- Twilio CEO Jeff Lawson spoke to Business Insider Australia on his first tour of the company’s Sydney and Melbourne offices.
- The cloud communications provider listed on the New York Stock Exchange in 2016 and has enjoyed a “wild ride” on the market since.
- Fellow enterprise software provider Slack will list directly on the NYSE in June this year.
You only need to look at Uber to know that initial public offerings (IPOs) can be fraught with danger. The ridesharing app logged the biggest first-day dollar loss in US IPO history in May, following a similarly lacklustre performance by its rival Lyft, which listed on the New York Stock Exchange just two months earlier.
Cloud communications provider Twilio is one of these B2B Silicon Valley players that knows the rollercoaster nature of retail capital raising all too well.
The company — which provides call, SMS and digital messaging services to app developers —listed on the NYSE in June 2016 at US$15 a share in what Business Insider at the time called “the hottest tech IPO of 2016”.
Its stock rose to $US70.96 in October of that year before falling back to $US26 per share in May 2017. On Tuesday, Twilio is priced at US$133.90 per share and has a market capitalisation of $16.9 billion, according to Bloomberg.
Speaking to Business Insider Australia on his first visit to Australia since launching down under in April 2018, Twilio founder and CEO Jeff Lawson reflected on the wild ride.
Business Insider Australia asked Lawson what advice he has for other B2B software companies planning to go public — like Slack, for example, which filed its paperwork to list directly on the NYSE on April 26.
Here’s what he said.
Talent, not popularity, wins the stockmarket game
Benjamin Graham, the father of ‘value investing’ and mentor to Warren Buffett, famously said in the short-term the stockmarket is like a “voting machine” which tallies individual votes, but in the long-term is a “weighing machine” which measures substance.
Lawson has his own version:
“In the short-term, the market is like a popularity contest, but in the long-term it’s a talent show,” he says.
Companies planning to go public need to try to focus on the long-term, even though the market has an implicit “short-term dynamic” which can be distracting with its focus on minute-to-minute and second-to-second changes, Lawson says.
“Focus on the customers, focus on building a good business, everything else will work itself out. I’m confident of that,” he adds.
Keep it real when pitching investors
His second piece of advice is regarding a situation that gets tech entrepreneurs into hot water, Lawson says.
“Where CEOs and entrepreneurs get into trouble … is when they promise things to investors that aren’t really what they want to do and how they want to run the company, and then they get in a jam,” he says.
Instead, you need to be straight with investors, whether private or public, institutional or retail, he says.
“Tell investors how it is,” he says. “Tell them how you are going to run the business, and then run the business that way.”
This means fighting back against the advice of investment bankers and others who may recommend using language that might not be an accurate reflection of your vision for the company.
“Every company gets the investors it deserves,” he says. “If you promise things and you get investors that want you to be a different kind of company, you’re in trouble. You want investors that like the business you’re building.”
Lawson has a decent track record when it comes to being straight with investors.
In May 2017, during one of the lower points on Twilio’s stock price rollercoaster, Lawson told analysts about the impact its then-largest customer Uber was having on the bottom line. He warned investors that future revenue could be hit by the ride-sharing pioneer’s decision to move some of its communication activity in-house.
The downlow on distribution Down Under
Although Lawson is happy to provide advice and straight-talk investors, he is a little more tight-lipped when it comes to Twilio’s Australian footprint.
In April 2018, Twilio Australia country manager Richard Watson told the Australian Financial Review the cloud communications company planned to grow its customer base in Australia by 100% by the end of 2018.
Asked by Business Insider Australia whether that explicit target was reached, Lawson’s response was clandestine.
“I can’t go through any of the internal metrics that we have but I can tell you we are very happy with the progress,” he says.
That progress has included signing some big name clients in Australia including Atlassian, AirTasker, Lendi, Aussie Bum and Domino’s.
Lawson also claims to have inked deals with “two of the top five banks in Australia” — though he declined to name names — as well as “50% of Australian insurance companies”.
For a company in the business of communications, and actively promoting the idea of telling it “how it is”, the detail of Twilio’s Australian push remains a little shadowy. But what is clear is Lawson’s unriddled optimism about his company’s prospects, both in Australia and abroad.
“We’re really excited about the growth,” he says. “It’s going great so far.”
By June 2022, three years out from its slated listing next month, Slack will no doubt be hoping to sing a similarly merry tune.
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