Segment launches customer journey tool to build fine-grained personal experiences

Twilio Segment announced a tool, which is available starting today, to help marketers create fine-grained customer journeys. Up until now the company has enabled marketers to build buyer personas and broader audiences, but this enables users to have much greater control of their interactions with a customer.

Company co-founder and CEO Peter Reinhardt says that marketers have been craving the ability to build more customized customer journeys and this tool gives them that. “It’s basically taking the power that existed in personas and audiences and actually putting it fully in marketers’ hands to build their dream journeys across every channel with the best data,” he said.

This enables marketers to stitch together a whole sequence of audiences. “Say when someone comes to the top of the funnel, they want to do X, then if they want to branch it and use X or Y, then do two different things, and you can keep branching and personalizing via this whole journey to cover the whole lifecycle.”

He says this capability has existed in some tools, but the Twilio Segment offering enables it to be used in more than 300 tools in the Segment ecosystem. “This is the first time that we’re going to be able to really do that and orchestrate this way, not just for a limited subset of channels, but across all of the channels,” he said.

Marketers can build branching by dragging and dropping journey components to send people on different paths depending on things like if they are a regular customer or a first-time customer or just about anything you can think of. Reinhardt says that flexibility is a key attribute of the new feature.

While it’s competing with some major players like Adobe and Salesforce in this space, Reinhardt believes this capability really gives Twilio a leg up over the competitors. “I think if you look at more of the legacy journey builders, [their products] are not built on real time data, meaning that they’re actually missing basically all of the interesting behavioral data that marketers actually build on,” he said.

Segment was acquired by Twilio last year for $3.2 billion, and part of the reason for that was to increase its customer engagement capabilities. Segment gives Twilio a customer data platform to build on top of its other communications tooling, and today’s announcement expands on that capability.


By Ron Miller

How Segment redesigned its core systems to solve an existential scaling crisis

Segment, the startup Twilio bought last fall for $3.2 billion, was just beginning to take off in 2015 when it ran into a scaling problem: It was growing so quickly, the tools it had built to process marketing data on its platform were starting to outgrow the original system design.

Inaction would cause the company to hit a technology wall, managers feared. Every early-stage startup craves growth and Segment was no exception, but it also needed to begin thinking about how to make its data platform more resilient or reach a point where it could no longer handle the data it was moving through the system. It was — in a real sense — an existential crisis for the young business.

The project that came out of their efforts was called Centrifuge, and its purpose was to move data through Segment’s data pipes to wherever customers needed it quickly and efficiently at the lowest operating cost.

Segment’s engineering team began thinking hard about what a more robust and scalable system would look like. As it turned out, their vision would evolve in a number of ways between the end of 2015 and today, and with each iteration, they would take a leap in terms of how efficiently they allocated resources and processed data moving through its systems.

The project that came out of their efforts was called Centrifuge, and its purpose was to move data through Segment’s data pipes to wherever customers needed it quickly and efficiently at the lowest operating cost. This is the story of how that system came together.

Growing pains

The systemic issues became apparent the way they often do — when customers began complaining. When Tido Carriero, Segment’s chief product development officer, came on board at the end of 2015, he was charged with finding a solution. The issue involved the original system design, which like many early iterations from startups was designed to get the product to market with little thought given to future growth and the technical debt payment was coming due.

“We had [designed] our initial integrations architecture in a way that just wasn’t scalable in a number of different ways. We had been experiencing massive growth, and our CEO [Peter Reinhardt] came to me maybe three times within a month and reported various scaling challenges that either customers or partners of ours had alerted him to,” said Carriero.

The good news was that it was attracting customers and partners to the platform at a rapid clip, but it could all have come crashing down if the company didn’t improve the underlying system architecture to support the robust growth. As Carriero reports, that made it a stressful time, but having come from Dropbox, he was actually in a position to understand that it’s possible to completely rearchitect the business’s technology platform and live to tell about it.

