This is the inaugural post in our “Lunches With Unicorns” series, inspired by this year’s Code conference entrepreneurship panel. We’ll sit down with companies valued at more than $1 billion to talk about how they fight the recruitment battles, why “unicorn” is a dirty word, what tricks people are pulling to land big valuations, whether work-life balance exists in startups and other issues of the day.
For a newly anointed unicorn, messaging company Twilio, the secret sauce behind Uber and Airbnb, resides in a far-from-luxurious building. It’s located in the popular San Francisco startup district SoMa, which stands for south of Market Street. But instead of a spot in an airy refurbished warehouse, Twilio’s pad is tucked in the back of a dingy structure.
Grungy beige carpet covers the hallways on the way in, a moldy smell permeates the air and a battered orange cone stands guard next to the service elevator up to the office.
The office itself looks more like a classic startup, with hardwood floors and rows of computers, the usual giant beanbags and couch nooks. But the space doesn’t appear to have been decorated by a high-end interior designer, and free lunches only occur during the weekly staff meeting, so we order in from a cafe. That’s downright barren by many big tech company standards.
Twilio’s humble workplace isn’t a mistake. Prudence is one of the key tenets of the business, and CEO Jeff Lawson takes it seriously even after hitting a valuation topping $1 billion.
Twilio is the behind-the-scenes startup that powers texting in major apps and services like Uber, Salesforce, Home Depot and Intuit. If you’ve sent a message to your Airbnb host after hitting a button in the app, Twilio made that happen. It’s offering a service that would have taken fast-growing startups time, money and headaches to build across different carriers and countries.
Twilio charges businesses to power their phone calls, in-app messaging and video calls, and its services now work in 200 countries and with 1,600 carriers. It has raised more than $200 million from venture firms like Redpoint (an early Netflix backer) and Bessemer Venture Partners (a Pinterest investor) to grow its business, and its unicorn status leaked through its May SEC filings.
We sat with Lawson to talk history, culture and magical creatures. The interview has been edited for length and clarity.
Re/code: What was life like in the early days, before you had product-market fit and things took off?
Jeff Lawson: Twilio is a unique story in that we’ve never had the pivot. We’d talk to developers in the early days and at first they’d look and scratch their head and change the subject, like “How ’bout them Giants?” At first I thought maybe this isn’t a good idea, but then a few minutes later the developer would say, “Going back to that communications thing, could I build shipping notifications for my e-commerce site?” I’d say yes, and then I could see the gears start to turn. It was a missing piece of the developer tool kit.
But you must have hit big challenges early on. How did you push through them?
We set out to raise a seed round in 2008. The summer of 2008 was the worst time to raise a seed round ever. I literally walked out of a prominent venture capital firm board meeting the day Lehman Brothers collapsed. A lot of investors said, “Come back to us when you build an app,” and we said, “We don’t want to be an app, we want to be the infrastructure layer behind all these apps.” We had a lot of debates when we got this feedback — these are presumably smart people. But ultimately we stuck to our guns and ended up not raising that seed round.
How do you weigh taking advice with sticking to your vision?
Radical progress does not come from the most rational thinking. If you took the consensus of the feedback all investors told you, you wouldn’t have a product that makes any sense. You have to have a gut, a sense of what you want to create.
What’s your leadership style?
I’ve always strived to focus on building small teams empowered to sprint every day for the customer. Small teams between five and 10 people, defined by an internal or external customer. Then metrics: What does success look like. Now that time should be free to sprint as fast as they can. We’ve got 500 people in the company now, so we strive to make sure everyone is part of a small team.
You used the term “sprint” a few times, and you used to be a product manager at Amazon, which was recently the subject of a huge expose on its intense, brutal pace. What’s your take on work-life balance?
A startup won’t succeed unless you’re working hard. But as a company, we definitely have a leaning toward work-life balance, and the biggest reason for that — it starts at the top — I have a family. I am home having dinner and putting the kids to bed two to three nights a week.
How is it possible to encourage both sprinting and work-life balance?
It always comes down to working smarter, not harder. How are you going to prioritize? There are times when things skew in favor of work, and times when things skew in favor of family. We’re here building Twilio in the most interesting time in the history of communications as it migrates from a legacy of hardware to software. This is a marathon — it is not a build it and flip it.
How do you balance recruiting staff at this stage with not promoting entitlement among them? I was surprised to see you don’t do daily meals.
Frugality is one of our goals. We’ve never been the most outrageous with our office or our perks. We want people here who want to work on the problem.
But you have to give some perks. It’s the only way to be competitive.
We have a book allowance for every employee. You get a Kindle and an allowance of $30 every month to expense books either for yourself or you can give a book to another employee. This is a perk that supports our values: Learning, improving ourselves. We also have a gym perk because we believe you should take care of yourself mentally and physically.
Why is unicorn a dirty word in tech, but everyone still uses it?
It’s one of the only visible metrics of progress — that’s why people focus on it. A scorecard of who is winning and who is losing. The problem is it creates the wrong incentives. Companies are doing things they shouldn’t be doing to get that number. You tell me the valuation, and I’ll tell you the terms. Almost any valuation can be met with onerous enough terms in a deal.
Huge valuations change people. What was it like for you to pass the $1 billion mark?
Every time we raise money, I speak to the staff, and I finish those announcements with two things: Number one, be humble, and two, be frugal. Two of our values that have been our values for years. The more money you have the easier it is to waste money — “What is another $1,000 for a hotel room?” These values don’t get less important as you scale, they get more important.
I would say you’re spouting bullshit, except this is one of the least lavish offices I’ve seen in my time as a tech reporter.
We’re focused on building a company for the long haul.
This article originally appeared on Recode.net.