Twilio's Jeff Lawson | Software with Superpowers

Hi everyone. Welcome to Grey Matter, the podcast from Greylock, where we share stories from company builders and business leaders. I'm Heather Mack, Head of Editorial at Greylock. Today, Greylock General Partner Sarah Gua interviews Twilio CEO and co founder Jeff Lawson. When Twilio was founded in 2008, it was a true outlier in the tech scene. While everyone else is making consumer centric apps to serve the new era of mobile and cloud technology, Twilio launched to serve developers. Not everyone in the investor community immediately understood how the business model could survive, but software developers did. Twilio's Cloud Communications APIs went on to become a default part of the developer toolkit, and today the company works with more than 200,000 customers. In this discussion, Lawson shares stories from the early days of Twilio, his vision for the future of software development, and insights from his new book Ask your developer. This interview is part of Greylock's Iconversations series. You can read a transcript of this interview on our website greylock.com and you can find all Gray Matter podcasts by subscribing on SoundCloud, Spotify, YouTube or wherever you get your podcasts.

I'm Sarah Guo, a General partner at Greylock and our guest today is Twilio CEO and Co founder Jeff Lawson. I've been so looking forward to this chat because I have an amazing love for companies that really invent a new type of business from first principles and Tullio was an outlier when it came onto the scene in 2008. Mobile and cloud technology were starting to converge, but building a business directly for developers wasn't a broadly accepted strategy. Clearly, Jeff and his team were onto something. It was a vanguard company in bottoms up software adoption, and their cloud communications APIs went on to become a default part of the developer toolkit and today the company works with more than 200,000 customers. Jeff is a lifelong entrepreneur. He started his first business in middle school, launched another while he was in college, and was the founding CTO of StubHub. He was acquihired into Amazon and was part of the early team that built out aws. Throughout it all, Jeff has been a candid and outspoken leader who's unafraid to talk about missteps. His new book, Ask your Developer is one of my favorite books of the past year and outlines strategies to create developer led business culture. As he says, build or die. Dramatic but right in my opinion. We'll talk about that too and I recommend the book to all of you. Jeff, thanks so much for being here today.

Thank you, Sarah, for having me here.

So middle school is a pretty early point to start an entrepreneurial journey. And you're a glutton for punishment, clearly. Tell us about how you got started down this path.

You know, really, there's two things. First of all, I've always loved to learn by doing so instead of like looking at a book, like, the way I tend to learn things is like, just get your hands on it and figure it out. And so I remember at that point in my life I was really interested in video. I was like, video and like, you watch tv, like, how do they make those cool, you know, effects and how they shoot that video? And my dad had a video camera, like a very basic one. And I remember, like, I want the real thing. Like, I wanted like one of those professional cameras, but like, how is a 13 year old gonna afford some professional camera? So I was like, I'm gonna start a business videotaping weddings and bar mitzvahs and like all this kind of stuff. Get people to pay me to figure out how this cool stuff works, have money to go buy the cool gear, and basically like, figure this out. And that's what I did. So my first company is called Video Visions. And a great tagline. Look forward to looking back. You know, it started out, I think, you know, when I was like, you know, 13 years old, someone would pay me, you know, 35 bucks to go videotape their third birthday party. But by the time I graduated high school, I was doing like full on weddings. You know, that might be like a $10,000 gig with like, you know, big editing and reception and the ceremony and all this kind of stuff. So it's just really interesting. So that's the first company that I built, but it really all came from one, wanting to f figure out how to do video and two, wanting the gear that was really cool and needing to say, like, okay, how am I going to afford it?

So how do we go from that to Varsity StubHub, all these tech businesses?

Well, you know, it's interesting. So the. The first company that I started, the first like, let's say call it Real Company or maybe Internet company. I was in college. I started at the University of Michigan, fall of 1995. And this was like a month after the Netscape IPO, right? And it became apparent to everybody that, oh my God, this Internet thing, this is going to be big, right? And so I show up at school at the University of Michigan and you know, the first week of school, the first day of school, Right. Everybody's excited, like, what are you excited about? You go party and you're excited about dating or whatever. I'm like, I was most excited about the 10 megabit Ethernet jack in my dorm room because at this point in my life, I only ever have like, you know, 28k modems, right? And so like having a 10 megabit Internet connection, that was amazing. Right? And so we started just playing around with this brand new thing called the Internet. I remember that one of the first things I did in my dorm room before I unpacked, like any of the stuff that I brought with me was I FTP down a copy of Netscape Navigator 1.0. And that was where it all started, right? And so what I really wanted to do, like, you started playing around with this technology. I remember, you know, you could browse all these websites and it was sort of like, you know, academic stuff and like webpages about people's dog or their interest or whatever. But then you started to come across these pages that were like, dynamic. They did things. Mm. You know, and I remember one of these, you know, whether it was a search engine, like, you know, Alta Vista or one of those. Or remember this one webpage, which was you clicked checkboxes for things you wanted on your pizza. So it was like pepperoni or olives or like screwdrivers, hammers, and you're like, what is this? What is going on? You click it and you click submit and would render a picture of the pizza that you just asked for with all those various things, like, right. I'm like, this is so stupid. But that's amazing. Like, how did they do that? And so I wanted to basically figure out how this whole Internet thing worked. And so started my first company. And again, it was very similar to the video company, which was like, I want an excuse to figure out how this cool Internet thing works. And what better way to do that than go, like, find a customer problem that you think you can solve with it. And now you've got like a mission you have a purpose for. Why am I learning this technology? It's like, well, I'm going to go figure it out in service of this reason. And if I do a good job of it, you know, customers will buy you what I'm building. And so that was how we started our first Internet company back in 1997, and it was an online lecture note company for college students. So we took this industry that was at the time, if you were in college, you could walk down to a copy shop and you know, Get a xeroxed copy of the lecture notes from the courses you were in. And you pay like $50 a semester to do that. And we said, well, why would you have to walk through the snow? This is Michigan after all. Why would you walk through the snow to go pick up lecture notes when you could just download them on a web browser? And so we built this company. It was called versity.com and we hired note takers in these college campuses to go take lecture notes. We paid them to transcribe their notes, put them into our system, and then we gave them away for free to college students. And we ended up amassing an audience, like a weekly audience of millions of college students that came to the site every day. And we never made any money, but we raised a bunch of venture capital and we had millions of people coming. And it was a very typical dot com story, which was we were literally like the dorm room developers building this thing. Dropped out of school, raised venture capital, moved out to the Bay area, built it up, sold the company to a competitor in an all stock deal. The competitor filed to go public in April of 2000, failed to go out because the market closed right at that point and they were bankrupt by August. Okay, Wild journey.

