20VC Twilio's Jeff Lawson on What It Takes To Create a Tribe, How To Create AntiFragile Organisations Through Decentralised DecisionMaking and Why Values Are Nice But Principles Are Better

In this episode of "20 VC," host Harry Stebbings interviews Twilio CEO Jeff Lawson, who shares insights on leadership, company culture, and the importance of diversity and inclusion in the workplace. Lawson, a seasoned entrepreneur with a history of founding successful companies such as StubHub and Versity, emphasizes the power of software to rapidly prototype and iterate solutions to customer problems. He discusses Twilio's commitment to creating an inclusive environment where employees feel they belong, and the company's proactive approach to finding talent that represents society's diversity. Lawson challenges the notion that diversity and merit are mutually exclusive, advocating for a merit-based system that recognizes the "distance traveled" by individuals. He also underscores the need for leaders to model vulnerability and the willingness to acknowledge mistakes, fostering a culture where employees are empowered to innovate and potentially fail without fear.

• Jeff Lawson is the co-founder and CEO of Twilio, a company enhancing customer communication across businesses.
• Prior to Twilio, Jeff co-founded several other companies, including Ninestar, Stubhub.com, Versity, and was a product manager at Amazon Web Services.
• Jeff raised funding from notable investors like Bessemer, Union Square Ventures, Redpoint, Salesforce, and Founders Fund.

"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."

The quote introduces Jeff Lawson and gives a brief overview of Twilio's business focus.

• Twilio has committed to become one of the first companies to dual list on the Long Term Stock Exchange (LTSE).
• The LTSE is designed for companies and investors who share a long-term vision.

"This founder committed his company to being one of the first to dual list on the long-term stock exchange."

The quote highlights Twilio's recent strategic move to dual list on the LTSE, emphasizing the company's long-term perspective.

• Jeff Lawson's entrepreneurial background spans diverse industries, with a common thread of using software to improve customer experience.
• The "aha" moment for Twilio came from the realization that communications were essential yet difficult for developers to integrate into their software.
• Twilio was envisioned to break down communication barriers into accessible APIs for developers.

"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."

This quote captures the foundational idea behind Twilio, which is to simplify communications technology for developers through APIs.

• Developers initially reacted with indifference to Twilio's concept, but later circled back with interest and questions.
• This recurring pattern of developers returning with curiosity and ideas convinced Jeff Lawson that Twilio was onto something significant.

"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, and they'd circle back to, wait a minute, that idea you had."

The quote reflects the moment of realization among developers that Twilio's API could be a powerful tool for them, indicating a market need.

• Jeff Lawson discusses the importance of storytelling, beginning from a place of familiarity and then leading the audience to new concepts.
• Good storytelling is about connecting with the audience and taking them on a journey that resonates with their experiences.

"The key thing is to start wherever your listener or your reader, whoever it is, start in a place they know and then bring them somewhere new."

This quote emphasizes the storytelling technique of starting from a relatable point to engage the audience before introducing new ideas.

• Great leadership involves defining and modeling desired behaviors within an organization.
• Leaders should create systems that reinforce these behaviors and help others understand their importance.
• Jeff Lawson likens companies to tribes, with symbols, heroes, and rituals that create a sense of belonging and identity.

"I think great leadership is really deciding what behaviors you want, permeating 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."

The quote outlines Jeff Lawson's view on leadership as the process of establishing, exemplifying, and institutionalizing key behaviors in a company.## Leadership and Identity in Organizations

• Leadership is about embodying and reinforcing the values of a group or tribe.
• Leaders must reflect the heroes, symbols, and rituals that represent their tribe.
• Leadership involves creating a strong identity for the group and ensuring behaviors align with the tribe's values.
• It's essential for leaders to create conditions that foster the desired culture within an organization.

"It is really living the heroes, symbols, and rituals that represent your tribe and creating a strength of identity for that group of human beings."

This quote emphasizes the leader's role in actively representing and reinforcing the core elements that define a group's identity, such as its heroes, symbols, and rituals.

