Twilio (NYSE:TWLO) saw explosive growth after its initial public offering earlier this year -- but, as befalls many tech companies, a lot of would-be investors don't have any idea what the company actually does.

In this clip from Industry Focus: Tech, Dylan Lewis and David Kretzmann explain what services Twilio provides, why they're so popular, and how you've probably used a Twilio product before without realizing it. Also, the two take a look at a few of the company's many impressively huge customers, and why developers from established giants and little start-ups like the platform so much.

A full transcript follows the video.

This podcast was recorded on Sept. 30, 2016. All comments about current share price reflect where the company was trading that day.

Dylan Lewis: Twilio is one of the big IPO names this year. It's one of those names that a lot of people may have heard of, but they probably have no idea what they actually do.

David Kretzmann: Yeah. This has been, I think it's pretty easy to say, the hottest tech IPO so far this year. I think they went public in June, and the stock has definitely been on a tear. I'm excited to dig a little bit deeper. But, taking a high-level view of Twilio, this is a company that describes itself as "communications as a service." Think of it as an Amazon Web Services [AWS], but for developers working with communication stuff with different apps. I think we'll talk about some use cases that give a very high level of you that will dig a bit deeper into.

Lewis: Yeah, they really like that AWS comparison. They bring it up a couple different times in conference calls, prospectuses. They're this cloud communication platform, and they're not offering up this single software application. What they're doing instead is building a platform of building blocks that allow developers to add communication functionality into different software applications, which is a roundabout way of saying, cloud communications. (laughs) But, if it sounds like an in-the-weeds tech company, that's because it is. They describe themselves as "a company founded by developers for developers," and I think that shines through in the solutions that they offer. As we hinted at, since going public in June, the company has been on a tear. The original offering price of $15 per share, first day trading sent it up to the mid $20s and they have not lost steam. I think shares are currently in the high $60s.

Kretzmann: It keeps going up.

Lewis: So, a lot of interest there. To get a better sense of what they do, and use an illustrated example here, we're going to touch a little bit on how Lyft and Uber do very similar things, integrating Twilio into their services. Lyft has this on-demand service where you are able to hail rides and have them show up at your door and you're ready to go. Of course, in order to do that, they need real-time communication between passengers and drivers. So, they've integrated Twilio's software-powered communications, and they have this custom solution that basically allows for real time SMS, or as we most commonly know it, text updates from drivers to passengers to let them know about where they're going to be.

Kretzmann: The benefit for Twilio, it makes it a much more scalable and secure solution for Uber or Lyft, because you're not actually a passenger contacting the actual number of the driver. It's basically a virtual phone number that's owned by Twilio, in this case. So you're calling that number, but it's still connects you to the driver. So it's a more secure way. That way, if you're a passenger, you're not giving up your phone number to someone you don't know, and vice versa with the driver. That's part of the appeal with the platform. 

Lewis: Yeah, they use the masked phone numbers product that Twilio offers. Basically, like you said, it lets individuals use their phone number without actually sharing their specific contact information. So you don't have to worry about someone harassing you afterwards, or chasing you down because you didn't offer them a tip on Lyft, or anything like that. They use the service to send notifications for when drivers accept requests, and when they arrive at a location, if the ride status changes. It's funny using this as an example because a lot of people probably use Twilio without even realizing it.

Kretzmann: Probably. Twilio has a pretty impressive list of customers. Just to name a few -- we already talked about Uber -- WhatsApp, owned by Facebook, is actually their biggest client. Then, we're talking about Home DepotNetflix, Airbnb, NordstromIntuitBox, Venmo, salesforce.com. You can go on and on. TripAdvisorExpedia. They really are serving customers across the board. Not just tech companies. A company like Home Depot might use Twilio's solution to do automated customer service to customers, things like that. So they're across the board.

Lewis: Yeah, a lot of names you wouldn't expect on that list. Just to give you an idea of some of the different use cases that Twilio offers to its customers, two-factor authentication is a very popular one. Basically, you have a second form of password, or a second way of identifying that you are the person you say you are. Most of the time, that happens through a user's phone via SMS or text. ETA alerts, if you're talking about Lyft and Uber, so, estimates on when a ride will arrive, confirmations, order tracking, that kind of stuff, masked phone numbers like we talked about before. I've also seen automated surveys. So, you can receive customer feedback using either automated voice or SMS surveys, and those integrate with the existing customer relationship databases that some of these retailers use. So, not just a tech company that serves traditional tech companies. They're kind of bridging out and becoming an all-encompassing provider.

Kretzmann: And the appeal of Twilio for developers, they let you scale with the platform. We'll talk more about this later. Essentially, you pay as you go. You don't have to pay a flat, high monthly subscription fee for this. But, if you're developer, you can play around on Twilio for free, you can register, and in a matter of minutes, you can create one of these different products, two-factor authentication or something with the voice or messaging or video. So it's very easy to use, intuitive platform. And I think that's a part of the reason you're seeing a lot of big names drifting to Twilio, because you don't have to worry about the infrastructure for this. Twilio basically gives you the software and the platform. If you're a developer, you have all of these different building blocks that Twilio provides and helps automate and simplify the whole process, so you can spend a lot more time developing and scaling that product really quickly.

David Kretzmann owns shares of Facebook, Home Depot, Netflix, and TripAdvisor. Dylan Lewis has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Facebook, Intuit, Netflix, and TripAdvisor. The Motley Fool recommends Home Depot, Nordstrom, and Salesforce.com. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.