20VC: Twilio's Jeff Lawson on What It Takes To Create a Tribe, How To Create Anti-Fragile Organisations Through Decentralised Decision-Making and Why Values Are Nice But Principles Are Better

Jeff Lawson is the Founder & CEO @ Twilio, the company that allows you to unite communications and strengthen customer relationships across your business. Prior to their incredibly successful IPO in 2016 Jeff raised funding from some of the best including Bessemer, Union Square Ventures, Redpoint, Salesforce and Founders Fund to name a few. Before founding Twilio, Jeff was co-founder & CTO of NineStar, founding CTO of Stubhub.com, co-founder, CEO & CTO of Versity, and one of the first product managers for Amazon Web Services. In Today’s Episode with Jeff Lawson You Will Learn: 1.) How Jeff made his way into the world of tech and startups and what that founding a-ha moment was for Jeff with Twilio? When explaining new ideas to people, what signals to Jeff that the idea is resonating? Are there clear indicators an idea is not resonating? 2.) Leadership: What does great leadership mean to Jeff today? How has Jeff's leadership style changed and evolved over the years? What does Jeff believe is the key to great storytelling? How has the leadership style required, changed in a COVID world? What have been the biggest inflection points in his leadership? 3.) Culture: What does Jeff believe are the 3 key ingredients to company culture? How can leaders create a tribe that people associate with? What are the biggest lessons we can take from sport and religion when it comes to culture building? At what points has Jeff been concerned about the Twilio culture? What did he do to rectify it? Why are "values nice but principles better"? 4.) Decision-Making: How has Jeff created a culture of decentralised decision-making? What has Jeff done to ensure the best ideas rise to the top? In what ways can leaders ensure people feel safe to be bold and go big, without the fear of failure? How does Jeff determine when to give or remove resources from new ideas? How does Jeff think about the importance of "focus"? 5.) Diversity: Frank Slootman previously said, "diversity should not override merit". What are the core problems that Jeff has with this statement? How do Twilio construct their recruitment pipelines to ensure diversity? Why does Jeff believe the secret to human assessment is one of "miles travelled"? What are the signals of this? Item’s Mentioned In Today’s Episode with Jeff Lawson Jeff’s Favourite Book: Made to Stick: Why some ideas take hold and others come unstuck As always you can follow Harry and The Twenty Minute VC on Twitter here!

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Harry Stebbings?

  Welcome back. This is 20 VC with me, Harry Stebbings, and I couldn't be more excited for the show today. And it's such a timely one. It's just last week, this founder committed his company to being one of the first to dual-list on the long-term stock exchange. I'm sure you've probably guessed it from that, but I'm thrilled to welcome Jeff Lawson, co-founder and CEO at Twilio, the company that allows you to unite communications and strengthen customer relationships across your business. Prior to their incredibly successful IPO in 2016, Jeff raised funding from some of the best, including Bessemer, Union Square Ventures, Redpoint, Salesforce and Founders Fund, to name a few. And before founding Twilio, Jeff was co-founder and CTO of Nine Star, founding CTO of StubHub.com, co-founder, CEO and CTO of Versity, and one of the first product managers for Amazon Web Services.

• 0:44Harry Stebbings?

  I do also need to say a huge thank you. This schedule was a total team effort. Scott Rainey, Byron Dieter, David Cohen, Matt Garrett, so appreciate all your help with questions today. But before we move into the show today, Mercury is building full-stack banking for startups. Apply in under 10 minutes from anywhere for FDIC insured bank accounts, physical and virtual debit cards, domestic and international wires, and integrations with Gusto, Stripe, QuickBooks, Plaid, and basically every other tool your startup uses. They also offer unusual features like API, ISS, custom team management, and their newly launched Mercury Treasury, a cash management product for high-growth startups. And they'll even help you build your startup with Mercury Raise, a program to connect you to Silicon Valley's top investors.

• 1:28Harry Stebbings?

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• 2:12Harry Stebbings?

  So you can invest in multimillion dollar paintings, buy and sell shares on secondary markets and then receive the proceeds when the painting sells. With more than $150 million in paintings purchased, Masterworks is the top buy in the art market. So build your diversified portfolio of expertly vetted works curated by industry leading research with Masterworks. And you can find out more at masterworks.io. But that's enough from me. So now I'm very excited to hand over to Jeff Lawson, co-founder and CEO at Twilio.

• 2:46Speaker 01

  You have now arrived at your destination.

• 2:49Harry Stebbings?

  Jeff, this is such a joy to do today. So thank you so much for joining me, first of all.

• 2:53Speaker 01

  Absolutely. It's great to join you, Harry.

• 2:55Harry Stebbings?

  Now I've heard so many great things, obviously, from Byron, Scott Rainey at Redpoint and many others. But I want to start with some context. So tell me, what was the aha founding moment for you with Twilio as a good starting point?

• 3:05Speaker 01

  You know, the aha moment, right? I'm a developer. When I set out to start my next company, I knew I wanted to build something that was in a product category and serving a customer that I would just love to wake up every day and serve. As I thought back on my entrepreneurial career, because I had founded three companies before Twilio, all very different in terms of the industry they were in and customer we were serving. My first company was an academic content company for college students. My second company was StubHub, so marketplace for live event tickets. My third company was a bricks and mortar retailer for extreme sporting goods. It's like you couldn't get three businesses that were as different from each other as these three.

• 3:48Speaker 01

  Yet I realized that all three had two things in common. First was that each one of these businesses, again, totally different businesses in every way, except we were using the power of software to build a better customer experience and a better product than what the status quo was in each of those respective industries. And to me, as a software developer, the superpower of software is the ability to listen to your customers and hear a problem that they have and then very quickly go build. A prototype, an answer to that problem and put it in front of some of those customers and say, how's this? Am I on the right track? And you get feedback and then you iterate your way towards a better and better and better solution. And your job of building software is never done.

