0:00

Hey Prime members, you can listen to How I

0:02

Built This early and ad-free

0:05

on Amazon Music. Download the

0:07

app today.

0:09

How I Built This is pleased to have Upwork as

0:11

our presenting sponsor. Visit

0:14

Upwork.com to get hiring. Upwork

0:16

has a message for you. Everything you know

0:18

about business, it was made up by a bunch

0:20

of guys 100 years ago. Don't stay bound

0:23

to their antiquated rules like the 9-5

0:25

workday, commuting to an empty office

0:27

building or only hiring full-timers.

0:30

Embrace a new way of working with Upwork.

0:32

It's a portal to the future of business, and

0:35

it's disguised as a website. Go to

0:37

Upwork.com. There you'll see the light

0:39

and also find talent for projects of any

0:41

size, from simple deliverables to complex

0:44

projects, from short-term help to full-time

0:47

hires. You can finally let those old

0:49

business titans and their tired ideas rest

0:51

in peace. This is how we work now. Visit

0:54

Upwork.com to get hiring talented

0:57

professionals today.

0:59

With the Capital One Spark Cash Plus

1:01

Card, you earn unlimited 2% cashback

1:05

on every purchase. And it has no

1:07

preset spending limit, so your purchasing

1:09

power can adapt to meet your business

1:12

needs. The Antonellis, who own

1:14

Antonellis Cheese Shop in Austin, Texas,

1:17

use their 2% cashback from

1:19

their Spark Cash Plus card to

1:21

help cover their employees' healthcare costs.

1:24

Imagine what the Spark Cash Plus card from Capital

1:27

One could do for your business. Capital

1:29

One.

1:29

What's in your wallet? Find out more at

1:31

CapitalOne.com slash Spark

1:34

Cash Plus. Terms and conditions

1:36

apply.

1:40

We had

1:41

this very fateful meeting, I

1:43

remember, where we said, look, you know, investors

1:45

have told us we're wrong, that this

1:46

is stupid. These

1:49

are smart people. Like these aren't dummies that are smart.

1:52

Like maybe they're right. Maybe we're on the wrong track. And

1:54

I remember we said, yeah, but our

1:57

customers, like those developers who are early

1:59

customers. They are loving it. They

2:02

are building. They are using this. They're

2:05

launching things and having all these

2:07

ideas. I think what we got to do

2:09

is like we got to follow through on

2:12

delivering for those customers and at least

2:14

get a product to launch

2:16

and see what happens. Welcome

2:23

to How I Built This, a show about

2:25

innovators, entrepreneurs, idealists, and

2:28

the stories behind the movements they

2:30

built. I'm

2:36

Guy

2:36

Roz and on the show today, how Jeff Lawson

2:38

hated the hassle of customer service

2:41

and built a company to deal with it. Twilio,

2:45

a multi-billion dollar communications

2:47

business that you are probably using

2:49

every day, without even

2:51

knowing it.

2:55

As long-time listeners to HIV

2:57

T know, I don't tend to interview

2:59

a lot of founders behind software

3:02

as a service company. It's not because they aren't

3:04

interesting or worthy. They are. Many

3:06

of them are multi-billion dollar businesses. But

3:09

this show generally focuses on consumer-facing

3:12

brands, products or services we

3:15

buy or use every day. But

3:17

the story of Twilio, which you

3:19

will hear today, is incredibly

3:21

fascinating and hopefully instructive

3:24

because Twilio was

3:25

started at a time not too dissimilar

3:28

from this moment right now in 2023. It

3:31

was 2008, the middle of the financial

3:33

crisis. Startup funding was

3:36

drying up, financial institutions

3:38

were being

3:38

tested, and not that many

3:40

investors understood what Twilio

3:43

did or how it would make money. So

3:45

its founder Jeff Lawson really struggled

3:47

at the beginning. Now before I go

3:50

on, let me explain what Twilio actually

3:52

does. When you get a text message

3:54

from a company saying your package

3:56

was shipped door, your food was dropped

3:58

off or your car has arrived.

4:00

The technology that makes that

4:02

happen is often powered by

4:04

Twilio. Its communications

4:06

technology connects big brands

4:08

like Airbnb or Uber

4:10

or DoorDash or even Nike and Toyota

4:13

to consumers in ways that have become

4:15

so natural, so intuitive

4:18

that we barely even think about them

4:20

today. Twilio does around $4 billion

4:23

in annual revenue and it's used by around 10 million

4:27

software developers around the world. By

4:29

the time Jeff Lawson launched Twilio

4:31

in 2008, he'd already been through

4:33

several different startup ventures, some of which

4:36

ultimately failed. Jeff's first

4:38

business posted students' notes

4:41

from college classes. That company

4:43

got erased when the dot-com bubble burst

4:45

in 2000. When he decided

4:47

to launch his second company, he

4:49

and his co-founder took one of the most

4:51

systematic approaches to brainstorming

4:54

ever. However, they created an elaborate

4:57

matrix of problems that needed to

4:59

be solved.

5:00

And they set those problems against a list

5:02

of technologies that might solve

5:04

them. And after all that brainstorming,

5:07

Jeff and his co-founder decided to launch something

5:09

that had almost nothing to do

5:12

with that matrix. They opened an extreme

5:15

sports shop that specialized in

5:17

skating and snowboarding. That idea

5:20

also fizzled out, but Jeff wound

5:22

up drawing on that experience as

5:24

well as many others before he launched

5:26

Twilio. And we'll get to all of that, but

5:29

before we do, here's some background. Jeff

5:31

grew up in the Detroit suburbs in the 1980s and

5:34

90s. His dad was

5:36

a doctor and his mom was a teacher. And

5:38

his first business was doing video production

5:40

for birthday parties in Bar Mitzvahs.

5:43

He started his next business as a student

5:46

at the University of Michigan. Yeah,

5:48

so you

5:49

know funny thing happened I get to college

5:51

it's the fall of 1995 and And,

5:55

you know, most people when they go to college,

5:58

the thing they're most excited about. when

6:00

they first get there and get dropped off

6:02

by their parents, it's like, oh, well, you know, you're going to go party

6:04

or you're going to go find some alcohol or, you know,

6:06

go start dating and go

6:08

to, you know, whatever. And I'm like, there's

6:11

a fast ethernet jack in my dorm

6:13

room.

6:14

This is amazing. Right. So

6:19

while you were at the

6:21

University of Michigan, while you were a student there, you

6:26

basically came up with a business idea called

6:28

diversity. What was it? Well,

6:31

so we looked around at a variety of things that we

6:33

could do and realized that there

6:35

was, you know, on every campus, there

6:38

were these, these lecture note

6:40

companies, you

6:41

know, they were and they were often run out of a copy

6:44

shop, like the local, you know, copy shop

6:46

where they would hire a college

6:48

student to essentially

6:51

drop off a copy of their lecture

6:53

notes after every lecture and it

6:55

was this little cottage industry that you know seemed

6:58

to form up around every college campus and

7:00

we looked at it we're like when you say we who's we

7:02

you know I started the company with

7:04

two friends of mine Brian Levine and Michael Krasman

7:07

both students at Michigan yeah

7:10

both students at Michigan and we were in the same dorm

7:12

so you're looking at this this cottage

7:14

industry and you guys are saying We're saying,

7:17

well, why should you walk across

7:20

campus in the snow, remind you this

7:22

is Michigan, to go pick up like

7:24

after every lecture to get a copy of these notes. When

7:26

the internet, you could just sit at your computer and download

7:28

it. It seems like an ideal use case

7:31

for this thing called the web. Why

7:33

don't we just pay note takers to put

7:35

their notes online? And so

7:37

we started this as just a very small

7:39

idea. We had no idea what we were doing.

7:41

I remember we came up with

7:43

the brilliant name for it originally.

7:46

It was called notes. Number

7:48

four, free.com. So

7:51

notes for free. Dot com.

7:54

Mind you, this is like 1996. We could

7:56

have had any domain we wanted, you know,

7:58

right? Google was available and

8:00

We picked notes. Notes for

8:02

free. The number four, free.com. But

8:07

if

8:07

they were going to be notes for free, how

8:10

is that going to be a business?

8:12

Great question. If we gave

8:14

them away for free, which was the prevailing

8:16

business model of the internet, which

8:19

is everything was free, and put advertisements

8:21

on it, well then really the sky is the

8:23

limit. And if you think about what people were

8:25

talking about in terms of internet businesses in

8:27

that era, it was eyeballs.

8:30

It was page views. It was

8:33

hits and... Still is in

8:35

some places. Yeah, absolutely. And so what

8:37

we were basically building was a very early

8:40

content management system

8:42

for lecture notes. How did

8:45

you know how to do that? I mean, was it you or was it

8:47

your one of the other friends? Like,

8:49

because building a website in 1997 was

8:51

hard. Like, people, even

8:54

big businesses would hire, like, you

8:57

know, anyone to build

8:59

a website, because it wasn't like you just go to Squarespace

9:01

or something, you had to know how to code

9:03

it. That to me

9:06

was the why we were doing it, right? Like,

9:08

we actually didn't care that much

9:11

about like lecture notes.

9:12

It wasn't about the lecture notes, it

9:14

was about the challenge of figuring out how

9:16

to do these things, really. Yeah. So,

9:19

all right, so you start at the University of Michigan

9:21

and you basically are soliciting

9:25

lecture notes from students and ultimately,

9:27

how many, I mean, what like, can

9:29

you estimate like what percentage of classes you

9:31

cover like 20%, 40%? Well

9:34

we, so the the sweet spot

9:36

were these courses, you know, that like

9:39

every freshman and sophomore had to

9:41

take. Yeah,

9:42

right, because you'd pay, you paid the

9:44

note taker the same amount of money, but

9:46

you had, you know, either dozens of potential

9:48

buyers or thousands, based on which classes

9:51

you picked, right? So what we started doing

9:53

is we got a little smarter and we put up

9:55

flyers around campus and say, are you an Econ 101?

9:58

pay you for your notes.

10:00

like every week. And it would say want to

10:02

make extra cash, sell your notes. Like

10:04

by the way I still think the

10:06

flyer method especially on a closed

10:09

environment like a college campus is a great marketing

10:11

tool. I have to say I don't know if people haven't

10:13

been on college campus in a while. I still

10:16

think they're pretty good. I look at flyers when I'm at like some

10:18

weird like old-school like

10:21

organic co-op. I'll go to the bulletin board

10:23

and you know there's like someone teaching yoga yoga

10:25

and someone, you know, doing a meditation

10:28

course. I

10:28

just, yeah, I like looking at flyers. Yeah,

10:30

it's like someone had to take the time to actually

10:33

go there and tape it up.

