From Twilio to Fusion Energy: Jeff Lawson’s Next Bet

People are not tapping into software budgets. They're tapping into headcount budgets. You know, in the past, you'd look at SaaS and you'd say, 'Oh, well, you know, maybe if I buy CRM for my salespeople, everyone got 10% more productive.' And I'm still probably going to hire the same number of salespeople. But if you look at customer service and you're like, 'Wow, I can actually deflect now 80, 90% of my customer service requests with AI successfully,' you just tapped into a huge budget opportunity. That's what enables that scaling.

One of the most brilliant values in corporate history: 'We move fast and break things.' The assumption is if I break things, I'm in trouble. That's a career-limiting move. The heavy lifting that that value does is it gives people permission to behave in a different way at this company than you probably will at any other company. If it's in the interest of progress and moving fast, you have my permission to break things. As long as we're learning, as long as we're moving fast, it's pretty powerful.

Yeah, go for it.

Well, you know, it's interesting because when you're growing a company, you really end up with kind of two sets of folks. Let's just talk about go-to-market. There's a set of folks that come in before you have product-market fit and you're exploring and you're trying to find it. So for example, the first salespeople that you might hire in that universe, they actually look a lot more like business development because I think of business development as essentially creative sales, sales where there's no playbook. You have to go figure something out with each customer.

And the goal of that era of your early go-to-market folks is to, one, close some sales, get some revenue coming in, but really it is to, two, figure out what the playbook is. So if you do five deals and all five deals look completely different, you don't really know much. But if you start finding that pattern and your folks are trained like, my job is to close deals, but more importantly find the pattern so that we can now write the playbook so that we can train up and scale, because in order to scale, you have to give people a playbook.

And before you have it, you can't scale. And so you end up with like the pre-product-market-fit, trying to find the playbook, but really be creative in your sales to then write the playbook. So then post-product-market-fit, you now have the playbook in your hand and start hiring, you know, sales after sales after sales and just scaling out that function. And so I always think that's really interesting. And so there's a big difference between people who've joined pre- and post-product-market-fit because the people who've spent their whole career in post-product-market-fit always assume that there is a playbook, right? I show up, there's a playbook, and yeah, we're going to iterate it, we're going to scale it, we're going to learn, but ultimately, we know how to sell this product, which is a completely different world from the 'we have no idea how to sell this product.'

And therefore, we have to explore a whole universe of different buyers, different messages, different problem statements, and maybe even evolve the product to solve a problem we didn't even anticipate on day one. And you made the comment like, I don't think people appreciate how uncommon it is to actually find product-market-fit when you tend to just join the companies that have them. Well, there's a survivorship bias, right? So the companies that you hear about and may be likely to join, or even the companies that are hiring salespeople to begin with or sales leaders to begin with, those are the companies who've already made it past that stage to where they're scaling and they probably raised their Series B or I don't know, who knows, maybe they're Series A at this point, but they've raised money. They probably have some product-market-fit and they're scaling.

So just numerically, the number of salespeople that are employed in the world statistically are going to work at companies that have found product-market-fit, right? And so therefore, if you have never experienced that and you join a company beforehand, that can be a big shock because you realize like, well, we don't know what we don't know about how to sell this product. But you, as a, you know, go-to-market person in the early days, you're given a canoe and an oar and sent out onto the ocean to try to find revenue. And that's a different personality. In fact, you know, we hired folks at Twilio in the early days. They were a very different profile of salespeople than who we ended up hiring later as we were scaling out, and that's just the, you know, nature of the beast.

Maybe, but like maybe I suppose the prerequisite to that is, what is the definition of that?

I'll give you a quick background on Twilio. So when I started Twilio, I had only done consumer products before. This was my first sort of B2B-ish product. And I remember one meeting with, you know, one of our early investors was Mitch Kapor. And I met with him in our seed round. Hadn't raised a dollar yet, but it was one of the, you know, early investor meetings I had. And I remember Mitch declined, and his reason for declining, he was like, 'I'm really interested actually. I think this developer thing could be super interesting, but I don't think you know how to run a product. I don't think you know how to run a go-to-market for developers. And so come back to me when you've figured out more about how to run the go-to-market here.' And I kind of like made my notes. Okay, I got to go figure out the go-to-market.