• 4:33Speaker 01

  There's always something you can be doing to continually solve more of your customers' problems or solve those problems better. And that iterative spirit of software is just so powerful. And that's what was driving us at every one of those companies. But the second thing that I realized was the same between all three of those very different companies was that to build the customer experience, to engage with our customers across all the various parts of the customer journey, whether it was when we were first meeting a customer, when we were doing our marketing or our sales, or while they were using our product or buying something, or after the fact, giving them service and support. Those things require communications. They require really great customer engagement. And every one of those companies, there were all these moments where we said, oh, wouldn't it be great if we could do X, right?

• 5:18Speaker 01

  And then we'd stop in our tracks and say, that's really neat, but I'm a software developer. I don't know the first thing about making a phone ring to automatically call the customer when your special order is ready, or letting them text us with, ask a question about the status of something. It's like, I have no idea how to make a phone ring. That's like magical. And so we'd reach out to, you know, carriers or like telco hardware companies and be like, yeah, we have this idea. How do we build it? And we always got the same answer back. It was, okay, you know, step one, you gotta run some copper wires from a carrier or data center. And then you gotta buy a bunch of hardware and rack it up. And then you gotta go buy a big software stack and install it. And then you need this army of like specialists to come and integrate all this esoteric technology together. And sure, we can make it work, but it's gonna take, you know,

• 6:02Speaker 01

  three years and $4 million to make this thing happen. Sign here, we're happy to get started. And every time I had that experience, I was like, wait a minute, like, first of all, like millions of dollars for this one part of our customer experience? I don't know. But let's say we had all the money and that didn't matter. The more offensive thing was the time, the idea that like, oh, wait, but it'll be years before this, what we think is the right solution for our customers, we were ever able to put it in front of those customers, at which point it would be done. And then when they told us like, well, here's all the things- Things you got wrong and here's what you should have built. Well, then we'd have to go spin up yet another multi-year, multimillion dollar project to do version two, version three.

• 6:37Speaker 01

  This is the opposite of software. It's like offensive to people who think in software and that iterative spirit, this idea that, oh my God, it'd be years and millions of dollars every time we want to iterate on this idea. And so that aha moment was when I took this idea, well, what if we broke all that stuff down into APIs? The things that developers use to plug into their applications and very easily write a few lines of code and plug into this infrastructure that just does it all for you. Then you could make communications a core part of the tool belt for every software developer and every software thinking company, every company that is now operating at the cadence of software and executing in this, you know, digital economy that we have that moves at the pace that it does.

• 7:18Speaker 01

  If the ability to engage with your customers was moving at the same pace as the rest of your software, as it took to build websites or mobile apps or anything else, then could we unleash so much potential that was out there? So many new ideas, like the ones I had had that had not been built because it was just too slow and expensive to try out those new ideas. That was the hypothesis. And whenever I had business hypotheses and I was testing out a bunch of different ideas at that time, I would go to potential customers of whatever the thing was I was experimenting with. And I'd explain like, hey, I have a question for you. I'm working on this idea where, you know, I have an API that would let you, you know, write a few lines of code and make a phone ring. And then you could express all these things you might do during a phone call, like saying text or playing back audio. And I kind of explained what Twilio was.

• 8:01Speaker 01

  And whenever I explained an idea to a potential customer, I'm looking for the reaction. Cause you go to people, usually they're friendly, they're friends, family acquaintances, you know, someone like that, someone who could be a customer of whatever thing you're doing. And so they're usually pretty polite about it, but when they like the idea, what they do is they ask you questions like, well, could it do this? Could it do that? And what you're seeing there is it's like tickling this part of their brain. You're tickling a problem that they have that maybe they didn't even know they had. But when they ask questions, they're basically exploring, oh, wait, wait, could it do that? And that is a good sign, but oftentimes what you get is not that. What you get is, so how about the weather? And you get this like, you know, awkward changing the topic and you know, you sort of. To take note, you're like, okay, well, I guess it didn't really tickle anything.

• 8:43Speaker 01

  And when I told the idea of Twilio to a bunch of developers, a funny thing happened. I'd tell the idea, I'd say, what if you had an API that did all the stuff? And they would say, oh, that's, uh, hmm. So how about the weather? And at first I was like, oh, you know, that's a bad idea. But then about 30 seconds later, they always circle back and they would say, oh, you know what? Remember that, that phone idea you were telling me about? Hey, could I use it to send a notification when the package ships from the e-commerce site I'm building? Could I use it to let a customer call in and get automated access to information? And they always have this idea, they correlate it back to some idea they were working on, but just assumed they couldn't do themselves. And that's when I knew, like, time after time, the developers would circle back. It was like the gears started turning in their head and it always took about 30 seconds

• 9:27Speaker 01

  and they'd circle back to, wait a minute, that idea you had. And when I saw that happen repeatedly, that's when I knew I was onto something.

• 9:33Harry Stebbings?

  Can I ask, Jeff, you are brilliant at storytelling and I actually spoke to Peter at Segment before this show. And the one question he had for you is, what does great storytelling mean to you? And how do you think you've changed in terms of how you tell stories?

• 9:48Speaker 01

  Hmm, that's an excellent question. I think, you know, where good story begins, the key thing is to start wherever you're a listener or you're a reader, or whatever it is, like, start in a place they know and then bring them somewhere new. Right? So like, you know, start with like, you know, you're working on a new idea and you're trying to figure out if it's any good. And like, I think a lot of people can probably connect with that idea. And then like, bring a log on the journey and tell the various bits that actually end up in the conclusion. But I don't know, I don't think of myself as an expert storyteller. It's just a way of telling it like it happened.

• 10:18Harry Stebbings?

