Twilio: Jeff Lawson

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We had this very fateful um meeting, I remember, where we said, look You know, investors have told us we're wrong, that this is stupid. Um These are smart people. Like these aren't dummies. They're smart. Like maybe they're right, maybe we're on the wrong track.

And I remember. We said yeah, but are customers, like those developers who are early customers. They are loving it. They are building.

They are using this, they're launching things and and having all these ideas. I think we gotta do is like we gotta follow through I'm delivering for those customers and at least get a product to launch. And see what happens.

Welcome to How I Built This, a show about innovators, entrepreneurs, idealists, and the stories behind the movements. I'm Guy Raz, and on the show today, how Jeff Lawson hated the hassle of Customer service. built a company to deal with it.

Twilio. A multi-billion dollar communications business that you are probably using every day. Without even knowing it. As longtime listeners to HIBT know I don't Don't tend to interview a lot of founders behind software as a service company's not

because they aren't interesting or worthy. They are. Many of them are multi billion dollar businesses, but This show generally focuses on consumer-facing brands, products or services we buy or use every day. But the story of Twilio, which you will hear today. is incredibly fascinating and hopefully instructive. because Twilio was started at a time not too dissimilar from this moment right now in twenty twenty three.

It was two thousand eight, the middle of the financial crisis. Startup funding was drying up. Financial institutions were being tested. And not that many investors understood what Twilio did or How it would make money.

So its founder, Jeff Lawson, really struggled at the beginning. Now before I go on, let me explain what Twilio actually does. When you get a text message from a company saying your package was shipped or your food was dropped off or your car has arrived, the technology that makes that happen is often powered by Twio. Its communications technology connects big brands like Airbnb or Uber or DoorDash or even Nike and Toyota.

to consumers. In ways that have become so natural, so intuitive. that we barely even think about them today. Twillio does around$4 billion in annual revenue, and it's used by around 10 million software developers around the world. By the time Jeff Lawson launched Twilio in two thousand eight,

He'd already been through several different startup ventures, some of which ultimately failed. Jeff's first business posted students notes from college classes. That company got eras when the dot-com bubble burst in 2000. When he decided to launch his second company, He and his co founder took one of the most systematic approaches to brainstorming

Ever. they created an elaborate matrix of problems that needed to be solved. And they set those problems against a list of technologies that might solve them. And after all that brainstorming? Jeff and his co-founder decided to launch something that had almost nothing to do with that matrix.

They opened an extreme sports shop. That specialized in skating and snowboarding. That idea also fizzled out. But Jeff wound up drawing on that experience, as well as many others, before he launched Twilio. And we'll get to all that, but

Before we do, here's some background. Jeff grew up in the Detroit suburbs in the nineteen eighties and nineties. His dad was a doctor, and his mom was a teacher. And his first business was doing video production for birthday parties and bar mitzvahs. He started his next business as a student.

At the University of Michigan. Yeah, so you know funny thing happened. I get to college, it's the fall of nineteen ninety five. And You know, most people when they go to college, the thing they're most excited about, like when they first get there and get dropped off by their parents is like, Oh, well, you know, you're gonna go party or you're gonna go find some alcohol or you know, go start dating. And go to you know, whatever. And I'm like

There's a fast Ethernet jack in my dorm room. This is amazing. Right. Yeah. So while you were

Uh University of Michigan while you were a student there. Um you Basically came up with a business idea. Called Versity. What what what was it?

Well, so we looked around at a variety of things that we could do and realized that there was You know, in every campus there were these These lecture note companies? You know, they were and they were often run out of a copy shop, like the local, you know, copy shop where they would hire a college student. to

Essentially drop off a copy of their lecture notes. After every lecture. And it was this little cottage industry that you know seemed to form up around every college campus. And we looked at it and we were like we, who's we? Uh you know, I started the company with two friends of mine, Brian Levine and Michael Krasman.

Both and students at at Michigan. Yeah, both students at Michigan. We're in the same dorm. So you're looking at this Well why why should you walk across campus in the snow, remind you this is Michigan. Yeah. To go pick up like after every lecture to get a copy of these notes when the internet you could just sit at your computer and and download it seems like an ideal use case for this thing called the web.

Why don't we just pay note takers to put their notes online? And so we started this as just a very Small idea. We had no idea what we were doing. I remember we came up with the a brilliant name for it originally. It was called Notes.

Number four. Free.com. So notes for free. It' mind you, this is like nineteen ninety six. We could have had any domain we wanted. You know, Google was available and we picked notes. Notes for free. The number four

Free. There are going to be notes for free. How is that gonna be business? Ah, great question. If we gave him away for free, which seemed was the prevailing

business model of the internet, which is everything was free, and put advertisements on it. Well, then really the sky is the limit. And if you think about what people were talking about in terms of internet businesses in that era, it was it was eyeballs. It was, you know, page views, it was hits. And still is in some places. Yeah, absolutely. And so what we're basically building was a very early content management system. For lecture notes. How did you yeah, how did you know how to do that? I mean, was it you or was it your your other one of the other friends? Like'cause building website in nineteen ninety seven was hard. Like People

B even big businesses would hire like You know. anyone to to build a website'cause it wasn't like you just go to Squarespace or something. You had to know how to Code it.

That to me was the why we were doing it. Right. We actually didn't care that much about like lecture notes. It wasn't about the lecture notes. It was about the challenge of figuring out how to do these things, really. Yeah.

So Alright, so you start at the University of Michigan and you basically Are soliciting lecture notes from students and and ultimately How many I mean what like can you estimate like what percentage of classes you cover, like twenty percent, forty percent? Well we s so the the sweet spot were these courses, you know, that that like every freshman and sophomore has. Yeah, right, because you pay yeah you paid the note taker the same amount of money

But you had, you know, either dozens of potential buyers or thousands, based on which classes you picked, right? Right. So what we started doing is we got a little smarter and we We put up flyers around campus and say, Are you an econ one oh one? We'll pay you for your notes. And it was like every week. I would say Wanna make extra cash, uh sell your notes. Like by the way, I I still think the Flyer method, especially in on a closed environment like a college campus, is a great marketing tool, I have to say. I don't know if people st I don't I haven't been on a college campus in a while.

I I still think they're pretty good. I look at flyers when I'm at like some weird like Old school like Organic co op. I'll go to the bulletin board and you know, there's like Someone teaching yoga and Someone, you know, doing a meditation course. I just yeah, I I like looking at flyers.

Yeah, it's like like someone had to take the time to actually go there and Tape it up. Yeah. Like that person was probably standing right where you are. And it makes it all very human and like small scale in a way that we don't actually get often these days.

Yeah. I I think I think it was around nineteen ninety seven that that that one of your partners on this this venture was doing an internship out in California, and he met This guy named Kevin O'Connor, who was the is the co founder of Double click, which is of obviously well known. Internet ad company was bought eventually bought by Google.

And and I guess he told him about bursity and and Kevin O'Connor liked the idea and then he even said like maybe w want to invest or s or something like that. Exactly. And that led to a meeting actually the following week. Wow. Where Where I flew out and Michael flew out and we met with Kevin in his office. And He kinda says to us look.

