No Money, No Support, Just Code: The Twilio Founding Story

and it's driving me nuts. Sorry, I've never told that story before. I was like, how do you say that in an appropriate way? It was just this bonkers journey. The two most important things in your career, your knowledge and your work. Reputation is the most important thing in Silicon Valley, not your idea or not even if your current company worked. What do you do when your first startup crashes, your second burns you out, and investors won't touch your next idea? Twilio founder Jeff Lawson shares how failure skate shops and a lot of persistence led to one of tech's biggest API plays.

Yeah, so Twilio well I you will give you know quick story. So I had started multiple companies really the most important beginning one was during the dot era. I had started a .com when I was just starting school and the internet when I started 1995 like I showed up at the University of Michigan. You know, you show up at college and you know, most people are interested in partying or beer or whatever and I was just like there's an Ethernet jack in my dorm. It's like fast internet was the most exciting thing. So I FTP'd down a copy of, you know, Netscape 1.0 and started discovering the internet because it was brand literally the web was like brand new and immediately was like I want to figure out how this whole thing works. I want to go build something. And I've always thought that the best way to learn how something works is to just get your hands dirty like just go do it. And so started playing around with the web and decided like let's start a company as an excuse to go figure out how all this stuff works. And so some friends of mine and I got together and we started a company doing free lecture notes for college students. Oh. So we would like hire students and other classes to take notes and then type them in and we publish them online and the whole thing was free and ad supported and it was 199 I think six at this time. We could have had any domain basically we wanted. This was 1996. Like we could have had Google, right? We could have had like anything. And we picked the domain name notes number44free.com.

Well, they were free notes. And so yeah, that we were proud owners of notes forfree.com and uh yeah, and started this company. And the amazing thing was it was a very typical dot-com ride which was like you know we were literally in a dorm starting it and then we ended up raising a angel round started expanding it to more and more campuses raised a venture capital round took it to 200 campuses 10,000 courses nationwide dropped out of school moved to Silicon Valley sold the company for equity to a company that was about to go public for a stratospheric valuation when the market tanked and that company that acquired us for equity was bankrupt two months later. Like that all happened in like you know 18 months basically. So it was like it was just this bonkers journey that was like completely the stereotypical like dot story. And so that was how my that was like my first like entry into the whole world of like real real entrepreneurship not like middle school entrepreneurship and the internet and technology and and all of that. And I'd like to think that like you know a few of the things I learned in that one uh was number one is like I always think the best way to learn something new is just to get your hands dirty like just be like just commit yourself to doing it you know tell the world hey we're starting this thing that's going to be lecture notes like now we had to figure out how to like program a website which in 1996 was very not obvious like how you did that. It was like pearl basically back then. And the other thing I figured out back then is is a like if you it didn't work out like we did not return a penny for our investors but nonetheless they all wanted to like fund our next thing. And so I learned this this lesson of Silicon Valley which is that you know failure can happen but it's really about the relationships you build. Did you act uh in like an honorable way? Did you do your best? Um etc. And when that when those things happen people get funded again for next idea. Maybe the next one will work to industry reputation based. But then the flip side of that is if you are a jerk, right, or were stupid or whatever, stole from the company or whatever, like then the opposite happens, right? And so reputation is the most important thing in Silicon Valley. Um not your idea or not even if your current company worked. Uh, and so that's an important thing I learned. And I like went on actually one of my co-founders that ended up starting another company, ended up doing not awesome things with the secretary and got fired and has not worked in technology again, you know, and I'm like, 'Wow, very diverging paths there, right?' So like, yeah. And uh, sorry, I've never told that story before. Um, I was like, how do you say that in an appropriate way that's been recorded by like 16 cameras, you know? That's something I always like would tell people when they were trying to decide like whether either to like join Twilio or or even like if they're thinking about leaving Twilio. I would say look the two most important things in your career, you know, whether you're joining a company, whether you're starting your own company is your knowledge and your word. Like those are the two most important traits of anybody and especially an entrepreneur, right? No one can ever take away your knowledge and no one can take away like your reputation of like like how people feel about how you've interacted with them. um those are yours. You get to keep them and you any decision you make that grows either your knowledge or your reputation is probably not going to be a wrong decision.