  I totally agree in terms of starting with that place of familiarity. I do want to start on your leadership though, because, you know, I think bluntly, you know, when you look at your scaling from that, you know, first founder raising the pre-seed to where we are today in terms of the public market CEO that you are. It's a broad and terrible question, I have to admit. But it's really like, what does great leadership mean to you today?

• 10:38Speaker 01

  I think great leadership is really deciding what behaviors you want permeating your, let's say for a corporate leader, your organization and then modeling those, of course, but then trying to create the framework whereby other people can understand why those are the behaviors that matter and create systems that continually reinforce those behaviors. And I think about companies, you know, we as human beings, we're tribal creatures, right? We survived for thousands of years in the wild because we formed a tribes and we could accomplish more together than we could as individuals. And that's what really separates human beings from, you know, so many other species is our

• 11:19Speaker 01

  very advanced ability to collaborate and that like that tribal thinking is like deep in our brains. And so when you think about a company, what you're really creating is a tribe that people belong to, to accomplish something together. And if you think about all the tribes that we kind of affiliate with in our lives, right? We've got, you know, a tribe of schools that we went to. We've got tribes of the sports teams that we follow. We've got tribes of, you know, many people, religion, right? These are all the, the belongings that like create our identity, even like brands that we like, right? You start to form a kind of a tribal belonging to all these groups. And like, what creates a tribe, I think is really three things. It's your symbols, your heroes and your rituals. And that actually allows you to create this identity for a group of human beings to accomplish

• 12:04Speaker 01

  something together. So like the symbols, those are the things that you value. So for a sports team, it might be the mascot or the color scheme, right? You've got your heroes, right? So who are the people who are the most important, the lore of this tribe, right? You know, the great quarterback from the football team or, you know, whoever it is. And then your ritual, you know, you've got your, the chants that you do or the, the thing that everyone wears on their head, you know, the cheese head for the Green Bay Packers or whatever. Yeah, it's like every group and like, you know, if you think about it, religions have that and, and schools have that and companies have it too. So symbols, heroes and rituals. And as a leader, you are a physical embodiment and every action you take either reinforces the values of that tribe or potentially challenges though in a not constructive way, let's say. And so I always think of What is leadership?

• 12:49Speaker 01

  It is really living the hero's symbols and rituals that represent your tribe and creating a strength of identity for that group of human beings. And so when I think about like, how do you lead? What do you do? It's like you're kind of always putting yourself through that lens and putting the organization through that lens, the organization you're building and asking like, what are the behaviors that I want? What do I want our tribe to stand for? And how do I want that lived every day by all the people in the company? And then how do I create myself the conditions where that's going to actually happen? So that may be a very like academic and complex way of stating it, but that's kind of how I think about it.

• 13:21Harry Stebbings?

  No, it was fantastic. And actually it was very human in the way you brought it back down to like sports teams. And you know, the cheese heads, I totally understand that now. My question is, how rigid are those three things? And how plastic do you as a leader have to be to change them over time with the scaling of your company?

• 13:36Speaker 01

  I mean, what I just described to you essentially is the culture of a company and therefore you as the leader of that culture. And you know, every one of these cultures evolves and your job is to really understand when is it the time for them to evolve? And then to lead that transformation, lead the changes that you feel the tribe needs in order to continue to survive and thrive. And as a CEO, going back to the three person company that we were when we started it, up to now, we're over 5,000 employees. You have to continually reinvent your job in many ways yourself in order to continue to be effective at leading organizations that are bigger and more diverse and more viewpoints as well as, you know, in a more tactical sense, like the mechanisms you use to lead a company as it grows need to continually evolve.

• 14:20Speaker 01

  And I always find that generally speaking, when you know, we continue, we're 13 years old today. We are continuing to grow extraordinarily fast. And I find that you have to kind of reinvent how you lead, give or take every 12 to 18 months in that kind of environment. And if you don't, then you're at great risk of falling behind the needs of the company.

• 14:40Harry Stebbings?

  When you think back to being the three person team there compared to where you are today, you weren't the same leader then that you are today. And it's a much more mature leadership stance and standpoint. Were there inflection moments that changed how you thought about that leadership?

• 14:55Speaker 01

  I think first time I realized the need for that this is a continually evolving job. I remember the company was probably about thirty people and I was really frustrated all the time. Like it didn't seem to be working well anymore. And I remember I was talking to one of our investors, Albert Wenger from Union Square Ventures and Fred Wilson, his partner. And I was talking to them and I was like, event that they were holding, how's it going, Jeff? I'm like, well, honestly, it feels pretty crummy right now. Why is that? And I was explaining some of the things I was frustrated by and they said, well, can you draw the org chart for me? And I said, oh, yeah, you know, I've never done that before, actually, because we're such a small company. You don't really think about org charts in those early days of a company. It just is what like you're just kind of running fast. So I go, okay, and I go up to the whiteboard and I'm like, okay, well, there's me and then there's this and then I'm drawing each person. And it's a straight line with everybody reporting to me.

• 15:40Speaker 01

  It worked when we were three people, four people, five people, right? But at some point we reached this tipping point where like you needed a, an org chart that wasn't just a straight line to help make sense of things and to make progress. And so I remember drawing this thing and I'm kind of, as I'm going along, I'm like, huh, there's another, oh, yeah, oh, yeah. And then Albert says, well, there's your problem. It's like, fair enough, right? And that was just one moment I remember, but it was the first time I really had this realization of like, oh yeah, the way I've been doing things. Just the kind of autopilot sense that at least this part of running the company has been on is, is broken. So I need to fix that in order to unblock more progress. That was the first of many.

• 16:12Harry Stebbings?