You know, this internet thing is like a once in a lifetime event that's occurring around us. Yeah. And sounds like you guys are working on this interesting thing. And you have the whole internet. Why are you focused it on like, you know, one square mile radius of of potential customers? Yeah. Like why don't you go use the internet for what it's good for, which is like scale. Yeah. And

But to do that, you need money. So you should go raise like investors are throwing money at internet companies. Why don't you go build a real company here? So you dropped out. of college to do this. You you guys moved to Silicon Valley, California. to pursue this idea, versity.com full time. Yeah, well we raised first a C uh like a

uh friends and family rounds. We raise money from people we knew and and Kevin participated and a few other folks like that. And that was while we were still full time students. We raised about, if I remember, a million dollars. That's insane. I I'm just Well, you know,'cause at that time, this is like nineteen ninety maybe eight at this point, like every every dentist and every you know, everybody is being told you gotta invest in this internet thing. And so people just th throw money at us. Yeah. And so we raise a million dollars. Um And we expand from like the University of Michigan to I think, you know, the Big Ten. And then we raised, um

A true like venture capital round of financing. Again, we're still Basically full time students. And we raised I think eleven million dollars. Wow! You raised eleven million days, you were twenty one years old. And that sounds super small by today's standards.

That's nuts. That was nuts to me. That was a lot of money back then. That's a lot of money. That seems crazy. You're twenty one, you've got this idea, and you've no experience and people threw all that money. I mean And and just just out of curiosity. I'm assuming your parents were like, Yeah, you gotta do this. Eleven million bucks, you've got this thing going, yeah, drop out. You can always go back to school if you want. Not at all. Our parents were were horrified by this whole thing. They were like, you know, you're well you know, why aren't you finishing school, you gotta c become professionals, you know, you gotta be doctors and lawyers and you know, that's what their generation really valued was those professions and this idea that you drop out of school because, you know, you're making something on the computer, right? Seemed kind of You know.

Like foolish to them. But you know, as we got more and more traction and as like, you know, there were s stories written about us in newspapers and you know, we're raising money from investors, I think they they started to come around and I remember we opened an office. We had you know, we had we had an office in Where was it? In Ipsilani, this town right outside of Ann Arbor. The rent was Like negligible. Like we paid nothing.

And we had you know first a small office and then bigger. We ended up taking over a whole floor in the key bank building in Ypsilani. And and did you so so you had this office in Ypsilanti, but you didn't have to They didn't your investors didn't say, Hey, you've got to build this in Silicon Valley. Well they did. So then we raised our venture round. And they eleven million. You need to move this.

So we picked up that whole office. On Friday? Everybody was at work in Ipsilani. And on Monday. We were all at work in Silicon Valley.

Wow. And just picked up going out here and we then expanded from You know, I think the the ten campuses that we were on to To fifty the next semester.

And then after that to two hundred. I'm still trying to wrap my head around the fact that it was This content was free. Wasn't was there anybody, any of your investors, who were like, Okay, this is great, you're gonna get a million eyeballs here And then let's turn this thing versity into

You know, now you're doing notes, but let's think of this as like the one stop shop for college students. This is gonna be like the Princeton Review meets You know US News will report ratings plus like you know, would yelp eventually like all those things. Like w did anybody say that?

Oh, absolutely. I mean we kept building more capabilities into the product. But never once was the conversation about and we're doing it to make revenue. It was always about, you know, more eyeballs, more hits, more page views. And in the course of that We made a total of about twenty six thousand dollars of revenue.

in the lifetime of the company. I mean it's it's totally crazy if you think about that, but The idea was let's just accumulate eyeballs and it's and you're now living there. um in California and

I think within a year of moving out there you guys got an acquisition offer. We did. From a r from a rival company. Well, you know so we were all about academic content. And I remember there were these other companies at the time who were They were uh s like social websites for college students, but they were not based on academics, they were based on like just social things.

And one of these companies was called collegeclub.com. And I you know, I said, I remember at the time I'm on the record as saying there is no purpose for a social network for college students. because college is the ultimate social network. You don't need to go online for it.

Which, you know, then later came back to bite me when when you know Facebook became Well the largest website, right? Um but uh so I I yeah I made this bold declaration. Well, meanwhile, this the college club company, they had been acquiring Their eyeballs, they were in the eyeballs game too. Yep. And I think they were paying like when they when they took their whole marketing spend and they divided it by the users, they were paying something like fifty dollars. to acquire a customer. And so that's a lot of money.

Yeah. And when you took the entire cost of operating our business, including paying these note takers. We were like A dollar. To acquire. To acquire a customer, it was so much more efficient. And they so they approached us, they said, look, you know, we've got this community.

Why don't you join up with us? And Together we'll go public and we'll you know uh obviously like make a lot of money because public companies are like, you know, to the moon. And you're gonna help us bring down our costs and we'll keep scaling this thing together.

And so we did it. And I should mention the acquisition price. They acquired your company, which had only made twenty six thousand dollars in revenue. for$30 million. All stock, no cash. Right. It was an all stock deal.

But they were g giving you thirty million dollars worth of stock. I mean that's a pretty great outcome. I mean for you, for your investors in such a short period of time. Yeah, and I think when it was the like expected value of their IPO, the number was even much higher because, you know, the numbers they were showing us were like

this is gonna be worth, you know, a few hundred million in a few months. Right. So we're all saying Wow. You're putting down pay you're putting a down payment on like a Well and and think about it. Yeah, and twenty one you're I don't think you're really thinking about mansions. You're more like that's a lot of like subway or something. Um

So we went from nothing being college students to like Raising this small round of friends and family investors to now having this thing that's gonna be public and worth hundreds of millions of dollars in about two years. I've just Furious like

twenty-two hour days, not because we had to, but because we loved it, because we was like the r the the time of our life. And then we get to college club. And they move us from Silicon Valley down to San Diego, which is where they're based. And They have filed to go public in April of of two thousand.

But the market has basically just closed. Just starts to collapse. Yep. This is the beginning of the dot com. Bubbling. It's the beginning of the bust.

And they are bankrupt by August. So all that work, all those investors, like all that money was gone. Everything gone like it was worth zero. Wow.

You know, by within months. I mean, as a twenty one year old you were gonna recover, obviously you did, and that was I'm sure not fun, but Do you remember how that felt like all those people, like family and friends and like investors who lost everything.

Yeah. You know, I remember conversations with some of the employees because we move down To San Diego. And people were kind of moving at various times. And they but like right when we get down there, they basically start saying, Look, we're we're gonna we have to lay off

Basically your whole company. And I was like, I are you serious? So like yeah, we've been burning, you know, fifty million dollars a month or some ungodly number. And now that we're not going public, we don't we're not we don't have the money. And so we've got to reduce our burn like immediately. And so they said you need to go talk to all your employees and play them off.

And It was just devastating. I mean talking to folks and and having this whole thing unwind so quickly. Yeah. But In a sense, I mean what happened to Versity wasn't really your fault. I mean you were acquired, of course, that acquisition. Maybe if you could do it again, you would have taken thirty million in cash and not thirty million in worthless stock. But that's what it was.