“One of the things I learned from my past life [at Dropbox] is when you have a problem that’s just so core to your business, at a certain point you start to realize that you are the only company in the world kind of experiencing this problem at this kind of scale,” he said. For Dropbox that was related to storage, and for Segment it was processing large amounts of data concurrently.

In the build-versus-buy equation, Carriero knew that he had to build his way out of the problem. There was nothing out there that could solve Segment’s unique scaling issues. “Obviously that led us to believe that we really need to think about this a little bit differently, and that was when our Centrifuge V2 architecture was born,” he said.

Building the imperfect beast

The company began measuring system performance, at the time processing 8,442 events per second. When it began building V2 of its architecture, that number had grown to an average of 18,907 events per second.


By Ron Miller

How startups can shake up their first idea and still crush the market

When Quibi announced it was shutting its doors recently after raising $1.75 billion, it begged an obvious question: If the original idea didn’t work, why not adjust its model or do something completely different while it still had capital? It wouldn’t have been the first company to decide to shift gears. Perhaps because of the unusually large amount of money it burned through in just six months of public operation, pivoting wasn’t an option for Quibi, but it has been for countless other successful companies over the years. Sometimes an original idea simply doesn’t pan out, a market gets too crowded or a company’s founders stumble onto something they have built that is actually a better business than the original idea.

There are many such examples:

These examples — and many more — show that when your first approach doesn’t work, pivoting may be the the only logical course, but it takes courage from founders and patience from investors.

We spoke to several founders and VCs who have been through this to find out how pivots happen, and how all the parties involved adjust to shifting priorities.

Sometimes it’s a long and twisting road

A big part of founding a company is having vision. You need to believe in your idea of course, but that doesn’t mean it’s the right way to go. Sometimes it pays to move on. The king of pivots might be the aptly named Pivotal, which changed direction several times and even swapped owners before it went public and got acquired, all in the span of about 20 years. Ed Sim, co-founder at boldstart ventures was part of Dawntreader Ventures in the late 90s when his firm invested in an early version of the company called Metapa. Sim had a front row seat to every twist and turn in the company’s long and intricate history.

“Greenplum, which was sold to EMC and eventually became Pivotal Software, was initially called Metapa. Metapa was in the Akamai space and as the markets cratered in 2001 for funding infrastructure projects, Scott Yara (the company’s founder) and team bought a small company called Didera and turned it into Greenplum, the first petabyte scale data warehouse built on top of open-source technology,” Sim told TechCrunch. It didn’t end there though as Sim continued, “Once again, years later, Scott recruited his replacement CEO, Bill Cook, and they paired together to sell Greenplum to EMC and eventually spin back out and take the company public as Pivotal Software.

It’s worth noting that Pivotal eventually ran into financial problems when its stock tanked last year, but fellow Dell/EMC family member VMware saved the day by acquiring it for $2.7 billion.

Sometimes you stumble onto an idea

Segment, the customer-data platform company that was recently sold to Twilio for $3.2 billion was originally a college lecture sentiment platform, according to CEO and co-founder Peter Reinhardt. “Our first idea was a classroom lecture tool, ClassMetric, which gave students a button they could press in class to let professors know, in real-time, that they were confused. I like to think of it like a pulse monitor for class confusion,” Reinhardt told TechCrunch

That idea quickly failed when professors testing it found that inviting students to open their laptops to test their sentiment just led them to start playing Solitaire or checking Facebook. Professors weren’t thrilled and they moved on. The founders, who were MIT students at the time, decided they wanted to build an analytics tool instead, but it turned out that competition from Google Analytics and Mixpanel at the time proved too steep.

“We spent a year on development, but it was a crowded market and we struggled to carve out our own niche. We were rapidly running out of capital and the pressure was on to find something new,” he said. They were actually considering simply packing it in, but they had developed a tiny open-source tool called analytics.js, which they used to get data into their failed analytics product. At that point, desperate for an idea, one of the founders suggested posting the open-source tool on Hacker News.