Now I secretly didn't tell him this, but he could not have been more right because I went home and Googled, 'What does go-to-market mean?' Right? I literally had no idea. I didn't know what I didn't know about how to run a B2B go-to-market.

And so in the early days, we were not thinking about, do I have product-market-fit? Am I running a go-to-market? Like, didn't even know what the word meant. All we were saying was, are we building a product that we think developers want to use and have use cases for? And we used to say, you know, our company has no strategy other than build a product that customers will pay us for, right? That's the strategy of the company. Because if you lose sight and you have some convoluted strategy statement that isn't just completely centered around solving a problem for a customer, then it's easy to get lost.

And so when I think back to like, when did we get product-market-fit? Well, very early on, I'm saying the day we launched, we started seeing developers come sign up, put in their credit card, and start building things with Twilio that were useful to themselves as developers and to the companies they worked for. And so, you could argue that Twilio didn't really go through this period of like, don't have product-market-fit, don't have it, don't have it. Ah, we did one magical thing and now we have product-market-fit. I think the bigger question is like, when did we make this transition from purely developer to more of a traditional B2B go-to-market motion? Because you might say that's when we found product-market-fit, when we were able to convert those developers into scaled, you know, commercial contracts with the companies they worked for.

Yeah. I mean, with a usage-based model, you know, you don't always have predictability, but at least you've got, you know, contracts with, you know, companies, enterprises, contracts that are worth, you know, five, six, seven figures, right? Like, you know, when you started seeing that happen, you might argue that's when really the company found product-market-fit. But again, that wasn't very long into the company. I'll give you an example. I remember, okay, we were in our office that was a few blocks from here. That was probably about two, three years in, maybe 2011 probably. And oh, I remember the desk I was sitting at, and we were still pretty sparse office... 2010.

In the very early days of Twilio, I was under the impression we wouldn't need salespeople. I'm a software developer. I didn't want to talk to a salesperson. I wanted to pick up an API and just go. That's what I wanted to do. And therefore, I assumed the developers of the world were similar to me and therefore wouldn't want to talk to salespeople. By the way, that's largely true. The thing I got wrong was though that the relationship that we needed to build with their company would go well beyond the developer. That's where I didn't anticipate that.

And I remember realizing, you know, I sort of decided, okay, I don't think we're going to need salespeople. It's just going to be the self-service magical adoption model. And one day, and this was back when, you know, I and the other co-founders, we were still doing, you know, all the customer service for Twilio. So we'd, you know, be in Zendesk answering, you know, emails and tickets from customers. I got an email from a product manager at Intuit. And the product manager said, 'Hey, one of our developers built this amazing thing on Twilio. It allows you to do two-factor authentication. So when someone tries to log into QuickBooks, it will call them and read them a PIN that they have to enter in order to make sure that they are who they say they are. It's a security feature.' And again, 2010, 2011, somewhere in there, pretty early. Like, 2FA was not actually commonly used at that time.

And so this product manager, but she says, 'But hey, you know, we're Intuit. Like, we got some questions, you know, are you secure? Are you scalable? Like, are you a real company?' Like all sorts of questions. And I very excitedly was like, happy to hop on the phone with you. And so I hop on the phone with this product manager and walked through all the stuff. And we set up a next step. Okay, well, it'll be a security review or a, you know, a commercial contract. And got off the phone and was like, 'That was amazing. Like, Intuit wants to use Twilio. This is so cool.' And I kind of, as a... I think I was just doing sales though, you know, and I kind of had this slow realization of like, oh yeah, that's what a salesperson would do. And that's the, you know, essentially the follow-up to the developer opening the door, bringing us in.

And then we have to then, you know, take the ball and... and, you know, I think I'm mixing metaphors at this point. But you know, if the developer opens the door, we have to walk through it and actually close the deal with the customer.

Yeah, that was probably about two years into the company, right? So at that point, we did not have salespeople at that point, but I think that's when we started down the journey of like hiring our first salespeople and all that.

But by the way, I'm going to say I was a complete... like I did not learn the lesson of go-to-market, you know, at that point because we did hire salespeople. But I'm going to tell you a terrifying story for any go-to-market person. We went public in 2016. We went public in 2016. That year I believe we had about 230, 240, somewhere in there, million of revenue. Do you know how many salespeople we had? I ask you because at the time I didn't know the answer to that question.

