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Twilio S-1

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Re: Twilio S-1

#71

Post by cissou »

matthewowen wrote: post #69
hamana wrote: post #45

> Jeff Lawson(1) --- 8,623,617 --- 11.9% How pathetic is this? Around 90% of the company is taken by the vulture capitalists and you, as a founder, only get to keep 12%. Bill Gates at the time of Microsoft's IPO had around 50% of the company.

The major investors (Bessemer, USV, Fidelity) amount to 48.2%. Bear in mind that other founders and employees will also hold equity, and that Jeff Lawson already cashed out a big chunk of equity (detailed in the doc). Given that Twilio has raised a lot of money across a number of rounds (six listed in the document) as a loss making company, none of this seems that strange to me.

where do you see that? I don't know how to read those things

Re: Twilio S-1

#73

Post by hawkice »

ProblemFactory wrote: post #32
stanmancan wrote: post #8

This is the first time I've ever looked through an S-1 before, but in the Risks section they say: We have a history of losses and we are uncertain about our future profitability Is it normal to go public when being uncertain if you'll ever be profitable?

The Risks sections are always like that. Any advertisements for stocks must have disclaimers about a wide range of possible risks, and that despite promising historical data you could lose your entire investment. Otherwise they could face expensive lawsuits when future shareholders claim that they were misled and not informed of these risks. For example from Facebook's S-1: "Growth in use of Facebook through our mobi…

I cannot disagree with your attitude more. This company is saying they have an existing threat to their ongoing operations that _will_ be fatal, that they are unsure will ever be solved. This is fundamentally different than saying ad blockers could impact Google's business.

In a way, their honesty is unexceptional because they are required by law to be honest about their risks. But the level of risk is not usual.

Re: Twilio S-1

#74

Post by epa »

hamana wrote: post #45

> Jeff Lawson(1) --- 8,623,617 --- 11.9% How pathetic is this? Around 90% of the company is taken by the vulture capitalists and you, as a founder, only get to keep 12%. Bill Gates at the time of Microsoft's IPO had around 50% of the company.

He was already paid out amounting to $9,310,100 prior to the IPO. Consider that insurance just in case an IPO never happened.

Re: Twilio S-1

#75

Post by Animats »

There's a lot there not to like:

    Revenue: $166,919,000
    Net Loss: $38,896,000
So they're still not profitable. This is surprising, since they don't have any big capital investments. They're not doing anything that takes a lot of R&D. The thing runs on Amazon AWS. They've been operating for years and should be profitable by now. Yes, they're growing fast, but the costs don't rise in advance of the growth. You don't have to prepay Amazon for AWS.

"Each share of Class A common stock is entitled to one vote. Each share of Class B common stock is entitled to 10 votes and is convertible at any time into one share of Class A common stock."

So the public stockholders have no power. The insiders can't be fired. Google and Facebook did that, but they were big successes before the IPO. It's unusual to try to pull that off when you're unprofitable. The NYSE, on which they want to list, didn't allow multiple classes of stock until 1986.

WhatsApp is only 15% of their revenue, so that's not a big problem.

Twilio's big thing is telephony integration. They have a SS7 gateway and can integrate Internet and telephony. If Amazon or Google offered that, Twilio would have a big problem. Google has Google Voice and Google Hangouts, but doesn't offer telephony integration via a usable API. Yet.

This IPO is an exit for their VCs. They were all the way up to a series E round, and since they grew fast by losing money, the early investors had to pour in a lot of cash.

Re: Twilio S-1

#77

Post by matthewmcg »

stanmancan wrote: post #8

This is the first time I've ever looked through an S-1 before, but in the Risks section they say: We have a history of losses and we are uncertain about our future profitability Is it normal to go public when being uncertain if you'll ever be profitable?

The "risk factors" section is a required part of an S-1. The applicable SEC rule[1] says that the section should list "the most significant factors that make the offering speculative or risky."

You do see some really interesting ones from time to time. For example, RSA's annual reports used to include the following math-related risk factor:

"Our cryptographic systems depend in part on the application of certain mathematical principles. The security afforded by our encryption products is based on the assumption that the “factoring” of the composite of large prime numbers is difficult. If an “easy factoring method” were developed, then the security of our encryption products would be reduced or eliminated."[2]

[1] https://www.law.cornell.edu/cfr/text/17/229.503

[2] https://www.sec.gov/Archives/edgar/data/932064/0000950135010...

Re: Twilio S-1

#79

Post by [deleted] »

chrdlu wrote: post #68
karangoeluw wrote: post #39

Earlier quoted context omitted.

It's just absurd that a company can't be profitable with 28M paying users some of which include Uber and WhatsApp.

It's not that they can't be profitable. It's more along the lines that they are re-investing all of their profits to grow the business. The market Twilio is in has plenty of room to grow and Twilio has to aggressively capture it or else someone else will. If they wanted to become profitable, they can. They're just spending a lot to continue to double every year.

[deleted]

Re: Twilio S-1

#80

Post by hamana »

ojbyrne wrote: post #61
hamana wrote: post #45

> Jeff Lawson(1) --- 8,623,617 --- 11.9% How pathetic is this? Around 90% of the company is taken by the vulture capitalists and you, as a founder, only get to keep 12%. Bill Gates at the time of Microsoft's IPO had around 50% of the company.

As the quora question here - https://www.quora.com/How-did-Bill-Gates-own-such-a-large-sh... - says, its for a pretty straightforward reason, economics. If you need investor money to grow, you get diluted. If you don't you don't.

Why does Twilio need investor money to grow and Microsoft did not? Microsoft also grew rapidly, but didn't take a lot of outside funding. Why? Because they charged adequate price for their products. In the documents, Twilio stated they have a hard time determining pricing (something I've seen with other SaaS companies as well). Since they are not profitable with the current pricing, they should increase it and cut certain costs.
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