Twilio Appeases Activist Investors with New Addition to Its Board of Directors

The news comes after Twilio refused to sell its Segment business, which has come under investor scrutiny

Twilio Appeases Activist Investors with New Addition to Its Board of Directors
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Published: April 3, 2024

Charlie Mitchell

Twilio has appointed Andy Stafman, a Partner at Sachem Head Capital Management LP, to its Board, effective immediately.

The announcement comes after Twilio Co-Founder & CEO Jeff Lawson stepped down earlier this year.

His departure came amid mounting pressure from activist investors to sell up Twilio Segment and Engage – if not the business in its entirety – as the vendor’s push for profitability slowed.

While the firm’s new leadership doubled down on its intentions to stick with Segment earlier this month, the appointment of Stafman seems like a move to appease investors.

Of course, Twilio didn’t frame it that way. In making the new appointment, Jeff Epstein, Chair of the Board for Twilio, said:

Over the last year and a half, we have made important changes to accelerate our path to profitability and position Twilio to capitalize on the opportunities we see ahead.

“We look forward to benefiting from the addition of Andy’s perspectives as an additional shareholder in the boardroom as we continue our strong oversight of the company’s strategy to enhance value for all our stakeholders.”

The changes Epstein alluded to include Twilio embarking on three rounds of layoffs, ditching Zipwhip, and selling off its IoT arm.

However, these moves do not address perhaps the most fundamental issue at Twilio, stalling its drive to profitability: how the business lands new customers but struggles to expand upon them.

For instance, as of the advent of 2024, Twilio had 305,000 active customer accounts – up 15,000 from 12 months ago.

Yet, across the full year 2023, it secured a dollar-based net expansion rate of 103 percent.

That statistic suggests that if Twilio hadn’t added any new customers last year, its revenues would have only increased by three percent.

Recognizing this issue, Khozema Shipchandler, the new CEO of Twilio, has looked to pull Twilio’s two businesses – Communications and Segment – closer together.

Indeed, he recently promised three innovations will come this year to bridge the businesses – and, just last week, Twilio released the first at Enterprise Connect 2024.

The innovation adds a native data layer to Twilio Flex – the vendor’s CCaaS platform – that the Segment CDP powers. That aims to generate a more “complete view” of the customer.

Now, Shipchandler hopes to align Stafman and other investors behind the strategy.

“We are operating Twilio with greater focus, rigor, and discipline than ever before and remain focused on our commitment to drive durable, profitable growth,” he said.

As we look ahead, we are confident that Twilio is well positioned to unlock the power of AI by converging our data capabilities with our powerful Communications solutions.

“The Board and I will partner with Andy as we continue to advance our strategy to realize the full potential of the business.”

By Twilio’s own estimates, it will take until Q4 2025 to reach operating profit. However, the vendor has pledged to hold an investor day – within the next 12 months – to discuss the company’s strategy in greater detail.

In doing so, it may quell activist investor concerns and give them more of a voice than it seems Lawson was willing to – as per reports of the former CEO soliciting advice for defending against activist investors shortly before his departure.

Now, Stafman has called for a more cooperative relationship.

“Sachem Head invested in Twilio because of its strong leadership position in the customer engagement market and the significant upside potential from the application of AI,” he said.

“The company has already taken meaningful actions to strengthen Twilio’s profitability and growth trajectory, and I look forward to working with the rest of the Board and management team to build upon that progress and enhance value for shareholders.”

Stafman will take his place on the Board alongside nine independent directors.

In doing so, Sachem Head has agreed to standstill, voting, and confidentiality commitments, in addition to other provisions.



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