Yeah. But um You know, I just It was sort of like what What just happened?

Right? We had this whole Internet bubble. And it Burst. And no one was really like it felt like nobody was

Um Like you know. Manning the door. Like what who's like who's in charge here of this internet now, right? If everybody agreed that revenue didn't matter and now suddenly it does. That's a that's a harsh transition. But one that you look back on, you're like, well

Of course, like how long can companies go without having any revenue? Before you start to ask questions about the business. Huh. So So I guess spring of two thousand, this thing

basically unravels and you You decide to start s spending a few months. working in another startup which it was called S Stub Hub, which we know of course of today. Um'cause it just I think it had just launched at the time. Mm-hmm. But I guess you

You weren't really into it'cause you I I guess pretty soon after you started there you you began meeting with people about other things that you might want to do, right? Like Like other companies you could work at? Yeah, so Kevin O'Connor, who was the founder of DoubleClick.

Who had invested in my first company. I was in New York and I was having lunch with him one day while I was, you know, still working on Stub Hub. And You know, he said you know, what are you you know, what are you doing or what are you thinking about? And I was like, you know, I just I'm not sure I'm gonna be long for the Stub Hub idea.

And he said well why don't Why don't you move to New York and we'll start a company together? And I said Okay. Like Doing what? He said

I don't know. Let's brainstorm and come up with an idea. He's like, Why don't you go find another entrepreneur that you really respect? And Move you can live in my summer home in the Hamptons. Uh, which is like empty most of the year. Nice. And we'll just brainstorm a bunch of business ideas and we'll come up with something.

Yeah, and I'm like Well, that sounds nice. And so I move out. In

November. The middle of winter. Yeah. Right. And it's kinda this old beach shack. Like it sounds great, like the the summer home in the Hamptons, but it was like this Old beach shack.

with very poor electrical infrastructure and Yeah, everything else. And were you by yourself in that house? So I grabbed one of my other co founders from Versity or one of one of our actually one of my key hires at Versity. Right. Uh, and we came out this guy named Matt Levinson. So we moved out in the middle of winter. And by the way, this is This is desolate. Like there's nobody in the Hamptons.

We would order packages on Amazon. So that the UPS truck would come and plow the road for us. I'm not I'm not shedding tears for you. You're in the Hamptons. Okay, let's keep talking about what you're doing there, okay? So you're you're brainstorming ideas. So So but what what is the process? You you guys are sitting there all day just doing what's and tell me what the conversation like how do you start to brainstorm a new idea? Okay, so we spend the first week. Brainstorming

Different groups of human beings that might have interesting problems. Okay. Yeah, doctors, small business owners, single parents, uh, you know, teenagers, what like just groups of human beings that when you think about them might have problems. Okay. So we we come up with Two hundred Different

Groupings of human beings. And then we rank which ones we thought were most interesting or most promising areas to go explore. Hm. So once we settled on like the top five, like small business owners, then we brainstormed what problems do they have. And so you brain's okay, well, like they need to acquire customers, they need to accept payments, they need to um you know do marketing, they need the security, they need but like all the sort of they need to get their store online, they all these list of things that they that they might need to do. Yeah. And then at the end of this process, like we spent a few months.

Uh maybe like a month, and we had a list of like a thousand ideas. Um of like problems that needed solving. Okay, then we move to the second phase of this. Wow. Which was okay, let's brainstorm. New technologies that are emerging. That

Might Allow us to go solve some problems. So you'd brainstorm, you know, the web, or you know, at the time it was like Bluetooth or GPS or all these different technologies. So do a long brainstorm of that, and then we narrow it down to the most promising ones. And then the really interesting part was you did a matrix. So you get on a big whiteboard. And on the horizontal axis. you would write all of the new technologies.

And then on the vertical, you would write a bunch of those problems. And then Draw a line and connect them or something. Well, like you brainstorm, you'd say like well, if if a business needs to acquire new customers, can Bluetooth solve that problem? Well, I remember my favorite one.

was called the Thing Locator. And the observation was that You had Pagers. You remember pagers like doctors would have? Yeah, there's always doctors and drug dealers, right? Of course, yeah. Yeah. Sure. Well, pagers were going out of style.

People didn't need him anymore, but yet every city was blanketed with infrastructure to do two-way paging. And We said well if you're always losing your keys Or your car or your whatever. Couldn't we put a GPS?

Chip. And a Like a pager radio. Into a small package. And let you just keep track of where things are.

And this was in two thousand. Yeah. And so we did a bunch of research and what we found was that the power requirements of both of these things GPS and the pager network.

would be the form factor of this thing would be pr pretty large. Yeah. And so like you wouldn't put it on your keychain. Right. And so while I'm sure we could have pursued some other things like well, you know, trucks or whatever, we kind of abandoned the idea because the original problem we were pursuing was Um you know, more for personal use. Clearly there were a lot of really interesting ideas that would eventually be developed by others and and you're looking at technology as a solution to problems

And yet I'm I'm just, you know, spoiler alert here, but the the business that you decide to pursue Is a A brick and mortar retailer for extreme sports called Nine Star, and you would sell skateboards BMX bikes and snowboards.

That is surprising that that was the idea that you all landed on. in what probably was a condemnation of this brainstorming process. Yeah. I mean totally. My co founder

Uh Matt. Had had this idea. Like five years earlier. for a like what was called the category killer retailer for extreme sporting goods.

Mm. Cause what he observed, he grew up in Santa Barbara. And he observed that these sports, you know, skateboarding, snowboarding, surfing They were exploding in popularity. Yeah, think about the X games and like this is like the the clothing brands everybody was wearing. Um and you know, Tony Hawk and all these things like But if you're gonna scary

You know, three hundred surfboards. And a thousand skate decks. And BMX bicycles and all that. Like you need a big footprint store. And we looked at it and like we were looking at retail in this time and saying Well everything seems to be either be going online

Or It's becoming Really experiential. Yeah. Think REI. Think like there's a climbing wall in the store. They've got great selection. The salespeople are knowledgeable. The salespeople do the sports. You wanted to do an R. I for extreme sport. Essentially. Yeah, but we said R E I if if R E I is the granola eating sports, where are the Pop Tart eating sports. Yeah. And by the way, were you a skateboarder or BMX or snowboarder?

Anything like that? I did none of these sports. Okay, I gotcha. So what would your role be in this company? Like you would do the Like if this was a brick and mortar retailer, what was the the technology aspect of it? Well, you know, I was asking myself that same question. I immediately said, Okay, well what like why am I doing this? Like I'm not doing these sports. I don't you're not a re you don't know retail. I don't know retail, I don't know. Skateboarding. I don't know anything. But the one thing I thought was interesting.

I said, you know what? Starting a bricks and mortar retail business from scratch. In the year two thousand and you know, basically this is two thousand one at this point. I could build whatever technology I want. to make this a great customer experience. Mm-hmm.