• Company culture evolves, and leaders must guide this transformation.
• Leaders should foresee changes and adapt their leadership style and mechanisms to fit the organization's growth.
• Effective leadership involves reinventing oneself and one's approach every 12-18 months in a fast-growing environment.

"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."

Jeff Lawson highlights the dynamic nature of company culture and the leader's responsibility to recognize and lead cultural evolution.

• Leaders face challenges as their organizations grow, such as the need for more structured organizational charts.
• Realizing when and how to adapt leadership strategies is crucial for progress.
• Leaders must plan ahead and prepare for the future needs of the organization.

"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 broken."

Jeff Lawson recalls a moment of realization when the existing leadership approach was no longer effective, prompting a need for change.

• Successful scaling involves anticipating the organization's future and preparing for it.
• Leaders must identify necessary leaders, mechanisms, and gaps to address upcoming challenges.
• Maintaining a balance between malleable aspects of culture and core values is essential.

"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."

Jeff Lawson discusses the importance of forward-thinking in leadership and the need to prepare the organization for future challenges.

• Leaders should inspire their teams to understand that they have the power to shape the world.
• Recognizing that the world is a result of human actions encourages a proactive and responsible approach.
• Leaders must communicate that the company's future is built collectively by its employees.

"The world is only a result of the decisions that we collectively make."

Jeff Lawson emphasizes the collective power and responsibility of individuals in shaping the world and the company.

• Company culture is defined by how work is done, decisions are made, and accountability is maintained.
• The daily experience of employees with their teams and managers is central to the company's culture.
• Leaders must establish clear principles to guide the company's operations and collaborations.

"The culture of a company is how you get your work done. How do you deal with a fact when you're in a room with five people and six opinions and you need to make a decision?"

Jeff Lawson explains that the true culture of a company is reflected in its operational processes and decision-making.

• Leaders must be comfortable with a certain level of disorder to maintain agility and speed as the company grows.
• Being antifragile, as described in the book "Antifragile," is contrary to how most companies operate but is essential for resilience and adaptability.

"I am very tolerant of disorder, if you will."

Jeff Lawson suggests that a tolerance for disorder is necessary for maintaining the agility and speed of decision-making within a large organization.## Hierarchical Decision-Making

• Hierarchical companies are fragile due to reliance on a few decision makers.
• Decisions are often based on opinion, gut feel, and experience, which can be flawed.
• Distributing decision-making allows for new ideas and reduces the risk of missing trends.

"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, there's wisdom to those things, but they're also flawed."

The quote emphasizes the limitations of a traditional hierarchical decision-making process, where decisions are made by individuals at the top based on subjective criteria, which can lead to flawed outcomes.

• Inverting the pyramid is about distributing decision-making.
• Companies should nurture new ideas instead of shutting them down prematurely.
• Decision criteria should be objective and not solely focused on immediate financial returns.

"And so I believe is that a very strictly hierarchical company is a fragile company, and therefore what you want is to invert the pyramid."

Jeff Lawson argues that a strictly hierarchical company is more prone to fragility and that an inverted pyramid approach, which distributes decision-making, can foster resilience and innovation.

• Antifragile companies distribute decision-making and have clear criteria for evaluating decisions.
• Ideas should be allowed to grow and not be dismissed too early based on unrealistic expectations.
• Empowering frontline employees leads to better customer-focused innovation.

"And so I think the most antifragile companies are those that do distribute decision making to a good amount, and they have good criteria to decide."

Jeff Lawson describes antifragile companies as those that spread out decision-making authority and have strong, sensible criteria for evaluating the success of those decisions.

• Empowerment of frontline employees can lead to waste but also drives innovation.
• Command and control environments may be efficient but stifle initiative and customer responsiveness.
• Balancing empowerment with alignment and guardrails is key to effective management.

"I would take the empowered, wasteful company pretty much every day."

Jeff Lawson expresses a preference for companies where employees feel empowered to act, even at the cost of efficiency, because it leads to greater innovation and responsiveness to customer needs.