By Ron Miller

Twilio wraps $3.2B purchase of Segment after warp speed courtship

It was barely a month ago we began hearing rumors that Twilio was interested in acquiring Segment. The $3.2 billion deal was officially announced three weeks ago, and this morning the communications API company announced that the deal had closed, astonishingly fast for an acquisition of this size.

While we can’t know for sure, the speed with which the deal closed could suggest that it was in the works longer than we had known, and when we began hearing rumors of the acquisition, it could have already been signed, sealed and delivered. In addition, the fact that Twilio CEO Jeff Lawson and Segment CEO Peter Reinhardt knew one another before coming to terms might have helped accelerate the process.

Regardless, the two companies are a nice fit. Both deal with the API economy, providing a set of tools to help developers easily add a particular set of functions to their applications. For Twilio, that’s a set of communications APIs, while Segment focuses on customer data.

When you pull the two sets of tooling together, and combine that with Twilio’s 2018 SendGrid acquisition, you can see the possibility to build more complete applications for interacting with customers at every level including basic communications like video, SMS and audio from Twilio, as well as customer data from Segment and customized emails and ads based on those interactions from SendGrid.

As companies increasingly focus on digital engagement, especially in the midst of a pandemic, Twilio’s Lawson believes the biggest roadblock to this type of engagement has been that data has been locked in silos, precisely the kind of problem that Segment has been attacking.

“With the addition of Segment, Twilio’s Customer Engagement Platform now enables companies to both understand their customer and engage with them digitally — the combination is key to building great digital experiences,” Lawson said in a statement.

In a recent post looking at the reasoning behind the deal, Brent Leary, founder and principal analyst at CRM Essentials saw it this way: “This move allows Twilio to impact the data-insight-interaction-experience transformation process by removing friction from developers using their platform,” Leary explained.

With the deal closed, Segment will become a division of Twilio. Reinhardt will continue to be CEO, and will report directly to Lawson.


By Ron Miller

Twilio is buying customer data startup Segment for between $3B and $4B

Sources have told TechCrunch that Twilio intends to acquire customer data startup Segment for between $3 and $4 billion. Forbes broke the story on Friday night, reporting a price tag of $3.2 billion.

We have heard from a couple of industry sources that the deal is in the works and could be announced as early as Monday.

Twilio and Segment are both API companies. That means they create an easy way for developers to tap into a specific type of functionality without writing a lot of code. As I wrote in a 2017 article on Segment, it provides a set of APIs to pull together customer data from a variety of sources:

Segment has made a name for itself by providing a set of APIs that enable it to gather data about a customer from a variety of sources like your CRM tool, customer service application and website and pull that all together into a single view of the customer, something that is the goal of every company in the customer information business.

While Twilio’s main focus since it launched in 2008 has been on making it easy to embed communications functionality into any app, it signaled a switch in direction when it released the Flex customer service API in March 2018. Later that same year, it bought SendGrid, an email marketing API company for $2 billion.

Twilio’s market cap as of Friday was an impressive $45 billion. You could see how it can afford to flex its financial muscles to combine Twilio’s core API mission, especially Flex, with the ability to pull customer data with Segment and create customized email or ads with SendGrid.

This could enable Twilio to expand beyond pure core communications capabilities and it could come at the cost of around $5 billion for the two companies, a good deal for what could turn out to be a substantial business as more and more companies look for ways to understand and communicate with their customers in more relevant ways across multiple channels.

As Semil Shah from early stage VC firm Haystack wrote in the company blog yesterday, Segment saw a different way to gather customer data, and Twilio was wise to swoop in and buy it.

Segment’s belief was that a traditional CRM wasn’t robust enough for the enterprise to properly manage its pipe. Segment entered to provide customer data infrastructure to offer a more unified experience. Now under the Twilio umbrella, Segment can continue to build key integrations (like they have for Twilio data), which is being used globally inside Fortune 500 companies already.

