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`The Wizard Of Apps: How Jeff Lawson Built Twilio Into The Mightiest Unicorn
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`Forbes / Tech / #CuttingEdge
`SEP 14, 2016 @ o8:ao AM
`45,604
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`The Wizard Of Apps: How Jeff Lawson Built
`Twilio Into The Mightiest Unicorn
`
`Miguel Helft, FORBES STAFFS
`FULL BIO
`
`This story appears in the October 4, 2016 issue of Forbes.
`
`Back in October of 2011, when Uber was still a tiny company beginning to expand
`beyond the San Francisco area, it sent an e-mail to its customers to alert them about
`a problem. Uber's SMS provider, Air2Web, was going to have a scheduled outage,
`which meant some Uber features, like notifications and SMS ride requests, would be
`temporarily unusable. "If you text in and don't receive a prompt response from us,
`it's not because we don't want to, it's because we can't!" said the snarky Uber note,
`its irritation at Air2Web poorly concealed.
`
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`The e-mail landed in the in- box of Jeff Lawson , the CEO of a crosstown startup
`named Twilio, which specializes in cloud-based text and voice communications.
`Short, stocky and balding, with a round face framed by rectangular glasses, Lawson
`could double for George Costanza, only without the bumbling, neurotic personality.
`Lawson is low-key and personable, and what he lacks in the swagger and bombast
`associated with startup founders he offsets in engineering intensity and
`entrepreneurial discipline.
`
`Lawson knew just what to do with the Uber e-mail, forwarding it to his friend Rob
`Hayes, an Uber board member at the time, along with a brief sentence: "For the love
`of God, they should be using Twilio." Hayes then introduced Lawson to Uber CEO
`Travis Kalanick, and within a month Twilio was powering Uber's SMS. "It was
`mutual love," Hayes says. Little by little the relationship expanded, and Twilio now
`runs texts, alerts and voice calls on the Uber app in most parts of the world. When a
`driver and passenger call each other, they do so through a Twilio number that keeps
`their own phone numbers private. "We didn't know Uber was going to be what it is,"
`says Patrick Malatack, Twilio's head of product. "But it was great to see Jeff s
`hustle."
`
`Twilio, as a company, reflects its chief executive's personality. "Be humble and be
`frugal," says Lawson, a 39-year-old father of two. That aw-shucks credo has
`translated into 30,00o customers—from small developers to large enterprises—who
`use Twilio to power some 75 billion annual connections that reach 1 billion devices.
`Match.com pairs potential lovebirds without revealing phone numbers, Airbnb
`sends rental notifications and the American Red Cross deploys volunteers, all
`through Twilio. ING, the European banking giant, recently announced it was
`yanking out 17 hardware and software systems across its global call centers and
`replacing all of it with Twilio. Its largest customer, WhatsApp, uses Twilio to verify
`customer accounts and logins. Apps from Lyft, Expedia EXPE -3.25% , Netflix NFLX -1.66%
`, Coca-Cola Ko +0.21% , Salesforce and the New York Times Nyr-0.3% all have Twilio
`inside. "He's built a fantastic business," says Salesforce CEO Marc Benioff. "This is
`something that every company will build into their applications, like we have."
`
`The latest group that seems to have noticed Twilio's behind-the-scenes success: Wall
`Street. Defying the all-but-dead market for tech issues, Twilio, which still isn't
`profitable, went public in June, raising $150 million at a $1.2 billion valuation.
`Shares of Twilio, which would have ranked high on our inaugural list of the 100
`hottest cloud companies had it stayed private, nearly doubled the first day. And
`within two months, fueled by 70% sales growth in its most recent quarter, it doubled
`again. Its recent $4.6 billion market capitalization dwarfs better-known tech names
`($3 billion).
`like Box ($1.7 billion), Fitbit ($3.1 billion) and Yelp
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`Twilio's coming-out party sends a multibillion-dollar signal that building
`communications functions into apps is both vital and easier than ever, which in turn
`prom-ises to make every smartphone in the world even smarter. Lawson is aware of
`the potential. As part of the IPO celebrations, he gave each of his more than 650
`employees a T-shirt with a simple message: "Day 1."