Was the competitor making money? No, it was a True.com company.

True.com stuff. Like we in our company, we raised, I think about 12 million of capital, which was a lot at that time. And I think we made a total of about $30,000 of revenue because we put ads on the site and we just said, we'll figure it out later. It was all about eyeballs and stuff like that. But that was the first entrepreneurial journey I was on. So despite the fact that we didn't make any money for anybody, equity did not end up being valuable. It was such a wild ride of learning and figuring out new technologies, figuring out business, figuring out the Internet, hiring lots of people. It was just this amazing thing. I'm like, I want to do that again. What a cool experience that that was, that we were trusted with millions of dollars and we could go build a website, we could go attract millions of people to that website by just building something that was of value. And like, that really got me started down this path of saying, like, it's amazing when you think about what the Internet is and what software is, because the scale that you can impact humans today with software with the Internet is. It's really mind blowing when you think about it. And I know we kind of all take it for granted, but when you sit Back for just a moment and think about it, you're like, let me get this straight. I can open up this thing called the text editor. I can type some magical codes into the text editor, hit publish, and it goes into an app store or online on the web, and millions or billions of people can interact with that thing that I built. And I can build a company and even make money. But, like, overnight, I can affect billions of people if I build the right thing. That is unheard of in the history of human creation. For most of humanity, if you built something, it was like a chair, and it's like, great, a dozen people would sit in that chair, and that was the scale of your impact. And now suddenly anybody with access to a text editor and Internet connection can truly change the world. And that. That's amazing. When you really take that in and.

Think about it, it's incredible and it's inspiring. And without using the buzzwords about it, I'm like, gassed up about the idea that, you know, I write code. More and more people write code, but you don't need to anymore, actually. Increasingly, you can type words as a human being into a text editor in a higher level of abstraction and do the same. And I think, like, we're just going to, like, the Internet's going to become more powerful, and I can't be excited enough about it.

You know, it's really interesting about the accessibility of the Internet and programming because 30 years ago I had Microsoft Word running on my 386, you know, Windows 3.1 computer. And Moore's law has kicked in in a serious way. Like, that computer was a 20 MHz computer. Right now we've got our word processor, which is like you're writing inside of a browser, and it's like, has the word processor gotten 10 million times faster? No, it's still the same thing, right? But we built all these abstractions into computing that enable us to do so much with so little. And in many ways, that's how we've used Moore's Law to build those abstractions that take, you know, they're less efficient than, you know, back in the way long ago when you were writing assembly code. But where that trade off for efficiency means that there's so many more people who can access building on the Internet and can build software and can run it at Internet scale and a global footprint. Like, it's amazing because it's never been easier to write software than it has been in the history of any of this stuff. And I think we've used more of this law in a pretty effective way to make. Make the humans better at what they do as opposed to making the computers better at what they do.

Yeah, I definitely want to come back to that. And just there's a couple different really interesting threads there, but one of them is also your role in being part of the team that start to build one of the most important layers of, you know, service abstractions in aws. Because I would argue that that has been one of the biggest needle movers to people being able to build today. But before we get there, StubHub did work right, or, you know, worked in a. In a much larger degree and did make dollars. Like, how did you come to, you know, find that team and go on that mission?

Jeff and Eric were the founders of StubHub, and they were bankers and they had this great idea for this business for people to buy and sell live event tickets. And so they wrote the business plan and then decided they'd actually start the company. But they needed folks who actually, you know, started companies before and had operated. So I joined as the first chief technology officer. My friend Matt joined as the chief operating officer. And together we started building out the team and the technology to get StubHub off the ground. And it was really wild. I always think about the superpower of software is your ability to hear a customer problem, or what you think is a customer problem, and very quickly go build a prototype and figure out if indeed you can go solve that customer problem. And you get that out in front of your proposed solution. You get it out in front of customers and you get feedback and you keep iterating your way towards a better and better and better product. And that's exactly what we did at StubHub. A lot of people are surprised to hear that we went from the first line of code written to. To launching StubHub in about six weeks.

Wow.

Yep, I remember it. We had a hard deadline. The NFL season was starting and we wanted to launch for the NFL season. And so we made our goal of launching for the NFL season. We started writing code in. It was like July or something. And so. But that just goes to show you the power of like, okay, build something quickly, put it out in front of customers, learn iterate.

How did you end up thinking about developers? Like, I assume, you know, Amazon and your experience there had something to do with it, but you were obviously a developer yourself, but how'd you end up thinking about them as a customer?