• Treat ideas as hypotheses to be tested rather than orders to be executed.
• Success is determined by the ability to test ideas quickly and inexpensively.
• Failure is acceptable only if it's due to the inability to prove or disprove a hypothesis.

"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?"

Jeff Lawson explains that by framing ideas as hypotheses, employees can focus on testing them effectively, which creates a safe environment for innovation and reduces the fear of failure.

• Acknowledging vulnerability and mistakes is key to building credibility and setting a culture of openness.
• Leaders should model the behavior of admitting and learning from mistakes.
• Vulnerability helps to humanize leaders, encouraging others to show their humanity as well.

"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 try to hide that from people, you can be wrong."

Jeff Lawson discusses the importance of vulnerability in leadership, suggesting that acknowledging one's humanity can foster a more understanding and collaborative work environment.

• Jeff Lawson disagrees with the notion that diversity should not override merit.
• He challenges the idea that all CEOs privately agree with prioritizing merit over diversity.
• Leaders have a role in publicly addressing and shaping the conversation around diversity.

"Two things I do disagree publicly and privately. What I was responding to mostly is he said, and all the ceos I talk to privately will say they agree with me on this."

Jeff Lawson publicly and privately disagrees with the statement that diversity should not override merit and questions the claim that this view is shared by all CEOs.## Authenticity in Public and Private Statements

• Harry Stebings emphasizes the importance of consistency between public and private statements.
• Jeff Lawson expresses his commitment to maintaining the same message in both settings.
• Lawson felt compelled to speak out against a high-profile CEO's claim that everyone secretly agreed with him, which he disagreed with.

"I do not say something differently in public than I say in private."

This quote highlights Lawson's dedication to authenticity and transparency in his communication, regardless of the audience.

"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."

Lawson is challenging the notion that public consensus exists without open discussion, particularly when it involves his own views which were assumed without prior conversation.

• Jeff Lawson argues against the false dichotomy of choosing between diversity and merit in the workplace.
• He explains that the real process involves creating an inclusive environment and actively seeking diverse talent.
• Lawson believes that diversity and inclusion are essential for the success of shareholders, employees, and customers.

"It is a straw argument that there is a choice between diversity and merit."

This quote refutes the common misconception that diversity initiatives compromise merit-based decisions, suggesting that both can coexist in a company's hiring and promotion processes.

• An inclusive company allows individuals to feel that they belong and can do their best work.
• Lawson uses the analogy of a man feeling out of place in a hair salon to illustrate the importance of inclusivity.
• Creating an inclusive environment requires active effort, especially in companies dominated by a single demographic.

"Creating an inclusive environment where everyone belongs."

Lawson emphasizes the goal of inclusivity in the workplace, where employees do not feel alienated or pressured to conform to a dominant culture.

• Jeff Lawson cites Mitch Kapor's saying that talent is widespread, but opportunity is not.
• A good recruiting process looks beyond traditional indicators like prestigious educational backgrounds.
• Lawson values the "distance traveled" by a candidate as a better indicator of future performance than their current standing.

"Talent is equally distributed by zip code. Opportunity is not."

This quote by Mitch Kapor, referenced by Lawson, highlights the disparity between inherent talent and the opportunities available to individuals, which can be addressed by proactive recruitment strategies.

• Human brains look for shortcuts, which can lead to biased recruitment practices.
• Lawson criticizes the overreliance on prestigious educational backgrounds as a measure of a candidate's potential.
• He advocates for assessing a person's merit based on their journey and the challenges they've overcome, rather than their current position.

"The best indicator of future progress is past progress."

Lawson suggests that a person's past achievements and the effort they've put into overcoming obstacles are more reliable predictors of their potential success at a company than their current social or educational status.

• Jeff Lawson argues that building a diverse and inclusive company leads to better competition for talent and products.
• He believes that the primary reason for fostering diversity is not social justice but improved company performance.
• Studies have shown a strong correlation between diversity, inclusion, and shareholder return.

"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."

Lawson presents the business case for diversity, linking it directly to competitive advantage and financial performance, rather than solely to social responsibility.