Twilio to accumulate Seattle enterprise texting startup Zipwhip for $850M

John Lauer, CEO of Zipwhip, shows off the company’s copywriter, a text-ready beer bot that made its debut at the 2016 GeekWire gala. (Zipwhip photo)

Twilio, a communications software company with roots in Seattle, is acquiring Seattle-based business SMS startup Zipwhip for around $ 850 million in a cash and stock deal, the companies said on Monday.

Zipwhip was founded in 2007 and was originally aimed at consumers. It should be the “Facebook of text messaging”. However, the company turned around 2013 and took a different approach by partnering with wireless carriers to enable hundreds of millions of landlines to receive and send text messages. This enabled companies to write to their customers using landline phones, VoIP services, and toll-free numbers.

“Twilio and Zipwhip share a vision for the future of business messaging and its growing role in customer loyalty,” said John Lauer, Zipwhip co-founder and CEO, in a press release. “Zipwhip’s goal is to ensure that every company we serve can text their customers using their existing business phone numbers. Together, we have a unique opportunity to improve the customer experience and help brands communicate better through a proven and growing channel that has been proven to communicate better and increase long-term customer satisfaction. “

Twilio actually started 13 years ago in Seattle, the brainchild of founder Jeff Lawson, who previously worked as one of the first product managers at Amazon Web Services. The company later moved to San Francisco.

While the acquisition is one of the most significant in the Seattle startup scene, it is certainly not Twilio’s largest acquisition. The company has strengthened its muscles in recent years with the purchase of the SendGrid email API platform for $ 3 billion in 2019 and the customer data platform segment for $ 3.2 billion last year.

Twilio’s rapid growth and expansion into communications have been amply rewarded on Wall Street. The company is now valued at $ 51 billion, and its stock is up 62% over the past year. “

The company had revenue of $ 590 million and non-GAAP income of $ 17.3 million for the first quarter of 2021, compared to $ 6.1 million. The company had more than 235,000 active customer accounts as of March 31, up from 190,000 a year ago.

The Zipwhip team in an undated photo from investor Voyager Capital.

Zipwhip raised $ 51.5 million in a Series D round in January 2019 led by Goldman Sachs Private Capital Investing group, along with existing investors including OpenView, M12 and Voyager Capital. According to PitchBook, the company was valued at $ 261.5 million after this financing and the total financing in Zipwhip was $ 92.5 million.

Lauer said at the time that he believed SMS software could be as widespread as email software – maybe even more so.

BEFORE: Until there is telepathy, John Lauer, CEO of Zipwhip, says SMS is the king of communication

“You’ve probably given up your email inbox. I have 20,000 unread emails, ”said Lauer. “But I have no unread texts in my SMS inbox. This is because SMS is a high priority medium. Email is a low priority medium. If you really want to get a grip on your customers, SMS is the medium by which you can do it. “

In a newsletter emailed about the acquisition on Monday, Voyager Capital shared the history of its business with one of its portfolio companies. Voyager was originally introduced to the Zipwhip opportunity and Lauer in 2009 when the CEO was hosting a meeting in his home office and attendees were sitting on bean bags in his basement.

Voyager’s Bill McAleer and Randall Lucas “both saw this [Lauer] was up for something big, ”says the newsletter. The company returned and led Zipwhip’s Series B round with a $ 3.0 million investment in September 2016. McAleer joined the startup’s board of directors.

John Lauer, CEO of Zipwhip, left, and Tom Engstrom, Senior Manager, IT Operations and Facilities, near one of the golf holes in an office corridor. (GeekWire File Photo / Kurt Schlosser)

According to Zipwhip’s State of Texting 2021, more and more companies have been using SMS to connect with customers during the pandemic.

“Twilio, a long-time partner of ours, recognized the immense value we have built and the potential to expand our offering even further,” Lauer said in a blog post about the deal. “By acquiring Zipwhip and bringing our teams together, we can achieve our common goals of changing the way businesses and consumers communicate.”

A graduate of the University of Michigan, Lauer had early business success. He started in 1997 as the 21-year-old CEO at Rootlevel, a web application development company that built GM.com and Ford.com. In 2002 he became CEO of Simplewire, one of the first SMS aggregators in the wireless industry.

Zipwhip employs around 275 people and moved into new headquarters in Elliott Bay Office Park in 2019.

Zipwhip will become part of Twilio’s messaging business unit and the boards of both companies have approved the transaction. The deal is expected to close in late 2021.