Segment was founded in 2011 and raised over $283 million, according to Crunchbase data. Its most recent raise was $175 million in April on a $1.5 billion valuation.

Twilio stock closed at $306.24 per share on Friday up $2.39%.

Segment declined to comment on this story. We also sent a request for comment to Twilio, but hadn’t heard back by the time we published.  If that changes, we will update the story.


By Ron Miller

Segment’s new privacy portal helps companies comply with expanding regulations

With the EU’s sweeping GDPR privacy laws and the upcoming California Consumer Privacy ACT (CCPA), companies have to figure out how to deal with keeping private data private or face massive fines. Segment announced a new Privacy Portal today, that could help companies trying to remain in compliance.

Segment CEO and co-founder Peter Reinhardt says companies have built a false dichotomy between personalization and privacy, and he says that it doesn’t have to be that way. “We’ve noticed that a lot of companies feel this tension between privacy and growth. They basically see a paradox between being either privacy-respectful versus providing a very personalized experience,” he said.

The new Privacy Portal is designed to be a central place where customers can sort their data in an automated way and create an inventory of what data they have inside the company. “By introducing a single point of collection for all the data, it creates a choke point on the data collection to allow you to actually govern that, a single place to inspect, monitor, alert and have an inventory of all the data that you’re collecting, so that you can ensure that it’s compliant, and so that you can ensure that you’ve got consent, and all of those things,” he said.

The way this works is that as the data comes into the portal, it automatically gets put into a bucket based on the level of concern about it. “We are basically giving customers monitoring and a consolidated view over all of the different data points that are coming in. So we have matches that basically look for things that might be PII, and we automatically grade most of them with green, yellow or red in terms of the level of potential concern,” Reinhardt explained.

On top of that, companies can apply policies, based on the grades, say letting anything that’s green or yellow through, but preventing any red data (PII) from being shared with other applications.

In addition, to make sure that the product can connect to as many marketing tools as possible to get the most complete data picture, the company is releasing a new feature called Functions, which lets customers build their own custom data connectors. With thousands of marketing technology tools, it’s impossible for Segment to build connectors for all of them. Functions lets companies build custom connectors in a low-code way in instances where Segment doesn’t provide it out of the box.

The two tools are available to Segment customers starting today.


By Ron Miller

Segment CEO Peter Reinhardt is coming to TechCrunch Sessions: Enterprise to discuss customer experience management

There are few topics as hot right now in the enterprise as customer experience management, that ability to collect detailed data about your customers, then deliver customized experiences based on what you have learned about them. To help understand the challenges companies face building this kind of experience, we are bringing Segment CEO Peter Reinhardt to TechCrunch Sessions: Enterprise on September 5 in San Francisco (p.s. early-bird sales end this Friday, August 9).

At the root of customer experience management is data — tons and tons of data. It may come from the customer journey through a website or app, basic information you know about the customer or the customer’s transaction history. It’s hundreds of signals and collecting that data in order to build the experience where Reinhardt’s company comes in.

Segment wants to provide the infrastructure to collect and understand all of that data. Once you have that in place, you can build data models and then develop applications that make use of the data to drive a better experience.

Reinhardt, and a panel that includes Qualtrics’ Julie Larson-Green and Adobe’s Amit Ahuja, will discuss with TechCrunch editors the difficulties companies face collecting all of that data to build a picture of the customer, then using it to deliver more meaningful experiences for them. See the full agenda here.

Segment was born in the proverbial dorm room at MIT when Reinhardt and his co-founders were students there. They have raised more than $280 million since inception. Customers include Atlassian, Bonobos, Instacart, Levis and Intuit .

Early-bird tickets to see Peter and our lineup of enterprise influencers at TC Sessions: Enterprise are on sale for just $249 when you book here; but hurry, prices go up by $100 after this Friday!

Are you an early-stage startup in the enterprise-tech space? Book a demo table for $2,000 and get in front of TechCrunch editors and future customers/investors. Each demo table comes with four tickets to enjoy the show.


By Ron Miller