Twilio CEO Jeff Lawson on
the day of the IPO
Twilio/Twitter
In late June 2016, cloud communications company Twilio held its
much-anticipated IPO — and blew
Wall Street’s socks off.
After pricing above its range at $15 per share, Twilio kept
soaring and didn’t stop for several days. Now with
the dust all settled, Twilio is trading at around a
market cap of over $3.5 billion, just about three times its
last private valuation.
And to hear Twilio CEO Jeff Lawson tell it, none of it would have
been possible without the revolution in computing brought about
by Amazon and its
massively profitable Amazon Web Services (AWS) business.
Lawson should know — he was one of the first product
executives at AWS before he started Twilio.
Lawson says there were two previous waves in computing: The first
was ruled by companies like Oracle, where IT departments
bought software in bulk and forced it on employees. The second
was ruled by companies like Salesforce, where sales or marketing
or finance departments bought their own services and IT
departments helped manage them.
Now, we’re in what Lawson calls the “third age,” ruled by Amazon,
where companies skip the IT department and users entirely, and
instead sell technology straight to the programmers who
build the apps and software that increasingly power our everyday
lives.
In this new age, multi-billion dollar startups like
Stripe and
GitHub, alongside tech titans like
Microsoft and
Google, sell their product straight to software developers,
with no middleman — a recognition that as software continues
to eat the world, it’s
programmers who are making and breaking new technologies.
This is where Twilio fits in. It provides the service that lets
Uber text you when your car is arriving, and that big financial
services institutions like ING are using to power their massive
call centers. And any success it presently enjoys is because
it rode that wave — before Silicon Valley even knew there
was even a wave to ride.
“I think we had a hunch,” Lawson says.
Cold fusion
To explain the tremendous opportunity of selling software
straight to developers, Lawson goes back to his college
years, circa the mid-nineties. Amid the first days of the dot-com
bubble, Lawson knew that he had to hone his computer skills if he
wanted to be a part of it.
“I wanted to learn this magical new thing called the internet,”
Lawson says.
Being short on funds and resources, he downloaded a bootleg copy
of Adobe
ColdFusion, a popular platform for making early
websites. Years later, when he was the first CTO of
ticket-buying site StubHub, he was in a position to choose the
technology that the whole company standardized on. And he chose
ColdFusion, the one he knew best.
That’s exactly like what’s going on today, Lawson says,
just at a larger scale. Twilio, Amazon Web Services, and
practically all other services that sell straight to developers
offer free levels for people who are just messing around
with the platform, and pay-as-you-go plans beyond that.
Twilio
held a “Code Jam” programming stunt on the floor of the NYSE
during its IPO. Here, stockbroker Kenny Polcari finishes writing
his first app.
Twilio
“You just want to get people’s hands on it,” Lawson says.
The appeal for students, like Lawson once was, is immediately
apparent.
But there’s also a tremendous appeal for big established
companies: If one lone programmer has an idea, they can use
this new class of technology to mock up a prototype in a weekend,
without having to go through the IT department or any red
tape.
“When it costs you a few dollars to build a prototype, the speed
and iteration is much more valuable,” Lawson says.
If that prototype catches on internally, it greatly
increases the odds that they’ll tap Twilio and whatever other
technologies they used to build it, too. As the project gets
bigger, so too does the check they write to Twilio.
“They’re going to be the ones who call us,” Lawson says.
This all seems obvious now that AWS is eating the world, but
it ”wasn’t common wisdom” when Twilio was founded in 2008,
Lawson says, and investors were skeptical.
“‘What’s this? This isn’t a business,’” Lawson remembers
investors telling him. “‘Developers don’t have a checkbook.’”
Common wisdom
Lawson came up with the idea that became Twilio back in the early
days at StubHub.
Someone had an idea for a system that would automate calls and
texts between the people who ran to buy tickets at the box
office, and the customers who would end up buying those tickets
from StubHub.
Lawson talked to some vendors about the idea. They told him
it would be possible at the scale StubHub needed…but it
would also take two years and $2 million to run a line straight
into the phone company’s systems. That was way too long and
way too expensive for Lawson’s team at what was then a very tiny
startup.
Glassdoor
“That’s forever for a developer,” Lawson says.
That brief, aborted experiment would form the seed of Twilio,
which performs exactly the kind of service that StubHub
might have needed way back when. Now, Twilio is helping companies
large and small build phone calls and text messaging features
into all of their apps.
What seemed like a niche business to investors in in 2008
actually looks pretty smart in 2016, as
the rise of chatbots, automated systems, voice commands, and the
like start to take over the tech landscape, even as people
begin to expect that banks, restaurants, and stores will be able
to automatically text or call them.
With 650 employees, a $3 billion public valuation, and some big
companies, Lawson sees this as only the start. And he says that
they’re going to keep growing by focusing on attracting
developers to the platform. With the capital raised by the IPO,
Twilio can start to go international and keep growing.
“There’s a very long, very big opportunity in front of me,”
Lawson says.