Yeah, after notes for free, which we later rebranded diversity, we were smarter. We we were like this academic community and the whole idea is we solve problems for college students that's academic. You know, you need notes for your class. We did study guides. We did all this kind of stuff. The company that quieted us was called college club and they were more like social things for college students. It was like posting pictures from last night's party and like stuff like that. And I always thought that was kind of silly because college is like, you know, it's already so social. the thing college students really need is the academic help. Like they don't need help drinking beer, right? They need help with the school part. And so a few years later, a few years later when my friend said, 'Oh, have you heard of this new thing? It's called the Facebook.' Uh I told him like I am on record saying a social network for college students is the dumbest idea ever. The thing I'd say about the college student audience is uh generally speaking like they don't have a lot of money obviously and so the way to monetize that audience generally speaking is they're very valuable to advertisers or at least they were at the time because they are going to have earning potential. They are making decisions when they're just starting their adult life away from home. They're making decisions about what brands they're going to use. They're getting their first credit card. All that kind of stuff. So they're very valuable as a demographic to advertisers even if not direct monetization is really hard with them which it generally is. That that would that's my one take. And then back then the way we reached that audience was all local. Like we hired street teams. We would chalk the sidewalks and put up banners. And actually um a guy who I hired at that company went on to start something again in the payment space for college students several years ago. And I was talking to him and he was doing all the same stuff. He's like, 'Oh yeah, we got street teams. They're chalking the sidewalks.' And I'm like, 'Have you bought Google Ads?' He's like, 'What?' And I was like, 'Dude, you got to evolve your, you know, like this is no longer 1996.' And so I would say all the things we did back then, while they might work, they don't scale particularly well. Um, and you know, I bet there's many better ways to reach college students today. So I would take my go to market lessons and throw them away.

Um, so after diversity, I won't go into much detail, but I uh was the first CTO of StubHub. Um, when I left that, ended up starting a bricks and mortar retailer for extreme sporting goods and then I went to Amazon. Were you just a fan of extreme sports? No, I Okay, you want the story? Okay, I'll give you a quick version of it. Uh, so I started, you know, at StubHub, uh, this, you know, online secondary ticketing exchange, right? and you know built the first site, hired the the initial team, all this kind of stuff and about a year in I realized you know I don't really care that much actually about event tickets like it just kind of felt like e-commerce of something else and I don't know I just didn't I wasn't passionate about it and that and a couple other reasons I was like you know what I'm I don't think this is for me because any startup you do anything you do is full of blood sweat and tears and so to me it was like why would I go through that when I don't really care about the category I'm like you know maybe it'll make money I thought it'd be a good business but I just like eh not my thing and I'm I'm particularly wired to be intrinsically motivated and so if I didn't really care about the product or the audience like it wasn't the kind of thing where I would be extrinsically motivated by like oh the money is going to be good or something like that and so I parted ways with the the founding team and uh went to the Hamptons actually and stayed in the summer home of one of my investors from my first company and we spent almost a year brainstorming ideas for a new business and we had this methodology we were like methodically brainstorming this methodology to it all and in that process we came up with about a thousand company ideas of which a hundred of them were like half decent. Uh we wrote about 20 business plans. Uh and the one we ended up starting was not a single one of those. It came in sideways. My co-founder who was from Southern California had always thought that like the extreme sporting goods market. So skateboarding, snowboarding, surfing. He looked around at the culture and was like, 'These things are the culture of not just Southern California, but increasingly just like the nation and the world.' He's like, 'Yet there's nowhere you go to buy the stuff other than like mom and pops, right?' And he was right. Supreme is like a billion dollar company. Yeah. There's a huge in the at the time the market was I think it was like 30 billion and growing 30% a year. Like it was bonkers. this like Quicksilver and