So you're right. I was a developer building things all the time. My third Company actually was a bricks and mortar retailer for extreme sporting goods. Skateboarding, snowboarding, surfing. I don't know if we're going to get into that. That's a weird one. How did I end up starting to do that? But I built a ton of technology for that company and I remember just thinking about when I needed something, what would I do? I'd Google, what is the solution to this problem? And you know, you'd find websites of various things and you go click around, right? And like most of the time you'd land on some website, you're like, oh, I need like a point of sale system or whatever it was that I needed for the retail business. And you click and then you get to this thing where like, okay, well this looks interesting. And it's like, okay, what do I, what do I do next if I'm interested? It's like talk to sales. And you're like, talk to sales. Probably it's not going to be the thing that I as a developer need. Back, back, back. And like, you know, and so you'd always find as a developer there were certain signs that something was made for you because it was self service. It had like published API documentation that say, oh yeah, this does the thing I needed to do. And so I sort of realized that there were certain things that you would do differently if you were to appeal to a developer who's trying to solve a problem that like, you know, maybe it's midnight, they're like, oh, let me, let me crack open, you know, this problem and see if I can solve it in the next few hours. And it's like, that's not the period of time when you know you're going to talk to a salesperson. And it's like a developer gets into the flow of I'm trying to solve this problem, I'm trying to solve this problem. The biggest thing that breaks flow is like, okay, fill out a form and wait three days for someone to call you back. Like flow is I'm trying to solve it. And I keep going, I keep solving, I keep, blah, blah, blah. And so I kind of realized that there's a certain way you build things for developers, which at the time was very nascent and it really wasn't mostly like open source and a few things like that. And I went to Amazon because I had been an entrepreneur three times in a row. So my first company, Versity, my second company, StubHub, my third company, the retail business called Nine Star and none of them at the time when I was there were like all that big. And it was always the early days. In the early days of a startup, like, you're just kind of running around doing stuff and, you know, it's not like, you know, it's not well organized. There aren't even a lot of meetings. It's just like, get stuff done. And, you know, I always kind of thought like, you know, if I'm an entrepreneur, you know, success looks like I build a big company one day. Yet I have no idea in my, in my head of like, how big companies work because I literally never worked at one. I was like, I know there's these, there's these, you know, there's big buildings and the logo of the company is at the top of the building. And, you know, people walk in at 9 and they walk out at 5. I have no idea what they do all day. Which sounds so weird, but it was like, true at that point in my career. And so I said, you know what, I want to go work at a big company. I want to learn how bigger companies work, like, what goes on in those buildings. Because if I want to build a company one day, let me have a model in my head for like, what are the things I'd want to replicate, what are the things I'd want to avoid? And so that's when I made a very short list of companies that seemed like the kind of companies where I've learned that and got an offer to join as a very early product manager at Amazon Web Services. And it's a funny story, I was actually interviewing there. The AWS team was, I don't know, probably about 30 people. And I was interviewing and Andy Jassy was in my interview loop. And you know, you get to that part of the interview where at the end, you know, the interviewer is like, well, do you have any questions for me? And I said, yeah, I actually do. What is Amazon Web Services? Because at the time you just knew it as a website, right? As a retailer.

Yeah.

And what is Amazon Web Services? Like, what did I spend all my day interviewing for? He says, you know, I'd love to tell you, but I can't. It's top secret, but trust me, it's cool.

And you took the job based on that?

As it turns out, for a relatively mobile, you know, 20 something candidate, that's a really great recruiting tactic to be like, yeah, I could tell you, but then I'd have to kill you. Yeah, I took the job. I'm like, you know what, I'm going to trust this guy, that this is cool. And this is interesting and like, yep. So I moved up to Seattle and started my first day, my first day I got there and you know, my office mate was this guy named Dave who was the first product manager for S3, the storage service. And you know, I was like, hey Dave, nice to meet you. What are you working on? He's like, well, we're building this storage thing where it's like, it's an HTTP request and a developer can embe like can store files in it and it's like only costs like a penny. And I was like, whoa, this is mind blowing and just started seeing like, here's all the things that we're building at Amazon and this whole idea that a developer would be the customer and that this is the infrastructure that they would use to like Amazon build Internet scale applications. And that was absolutely amazing to me. And so when I left Amazon, I knew I wanted to start my next thing again. So I kind of got the experience. I saw the big company and I said, okay, it's time to start my own thing again. And, and I thought back and as I had this question of like, well, what am I going to start? What am I going to do? And so I started looking at a lot of different ideas. But one of the ideas, one of the things I realized was that at all three of my prior companies there were two things in common, even though they were completely different. I mean, the businesses couldn't have been more different from each other, right? Yep. There were three things in common. Number one, the power of software, the fact that we were using software to understand a customer problem, build the answer to that problem incredibly quickly and put it in front of customers in record time and then iterate our way towards a better and better and better product experience. And to me, like, that's the super power of software. But the second common thread between all those companies was we're building up these customer experiences and like the lifetime journey of like, how do you go from like finding the company to signing up to using the product to getting help, like all that stuff. And at every one of those points there would always be these ideas like, oh, wouldn't it be great if we could like, you know, let a customer call in and get automated access to this information? Wouldn't it be cool if we could send a text message to them? When this thing happened, we kept having these really neat ideas and every time we had those ideas they were like, yeah, that's really cool, but I'm a software developer, like I don't Know how to do that? Like making a voltage on some phone line somewhere in the world appear like, I have no idea how to make a phone ring. So we turn to the companies who seem like they do, we turn to carriers, we turn to people like Cisco and we'd say, hey, you know, like we have this idea that we're trying to figure out, can you help us with that? And every time we got a pretty similar answer was like, oh yeah, oh yeah, interesting idea. You know, we can help you with that. You know, first thing is you're going to roll out a bunch of copper wire from a carrier, then you're going to rack up a bunch of hardware, then you got to buy this whole software bit and then you're going to bring in like this army of professional services to come and like bang all this technology together and I think we can bang it into submission and do this thing you want. It's going to take us, you know, three years and $4 million. But sign here, we'll get started. And every time I was like, wait, hold on, like, first of all, like millions of dollars, okay, we're starting up. I don't have millions of dollars to spend on this thing. But more important than the money actually was the time I was like, wait, hold on a second, let me get this straight. We think we know what our customers want and like three years from now, when we finally get version one rolled out with this waterfall looking process, we put it in front of customers, then they'll tell us what they really wanted and then we'll go back and spend another three years and $4 million to build the thing based on the feedback. This is the opposite of software. How do we ever expect to serve customers if this part of what we do is so diametrically opposed to everything else that software people do? And that was when I said, okay, how do we bring this idea of communications and like how we engage with our customers? How do we bring this into the software? How do I put this into the tool belt of every software developer in the world? So when they run into these ideas and they say, oh, wouldn't it be cool if the answer now was yes, let's build it in an afternoon. And that's where we started building Twilio back in 2008.

