The Dot-Com Dorm Room Birth Of Twilio: An Interview With CEO Jeff Lawson

It takes a lot of guts to bet against the market, but sometimes, contrarian instincts pay off.

One of the larger narratives in the capital markets this year is the relative drought of technology companies going public. According to Benzinga, the IPO market is barely hotter than it was during the financial crisis.

Despite that trend, one company, Twilio Inc TWLO, decided to go big with an IPO on June 23, as uncertainty roiled the global markets and Brexit votes were being counted 3,000 miles away. Its bet paid off.

Twilio shares closed that day up 92 percent at $28.79, after Twilio initially priced stock at $15 a share. At the end of trading on June 23, Twilio was worth more than $2 billion, becoming the latest billion-dollar tech company.

The Tech That Nobody Sees

The man behind the company, and one of Fortune's 2016 40 under 40, is CEO Jeff Lawson, serial technology entrepreneur, onetime University of Michigan dropout, and a West Bloomfield native. Lawson’s net worth now sits at nearly $400 million from his stake in Twilio.

Basically, Twilio makes the technology that Uber, WhatsApp, and Airbnb use to send customers text messages. It also provides cloud communications software that lets companies send voice messages or set up phone systems in new offices overnight. Twilio’s tech is so flexible that even an organization as ostensibly un-hip as the Washington state Department of Transportation uses it to alert commuters when the next ferry is arriving via SMS.

What’s remarkable about Twilio’s technology is that it reduces telephony from miles of wires and black boxes down to simple computer commands. When Lawson was raising money in the early days of the company, he would woo investors and crowds at conferences by using lines of code to dial the cell phones of people in the room.

Fascinated About How Things Worked

As a kid growing up in metro Detroit, Lawson was fascinated by how things worked. He would build models of technology he saw around the house, such as a VCR he fashioned from cardboard and crayons. He got upset when his father had to break the news to him that his model VCR wouldn’t play tapes. (Fun fact: Lawson’s father, Larry Lawson, voiced several characters on Dick Purtan’s morning radio show for many years).

Lawson was also driven by the entrepreneurial spirit from an early age, even if he didn’t realize it first.

“I started my first business in middle school shooting wedding and bar mitzvah videos,” said Lawson in an interview with Benzinga. “I didn’t think about it, necessarily, as ‘I want to be an entrepreneur,’ but as a 13-year-old, I wanted all this cool gear because I was really into shooting videos! I was asking myself how I could afford some camera that’s thousands of dollars and looks pretty awesome. I thought, ‘oh, I gotta work for it!’”

That entrepreneurial drive led Lawson to the University of Michigan in 1995, where he double-majored in film and computer science. It was during his freshman year where he was first fascinated by the potential of the Internet.

Lawson’s approach to figuring something out is to “force yourself to do it,” so he started a company with a few friends to figure out how to build things on the new, wild World Wide Web.

That company, Versity.com, provided class materials to college students online. The company’s growth could be considered analogous to Facebook Inc’s FB: the service was first aimed solely at University of Michigan students, and then expanded to other campuses.

Dot-Com Boomed

Another parallel to Facebook was that Lawson wasn’t quite sure how the company would make money, despite having millions of users, 30 employees and an office in Ypsilanti by the time he dropped out of school to run the company full-time in the beginning of his senior year. He would return to school to finish his degree in 2003 after the company was acquired.

“The revenue model was that there wasn’t a revenue model,” Lawson said. “These were the dot-com days, when revenue just wasn’t valued for companies for some reason. We were focused on growing the audience at the time, instead of monetizing the audience.”

Before the bubble of first-wave Internet companies crashed, Lawson sold Versity.com to CollegeClub.com, another lecture notes company that was about to go public. Before CollegeClub.com could issue, however, the bubble burst, and Lawson lost it all.

Bust, Then Lessons

The experience taught Lawson lessons that would become Twilio’s core values, which teach employees to dream big, but act responsibly and to get more done with less.

“Since we were moving so fast at Versity, we didn’t do a good job of focusing on things like culture or frugality,” Lawson said. “A lot of that stuff came into play when I was building my future companies.”

Of all the hard lessons Lawson has learned from his time in Silicon Valley, one in particular is salient to his home city as Detroit repositions itself as a technology hub. He thinks the city is implementing the self-reinforcing entrepreneurial culture he sees in Silicon Valley.

“The biggest thing that makes Silicon Valley unique is a culture of giving back. When people see success, they give back to the next generation of entrepreneurs in the form of their time and their advice, which is very common in Silicon Valley, but also in the form of money. The community responsibility to reinvestment is what makes Silicon Valley unique. It’s like a flywheel. It just has to start spinning.”

Lawson said the ball is already rolling in Detroit, but that there’s a lot more work to do. The reinvestment effect can be replicated anywhere, he said, but it takes time.

“Dan Gilbert has done a very good job of this, taking his success with Quicken Loans and parlaying it into this next generation of entrepreneurs, be it with advice, time, or money,” Lawson said. “He’s gotten the ball started, but it really takes many, many, many people doing that many times for it to become the norm and the religion of the innovation cycle.”

But what’s next for Lawson himself? The work of an entrepreneur is never over. His next move is to continue building Twilio’s business-to-business sales momentum and expand its reach around the globe.

“Those things will help us fuel the future of communications,” he said excitedly.

“Our next move is to continue building Twilio’s enterprise momentum, and building more geographic expansion around the world,” Lawson said. “These are the things that we’ve been working on for a long time and continue to work on. They’ll help us fuel the future of communications!"