, and in our current IPO lull, it is the most discussed deal of the moment.
So it hasn’t been a surprise to see folks working to figure out if the $3.2 billion price tag Twilio expects to pay for Segment is cheap, reasonable or expensive.
The Exchange explores startups, markets and money. Read it every morning on Extra Crunch, or get The Exchange newsletter every Saturday.
We had the same question.
The all-stock transaction is another big deal from Twilio, which previously scooped up SendGrid. Some expected Twilio to be picked up by a larger company after it went public, I’ve been told. Instead, Twilio has become the acquiring entity, boosting its size and adding to its total addressable market (TAM) through deal-making.
But a smart company can still overpay while executing a generally intelligent strategy. So, does the Segment deal look cheap, or expensive? While we don’t have all the data we’d like, a few useful VCs dropped hints about the size of Segment in my DMs.
Our hunt begins with Twilio’s own release on the matter. From there, we’ll bring in some historical data from the deal that Twilio compares the Segment transaction to, compare the resulting multiples to today’s market norms and close with a discussion of the acquiring company’s rising share price. The synthesis of all the elements will give us an answer. And we’ll have some fun at the same time.
The deal
A quick refresher on the deal: Twilio will spend $3.2 billion in shares of itself to purchase Segment. Per the company, the transaction is worth about 6% of the combined entity.
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Twilio’s $3.2B Segment acquisition is about helping developers build data-fueled apps
The pandemic has forced businesses to change the way they interact with customers. Whether it’s how they deliver goods and services, or how they communicate, there is one common denominator, and that’s that everything is being forced to be digitally driven much faster.
To some extent, that’s what drove Twilio to acquire Segment for $3.2 billion today. (We wrote about the deal over the weekend. Forbes broke the story last Friday night.) When you get down to it, the two companies fit together well, and expand the platform by giving Twilio customers access to valuable customer data. Chee Chew, Twilio’s chief product officer, says while it may feel like the company is pivoting in the direction of customer experience, they don’t necessarily see it that way.
“A lot of people have thought about us as a communications company, but we think of ourselves as a customer engagement company. We really think about how we help businesses communicate more effectively with their customers,” Chew told TechCrunch.
Laurie McCabe, co-founder and partner at SMB Group, sees the move related to the pandemic and the need companies have to serve customers in a more fully digital way. “More customers are realizing that delivering a great customer experience is key to survive through the pandemic, and thriving as the economy recovers — and are willing to spend to do this even in uncertain times,” McCabe said.
Certainly Chew recognized that Segment gives them something they were lacking by providing developers with direct access to customer data, and that could lead to some interesting applications.
“The data capabilities that Segment has are providing a full view of the customer. It really layers across everything we do. I think of it as a horizontal add across the channels and extending beyond. So I think it really helps us advance in a different sort of way […] towards getting the holistic view of the customer and enabling our customers to build intelligence services on top,” he said.
Brent Leary, founder and principal analyst at CRM Essentials, sees Segment helping to provide a powerful data-fueled developer experience. “This move allows Twilio to impact the data-insight-interaction-experience transformation process by removing friction from developers using their platform,” Leary explained. In other words, it gives developers that ability that Chew alluded to, to use data to build more varied applications using Twilio APIs.
Paul Greenberg, author of CRM at the Speed of Light, and founder and principal analyst at 56 Group, agrees, saying, “Segment gives Twilio the ability to use customer data in what is already a powerful unified communications platform and hub. And since it is, in effect, APIs for both, the flexibility [for developers] is enormous,” he said.
That may be so, but Holger Mueller, an analyst at Constellation Research, says the company has to be seeing that the pure communication parts of the platform like SMS are becoming increasingly commoditized, and this deal, along with the SendGrid acquisition in 2018, gives Twilio a place to expand its platform into a much more lucrative data space.
“Twilio needs more growth path and it looks like its strategy is moving up the stack, at least with the acquisition of Segment. Data movement and data residence compliance is a huge headache for enterprises when they build their next generation applications,” Mueller said.