10:36

Yeah. Like that person was probably standing

10:38

right where you are. Right. And

10:40

it makes it all very human and like

10:42

small scale in a way that we don't actually get often

10:45

these days.

10:45

Yeah. I think it was around 1997

10:49

that one of your partners on

10:51

this venture was

10:53

doing an internship out in California

10:55

and he met

10:57

this guy named Kevin O'Connor who is the

10:59

co-founder of DoubleClick, which

11:01

is obviously a well-known internet ad

11:04

company, which is eventually bought by Google. And

11:06

I guess he told him about Bursity and

11:09

Kevin O'Connor liked the idea and then he even said

11:11

like maybe he wanted to invest or something

11:13

like that. Exactly. And

11:15

that led to a meeting actually the following week. Wow.

11:19

where I flew out and Michael flew out, we met

11:21

with Kevin in his office. And

11:23

he kind of says to us, look,

11:26

you know, this internet thing is like a once

11:28

in a lifetime event that's

11:30

occurring around us. Yeah. And

11:33

sounds like you guys are working on this interesting thing. And you have

11:36

the whole internet. Why are you focused

11:38

on like, you know, one square mile radius

11:41

of potential customers? Yeah. Like, why don't

11:43

you go use the internet for what it's good for, which is like

11:45

scale. Yeah. And But

11:48

to do that, you need money, so you should go

11:50

raise, like investors are throwing money at internet

11:52

companies, why don't you go build a real company

11:54

here?

11:56

So you dropped out of

11:58

college to do this. guys

12:00

move to Silicon Valley to California to

12:04

pursue this idea? Varsity.com full

12:06

time. Yeah.

12:07

Well, we raised first a seat,

12:09

uh, like, uh, uh, friends and family rounds.

12:11

We raised money from people we knew

12:14

and Kevin participated and a few

12:16

other folks like that, and that was while

12:18

we were still full time students, we raised about, if

12:20

I remember a million dollars. That's

12:23

insane. I I'm just, well, you know, cause

12:25

at that time, this is like 1990, maybe eight at

12:27

this point, like every, every dentist

12:29

and every, you know, everybody is being told

12:31

you got to invest in this internet thing. And so people just

12:34

throw money at us. Yeah. And

12:36

so we raised a million dollars.

12:37

And we expand from

12:40

like the University of Michigan to I think, you

12:42

know, the Big Ten. And then we raised a

12:45

true like venture capital round of financing.

12:47

Again, we're still

12:48

basically full time students. And

12:51

we raised, I think, $11 million. Wow.

12:54

You raised $11 million to you at 21 years old. And

12:58

that sounds super small by today's

13:00

standards. It's nuts. That

13:03

was... That sounds nuts to me. That was a

13:05

lot of money back then. That's a lot of money. That's

13:07

crazy. You're 21, you've

13:09

got this idea, and you've no experience

13:12

in people through all that money. Yeah.

13:15

And just a curiosity. I'm

13:17

assuming your parents

13:18

were like, yeah, you've got to do this. $11 million,

13:21

you've got this thing going, yeah, drop out. You can always

13:23

go back to school if you want. Not at all. Our parents were

13:25

horrified by this whole thing. They're

13:28

like, why aren't you finishing

13:30

school? You've got to become professionals.

13:32

You've got to be doctors and lawyers. And that's what

13:34

their generation really valued, was those professions.

13:37

And this idea that you drop out

13:39

of school because you're making

13:41

something on the computer seem kind of foolish

13:44

to them. But

13:47

as we got more and more traction, and as there

13:49

were stories written about us in newspapers,

13:52

and we're raising money from investors. I

13:54

think they started to come around.

13:57

And I remember we opened an office, you

13:59

know, we...

14:00

We had an office in- Where was it? In

14:02

Ypsilanti, this town right outside of

14:04

Ann Arbor, where the rent

14:07

was like negligible. Like we paid

14:09

nothing. And we had, you know,

14:11

first a small office and then bigger. We ended

14:13

up taking over a whole floor in the Key Bank

14:15

building in Ypsilanti. And did

14:18

you, so you had this office in Ypsilanti,

14:20

but you didn't have to, they didn't, your

14:22

investors didn't say, hey, you've got to build this in Silicon

14:24

Valley? Well, they did. So then we raised our

14:26

venture round and they-

14:30

And they said, you need to move this to

14:32

Silicon Valley. So we picked up that whole office

14:34

on Friday. Everybody

14:36

was at work in Ypsilanti. And

14:39

on Monday, we were all

14:41

at work in Silicon Valley. And

14:45

just picked up going out here and

14:47

we then expanded from, you know,

14:50

I think the 10 campuses that we were on

14:52

to 50 the next

14:54

semester. And then after that

14:56

to 200. I'm still trying

14:58

to wrap my head around the fact that it was

15:00

this content was free. Wasn't,

15:03

was there anybody, any of your investors who were like, okay,

15:05

this is great, you're going to get a million eyeballs here

15:08

and then let's turn this thing,

15:10

VersaDee, you know, now you're doing

15:12

notes, but let's think of this as like the

15:15

one-stop shop for college students. This is going

15:17

to be like the Princeton review meets, you

15:19

know, US

15:20

News and Report ratings

15:23

plus like,

15:24

you know, what Yelp eventually, like all

15:26

those things. Did anybody say that?

15:28

Oh, absolutely. I mean, we kept building

15:31

more capabilities into the product, but

15:34

never once was the conversation about,

15:36

and we're doing it to make revenue.

15:39

It was always about, you know, more eyeballs,

15:41

more hits, more page views. And

15:43

in the course of that, we made a

15:46

total of about $26,000 of

15:50

revenue

15:50

in the lifetime of the company. I mean, it's

15:53

totally crazy if you think about that.

15:55

But the idea was let's just

15:57

accumulate eyeballs and it's

16:00

and you're now living there in California.

16:02

And I think within a year of moving

16:05

out there, you guys got an acquisition offer. We

16:07

did. From a rival company. Well,

16:09

you know, so we were all about academic

16:12

content. And I remember there

16:15

were these other companies at the time who

16:17

were,

16:18

they were like social

16:20

websites for college students, but

16:23

they were not based on academics, they were based

16:25

on like just social things. And

16:27

one of these companies was called collegeclub.com.

16:30

And I, you know, I said, I remember at the time

16:32

I'm on the record as saying there is

16:35

no purpose for a social

16:37

network for college students

16:39

because college is the ultimate social network.

16:41

You don't need to go online for it,

16:43

which, you know, then later came back to bite me when, when,

16:45

you know, Facebook became one of the largest website.

16:48

Right. But so I

16:50

made this bold declaration. Well, meanwhile, this the

16:53

college club company, they had been acquiring

16:55

their eyeballs. So they were in the eyeballs game

16:57

too. And I think they were paying like when

16:59

they took their whole marketing spend and they divided

17:02

it by the users, they were paying something like $50 to

17:05

acquire a customer.

17:07

And so that's a lot of money. And

17:09

when you took the entire cost of operating our

17:12

business, including paying these note takers, we

17:15

were like a dollar to

17:17

acquire a customer who was so much

17:19

more efficient. And they approached us, they said, look,

17:21

we've got this community, why don't

17:24

you join up with us? And

17:27

together we'll go public and we'll, you

17:29

know, obviously like make

17:31

a lot of money because public companies are like,

17:33

you know, to the moon and you're

17:36

going to help us bring down our costs and we'll keep scaling this thing

17:38

together.

17:39

And so

17:40

we did it. And I should mention

17:42

the acquisition price. They acquired

17:45

your company, which had only made $26,000 in revenue for $30 million.

17:51

All stock, no cash, right? It was

17:53

an all stock deal. they were giving

17:55

you 30 million dollars worth of stock.

17:58

I mean, that's a pretty...

18:00

great outcome for you, for your

18:02

investors in such a

18:04

short period of time. Yeah. And I think when

18:06

it was the expected value of their IPO,

18:09

the number was even much higher because the

18:11

numbers they were showing us were like, this

18:14

is going to be worth a few hundred million

18:16

in a few months. So we're all saying,

18:19

hey, wow, look at that. You're

18:21

putting a down payment on a mansion. Maybe

18:24

not. Think

18:26

about it. Yeah, 21 year, I don't

18:28

think you're really thinking about mansions. You're more like, that's

18:30

a lot of like subway or something.

18:33

We went from nothing being college students

18:35

to like raising this small

18:38

round of friends and family investors to not having

18:40

this thing that's going to be public and worth hundreds of millions

18:42

of dollars in about two years of

18:44

just furious, like 22 hour

18:46

days. Not because we

18:49

had to, but because we loved it, because we was like the

18:52

time of our life. And then we

18:54

get to College Club

18:56

and they move us from Silicon Valley down

18:59

to San Diego, which is where they're based. And

19:02

they have filed to go public in April of 2000,

19:06

but

19:06

the market has basically just closed.

19:09

Just starts to collapse. Yep.

19:11

This is the beginning of the dot com bubbling,

19:14

bubble bursting. It's the beginning of the

19:16

bust and they are bankrupt

19:18

by August. So

19:21

all that work, all those investors,

19:24

all that money was gone. Everything got, like it was worth

19:26

zero by within months.

19:32

I mean, as a 21-year-old, you were going to

19:34

recover, obviously you did, and that

19:36

was, I'm sure not fun, but do

19:38

you remember how that felt like all those people,

19:41

like family and friends and investors

19:43

who lost everything?

19:45

Yeah. I

19:48

remember conversations with

19:50

some of the employees because we moved

19:52

down to San Diego and

19:54

people were kind of moving at various times.

19:57

they like right when we get down there they.

20:00

basically start saying, look, we're going to, we have to lay

20:02

off basically your whole company.

20:05

And I was like, are you serious? Like, yeah, we've been

20:07

burning, you know, $50 million a month

20:10

or some ungodly number.

20:12

And now that we're not going public, we don't, we're not going

20:14

to have the money. And so

20:16

we've got to reduce our burn, like immediately.

20:20

And so they said, you need to go talk to all your employees

20:22

and lay them off.

