Twilio CEO Interview: The Superpower Of Digital Transformation

Back in 2008, Jeff Lawson made a pitch for his startup Twilio to Union Square Ventures. His message was clear and compelling: “We have taken the entire messy and complex world of telephony and reduced it to five API calls.” Lawson then got on his laptop, coded an app and made a phone call to one of the VCs, Fred Wilson. 

And that’s all he needed to see. He agreed to make the investment on the spot.

Since then, Lawson has made Twilio into a powerhouse in the enterprise software world. The company now has a market cap of $58 billion and the revenues jumped by 52% to $448 million in the latest quarter. There are over 208,000 active customer accounts. 

A key to the success for Twilio has been the focus on helping companies with digital transformation. Customers have been able to use the company’s technologies to develop systems and innovations that go well beyond off-the-shelf software.

In fact, Lawson has recently published a book about this. It is called Ask Your Developer: How to Harness the Power of Software Developers and Win in the 21st Century and I read it over the holiday. Unlike the typical books about digital transformation, this one is based on the viewpoint of someone who is both a coder and CEO. This unique view provides great insights on how companies can better use technology.

I also had a chance to interview Lawson recently. Here’s what he had to say:

Tom Taulli: Your book takes a different approach to the strategies with digital transformation.

Jeff Lawson: That’s right. First of all, Marc Andreessen said “software is eating the world.” It was a prescient prediction. The power of software is really changing every industry there is.

But he did not describe how it would eat the world or what the roles would be. Keep in mind that nobody really talks about how people are making this transformation happen–and of course, this is about software developers. 

I have the advantage of talking to Fortune 500 companies and everything in between. The conversations I often have involves the understanding of building software to compete in the digital economy. 

And it’s a pretty daunting process. You have to hire great developers. You need to make them successful. If not, they will go somewhere else, like Google or Facebook.

So my book is about how to engage with developers. It’s a playbook on thinking about the topic. 

Taulli: The buy-versus-build decision is a tough one, especially for non-tech companies.  What do you see as a way to make the best decision?

Lawson: There is no shortage of vendors who will say, “Oh yeah, trust me. If you buy my software and plug it in, it will solve your problems. You don’t need to reinvent the wheel.”

But if everyone is using the same technology, there is no differentiation. There will be commoditization. 

So there are times when technology needs to be bespoke and have a special secret sauce in order to win in the market. Every company has its table stakes. 

One example I like to use is the traditional bank. It’s often an undifferentiated experience. But because of this, disrupters like Square and PayPal have been very successful in making major inroads. These companies have built unique customer experiences. Your bank is now a mobile app, not a lobby. 

For the incumbents, there may be continued dwindling of the customer base. It then becomes a Darwinian evolution where it is about build versus die. 

Taulli: What are some strategies for digital transformation efforts?

Lawson: One thing that comes from the startup world is to iterate and learn. Build something quickly that you think solves the problem and then put it in front of customers to get feedback. Think of all those apps on your phone that get updated frequently.

Taulli: You also believe in having small teams. You learned this when you were at Amazon.

Lawson: I think this is the key to making an organization stronger as you scale. But for many companies, as they get bigger, it seems that the universe wants them to get worse. There’s more overhead. There’s more communication. A person will begin to feel like a cog in the machine. They say, “You know, I’ll just take my paycheck and do whatever they tell me to do.”

This is why most companies tend to fail at some point when they get bigger. They just kind of collapse under their own weight.

And I think it’s fairly remarkable that Amazon seems to at least so far have avoided that outcome. And I think it’s because of that small teams focus.  It’s because it continually reorganizes the company into startup-sized units.

This is what we do at Twilio. You need to recapture the energy, enthusiasm, customer focus and that sense of urgency that startups have—no matter what you’re doing. 

Taulli: You also believe there needs to be a different mindset when it comes to developers.

Lawson: There are many misconceptions about developers. It’s not about sliding pizza, Mountain Dew and Doritos under the door. It’s not about putting together detailed requirements when creating a project. 

Developers are not math nerds who like stuff like quadratic equations. The reality is that many of them that I’ve met through my life are creative people. They may, on the side, play a musical instrument or be active in sports. 

So the key to unlocking the talent of developers is to make them contributors. Management should share problems with them, not solutions. Leave up to the developers to come up with the best approaches. 

Otherwise you will be treating them like factory assembly line workers. It should then be no surprise that you will have a hard time attracting and retaining talent. 

For example, a lot of executives know their top sales people. These are the rainmakers. Executives will shower praise on them and give them perks like new cars if they hit their numbers. But how many executives know the names of their top technical talent? Not enough.

This is not to say that developers need to be coddled. They shouldn’t. But they need to be recognized and become a key part of the collaboration with the business. This is how you get the best solutions to the market. 

Tom (@ttaulli) is an advisor/board member to startups and the author of Artificial Intelligence Basics: A Non-Technical Introduction, The Robotic Process Automation Handbook: A Guide to Implementing RPA Systems and Implementing AI Systems: Transform Your Business in 6 Steps. He also has developed various online courses, such as for the COBOL and Python programming languages.