As Chew said, early on the problems were related to building SMS messages into applications and that was the problem that Twilio was trying to solve because that’s what developers needed at the time, but as it moves forward, it wants to provide a more unified customer communications experience, and Segment should help advance that capability in a big way for them.
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Equity Monday: Twilio buys Segment, and Airkit raises $28M for its low-code platform
Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast where we unpack the numbers behind the headlines.
This is Equity Monday, our weekly kickoff that tracks the latest big news, chats about the coming week, digs into some recent funding rounds and mulls over a larger theme or narrative from the private markets. You can follow the show on Twitter here and myself here — and don’t forget to check out last Friday’s episode.
So, what was on our minds this morning?
- Headlines: The Twilio-Segment deal is real, happening and priced about where we expected. Big names in the ex-China internet want to make encryption worse. And, how the United States government would break up Google is becoming clearer by the week.
- On the Twilio-Segment deal, as TechCrunch and Forbes anticipated, the transaction came in around $3.2 billion, forming something of an API monster from their combined form. As we noted on the show, a lot of investors made a mint from the transaction.
- Airkit has raised $28 million while in stealth since 2017. What does it do? Per Forbes, it’s a “low-code platform” that wants to “improve customer engagement.” That’s notably similar to what Segment does.
- Flash Express raised $200 million, as the on-demand and delivery spaces stay hot.
- And Razorpay raised $100 million at a valuation of $1 billion, meaning that we have just witnessed the birth of yet another fintech unicorn.
- And, finally, warm public markets mean that the startup and VC game will stay afoot, even if we see a pre-election dip in IPOs.
We hope that you are well and warm and full of good spirits. Back soon!
Equity drops every Monday at 7:00 a.m. PT and Thursday afternoon as fast as we can get it out, so subscribe to us on Apple Podcasts, Overcast, Spotify and all the casts.
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Twilio is buying customer data startup Segment for between $3B and $4B
Sources have told TechCrunch that Twilio intends to acquire customer data startup Segment for between $3 and $4 billion. Forbes broke the story on Friday night, reporting a price tag of $3.2 billion.
We have heard from a couple of industry sources that the deal is in the works and could be announced as early as Monday.
Twilio and Segment are both API companies. That means they create an easy way for developers to tap into a specific type of functionality without writing a lot of code. As I wrote in a 2017 article on Segment, it provides a set of APIs to pull together customer data from a variety of sources:
Segment has made a name for itself by providing a set of APIs that enable it to gather data about a customer from a variety of sources like your CRM tool, customer service application and website and pull that all together into a single view of the customer, something that is the goal of every company in the customer information business.
While Twilio’s main focus since it launched in 2008 has been on making it easy to embed communications functionality into any app, it signaled a switch in direction when it released the Flex customer service API in March 2018. Later that same year, it bought SendGrid, an email marketing API company for $2 billion.
Twilio’s market cap as of Friday was an impressive $45 billion. You could see how it can afford to flex its financial muscles to combine Twilio’s core API mission, especially Flex, with the ability to pull customer data with Segment and create customized email or ads with SendGrid.
This could enable Twilio to expand beyond pure core communications capabilities and it could come at the cost of around $5 billion for the two companies, a good deal for what could turn out to be a substantial business as more and more companies look for ways to understand and communicate with their customers in more relevant ways across multiple channels.
As Semil Shah from early stage VC firm Haystack wrote in the company blog yesterday, Segment saw a different way to gather customer data, and Twilio was wise to swoop in and buy it.
Segment’s belief was that a traditional CRM wasn’t robust enough for the enterprise to properly manage its pipe. Segment entered to provide customer data infrastructure to offer a more unified experience. Now under the Twilio umbrella, Segment can continue to build key integrations (like they have for Twilio data), which is being used globally inside Fortune 500 companies already.
Segment was founded in 2011 and raised over $283 million, according to Crunchbase data. Its most recent raise was $175 million in April on a $1.5 billion valuation.
Twilio stock closed at $306.24 per share on Friday up $2.39%.
Segment declined to comment on this story. We also sent a request for comment to Twilio, but hadn’t heard back by the time we published. If that changes, we will update the story.
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