Yeah, amazing. And clearly people do a lot more if they can just say, well, what if? And we'll just try it right now in the 10 minutes while I'm in flow and have the creative idea in 2008, 2009, what was the reception for the initial idea.

Reception by who?

By developers. I mean by your audience. Yeah, there's clearly another comment behind that joke. So you tell me who the other audience? Like, I suppose, I don't know, investors.

Your parents and friends, your cohort there. Here's the interesting thing. As I said, I was working on a bunch of ideas at that time and I was, I had an idea for a distributed BitTorrent based cable company. I had an idea for a computer backup service. And every time I had an idea that I was working on, what I would do is I'd go find a bunch of like, what I thought were like the potential customers for that thing. Usually it was friends, family, colleagues, whatever. And I would say, hey, you know, I'm thinking about this idea and I go describe the problem. And then a funny thing happens. Either one, they start asking you a bunch more questions like, oh, well, that's really interesting. Would it do this? Would it do that? But usually what happens is there's like this awkward silence and they're like, yeah, you know, how about, how about those giants? See, the giants came last night and you're like, oh, okay, yeah. And they would like awkwardly change the topic because they had no idea what to, how to respond to what you just said. And that showed that you didn't tickle some problem that they deeply held that like, it didn't pique their interest. And they, they were trying to be polite but like, you know, didn't really understand what the hell you were talking about. So when I had the idea for Twilio, I went to a bunch of software developers I knew and I said, hey, you know, we're getting this idea of like this, you know, this platform in the cloud, and you can make API requests and you know, you can make a phone call. And I'd kind of describe what it did and I'd say, you know, do you have use? You know, does that sound interesting to you? And if anything happened, they would say, oh, oh yeah, how about those giants? So first I was like, oh, okay, this idea is no good. But then a funny thing happened almost every time. Like a minute later, conversation would move on, but a minute later they would say, hey, I got a question. You know the telephone thing you were talking about a few minutes ago? Could I send a notification to a customer when the package ships from the E Commerce site I just built? And I'd say, yes, yes, you could. And they'd be like, oh, that's interesting. Yeah, we were just trying to figure that out. Hey, can I try that out. So every single time I got this, like, the gears started turning in their head after I described what we were thinking. And they'd always match it to some use case something they'd been trying to build, just like I had been they'd been trying to build. And they would inevitably say like, oh yeah, that's it, I'd love to play around with it. Like, let me know when I can play with it. And that gave me the confidence to say, you know, I think this idea has merit. So we started building it. I stopped with all the stuff I was. Other stuff I was working on, started building this thing, took a prototype that we built, put it out in front of many of those developers that we had talked to. We said, remember, you asked to play with it, here you go. We'd send them some, some credentials. And we kept building it and getting feedback and iterating and that was the encouragement really that allowed us to continue investing in this and to like quit anything else that we were working on and just focus all of our energy on Twilio. And the funny thing was, you know, you'd ask before they're like, well, who, what was the reception like? I said, you know, the developers that were digging it in the early days and giving us a lot of feedback and adopting people started building apps. And I remember while we were still like, all of Twilio was running on like one EC2 small and it was like really not well made, but it was just like enough to be able to, for people to prototype things. And like they launched on Life Hacker, like the thing that they had built on top of Twilio got coverage on Life Hacker and it was like. And we were like, no, don't build things that are real. And. But, you know, nonetheless it worked and it was fun. So people started building things. So then we said, okay, great. We got early customers coming on board in that alpha type period. And so I said, we're going to raise a bunch of money and then we're going to launch. So summer of 2008, I go out to go raise a seed round for Twilio. I go around and talk to a bunch of investors. I go to Sandhill Road, I go to Angels, I do all this stuff and two things happen. First, it is the summer of 2008, financial crisis is in full swing. People were literally like, it sounds interesting, but we're just not investing. So sorry. I got one investor really interested. It was like the full partner meeting I was going to, which is usually the last step it's like a formality, basically, and then they fund you. And I remember it was the day after Lehman Brothers collapsed, and I walk into the full partner meeting, they were like, just, sorry, no, we're not doing anything anymore. So that sucked. But more interesting than that was the other bit of feedback that I got from a lot of the investors I pitched. They said, you know, I don't really get it. Software developers, you know, they don't, they don't pay, they don't have any budget, they don't make decisions. Like, they're not a market, no one knows how to reach them. Like, so, you know, come back to us. Why don't you go build an app? Just go, go build like a, you know, pbx or just go build an app if you really want to. You can add APIs to it later. I mean, that's what Facebook did. Seems to work out for them. But go build an app and come back to us and talk to us if you, if you, if you build an app. And that was the most common refrain that we got during that whole summer of fundraising, which was, go build an app. That's what everyone does. And we went through that whole summer and because of the financial crisis and because of the developer thing, I spent that whole summer trying to raise money. Didn't have a dime, not a single investor, nothing. We didn't even have a bank account because we would have had nothing to put. You need a check to open a bank account. We had nothing. And I remember this very fateful phone call I had with my two co founders and I said, so look, we couldn't raise any money, so what do you want to do? And we thought about, all right, maybe we should just go build that app that everyone's talking about. Maybe we should go back, maybe it's a horrible idea. We should just go back to square one and find a different idea. But I remember us coming to the conclusion. We said, look, our customers are telling us we're on the right track, that the developers are building stuff. They're loving this thing. Let's follow our customers. And so we did. We raised a very small amount of money from a few friends and family and launched Twilio. And immediately developers started signing up, paying us, building stuff. Our second day after launch, Sony became a customer and it all just started happening. And I circled back a lot of those investors and just started showing them, okay, look, here's traction starting to happen. And it was small scale traction, but every month was just, the revenue was ticking up, up up and in the beginning of 2009, you know, I was able to go raise some money for those folks. And it just showed that, like following customers, you know, don't worry about what investors tell you. Like if your customers are sending you signal, really pay attention to that. Because what do investors want? They want traction. They'll give you their best advice on how they think you can get traction. But the real thing everybody wants is traction. And so follow your customers to get traction. And that's what we did and it worked out really well and we were kind of off to the races.