  What did you do to fix that? My question was going to be like, what do you think you put in place that enabled you to scale so well as a founder? What mechanism, what support structure? How did you transition so well from stage to stage? And I know it's tough with hindsight to reflectively look back, but what would you say it was?

• 16:29Speaker 01

  I think the key, when I've done this well, and there's many instances when I've not done this well. When I do this well is when you're thinking to where the organization is going to be, you know, twenty four months from now, thirty six months from now. And planning ahead to that company and thinking about what are the leaders that I need? What are the mechanisms that I need? What are the gaps and building ahead of the challenges that you see coming? When you think about repeatable, there's different things at different stages you have to do. But ultimately thinking ahead and then just recognizing like, you know, we had talked about the culture and all that kind of stuff. And realizing that a lot of those things have to be very malleable. Certain things are not. But other things you are constantly changing. And one of the things I keep telling the company,

• 17:09Speaker 01

  because I actually just saw a stat that in the beginning of 2019, Twilio was 1,900 employees. Here we are just over two years later and we're over 5,000, right? So that's a lot of growth in a short period of time. And so the thing I keep telling the company is that every company that you have ever heard of, admired, been a fan, like pick your company. Harry, what company do you think of as like, oh, this is my favorite big company?

• 17:32Harry Stebbings?

  Honestly, Apple and the product design beautiful. I love it.

• 17:36Speaker 01

  That's like, half of the answers are usually Apple, right? So it's like Apple, right? Guess what? They've gone through these changes. They've gone through these, these periods of hyper growth. They've gone through the, some of the like, you know, confusion and the, and the changes have gone on and like reorganizations or like whatever the particular change is. And guess what? The companies that you haven't heard of, those are the ones that failed to migrate these periods of time and failed to make the changes. And so it's reassuring to know that, you know, all of the complexities and all the changes that are constantly going on in a rapidly growing company are a fact of life. And in fact, it's the companies that don't evolve with it are the ones that ultimately you don't care about. And so that's one thing. The other thing that I always remind people at Twilio, this is like a realization I had at some point in adulthood, right?

• 18:19Speaker 01

  Where, you know, as a child, you see the world the way it is and you just kind of assume, well, like, you know, it's just always been like this. You just present it as fact. Like this is how the world works, right? And at some point in the maturation, becoming an adult, you realize, oh no, wait. People did all of this. Everything that we see in front of us was created by people. That's the good things, the bad things, the ugly things, like everything that exists in our society was created by people just like you and me. Therefore, it's incumbent upon us to say, okay, well, what are we doing that is impacting the world around us? What are we doing that is impacting either the company or our communities or society generally? It's within our control to do good, to do bad, to do whatever we're gonna do. But the world is as it is as a result of the actions of human beings, just like you and me.

• 19:04Speaker 01

  People invented everything that we use. People have built everything that we use. People have written every law, you know, we have to abide by, right? Like everything out there was created by people and it's such an obvious statement when you think about it. Like, yeah, what's the big deal? Of course. But when you really internalize that, it's such an empowering concept. Because you realize the world is not static. The world has never been this way. And the world is only a result of the decisions that we collectively make. And when you boil that down to the company, it really means that this is our company. And despite the fact that we are more than 5,000 employees today, I always make that point to the company. That we are building this company. We are a work in progress. And you all are building this company along with me today. And that is true. No more or less true than the day that we founded the company.

• 19:48Speaker 01

  And everything we've done prior is to get us to this point where we have the resources and we have the customer base and the capital and everything else to now go invent the next, you know, tomorrow, where do we go from here? And when you just think about the world in that context and the company in that context, it really does say anything is possible and it's up to us to create whatever future we want, which sounds very Terminator-esque, but it really is true.

• 20:10Harry Stebbings?

  I love it. I mean, the first provides security and the second is empowering. I guess my question is like, when I hear it and when you see it, it is empowering. It's inspiring. When you think about leadership today, it's very different from leadership of old of the chest pumping in the HQ and firing up the org. It's remote world. It's a lot written. How do you think about the effective communication style to inspire, to empower, to make people feel safe? How do you think about imbuing those emotions effectively to a 5,000 person team though?

• 20:40Speaker 01

  I think a lot of the experience you have at a company is local, right? And so really the question is not like, what do I say in an all hands or whatever? Really, the answer is what is the experience on a day to day basis people have with their team, with their managers and the other people that they are, they have the opportunity to work with on a daily basis. And that's where it really comes down to principles of how we operate. How do we get things done together? How do we set goals? How do we make decisions? How do we hold each other accountable? That's the meat of really a company culture. And people often talk about some of the fun things about culture, like in the early days, people, oh, it's a great culture. Why? Because we go to the bar and drink afterward. And it's like, that's not the culture. That's people building friendships, which is great. But the culture of a company is how you get your work done. How do you deal with a fact when you're in a

• 21:25Speaker 01

  Room with five people and six opinions and you need to make a decision. That was the moments where the culture of a company really shines. And that's the lived experience of of most people in a company. And so therefore, how you set up the shared principles to navigate those situations. That is what really dictates the experience that people have inside of a company. And so I give a lot of thought to the principles that we use to run the company. We call ours the Twilio magic. It's currently 10 principles and we've vacillated a little bit through the years. Are these values or are they principles? And if I'm being honest, our Twilio magic is a little bit of both today. And the way we tilt the company, though, is values are nice, but principles are actually more usable. Principles are actually more aligning.

• 22:06Speaker 01

  Principles, how we get things done, what's the thought process that we think is the best thought process? To answer some of these hard questions like, how do we get work done? How do we make hard decisions? How do we hold each other accountable? That is really the meat of what people experience every day. My job as the leader is to provide some shared set of principles that we can all use. Therefore, we understand each other. Therefore, we understand what the company itself, how it works, how it operates. And when I think about like, how do you lead? It really is not like what I say in an all hands or, you know, what's the email I send to the company? The most lasting and most impactful things are what are the principles that we develop? For how we are going to do our best work together? And is that a system that works for a large number of human beings to all successfully collaborate?

