Twilio CEO Jeff Lawson
Photo: David Paul Morris/Bloomberg via Getty Images

Twilio delivers a SaaS margin wake-up call

Protocol Enterprise

Hello and welcome to Protocol Enterprise! Today: why Twilio’s layoffs might signal the beginning of the end of the long-term unprofitable public SaaS company, Arm reveals its server chip roadmap and confusion accompanies the rollout of the long-awaited SBOM rules from the White House.

Breaking hearts to break even

Not long after declaring his intentions to make Twilio profitable, CEO Jeff Lawson announced a round of layoffs Wednesday. In a letter to employees this morning, Lawson wrote that the company had grown too fast and needed to make cuts in order to reach profitability.

The fall is more spectacular given how the story started. Twilio shot to fame in 2016, when the communications platform went public at a valuation of more than $1 billion. By 2021, the company had reached a market cap of more than $60 billion.

Then the rubber hit the road. Now Twilio is shedding 11% of its workforce in a restructuring plan aimed at accelerating the company’s sales.

  • “Twilio has grown at an astonishing rate over the past couple years,” Lawson wrote in his letter. “It was too fast, and without enough focus on our most important company priorities. I take responsibility for those decisions, as well as the difficult decision to do this layoff.”

It's a bitter pill to swallow for Lawson, and even more so for the approximately 800 employees who were let go today within hours of the letter’s release.

The macroeconomic environment has once again exposed the thin line between success and failure in Silicon Valley, from startups raising mega rounds right on the cusp of layoffs to CEOs resigning over unmet expectations.

  • Many public SaaS companies have operated at a loss for a long time, with the expectation they would eventually generate enough revenue to cover their investments in sales and marketing.
  • Those days might be over.
— Aisha Counts (email | twitter)

A MESSAGE FROM CNCF

The Cloud Native Computing Foundation’s flagship conference gathers adopters and technologists from leading open source and cloud native communities in Detroit, Michigan from October 24 – 28, 2022. Register now and join thousands of attendees, including maintainers for CNCF's 140 Graduated, Incubating, and Sandbox projects, either virtually or in-person.

Register to attend: In-person | Virtual

Arm lays out its server chip roadmap

Chip technology developer Arm announced plans for the evolution of its Neoverse server chip technology at a virtual press conference Wednesday, promising core designs that are further refined for AI applications, among other tasks.

Chips based on Neoverse designs are optimized for meeting the demands of the cloud computing giants, which require specific types of computing performance that is capable of working with ever-larger datasets, said Dermot O'Driscoll, vice president of product solutions at Arm, at the briefing. The current generation of the Neoverse V2 platform is codenamed “Demeter” and is available to customers now, and it will be followed by the “Poseidon” platform scheduled for release in at least 2023.

O’Driscoll said that the Demeter design helps improve single-thread performance and lowers power consumption compared with the area required by the chip’s design, which are standard objectives most chip designs seek to achieve with each successive generation. Arm executives pointed out other improvements, including security features and its ability to handle greater amounts of memory bandwidth.

Nvidia, which has said it is using Arm designs for its forthcoming server CPU called Grace, disclosed Wednesday that it was deploying the Neoverse V2 designs in the already announced CPU. Grace is set to arrive in 2023.

Broadly, Arm sells two types of technology to its customers: The first is premade building blocks, or cores, that chip designers can incorporate into their designs — the Neoverse V2 server designs fall into this category. The company also sells a license for its technology that allows companies to build cores and other features from the ground up, which is what Apple has done with its laptop chips.

— Max A. Cherney (email | twitter)

SBOMs not required

The White House released its much-anticipated memo to federal agencies today on software security. Notably, the memo includes new guidance on collecting a type of software documentation from vendors — known as a "software bill of materials" (SBOM) — that's meant to offer improved transparency into the security of software components.

According to the guidance, it won't be compulsory for agencies to collect SBOMs from their software suppliers. Instead, the memo “gives federal agencies some discretion on whether to require contractors to produce an SBOM based on criticality of the software,” said Harley Geiger, senior director for public policy at Rapid7, in an email. The memo from the White House's Office of Management and Budget lays that out by saying that an SBOM “may be required” by agencies as part of the contracting process, “based on the criticality of the software as defined in M-21-30 [a memo from August 2021], or as determined by the agency."

As one would expect, given the past debate over SBOMs, the guidance is prompting a mix of reactions from the industry. MongoDB CISO Lena Smart said she was disappointed, saying in an email that "if an SBOM is not mandatory and simply a 'nice to have' option, the reality is no one will do it, because developing and producing one takes a considerable amount of budget and resources."

On the other side, Henry Young, director of policy for industry group BSA, applauded the lack of a firm mandate for federal agencies around SBOM collection. "SBOMs aren’t ready today, and even if they were, they will not address all, or even most of the cyber risks an organization faces daily," Young said in a statement.

— Kyle Alspach (email | twitter)

Around the enterprise

Zoom is preparing business email and calendar products that could challenge Microsoft and Google’s hold on those markets, according to the Information, and those markets could use a little competition.

Canva is also eyeing the office productivity market, launching new products Tuesday including Canva Docs while downplaying any head-to-head comparisons to Microsoft Office and Google Workspace.

A MESSAGE FROM CNCF

The Cloud Native Computing Foundation’s flagship conference gathers adopters and technologists from leading open source and cloud native communities in Detroit, Michigan from October 24 – 28, 2022. Register now and join thousands of attendees, including maintainers for CNCF's 140 Graduated, Incubating, and Sandbox projects, either virtually or in-person.

Register to attend: In-person | Virtual

Thanks for reading — see you tomorrow!

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