I remember I hired George, who was my COO, to help me scale out go-to-market, and you know, we agreed. He started in I think January of 2017. So that year we probably did about 400 million of revenue. He started in January 2017. He did the usual thing when an executive comes in and says, 'Well, I'm going to, you know, spend my first three months just talking to a lot of people and learning the ropes and figuring out what's going on and not make any changes, and then I'll come back to you after three months with all my, you know, observations and we'll figure out what to do from there.' Great. Comes in 30 days in, he comes to me, says, 'Jeff, I know I said I wasn't going to make any changes for 90 days, but I can't not do something about this.' He said to me, 'Do you know how many quota-carrying reps we have?' And I said, 'God, I think like, I don't know, 50.' And he said, 'No, we have seven.'

I was like, 'Well, who are all those other people?' He's like, 'Everything else, but they're not carrying quota. You know, we've got sales engineers and BDRs and all these people, but the actual quota-carrying reps, seven.' And I remember because I remember someone had said to me, you know, we have two enterprise reps. We have the US East and the US West. So everyone west of the Mississippi, which at that point probably represented, you know, just because we had a lot of Silicon Valley companies in our... like probably represented a few hundred million dollars of revenue. One salesperson. One salesperson.

And you know, and I remember George said, he said, you know, 'I'm pretty sure,' he's like, 'I don't know what the right number of sales reps is. I'm pretty sure it's not seven given our opportunity and the size of the business even that we have today. Oh, and if you go look on LinkedIn, you can see our lesser competitors who are much smaller businesses than we are, they seem to have about 100 reps. Oh, and by the way, a Wall Street analyst just wrote a report where they spoke to one of the prior sales leaders at one of our competitors, and that person said their entire business was built upon people who Twilio didn't call back when they reached out to us.'

And then the last data point he had was, 'And I sat in on a call with one of our BDRs, and it was interesting. We have this inbound lead. Someone filled out the, you know, the form, and they took an inbound call from... it was a Fortune 100 company. I can't remember which one it was. Let's just say it was General Motors, you know. So General Motors is on the phone and says, you know, we want to use Twilio for this use case.' And the BDR... and I'm going to make my like Simpsons like 18-year-old impersonation. You know, this BDR is on the phone like, 'Yes, thank you for calling Twilio,' right? Like, and they're like, 'Yeah, we want to build whatever it is on Twilio.' And they're like, 'Oh, that's amazing. Well, let us know how it goes.' Click. You know, like that was the conversation.

That to me is just less interesting. Also, it means you can have huge competitive dynamics in terms of talent, in terms of capital, in terms of everything when everybody is walking in doing the exact same story roughly.

Okay.

For me though, I do think that there is something that you're, you know, in some ways a luxury you're afforded to be able to do a long play like this that is, you know, is a classic long shot, moonshot, whatever you want to call it. But I have the luxury of doing it. Like I don't have to prove anything to anybody. You know, I feel like a lot of founders start their companies because they want to prove like, I can do it, you know, I can build something, and they're proving it to themselves or others or whatever, but they got something to prove, right? And you could look at this as a good thing or bad thing, you know, that I don't have something to prove. Therefore, I can put in the time, I can put in the effort, and this is going to take 20 years and I'm completely comfortable with that. So I can take that big risk and take that big swing because I don't need an exit in the short term and I don't need some, you know, validation, you know, in the short term. Now you could say that's a negative thing and I've heard some people say, oh well, you know, if you don't have that hunger, you don't have something to prove, then, you know, you're not a good founder. And, you know, I don't particularly believe that, but, you know, I think there is something that is afforded you after you've done it, after you've, you know, shown the world like, yeah, I can do that thing, and now I want to take an even bigger swing. And that to me is what's really exciting about this, because at some point at the end of the day, like software...