My, how times have changed and everybody is a believer in or. Many people are believers in the API economy today, but it's an incredible start. Like when you say Sony became a customer on day two, that doesn't come for free, right? Like it, you know, reaching developers is still a practice. And I know even in 2009 you were talking about the power of community. I'm a big believer in the power of community. I even invested in a company called Common Room recently that allows companies to like, better serve their communities at scale. But you talked about community, social presence, open source, the pace of blogging conferences like this wasn't mainstream enterprise go to market in 2008. People didn't believe in it, investors didn't believe in it. Like, what gave you the confidence it would work? Like, where'd you come up with the ideas for that?

We had a very sophisticated marketing strategy and it was this. Be everywhere, be awesome.

Okay, great.

That was literally like our, that was our marketing strategy. And we just started doing the things that we said would reach us. You know, one of the great things about kind of being the customer demographic you're trying to reach is you just literally say what would resonate with me. So we started going to meetups, we started going to hackathons, we started, you know, buying ads on websites that developers frequented and just got out into the real world where developers were convening and in the online world tried to figure out where they were convening and get there. And I like, I remember at one point, like, you know, you really think like a developer, you say, okay, what's going to get them in? We never actually did this, but I really wanted to do it. Like, asterisk was a popular open source telephony server. And in the early days of Twilio, a lot of people I talked to about Twilio, they'd be like, oh yeah, you know, I tried using asterisk to solve this thing once. It was so complicated I couldn't figure it out. I wrestled with this thing for like a week and then gave up. And like, that was a common refrain. I heard it. I said, so I was like, oh, why don't we go buy Google Ads for the error codes for asterisk?

Amazing.

Because think about that developer trying to wrestle this really complicated piece of software that's not working and all the error codes that they're googling to try to figure out, like, how do I solve this problem? They're like, let's just put an ad that says, like, hey, you know, don't bother figuring out this error. Just come sign up, move to the cloud. Right? And so like just things like that, like guerrilla tactics to like get yourself in front of developers and the things that developers care about. I remember one of the early things that we did is we started a weekly developer contest. The Netbook contest.

Yep.

Remember there was a brief window of time when netbooks were all the rage. Netbooks were like those two 300 hour computers. They were like that big. They tangled keyboard and a little screen, but they ran like full Windows or Linux. And it was like there was no use case for it. They were just kind of cool. So you really, you couldn't justify shelling out your own $300 for it because you knew they would just sit in a closet, but damn, you really wanted one. So we were like, all right, let's run a contest. And every week we're going to give away a netbook. We're just going to make up a theme every week. And this week is like, okay, the best thing that you can use Twilio plus Halloween. And we're like, that's this week's theme. And like, you know, the early days, some of these contests we'd have like two people would submit an entry, you know, and then we'd like write a blog post on Monday morning. Like, oh, of all the entries we got, we picked such and such, right? And here's the new theme. And so we just did that by the end. We stopped doing it at some point. But like by the end it was like, yeah, we'd have a lot of entries. And it was a really great vehicle to go do partnerships. I remember in the early days of Twilio, we're like, hey, we're gonna. I called up Jeff Barr at aws. I said, jeff, can we do a joint contest with aws and you'll give the winner like a thousand dollars of AWS credit. He's like, sure. So we did a joint. The best Use of AWS plus Twilio, the best use of, you know, this and this and just gave us a venue to go like build partnerships and build relationships and get ourself in front of. And I said oh yeah, Jeff. And you're going to blog about this on AWS's blog, right? Oh yeah. So it was a vehicle to go get ourselves out into the world. So again this was all just super gorilla but just saying okay, I'm a developer, what am I looking at? Where am I going? What am I doing? Where am I learning about new technologies, where am I doing my job? And even things like Googling error codes was where things that we were thinking about of like where are the places where you might meet a developer? Be everywhere. Be awesome.

That's so interesting because it speaks to another theme that like we'll talk about the book in a bit about, you know, develop. If we're going to have developer oriented businesses then developers need to be business people and be like thinking about what the go to market is for these businesses. Because people who do not understand the audience, like you can't take your average SEO consultant that doesn't think about developers and have them come up with the error codes for asterisk. Right. That just won't make any sense. Yeah. So Twilio works with a huge range of customers for very different use cases at all levels. Now were there some early customers like key ones that that taught you the most important lessons about how to keep iterating and move the product forward?