• 22:51Harry Stebbings?

  If you think about doing your best work together and having a streamlined and efficient decision making process. It was so interesting when I had Byron on the show talking about investing in Twilio. He said about how the incumbents bluntly at the time when he made the investment, investment did. It was actually pretty poor, their performance, their speed, their velocity of decision making. You are now 5,000 people, you would be considered an incumbent. How do you ensure the same velocity of decision making, speed of iteration, agility within the organization? Despite the scale that you have, how do you think about retaining that speed and velocity with scale?

• 23:24Speaker 01

  I am very tolerant of disorder, if you will. Have you read the book Anti-Fragile?

• 23:29Harry Stebbings?

  Yeah, I loved it. Brilliant.

• 23:30Speaker 01

  Right. One of the things I really liked about that book is very contrary to how most companies are run. That's why most companies I would describe as fragile, in that they're highly dependent on a small number of decision makers, who obviously can be right or wrong, but it really, their judgment dictates the future of the company. So you're highly dependent upon folks and every person is flawed and every person will fail to miss trends or ideas or whatever. And so in a very hierarchical company, where the person with the highest title makes the most of the decisions and typically makes those decisions based on opinion, gut feel, experience, pattern matching. I mean, these are all, you know, there's wisdom to those things, but they're also flawed. And so I believe is that a very strictly hierarchical company is a fragile company.

• 24:12Speaker 01

  And therefore what you want is to invert the pyramid. People often talk about the inverted pyramid management style, but to me, the point of that is to actually distribute decision making somewhat. And to make it so that you can have new ideas. Every company has ideas. I'm sure there was someone Byron had talked about, you know, carriers not entering the market that we were in. And I'm sure there was someone at the carrier was like, oh, this is great. We should go do this. But then someone higher up was like, well, that's no, that's stupid. You know, and it's like, well, that person maybe who made that call was like, not a developer. I don't understand the need that was out there. And it's like, you know, I don't know what those conversations were, but I have to imagine something like that. Or, you know, the typical conversation, which is all you like, and actually it's during the period of time Byron was talking about, almost every major carrier did have an API program, believe it or not. But it were like small side project.

• 24:56Speaker 01

  And at some point, I, and a lot of these, they would spin up, there'd be a big launch and a year later it'd be quietly shut down. And then two years later, the whole cycle would repeat again. And I think what happens is, you know, there's some new idea, someone gets a little bit of money, they do a thing. And then someone higher up is like, well, wait, this isn't a billion dollar business. Why are we doing this? And it gets shut down. And so the process of deciding like which ideas get life, which ones get fuel, which ones grow, is a very flawed process because we're human beings and we're flawed. We have all sorts of cognitive biases and like things that that prevent, you know, our best thinking that come into play. And so I think the most anti-fragile companies are those that do distribute decision making to a good amount. And then have good criteria to decide, how do we decide if those decisions were the right ones or not?

• 25:39Speaker 01

  And you go back to principles and you go back to, okay, well, if we try something new, what's the objective way we decide whether that new thing is working or not? And you come up with criteria, but criteria for a one-year-old project of is it making a billion dollars yet? Is not a very good criteria. And so what you see is like a mismatch between like, you know, the people on the front line seeing an opportunity and even being grinlit, go experiment in conflict with the decision-making criteria of people at the top, who are often the budget holders, who say, I'm here to move the needle. A billion dollars is all I care about. And of course, any new idea is not going to be a billion-dollar idea overnight. You never know which idea might be the next billion-dollar idea. Therefore, like I liken it to, you know, when I've talked to Eric Ries, you know, of the lean startup, who's a good friend, we often joke about the idea that like, you know,

• 26:23Speaker 01

  people are often very opposed to like, you know, trying a lot of things. And it's like, if you want a forest, you have to plant a lot of seeds. And look, most of those seeds are not going to turn into anything. But when the ones do sprout and they start to grow and you've got a little sapling in front of you, what do you walk over and step on it and say, you're not a tree yet? Or do you say, oh, wow, this one's growing, let's pour a little water on it, let's give it some fertilizer, let's see it grow, right? And that's the process that goes on inside of companies, which is even when you do get it right, where you like try some new things, plant some seeds, and oftentimes it's the ones that start to grow. Like the ones that don't go anywhere, that's kind of obvious. It's like, okay, bad idea, bad execution, wrong idea, that's fine, you do an experiment, results didn't work, move on. But the ones that start to grow, those are the ones that are like, oh, you need to nurture those, you need to celebrate those. Not step on them, it's like, you stupid, you're not a tree yet.

• 27:05Speaker 01

  And I just think that the way to build a company that stays on its edge is to distribute a lot of that decision-making. And I've done the thought experiment of saying, well, would I rather have a company where things were perfectly aligned? Right? Where you have very perfect top-down management and there was no duplication of efforts. And, you know, you felt with conviction that like every dollar was like perfectly planned, yet nobody in that organization was empowered to really like do something because of that top-down nature. Everyone was kind of waiting and everyone else, okay, you deliver your part, then I'll deliver my part and then we'll have some success. Like that works, that's command and control, that's like every military ever, right? In fact, that's most corporate environments. It works, but it does not optimize for agency by people on the front lines who are seeing opportunities. Who are, you know, meeting customers every day. And I often say, well, who knows more about what our customers need?