20:24

And it was just devastating. I

20:26

mean, talking to folks and having

20:29

this whole thing unwind so quickly. Yeah. But

20:31

in a sense, I mean, what happened

20:34

to Versity wasn't really your fault. I mean, you were acquired,

20:36

of course, that acquisition. Maybe if you

20:38

could do it again, you would have taken 30 million

20:40

in cash and not 30 million in worthless

20:42

stock. But that's what it was.

20:45

Yeah.

20:46

But, you know, I just

20:49

it was sort of like what what just happened.

20:52

Right. We had this whole Internet bubble.

20:55

And it burst

20:57

and no one was really like it felt like nobody

21:00

was

21:03

like, you know, manning the door. Like

21:05

what? Who's like who's in charge here of this Internet now? Right?

21:09

If everybody agreed that revenue didn't matter and now

21:11

suddenly it does, that's

21:13

a that's a harsh transition.

21:16

But one that you look back on, you're like, well, of

21:18

course, like how long can companies go

21:20

without having any revenue before

21:23

you start to ask questions about the business.

21:26

Huh. So I

21:28

guess spring of 2000, this thing

21:31

basically unravels and you decide

21:35

to start spending a few months

21:38

working at another startup, which was

21:40

called StubHub, which we know of course

21:42

of today because I think

21:44

it had just launched at the time. Mm-hmm. you

21:47

weren't really into it because you I

21:49

guess pretty soon after you started there you you began

21:52

meeting with people about other things that you might want to do

21:54

right like like other companies you could work at.

21:57

Yeah, so Kevin O'Connor, who was the

21:59

founder of DoubleClick.

22:00

who had invested in my first company. I

22:05

was in New York and I was having lunch with him one day while

22:07

I was still working on StubHub.

22:10

And he said, what

22:12

are you doing or what are you thinking about it? I

22:15

was like, I'm not sure I'm going to be long for the StubHub idea.

22:19

And he said, well, why don't you move to New York and

22:22

we'll start a company together? And

22:25

I said, okay, like doing what? He said, I don't know.

22:27

Let's brainstorm and come up with an idea. You go find

22:29

another entrepreneur that you really respect and

22:32

move. You can live in my summer home

22:34

in the Hamptons,

22:36

uh, which is like empty most of the year. Nice.

22:39

And we'll just brainstorm a bunch of business ideas and

22:41

we'll come with them. My summer home in the Hamptons.

22:44

Yeah. And I'm like, well, that sounds

22:46

nice. And so

22:49

I move out in November,

22:52

the middle of winter. Yeah.

22:54

Right. And it's kind of this old beach shack. Like

22:56

it sounds great. Like the summer home in the Hamptons,

22:58

but it was like this old beach shack with

23:01

very poor electrical infrastructure

23:04

and, you know, everything else. And

23:06

were you by yourself in that house? So

23:08

I grabbed one of my other co-founders from Versity,

23:11

one of our, actually, one of my key hires at Versity.

23:13

Right. Uh, and we came out this guy named Matt

23:15

Levinson. So we moved out in the middle of winter.

23:18

And by the way, this is, this is desolate. Like

23:20

there's nobody in the Hamptons. We

23:22

would order packages on Amazon

23:24

so that the UPS truck would come and

23:26

plow the road for us. I'm not shedding

23:28

tears for you. You're in the Hamptons. Okay, let's keep talking

23:31

about what you're doing there, okay? You're

23:33

brainstorming ideas. I'm just doing some scene setting

23:35

for you. The tiniest violin in the

23:37

world is playing now for your time at the Hamptons.

23:40

So, but what is the process?

23:43

You guys are sitting there all day just doing

23:45

what? Yeah, because there's nothing else to do. And tell me what the conversation...

23:48

Like, how do you start to brainstorm a new

23:50

idea?

23:51

Okay, so we spend the first week brainstorming

23:55

different groups of human beings that might

23:58

have interesting problems. Okay. You

24:01

know, doctors, small business owners,

24:03

single parents, you know,

24:05

teenagers, whatever, like just groups

24:08

of human beings that when you think about them might have

24:10

problems. Okay. So we come

24:12

up with 200

24:13

different groupings of human beings and

24:16

then we rank which ones we thought were

24:18

most interesting and most promising areas to go explore.

24:22

So once we settled on like the top five, like small

24:24

business owners, then we brainstormed what problems

24:26

do they have? And so you brainstorm,

24:28

okay, well, like they need to acquire customers,

24:31

they need to accept payments, they need

24:33

to do marketing,

24:35

they need to do security, they need to get their store

24:38

online, all these list of things

24:40

that they might need to do. And then

24:42

at the end of this process,

24:43

like we spent a few months, maybe

24:45

like a month, and we had a list of like a thousand

24:48

ideas of problems

24:51

that needed solving. Okay, then we moved to the second

24:53

phase of this, which was, okay,

24:55

let's brainstorm new new technologies

24:58

that are emerging

25:00

that

25:01

might allow us to go solve some problems. So

25:04

you brainstorm, you know, the web or, you

25:06

know, at the time it was like Bluetooth or GPS

25:09

or all these different technologies.

25:11

So do a long brainstorm of that and then we narrow

25:13

it down to the most promising ones. And then the

25:15

really interesting part was you did a matrix.

25:18

So you get on a big whiteboard and

25:20

on the horizontal axis,

25:23

you would write all of the

25:25

new technologies.

25:27

And then on the vertical, you would write a bunch of those

25:29

problems.

25:30

And then you would draw a line and

25:32

connect them or something? Well, like you brainstorm.

25:34

You'd say, like, well, if a business needs to acquire

25:37

new customers, can Bluetooth solve that problem? Well,

25:40

I remember my favorite one

25:43

was called the Thing Locator. And

25:46

the observation was that you

25:49

had pagers. You remember pagers? Like

25:51

doctors would have, you know, there's always doctors and drug dealers,

25:53

right? course yeah yeah sure

25:55

well pagers were going out of style people

25:58

didn't need anymore but yet there were every

26:00

city was blanketed with infrastructure

26:02

to do two way paging. And

26:05

we said, well, if you're always losing your keys

26:07

or your car

26:10

or your whatever,

26:12

couldn't we put a GPS chip

26:15

and a pager radio

26:18

into a small package and

26:20

let you just keep track of where things are? And

26:23

this was in 2000. Called

26:25

the Thing Locator. And so we did

26:27

a bunch of research. What we found was that the power

26:30

requirements of both of these things, GPS

26:33

and the Pager network would be the form

26:35

factor of this thing would be pretty large. And

26:38

so like you wouldn't put it on your key chain. And

26:41

so while I'm sure we could have pursued some

26:43

other things like well, you know, trucks or whatever,

26:46

we kind of abandoned the idea because the original problem

26:48

we were pursuing was more

26:51

for personal use. I'm just going to interrupt

26:53

you for a moment because clearly there were a lot of

26:55

really interesting ideas

26:57

that would eventually be developed by others.

26:59

And you're looking at technology

27:02

as a solution to problems.

27:04

And yet, I'm just spoiler

27:07

alert here, but the business

27:09

that you decide to pursue is a

27:13

brick and mortar retailer for extreme sports

27:15

called Nine Star. And you would sell skateboards,

27:18

BMX bikes, and snowboards. That

27:21

is surprising that that was the idea that

27:24

you all landed on.

27:25

In what probably was a condemnation

27:28

of this brainstorming process. Yeah.

27:30

I mean, totally. My co-founder,

27:34

Matt,

27:35

had had this idea like five years

27:37

earlier for a, like

27:38

what was called the category

27:40

killer retailer for extreme sporting

27:42

goods. Cause what he observed, he grew up in

27:44

Santa Barbara

27:46

and he observed that these sports, you know, skateboarding,

27:48

snowboarding, surfing, they were

27:50

exploding in popularity. You

27:53

think about the X Games and like this

27:55

is like the clothing brands everybody was

27:57

wearing. and Tony

27:59

Hawk and all.

28:00

these things like, but if you're going to carry,

28:02

you know, 300 surfboards

28:06

and a thousand skate decks and

28:09

BMX bicycles on that, like you need a big

28:11

footprint store. And we looked at

28:13

it and like we were looking at retail in this

28:16

time and saying, well, everything seems

28:18

to be either be going online

28:20

or is becoming

28:22

really experiential.

28:24

Think REI. Think like there's

28:27

a climbing wall in the store. They've

28:29

got great selection. The sales people

28:31

are knowledgeable. The sales people do

28:33

the sports. You wanted to do an REI

28:35

for extreme sports, essentially. Yeah,

28:37

but we said REI, if REI

28:40

is the granola eating sports, where are the Pop-Tart

28:42

eating sports? Yeah, and by the way, were you a skateboarder

28:44

or BMX or a snowboarder or anything like

28:46

that?

28:47

I did none of these sports. Okay, I gotcha, all right.

28:50

So what was your role be

28:52

in this company? Like you would do the,

28:55

like if this was a brick and mortar retailer,

28:57

What was the technology aspect of

28:59

it? Well, you know, I was asking myself that

29:02

same question. I immediately

29:04

said, okay, well, why am I doing

29:06

this? Like, I'm not doing these sports. You

29:08

don't know retail. I don't know retail,

29:11

I don't know skateboarding, I don't know anything.

29:13

But the one thing I thought was interesting,

29:16

I said, you know what, starting a bricks

29:18

and mortar retail business from scratch in

29:20

the year 2000, and basically

29:23

this is 2001 at this point,

29:25

I could build whatever technology I want

29:28

to make this a great customer experience. What

29:32

would I do? What could we build? And

29:36

I kind of latched onto that problem being

29:38

a really interesting one. Again, going

29:40

back to like, what's a great way to learn new things

29:42

or discover new technology is just commit

29:44

yourself to the domain and

29:47

go figure it out. Can

29:49

we come back in just a moment?

29:51

How Jeff discovers that selling

29:53

skateboards is not his true

29:56

passion in life, and how that

29:58

after subsy needs

30:00

him to Twilio.

30:01

Stay with us, I'm Guy Roz, and you're listening

30:04

to How I Built This.

30:11

Millions of Planet Fitness members are defeating low

30:14

energy and finding their big fitness energy.

30:16

And right now you can join them for just one dollar

30:18

down and ten dollars a month. That's so nice,

30:20

I think I'll say it twice. You

30:23

can join Planet Fitness for one dollar down and ten

30:25

dollars a month. No commitment, cancel any

30:27

time. What a deal! Join

30:30

the Judgment Free Zone today and enjoy tons of equipment

30:32

in the clean and spacious club. $10 a

30:35

month, no commitment, cancel any time. Deal

30:37

ends Wednesday, April 5th. See you home club for

30:40

details. Life is short

30:41

and it's full of a lot of interesting questions.