Well, there's so many influential early customers. I'll share a couple of interesting stories. One, I remember Intuit became a customer very early on and at the time we were entirely self service. You had to come to our website, sign up. Famously I had told one of the first investor pitches I ever did was a kind of a friendly investor. He's a guy who invested in my prior startups and he was like, oh, that'll be my first, actually my very first investor pitch for Twilio, like make the friendliest one possible. A guy who had invested in me multiple times in the past and he asked so what's your sales strategy going to look like? And I said we're not going to have sales. I'll be self service. He laughed me out of the room, laughed me out of the room. He's like, you are going to need salespeople. I said no, it's all self service developers. Just come sign up. And so that was still the mode we were operating in and Intuit became a Customer. And I remember I got a support ticket via email that you know, still like the three founders and like, I think maybe two employees right at the time. And this support ticket came in and it was a product manager at Intuit and said, hey, you know, we discovered Twilio. We're building the thing, but, you know, can I talk to somebody about what we're building? And I was like, super excited. I was like, oh my God, into it. This is fantastic. Like, of course, let's settle a call. And I talked to them, like, okay, how reliable are you? And like, how does this work? How much it costs? We get discounts at scale, blah, blah, blah. I do the whole thing. And I'm so excited to like to get into it as a customer. And I'm like, wait a minute. And just did sales. Ta da. You know, and so I remember in that moment realizing, oh, you know what? Like, yeah, clearly we are going to have sales. And that's when we started our sales journey of like hiring people to actually talk to customers. You know, what were some other interesting customers along? I mean, there's so many. We have about 235,000 customers now and over 10 million developers in the platform. You know, just some interesting use cases. One is this doctor in the UK who built this thing called the Parkinson's Voice initiative, where he did this study to realize that with just a phone call recording of your Voice for about 30 seconds, he can actually diagnose with greater than 99% accuracy whether or not you are going to get Parkinson's in your life. And he built that study because he basically built like machine learning models based on voice. And he built that whole study, improved that out for like less than $1,000. And when you talked to him, he's like, yeah, historically this would have been. I had to go to my institution and like get a grant. And the grant would be for a million dollars and it would take five years. He's like, we built it in like a week. And we had our results like six months later. And he's like, and it all cost us like nothing. And he was just like, this was just mind blowing for this pace and the quality of the research they can do. I remember another one. There were these other researchers. Sometimes researchers have the most interesting use cases. They were tracking the migratory habits of bears. So if your job is to track the migratory habits of bears, here's what you do in a typical day. You get in a helicopter, you fly around with binoculars, and you go spot some bears. And when you see the bears. You land the helicopter, you go run up to the bear, you shoot it with a tranquilizer and then hopefully it's tranquilized and you climb up on and you put a collar around its neck and then you run away, hopefully before it wakes up, fly away. And then a year later you get back in your helicopter, you go try to find that bear again so that you can again tranquilize it to pull a data card out of the color, put a new data card in and then run away, hopefully before the bear wakes up. And they were like, there's got to be a better. I'm really tired of shooting bears with tranquilizers. And so they built this collar that had a like a two very power efficient modem that would collect data and periodically wake up. And if the bear ever wandered into cell service, it would text all the data off the cart as fast as it could. It was super powerful.

Better system?

Yes, much better system. I call it the Internet of Bears. And it just started these use cases you end up with. But you know, we have customers of every shape and size, right? We've got, you know, kind of the digital leaders that you think of. So Uber, Lyft, Airbnb, you know, pretty much everyone, but now the incumbents as well, in every industry, right? So major banks, you know, NatWest, ING Bank, bank of America, I mean, you name it. Every company is having to become a digital company. And when they do, they start adopting the tactics of the great digital companies, which is they start hiring developers, they start building software they realize they have to build in order to create a great experience. And so now our customers really run the gamut of like every industry, every continent, and every kind of company, big and small, new and old. And that's one of the things that's really cool about being a platform, is that you can really attract every kind of company and like every use case and even things you didn't imagine on the day that you started the company or built a new product, you find yourself being used for these things. Whether it's verifying customers identities, powering the contact center for a major global bank, or tracking the migratory habits of bears. You know, it's just there's a reason why at the end of every press release Twilio's ever done, there's a line for me that says, we can't wait to see what you build.

So I have to just ask you, for all of the founders listening in right now, it's a common adage of like, you need a, you Need a killer app to make a platform company, right? You've built a platform company and like, you know, I love bears, but tracking the migratory habits of bears probably isn't the only killer app that made Twilio.

You'Re not going to go tranquilize some bears this weekend?

I feel like I have picked the wrong career path and that's really cool. But, but I love software. How would you respond to that? The idea of like needing to like identify the killer app to make a platform grow quickly.

We always thought about there's this 80, 20 rule because 80% of what people want to build with your platform, you should probably have a reasonable idea and it should be easy to build those things. But there's another 20% which is like, I have no idea what they're going to and let's make sure those are possible. So the obvious things should be easy and everything else should still be possible is kind of how we've thought about it. And so inherent in that is this idea that like, yeah, we, we do have a bunch of ideas of what people are going to build. And so therefore we should optimize the product and the platform to make those things, you know, easy and make them work really well. And so, you know, we've always sought to do that. But the challenge, the difference between like a killer app and, and the platform is like, is everything else is possible. And so you learn that a bit by building yourself. I remember in the very early days of Twilio, we built a thing called VIP. VIP.Twilio.com yeah, I don't know, no one's heard of it. It was again another like, it wasn't a growth hack, but it was like a. I gave a secret business card with these black business cards printed up and all I said on them was vip.toyota.com and I'd give them out to. This is before influencers were a thing, but I gave them out to press, to analysts, to investors. And it was, you could log into it only if a secret Twitter account followed you. And so if I followed you from that secret account, then you could log into this vip.Twilio.com thing and you got three phone numbers. The three phone numbers were a conferencing line, a voicemail transcription line and a something else. I can't. Or a toll free phone number. You got your own toll free phone number. It was like cool. Took us like 10 minutes to build this thing. The reason I tell the story is like we were our own ISV building an app on Top of Twilio that then itself had many customers of customers in the sense the VIPs I gave it to. And because of that we realized, oh wait, it's really hard to build a multi tenant app on top of Twilio. And so that led us to go build a bunch of features that ended up being really valuable to ISVs. So companies like Zendesk or ServiceNow or Talkdesk or any of these folks who are built on top of Twilio, all the features that we intuited we would need because we were building a little bit on top of it ourselves, directly enabled those amazing customers to go, then go build things on top of Twilio as well.

Yeah, such a cool path and very consistent with your learn by doing mentality.