you have Ripcurl and all these brands and yet it was only mom and pop shops basically and you looked at any mature retail category and there was basically a third of the market mom and pop a third of the market Walmart and then a third of the market was like a big box retailer for that category you looked at electronics you looked at uh office supplies you looked at like and and so we thought there's room for this REI type store but for extreme sporting goods and the market for extreme sports was about triple that of REI we We called them the granola sports. Uh we were the pop-tart sports, they were the granola sports. And so we said, there's clearly a room for an enormous uh retailer in the big box category. And we decided to make it like experiential. We had a skate park in the store. We had like video screens everywhere. We're playing all the videos. I wrote uh a a video jukebox so kids could go up to like a computer in the store and pick which like skate video they wanted to see on that screen and click and it would start playing over there. You're ahead of your time. Yeah. Oh yeah. No, I I built crazy things. I uh built my own point of sales system from scratch for that store. Shipping and receiving, inventory management, I built all of it uh as a single page web application in 2004. But a funny thing happened like we made every surface in the store skatable. So like all the handrails, all of the we had stairs, everything was like grindable so that kids could skate and we encourage them for reasons unknown to skate in the store. And I'm sitting in the back like the back of this store writing code. This is like our prototype store. So it's like everything was like super cheap and we're like you know like totally ad like you know like lean startup but a brick store retailer. I'm in the back room writing all this code. You know how it is. Headphones on whatever right. And people kept kept coming up tapping me on the shoulder. Hey man, you know where the you know where the shoes are? Like you know like like the employees like the the kind of bros who work there. And then in the front of house like there were kids just constantly skating and smashing their skateboards on everything. And you just heard this constant like like slamming everywhere and it's driving me nuts. And it all comes to a head one day. This one of our employees comes up and taps me on the shoulder while I'm coding and I take off my headphones and I'm like, 'Yeah.' He's like, 'Um, is the website down?' And I'm like, he thought you were it? I was the tech guy. I was the guy, right? Yeah. And I I look at him and I go, 'Are you asking me or are you telling me?' And the guy was like, 'Okay, slowly back away.' I've angered the tech guy. And I realized like, 'What the hell am I doing in the back of a skate shop writing like voluminous amounts of code for the skate shop that nobody is ever going to use like except like a few employees in this skate shop.' And I realized that not only did I like hate that, I hated our employees. I hated our I hated the products we sold. I hated our customers. Like I was like, okay, it's it's time to go back to intrinsic motivation. Yeah. Right. Right. Well, the funny thing was I got a ton of intrinsic motivation by writing all those systems. Like it was fascinating. I loved it. I wrote a point of sales system that would pixie boot off the network straight into a single page web application. point of sales system with pin pads and cash drawers and receipt printers and all that stuff. And like any given day, I'd be dealing with like web application stuff and like BIOS stuff like at any point in time. And I like I was having a lot of fun because of that. But I realized the reason I was doing all this stuff was like pretty stupid and I hated everything that was going on around me. I was like, 'Okay, it's time to go.' So I went and got a job at Amazon and I was one of the first product managers at AWS. You know, my favorite story about that is I'm interviewing at Amazon and this is 2004. I'm interviewing and Andy Jasse is my bar raiser. So you got I'm there all day interviewing and at the end of the day finally someone's like, 'Well, do you have any questions for us?' You know, after like six hours of interviews and I was like, 'Yeah, what is AWS?' And he goes, 'I'm sorry, I can't tell you, but trust me, it's cool.' He was right. And it turns out that is a really good way to recruit a very mobile 20-some who hates his current life. And so I moved myself up to Seattle and took a job at Amazon. My very first day my office mate was the PM of S3. S3 was still years away from launching and the team was three people and you know so it was a fascinating time to be there. Roll ahead. I was there for a couple years left um and started thinking about what I want to do next. I knew I wanted to get back to entrepreneurship. I want to start something again. And one of the things I realized was that every single one of my prior companies, I had had this problem, which was for very different