Jeff Bezos said it well. I was in all hands in the early days of Amazon and I can't remember what the question was, but I remember his answer. His answer was, 'Folks, we're in the software business. Our job is to arrange magnetic particles better than our competition.' Like, that's what we do. And it always stuck with me. Wow. The job of software is arranging magnetic particles in a profit-making order. And at some point you realize like, God, that's not very fulfilling. Actually, it's a great business model. Don't get me wrong. What an amazing, astounding way to build a business and make money. But as a life's work, I did start to feel this like, I want something more tangible. I want something more lasting, more durable. And that's where something like Fusion Energy, which is a long shot, but if it works, will change the world in a positive way, by the way. That's so exciting. And I say in a positive way because I also think for some folks, myself included, some of the effects of the software world and the internet on society are starting to be a little disappointing.

And so you start to, oh, like this world where we thought we could create this amazing utopian world of information for everybody and information is going to be free and therefore everyone's going to reach their maximum potential. Yeah, that turns out when you connect a billion people together, it's mostly scams and frauds and people trying to take money from each other. You know, that's kind of a disappointing outcome in a lot of ways. And so as I look to like what's next for myself, I was kind of ready for like, okay, let's think about something where there's tangible real world impacts if we succeed and we're not dependent upon the behavior of human beings for that success.

Total access. I mean, I wasn't looking to actually start my next company. I was perfectly content. I bought The Onion. Was perfectly content doing some fun things.

Yeah. Yeah.

Mhm. Yep.

Uh, 16 years.

Started in 2008.

Post AI, post ChatGPT.

We brought back, by the way. So, The Onion was swirling. It was owned by private equity who were absolutely destroying it. It was in a death spiral, right? They laid people off to try to squeeze more cash out of it. The product got worse. Fewer people read it. It made less money. They laid more people off. Like, death spiral. This private equity is not the right owner for a satirical publication, especially in this era of media, right? So, my first interest was in buying it and I realized it actually wasn't buying it. It was saving it. So, I bought it from private equity and immediately just like we put it back on solid footing because the product had gotten horrible because the last owners had said, 'Hey, you know, the business model of the internet is to write content that gets maximum clicks, make people refresh their pages a lot to view more content, and load the pages up with awful ads.' That was the business model. And so, the product was god awful. So, we reset the whole thing and we say, 'Okay, first of all, who's at the center of our universe again? The reader. That's our customer. It's not the advertiser, and it certainly isn't private equity.' And so we're putting the reader back at the center, and we're going to go back to the world's oldest business model, which is if we do something people like, they will pay us. So, we introduced a membership model. And with that membership model, if you pay $99 a year, we brought back the print edition of The Onion, we will mail it to your door 12 times a year. So every month we now make again a print edition of the paper which they hadn't done in a decade. They killed it in 2013, I think it was. So brought back print and now have a model where our readers support it. And since then we brought it back, we've 5x'd the revenue from when I bought it. By the way, we took the revenue to zero because it was all like chum box ads, you know, like awful AI ads that don't make any sense. It was like all the page was loaded with those and it didn't even work on mobile because there were so many ads your phone would start overheating, right? It was like the worst thing. So, we got rid of all the ads. There's no ads on the site anymore. And then, so we took the revenue to zero. And now, two years on, we have more than 5x the revenue that it had before I bought it. And we would be profitable except that in this current era, we said, you know what, we should invest. We should invest to go actually grow and to, you know, be the satire that the world needs right now in this era of, you know, mega and everything else, right? And so that's where we're at. Yeah, it was losing money. They kept, under private equity, they kept slashing, you know, the budget to try to make more money and they'd end up losing more money. It was bonkers.

So that, not really. I hired a management team on day one and was just like, you know, you guys run with it. I'm here to support you. I'm helping you with the strategy and I'm here to support you as a team. But you guys are running this thing. So, but while all this was going on, one of the other things I'd had in the back of my head was, you know, look, I took a lot of physics classes in college because I just thought it was so interesting. Obviously, not what I did with my career, but I thought physics was just fascinating. And so, as such, I learned about, you know, nuclear energy and, you know, fission, which is the power plants, you know, we have today, but also fusion, which is the process that powers the sun. So unlike fission, which is splitting heavy atoms like uranium, plutonium and bizarre things like that, fusion is taking light atoms, hydrogen, and getting it to fuse into a heavier helium atom in the process giving off a ton of energy. It's the process that powers the sun and we have known about it and pursued it because it is considered to be the holy grail of energy because it is clean, it is safe, it is cheap and the inputs to it are abundant on Earth. And so the only problem with it is it's never actually worked. That's been the problem. Because we know and we've known since the '40s how to convince, you know, a plasma of hydrogen atoms to fuse into helium by imparting a huge amount of energy to create a plasma that is, you know, tremendous temperatures and pressures. We've known how to make it happen. It's just it took more energy for us to put in than we get out. But you can spend a ton of energy to create this high energy plasma and you get a, you know, few fusion reactions happen and get out a little tweak of energy here. But, you know, you spent way more energy to try to create those conditions and you got out...