What would I do? What can we build? And I kinda latched on to that problem being a really interesting one. Again, going back to like what's a great way to learn new things or d or discover new technology is just commit yourself to the domain.

and go figure it out. When we come back in just a moment. How Jeff discovers that selling skateboards is not his true passion in life. And how that discovery Eventually leads him to the

Coolio. Stay with us, I'm Guy Raz, and you're listening to How I Built This. Hey, welcome back to How I Built This. So it's around two thousand one and after much brainstorming Jeff and his partner Matt have decided that what the world really needs in that moment?

is a brick and mortar store that sells skateboards and snowboards, and to start out, They're able to get some backing from Kevin O'Connor, the guy who helped them with their first business. Well, luckily for us, Kevin was just getting into surfing himself. So He sort of understood the market and was really interested in this idea. And so he said, Yeah, like I'll be your first funder.

Let's go. We're gonna move out from New York to Southern California, which is the home of all these sports. Let's open our first store out there. And you know, I'll be your first uh funding and we'll go find more money, of course, but I'll be your first backer. Where was the first store? The West Side of Los Angeles. Yeah.

couple of years to get the store open, but we finally opened it, uh in um Uh basically Westwood and the corner of Olympic and Spulvida. Mm-hmm And so I spent the next Like several years actually. Building a point of sale system.

From scratch. to run the business on. And b by the way, a at its height, how many stores did Nine Star eventually open? Well, this is when we ran into the fact that retail is a brutal business. We our first store did very well, actually. We put

So we put a skate park. In the store. Like there was a kids could skate. In the store. We had a video game lounge in the store. We had amazing selection, great employees, knew the sports inside and out, and the store was like the place to be. In fact, we put a a half pipe in the parking lot.

And it drew people in the door. It was amazing. So we said, Oh, this is great. And so we raise some more money and we open store number two. Inside a mall in Orange County. And it was a dud. And so we had one store that was doing really well, one store that was not doing well, and so the average of both was the company was just basically staying afloat.

Hm. I think why you are still trying to get that decide to go back to school, back to to University of Michigan to finish your degree. Uh and

Like what was your plan after you finish. We're just gonna head back to LA and and kinda pick up where you left off? Yep. Yep. And first of all, going back to school when you are in your mid twenties is a blast. It is like literally the movie old school. Hm. And I kept in contact with my co founder who did actually in that that summer started building out the store. And I said, Great.

So when I finish um College, I moved back to the west side of Los Angeles, and we got hustling to get that store open. So did this thing, got the company off the ground, we opened the store. And we're running this store, this retail store. I'm sitting in the back of the store writing code for this point of sale system. I've got You know, skate.

Kids who are skating in every part of the store making all this noise with their skateboards. Cause we made the whole store basically a skate park. You could skate everywhere inside the store. And so kids are skating everywhere, you kept hearing these like bang, bang, bang of like Ki the skateboards landing everywhere. The employees are like these young skater guys and they're like running in like, Hey, bro, do you know where the size nine shoes are? And I'm like, No, I don't know where the shoes are. I'm trying to write code here. And after a while I realized I Actually hate.

This business I hate The customers, I hate the employees, I hate the stuff we're selling, and for a software developer sitting in the back of a skate shop trying to focus on writing code. Getting constantly disrupted by everything going on. I again had this realization that I'd made the same mistake I made at Stub Up, which is for some reason I'm building this business. Without a love for the customer.

In fact, I had sort of grown to hate the customer. Um And I was like This is a problem. Now Also, I had at this point gone multiple years without a salary. My bank account is drained. I've racked up

credit card debt. Yeah. And I and I'm actually not even meeting my minimum payments at this point. And I'm like, something's gotta give. And so I kinda float my resume out there to a few friends and I'm like you know, maybe I should just go work at a big company.

Like I literally had no experience in a big company. Like I knew they had these big buildings, they had a logo on the top of the building and people walked in at nine and left at five. But I like I had no idea what people at big companies did all day. Because as a startup, you're just you're just moving. You're just doing all day, every day. Yeah. And I'm like, I feel like if I want to be an entrepreneur and like succeed in building a great company, knowing what happens in one. would be really useful knowledge. And by the way, recharging my bank account is another added bonus.

Yeah. So so Naturally. To work for Amazon. Yeah. And I think this is around two thousand four, um and Presumably you move to Seattle and and and you go

think you went to work for what at the time was a new division, which was AWS Amazon Web Services, um, which obviously now is I think this uh Biggest it. Engine revenue. Um and you were there. Like a little over a year.

Um but at some point obviously you had this idea to start an a new company which would become Twilio. Yeah. But what was the insight that you had at Yeah, because we should just

say th this at the start, like that the vast majority of people who listen to our show, right, they're listening for consumer facing brands. So I mean twilio, I think. think you'd admit it's a little bit hard to explain to people who don't know what it is, but we we'll get there. But but what was the insight that you had at Amazon, what you thought?

Oh, you know, I can turn this into a business. You know, I've always wanted the like the things that the big companies have I had always wanted. And I remember like I'm called An Apple store one day.

And I got this amazing like hello, thank you for calling the Apple store for hours press one for b you know you get the typical thing and I was like That's so cool. And How did they do that? Like when you call my store, like someone has to answer the phone and be like

And I was like, how do they do that? And I researched it a bit and it was like very expensive, very sophisticated, like you have to go buy hardware, you have to go work with carriers, you have to roll out copperware to a carrier to your to your closet, you gotta go buy software. There's people involved who are the experts in selecting it. Yeah, right. It was incredibly complex. And You know, in the in the skate shop business, I I remember like I would work in the store. I'd work in the front of the house and I'd be at the register and the phone rang all day every day and you pick it up and every time it was someone saying, Hey, I got a question for you, is my uh you know, my surfboard repair is it done yet? And I'd be like, well, okay, tell me your email address. And I'd like, you know, have the phone hunched in my ear with like my shoulder holding it up while I'm typing in a keyboard.

And Looking up in the system that I wrote. whether the skateboard was or the surfboard repair was gonna be done. I'm like, nope, it's still gonna be ready Thursday. And I was like, Why did I have to do this? Yeah. And what I saw at AWS

Was this idea that like oh Now every business can have the most sophisticated technology. The same infrastructure that the giants that the Amazons and Googles of the world are using to build their business. Now it's available to everybody.

And I kinda saw what Amazon was doing, because I'd been there and they're doing it for computes, you know, for servers, for storage, for databases. But I thought about my set of experiences and I was like, you know what I would really want it for? It's like how do I talk to my customer? Hm. I bet a lot of entrepreneurs, a lot of software developers.

Are having this problem too. So so essentially the idea was to make it easy for companies, technology companies, to communicate with our customers or to to enable some kind of communication Using a f

using a phone, right? And and and it was to do that at that point was very expensive It required lots of hardware. There was essentially no cloud version of this. It was basically like having servers in the old days. Now you worked at AWS People were s were we're working with cloud based servers, you're essentially saying why d why can't we do this with Telecommunications.