30:44

What does happiness really mean? How

30:46

do I get the most out of my time here on

30:48

Earth? And what really is

30:50

the best cereal?

30:52

These are the questions I seek to resolve on my

30:54

weekly podcast, Life is Short with Justin

30:56

Long. If you're looking for the answer to deep philosophical

30:59

questions, like what is the meaning of life, I

31:02

can't really help you. But I do believe that we really

31:04

enrich our experience here by learning

31:06

from others. And that's why in each episode, I like

31:09

to talk with actors, musicians,

31:11

artists, scientists, and many

31:13

more types of people about how they get the

31:15

most out of life. We explore how

31:18

they felt during the highs, and

31:20

sometimes more importantly, the lows of

31:22

their careers. We discuss how they've been

31:24

able to stay happy during some of the harder times.

31:26

But if I'm being honest, it's mostly

31:28

just fun chats between friends about the

31:30

important stuff. Like if you had a sandwich named

31:33

after you,

31:33

what would be on it? Follow

31:35

Life is Short wherever you get your podcasts.

31:37

You can also listen ad free on the Amazon

31:39

Music or Wondery app.

31:49

Hey, welcome back to How I Built This. So

31:52

it's around 2001 and after

31:54

much brainstorming, Jeff and his

31:56

partner, Matt, have decided that what

31:58

the world

31:58

really needs? In that moment

32:01

is a brick and mortar store that sells

32:03

skateboards and snowboards. And

32:05

to start out, they're able to get some backing

32:08

from Kevin O'Connor, the guy who helped

32:10

them with their first business. Well, luckily

32:12

for us, Kevin was just getting into surfing

32:14

himself. So he sort

32:17

of understood the market and was

32:19

really interested in this idea. And so he said,

32:22

yeah, like I'll be our first funder. Let's

32:24

go. We're going to move out from New York to

32:27

Southern California, which is the home of all

32:29

these sports.

32:30

Let's open our first store out there and I'll

32:33

be your first funding and we'll go find

32:35

more money, of course, but I'll be your first backer. Where

32:37

was the first store?

32:39

The west side of Los Angeles. And it took us

32:42

a

32:42

couple of years to get the store open, but we finally opened

32:44

it in basically

32:47

Westwood and the corner of Olympic and Spulveda. And

32:50

so I spent the next,

32:51

like, several years actually building

32:54

a point of sales system from

32:57

scratch to run

32:59

the business on. And by the

33:01

way, at its height, how many stores

33:03

did Nine Star eventually open? Well,

33:06

this is where we ran into the fact that retail is a brutal

33:08

business. Our first store did

33:11

very well, actually. So

33:13

we put a skate park in the store, like

33:15

there was a kids could skate

33:18

in the store.

33:19

We had a video game lounge in the store.

33:22

We had amazing selection, great employees,

33:24

knew the sports inside and out. And the store was like

33:26

the place to be. In fact, we put a half

33:28

pipe in the parking lot and

33:31

it drew people in the door. It was amazing. So

33:33

we said, Oh, this is great. And so we raised some

33:36

more money and we opened store number two inside

33:39

a mall in Orange County.

33:41

And it was a dud. And

33:44

so we had one store that was doing really well,

33:46

one store that was not doing well.

33:49

And so the average of both was the company

33:51

was just basically staying afloat. Hmm, I

33:54

think while you are still trying to get that

33:56

first store off the ground you actually

33:59

decide to go back school back to the

34:01

University of Michigan to finish your degree. And

34:05

what was your plan after you finished?

34:06

Were you just going to head back to LA

34:08

and kind of pick up where you left off? Yep.

34:12

Yep. And first of all, going back to school

34:14

when you are in your mid-20s is a blast. It is

34:16

like literally the movie Old School.

34:19

And I kept in contact with my

34:21

co-founder who did actually that

34:23

summer, started building out the store. And

34:25

I said, great.

34:26

So when I finished college,

34:29

I moved back to the west side of Los Angeles

34:31

and we got hustling to get that store open. So

34:34

did this thing, got the company off the ground, we opened the store

34:36

and we're

34:37

running this store, this retail

34:40

store. I'm sitting in the back of the store writing

34:42

code for this point of sale system. I've

34:44

got, you know, skate

34:46

kids who are skating in every part of the store

34:49

making all this noise with their skateboards because

34:51

we made the whole store basically a skate park.

34:53

You could skate everywhere inside the store. So

34:56

kids are skating everywhere. He kept hearing these like bang,

34:58

bang, bang of like the skateboards

35:01

landing everywhere. The employees are like these

35:03

young skater guys and they're like running

35:05

in like, Hey bro, do you know where the size

35:07

nine shoes are? And I'm like, no, I don't know where

35:09

the shoes are. I'm trying to write code here. And after

35:11

a while I realized

35:13

I actually hate this

35:16

business. I hate the

35:18

customers. I hate the employees. I

35:20

hate the stuff we're selling and

35:23

for a software developer sitting in the back

35:25

of a skate shop trying to focus on writing

35:27

code, getting constantly

35:29

disrupted by everything going on.

35:32

I, again, had this realization that I'd

35:34

made the same mistake I made at StubHub, which

35:36

is for some reason I'm building

35:39

this business

35:40

without a love for the customer.

35:43

In fact, I had sort of grown to hate the

35:45

customer. And

35:48

I was like, this is a problem. Now, also

35:51

I had at this point gone multiple years without a salary.

35:53

My bank account has drained. I've racked up credit

35:56

card debt. Yeah. and

35:58

I'm actually not even meeting my minimum payment.

36:00

at this point. And

36:02

I'm like, something's got to give. And

36:05

so I kind of float my resume out there to a

36:07

few friends and I'm like, you know, maybe I should

36:09

just go work at a big company. Like I literally

36:12

had no experience in a big company. Like

36:14

I knew they had these big buildings. They had a logo

36:16

on the top of the building and people walked in at nine

36:19

and left at five. But I had

36:21

no idea what people at big companies did all day because

36:23

as a startup, you're just moving. You're

36:26

just doing all day, every day.

36:29

Yeah.

36:30

And I'm like, I feel like if I want to be an entrepreneur

36:32

and like succeed in building a great company, knowing

36:34

what happens in one would be

36:36

really useful knowledge. And

36:39

by the way, recharging my bank account

36:41

is another added bonus. Yeah.

36:44

So naturally, you go to

36:46

work for Amazon. Yeah. And

36:48

I think this is around 2004. And presumably

36:52

you move to Seattle and you go,

36:54

I think you went to work for what

36:57

at the time was a new division, which was AWS,

36:59

Amazon Web

37:00

Services, which obviously now is the

37:02

biggest engine revenue. And

37:05

you were there

37:06

like a little over a year. But

37:09

at some point, obviously you had this idea

37:11

to start a new company, which would

37:13

become Twilio. Yeah.

37:15

But what was the insight that you had at Amazon

37:18

to make you think...

37:20

Because we should just say this at the

37:22

start, like the vast majority of people who listen to our show,

37:24

right? They're listening for

37:26

consumer facing brands. I

37:28

mean Twilio, I think you'd admit, it's a little bit

37:30

hard to explain to people who don't know what it is,

37:33

we'll get there. But what was the insight

37:35

that you had at Amazon where you

37:37

thought,

37:38

oh, you know, I can turn this into a business?

37:41

You know, I've always wanted the things

37:44

that the big companies have, I had always

37:46

wanted. And I remember like I called

37:50

an Apple store one day,

37:51

and I got this amazing like, hello, thank

37:54

you for calling the Apple store for hours,

37:56

press one. you know, you get the typical thing. I was like,

37:58

that's so cool.

38:00

And how did they do that? Like

38:02

when you call my store, like someone has to answer

38:04

the phone and be like, oh, and I was like,

38:06

how did they do that? And I researched it a bit

38:08

and it was like very expensive, very sophisticated.

38:11

Like you have to go buy hardware. You have to

38:13

go work with carriers. You have to roll out copper wire

38:15

to a carrier to your closet.

38:18

You got to go buy software. There's people involved

38:20

who are the experts in selecting. Just

38:22

to have that automated phone line? Yeah,

38:24

right. It was incredibly complex. And

38:27

in the skate shop business,

38:30

I remember I would work in the store, I'd work

38:32

in the front of the house and I'd be at the register

38:34

and the phone rang all day every day and you

38:36

pick it up. And every time it

38:38

was someone saying, hey, I got a question for you, is my

38:40

surfboard repair, is it done yet? And

38:43

I'd be like, well, okay, tell me your email address. And

38:47

I'd have the phone hunched in my ear with my shoulder holding it up while

38:50

I'm typing

38:51

in a keyboard. And looking

38:53

up in the system

38:54

that I wrote, and the surfboard

38:56

repair was going to be done. I'm like, nope, it's still going to be ready

38:58

Thursday. And I was like, why

39:00

did I have to do this? And what I saw

39:03

at AWS

39:04

was this idea that like, oh,

39:07

now every business can have

39:09

the most sophisticated technology.

39:11

The same infrastructure that the Giants,

39:13

that the Amazons and Googles of the world

39:16

are using to build their business, now is available

39:18

to everybody. And I kind of saw what

39:20

Amazon was doing, because I'd been there and

39:22

they're doing it for compute, servers, for storage,

39:25

for databases. But

39:27

I thought about my set of experiences and I was like, you know

39:29

what I would really want it for? It's

39:31

like, how do I talk to my customer? I

39:34

bet a lot of entrepreneurs, a lot

39:37

of software developers

39:38

are having this problem too.

39:40

So, so essentially the idea was

39:42

to make it easy for companies,

39:46

technology companies to communicate with

39:48

their customers or to enable

39:50

some kind of communication with their customers

39:54

using a phone, right? And it was, to

39:57

do that at that point was very expensive.

40:00

required lots of hardware. There was essentially no cloud

40:02

version of this. It was basically like having

40:05

servers in the old days. Now you'd worked

40:07

at AWS,

40:08

people were working with cloud-based

40:11

servers. You're essentially saying, why can't

40:13

we do this with telecommunications?