reasons, we had actually needed the phone network to like build our business. So like at StubHub, we needed to um coordinate phone calls to help coordinate the courier delivering a ticket and the person who was buying the ticket. At the note-taking company, we literally were like, let's just do phone calls. If they've forgotten to submit their notes, let's if we sent them like five emails and they still haven't done it, let's have a phone call go to them, right? And then at the retail store, we had this like people calling all the time be like, 'Yo, where's my special order surfboard and like the salesperson would sit there and like put the phone to their shoulder and like type into the point of sales system that I wrote to find the answer to that question, which I knew was in the database already.' And so everyone in these companies like, 'Oh, I wish I could do this thing.' And I'm like, 'Oh, but phone network, I don't know the first thing about that.' A few times I would call, actually, I'd call existing vendors like Cisco or AT&T, these folks. I'd be like, 'Hey, how do we solve this problem?' And usually a they won't even return your calls. But if they did, they'd be like, 'Oh yeah, we can help you solve that.' It's going to be millions of dollars and years to go build that solution. You know, sign here, we'll get started because it's like hardware and software and lines run to your data center and huge integration projects and all this kind of stuff. I was like, nothing that we're doing takes years. You know, everything is like measured in in, you know, days and sprints and things like that. Nothing we do is like years long and millions of dollars. And so when I realized I had that problem at every single company, I was like, 'Huh?' And just coming out of AWS where they were just starting to introduce a lot of these web services that we all know now all take for granted. I was like oh there could be this developer interface and APIs for it and all this kind of stuff and started building out this idea. Now the first thing that I did and I think your question now a very long time ago was you know how did we kind of start getting our you know our sense of like traction in the market at the time when I was I was working on a few ideas actually and what I would do is I would take the idea that I had and I would go to someone who seemed like they were a likely customer for that idea and I would very briefly you know like usually like a friend like someone who I knew fairly well and I would just briefly explain this thing that I'm working on and a funny thing happened which is If you know if they have some latent problem in their life and you suddenly describe a solution to it, they they perk up. They ask you questions like, 'Oh, wait. How would that do how would that work?' You know, but when they have no such problem in their life, the conversation is just awkward. So, for example, I came up with the idea for Dropbox in 2006. However, I pitched it as a backup solution. I was like, 'Oh, this like peer-to-peer cloud sync storage thing to back up your computer.' And I went to people and I was like, 'What if you had this thing that could very cheaply back up your computer using the internet?' And people were like, 'Um, how about them Mets?' You know, like they like change the conversation in the most awkward way. And so you'd find out like, 'Okay, I guess that's not a very good idea.' And so I had a few ideas like that. I was working at a bit torrent based cable company and like all sorts of things. Everybody like nobody cared about these things. And when I started talking about the Twilio idea to some folks, some developers that I knew, you know, I got this idea. It's an API, make telephones ring, and all this kind of stuff. And they would say, 'Huh? You know how how about them Mets?' You know, and at first I'd be like, 'Oh, okay. Well, I guess this is another stupid idea.' But a funny thing happened like 30 seconds later, they would say, 'Hey, wait, that phone idea you were just talking about. I have a question. Could I?' And they'd insert some use case they'd recently had, like, 'Could I automate a phone call when like a package shipped from this website?' these commerce site I just built. I was like, 'Yeah, yeah, you could.' Like, 'Oh, huh? Yeah. Can I check that out?' And I'd be like, 'Oh, yeah, sure. You know, we're working on it. I'll get I haven't written a line of code yet.' And when I had that happen like five or six times in a row, this like you saw the gears start turning of like, 'Oh, wait a minute. They connect the dots.' Like, 'Wait, I've had a problem that I've wanted to solve again just like I had had.' And like, 'Oh, it' be cool if we could do this.' Oh, but whatever. We can't do that. Making phones ring like that's magical. Take them a little bit of time. Yeah. Dude, connect the dots. And as soon as they did, they were like, 'Oh, wait a minute. I have wanted this. There's all these things I've wanted to build that I couldn't build that now I