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Twilio, a CX platform vendor with a customer service bent, acquired Segment, a marketing-oriented customer data platform, for $3.2 billion last October. Segment co-founder Peter Reinhardt remains CEO of a newly formed Twilio Segment division. Both companies are known for their developer-friendly tool sets.
SearchCustomerExperience caught up with Reinhardt to learn how the merger went down. He also discussed CDPs, already a red-hot marketing technology before the pandemic that has only grown in stature since social distancing and lockdowns forced most companies to prioritize investment in digital experiences.
How does somebody end up launching and running a CDP company? I'm sure that wasn't what you imagined when you were at MIT.
Peter Reinhardt: I was studying aerospace engineering. My roommates at MIT [eventual Segment co-founders Calvin French-Owen and Ilya Volodarsky] were computer science majors. We failed pretty hard at building a classroom lecture tool, and then we failed pretty hard building an analytics tool. We'd built a tool for ourselves called Analytics.js, a little open source library. It took data from someone's website and federated it out to their downstream analytics tools -- and we kind of ignored it.
About a year later, [the fourth Segment co-founder, Ian Storm Taylor, said] "I think there is a really big business behind this data routing thing. We should launch the open source library on Hacker News." Inside, my reaction was, that's the worst idea I've ever heard. I was thinking that launching it would kill it. But when we launched on Hacker News, we went straight to the top, got hundreds of upvotes, thousands of email signups and thousands of stars on GitHub. That was the first time [Twilio CEO] Jeff Lawson saw it.
Things kind of took off from there. We incrementally expanded as we paid really close attention to what problems our customers had. We started to realize that it wasn't just about getting data into analytics tools, it's also getting data into email marketing tools, advertising tools, data warehouses, chat tools and so on. Then we started to realize it's not just web data, but also mobile data, server-side data, test data and CRM data. Then, we started to realize that we're actually assembling the complete view of the customer. Maybe it's not perfectly complete -- maybe it's a 359-degree view of the customer, the aspirational 360-degree view. Once we assemble that, we're making sure that that customer data is available and federated out to all places. Anyway, that's how we stumbled into it.
Fast-forward to 2020 and the Twilio acquisition.
Reinhardt: Jeff and I had been meeting quarterly for about a year, leading up to more serious discussions. Jeff's vision was that Twilio has all these communication channels and APIs for messaging on those channels but needed to really make them intelligent. Segment has all the data, but we didn't have any way to communicate with customers.
This is a beautiful marriage. Segment brings the data about how to communicate intelligently with customers, and Twilio brings the communication platform that allows this combined entity to do that. It took me a while to see it. But it's very compelling and an extremely differentiated developer experience. Other customer experience, customer engagement tools tend to be very focused on the application or the UI that the marketer wants to use. But the thing that's most important to the user is: Were you able to execute on those communications, and to did you send the right message to the right customer at the right time? And that's governed by the data.
How's the Twilio-Segment integration coming along? What are you working on right now?
Reinhardt: Fantastically well. Jeff and I see very much eye-to-eye on the product vision and where it needs to go. I think that comes from that kind of shared DNA around developer-first vision and infrastructure. Seeing how Twilio operates at scale has been an incredible learning experience. There's a lot that we can draw from there to accelerate. We're operating as an independent division within Twilio, and there is a lot that we can learn and apply to accelerate things growth. I think we have a couple hundred open roles.
Was it harder to do this during the pandemic?
Reinhardt: We are 100% remote. It makes hiring challenging in some respects, but we've all kind of gotten used to it. Not just Twilio Segment -- we've all kind of gotten used to the way the world works right now in terms of like doing business and building relationships and teams. I'm not sure that the world is really going to go back to 100% the way it was -- it will be interesting to see what happens, but it's going to be a much more remote-work world.
Do you feel like you're going up against Salesforce and Oracle now with Twilio Segment?
Reinhardt: I don't think we necessarily view it that way. I think generally, we take a much more customer-focused approach in terms of how we build in the space. We hear again and again from customers that if you're trying to build a really differentiated customer experience -- or trying to engage your customers in a competitive field -- you can't just buy something random off the shelf. You have to build a differentiated customer experience.
Peter ReinhardtCEO, Twilio Segment
Buying a set of marketing tools off the shelf and stitching it together doesn't really cut it. You need developers to get in there and build something on top that is unique. If you're a bank, what differentiates your bank? How you engage your customers. If you're not building something unique around that and you're just using some off-the-shelf thing, it's not going to work.
The bigger thing that we're going for here is decomposing the customer experience in such a way that developers can build unique products. Twilio and Segment will always be developer-first, and that means offering APIs and composable things that can be built together.
How do you get marketers to buy in? They're not developers.
Reinhardt: More and more, the developer has significant influence at the data layer for what marketing is trying to accomplish. Marketers realize that assembling the necessary data sets is something they need to be involved in. Behavioral data on how my customers interact with the product drives how I want to market.
If you want to drive those unique experiences, you need the data. And if you need the data, then you need the engineering team. So the engineering team has significant, appropriate say in how those platforms come together.
There's a growing recognition that data is really the important thing. Sure, you could try running a random, really creative campaign, but what really makes it resonate is the ability to target. We know this in the advertising space -- how you choose audiences, and so forth. But for your own first-party data, how you engage with customers for the full lifecycle marketing is just as important, if not more important. That fundamentally requires the engineering team to help collect and trigger that first-party data as well.
I think the Amazons and the Googles of the world have figured out how to do this internally, but the level of infrastructure required to make that happen is reserved for the top 0.001% of tech companies. Bringing a little bit of that data rigor and pipeline infrastructure to the rest of the world's first-party data is super-important -- and super-empowering -- to the marketer.
Editor's note: This Q&A has been edited for brevity and clarity.