The pandemic has given the second tier a further boost. You can just plug into our systems,” explains Jeff Lawson, Twilio’s boss, “that’s the idea of infrastructure-as-a-service.” “If you are a developer, you don’t have to spend a year to understand all the details. After a few years of fast growth, its annual revenue is approaching $2bn and its market capitalisation exceeds $50bn. It provides services for text, voice and video communication to more than 200,000 other firms, from Airbnb, a home-sharing site, to Zendesk, a help-desk service. The firm is largely unknown to consumers, but used by most. “The investments we made back in 2017 are now paying off,” says Mr Spiegel.Ī good example is Twilio. This has allowed firms to specialise and created big markets even for seemingly obscure products and services, which can now be tailored for narrow purposes and offered globally. One reason for the increase in relative size in America is technological progress, especially the rise of cloud computing. In February 2020 its joint market capitalisation amounted to 22% of GAFAM’s, up from 14% three years earlier (see chart). They range from e-commerce sites and streaming services to travel firms and vendors of corporate applications.Įven before the pandemic this group had added some weight relative to “ GAFAM”, as some now call America’s five tech behemoths (Google and its parent company Alphabet, Apple, Facebook, Amazon and Microsoft). That leaves 42 firms worth a combined $2.4trn. We have defined as “tier-two” those with a market value of no less than $20bn that were incorporated in 2000 or later. In America it includes hundreds of firms. Some second-tier companies are confounding sceptics who claimed it was impossible to thrive in the shadow of the industry’s titans.īy any reasonable definition, the universe of biggish listed tech companies is large. And it is not just the extra digital demand generated by the pandemic that is making all boats rise, or the fact that it is easier for smaller firms to grow. While the largest Western tech companies have had a blowout first quarter, firms that fall in the category below-call them “tier-two tech”-are growing briskly, too. “The pandemic exposed the resilience of the changes we have made,” says Evan Spiegel, Snap’s boss.
The firm’s share price has surged by 208% in the past 12 months, to $54. The number of daily users reached 280m, an addition of more than 50m over the same period. Revenue grew by 66% from a year earlier, to $770m. When it reported its latest quarterly results in April, it pleasantly surprised analysts again, just as it has for the past few quarters. Snap has since staged one of the greatest turnarounds in tech history.
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