Twilio finds its place in the AI stack

Twilio was founded in 2008 to solve a telecom problem using software. If developers could tap into communications APIs, they could start creating software that disrupted the biggest telecommunications companies by putting previously expensive and rare capabilities into the hands of just about anyone who knew how to code.

With advancements in AI, now anyone can code, at least in theory, and that changes Twilio's core business in subtle and not so subtle ways. That's especially true when you consider the fact the company expanded beyond that pure initial vision when it bought Segment, the first-party customer data platform in 2020, for $3.2 billion. You may recall that money was cheap back then and it was betting that combining the APIs and the data would make a powerful combination.

What it couldn't have known was just how valuable that data would become as large language models, which rely on quality data, took center stage. In spite of that, the company ran into trouble post-pandemic. By 2024, money had gotten expensive. Its stock price dropped precipitously and activist investors swooped in and began clamoring for substantive change at the company. Company co-founder and CEO Jeff Lawson eventually stepped down and was replaced by president of Twilio Communications Khozema Shipchandler, who was charged with righting the listing ship.

For Shipchandler, who had been with the company for over five years, it was a tough moment. He and Lawson were friends. He was an insider. He had to make tough decisions, but he also recognized this was a huge opportunity as the AI landscape was coming together, and if he executed correctly, he believed that he could get Twilio back on track.

"There was like a 30 second celebration, and then it was like, let's get to work. And so the way that we kind of went after it was, let's make our list of things that we've got to go do," Shipchandler told FastForward. 

That work involved recognizing the assets he had and understanding what the activists were looking for. While they were right that the company needed to refocus and take advantage of its market position, they were wrong when it came to thinking they should get rid of Segment when the data piece was such an important part of the AI equation. Shipchandler made the decision to keep Segment and it turned out to be a good one.

Playing into the AI narrative

He knew he had good people, good tech and he just had to redirect the company to meet the coming AI change. The beauty of APIs was they were a way for human developers to connect services to apps easily. As the world shifted to agents, they were already well positioned to have agents communicating with those same protocols by connecting them to MCP servers. It wasn't a huge leap.

What's more, in a world where this technology is growing increasingly expensive to run, we are starting to see a shift from seat-based pricing to usage-based pricing. We saw GitHub make this very change last week. In an interview earlier this month, PagerDuty CEO Jennifer Tejada told FastForward about her company's transition to this type of pricing. But as an API vendor, Twilio was already doing this. "We were kind of looking at the market, and saying, alright, you've got real disruption happening in AI with respect to SaaS, all of these seat-based models are under real strain. We're already a usage-based company whose business model is perfectly aligned with the ways in which our customers generate revenue," he said.

When you combine that with the data from Segment, they had a lot of the pieces in place already. "We've got this awesome data asset," he said, and as he looked out, he saw an opening for his company that nobody was really exploiting, not the big AI labs, and not the enterprise software companies. 

"None of these guys was building a nervous system and a substrate that's able to carry the conversation, verify identity, preserve contacts, and make sure that there's a wrapper of trustworthiness around the entire thing," he said. He believed that was what his company was doing, and it could lead them out of the quagmire they found themselves in.

Redirecting the company

It made sense, but he had to execute. If the stock price is any indication, he's been successful in moving the company to become AI-centric. The price hasn't come close to 2021, but whose has? Still, the stock is up 46% over the last year and around 60% since he took over. 

"The play that we ran was basically, we can run this company with better financial discipline and we can run it with more operating rigor. We can still be highly innovative, but we can be a lot more focused about the way in which we want to innovate," he said. By 2025 the company was profitable and has been able to sustain that. 

His disciplined approach appears to be working. In its most recent earnings report just last week, Twilio reported 20% growth year over year on $1.4 billion in revenue. Jason Lemkin from Saastr wrote, "This is one of the more remarkable re-accelerations in modern public B2B software history. If you owned this stock through the dark period, congratulations."

Shipchandler says that his company is where it should be, building what it should have built all along. "We've gone from '24 to '26 and seen what's transpired with AI, and we've been successful in reasserting our leadership both financially as well as in the market," he said. "I think this is what we were always meant to build. We may not have known it every step of the way because we couldn't see AI five or seven years ago, but now that we're here, it's ours to go get and we're going to get it."

As for those activist investors that caused his ascension to the corner office, they achieved what they wanted and they're gone. "The funny thing about activists is when you turn your company around, it will hit a certain stock price, which is their strike price, and they will immediately leave the stock —  and you will literally never hear from them again. Two of them literally left, and we never heard from them again."