Twilio Acquires Segment, What is Segment, An Interview with Twilio CEO Jeff Lawson

Author: Ben Thompson (Stratechery), interviewing Jeff Lawson URL: https://stratechery.com/2020/twilio-acquires-segment-what-is-segment-an-interview-with-twilio-ceo-jeff-lawson/ One-line: Twilio CEO Jeff Lawson on why even a developer-first, Product Led Growth (PLG) company eventually has to build a real sales force — told through the painful lesson of a $60M Uber account that churned for lack of a relationship.

Key claims

• Twilio started developer-first (“the product will sell itself”), influenced by Atlassian’s famous line that anything a customer needs a salesperson for is a bug to fix in the product.
• That advice was misleading: Atlassian did have salespeople — they just called them Support Specialists or Customer Success. “Throwing everyone off the scent of their brilliant business model.”
• At IPO Twilio had only ~15 quota-carrying sales reps; Uber organically grew into a $60M ARR account that didn’t want to talk to sales.
• When Uber’s mandate flipped from grow-at-all-costs to financial discipline, Twilio had no relationship or heads-up to renegotiate — a painful Q3 2017 earnings miss.
• The lesson: even customers who say they don’t want a sales rep actually want a relationship, especially when you’re critical to their business.
• Twilio’s winning model is dual-pronged: initial developer momentum, then a mature sales process layered on top to unlock bigger accounts and more strategic positioning.
• All companies eventually need to build large sales teams — great products make people want to use them, but relationships matter too.

Notable quotes

JL: I was influenced by Mike and Scott at Atlassian because they always famously said, “Whatever you’re going to spend on sales, just put it into the product to make the product better. Anytime a customer needs to talk to a sales person, that’s a bug you have to go fix.”

JL: … And they’re like, “Oh no, we have salespeople, we just call them something else. We just call them Support Specialists or Customer Success, or just some other name. But yeah, they’re basically doing sales.” … It’s basically throwing everyone off the scent of their brilliant business model.

JL: Meanwhile, Uber had grown to be a $60 million ARR account for us just because of organic growth… Then, suddenly one day, their priorities changed. Their mandate from the top changed from grow at all costs to financial discipline… Suddenly, our $60 million line item they were paying us was one of the top things on their expenses.

JL: … we lacked the face time, to be honest. So my big learning from that was that we should not have been surprised if we had a salesperson who had spent a lot of time building the relationship… sometimes even though people might say they don’t want a sales rep, actually they do, they want a relationship.

JL: … great products do make people want to use them, absolutely, but relationships matter too. Just to know what’s in the head of your customer and understand what their priorities are and understand how you can better serve them and help them guide your roadmap… we had to mature. We had to figure a lot of that stuff out.

Notes

• Key takeaway: All companies eventually need to build large sales teams — even a Product Led Growth (PLG) poster child like Twilio. #Sales
• Twilio runs a consumption-based model: a fast-growing customer’s spend grows fast too — but that same dynamic cuts the other way when the customer’s priorities shift to cost discipline.
• The dual-pronged approach (developer momentum → mature sales relationship) is what unlocked bigger deals and more strategic positioning over the four years following the Uber lesson.

How it connects

• Jeff Lawson — Twilio CEO and interviewee; the developer-turned-executive learning the value of sales relationships.
• Twilio — the company; consumption-based, developer-first, acquiring Segment.
• Segment — the customer-data platform Twilio is acquiring (context of the piece).
• Atlassian — the source of the “salespeople are a bug” mantra that Lawson later saw through.
• Product Led Growth (PLG) — the playbook Twilio exemplifies, and its limits.
• Ben Thompson / Stratechery — interviewer and publication.