Startups can go boom and bust overnight, and part of the fallout is leaving its customers in a lurch.
Startups, especially in the cloud space, can be seen as risky bets because they’re asking customers to trust them with their data and operations with no guarantee that the company is in it for the long term.
That’s the main reason why Twilio decided to go public and prove it’s in the business for awhile, said CEO Jeff Lawson onstage at TechCrunch Disrupt.
“Trust is the number one thing you sell as a cloud company. That can be software-as-a-service, or even more importantly as a developer platform. You’re saying to customers trust us with your applications, build on top of us and know we’re going to keep delivering for you,” Lawson said.
“And the best way to deliver on trust and to show that customers should trust you, I thought one of the great things you can do is actually become a public company.”
For one, the business operations are laid bare so you know how healthy financially the company is and how fast it’s growing. Compared to a startup whose financial metrics are obfuscated, potential customers might opt for the public company since it can see its financial health.
“People know that public companies are run as tighter ships than private companies as a general rule because you have to be, and that should also help engender trust with your company,” Lawson said.
There’s the money aspect of going public, too. Having raised venture capital, Lawson acknowledged that he had a duty to return it to investors and an IPO accomplishes that. While Twilio has seen its stock soar since going public, Lawson doesn’t pay much attention to it.
“You can’t believe that when the stock price doubles, you’re twice as good as you were yesterday,” he said.
Instead, he’s thinking about how to “accelerate our trust” with customers.
Lots of software developers, particularly those building products for large enterprises, often rely on technology from large, established companies like Microsoft or Oracle – given the volatility of the startup world, there’s a reasonable fear that they’ll vanish overnight, making it difficult for them to rely on their products while they build important new apps or services. Twilio’s status as a public company goes a long way to assuage those fears.