Well, and that's where in December of 2022 the world changed because one of the world's largest science experiments is just 80 miles east of here. We're in San Francisco right now. 80 miles east of here in Livermore, California, there is the Lawrence Livermore National Lab. And they have an experiment there called the National Ignition Facility. And it's one of the world's giant science experiments. And what they do is they have a little target about the size of a peppercorn full of deuterium and tritium, so two isotopes of hydrogen. And they shoot this tiny peppercorn-sized target with the world's largest laser. Literally a laser that is three football fields long and 20 stories tall, and they shoot it with two megajoules of energy all converging on this tiny little peppercorn of fuel. And guess what? In December of 2022, after 60 years, 30 billion dollars our government has put into this experiment and its predecessors, they finally created the conditions where more energy came out than it took to start. It's called ignition and it's the thing scientists have been pursuing for 75 years. And it is the only experiment where that has ever actually worked. And so I saw this news. It was a huge news story. They did a press conference at the Department of Energy and the president was talking about it and all around the world. This is front page headlines. I saw this news. It's like, holy crap, maybe fusion energy, which I always thought was a thing of science fiction, right? Maybe this will actually happen in our lifetimes. Holy crap. And I kept expecting to see, you know, the news of some spinout, you know, the lab spun out a startup that's going to go commercialize this for energy. And, you know, at the time though, I was still running Twilio. And I was like, 'Oh my god, I hope, you know, I'm sure I'm going to see that headline one of these days, right?' And I never saw that headline. So, one of the things I had in the back of my head was let me go figure out what's going on in that world of fusion because I would certainly expect that after having reached this huge milestone for humanity that this would be the next great step would be to turn it into an energy source. And so I met the lead designer of this experiment, Dr. Annie Crater. And my question for her was quite simple. How come I haven't seen a startup? And her answer was super interesting. She said, 'Yeah, I've kind of been wondering the same thing.' Because it would seem like the hard part we did, now commercializing it is the next step. But she said, 'You know, there were a bunch of people that came through and they looked at the experiment and they said, 'Oh god, this thing's three football fields long and 20 stories tall and these targets are made by hand and you only make a dozen of them a year and in order to make energy, we have to produce a million of them a day and this laser is really inefficient and so we'd have to build a much more efficient laser.' God, this just seems, you know, too hard. And so people declined to go take that next step. And so we relooked at this and we said, well, hold on a second. There's billions of dollars of investor money going into the fusion space already into approaches that have never actually achieved that milestone. And, you know, God knows humans have tried, you know, hundreds of fusion machines have been built over the decades. Each time they think, oh my god, like this is going to be the one. We're going to make it. And then they build the machine and turn it on and realize, oh, we didn't know. We didn't know. And so we failed to achieve ignition. But, you know, we learned a few things. And so we asked ourselves this question. If we want to see fusion happen in our lifetime, what's a more likely outcome? That one of these startups that have collectively raised 10 billion dollars of investor capital in the last few years, they're going to be the ones to go make their approach work for the first time after some of the smartest people in the world have spent billions of dollars trying to make it work for 75 years? Do we think that's more probable or do we think it's more probable that we can take the one approach that has actually worked and go make it economical? Go make a laser that's much more economical. Go make targets that are much more, you know, cheap. Make them in factories. And we said, you know what, those two things are engineering problems, not basic science problems. Those are supply chain problems. And so we started this company to say, you know what, while everyone else is exploring basic physics, we're going to go commercialize. We're going to go build an industrial supply chain to go build a giant semiconductor-powered laser and go build the supply chain to be able to go mass-produce these fusion targets. And in doing so, bring in the cost of this whole operation from what is, you know, if you look at this giant science experiment, not very economical at all, but actually bring it into the realm of economical power. And that's what we're here to do. Our company is called Inertia.