Today we will be diving into Twilio. Twilio was founded just over a decade ago by Jeff Lawson, with the vision of enabling developers to access the world's communication infrastructure through APIs. Twilio has over 200,000 customers and powered nearly 1 trillion interactions last year through SMS, voice, video, email, and more.  In this business breakdown, we'll cover Twilio's unique approach to distribution, how lower gross margins versus peers can actually be a moat, and why Twilio's revenue model aligns incentives with its customers. We closed with the bull and bear case for Twilio over the next five years and what investors and operators can take away from studying Twilio more closely.  To help me break down Twilio, I'm joined by Ro Nagpal, a senior investment professional at the Holocene advisors. For the full show notes, transcript, and links to mentioned content, check out the episode page here.-----Business Breakdowns is a property of Colossus, Inc. For more episodes of Business Breakdowns, visit joincolossus.com/episodes. Stay up to date on all our podcasts by signing up to Colossus Weekly, our quick dive every Sunday highlighting the top business and investing concepts from our podcasts and the best of what we read that week. Sign up here. Follow us on Twitter: @JoinColossus | @patrick_oshag | @jspujji | @zbfuss Show Notes[00:02:53] - [First question] - What is Twilio?[00:03:36] - How the world received text updates before Twilio[00:04:14] - The scale of Twilio today[00:05:02] - How expensive designing infrastructure of this magnitude can be[00:05:34] - How to use Twilio and gain access to its functionality[00:06:33] - The insight that led to developing the company[00:08:37] - Other aspects of Twilio’s services beyond SMS[00:09:50] - Unit economics of the business[00:12:01] - Case studies of likely and unlikely customers to use Twilio[00:15:17] - Original use cases and how they’ve evolved since[00:16:12] - Developer insights and what innovation it’s led to[00:19:19] - Twilio becoming a pioneer in the user software API space[00:22:15] - How big the TAM can be and why it’s bigger than people may think it is[00:23:38] - Why the API data and growth rate of Twilio separates it from its competitors[00:26:02] - How having a lower gross margin actually works to their benefit[00:27:28] - Who their competitors are and why Twilio beats them out[00:29:11] - Strategic acquisitions they’ve made like SendGrid, Segment, and Syniverse[00:31:18] - Unifying themes in their M&A strategy[00:32:08] - Fees associated with using iMessage and WhatsApp[00:32:43] - Improving margins as SMS becomes less pivotal in their operations [00:33:21] - Things about Jeff Lawson that makes Twilio so special[00:35:25] - What’s their bear case is[00:36:19] - Lessons for builders and investors 

Today we will be diving into Cinnabon. Founded in Seattle in 1985, Cinnabon is the market leader among cinnamon roll bakeries and is owned by parent Company Focus Brands. Cinnabon currently operates in almost 50 countries with over 1,500 franchised locations, primarily in high-traffic venues such as shopping malls and airports. In this breakdown, we start with Cinnabon's scale and an overview of the franchise's fascinating history. We then dive into what really makes Cinnabon special - its omnichannel ecosystem and how it balances franchisees, licensing deals, and distribution through other retails while maintaining its differentiated and relevant brand.  To help me break down Cinnabon, I'm joined by Kat Cole, the former COO and President of North America for Focus Brands. Before that role, she was the president of Cinnabon. Kat's operating and investing experience in this space and her deep understanding of the brand make her the perfect guest to break down Cinnabon. Please enjoy this Business Breakdown. For the full show notes, transcript, and links to mentioned content, check out the episode page here.-----Business Breakdowns is a property of Colossus, Inc. For more episodes of Business Breakdowns, visit joincolossus.com/episodes. Stay up to date on all our podcasts by signing up to Colossus Weekly, our quick dive every Sunday highlighting the top business and investing concepts from our podcasts and the best of what we read that week. Sign up here. Follow us on Twitter: @JoinColossus | @patrick_oshag | @jspujji | @zbfuss Show Notes[00:03:04] - [First question] - The operational scale and complexity of Cinnabon[00:05:48] - Origins and humble beginnings of Cinnabon[00:10:07] - Diversified stakeholders involved in franchised businesses[00:14:44] - A focus on brand relevance and differentiation[00:19:38] - Building brick and mortar traffic during a recession and partnering with Pillsbury[00:23:21] - Cinnabon’s ability to thrive and support an omnichannel brand ecosystem[00:26:57] - Partnering with Burger King and fast-food market exposure[00:32:55] - Building successfully collaborative equity buckets[00:36:52] - Focus Brands and advantages of being part of a bigger ecosystem[00:41:52] - Balancing licensing opportunities while maintaining core channel partners[00:45:37] - Lessons for operators and investors we can take away from Cinnabon