40:16

Well, you know, I can remember I would call, I would

40:18

say, okay, we want that fancy like phone

40:21

thing. Yeah. So it's like, I

40:23

don't know anything about that. I'm a software developer. I don't know the first

40:25

thing about how to make a phone ring. So I call the people

40:27

who It seemed like they did. I

40:33

call Cisco and say, hey, it seems like you people know how to make

40:35

the phone ring. Tell me how it is about doing this.

40:38

They'd say, well, it's going to take us two years and cost us

40:40

about $4 million, but sign here, we'll get started. And

40:42

every time I remember having this same reaction, I

40:45

was like, well, first of all, that's funny.

40:49

$4 million, I'm a startup, I don't have that kind of money. But even

40:51

if I did, let's say I was some

40:52

big company. I

40:55

would look at it and say,

40:56

well, actually, idea. Because

40:59

what I was observing was that everything in the world of

41:01

software has gotten faster,

41:04

where it's like, hey, we no longer design

41:06

a product and spend years building it. We

41:09

look ahead the next two weeks and design

41:11

the next sprints worth of work, build

41:14

that and then reevaluate. And that's like the

41:16

nature of agility has really entered

41:18

not just the software development world, but like

41:21

the business parlance, which is you're

41:23

no longer embarking on multi year projects

41:26

because those always tended to fail. Yeah, instead

41:28

you kind of work more iteratively and that's who

41:30

I'm not value. That's think about all the apps on your phone.

41:33

They're getting updated like all the time.

41:36

But then you looked at the world of like, but if I needed a

41:38

phone to ring, now we're back into the years

41:39

and millions of dollars role. They said, why

41:42

can't we fix that? Why can't that just be a line of

41:44

code? And that was where Twilio

41:46

started. All right. So you

41:49

decide that you're going to pursue this and you, you're

41:51

going to do it with two friends, Evan Cook

41:53

and John. Is it Wolthias? Uh,

41:56

Wolthias. Voltais. And

41:58

so did you leave Seattle?

42:00

did you move to back to California?

42:02

So

42:05

we first had this idea, we talked to a bunch of developers that were just friends

42:07

or acquaintances of ours. And we said, like, hey, you know, if

42:09

you had, you know, have this idea where

42:12

there's this like service that's running in the cloud, that

42:15

with like, you know, line of code, you could hit it and

42:17

you could make the phone ring and you could do all these neat things.

42:20

You know, would you have use cases for it?

42:23

And

42:25

a funny thing happened. The developers would first say, uh, huh, that's a,

42:27

you know, yeah.

42:28

Yeah. How about the Mets? You

42:30

know, and I was like, well, okay, well, maybe this is a bad

42:32

idea. And then every single time,

42:35

about a minute later,

42:38

they would say, hey,

42:39

wait, can you go back to that phone thing you were

42:41

just talking about? You know,

42:44

could I notify my customers when a package

42:46

ships from an e-commerce site I was recently building? And

42:49

I'd say, yeah, yeah, you could. And

42:51

they'd say, oh, interesting.

42:54

know, like one of our early customers was Uber.

42:57

And they they came to us and said, Well,

42:59

actually, we want to let you know when your rides arriving, can we do that? Which

43:01

will they always say, Of course you could. And they like

43:04

a day later rolled out the first version of

43:06

getting a text message when your car is arriving.

43:09

Okay, I just

43:09

just a question here, right? This is 2008. Obviously,

43:12

everything we're talking about today is just normal. Like

43:14

I think everyone listening takes us for granted. But when you

43:17

when a developer would say, Oh,

43:18

wow, I can notify my customers when the

43:20

package arrived. I mean, they could do that with

43:23

email at that point already. So

43:25

what was the, you know, when somebody would

43:28

say that to you,

43:29

say, well, I can only do that through email. Like

43:32

what would you say about

43:34

your product or your idea that would make it better?

43:38

Well, people did do it via email, but it was

43:40

sort of like a, it

43:41

was actually they were coming to me with the idea

43:43

as opposed to the other way around, because they were saying like, if

43:45

customers are calling me all day saying, did my

43:47

package ship, did my package ship? Like we almost forget

43:49

about about the early days of the internet,

43:51

when you would always be wondering when the thing was gonna arrive.

43:54

And it might be like weeks, like, you know. And

43:57

when people would hunt for the customer

43:59

service phone.

44:00

number to call. And very quickly,

44:02

what customers started asking us was

44:05

like, you know, the phone is the phone calls

44:07

are great. But what about text messages?

44:10

You know, can I send a text message because that would

44:12

be even more convenient. And we kind of looked at it and

44:14

said, Yeah, like, and you know, wearing

44:16

my consumer shoes, I'm like, that I would

44:18

prefer a text message in a lot of these cases. And then wearing

44:20

my developer hat, I was like, Oh, yeah,

44:23

a lot of those situations that I described before

44:25

would actually be even be better as a text message. I

44:28

want to ask you a bit more about that in a moment,

44:31

but I want to ask you about how you,

44:33

when you started to explain this idea

44:35

to people, because to build this, you

44:38

were going to need money. You were going to need

44:40

a lot of money because you had to fire

44:42

software developers and engineers

44:44

and all kinds of people.

44:47

What was the reception from?

44:51

Well, before we talk about investors,

44:54

just from people that you met. I mean, yes,

44:56

you know, developers, they got it.

44:58

They seem to get it. But when you would just

45:00

explain this idea to people, did they understand

45:03

it? Did they understand it? Were there puzzled

45:05

looks? Was it like, oh my god, you've

45:07

got a hit?

45:08

What do people say to you? Well,

45:10

you know, in the early days of a company, the

45:12

two people you really need to explain yourself to

45:15

are customers and

45:17

investors, if you're raising investor

45:20

money. Yeah, yeah. And so we

45:22

talked to customers, you know, the developers,

45:24

And they would like, you know, the gears were going,

45:27

they were like chomping at the bed. Yeah, look, when can I get

45:29

access to it? So we started building the

45:31

early prototype of the service and started giving access

45:33

to those developers.

45:35

And they immediately started building some really interesting stuff.

45:38

And they come to us with great feature requests and they

45:40

were saying, hey, can I launch this? And we'd be like, well,

45:43

maybe not yet. This is like super prototypy.

45:45

So you could build the prototype

45:48

with Twilio and initially

45:51

the way you would make money or how you pitch it to investors

45:54

was, we get a cut, a

45:56

penny or two pennies for every automated

45:59

outgoing.

46:00

call and then every incoming call, we

46:02

get a penny or something like that. Yep.

46:04

Yep. And so every phone call

46:06

would be like, you know, a penny a minute. And

46:09

when developers embed these capabilities

46:11

into their apps and interact with their end users,

46:14

we're just going to make a little bit of money every

46:16

time they're used, but those are going to add up over

46:18

time. So the summer of 2008, we like

46:21

feel like we're rocking and rolling. We're going to go raise,

46:23

uh, our first round of financing.

46:26

And then, you know, later in the year we're going to launch, and

46:28

this is going to be amazing. Yeah. So I

46:30

start, I'm still in Seattle. My co-founders

46:32

live in the Bay area, but I'm still in Seattle. I

46:35

start flying down to meet with Silicon

46:37

Valley investors, venture capitalists. And

46:41

two things happen.

46:43

First of all,

46:44

it's the summer of 2008.

46:46

Not a good time to be raising money. The financial

46:48

crisis is in full swing. I

46:51

mean, they are like, many of them were just

46:53

like, our checkbooks are closed. I'm sorry. We're

46:56

just not writing checks right now. So horrible time

46:58

to be fundraising.

46:59

But the second thing that happened

47:01

kind of universally, like I go into these investors and I say, you

47:03

know, we have this idea. It's this, you know, platform

47:06

approach. Software developers are going to build these services

47:08

that use, you know, phone calls to go achieve

47:10

all these business goals. And we're going to charge a

47:12

pay as you go rate to make it super easy to sign

47:15

up and explain the whole thing. And they'd say, well,

47:17

yeah, I just, you know, it sounds interesting,

47:20

but like software developers, you know, that's not,

47:23

that's not a market. Like they don't have

47:25

the checkbook. They don't have buying authority in their

47:27

companies. Nobody

47:31

knows how to reach them. Like

47:33

no one's ever built a business for software developers before. So why don't you

47:35

go build an app, build a call center, build something in the cloud,

47:38

and come back to us when you've built that

47:40

and we'll think about it again. And

47:43

I remember meeting so many investors and they all

47:45

had basically the same feedback that

47:48

at the end of that summer, we

47:50

had one investor that was really close.

47:53

That was really close they got it.

47:55

They were like, oh the developer thing I think they were paying attention

47:57

to AWS and they said this is gonna be amazing.

48:00

Lehman Brothers collapses and they're like,

48:02

sorry, we're not. Yeah. And

48:04

so we spent that whole summer and

48:07

did not have a dollar to show

48:09

for it from investors. We raised

48:11

no money. So we're like back

48:13

where we started. We have no money. We have no investor

48:15

interest. We didn't even have a bank

48:17

account because you need like

48:20

money to open a bank account and we had no money.

48:25

When we come back, in just a moment,

48:27

Hatuilio begins to get customers,

48:30

and how Jeff uses a proven gorilla

48:32

marketing technique to generate buzz. Free

48:36

tacos. Stay with us. I'm

48:38

Guy Roz, and you're listening to How I Built This.

48:51

Aaron Burr, a founding father who fought

48:54

valiantly for the revolution, would later

48:56

become the highest ranking American official

48:58

ever charged with treason. American

49:01

History Tellers is a podcast from Wundery

49:04

that explores the events and people

49:06

who shaped our collective history. Their

49:08

newest season looks at the insurrection

49:10

of Aaron Burr. Nearly 200 years

49:13

after his death, Aaron Burr's legacy remains

49:16

hotly debated by historians. After

49:18

all, he was a hero of the Revolutionary War,

49:21

served

49:21

as a United States Senator and even

49:24

Vice President. But Burr had his

49:26

fair share of controversy, killing

49:28

Alexander Hamilton in a duel and

49:30

conspiring to take America's Western

49:32

front as his own, to rule over

49:35

like an emperor. On American History

49:37

Tellers, you'll learn more about Burr's desperate

49:39

power grab, how it was thwarted by

49:42

President Thomas Jefferson, and how

49:44

our fledgling democracy endured its

49:46

first stress test. Follow

49:48

American History Tellers wherever you get your

49:51

podcasts.

49:51

You can listen ad-free on the Amazon

49:53

Music or Wondery app.