Well, you know, like I remember I would call I would say, Okay, we want that fancy like Phone. Thing. Yeah. So it's like who I don't know anything about that. I'm a software developer. I don't know the first thing about how to make a phone ring. So I call the people who it seemed like they did. Like I call like Cisco. And say like, hey, you know, you it seems like you people know how to make the phone ring.

tell me how to think about doing this. And they'd say, Well, you know, it's gonna take us two years and cost us about four million dollars, but you know, sign here, we'll get started. And every time I remember having this Like same reaction. I was like, Well, fr first of all, that's funny, like four million dollars, like yeah, I'm a startup. I don't have that kinda money. But even if I did, let's say I was some big company. Yeah. I would kinda look at it and say, like, well actually you know is even more problematic.

It's like this two years idea. Because what I was observing was that everything in the world of software has gotten faster where it's like, hey, we no longer design a product and spend years building it. We Look ahead the next two weeks and design the next sprints worth of work.

Build that and then reevaluate. And that's like the nature of agility has really entered not just the software development world, but like the business parlance. Which is you're no longer embarking on multi-year projects because those always tended to fail. Yeah. Instead, you kinda work more iteratively, and that's how you unlock value. That's think about all the apps on your phone. They're getting updated like all the time. But then you looked at the world of like But if I needed a phone to ring, now we're back into the years and millions of dollars for all this and

Why can't we fix that? Why can't that just be a line of code? And that was where Twilio started. Alright, so you decide that you're gonna pursue this and you you're gonna do with two friends. Evan Cook and John W Is it Woltius?

Uh Waltice. Wolfice. And and so did you leave Seattle? Did you move to back to California? So we first had this idea, we talked to a bunch of developers that were just friends or acquaintances of ours, and we said, like, hey, you know If you had You know, have this idea where there's this like service that's running in the cloud that with like you know, line of code, you could hit it and you could make the phone ring and you could do all these neat things. You know, would you have have use cases for it? And a funny thing happened.

The developers would first say Uh Huh, that's uh you know. Yeah. How about how about the Mets, you know, and I was always like, Well, okay, well maybe this is a bad idea. And then every single time. About

A minute later. They would say. Hey, wait, can you go back to that phone thing you were just talking about? I you know, could I uh could I notify my customers when a package ships from an e-commerce site I was recently building? And I'd say, Yeah, yeah, you could and they'd say, Oh, interesting. You know, like one of our early customers was Uber.

And they w they came to us and said, well, actually we want to let you know when your ride's arriving. Can we do that with William? We said of course you could. And they like a day later rolled out the first version of Getting a text message when your car is arriving. Okay, I just a just a c a question here, right? This is two thousand eight. Obviously everything we're talking about today is just normal. Like I think everyone listening takes this for granted. But when you when a developer would say Oh wow, I can notify my customers when a package arrives. I mean, they could do that with email at that point already, so What

What was the You know, when when somebody would say that to you Say, Well, I can already do that through email. Like what what would you say? About your product or your idea that would make it

Better. Well, and people did do it via email, but there was sort of like a It was actually they were coming to me with the idea as opposed to the other way around,'cause they were saying, like, if customers are calling me all day saying, Did my package ship? Did my package ship like we almost forget about the early days of the internet. when you would always be wondering when the thing was gonna arrive and it might be like weeks like, you know. And when people would hunt for the like the customer service phone number to call.

And very quickly. What customers started asking us Was like Yeah, the phone is the phone calls are great, but what about text messages? You know, could I send a text message? Because that would be even more convenient. And we kinda looked at it and said, Yeah, like and you know, wearing my consumer shoes, I'm like

I would prefer a text message in a lot of these cases. And then wearing my developer hat, I was like, oh yeah, a lot of those situations that I described before would actually be even be better as a text message. When you started to explain this idea to people, because to build this you you are gonna need money. You're gonna need a lot of money because it w you know you have to fire develop software developers and engineers and all kinds of people. Um How what was the reception? From

And from Well, before we talk about investors, just from people that you met. I mean, yes, you you you know, developers, they got it, they seem to get it. But when you would just explain this idea to people, did they understand Did they understand it? Were their puzzled looks? Was it like, Oh my god, you've got a hit.

What how d what do people say to you? We know in the early days of a company. The two people you really need to explain yourself to are Customers? And investors.

If you're raising uh investor money. And so we talked to customers, you know, the developers, and they would like You know, the gears were going. They were like chomping at the bit. Yeah, look, when can I get access to it. So we started building the early prototype of the service and started giving access to those developers. And they immediately started building some really interesting stuff.

And they come to us with great feature requests and they were saying, Hey, can I launch this? And we'd be like, Well, maybe not yet. This is like super prototypey. So you could build the prototype. Um with Twilio. And and initially the way you would make money or how you pitch it to investors was

We get a cut. A few a a penny or two pennies. for every out automated outgoing call and then every incoming call. We get a a a penny or something like that. Yep.

Yep. And so every phone call would be like, you know, a penny a minute. And when developers embed these capabilities into their apps and interact with their end users, we're just gonna make a little bit of money every time they're used, but those are gonna add up uh over time. So the summer of two thousand eight, we like feel like we're rocking and rolling. We're gonna go raise Uh our first round of financing. And then, you know, later in the year we're gonna launch and this is gonna be amazing. Yeah.

So I start I'm still in Seattle. My co founders live in the Bay Area, but I'm still in Seattle. I start flying down to meet with uh Silicon Valley investors, venture capitalists. And two things happen. First of all

It's the summer of two thousand eight. Not a good time to be raising money. The financial crisis is in full swing. I mean they are like Many of them were just like our checkbooks are closed. I'm sorry. We're just not writing checks right now.

So horrible time to be fundraising. But the second thing that happened. Kind of universally. Like I go into these investors and I say, you know, we have this idea, it's this, you know, platform approach. Software developers are gonna build these services that use, you know, phone calls to go achieve all these business goals and we're gonna charge a pay as you go rate to make it super easy to sign up. We'd explain the whole thing and they'd say, Well Yeah, I I just you know, it sounds interesting, but like software developers, you know, that's not That's not a market. Like they don't have the checkbook. They don't have buying authority in their companies. Nobody knows how to reach them. Like no one's ever built a business for software developers before. So why don't you go build an app?

Yeah, build a call center, build something in the cloud and you know, come back to us when you've built that and you know, we'll we'll think about it again. And I remember like meeting so many investors, and they all had basically the same feedback. That at the end of that summer Mm-hmm. We we had one investor.

that was really close. They got it. They were like, oh the developer thing, the pl I think they were paying attention to AWS and they said this is gonna be amazing. Lehman Brothers collapses and they're like, sorry, we're we're not. Yeah. And so we spent that whole summer and did not have a dollar to show for it from investors. We raised no money. So we're like back where we started. We have no money, we have no investor interest. We didn't even have a bank account. Because you need like money to open a bank account and we had no money. When we come back in just a moment, how Twilio begins to get customers, and how Jeff uses a proven guerrilla marketing technique to generate buzz. Free tacos. Stay with us, I'm Guy Raz, and you're listening to how I built this.