Today, we will be diving into Costco. Costco is a favorite business story and model for many operators and investors. It was founded in 1983 in Seattle, and it has grown into a juggernaut with over $169 billion in sales and almost 60 million members globally. To me, Costco is the best example of doing one thing for customers and getting better at it constantly for decades. To help me break down Costco, I talked to both Zack Fuss and Chris Bloomstran. Zack is an investor at Continental Grain, a 200-year old family-owned business that is focused on investing and operating businesses throughout the food and agriculture ecosystem with assets across the US, Latin America, and Asia. Chris is President and Chief Investment Officer of Semper Augustus Investments Group and a long-time shareholder in Costco. In this Breakdown, we'll start with Zack by diving into the Costco business model, examining the relentless focus on efficiency that separates Costco from its peers, and exploring the secrets behind its private label brand, Kirkland. I'll then talk to Chris about Costco's growing international opportunities and the lessons that operators and investors can take away from studying the business and founder Jim Sinegal. I hope you enjoy this Breakdown of Costco. For the full show notes, transcript, and links to mentioned content, check out the episode page here.-----Business Breakdowns is a property of Colossus, Inc. For more episodes of Business Breakdowns, visit joincolossus.com/episodes. Stay up to date on all our podcasts by signing up to Colossus Weekly, our quick dive every Sunday highlighting the top business and investing concepts from our podcasts and the best of what we read that week. Sign up here. Follow us on Twitter: @JoinColossus | @patrick_oshag | @jspujji | @zbfuss Show Notes[00:03:03] - [first question] - The fundamental equation that makes Costco work[00:04:02] - Dynamics of a shared scale economy business[00:06:45] - Jim Senegal’s devotion to perfecting one model for decades[00:10:10] - Examples of how far Costco is willing to go to provide value for its members[00:12:27] - Analysis of a private label strategy, and why Kirkland is such a success[00:15:35] - Key differences that separate Costco from their competitors[00:18:19] - An open-source retailing relationship with suppliers[00:21:10] - How they maximize sales per square foot over time[00:25:45] - Thoughts on leverage in unit-concept stores and why Costco doesn’t use leverage to accelerate growth [00:28:02] - Lessons that can be learned and applied to other businesses   [00:30:47] - How Costco approaches international expansion[00:33:54] - Why Jim Sinegal is such an exemplary CEO