50:02

Hey,

50:02

welcome back to How I Built This. I'm Guy

50:04

Roz. So, it's 2008 and

50:07

Jeff and his co-founders have gotten some pretty

50:09

good early feedback on Twilio. Other

50:12

software developers? They love it.

50:15

The problem is investors think

50:17

it's a bad idea. And we had

50:19

this very fateful meeting, I

50:21

remember, where we said, look, you know, investors

50:24

have told us we're wrong, that this is stupid.

50:27

These

50:27

are smart people. These aren't dummies that are smart.

50:30

Like maybe they're right, maybe we're on the wrong track. And

50:33

so we said, maybe we should either just give up, maybe this is a bad

50:35

idea, all right, let's just go get jobs somewhere. Or

50:38

maybe we should just pivot and like build one of those apps they

50:40

told us to go build, even though we're not that passionate

50:42

about it. And I remember we

50:45

said, yeah, but our customers,

50:47

like those developers who are early customers,

50:50

they are loving it. They are building,

50:53

they are using this, they're launching things

50:55

and having all these ideas.

50:57

I think what we got to do is like, we got to follow

50:59

through on delivering

51:01

for those customers and at least get a product

51:03

to launch and see

51:06

what happens. It

51:08

seems like your earliest customers, because you

51:10

were of course eventually able to raise some seed money

51:13

and then you would raise a lot more over the years, but it

51:16

seems like your first

51:18

customers were really focused on SMS,

51:20

on text, and using this as a way to communicate

51:23

by a text or get people

51:25

to sign up for things, right? Like

51:27

you could say, you start to see these

51:29

things, it was like text, you know, dollar

51:33

to 5421 or whatever and

51:36

you would sign up for whatever that was. Like

51:39

that, was that

51:41

a function of what you had built?

51:44

Yeah, so we launched, and at first

51:47

we were voice only, so we launched, we had

51:49

basically nothing in our bank account. We

51:52

launched-

51:53

And by the way, who

51:55

was your first significant customer? I

51:58

remember the day we- launched Sony

52:02

reached out

52:04

and you'd say so many what it's Sony and you

52:06

sort of think about some big enterprise use case

52:08

well it was actually Sony music and

52:10

there was a music promoter who

52:12

worked at the record label

52:14

who was like I saw your launch post

52:17

I want to build this service is a band called Lamb

52:19

of God it's like a metal band I yeah

52:22

he said what we've had we've had this idea

52:24

in our mind forever However, that we want to do is called

52:27

log rolling our customers, our

52:30

fans, where they can sign up to get a daily

52:32

phone call. And

52:35

the band is going to record audio from the road. They're

52:38

on tour. and

52:41

we'll blast out the phone call and you'll hear from the band

52:43

every day.

52:44

And

52:46

I was like, that was the day after we launched.

52:49

I'm on the phone with a music promoter

52:52

at Sony. some real like, you know, business

52:54

needs are coming out of left

52:56

and right here. Yeah.

52:58

And, but I remember like, first of all, it was a weird period of

53:00

time because we launched and I

53:03

remember like the day we launched my co-founder,

53:05

John, looking at this like internal dashboard

53:07

we had saying, oh my God, like

53:09

they're paying us, like seeing like, you know,

53:12

credit card payments starting to come in and

53:14

they're like, they actually trust us with their credit cards.

53:17

They will actually, you know, willing to pay for this. And that's

53:19

the validation you're looking for and

53:21

immediately started seeing it. And

53:24

suddenly you saw this explosion where

53:26

like most apps that you downloaded from the app store,

53:29

you know, would text you to verify your phone number or

53:31

would you know, text you when your order ships or

53:33

when you have a friend say something or whatever, and

53:36

there were all these ideas that were coming out of the woodwork

53:38

of things people had wanted.

53:41

Uh, you know, app developers had wanted

53:43

to build into their apps, but just never knew

53:45

how to do before. and now

53:47

they could.

53:50

As you, you know, began

53:53

to, just from a business perspective, right,

53:55

as you begin to get some investors

53:58

and more interest. into 2010,

54:02

for example. How did

54:04

you go about hiring people?

54:07

Did you have that massive expansion

54:10

quickly or were you still relatively

54:12

small?

54:13

You know, one of the things that I have

54:15

always taken from my entrepreneurial

54:17

endeavors, because most of my companies, we

54:19

did not have a lot of money.

54:21

And so in the early days of Twilio, we

54:24

sat about, we said one of our values is

54:26

be for Google. And sure enough, I

54:28

remember We hired our first software developer

54:31

who was not a founder joining the company, a guy

54:33

named Adam Beli. I

54:35

remember Evan saying, hey, Adam

54:38

is great. We really got to hire this guy,

54:40

but he wants a salary of like $100K. I

54:43

was like, whoa, the sticker shock

54:46

of paying someone that much money when

54:48

the founders had made nothing

54:50

and then we gave ourselves a meager salary

54:52

in the very early beginning. I'm like, wow, this

54:55

is like... I remember telling

54:57

Evan like,

54:58

all right, like we're gonna hire him, but like, better

55:01

be worth it. Right. And it

55:03

started growing the team at that point. But it wasn't for a couple

55:06

of years, because we've just tried to stay small

55:08

and lean. In those early days, while

55:10

we were building out with really

55:13

pretty limited resources. Yeah. I

55:16

think a big turning point for you was, or

55:18

maybe not, I don't know, but Uber started

55:21

to

55:21

use Twilio, and I guess this is probably

55:24

still early in Uber's history,

55:26

so maybe it wasn't a significant amount

55:29

of revenue at the time. I think the first time I used

55:31

Uber maybe was 2012, I can't remember, 2013.

55:35

But was that a turning point or not quite yet in 2011?

55:39

You

55:39

know, looking back at it, Uber,

55:41

it was not clear that Uber was going to

55:43

be such a big deal, right? Because at the time they were

55:45

like town cars. It was like fancy.

55:47

And Uber,

55:49

when we won them as a customer, I think the whole company

55:52

was about five people. Right. So it's very

55:54

early in their history. But there's

55:56

a funny thing, like I look back at that period of time, 2011, 20.

56:00

where Uber was a few

56:02

blocks away in that direction, and Airbnb

56:04

was a few blocks away in that direction,

56:06

and the floor above us was Instagram, and

56:08

we would throw an office party on a

56:10

Friday evening, and

56:12

all of the people who founded these companies,

56:15

and were building these companies, would just come over for a beer.

56:19

At some point, it wasn't just Uber,

56:21

I would say, but it was the sum of all of that

56:24

entrepreneurial activity going on in our backyard,

56:26

who were almost all of them, our customers, that

56:29

started to like really propel the growth

56:31

of the company, especially after we added

56:33

text messaging, which was the service

56:36

that

56:38

this new whole category of mobile apps that

56:40

was getting born really needed.

56:43

And we were the one everyone turned to. How,

56:46

and essentially it sounds like, was it

56:48

just basically developers talking

56:51

to other developers and that's

56:54

who you're,

56:54

that's how it grew? You

56:57

know, in those days, the notion

56:59

of like

57:00

anything is possible with code was

57:03

really permeating the world. And so you had

57:05

these like hackathons.

57:07

And they were happening all the time,

57:09

like every weekend, every college campus,

57:11

every major city. Wow. And

57:13

we were right there. And we made sure to go to every hackathon.

57:16

I remember one of the

57:17

big hackathons in San Francisco was

57:19

going on and it was happening

57:22

over a weekend. And

57:24

the hackathon organizers got wires to this. They started

57:27

charging a lot of money to sponsor it. Like, oh,

57:29

you want to sponsor our hackathon? Great. That's $50,000,

57:31

right? Yeah. And so they started

57:33

getting wires to it. So I remember I showed up at one

57:35

of these hackathons at 2 AM with

57:39

about $700 worth of Taco Bell. Wow.

57:43

That was probably the best marketing dollars ROI

57:45

we ever got.

57:46

You just walked around handing people tacos.

57:48

Tacos. Wearing my Twilio shirt

57:51

and just handing out tacos. And

57:54

I remember I closed down that Taco Bell. There was a Taco

57:56

Bell in Oakland that was still open at that hour. And

57:58

I went on, I pulled into the...

58:00

drive-through. And I said, how many

58:02

tacos do you have left? I said,

58:04

I'll take them all. And she literally

58:06

turned off the open sign.

58:09

That was a very guerrilla approach

58:11

to how to reach the world's developers. And

58:13

we really had to develop that. But I think I benefited

58:16

actually, from a lot of the guerrilla marketing

58:18

that we did in my college campus

58:20

for VersaD. A lot of the similar things

58:23

like you're just getting to where your customers are and

58:25

like screaming from the the mountain tops in whatever the most

58:27

relevant way is.

58:28

And also your customers are a very

58:31

specific set of people. It's

58:33

not, it's developers. I mean that's,

58:35

and you, I guess going to hackathons

58:38

you know you're going to find them there.

58:39

And at that time no one else was trying

58:41

to reach them. We were like one of the only ones.

58:44

Yeah.

58:45

I'm curious about competitors

58:47

as you started to grow because, you know,

58:50

you're going to You start with a

58:53

few thousand developers and then tens of thousands

58:55

and then hundreds of thousands. And

58:58

you quoted around this time, maybe

59:01

it was 2013, you said, you know, our end

59:03

goal is to open the black box of telecom

59:05

and move the world away from the legacy

59:08

of Cisco and Microsoft's big, expensive

59:10

hardware that you put in your closet and watch age.

59:12

I mean, that sounds like a shot across the bow.

59:15

I mean,

59:16

did you start to see competitors

59:18

and some of the big companies like Cisco

59:21

come in and say, well, we should do this too. We

59:23

can do this.

59:24

You know, it was interesting because

59:26

one of the early questions we got from like investors,

59:29

they said, well, won't carriers do this? Won't AT&T

59:32

just do this? Right. You know,

59:34

they could, I guess, but

59:36

you know, people always over estimate

59:39

the

59:40

ability for a big company to

59:43

see an emerging market like this and

59:45

actually invest in it because it is in

59:47

its early days, small peanuts

59:49

compared to the scale those big companies are operating at,

59:52

right? Yeah. So

59:54

inevitably, like the carriers,

59:57

they weren't dummies. like they saw this

59:59

trend of AP. and developers and

1:00:01

innovation, they saw all this stuff happening. And inevitably,

1:00:04

almost every carrier in the world that I can think

1:00:06

of in that

1:00:07

era, in those early days, like 2010, 2011, 12, built an

1:00:09

API on top of their services

1:00:12

and

1:00:15

launched with great fanfare, their developer

1:00:17

platform. And every one of

1:00:19

those carriers within 12 months had shut

1:00:21

it down. Why?