The notion of the killer app though is most people say you have to have an, a killer app that like you build and like that's driving adoption of your platform. And I thought about it a little bit differently is let's build on top of our own platform so we know if our product is good for the use cases that we can imagine. And let's test that hypothesis that many other things are possible, but not the killer app is how you drive adoption of the platform. Because that's a different model. That's the, hey, go build an app and then add an API to it. Like that's really what that model is. That's the killer app. Right. And I thought of it as our job is to deliver composable building blocks, programmable APIs that allow developers to embed those into the great many things they're doing, which is just a kind of fundamentally different value proposition.

Yeah, we don't have any, you know, tracked bears yet, but I sit on the board of some companies that are, you know, trying to be platform companies. And I get so excited when people build weird things on them because it, it tells me that like, you know, there's experimentation, it's working and people are trying to stretch the limits of what's possible. Yeah, let's talk about the book. So I loved it. I genuinely mean that. I recommend it all the time. But I'm a, I'm a software person and I'm making a huge career bet as an investor enabling other software people. So I'm like, I already, you know, I drank the Kool Aid. What motivated you to write the book? Like, what were you hoping to accomplish?

Well, you know, it's interesting. Like I am a software developer and I'm a CEO and I talk to developers all the Time and I talk to C suite people all the time. And what I've found, what I've noticed in talking to so many customers, you know, especially big customers, there is this gap between how developers think and how business people often think and they don't really understand each other. You know, think about it like, you know, you've got the business people who ask these questions like hey, how come the, how come the developers like that, you know, the roadmaps always seem to take so long and like, you know, they can't tell me what date this is going to ship or like what features it's going to have, you know, and think about like Agile, like what do we often say? Like you can predict the features but not the timeline. You're like, to a business person you're like what? We have a marketing conference. Like, you know, we're spending millions of dollars, you got to tell me when that it's going to ship and what it can do. And developers like, sorry, we can't say that. Like it's infuriating. Think about the flip side. What are the developers? Oh, the Dilbert pointy haired boss guy doesn't get it right. And it's like, so these two sides don't understand each other. Well the interesting thing is as a developer and CEO, like I got one foot in both worlds and I regularly would get customers come to me and ask things like, you know, Jeff, I just had this question like, you know, we're trying to build, we're trying to build a software culture and we're trying to hire developers, but this is really hard, how do we do it? And I'd find myself, you know, talking through some of these things about like how do you hire great talent and how do you empower them? And, and I realized that my role as a, both developer and CEO is pretty rare. So let me take the knowledge that I have as a developer and let me try to give a playbook to the business people of the world of like, here's what's actually going on with those developers, here's how it all works and here's what you need to know to be a business person or an executive who's going to have a high performing software team in your company. How do you not be the pointy haired boss? And by the way, how do you unleash that talent to do great work? And that seemed to be the missing, the missing book because so much has been said about digital transformation. I mean every article, every, you know, there's so many books and articles Written about digital transformation, it's almost like the software is going to write itself. And no, like, like anything in business or life. It's all about people. It's what are people going to do? And nothing has been said about the talent, the people of digital transformation, the software developers, the people with hands on keyboards, making this whole thing happen. And how do you unleash them to go win in this digital economy? And so that's why I wrote the book.

Let me ask you a question sitting on both sides, right? You know, software person, business person, developers are creatives. I strongly believe that. But it's an interesting creative activity because it's not like painting or being a jazz pianist. You're still building with schedules and on teams. And there's a piece that's like, you know, the industrial craft of it, right? Let's just think about the VP of engineering Persona. Like, we care about delivering against expectations with some degree of predictability. And you do have different levels of performance within your team. Like, can you tell us a little bit about how you think about managing engineering teams when, you know, you obviously have such empathy and understanding for like Twilio magic. The thing that could make it great is leaving room for that creativity.

I think that's the key thing, right? The key thing is, first of all, recognizing that code is creative. And by the way, the examples you gave of like a musician, like, well, there are professional musicians, right? There are symphonies where they have to perform every night and have to make it work, right? And so there's always an art of taking something that is like a craft and a creative exercise, but also turning it into a predictable thing. But I will also say that in the world of software and business, there's a certain creative aspect. Like think about the disruption that's going on in the world all around us and trying to predict what the disruption is going to be next year or next decade and how our companies are going to survive that and thrive in that world. That's a fundamentally creative thing. The interesting thing about software is, like, anything is possible. You know, rarely are there things that most companies want to build. And you're like, software can't do that. Like, no, computers can do almost anything that we need them to do. Therefore, the only question is, what do we want them to do? What will create business value, what will my customers appreciate, et cetera. So that's a creative process. And so first is recognizing that code is creative. And if you talk to most business executives, I think their view of how like technology teams work is sort of like, okay, over here, there's some business people, you know, MBAs, who have gone and, you know, talk to customers and written a specifications document. And then, you know, I've got this black box over here where all the developers are. And if you feed product specs and Mountain Dew in one end, you'll get code out the other. And like, that's how it works. And what I try to do is just dispel that. I'm like, no, for a creative field, you don't want to hand people solutions and say, build this. You want to hand them problems that you want them to solve. Because developers are creative problem solvers. And if you think that the only kind of problem a developer can creatively solve is like, okay, how do I build this sort algorithm? But you're really missing out, by the way. Hint, developers, we don't build sort algorithms anymore. What you're really doing is saying, how do I solve some business problem with a computer? And that's fundamentally creative. And so one of the things I talk about in the book is share problems, not solutions. So imagine one world where a business executive writes his products back and hands it to a development team that says, okay, we need a form on a website. It says, first name here, last name here. Last name can be 40 characters long. Okay, well, you'll get a developer to dutifully write you that form, I'm sure. But imagine a different world where that executive goes to that software team and says, hey, what we're really trying to do here is make it so a customer can sign up for our, I don't know, bank account and they can do it in two minutes, not the hour that it takes today. Can you help me solve that? Now you've got those software developers thinking about all sorts of interesting new ideas, like, oh, well, what if we change the flow this way? Or what if we delay gathering this information until later? What if we do all these cool things that we've seen, felt, heard, like technologies that we've played around with that can enable us to do these amazing things where their hands aren't tied behind their back. And what I found is that when you do that, when you go to a team with a problem not a solution, a few things happen. Number one, teams get really invested in the problem. We're more humans. You give someone a mystery that we love solving them hand people a mystery, make them ask them to solve it, and people get really invested in that. And when they know why they're solving a problem and they know who the customer is, there's all sorts of things they can intuit. Well, the spec doesn't say whether they should hit enter or not. I don't know. Do what seems right, do what you would want. Right. And then third is there's a level of pride and there's a quality that goes along with that, going the extra mile. And so when you do those things, when you hand a developer a problem, not a solution, people tend to get better software written faster with the details thought through. And it's like, who doesn't want that? What business executive out there is saying, those aren't the things that I want. Of course you want that. And the interesting thing is that the business people and the software developers are all super aligned around the same motivation. They want to build great technology that's used by millions or billions of customers and that makes the company money. That's basically what everybody wants to do. So great, let's align around that and let's get into creative problem solving mode of. And how to do that. Like what should we build? Like that is a hard problem. Great, let's get our best minds all thinking about that. How are we going to serve our customers? Not assuming that, oh, that's just the product manager's job. That's just the MBA's job to go figure that one out. Let's get all of us thinking about that.