`
`ABOUT A YEAR AFTER LAWSON and two friends founded Twilio in 2008,
`Lawson was invited to introduce it at a popular networking mixer called the SF New
`Tech Meetup. Rather than talk about an inherently difficult-to-explain technology,
`Lawson decided to let the Twilio software speak for itself. In front of a thousand
`people Lawson began telling his story while simultaneously coding a Twilio app—a
`simple conference line. In just a few minutes he opened an account and secured a
`phone number, and after writing a handful of lines of code that everyone in the room
`could understand, his conference line was up and running. Lawson then asked
`everyone to phone in, and just like that a mob of developers was on a giant
`conference call. Lawson then added some more code, and his app called everyone
`back to thank them for participating. As phones throughout the room began
`buzzing, the crowd went wild with enthusiasm. "He is the let-me-show-you-what-
`we-can-do type of exec," says Byron Deeter, of Bessemer Venture Partners, an early
`backer who has become Twilio's largest shareholder. "There's no bravado and no
`ego, and that gives him a special charisma and authenticity."
`
`Lawson's parlor trick did more than generate industry buzz. It epitomized a
`developer-centric business strategy that has fueled its growth. Twilio is exceedingly
`simple to use and charges no upfront fees, so programmers often use it to test an
`idea or product. Pretty soon that product scales and turns into a six- or seven-figure
`account that required no traditional sales process. "We onboard developers like
`consumers and let them spend like enterprises," Lawson says. Like others that have
`embraced developer-driven marketing—Amazon for computing services, Stripe for
`payments, New Relic for analytics—Twilio benefits as companies increasingly turn
`to software for differentiation. "As that happens, and companies hire more
`developers, they come in with Twilio in their tool belt," Lawson adds.
`
`Given this ethos, all new Twilions, as the company's employees call themselves,
`endure a rite of passage: They have to create a Twilio app and present it to the whole
`company. (And, no, the assistants and marketers and lawyers aren't exempt: Non-
`engineers learn the ABCs of coding a Twilio app as part of an onboarding "boot
`camp.") On a recent Wednesday evening a few dozen staffers, hunched over catered
`Vietnamese pho in the company's cafeteria-cum-kitchen in San Francisco's South of
`Market tech hub, cheer a handful of newbies as they unveil their handiwork.
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`Most of the apps are goofy. One answers text queries with a Simpsons' GIF. Another
`allows users to text a math problem and promptly delivers an answer from Wolfram
`Alpha, a Web-based knowledge engine that does computations. The takeaway,
`however, is serious: Anyone can build a Twilio app. After each presentation, Lawson,
`dressed in his usual jeans, sneakers and a dark fleece vest over a button-down shirt,
`officially turns them into Twilio's version of a varsity letterman: "Here's your
`traaaaack jacket!" Lawson also hands them a Kindle, which comes with $3o in
`monthly credit. "We want to encourage people to invest in themselves," he says.
`
`The CEO has been investing in himself from a young age. Growing up outside
`Detroit, he started a business in middle school, filming and editing event videos,
`mostly bar mitzvahs. By the time he graduated high school, he'd moved up to black-
`tie weddings, pulling in as much as $5,000 on some weekends. Lawson began
`coding in college, at the University of Michigan, and got his first paid programming
`gig while still a freshman.
`
`Soon after, Lawson launched his first Internet startup, Versity.com, which published
`notes from the biggest courses on campus. As Versity gained traction and pulled in
`advertising revenue, Lawson dropped out of school, raised money from venture
`capitalists, moved the company to Silicon Valley and expanded the business to about
`20o campuses.
`
`In 2000, as the dot-com wave was cresting, Versity was acquired by a competitor,
`CollegeClub.com, which had filed for an IPO. Unfortunately, the crash hit before the
`company could go public, and it collapsed soon after. Since Versity had been
`acquired for stock, Lawson ended up empty-handed. "No one looked at their burn
`rate or their cash balance," he says. "I learned a lot and became very cognizant of
`spending money wisely."
