Lost in the cloud
Reality check at Twilio
Good morning, bug busters. This is your Stock Market Rundown for December 14th, 2023. Thank you, once again, for being here with me. Let’s dig in:
TODAY’S TOP STORY: GETTING PINGED
You may have never heard of Twilio, but if you’ve ever gotten a ride status update from an Uber or a customer service email from Nike, you’ve used their products.
Founded in 2008, Twilio builds cloud-based software that helps enterprises send and receive phone calls, texts, and emails. Like many startups, the idea for the business was born out of founder Jeff Lawson’s frustrations with the status quo. (As for the name “Twilio”, it’s a made-up word Lawson picked because the domain only cost seven bucks.)
Twilio’s customer base is software developers, and they put these crackerjack coders in the spotlight. The company has a tradition of honoring any employee who builds an app and demos it to their peers, with a red track jacket, which is worn with pride.
Twilio officially became a “unicorn” when it went public in 2016 at a valuation over $1 billion. Unfortunately, lately that unicorn is looking more like a donkey wearing a party hat.
When valuations were sky-high and sales were rocketing, Twilio fell into the same trap as many tech peers: overhiring. Now that shares have been crushed by more than 80% from the peak, and sales have slowed, they’ve had to do three rounds of morale-killing layoffs, slashing thousands of jobs.
Recently, some big investors have been pressuring the company to spin off a division or even sell the entire company. Twilio’s dizzying rise and precipitous fall proves yet again that sometimes, even the smartest leaders confuse a bubble with brains.
SO WHAT ELSE IS GOING ON?
Big-four consultant firm McKinsey cut its new partners class by 35%, a red flag of tough times for the corporate clients they serve. If they ever train an AI to regurgitate airport business books and make PowerPoint decks, these guys are really in trouble.
“Temu” may sound like the name of the latest killer whale at Sea World, but it actually refers to a fast-growing Chinese e-commerce site. Recent data shows Temu is taking share from US chains like Dollar General as Americans log on to buy cheap personal electronics and plastic running shoes.
McDonald’s is testing a pilot concept for a smaller-footprint store named “CosMc’s”, which will sell drinks with names like "Sour Cherry Energy Burst" and "Blueberry Ginger Boost". Guess they wanted to elbow in on Starbucks’ market dominance in hawking thousand-calorie liquid sugar bombs.
According to the International Air Transport Association, airlines make just $5.45 in profit for every passenger carried. The next time you’re on a flight, why not try to steal one beer from the drink cart so you come out ahead?
That’s me signing off for now, folks; let's circle back first thing tomorrow morning. Yours in capitalism, The Axe
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