Today, we will be breaking down the world's largest e-commerce company, Alibaba. Alibaba was founded in 1997 by Jack Ma and almost 20 other co-founders as an online bulletin board that allowed small Chinese manufacturers to tell buyers around the world that they were open for business. Today, Alibaba operates a sprawling ecosystem of businesses that includes e-commerce marketplaces, cloud computing, food delivery, logistics, and financial services.  In this breakdown, we discuss the staggering scale Alibaba's business, how Alibaba went from copycat to innovator, the looming threat to Alibaba from the next generation of Chinese juggernauts, and how competition is viewed differently in China versus the West.  For this episode, I'm joined by a special guest host, Claire Cormier Thielke, who many of you will remember from her appearance on Invest Like the Best. Claire is the managing director of Asia Pacific for Hines and brings her first-hand view of what Alibaba has built in China and her daily experience using the company's products.  To help us break down Alibaba, we're joined by Ram Parameswaran, the founder and managing partner of investment firm Octahedron Capital. Ram has invested in some of the biggest Chinese companies of the past decade, including Pinduoduo and Bytedance, and is the first person I thought of when wanting to discuss Alibaba. For the full show notes, transcript, and links to mentioned content, check out the episode page here.-----Business Breakdowns is a property of Colossus, Inc. For more episodes of Business Breakdowns, visit joincolossus.com/episodes. Stay up to date on all our podcasts by signing up to Colossus Weekly, our quick dive every Sunday highlighting the top business and investing concepts from our podcasts and the best of what we read that week. Sign up here. Follow us on Twitter: @JoinColossus | @patrick_oshag | @jspujji | @zbfuss Show Notes[00:03:13] - [First question] - What Alibaba is[00:04:29] - Tmall and Taobao[00:06:48] - The many faces of Alibaba as a country-scale business[00:09:58] - What defines a company as being country-scale[00:11:29] - Adaptive business models for cities of multiple tiers and mimetic behavior of other large-scale companies[00:18:15] - Alibaba’s ability influence the physical infrastructure of cities and China as a whole[00:19:01] - Full stack solution company JD Global[00:21:03] - Tencent[00:21:47] - Key players in the monetization of commerce in China: JD, Pinduoduo, Meituan [00:26:35] - Reducing friction may be the number one reason for internet businesses to scale[00:31:15] - Is it worth it for Alibaba to explore the social media space?[00:34:05] - Why Chinese companies are naturally more competitive and aggressive than North American ones [00:38:46] - How China perceives and adopts language such as the Seven Powers framework[00:40:23] - What the West can learn from China and Alibaba[00:43:28] - Adopting Chinese practices for Western brick and mortar stores[00:45:35] - Connectography: Mapping the Future of Global Civilization[00:45:51] - Learning more about Alibaba; The House That Jack Ma Built

Today we will be diving into Chipotle, the fast-casual food chain known for its burritos. It was started in 1993 by Steve Els, an entrepreneur who is actually a classically trained chef and dreamed of opening a fine dining restaurant.  He started Chipotle to earn cash for that dream, but the well-known chain took off and made TexMex fast-casual food an American staple. Over the past two decades, Chipotle has expanded nationwide to over 2000 owned and operated stores. Its significant growth is tied to its simple restaurant decor and efficient operations. Nevertheless, the beloved fast-casual chain was plagued with a series of foodborne illnesses from 2015 to 2018. Since then, the chain has been adapting rapidly to regain the trust of customers nationwide.  In this breakdown, we discuss Chipotle's origin stories, its hypergrowth, its focus on simplicity and innovation. We'll also go into details around how they navigated COVID and their national food safety outbreaks.  To help me break down Chipotle, I'm joined by Zack Fuss, an investor at Continental Grain and an expert on all things food and restaurant-related. For the full show notes, transcript, and links to mentioned content, check out the episode page here. -----Business Breakdowns is a property of Colossus, Inc. For more episodes of Business Breakdowns, visit joincolossus.com/episodes. Stay up to date on all our podcasts by signing up to Colossus Weekly, our quick dive every Sunday highlighting the top business and investing concepts from our podcasts and the best of what we read that week. Sign up here. Follow us on Twitter: @JoinColossus | @patrick_oshag | @jspujji | @zbfuss Show Notes[00:03:13] - [First question] - What is Chipotle[00:04:24] - Chipotle’s scale compared to its competitors[00:05:36] - The origin story of Steve Ells and Chipotle[00:06:47] - Carving out the fast-casual restaurant niche[00:09:02] - Unique themes that have been carried into today[00:10:22] - Unit economics in fine dining versus fast-casual dining[00:11:56] - Gross margins and their similarities across establishments[00:14:53] - An ideal payback period for a restaurant[00:16:00] - What allows for Chipotle to have such an optimized payback period[00:18:29] - Owned and operated versus franchised [00:20:49] - Pros and cons to franchising or being an owner-operator  [00:22:11] - Key factors to consider when choosing to franchise or not[00:23:31] - Chipotle taking $350 million in growth capital from McDonald’s[00:25:58] - Differences between McDonald’s and Chipotle’s food[00:27:08] - The E Coli outbreak in late 2015 [00:28:17] - Sweetgreen, Cava, Zoes Kitchen, Noodles & Co.[00:30:09] - Pershing Square’s investment in Chipotle post-outbreak [00:31:51] - Technology and its effects on the restaurant industry[00:33:39] - Digital orders and profit margin variance[00:35:53] - Launching a Digital-Only quesadilla menu item[00:36:33] - Internet aggregators, dark kitchens, and future food tech trends[00:39:52] - How Chipotle beat out Qdoba[00:41:32] - Blaze Pizza, Tasty Made, Panda Express [00:43:38] - Dark kitchens and network expansion[00:45:01] - Lessons builders can take away from Chipotle’s story[00:45:01] - Lessons investors can take away from Chipotle’s story