`
`Bitten by the entrepreneurial bug, Lawson teamed up with a friend, Jeff Fluhr, who
`had recently cofounded StubHub. As the company's first CTO, Lawson developed
`the original version of the ticket-reselling site in just six weeks. "He architected the
`whole thing and recruited a couple of people to help build it," says Fluhr. But sports
`wasn't his thing, and Lawson left the company after a few months, dabbling in a
`brick-and-mortar retail venture and finishing his college degree.
`
`Hungry for some big-company experience to round out his skills, Lawson
`interviewed at Amazon in 2004. He got an offer from a tiny team that couldn't tell
`him what it was up to until after he accepted. It was the beginning of what would
`become Amazon Web Services, and Lawson helped build the technology that
`Amazon launched publicly in 2006. "This whole idea that you can offer
`infrastructure as a service was kind of mind-blowing," he says.
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`His 15 months at Amazon proved to be formative. Selling the building blocks of
`computing as a service was a brand-new idea, and Lawson was at its epicenter. The
`model gained traction with the advent of mobile apps, which over time prompted
`scores of businesses to turn to software as a way to interact with customers. As he
`began to think about where he could apply the Amazon Web Services model, Lawson
`homed in on communications, which had proved essential to every business he had
`started. Along with two friends, Evan Cooke, who now works in technology at the
`White House, and John Wolthuis, who remains at Twilio, they developed a
`prototype and put it up—where else?—on AWS. Initial reaction from developers was
`enthusiastic, and Twilio got its first customer, a service called PhoneMyPhone.com,
`which allowed people to type their number into a website to ring their own cellphone
`(handy when it's stuck between the couch pillows).
`
`Twilio's reception on Sand Hill Road was more muted. Many VCs told Lawson that
`targeting developers, who don't control budgets of any significance, was a bad
`strategy. And his timing was lousy: One meeting with a prominent early-stage firm
`was interrupted by news of Lehman Bros.' collapse. Eventually, Lawson received
`some encouragement and capital from angels Mitch Kapor, who had developed the
`first popular spreadsheet and founded Lotus, and Dave McClure, who had run a
`developer program at PayPal . Chris Sacca, a former Googler who made his fortune
`backing Twitter TwrR -3.55% and Uber, and Bessemer's Deeter also invested.
`
`Deeter later secured Bessemer's position as lead financier of the company's Series B
`round with a Twilian stunt: He used Twilio to program a conference line and asked
`Lawson to call in at a set time. Instead of a conference, Lawson was greeted by a
`message: "Thank you for calling the term-sheet hotline for Bessemer Venture
`Partners. We value your business." The robotic voice told Lawson to Press "1" for a
`$15 million term sheet, "2" for $2o million and so on in $5 million increments to
`$3o million. There were also options for hearing Katy Perry's "Last Friday Night"
`and for connecting with a psychic. Lawson ended up choosing to raise just $12
`million. (Click below to hear Bessemer's greeting for Lawson, or dial 650-451-1423
`for the full experience -- including a link to a "term sheet" texted to your phone.)
`
`Twilio began by offering a simple set of basic programmable communications
`functions—things like "dial," "play," and "record"—which developers could bolt onto
`their apps. Underneath those, Twilio handled the messy task of plugging into the
`telecommunications infrastructure across a multitude of carriers in various
`countries. The service allowed any developer to easily add voice and text messaging
`to Web and mobile applications. As Twilio's capabilities expanded—it now offers
`more than 5o building blocks, or APIs, up from the initial 5—customers began
`programming increasingly complex functions and gaining access to analytics,
`
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`routing data, pricing and other features, across not only voice and text but also video
`communications.
`
`Today customers can build a call center entirely out of software building blocks
`rather than having to purchase expensive equipment or prepackaged
`communications solutions. What once required pulling copper wires into a data
`center and costly investments in carrier contracts and infrastructure can now be
`done by a small team of programmers with no upfront cost. Twilio charges only for
`usage.
`
`"The things they made possible were crazy," says Sacca, who worked on various
`telecommunications projects at Google
`. "The idea that someone with no
`telecom engineering experience could build a call-center flow by dragging and
`dropping was amazing." Today Twilio connects to the global telecommunications
`network through 22 data centers in 7 regions and has agreements with most of the
`major carriers that allow it to deliver a message to pretty much any phone on the
`planet. Lawson calls this Twilio's "super-network." "As our business grows, the
`super-network becomes more difficult to replicate over time," he recently told
`investors. Many analysts agree. "Twilio is a company that is light-years ahead of
`their competitive field," says Mark Murphy, an analyst at JPMorgan.