• 27:49Speaker 01

  Me, who's sitting here on a podcast with you, Harry? Or, you know, the many twillions who are like talking to customers right now. And so it's like contrast that company that's like perfectly top down organized, no duplicative work with a company that is much more bottom side, where people are running and there's duplicative work and people aren't necessarily as aligned, but they're all really driven by what customers are telling them they need and less about what the org chart is telling them to do. And in that world, there may be duplicative work and there may be, you know, duplicate ideas or infrastructure that isn't perfectly well harmonized. But in that world, the frontline folks feel very empowered to go sprint for their customer. And it's like, which of those two companies would I rather have? The one where people on the frontline are empowered and there's waste, or the one where they're disempowered and there's no waste? I would take the empowered wasteful company pretty much every day.

• 28:34Speaker 01

  Now, I say that, but our job as managers and leaders is to take the best of that world of like getting that empowerment and allowing people to do things, even if they don't make perfect sense. But then bring the alignment and bring the general, like the bumpers, the guardrails to create some mechanisms to keep people aligned and reduce duplication when you see it happen, but not to even attempt to do it perfectly. Because in doing so, what you essentially do is erase the initiative and the agency that frontline people have who often have the best ideas of what you need to do for your customers. And so that's how I think about that.

• 29:06Harry Stebbings?

  My question to you is when they have the agency and in a world of distributed decision making, sounds great, but often people still don't feel secure and safe to really pursue things, to go big, to build. How do you create an environment of safety and a culture where, yeah, Jeff, you can try that. That sounds really interesting that you've heard that from four customers. Give it a go. It's okay if it fails. How do you create that acceptability of failure, but not also accepting failure? Do you know what I mean?

• 29:32Speaker 01

  Yeah, I think the best that I've thought of, and we are imperfect at implementing this, but two things. Number one, you treat every one of those ideas as a hypothesis. As opposed to like, you know, a lot of companies, you might say, oh, like, you know, somebody, especially someone highly paid, has an idea and they say, I want you to go do this, right? That's not a hypothesis, that's an order. And then if you, you know, build whatever that thing is and you put it in front of customers and nobody cares. It's like, well, you know, it must have been bad execution, right? And that would be a career suicide for someone if that happens. They'll definitely start your career, right? And because certainly it's not the executive's fault if the idea was bad. It was some underling who didn't do a good job executing it. Well, that's why customers don't want it because you didn't explain it right or you didn't build the right features or whatever, right? And so if instead you treat every idea, whether it comes from someone on the frontline or the CEO of the company, you treat it as a hypothesis.

• 30:17Speaker 01

  And hypotheses then need to be tested and they can be true or they can be false. So the work ahead is to prove the hypothesis true or false. And success is doing just that. Success is getting to a true or false as quickly and cheaply as possible. As hypotheses, the only failure mode is failing to prove it true or false of going like spending a lot of time or money and still not knowing if the hypothesis is true or false. You're like, well, that's really the only failure mode. But if you live in a world where everything is a hypothesis, then good work and training the organization is like, how do we prove or disprove hypotheses and do it quickly and cheaply? And that's a world where your career does not depend on your idea being right. Your career depends on your ability to actually test hypotheses quickly and inexpensively. And that's a skill, right? Every idea is not going to be right,

• 31:00Speaker 01

  but the ability to weed out as quickly and cheaply as possible, good from bad, that is actually a really good skill to have. And that's something you should reward employees for being able to do. And then the key thing is like, well, don't shoot the messenger. If someone comes back to you and says, well, we treated this as hypothesis when we tested it with all these customers or whatever, and we found out that that's not what they want. There might be a tendency to be like, well, you're wrong because the idea was great. So go back, right? No, that's shooting the messenger. Instead, you want to say, great job figuring out something that we shouldn't go spend a lot of resources on. Now we get to move our resources to something that is, you know, a next idea that may have better opportunity than the first one. And so that's how I think of changing the dynamic from like idea, execution, like the idea of course is good because usually someone highly paid had it. And then execution is like, you know, people risk of that.

• 31:43Speaker 01

  You instead change it to every idea is just a hypothesis and we prove or disprove. And our ability to prove and disprove it in a quick and inexpensive manner, that is what's called success.

• 31:53Harry Stebbings?

  I do want to ask a bit of a weird one, Jeff. I have to be honest. It's like you speak with such clarity, such assuredness, such confidence. But it's not always like, I'm interested, like, how do you think about your own self doubt? You mentioned earlier, you know, talking to Albert going, it's not all that great actually right now. How do you think about that self doubt, that vulnerability as a leader today, even when you are a 5,000 person organisation?

• 32:16Speaker 01

  Well, I challenge you to go ask Tulioans, like, how good I am at implementing the thing I just told you. And like, I'm sure they'll fill volumes of like, well, Jeff, you said this, but like, we came to you at this review and you were like, no, go back and do it. So I violate everything that I've already said. I've learned the hard way. Sometimes I get it right, sometimes I get it wrong, right? And it's just an acknowledgement, like, first of all, you're human, I'm human, like, remember that we're human. And I think that vulnerability gives you a lot of leash with people. Because when you are vulnerable, when you are a human, when you're trying to hide that from people, you can be wrong, but people don't ascribe malintent. Because they see you as a human being. But when you try to pretend we're not human, we put on this facade, I'm an executive, here's what I'm supposed to be, and then you're wrong? Well, that's when people often describe, well, you know, they don't even know who you are, they just see a facade.

• 32:58Speaker 01

  And so they often don't assume like, human, human error is possible, or, you know, good intent, or, you know, they assume maybe bad intent. And so I think the biggest thing that I do is, is I am very willing to be vulnerable and to be myself, including acknowledging the places where I fall short. And I think as leaders, actually, I go out of my way to, in public settings, inside of Twilio, acknowledge where I've made mistakes. And the reason is because I think that is a behaviour that we need to model for everybody. It's okay, we make mistakes. You know, there'll be a meeting, I raise my voice in it. And afterwards, I'm like, oh, I'm not proud of that. So the next time I get that group together, I'll say, you know, before we start, I just want to say, like, you know, last week in the meeting, I was not my best self and I apologize.