Today we will be diving into Shopify. Shopify was founded in 2004 by Tobi Lütke and Scott Lake around their original problem of why it's so hard to build an online business when they struggled to open an online snowboard equipment store. Today, Shopify's goal is to make commerce better for everyone and it's essentially an on-ramp for people looking to sell online.  To help us break down Shopify, I'm joined by co-host Zack Fuss and our guest Alex Danco, who works on the Money team at Shopify. To really understand Shopify, you have to understand its different business units -- Core, Merchant Services, Ecosystem, and the new Shop platform -- and the role they each play in making commerce easier and better for merchants. We begin this breakdown by covering each of those business units and how they compare to Apple's business lines. We then dive deep into how Shopify makes money through the first and second derivative of their merchant success and how Shopify thinks about friction in e-commerce. We close with an incredible analogy of Shopify and StarCraft and the tools that Shopify has built into the still-nascent world of e-commerce. For the full show notes, transcript, and links to mentioned content, check out the episode page here.-----Business Breakdowns is a property of Colossus, Inc. For more episodes of Business Breakdowns, visit joincolossus.com/episodes. Stay up to date on all our podcasts by signing up to Colossus Weekly, our quick dive every Sunday highlighting the top business and investing concepts from our podcasts and the best of what we read that week. Sign up here. Follow us on Twitter: @JoinColossus | @patrick_oshag | @jspujji | @zbfuss Show Notes[00:03:03] - [First question] - What Shopify is as a product[00:04:58] - Product pillar 1: Core[00:06:58] - Product pillar 2: Merchant services[00:09:02] - Product pillar 3: Ecosystem[00:11:04] - Product pillar 4: Shop[00:13:08] - The evolution of commerce with the rise of the internet[00:20:01] - Differences between high and low trust commerce[00:24:48] - The role of friction and trust in stakeholder variety[00:29:18] - Overview of all four product pillars’ business models[00:32:10] - Shopify App Store[00:33:16] - How Shopify competes and partners with their competitors[00:35:53] - Shop Pay expands to Facebook and Instagram[00:37:49] - Key areas where Shopify will continue to grow across their product pillars[00:41:52] - Affirm, Klarna, Afterpay[00:42:56] - Potential pitfalls of having such a high self-imposed quality bar [00:44:12] - Conway’s law[00:44:12] - Aggregators versus platforms[00:52:35] - Unique marketing aspects for Shopify’s sales and marketing with their subscription model [00:55:37] - Shopify: A StarCraft Inspired Business Strategy 

Welcome to Business Breakdowns, a new Colossus podcast featuring deep-dive conversations on individual businesses. In each episode, we will dissect a new company with investors and operators that know it best. We believe every business has secrets and lessons to learn from, and these conversations are designed to deliver that content in an entertaining and narrative format.   The series launches on April 5th with Shopify.    Make sure to subscribe for new episodes and leave us a 5-star rating on Apple Podcasts if you like the show.    With each new episode, we will be releasing full episode transcripts, show notes, and the best content we could find on that business from across the internet. Check out www.joincolossus.com for more. 

Business Breakdowns is a series of conversations with investors and operators diving deep into a single business. For each business, we explore its history, its business model, its competitive advantages, and what makes it tick. Learn more and stay up to date at joincolossus.com