How Twilio Went to Market Without Investors
00:07 Jeff Lawson: Maybe this just wasn't meant to be. Right? Maybe this isn't a good idea. Maybe we made a mistake by working for nine months now without salaries.
In 2008, Jeff Lawson, a serial entrepreneur, co-founded Twilio, which helps developers incorporate text messaging and other phone services into apps.
Lawson and his two founding partners created a prototype before seeking funding.
00:31 Lawson: And so, in the very beginning in 2008, we started building it. So, myself, and I have two co-founders, we all quit our jobs. We were working on the things. We all devoted ourselves to it full time. And initially, we were working out of coffee shops, we were just... Basically, we had no salaries, the company didn't have any money, the company didn't even have a bank account at the beginning. And, we just started writing code. We started building the product.
After six months, Twilio took the prototype to investors.
Twilio met with more than 20 VCs and angels--and none were interested.
01:07 Lawson: We were really starting to kinda question, did we build the wrong thing? All these investors are saying we're idiots. These investors are saying, "Why did you do it this way? There's no market here." And then finally, we find one of the most prominent great angel investors in Silicon Valley. And we're sort of checking off all the boxes, and making it through the investor process. We're saying, "This is great. Finally, we've got this great investor lined up. They get it, we're gonna close the seed round, and we're gonna use that money to have a big launch." So, we're getting to the final part of the process, and that's the full partner meeting. Right? Where you present in front of everybody. They're all there, they're all asking you questions, and then typically that day they decide, yes or no. So, we wake up that morning and that meeting was scheduled for the day Lehman Brothers collapsed. And, it's like there is a cloud hanging over the world, and the cloud was hanging over that conference room we were in. Everybody was distracted.
The investor decided not to back Twilio.
02:23 Lawson: We sat down and me and my two founders read this heart to heart and we said, "You know what, screw those guys. We're just going to keep building. Right? We've made it this far, the next... The milestone right here is, launch it. Get it in the hands of customers. Have those customers pay us. That's what we're building for." And very end of 2008, we launched Twilio. Right? We got it out there, so anybody could come and sign up. We got some good press. And the buzz was amazing. And I remember we were driving down the Freeway the day we launched, and one of my co-founders, John, was on his laptop with a cellular connection, and he said, "Oh my God! They're actually paying us, they're putting in their credit card. Oh my God!" And we're all so excited. Right? And that's the thing, getting it out there, and getting the real reaction and seeing the real adoption start to happen. That was what we needed, because after, that that's when investors started saying, "Ah, I see. I get the kinds of things people are building. Oh wow. Maybe, I don't understand it but you know what, you've got thousands of people who do, just within weeks after your launch. That's really cool."
Two months after launching its first product, Twilio raised its first round of seed financing.
It has since raised $34 million, led by Union Square Ventures and Bessemer Venture Partners.