• 33:37Speaker 01

  And that, those are the things where you, you can acknowledge your own humanity, but also set the tone for the organisation that it's okay, we make mistakes. But the important thing is to acknowledge them, apologize for them, and then we can move on. And I think that is how you buy credibility in a lot of ways with people.

• 33:52Harry Stebbings?

  Oh, totally. And the humanity then inspires more humanity from them and it's infectious. Speaking of kind of talking with confidence, you know, I wasn't sure whether to bring this up because I'm normally British and so I normally just skirt around anything at all because we hate conflict. But Frank Slootman said the other day, diversity should not override marriage. And it was one that kind of struck me. And so I, and you said I disagree both privately and publicly on it. Can you unpack your thinking here and how you think you as a leader have a role to respond, actually?

• 34:19Speaker 01

  Yeah, two things. First of all, I do disagree publicly and privately. What I was responding to mostly is he said, and like all the CEOs I talked to privately will say they agree with me on this. I'm like, well, how can you speak for every CEO? So I was really responding to is like, well, I just want to make sure that in my voice I am clear. This is, I do not say something differently in public than I say in private. And you can ask anyone who I've talked to. That was the major thing that I was disagreeing with because here's a high profile CEO who's saying, look, secretly, everyone agrees with me. And I'm like, no, you can't say that. Because you just described that to me, even though we've never talked about this. In fact, I've never even met Frank. And so that's the thing that really made me feel obligated to say something in that moment.

• 34:59Speaker 01

  Now let's talk about why I wanted to say something. First of all, it is a straw argument that there is a choice between diversity and merit. Right? If you were to say, well, look, I've got, you know, this person deserves a job, but this person is diverse. Clearly I have to pick the diverse one. Like that is not how it actually works. That is not how it plays out in practice. Those are not the decisions that we make. I don't know what kind of recruiting process that would be or a promotion process. But the way it works in practice and in reality is if you believe that building a diverse and inclusive company is the right thing to do for your shareholders, for your employees, for your customers, and because it's right, then you say, great, it's not going to happen on its own.

• 35:40Speaker 01

  It's something that we have to work to achieve. Okay. How do we do that? Well, it's many, many things, but in some ways it does boil down to two primary things you have to do well. First, starts inside the company you have today. You have to build an inclusive environment. And that is an environment where everybody, when they walk into work, when they go to do their job, feels like they can do their best work. They don't have to expend tremendous amounts of energy in order to be someone they're not in order to do their job. They feel like they belong. And so like I think about it, somebody said this once and just resonated with me. It clicked when I heard this. Someone said, if you want to know what it's like, because I'm a white, cis, male. I'm kind of the majority of like every demographic, right? So it's hard, you know, you know, you don't know the experience that you haven't had.

• 36:23Speaker 01

  But somebody said this to me once. They said, when you walk into a, like a hair salon that is typically thought of as like, You know, there's mostly women in there. Like, are you like your normal self? Or do you feel like, like I'm a fish out of water? I don't really know what I'm doing here, right? And it's like, you know, if you ever go with, let's say, your partner, you go to the salon, you're like, I'm gonna, I'm gonna walk down the street. You just sort of don't feel like you belong, right? Because it's a lot of people who aren't like you. And you're not accustomed to the way, it's just like, it's just not a place where you feel. And if you are trying to fit in there, it's like, again, I don't speak for every male person on the planet, but probably for a lot of us, it's like, yeah, it doesn't feel like I belong there. Imagine if going to work every day felt like that. Because there are just subtle things in the way the place worked where it's just like, yeah, this, this isn't where I belong. And you felt that every day when you walked in there, you're like, I don't really belong here.

• 37:06Speaker 01

  How could you do your best work? Could you be yourself? Would you second guess everything you wanted to say? And that is what it means to build a inclusive company, is a place where people don't walk in the door, feel like a fish out of water. And you have to go out of your way to do that. Because when you have a company that is overwhelmingly like white, male, cis people, you know, it is going to bias towards that, an environment that caters to that demographic, right? And you'll get lots of, you know, the bad behaviors and the things that people have pointed out that makes it feel like a frat house. And you have to go out of your way to make that not the outcome. Then that's the first thing, creating an inclusive environment where everyone belongs. And the second thing you have to do is to go out of your way, then to bring people into your company who represent the world around us.

• 37:49Speaker 01

  And one of my mentors, Mitch Kipor, has a saying, it says, talent is equally distributed by zip code, opportunity is not. And so if you think about how do you go actively find people that represent every facet of humanity? And make it clear that your company is a place where they will succeed. And extend your hand and say, like, we want you to apply here. You're wanted here. That is how you build a diverse set of candidates from which to choose. And now you choose the right people for the job based on qualifications and things like that. Now, I would say there's other things, though, that come into play. There's a lot of shortcuts that human beings take. Our brains are wired to find shortcuts everywhere. Like, that's how our brains work. And so there's certain shortcuts that we take, like, for example, oh, this person went to Harvard, therefore they must be smart, therefore they must be a great candidate.

• 38:31Speaker 01

  Great, let's meet them, right? So, but now you're subject to all the biases of Harvard's recruiting process and the generational schemes where their grandfather went to Harvard, therefore they went there. And it doesn't necessarily mean they're smart. It's like you're basically saying whatever process those institutions have is now my process for how I'm going to have diversity in my company. And I think a lot of people recognize like, yeah, that's not really the right way to figure it out. In fact, the better way to figure out is this person going to do great work in my company is not assessing their position in life. So imagine somebody who grew up well off, got a good, you know, we went to private school and went to an Ivy League school. And their resume shows up and you're doing like, wow, this is going to look great, right? But that person may not have had to work very hard to get to that point in life.

