Twilio backs Terazo to power the API economy and ‘third wave of cloud’

As companies grapple with the rapid migration to cloud computing, this opens a Pandora’s box of problems at a time when technology talent is at a premium.

Internal development teams are already stretched, often with their focus centered on core product development. This can leave a vacuum when it comes to building robust cloud-native applications that rely on application programming interfaces (APIs), the glue that holds modern software together. The so-called “API economy” is powering digital transformation across the spectrum, helping companies to improve their efficiency and profitability by funneling into the expertise of the wider digital ecosystem.

And this is where Terazo has set out on its mission. The five-year-old Virginia-based company helps everyone from stealth startups to large publicly-traded companies integrate and automate their internal systems, by providing the technology talent (or “engineering rockstars,” as Terazo calls them) needed to flourish in the cloud era. While it sometimes serves as a simple outsourced software development team, it also works in tandem with internal development teams in what Terazo CEO Mark Wensell calls a “blended team model,” with Terazo bringing its experience in API management to the mix.

“Internal development teams are often focused on the core business systems and software development initiatives of a company, with large product development backlogs that they’re assigned to,” Wensell told VentureBeat. “When strategic API integration or API publishing opportunities come along, using internal teams for that work often means their focus attention to core product development is taken away.”

To help, the company today announced that it has raised $10.5 million in a round of funding led by Tercera, an investment firm specializing in cloud services companies. However, cloud communications API giant Twilio also participated in the round, a notable strategic investment for a company that relies on consultancy companies such as Tercera to help businesses deploy and manage its APIs.

Above: Terazo CEO Mark Wensell

Software development as a service

In many ways, Terazo is analogous to APIs themselves. Rather than having to build a robust communications infrastructure from scratch, tech companies can leverage the expertise of third-party specialists and integrate with their smarts through an API — why would Box develop and maintain its own two-factor authentication (2FA) system from scratch when it can use Twilio’s infrastructure instead?

Terazo and its ilk fulfill a similar role, but from a human resources perspective instead.

“For us, things like REST API integrations are a relatively repeatable pattern across our client portfolio, whereas for an internal team, there might be a much larger learning curve to learn the necessary patterns and practices and get it right,” Wensell said. “That becomes even more true when a client is building on a technology platform like Twilio. We have deep experience and a lot of reusable assets that mean our clients’ spend is focused on the customization unique to their business process.”

While Terazo generally works under tight NDAs and can’t disclose its clients, it did reveal that real estate platform PrimeStreet is one of its customers, which Terazo helped to build a more cohesive, unified digital platform powered by APIs.

“Rather than just building a collection of mobile apps and websites, we helped them make the core of their business a platform in and of itself,” Wensell added.

All of this feeds into a trend that has been touted as the “third wave of cloud computing,” with some estimates predicting cloud spending could hit $1 trillion in 2030. In turn, this opens the door to “third-wave” consultancies such as Terazo, which can plug a gap with specialized skills and let in-house developers focus on what they do best.

“We define a third-wave consultancy as a cloud-focused professional services firm whose business values, delivery, go-to-market models, and talent are optimized for the cloud’s next wave of growth,” Tercera partner Dan Lascell told VentureBeat. “The cloud has matured over the last 20 years, and the attributes that made services firms successful in the first two waves won’t necessarily cut it in the next decade.”

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