MessageBird raises $60M Series A
blog.messagebird.com
blog.messagebird.com
That means you'll either need to be bought for ~$100M just to break even, or IPO, which seems very rare nowadays.
Could anyone help me understand what the calculus looks like for these decisions? It's a series A too, not even a series B or C. I get that the founding team genuinely believes in the vision of the company, but you can still believe in the vision without removing your ability to exit.
Also remember that the Series of the investment doesn't necessarily reflect the stage of the company but rather the number of rounds of investment it's had. In this case MessageBird expect to hit $100m of revenue this year.
The fact that they’re there this quickly is absolutely mind boggling.
I wouldn't want to be competing against AWS Pinpoint, and the problems Twilio have suggests this is a technically difficult space. Seems like quite a big bet from the VCs involved.
Care to expand on this? When I visited their site to find out what they offer, I immediately said to myself.. "So this is just a Twilio competitor".
On the good side: It's not unusual for founders to demand a secondary sale to take some money off the table when VCs come in, especially in successful startups that raise lots. This is the counter "de-risk" move that the founders can (and probably should) pull so everybody can swing for the fences and the founders aren't the ones holding the bag if things go wrong.
Telecom is a capital intensive industry, which is why startups need to raise such large amounts of money. This is also why Twilio needed so much money (>$200mm) though they did take it in later rounds.
Venture and Growth Investors are only looking for $1 billion plus exits, so the $100M breakeven doesn't bother them. Instead, they ask, "What's a new telecom company going to be valued at?" and "What are the chances this can get there?" and "What will our ownership be then?". They multiply the three #s, and then do some discounting.
These companies aren't really telecom companies though. Twilio owns no physical switches or telecom equipment, or at least they didn't when I worked there and I would be very surprised if they do now. There is no physical capital required to implement the business model of Twilio or MessageBird.
Note that there are still good reasons to take on large amounts of venture capital despite not needing to spend it on traditional telecom equipment.
Perhaps a genuine (and still rare) example of 1999 style startup bubble investing.
I am curious why they decided to join YC? Was it a ego thing. What proof do they have that their service is better than Twilio?
So in this case it could simply be the cash they need to either prep for an IPO or to solidify their lead so that if they are taken out it is expensive (and thus a good return to the Series A investors).
That said, I've looked at MessageBird a bunch of times but I still don't get it. What makes them different from all the other SMS gateways out there? It's the same product everywhere: you invoke some REST API, an SMS is sent to a number and you get billed.
It's 2017 and the incumbent (Twilio) can't explain why I get delays in inbound SMSs.
They blame it all the time on carriers, but if they can work directly with carriers to improve QOS while having Twilio-like ease of use they might have a winner.
There are other providers that promise better QOS than Twilio, but they're very enterprisey (meaning long sales cycle, no ease of testing, etc).
The result is fairly untraceable failures.
Source: former telecom PM.
I.e., if you ever worked with Twilio you will learn about "30008 Unknown error" - Twilio support tries but because "Carrier Network" problems these problems cannot be fixed.
In short, reliable delivery of SMS messages internationally is still not solved.
So how does MessageBird solve this...?
where (in the world) is your data stored physically? The FAQ only says that
> The MessageBird platform is build to be secure from the ground up, through all application layers. We have put in place best practices from several industry standards to help reduce and mitigate risks. MessageBird’s communication platform is hosted at secure data centers that comply with leading security policies and frameworks, including ISO 27001 and NEN 7510.
Similar question/issue has prevented us from using Twilio in the past.
I've never heard of this company but looks like the same space as Twilio. Given how entrenched something like this could be in the API stack of an application, I can see the value in having a large war chest to drive development and adoption. Kudos!
- For companies doing a lot of messages or calls, pricing becomes a big issue in terms of scaling. Better pricing means they can do more to achieve even greater results, without too big of a restraint of financial overhead compared to competitors.
- For smaller companies doing smaller amounts of traffic, pricing isn't the biggest issue, all though it does become one when scaling.
An alternative benefit, which is applied to all types of companies, is the fact that MessageBird is better for security and quality: having more direct connections and working closely with telco's makes it possible to have complete end-to-end control over the traffic. This is crucial when choosing a partner to do 2FA with or other types of sensitive, security related messaging and calling, but also guarantees an overal better quality of service.
Provider based on price depends on how heavily you use US vs World, and if it's SMS (and/or MMS needed) or Voice or both and what volume you are operating at. For pure SMS with a balanced mix of domestic and international, I would probably suggest AWS Pinpoint at this point. Their international rates compared to Twilio are fantastic for all the locations I spot checked.
A lot of people are on plans which let them receive unlimited texts in the USA, which means the provider is absorbing the cost, but it still is much cheaper to send.