`
`AT A RECENT ALL-HANDS MEETING at Twilio's headquarters, Lawson plays
`MC in front of a hundred or so Twilions, most of whom sit on the cement floor. He's
`framed by large monitors that show colleagues from offices in Mountain View, New
`York, London, Dublin and Tallinn. Lawson introduces a handful of new employees
`and, to make sure everyone remembers their names, leads the group in a boisterous
`camp counselor call-and-response routine. (He's dressed exactly like the night
`before, when he watched new employees present their Twilio apps.) He then sits
`down for one of the mainstays of the weekly meetings: a customer Q&A. Gene
`Schriver, the CEO of Globo, a translation-services company, joins him at the front of
`the room, and the two embrace. "I'm hugging him because I bought Twilio at $26,"
`Schriver quips. No one in the audience needs a reminder that shares are above $50.
`
`With the two of them on barstools, Lawson, his leg shaking restlessly, listens
`intently as Schriver explains how he essentially built Globo on top of Twilio. Globo
`connects customers with translators around the world over the telephone. The calls
`could be coming from a call center serving a customer who doesn't speak English or
`a hospital in Bangkok where a doctor needs to talk to a French-speaking tourist.
`
`Globo, which also offers e-mail, text and document translations, connects the calls
`through Twilio and routes them to the appropriate translator, not only by language
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`but also by expertise, be it medical, legal, technological or other. "Twilio was a blank
`canvas upon which we could make anything happen," Schriver says. The capabilities
`and reliability of Twilio's platform, he adds, are what allowed Globo, which has just
`4o employees, to beat far larger rivals for a federal government contract to offer
`translation for Medicare recipients and people signing up for ObamaCare at
`government exchanges. Schriver calls his choice of Twilio critical. "It's the most
`important bet that we made," he says.
`
`Amid the lovefest, Lawson wants to know what's not working and what his team
`could do better. Schriver lists a few: Some services could work faster; analytics on
`voice quality could be improved; it would be nice to know what new features Twilio
`is planning. This kind of feedback is an integral part of how Twilio develops its
`products. Not long ago, Malatack, the VP of product, found out that two large Twilio
`customers were parking callers they couldn't handle immediately on a conference
`line and muting them. He instructed his team to build a capability to queue calls.
`"We look at what customers are doing and try to make it easier," says Malatack, a
`developer himself, who used Twilio to connect the buzzer of his Seattle apartment to
`his cellphone before joining the company.
`
`Twilio's approach is resonating with all types of customers. When Yelp built a
`restaurant-reservation system to compete with OpenTable OPEN +o% , it used Twilio
`to automate the confirmation process. Rather than have a host call customers the
`day before to make sure they're still planning to come, the interchange happens
`automatically via SMS, and restaurants see a confirmation on their dashboard.
`Similarly, Zendesk, a cloud-based provider of customer-service software, has used
`Twilio to offer call centers to small and medium-size businesses—say, a mom-and-
`pop limousine dispatcher.
`
`Twilio has also brought its simple programmable communications capabilities to
`countless nonprofit organizations through its Twilio.org arm. Modeled after
`Salesforce's 1-1-1 commitment to donate 1% of employees' time, technology and
`resources to charitable causes, Twilio.org has been seeded with nearly 800,000
`company shares and has a goal of delivering a billion messages "for good." It's
`currently at io% of that goal because of organizations like Trek Medics, which gives
`people access to emergency services in countries where 911 doesn't exist, like Haiti,
`the Dominican Republic and Tanzania.
`
`In the United States the Crisis Text Line used Twilio to build a service that connects
`some i,600 volunteers with people who are contemplating suicide or face a threat of
`domestic violence. As Twilio integrates with services like Facebook FB -1.32%
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`EEIIEE-T T EI'I'.
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`THEWD L '5
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`(Credit: Tim Pannell)
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