Self-funding with wedding gifts, living on excitement, and teaching your team to ignore the stock price
Twilio CEO Jeff Lawson on building a company during a downturn.
On September 16, 2008, Twilio CEO Jeff Lawson almost gave up. He and his co-founders were headed to a Monday-morning meeting to seal a deal with a Silicon Valley VC firm for seed money to fund their burgeoning communications startup. And then Lehman Brothers filed for bankruptcy, and the bottom fell out.
"We walk into the meeting, and it's just like, 'Sorry guys, I don't know what to tell you: We're not investing right now,'" Lawson said. The team had spent the whole summer trying to raise the money they needed, "and didn't have a dime to show for it." And things were only about to get harder.
Twelve years later, Twilio has emerged as a shining example of what startups born amid turmoil can do. Worth $15 billion and up more than 300% from its IPO share price, the company now powers the texts you get from Uber and Airbnb, among others.
Protocol caught up with Lawson ahead of Twilio's first-quarter earnings announcement to find out how the company plans to handle this downturn.
This interview has been lightly edited and condensed for length and clarity.
What was it like building a company during the last downturn?
[After that 2008 investor meeting], I remember myself and my two co-founders, we looked at each other and we said: Is this a bad idea? Is it a bad time to do this? But then we kind of thought about it: Our customers that we're serving right now, they're loving it. They're building and giving us feedback. They're really excited, they're sharing it. And so the fact that our customers loved what we were building, that was what we needed. That was what encouraged us.
We raised a small amount of money from our parents. My wife and I got married, actually, in that time, and we returned all of our wedding gifts to be able to fund ourselves. We got to launch in November 2008. And sure enough, customers loved it, and revenue started coming in right away. And shortly thereafter, investors started to take note, and we raised the seed round in the very beginning of 2009.
My lesson that I take away from that is, if you focus on customers, that's all that matters. Investors, anyone else, they'll fall into place if what you have is a great product that's serving your customers. And during a time of economic tumult, that is an even more important time to serve your customers.
Some of your biggest customers are among the hardest hit in this downturn: Uber, Airbnb, Yelp. How exposed is Twilio to their difficulties?
We have 180,000 customers. We've spent the last several years really minimizing customer concentration. [Editor's note: According to the company, its top 10 customers accounted for 31% of its revenue at the time of its IPO in 2016, compared to 14% at the end of last year.] And what's interesting is, you've seen some of these things, like ride-sharing, there's a lot less of that going on. But the food delivery world, that's gone through the roof. And so in places where there have been declines, there's oftentimes been offsetting gains.
Back in February, you said you were focused on growth rather than profit. Has that changed at all?
I can't speak to the [earnings] guidance that we've given. But philosophically, I think that Twilio is more important than ever to the world. And what we offer in terms of digital communications, in terms of agility, cloud scalability — what we offer the world is more important than ever. And so I think it's important that we invest to capture the opportunity.
Are there any areas where you've seen growth?
We launched support for health care workloads in February, which was a coincidence — we'd been working on it for about 18 months. And that has enabled us to address so many emerging workloads in telemedicine, in messaging-based triage. One of my favorite examples is: Mount Sinai health system, one of the largest health systems in New York, has dramatically changed the way they communicate with patients during this time. They started with a text-to-chat product that they started building for the flu season, so that instead of walking into the emergency room if you're feeling sick, you would text and explain your symptoms. And that allows patients to chat live with a clinician who can help fully diagnose and triage patients. They've seen dramatically increased — 10 times — adoption in the last month.
If you think about it, 2020 is this massive digital acceleration. Every company has this five- to 10-year strategic roadmap for digital transformation. And these projects that were slated to take five years, 10 years — they got done in a weekend because of COVID-19.
What's it like being a public-company CEO during a market crash?
I've always evangelized for the employees that in the short term, the stock price is something that is not in our control. Stock prices move every minute of every day. Meanwhile, we only release new information to the world quarterly, on our earnings calls. So when our stock price has gone up, or when it's gone down, what I'll point out to the employees is, what new information do investors have to value us differently today? And you get these crickets in the room. There's no other information, so it's stuff that's out of our control.
So what we focus on is our customers. And when we do that, in the long term, our stock price will reflect the value that we build for customers. And so I think laying that groundwork at all times — when it's good, when it's bad, when it's not a crisis, when it is a crisis — that's how you actually get people to take it in stride.
Get in touch with us: Share information securely with Protocol via encrypted Signal or WhatsApp message, at 415-214-4715 or through our anonymous SecureDrop.
Do you have any advice for entrepreneurs building companies in this environment?
An intrinsic drive, a motivation to serve customers, to build products that you feel the world needs — that's what motivates the best entrepreneurs. And so if you see that, if you feel that, and you see that way of serving customers and building a product that the world needs right now, fantastic. Don't let the current crisis deter you. In fact, if anything, there are more problems that the world needs solved right now, so do it.
But I think if you are an entrepreneur who's in it for the wrong reasons, like you're just trying to make a buck or you're trying to raise easy money from investors — I think times like this weed out folks who are in it for the wrong reasons and really help provide clarity for the folks who are in it for the right reasons.