1:00:24

Because it didn't immediately

1:00:28

pass their bar for like, for like, well, is it making us a

1:00:30

billion dollars revenue? And if it's not, we don't care

1:00:32

about it because it's not moving the needle for

1:00:34

our big company.

1:00:36

And that's the advantage that every

1:00:38

small company has. It's like when we were, our

1:00:41

first year, we made $200,000. Our

1:00:44

second year, we made $2 million. For

1:00:48

a startup, that's a huge success story.

1:00:50

Yeah, yeah. For a carrier-sized

1:00:52

company, that's a miserable failure and

1:00:54

like, shut that thing down. We don't have time for that. And

1:00:57

that's the natural advantage that every startup has

1:00:59

over like incumbents in the market. And

1:01:02

we saw that innovators dilemma just play out time

1:01:04

and time again. Inside

1:01:06

of the bigger companies while we went about building

1:01:08

this and you know, now today, we're

1:01:10

approximately $4 billion of revenue.

1:01:13

But like, you know, that's a 15 year journey.

1:01:15

And that's the nature of that creative disruption. Yeah.

1:01:20

Uber eventually became a significant,

1:01:22

very significant, I think Uber and

1:01:24

WhatsApp became two of the most significant drivers

1:01:27

of revenue. And I think Uber at a certain point was like 12%

1:01:31

of your revenue is coming from Uber. Because

1:01:34

every time you're in Uber, Twilio

1:01:36

was powering that in the background,

1:01:38

right? They would tell you how long your driver

1:01:41

is going to take. And I mean, that was all basically

1:01:43

coming through Twilio. But

1:01:46

they essentially

1:01:48

pull out of their relationship with you

1:01:51

or drastically reduce it, I

1:01:53

think in like 2017. Yeah. Was

1:01:56

that something that,

1:01:59

I don't know. You know, I,

1:02:01

it actually didn't worry me. You

1:02:03

know, our, our business model is usage

1:02:06

based, right? So when a customer

1:02:08

sends a text message, it costs a very little amount of money,

1:02:11

but like those things add up over time. And

1:02:14

what results from that business model is

1:02:17

that a company like Uber, when you get in,

1:02:19

in the early days, as they expand, our revenue expands,

1:02:21

but in some ways, like

1:02:24

when a customer is growing so fast

1:02:26

as Uber was during those days, customers growing so

1:02:28

fast as Uber was during those days, you

1:02:30

look at it and you're like, do I want my company to actually

1:02:32

become just like the Uber story?

1:02:35

Not really. Like I've got tens

1:02:37

of thousands of customers at that time. So

1:02:40

they were growing to be like a quarter of a revenue.

1:02:42

I'm like,

1:02:43

that's actually a problem. That's not something

1:02:45

to celebrate. That's actually something to be worried about.

1:02:47

I'm

1:02:47

curious about that as a case study because at that

1:02:49

time, Twilio had gone public.

1:02:52

And so you were a publicly traded company. And when

1:02:54

that Uber decision came out, I think stock

1:02:58

plummeted like 30% for some time.

1:03:00

And you did

1:03:03

talk about this, that actually there were mistakes

1:03:05

that you felt you could

1:03:07

learn from. Like, for example, you didn't

1:03:10

service

1:03:11

them as well as you should have

1:03:13

serviced them. Is that true? Do you feel

1:03:15

like

1:03:16

that was a

1:03:17

lesson that you learned from losing that account?

1:03:20

There's a sense in certain customers,

1:03:23

especially like very technology-driven companies,

1:03:25

that They're like, we don't want

1:03:27

a salesperson. We just want, just leave

1:03:29

us alone, just give us a service, and

1:03:33

we don't need to talk to you. And I'm

1:03:35

a software developer myself, so I

1:03:37

can understand that mentality. But at

1:03:39

some point, a customer gets big enough

1:03:41

that you're like, first of all, someone

1:03:44

in that business is signing the check every month.

1:03:47

We need to know that person. And

1:03:49

even though the customer was saying, we're fine, we're

1:03:52

okay, we don't need you, and we had assigned

1:03:54

our sales resources elsewhere, the mistake

1:03:56

we made was saying, like, like, no, we needed

1:03:58

to be walking the halls. We need-

1:04:00

to be really working that account. Like white

1:04:02

glove treatment. Well, and

1:04:04

figure out, okay, if the developer doesn't want

1:04:06

to be talking to us, so be it. Somebody else

1:04:08

might. There's a budget owner somewhere who's

1:04:11

spending now millions and going on

1:04:13

tens of millions of dollars on our services,

1:04:16

we at the very least have to know that person really

1:04:18

well. And that was the transition

1:04:20

that we had not really made because we

1:04:22

were taken a little bit by surprise when Uber

1:04:24

one day said, you know what? Like we actually want

1:04:26

to start, We're

1:04:29

going to use less

1:04:30

of your services. So, you know, it was a bit of a tough

1:04:32

transition for us, but I remember standing up

1:04:34

in front of the company the day after

1:04:36

that happened, and the company, we're a newly

1:04:38

public company. I think it was our third quarter

1:04:41

reporting as a public company. Everyone

1:04:43

was like, well, what happened? Like I thought being public

1:04:45

was just like, you know, up and to the right. Yeah,

1:04:47

right. And, you know, I remember

1:04:50

saying like, look, you know, this company

1:04:52

is not about one customer.

1:04:55

We've got tens of thousands of customers and we're building

1:04:57

this for an enormous opportunity. that's far

1:04:59

bigger than just, you know, the activity

1:05:01

as one customer. And I think that was the right

1:05:04

way to look at it.

1:05:05

Let me talk about heading up a public

1:05:07

company because it's a different beast, right? You're

1:05:10

you've got to disclose and your books are

1:05:12

open. And, and, you know, I think

1:05:14

you debuted at $15 a share. So

1:05:17

if you bought Twilio stock, when you went

1:05:19

public, you would still have made a lot of money today

1:05:21

at 60. Today, it's roughly 64, almost $65

1:05:24

a share. But

1:05:26

like many technology companies, 2022 is

1:05:29

not a good year

1:05:31

for you, right? There was a 70 plus

1:05:34

percent

1:05:34

decline in the stock value. I

1:05:37

mean, every time I talk to the

1:05:40

head of a public trade company, they say, well, I don't pay attention

1:05:42

to the stock price. I don't believe that. I just

1:05:44

don't believe that they don't.

1:05:46

I mean, do you, it must

1:05:49

weigh on you to some extent, or do you

1:05:51

just feel like, well, you know, there's

1:05:53

not much I can do to move this thing? You

1:05:56

know, everything guys about

1:05:58

time frames. Right

1:06:00

if you look at the stock on a

1:06:03

hour by hour or even day by day basis

1:06:06

It you know, I kind of like in it to Imagine

1:06:10

you were playing in a basketball game.

1:06:13

Hmm, but the score did

1:06:15

not go up when you made a basket the score randomly

1:06:17

changed You know, you're dribbling up

1:06:19

the court and you get 10 points and then

1:06:22

you make a shot and you lose five points And

1:06:24

it's like a rant, like the score is disconnected

1:06:27

from the thing you're doing.

1:06:28

Would that be a fun game?

1:06:30

Like

1:06:32

no, right? You'd

1:06:34

be like, this is a bunch of BS, like why am I doing this? And so

1:06:37

if you look at a stock price on the day by day, minute by minute basis, you're like, this

1:06:39

is completely disconnected from what I'm doing today.

1:06:41

Like what new information exists

1:06:43

in the market on

1:06:45

a Tuesday afternoon when we're not

1:06:47

reporting earnings about our company's

1:06:49

future profit potential? So

1:06:52

what's causing the stock price to move? I don't know

1:06:54

about stuff that's not in our control. And

1:06:56

so in order for you to actually believe

1:06:59

That you have agency of the outcome you

1:07:01

have to ignore the short term but

1:07:04

you also have to believe that in the fullness

1:07:07

of time the activities we undertake

1:07:10

do affect and But

1:07:12

that plays out over years not over

1:07:15

like, you know minutes hours

1:07:17

days or even quarters

1:07:18

Yeah, I'm curious. Your take

1:07:21

on this, there's a headline in the Washington

1:07:23

Post today, for example, the day we're talking on

1:07:25

this interview. And it's

1:07:28

something like the golden era of

1:07:31

Silicon Valley, the golden era of tech is over,

1:07:33

right? And you've seen these, and I'm sure you've

1:07:36

seen these over the many

1:07:38

years. And

1:07:41

right now, we're in the midst of just

1:07:43

a period of large layoffs, you know,

1:07:45

every single company. Twilio

1:07:47

obviously had to lay off about 11%

1:07:51

of its workforce in September of 2022.

1:07:53

I mean,

1:07:55

do you think and also

1:07:57

the explanation that we hear is that there was over...

1:08:00

overhiring in

1:08:01

the previous two years.

1:08:04

Is that the

1:08:06

beginning and end of why there

1:08:09

are layoffs in your view? I

1:08:10

mean, for example, with Twilio, is

1:08:13

that why? Did you overhire?

1:08:16

Overhire is a

1:08:18

simplified way to talk about it, but

1:08:20

I think you have to look at the root cause.

1:08:23

But the end result is, yep,

1:08:25

if you have to let go of people, it means you

1:08:27

hired people that in retrospect you wish you maybe

1:08:29

hadn't hired. But the

1:08:31

reasons why are more interesting. When

1:08:35

you are operating in an environment where

1:08:37

interest

1:08:39

rates are very low, meaning

1:08:41

an investor can put their money into a

1:08:44

very safe account, like a savings account, and

1:08:47

make nothing,

1:08:49

then they're much more likely to want to

1:08:51

put their money into a more speculative

1:08:55

stock like a tech company. But

1:08:57

once the savings account is making

1:09:00

five, 6% whatever in a higher interest

1:09:02

rate environment, you're like, well, now I'm less likely to take

1:09:04

risk. That's why the equation

1:09:06

of tech companies that

1:09:09

are going to spend a lot today

1:09:12

to go build market share. And if you remember, like

1:09:14

the internet is a massive market.