could. Oh, yeah. Let me try it out.' And so, when I got that response, you know, many times in a row, I was like, 'Okay, this is it.' And I just dropped everything else and just started working on Twilio uh full-time and built the prototype in about four months along with me and my co-founders. And then we took that group of people that we had told that to, I like wrote down everybody, right? And I went back to them. I said, 'Hey, you think I was talking about a few months ago? Here it is.' And I just gave them an API key and said, 'Just play with it. let us know what you think and people really liked it. They started building stuff. I remember we said like is not scalable at all. It is like it's on one EC2 instance uh a small actually and you know it was really the code was very hastily written but it was just enough to test like was it doing the things people wanted it to do and like word started to spread a little bit in the community of like people would say it's okay if I tell such and such I think they would want it. I'd be like, 'Sure, go ahead.' And so, like, I started getting more and more people. We had about uh probably about 50 people mostly in the Seattle area, which is where I lived at the time, who were like building things on it, including um uh you know, people were getting stuff like on on like uh like Lifehacker, I remember back then, like the blogs were being written about some of the stuff they like, dude, do not get attention. This thing is way janky. But like people were building all sorts of cool things and that gave us like the encouragement. I remember like one guy, he was building something. I remember I was like met him at a coffee shop and he was like, 'Oh, this is great. I give him the API docs. He's like, 'Great, great, great.' And at the time we had like, you know, play, dial, say, things like that when he says, 'Oh, where's record?' You know, record audio for a phone call. And I was like, 'Um, you know, we're launching that tomorrow, actually.' And I went back, I'm like, 'Dude, we need record.' And like we built it like that night, right? And so we had that encouragement uh by our early customers just really showing us we're on the right track because they were doing exactly what we wanted. They were building all sorts of interesting ideas. And a funny thing happened actually this that summer, summer of

2008. This was when we got to raise our first round of financing and we can't raise a penny because the global financial meltdown was happening and nobody understood this whole idea of a developer service. Developer as a repeat founder worked on AWS. The financial market, AWS was very, it was brand new, still very far from proven. And so I couldn't raise a penny. In fact, I spent the whole summer trying to fundraise and at the end of the summer didn't have a dime to show for it. And in fact, a lot of the investors were like, 'Well, just go build an app. Like this API thing is stupid. Go build an app.' We thought about it. And I remember that we had this very fateful phone call. My three co-founders, the three founders of the company, we said, 'Maybe they're right. Like maybe, you know, we tried to fundraise all summer long. Couldn't raise a dollar. Like we don't even have a bank account because no one would give us a penny to put in it. What do we do?' We already had developer usage too, right? So you can show them like, 'Hey, here's what all...' Yeah. No one was paying us yet. It was all just like, you know, and they were stupid. Like our biggest customer was phonemyphone.com, this website where for a buck it would make your phone ring. And the two use cases were you lost your phone in the couch and you need to get out of a bad date. That was our biggest customer. So developers ask for, you know, your customer list and you give them a phone. My phone, please. Yeah. Exactly. So we weren't exactly like the proof points weren't exactly there. Right. Fair. But, you know, we kind of thought about, okay, maybe we should pivot, maybe we should just do an app, like a PBX, like, you know, like a RingCentral kind of thing. And I remember we thought about like, but wait a minute, our customers are telling us we're on the right track. Like, our customers love it. They're building. They keep giving us new ideas, next things we should do. And like, I think that's the signal that we should follow here. And so, we said, 'Okay, let's give it a couple more months. Let's get to launch. See what happens when we launch.' Um, but like we're so close to being able to launch something because we had rewritten the whole thing from the janky prototype to actually a real product at that point. So, we finished it all up. We got to a launch. We launched it on November 20th, 2008. And like immediately people started signing up, giving us that credit card. I remember like we were driving down the 101 on the day of our launch and to an event and, you know, my co-founder was in the back seat like refreshing like the backend page. He's like, 'Oh my god, they're paying us.'