Twilio Inc. Just Hired One of Salesforce's Top Executives

Twilio (NYSE: TWLO) recently hired George Hu as its new COO. Hu spent 12 years at Salesforce (NYSE: CRM), and served as its COO for his final three years between 2011 and2014. That big hire fills the void left after the departure of Roy Ng, who resigned as Twilio's COO last December.

Twilio CEO Jeff Lawson noted thatHu "helped build Salesforce into the leading cloud SaaS (software as a service) and platform company, growing it to more than $5 billion in revenue during his tenure." Lawson also stated that he was "excited to have George's operational expertise and go-to-market skills helping us reach Twilio's next stage of growth." Let's take a closer look at some of the key challenges which Hu will face as the company's new COO.

Image source: Getty Images.

Helping Twilio reach the "next stage"

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At Salesforce, Hu led the marketing, small business products, automation, applications, andvoice over DSL teams prior to becoming the COO. After leaving Salesforce, Hu created Peer, a management feedback tool to continuously monitor employee performance -- similar to how riders rate Uber drivers after each ride. Twitter acquired Peer lastApril.

Hu's "jack of all trades" enterprise skills could be useful at Twilio, which recently added a wide array of features for enterprise customers. Last year, it launched the Twilio Enterprise Plan, which added security, access management, and administration tools for large organizations -- all products which a former Salesforce COO could likely improve.

What Twilio can learn from Salesforce

As the top cloud-based CRM (customer relationship management) service vendor in the world, Salesforce has proven that the SaaS model can become profitable. The SaaS market is generally a tough one to profit in, due to price competition and the high costs of securing customers and developing new services.

The main ways to counter those pressures are to scale up, maintain a "best in breed" reputation, and lock in customers with a wide array of new services. Salesforce scaled up by acquiring smaller companies and integrating their services into its ecosystem, and maintained its market leading position with big enterprise partnerships.

It also diversified its business into four core pillars of growth -- the Sales Cloud, Service Cloud, Marketing Cloud, and Salesforce Platform. Those moves helped Salesforce achieve consistent non-GAAP profitability, although its GAAP profitability remains shaky on a quarterly basis.

Twilio is expanding its ecosystem

Twilio is already scaling up and diversifying. In addition to introducing the new Enterprise Plan last year, it launched Voice Insights for analyzing data from voice applications, and acquired WebRTC's media processing tech to improve Twilio Programmable Video. It also tightened its integration with Amazon's AWS, which lets developers on AWS easily integrate Twilio features intotheir apps.

COO George Hu. Image source: Twilio.

Earlier this year, Twilioacquired Swedish SMS provider Beepsend to streamline its SMS delivery capabilities. All these moves widen Twilio's moat and boost its revenue per customer. That's why its "dollar-based net expansion" rate, which measures its revenue growth per customer, rose 155% annually last quarter.

In a statement, Hu declared that Twilio had "a massive opportunity that has the power to change how every company engages with its customers and employees, limited only by the imagination of developers and businesses in every industry and market globally."

So what does this all mean for Twilio?

Hu's statement might sound broad, but he's indicating that Twilio's cloud platform -- which is best-known as a middleman which handles voice calls and SMS messages for app developers and carriers -- has the potential to do much more.

This means that Twilio will likely add additional tools for video, analytics, security, and other features to its platform in the near future. Those features will be attractive to "no stack" API developers, who create core features for apps but outsource other secondary features (like Google Maps for navigation and Twilio for SMS messages) to other companies. As Twilio adds more of these services, it can generate more revenues per customer and inch toward profitability -- just as Salesforce did over the past decade.

Investors shouldn't assume that Hu can turn Twilio into the next Salesforce, but his invaluable experience could help the company evolve from a young company into a well-diversified cloud player with sustainable growth.

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Leo Sun owns shares of Amazon and Twilio. The Motley Fool owns shares of and recommends Amazon and Twitter. The Motley Fool recommends Salesforce.com and Twilio. The Motley Fool has a disclosure policy.