Hey, welcome back to How I Built This. I'm Guy Raz. So it's 2008, and Jeff and his co-founders have gotten some Pretty good early feedback on Twilio. Other software developers? They love it. The problem is, investors think it's a bad idea.

And we had this very fateful um meeting, I remember, where we said, look You know, investors have told us we're wrong that this is stupid. Um These are smart people. Like these aren't dummies. They're smart. Like maybe they're right, maybe we're on the wrong track.

And so we said maybe we should either just give up, maybe this is a bad idea, all right, let's just go get jobs somewhere, um, or maybe we should just pivot and like build one of those apps they told us to go build, even though we're not that passionate about it. And I remember We said yeah, but are customers, like those developers who are early customers. They are loving it.

They are building. They are using this, they're launching things and and having all these ideas. I think we gotta do is like we gotta follow through on delivering for those customers and at least get a product to launch. And see what happens.

Um, it and it seems like your earliest customers'cause you were of course eventually raise some seed money. Um and then you would raise a lot more over the years. But seems like your your first Um customers were really focused on SMS, on text and using this as a way to communicate via text. Or get people to sign up for things, right? There like you could say y you start to see these things it was like text, you know

Uh dollar to five four two one or whatever and and You would Like That was that A function of what you were

You had built? Yeah. So we launched and at first we were voice only. So we launched. We had Yeah, basically nothing in our bank account. Um And by the way who who was your

I mean who was your first significant customer? I remember the day we launched Sony. Reached out. Hm. And you'd say Sony, what is Sony? And you sort of think about some big enterprise use case. Well, it was actually Sony Music.

And there was a music promoter who worked at the record label. Who was like oh I saw your launch post I wanna build this service. There's a band called Lamb of God. It's like a metal band, I think. He said what we've had we've had this idea in our mind forever that we want to do was called

Log rolling our customers. our fans where they can sign up to get a daily phone call. And the band is gonna record a uh like an audio from the road. They're on tour, they're gonna record their daily update, and then customers can sign up. And we'll blast out the phone call and you'll hear from the band every day. Wow.

And I was like that was the day after we launched. Like I'm on the phone with a, you know, a a music promoter at Sony and I was like, huh. There's like some real like you know, business needs are coming out of of of left left and right here. Yeah. And And but I remember like first of all it's a weird period of time because we launched And

I remember like the day we launched my co-founder John looking at this like internal dashboard we had. saying, oh my God, like they're paying us. Like seeing like, you know, credit card payments starting to come in. And they're like, they're they actually trust us with their credit cards. They will actually, you know, willing to pay for this. And that's the validation you're looking for. and immediately started seeing it. Mm. And suddenly you saw this explosion.

Where like most apps that you downloaded from the app store, you know, would text you to verify your phone number, or would you know, text you when your order ships, or when you have a friend say something or whatever. And there were all these ideas that were coming out of the woodwork of things people had wanted uh you know app developers had wanted to build into their apps, but just never knew how to do before. And now they could. Um

Uh as you you know began to just from a business perspective, right? As you begin to get some in investors and More interest? um into two thousand you know, ten, for example. Um, how did you

go about hiring people. I mean did you did you have like that massive expansion quickly or were you still relatively small? You know, one of the things that I have always taken from my Entrepreneurial endeavors because most of my companies, like, we did not have a lot of money.

And so in the early days of Twilio, uh, we sat about we said one of our values is is be frugal. And sure enough, I remember l we hired our first software developer who was not a founder joining the company, a guy named Adam Bellye. And I remember Evan saying, Hey, Adam is great. We really gotta hire this guy, but he wants a salary of like a hundred K. And I was like, whoa, you know, the sticker shock of like paying someone that much money when, you know, the founders had made nothing. And then we gave ourselves a meager salary in the very early beginning. I'm like, wow, this is like Oh, and I remember s telling Evan like

All right. Like we're gonna hire him, but like Better be worth it, right? And and started growing the team at that point. But it wasn't for a couple of years'cause we've just tried to to stay small and lean. in those early days while we were building out with um well really pretty limited resources.

Yeah. Yeah. I think a big turning point for you was was or maybe not, I don't know, but but Uber started to use Twilio. And I guess this is probably still early in Uber's history. So maybe it wasn't a significant

um amount of revenue at the time. I th I think the first time I used Uber, maybe was twenty twelve, I can't remember, twenty thirteen. Um, but was that a turning point or not quite yet in twenty eleven? You know, looking back at it, U Uber it was not clear that Uber was gonna be such a big deal, right? Because at the time they were like town cars, it was like fancy. Um Uber, when we won them as a customer, I think the whole company was about five people.

So it's very early in in their history. But there's a funny thing, like I look back at that page of time, twenty eleven, twenty twelve, where you know, Uber was a few blocks away in that direction and Airbnb was a few blocks away in that direction. And the floor above us was Instagram. And like we would throw uh like an office party on a Friday evening. And all of the people who founded these companies and were building these companies would just come over for a beer. Um You know, at some point it was the it wasn't just Uber, I would say, but it was the sum of all of that entrepreneurial activity going on in our backyard, who were almost all of them our customers.

that started to like really propel the growth of the company, especially after we added text messaging, which was the service that um this new whole category of mobile apps that was getting born. Really needed. And

We were the one everyone turned to. How d and and essentially it sounds like w was it just basically developers talking to other developers and And that's Who you're

That's how it grew. You know, in those days the notion of like Anything is possible with code. was really permeating the world. And so you had these like hackathons.

Yeah. And they're happening all the time, like every weekend, every college campus, every major city. Wow. And we were right there. And we made sure to go to every hackathon. I remember one of the Big hackathons in San Francisco was going on. And it was happening over a weekend. And like and be and the hackathon organizers got wise to this. They started charging a lot of money to sponsor it. Yeah. Like, Oh, you want to sponsor our hackathon? Great, that's fifty thousand dollars, right? Yeah. And so they started getting wise to it. So I remember I showed up at one of these hackathons at

Two AM. With About seven hundred dollars worth of taco bell. Wow. That was probably the best marketing dollars ROI we ever got.

He just walked around handing people tacos. Tacos. Wearing my twilio shirt. And uh and just handing out tacos. And I remember I closed down that taco bell. There was a taco bell in Oakland that was still open at that hour. And I went on, I I pulled into the drive thru.

And I said, How many tacos do you have left? I said I'll take'em all. And she literally turned off The open sign. That was a very gorilla approach to how to reach the world's developers. And we really had to develop that, but I think I benefited actually from a lot of the gorilla marketing that we did in my college um campus for versity.

A lot of the similar things, like you're just getting to where your customers are and like screaming from the mountaintops in whatever the most relevant way is. And also your customers are a very specific set of people. It's not it's developers. I mean that's and and you you I guess going to hackathons, you know you're gonna find them there. And at that time no one else was trying to reach them. We were like one of the only ones. Yeah. I'm curious about

competitors as you started to grow because You know, you're going Start you start with uh Yeah, a few thousand developers and then tens of thousands and then hundreds of thousands. And you're quoted um around this time, uh maybe it was tw two thousand thirteen

uh you said, you know, our end goal is to open the black box of telecom and move the world away from I mean that that sounds like a shot across the I mean Did you start to see competitors in some of the big companies like Cisco come in and say, Well We should do this too. We can do this.