1:09:16

And so for everybody who's building an

1:09:19

online business, you're like, I've got billions

1:09:22

of people who are potential customers. There's

1:09:24

a tremendous amount of entrepreneurial activity. I'd

1:09:27

be a fool not to invest as much as

1:09:29

I can and go building my market share

1:09:31

today for this enormous

1:09:33

market we're in. And that's what people have done. But once

1:09:36

you change that story and say, well,

1:09:38

actually

1:09:39

the profits

1:09:41

that we said will eventually give

1:09:43

the equity value. It's

1:09:45

the eventually part that changed because they

1:09:47

eventually became, well, now it's like a lot

1:09:50

closer to today. Yeah. And that's what

1:09:52

makes this period so hard. Now this happens.

1:09:54

This is a business cycle. This This business cycle happens

1:09:56

all the time. is not the first time

1:09:58

we've been through any cycle.

1:10:00

But the one thing that's different is the

1:10:02

last business cycle, the boom time,

1:10:04

the low interest rate environment, went

1:10:06

on for a pretty historically long

1:10:09

time. So there's a lot of people in

1:10:11

the workforce, for example, who have

1:10:13

never seen a high interest rate environment in their career.

1:10:16

And that created a whole generation

1:10:19

of entrepreneurs and workers and

1:10:21

investors too, who are

1:10:23

accustomed to like revenue growth,

1:10:25

future opportunity, all that. And suddenly you look

1:10:27

at it and you're like, oh, actually, current

1:10:30

day profits are highly valued. And

1:10:32

that's the change that the whole industry, especially in

1:10:34

tech, is going through. And that's a

1:10:36

difficult transition because our muscle

1:10:39

memory is so oriented towards the last 10 and 15 years.

1:10:44

You've got, I think, roughly 7,000

1:10:46

employees all around the world. Is

1:10:48

that about right? About right.

1:10:51

Yeah. And we're now in

1:10:53

this new kind of phase where,

1:10:56

you know, a lot of companies

1:10:58

are still grappling with how to,

1:11:01

whether to bring people back, right? There are lots of

1:11:03

companies that are demanding it. And

1:11:07

I know you are essentially a fully remote company.

1:11:11

Some of the concern that I'm

1:11:13

hearing from leaders and

1:11:16

founders and CEOs is that

1:11:19

it's really damaging to the culture when

1:11:21

everyone's remote. That actually, it's

1:11:23

hard to cultivate a sense

1:11:26

of belonging and

1:11:29

other things involved in working

1:11:31

in a space where you're interacting with

1:11:33

other people. How

1:11:36

do you feel about that? Do you think that's a fair...

1:11:38

Because I think it's a pretty fair assessment

1:11:41

of what's going on. What's

1:11:44

your take?

1:11:45

I think the hard thing is when you

1:11:48

go extended periods of time without

1:11:50

the ability to have that face-to-face. The challenge

1:11:52

that a lot of companies are having in

1:11:55

the current environment,

1:11:57

because You see, there's a lot of startups that were born

1:11:59

during the pandemic.

1:12:00

pandemic, that were purely distributed

1:12:02

because like, look, that's all you can do during a pandemic

1:12:04

and like, I think their cultures are probably

1:12:07

doing fine. But then you've got

1:12:09

a lot of companies that have a big investment in

1:12:11

real estate

1:12:12

and those companies

1:12:16

you're saying, I can't afford to carry

1:12:18

all this real estate that people don't want to go into

1:12:21

and afford for people to travel everywhere to go

1:12:23

see each other. I got to pick one or the other

1:12:25

because I only have so much budget. So

1:12:29

just out of curiosity, you've

1:12:31

got a lot of real estate.

1:12:33

We do. Yeah. And

1:12:35

it's not used. Yeah. I mean,

1:12:37

there's a building on the side of the 101 in San Francisco

1:12:40

that, right, your headquarters here. Yeah,

1:12:42

our headquarters is in Soma. You

1:12:45

know, at the beginning of the pandemic, we had, I think, three

1:12:47

buildings in San Francisco. And

1:12:50

today, you look at those offices,

1:12:52

they're about, you know, lowest

1:12:55

single digit percent utilization. Wow.

1:12:57

Yeah.

1:12:58

So what are you guys

1:13:00

going to do? I like

1:13:03

face-to-face interactions like I think most human

1:13:05

beings do, but I do not think we need

1:13:07

to have it on as regular

1:13:09

basis as like the nine to five office used to

1:13:11

have us doing it. Right. And

1:13:14

so if I have to pick, which as a CEO, I

1:13:16

basically do, I am picking

1:13:18

a distributed company

1:13:20

that as we work through the phases,

1:13:24

we'll be able to get together on a regular basis

1:13:26

and in teams or divisions or departments

1:13:29

have fun together, break bread together and then

1:13:32

break up. And so if I have

1:13:34

to pick,

1:13:35

that's what I'm picking.

1:13:36

But the challenge is to get there. I

1:13:39

personally believe that the future

1:13:41

of a company like ours,

1:13:43

I think that the company's offices

1:13:46

are going to consist of three different

1:13:48

types of locations.

1:13:50

I think you'll have, number one,

1:13:53

like a showroom, the place where you bring customers

1:13:55

or like recruits or like a place that looks

1:13:58

really fancy and nice and like... You

1:14:00

know, people are looking about it just looks like your

1:14:02

company. It's a physical manifestation of your company.

1:14:04

Yeah. The second is you need offsite

1:14:06

space. If, you know, once a quarter

1:14:09

employees are traveling from, you know,

1:14:11

wherever they are to the, to meet, wouldn't

1:14:13

it be nice if they had an experience that felt like

1:14:15

your company? And those are like regional,

1:14:17

like, you know, you can have one in North America.

1:14:20

That's where teams do their off sites. And by the way,

1:14:22

if everybody's doing this, it'll be cheaper than renting a

1:14:24

hotel every time. But the third is my

1:14:26

favorite. The third type of office space

1:14:28

are coffee shops. Like

1:14:31

I actually think that instead of having a formal

1:14:34

office in a city, what

1:14:36

you might want is like a thousand square foot coffee shop.

1:14:39

It's only for employees you batch in, but it's like, hey,

1:14:41

you know, I work from home often, but, you

1:14:44

know, I need to get out of the house. I need to concentrate

1:14:46

more. The, you know, I got to get away from like

1:14:48

a distraction at home or I just want some energy

1:14:50

around me. So I can go to a coffee shop.

1:14:53

And like, you know, for a few thousand square

1:14:55

feet, like you could have one in every major

1:14:57

metropolitan area or even every neighborhood in some major

1:15:00

areas and have enough employees in those areas

1:15:02

to be able to justify the cost because they go in

1:15:04

every day and I think that combination

1:15:06

of like the showroom the destination

1:15:10

off-site space and the coffee shops Ultimately

1:15:12

will solve the problems of like why does

1:15:14

the company need physical places? I think

1:15:16

it's those three problems, hmm

1:15:18

you know When

1:15:20

you reflect on on your journey and and the you

1:15:22

know the failures you had early in your career which were

1:15:24

very valuable clearly because they you

1:15:27

were able to take all of that knowledge

1:15:30

and those experiences and apply them to what you

1:15:32

would eventually build in Twilio, which is a, you know, multi

1:15:35

billion dollar giant now. How

1:15:38

much of of of where you are today? Do you attribute

1:15:41

to to your work, your work

1:15:43

ethic, your skill, your intelligence

1:15:45

and how much do you think has to do with getting

1:15:47

lucky? You know, I think we're

1:15:49

all a

1:15:50

product of our environment. You

1:15:52

know, so much of what we know

1:15:55

or have the opportunity to do

1:15:57

or just...

1:16:00

problems that we end up getting visibility into

1:16:02

or having the resources to go solve them. I mean, these are all

1:16:05

things that are a product of like

1:16:08

how we were raised, when we

1:16:10

were born, where we were born. And

1:16:13

so you can seize

1:16:15

those opportunities or not. But

1:16:18

the first thing you need is those opportunities to exist

1:16:21

for you.

1:16:22

And so I definitely feel tremendously

1:16:25

lucky to

1:16:26

be born where and

1:16:28

when and and all sorts of things

1:16:31

and I like I don't take that for granted.

1:16:33

I take it very seriously that

1:16:35

like we have an obligation for those

1:16:38

of us who have had opportunities

1:16:40

to use part of our time and

1:16:42

our money on this planet to try to create more

1:16:44

opportunities for our people.

1:16:50

That's Jeff Lawson, founder and

1:16:52

CEO of Twilio. By

1:16:54

the way, the name Twilio is of course

1:16:56

totally made up. Jeff and his team were

1:16:58

looking for words that kind of sounded

1:17:01

like telephone. So tell,

1:17:03

twee, hello, things like that. And in 2008,

1:17:06

they got a really

1:17:08

great deal on the domain Twilio.com.

1:17:11

It only cost them seven bucks.

1:17:15

Hey, thanks so much for listening to the show this week.

1:17:17

Please be sure to follow the show however

1:17:19

and wherever you listen to podcasts on Apple

1:17:21

Podcasts. You just click the plus sign and

1:17:24

on Spotify you click follow. If

1:17:26

you want to contact the team our email address is

1:17:28

hibt at id.wonderie.com.

1:17:31

If you want to follow us on Twitter our account is at

1:17:34

how I built this and mine is at Guy Raz.

1:17:36

On Instagram we're at how I built this and I'm

1:17:38

at Guy.raz. This episode

1:17:40

was produced by Kira Wakeem with music

1:17:42

composed by Rametin Ereblue. It

1:17:45

was edited by Niebha Grant with research help

1:17:47

from Sam Paulson and technical assistance from

1:17:49

Hans Copeland. My production staff

1:17:51

also includes J.C. Howard, Casey Herman,

1:17:54

Kerry Thompson, Alex Chung, Elaine

1:17:56

Coates, John Isabella, Chris Messini, and

1:17:58

Carla Estes. I'm Guy Roz

1:18:00

and you've been listening to How I Built This.

1:18:14

Hey Prime members, you can listen to How

1:18:16

I Built This early and ad-free

1:18:19

on Amazon Music. Download the Amazon

1:18:21

Music app today. Or you can

1:18:23

listen early and ad-free with Wondery

1:18:26

Plus and Apple Podcasts. If

1:18:28

you want to show your support for our show,

1:18:30

be sure to get your How I Built This merch

1:18:32

and gear at wondereshop.com. Before

1:18:36

you go, tell us about yourself by completing

1:18:38

a short survey at wondere.com.

1:18:41

survey.