Twilio Grabs CDP Startup Segment in $3.2B Buy. Is the Match Promising?

Twilio strikes a deal to take over customer data platform Segment for $3.2 billion. With the acquisition, Twilio is transforming into a customer engagement company to deliver an enhanced customer experience, fueled by data generated from its cloud-based unified communications platform.  

Cloud communications platform vendor Twilio on Monday confirmed its intent to acquire Segment, a customer data infrastructure company. The deal, by far its largest, is valued at $3.2 billion and underscores Twilio’s ambition to transform into a leading player in the cloud communications and customer engagement market. San Francisco-headquartered Twilio has largely positioned itself as a Communications Platform as a Service (CPaaS) major. So far, what it lacked was a customer data infrastructure to power impactful customer experiences.  

The API-based cloud communications company has ratcheted up a raft of acquisitions to meet its business goals and global ambitions. Twilio, which went public in 2016, added email capabilities with the acquisition of SendGrid in 2018 and is now looking to boost customer experience (CX) through Segment’s customer data platform.

“Wow I did not realize Twilio is a $45B company,” is what Semil Shah, General Partner at Haystack and Venture Partner at Lightspeed tweetedOpens a new window upon coming across what may very well be the acquisition of the week.

However, a user on YCombinator forum believes Segment’s growth is a fluke. He commentedOpens a new window , “They basically just threw spaghetti for months building random products for markets they barely understood until they landed on analytics and it just snowballed. This isn’t even a brilliant idea. They entered a crowded market with a solution that was just a bit better than everyone else and now have a $3B exit.”

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In any case, Segment and Twilio seem like a good match, and the benefits go beyond the tech stack. Data is the key to the future and Segment offers a way to better leverage it. Segment’s acquisition pivots a part of Twilio operations from cloud communications to customer engagement.

A Twilio executive revealed the company hoped to gain a solid footing in CX. Chee Chew, Chief Product Officer at Twilio told TechcrunchOpens a new window , “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.”

This acquisition makes it clear – Twilio is moving beyond just the “communication cloud” and into the broader “Engagement Cloud” pic.twitter.com/5cheFoY5vXOpens a new window

— Jamin Ball (@jaminball) October 12, 2020Opens a new window

The acquisition will significantly change Twilio’s total addressable market and enable the company to go after a $10.3 billion CDPOpens a new window market opportunity.  

Twilio TAM

Source: Jamin BallOpens a new window , VP at Redpoint Ventures

Twilio shares are up nearly 9% since the news of the acquisition broke. 

Segment captures and controls the movement of customer data through APIs, which can be leveraged for an organization’s marketing activities. The integration of Segment data capabilities with Twilio’s cloud communications platform is expected to enhance customer engagement and experiences through high-quality data operations. “Together, Twilio and Segment have an incredible opportunity to build the customer engagement platform of the future,” said Peter Reinhardt, Segment’s Co-Founder and CEO.

Calvin French-Owen, co-founder of Segment captured Segment’s journey in this tweet: 

How it started: How it’s going: pic.twitter.com/7vBDqhf7FZOpens a new window

— Calvin French-Owen (@calvinfo) October 12, 2020Opens a new window

Meanwhile, Twilio’s powerful unified communications platform offers API-driven flexibility to developers. Jeff Lawson, Co-Founder and CEO of Twilio said, “Segment lets developers and companies break down [data] silos and build a complete picture of their customer. Combined with Twilio’s Customer Engagement Platform, we can create more personalized, timely and impactful engagement across customer service, marketing, analytics, product and sales. We are thrilled to welcome Segment to the Twilio team.”

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