• 39:13Speaker 01

  Now they may have, I'm not saying they don't, but they may not have as well because they had a lot of advantages. Now take someone who did not have those advantages, did not come from wealth, was the first maybe person to attend college in their family. And has a graduate degree from maybe a not Ivy League school. But you think about how hard that person had to work to get to that point. Which of those two is a better predictor of how hard that person is going to work at your company? And I would say it's the person who traveled the greater distance is the person who you want on your team. Not the person who has the standing necessarily, but the person is, it's all about distance traveled, not position in life. Therefore, great recruiting processes, I believe, look at all sorts of factors to decide, does this person have merit? Does this, should this person be in my company and are they going to do great work here? And are they going to help us succeed?

• 39:57Speaker 01

  The best indicator of future progress is past progress. And that is not something that you always get just by looking at the usual places. And so these things combined to say, you need to think differently about how you attract and where you look for talent. If you are really going to find a set of potential employees that represent the fullness of society. And when you do that, you have a greater shot at building a company where A, people belong. Cause again, like, let's say you do find that great underrepresented person who you really want to work at your company. And they walk in and they just see this like white male cisgender place and they're like, I don't belong here. And they don't accept your job offer, right? So these things then merge in the middle of like, great, if you build a company where people belong.

• 40:40Speaker 01

  And then you do a really good job going and finding talent wherever it is and go out of your way to go to the places where a lot of people don't look for talent. And then they look around and say, oh, wow. To be successful there. That is to me what a truly diverse and inclusive company looks like. And it just, it doesn't happen by default. It doesn't happen by just saying, you know, merit. Such a simplistic way of answering that question. But ultimately, this is all done in service of building the very best company you can. And I think the mistakes some people get into is thinking that this is some sort of like woke, like scheme to like change the world or correct history's wrongs. And like, you know, I will admit, it feels good to do good by communities who have been wronged historically. I'm just wired that way. I feel like that brings me joy.

• 41:25Speaker 01

  But that's not the primary reason to do it, actually. The primary reason to do it is because when you do build a diverse and inclusive company, you will outcompete for talent, you will outcompete with your products, you will outcompete and you will give greater returns to your shareholders. And that is why you build a diverse and inclusive company. And there are ample studies that have tracked diversity, inclusion and shareholder return. And there is a strong correlation. So it's not even a hypothesis at this point.

• 41:50Harry Stebbings?

  I think my favorite element there is kind of it's to focus on the distance traveled, which I think is a great takeaway. And I actually want to finish on that element because I think it's a really important one to finish on. I do want to move into my favorite though, Jeff, which is the quickfire round. So I say a short statement and then you give me your immediate thoughts. Does that sound okay?

• 42:06Speaker 01

  That sounds good. And by the way, I've not read you, so I do not know what you're gonna ask, so.

• 42:10Harry Stebbings?

  Well, great. This is the beauty of editing. I mean, it's wonderful. But let's start with the favorite book and why. I mean, obviously ask your developer would be mine. What's your favorite book and why?

• 42:18Speaker 01

  You know what I always come back to is Made to Stick, which is about how to deliver messages that people remember. And it's such an important life skill by Dan and Chip Peeth, I think is their name.

• 42:27Harry Stebbings?

  I love that.

• 42:28Speaker 01

  Yep, Made to Stick.

• 42:29Harry Stebbings?

  What's the hardest element of your role stage, Jeff?

• 42:31Speaker 01

  Figuring out what my role needs to be 12 months from now.

• 42:34Harry Stebbings?

  What's the biggest lie that rich people tell themselves? Someone said the other day that they should pay less taxes. I thought that was a funny one.

• 42:41Speaker 01

  I think the biggest lie, I'm not gonna say rich people, successful people tell themselves that it was all their work that resulted in this success.

• 42:48Harry Stebbings?

  What advice do you often give, but you find hard to take?

• 42:51Speaker 01

  I think listening more. We all want to believe we're good listeners. But when I really get down to it, man, I have to work hard to be a really good listener.

• 43:00Harry Stebbings?

  Yeah, that and delegation are definitely ones for me. What three character traits would you like your children to adopt, Jeff?

• 43:05Speaker 01

  I want them to have grit. I want them to be polite and I want them to be happy.

• 43:11Harry Stebbings?

  Final one, if we sat down in five years' time and everything's gone to plan, where would we be, Jeff?

• 43:16Speaker 01

  Like, related to Twilio or society generally?

• 43:19Harry Stebbings?

  Both.

• 43:19Speaker 01

  I think that technology is at something of an inflection point where a lot of what we see on the internet now, especially from giant tech, doesn't really feel like it's necessarily serving us as human beings. And I hope the next five years brings a world where we figure out some new ways to make technology that has infused every part of our life to really feel like it is making us better, not just buying more shit.

• 43:43Harry Stebbings?

  Listen, Jeff, I've so loved doing this. I apologize for my completely wayward questions, but it's been amazing and I really do appreciate it.

• 43:50Speaker 01

  Thank you, Harry. It's great being here.

• 43:53Harry Stebbings?

  I have to say, I just so love that discussion. I find so many people can talk at a surface level about culture building. And I think Jeff there, going into what really it takes to build that granular, but also deep and powerful culture was just fantastic. So huge thanks to Jeff for that. If you'd like to see more from us, you can, of course, on the 20minvc.com. But before we leave you today, Mercury is building full stack banking for startups, applying in under 10 minutes from anywhere for FDIC insured bank accounts, physical and virtual debit cards, domestic and international wires, and integrations with Gusto, Stripe, QuickBooks, Plaid, and basically every other tool your startup uses. They also offer unusual features like API access, custom team management, and their

• 44:35Harry Stebbings?

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• 45:18Harry Stebbings?

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