You know, talking about things that are on the roadmap and moving into the application layer. Like what's the strategy in the contact center space?

So we've got a product called Flex. So we have a big ecosystem of contact centers built on top of Twilio and we have a platform that we built ourselves. Now the interesting thing about our platform is what we found is that there's a lot of customers who want a turnkey solution and there's a lot of partners who have built those. On top of Twilio, amazing companies like Zendesk and Talkdesk and Zoho and Freshdesk and like all sorts of really cool companies out there, there. But one of the things we found that were for the very large contact centers in the world. These are ones with thousands and thousands of agents. You know, they do a ton of customization of those solutions. And SaaS does not lend itself to like really deep customization because the power of the cloud is multi tenancy. Right? It's one code base that everyone's using. And so typically there are a few things that you can tweak but you really can't go in and like deeply tear the thing apart. And what we found was that there's a lot of companies out there, bigger companies that need to be able to go in and tear the thing apart in order to make it work the way their company works and to fit with their workflows and all sorts of interesting things like that. And so we built Flex as a context center platform that enables a company to go take out of the box and have contact century things that it does, you know, has all the channels and has routing of agents and all this kind of stuff, but. But fundamentally is still a developer product. It's designed the first step after you spin up a Flex instance, it says, all right, now download the SDK and start building, and you can build modules for it. The whole thing is built in. On the back end is all of our rest APIs, and the front end is React. Developers can go change the parameters of the default React components. They can go build their own React components. We invented a way to basically compile in our core code and your React components and all your customizations and continually recompile the combination of both of our code bases into a runtime that is just yours, that runs on our platform, that allows us to keep innovating and you to keep innovating. And as long as we keep that contract in place, we can both keep making the solutions better. And so we launched that about three years ago, and now we've got amazing companies. Both digital native companies like Lyft is running their customer service on Flex and Shopify is running their customer service on Flex. But also, you know, really big banks or insurance companies like Allianz Direct is, you know, the largest insurer in Germany, you know, and very traditional industry, right? And they've spun up their new digital business on Flex. And so, you know, it's really been really interesting to see this problem out there in the world was the amount of customization that companies need to do has really held companies back from migrating contact centers from on Prem to the cloud. And, you know, the contact center business is a huge one and 85% of that market is still on prem. And you think about every other category of software is like, wait, it's like, you know, it's well on its way to being a cloud business. It's like, you know, 80% is the cloud and the 20% laggards are still on prem and the contact center is reversed. And you're like, why is that? And when you go double click on the problem, the problem was that nothing in the cloud provided a level of deep Customization and therefore, so we built, you know, we built that platform to.

Enable that you're a huge SaaS business with consumption based revenue. You do report to the street. How do you think about forecasting that revenue?

Well, you know, it's an interesting problem and in the early days of Twilio it was like, how do we forecast now? Luckily in the early days of a company you don't really have to forecast, but what we did is if you have a large customer base across, first of all, many customers, we have 235,000 customers across many different verticals, many industries, many continents, big companies, small companies, it starts to actually look more like a consumer business in some ways. I don't think Amazon forecasts how much I'm going to buy tomorrow. But in aggregate, all of their customers, humanity will act in a somewhat predictable way. And I think that a usage based SaaS business ends up being that way as you get big, when you get to scale. And so our FPA team has been able to model the business and you know, the first few years, I mean this was this before we were public, but the first few years the model was, you know, it'd be off by 5, 10% and then they kept dialing it in, dialing it and dialing it in. And now we've got models that are, you know, pretty darn accurate for what the business is going to do. And so that's pretty useful. And again, it kind of goes back to aggregates.

Well, I could certainly be here for another couple hours, but we're at the end of our time. Jeff, thank you so much for being here today and thank you to, you know, you and everyone at Twilio for powering so many of the products and tools that we rely on and paving the way for a new type of company. It's been such a pleasure to have you.

Awesome. Well, it's great to be here. Thank you for the invitation, Sarah, and it's been fantastic to chat with everybody. Hope everybody is doing well and can't wait to see what you build.

That concludes this episode of Gray Matter. If you liked what you hear and want to find more interviews on entrepreneurship, Please subscribe at SoundCloud, Spotify, YouTube, or wherever you get your podcasts. You can also find all Gray Matter content at our website, greylock.com and you can follow us on Twitter reylockvc. I'm Heather Mack and thanks for listening.