You know, it was interesting because one of the early questions we got from Like investors. They said, Well, won't carriers do this? Won't A T and T just do this? Right. You know, they could, I I guess. But You know, people always overestimate

The Ability for a big company. To see an emerging market like this and actually invest in it because it is at in its early days small peanuts compared to the scale those big companies are operating at, right?

Yeah. So Inevitably. Like the the carriers, they weren't dummies. Like they saw this trend of APIs and developers and innovation. Like they saw all this stuff happening. And inevitably, almost every carrier in the world that I can think of.

in that era in those early days of like 2010, 2011, 12. built an API on top of their services. And launched with great fanfare their developer platform. And every one of those carriers within twelve months had shut it down. Hm.

Why? Because It didn't Immediately. pass their bar for like, well, is it making us a billion dollars of revenue? And if it's not, we don't care about it because it's not moving the needle for our big company.

And that's the advantage that every small company has. It's like when we were Our first year we made$200,000. Okay. Our second year. We made two million dollars.

For a startup, that's a huge success story. Yeah. For a carrier size company? That's a miserable failure and like shut that thing down. We don't have time for that. And that's the natural advantage that every startup has over like incumbents in the market. And we saw that innovators' dilemma just play out time and time again. uh inside of the bigger companies while we went about building this. And you know, now today we're approximately four billion dollars of revenue.

But like, you know, that's a fifteen year journey and that's the nature of that creative disruption. Yeah. Yeah. Um Uber eventually became a significant

Very significant. I think Uber and um WhatsApp became two of the most significant drivers of revenue. And I think Uber at a certain point was like twelve percent of your revenu revenue is coming from Uber. Uh, because every time you order newber, right, Twilia was was powering that in in in the background, right? They that would tell you how long your driver's gonna take and I mean that was all

Um but they Essentially. Pull out. of their relationship with you or or drastically reduce it. I think in like twenty seventeen. Yeah um

With that. Something that um I don't know. Freaked you out. You know, I it actually didn't worry me.

Yeah. Where our business model is. is usage based, right? So when a customer sends a text message. It costs a very little amount of money, but like those things add up over time. And what results from that business model.

is that a company like Uber, when you get in in the early days As they expand our revenue expands. But in some ways like when a customer's growing so fast as Uber was during those days, You look at it and you're like, do I want my company to actually become just like

The Uber story. Not really. Like I've got Tens of thousands of customers at that time. So they were growing to be like a quarter of our revenue. I'm like That's actually a problem. That's not that's not something to celebrate. That's actually something to be worried about.

I'm curious about that as a case study because at that time it was uh T Tulio had gone public and so you were a publicly traded company and When that Uber decision came out, the I think the stock you know plummeted like thirty percent for some time. Um and you you did talk about this, that that actually there were mistakes that you felt you you could learn from like for example

You know you didn't service them as well as you should have serviced them. Is that is that true? Do you feel like That was um a lesson that you learned from losing that account? You know, I there's a sense in certain customers, especially like very technology driven companies, that they're like

Like yeah, we don't want a salesperson. Like we just want just leave us alone, just give us a service. And you know, we don't need to talk to you. And like I'm a software developer myself, so like I can understand that mentality. But at some point, like a customer gets big enough that you're like First of all, someone in that business is signing the check every month.

We sh we need to know that person. Yeah. And even though the customer was saying, like, we're fine, we're okay, like we don't need you And we had assigned ourselves resources elsewhere. The mistake we made was saying like Like no, we needed to be walking the halls. We needed to be really working that account.

Well, and figure out, okay, if the developer doesn't want to be talking to us, so be it. Somebody else might. There's a budget owner somewhere who's spending now millions and going on tens of millions of dollars on our services. We at the very least have to know that person really well. Yeah. And that was the transition that we had not really made.

because we were taken a little bit by surprise when Uber one day said, you know what, like we actually wanna um you know, start we're gonna s we want to use less of your services. So yeah, it was a bit of a tough transition for us, but I remember standing up in front of the company. the day after that happened and the company, we're a newly public company. We I think it was our third quarter reporting as a public company. Everyone's like, Well what happened? Like I thought being public was just like, you know, up into the right. Yeah, right. Um

You know, I remember saying like look You know, this company is not about one customer. We've got tens of thousands of customers and we're building this for an enormous opportunity that's far bigger. than just you know the activities of one customer. And I think that was the right way to look at it.

L let me talk about heading up a public company because it's a different beast, right? You're you you've got to disclose and and your books are open and um and you know, I think you debut at fifteen dollars a share, so if you bought Twilio stock when when you went public you would still have made a lot of money at sixty Say it's roughly sixty four s almost sixty five dollars a share. But like many technology companies, twenty twenty two is not a good year. For you, right? There was a uh

Seventy plus percent. decline in the stock value. Yeah, I mean Every time I talk to a po uh uh the head of a public trade company, they say I don't pay attention to the stock price. I don't believe that. I I just don't believe that they don't.

Th I mean, do you it must weigh on you to some extent, or do you do you just feel like, well, you know There's not much I can do to move this thing. You know, everything guy is about About time frames.

Right. If you look at the stock on a hour by hour or even day by day basis. It it you know, I kinda liken it to Imagine you were playing in a basketball game. Mm.

But The score did not go up when you made a basket. The score randomly changed. You know, you're dribbling up the court and the get ten points and then you make a shot and you lose five points. And it's like a rand like the score is disconnected from the thing you're doing.

Would that be a fun game? Like no, right? You'd be like, this is a bunch of BS. Like, why am I doing this? And so if you look at a stock price on the day by day, minute by minute basis, you're like, this is completely disconnected. From what I'm doing today. Right. Like what new information exists in the market.

On like a Tuesday afternoon when we're not reporting earnings. About our company's future profit potential. There's no new information. So what's causing the stock price to move? I don't know, a bunch of stuff that's not in our control. And so in order for you to actually believe That you have agency over the outcome. You have to ignore the short term.

But you also have to believe that in the fullness of time The activities we undertake. Do effect. And But that plays out over years, not over like

uh you know, minutes, hours, days, or even quarters. Yeah, I'm curious, um your take on this. There's a a an a headline in the Washington Post today, for example, uh the day we're talking on this interview, and um And it's s it's something like the golden era of of Silicon Valley or the golden era of tech is over, right? And you s you've seen these and I'm sure you've seen these over the not over l many years. Um

And right now we're in the midst of of just a period of of large layoffs, you know, every single company. Twilio obviously had to lay off. about eleven percent of its workforce in September of twenty twenty two. Um I mean, do you do you think and and and and also the explanation that we hear is that there was over hiring.

you know, in the last in the previous two years. Um is that The the beginning and end of of why There are layoffs in your view?

I mean, for example with Twilio, is that Is that why? Did you overhire? You know, overhire is a like a a simplified way to talk about it. But I think you have to like look at the the root cause, but like the end result is like, yep, if you have to let go of people, it means you hired people that in retrospect you wish you maybe hadn't hired.

Um But the reasons why are are more interesting. Um When you are operating in an environment where Interest rates are very low.

Meaning an investor can put their money into a um a very safe account, like a savings account. And make nothing. then they're much more likely to want to put their money into a more speculative um stock like a tech company. But once the ch the the savings account is making five, six percent, whatever, in a higher interest rate environment, you're like, well now I'm less likely to take risk.

That's why the equation of tech companies That are gonna spend a lot today. to go build market share. And if you remember, like the internet is a massive market. And so for everybody who's building it a an online business, you're like, I've got billions of people who are my potential customers. There's tremendous amount of entrepreneurial activity. I'd be a fool not to invest as much as I can and go building my market share today.

For this enormous market we're in. And that's what people have done. But once you change that story and say, Well, actually The profits that we said will eventually Give the equity value. if the eventually part of that changed. 'Cause they eventually became well now it's like a lot closer to today. Yeah.

And that's what makes this period so hard. Now this happens this is a business cycle. This business cycle happens all the time. This is not the first time we've been through one of these cycles. But the one thing that's different is the last business cycle, the boom time, the low interest rate environment. went on for a pretty historically long time. So there's a lot of people in the workforce, for example. Yeah. who have never seen a high interest rate environment in their career.

And That created a whole generation of entrepreneurs and workers and investors too. who are accustomed to like revenue growth, future opportunity, all that, and suddenly you look at it and you're like, Oh, actually Current day profits are highly valued.

And that's the change that the whole industry, especially in tech, is going through. And that's a difficult transition because our muscle memory is so oriented towards the last 10, 15 years. Um You've got I think Uh uh roughly seven thousand employees all around the world. Is that is that about right?

Uh about right. Yeah. And and we're now in in this new kind of phase where um you know, a lot of companies are still grappling with how to

whether to bring people back. Right. There are lots of companies that are demanding it. And and um And I know you are essentially fully remote company. Um Some of the f the the the concern that I'm hearing from

Leaders. and founders and COs is that um It's really damaging to the company culture. when everyone's remote. it it's hard to cultivate.

A sense of And um And other things involved in in working. in a space where you're interacting with other people. Um

How do you feel about that? I mean, do you think that's a a fair 'Cause I think it's a pretty fair Assessment of what's what's going on. Um W what's your take?

You know, I think the hard thing is when you go extended periods of time without the ability to have that face to face. And the challenge that a lot of companies are having In the current environment. 'Cause you see there's a lot of startups that were born during the pandemic. Right. That were purely distributed because like look, that's all you can do during a pandemic and like I think their cultures are probably doing fine.

But then you've got a lot of companies that have a big investment in real estate. And Those companies You're saying I can't afford to carry all this real estate that people don't want to go into. And afford for people to travel everywhere to go see each other. Right.

I gotta pick one or the other,'cause I only have so much budget. So what So just out of curiosity, w you you've got a lot of real estate. We do. Yeah. And it's and it's not used.

Yeah. And there's a building on the side of the one oh one in San Francisco. That right? Headquarters here. Yeah, our our headquarters is in Soma. Um You know, at the beginning of the pandemic we had I think three buildings in San Francisco.

And today, you look at those b those offices, they're about You know. Low single digit percent utilization. Wow. Yeah. So what

Yeah, so what are you guys gonna do? I like face to face interactions like I think most human beings do, but I do not think we need to have it. On as regular a basis as like the nine to five office used to have us doing it. Right. And so if I have to pick, which as a CEO

I basically do. I am picking a distributed company. That as we work through the phases. We'll be able to get together on a regular basis and in teams or divisions or departments. Have fun together, break bread together.

And then break up. And so if I have to pick That's what I'm picking. But that's the challenge is to get there. I I personally believe That the future of a company like ours

I think that it The company's offices are gonna consist of Three different types. Of Locations.

I think you'll have number one. Like a showroom. The place where you bring customers or the like recruits or like a place that looks really fancy and nice and like, you know, people are looking but it just looks like your company. It's a physical manifestation of your company. Yeah. The second is you need off site space.

If you know, once a quarter employees are traveling from, you know, wherever they are to the to meet Wouldn't it be nice if they had a an experience that felt like your company? Okay. And those are like regional. Like, you know, you can have one in North America. That's where teams do their offsite. And by the way, yeah, if everybody's doing this, it'll be cheaper than renting a hotel every time. But the third is my favorite. The third type of office space

Are coffee shops. Like I actually think that instead of having a Formal office. In a city? What you might want is like a thousand square foot coffee shop. It's only for employees, you badge in, but it's like hey, you know, I'm I work from home often, but

You know, I need to get out of the house. I need to concentrate more. The you know, I gotta get away from like a distraction at home, or I just want some energy around me. So I can go to a coffee shop. And like, you know, for a few thousand square feet, like you could have one in every major metropolitan area or even every neighborhood in some major areas and have enough employees in those areas to be able to justify the cost because they go in every day. And I think that combination of like the showroom, the destination, offsite space, and the coffee shops ultimately will solve the problems of like why does the company need physical places? I think it's those three problems. You know.

When you reflect on on your journey and and the you know, the failures you had early in your career, which were very valuable, clearly, because they You you were able to take all of that. knowledge and and those experiences and apply them to what you would eventually build in Twilio, which is a you know Multi billion dollar.

giant now. Um how much of of of where you are today do you attribute to To your work. Your work ethic, your skill, your intelligence and how much do you think ha has to do with Getting lucky.

You know, I I think we're all a product of our environment. Yeah, so much of what we No Or have the opportunity to do Or just

problems that we end up getting visibility into or having the resources to go solve them. I mean these are all Things that are a product of like how we were raised, when we were born, where we were born. And so You can seize those opportunities.

Or not. But the first thing you need is those opportunities to exist for you. And so I definitely feel um tremendously lucky. To be born. where and when and all sorts of things and I like I don't take that for granted.

I take it very seriously that like We have an obligation. For those of us who have had opportunities. to use

to try to create more opportunities for more people. That's Jeff Lawson. Founder and CEO. of Twilio. By the way, the name Twilio is, of course, totally made up.

Jeff and his team were looking for words that Telephone. So tell, twee, hello, things like that. And in two thousand eight? They got a really great deal on the domain twilio.com.

It only cost them seven bucks. Hey, thanks so much for listening to the show this week. Please be sure to follow the show however and wherever you listen to podcasts on Apple Podcasts, you just click the plus sign. And on Spotify, you click follow. If you want to contact the team, our email address is hibt at id.wondery.com. If you want to follow us on Twitter, our account is at how I built this and mine is at guyRoz. On Instagram, we're at how I built this and I'm at guy.Roz.

This episode was produced by Kira Wakeem with music composed by Ramtin Arablui. It was edited by Neba Grant with research help from Sam Paulson and technical assistance from Hans Copeland. Our production staff also includes JC Howard. Casey Herman, Carrie Thompson, Alex Chung, Elaine Coates, John Isabella, Chris Massini, and Carla Estevez. I'm Guy Raz and you've been listening. how I built this.

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