Chatting With Twilio CEO Jeff Lawson About the API Economy Coming of Age

We recently visited with Twilio CEO Jeff Lawson about emerging impact of the API economy. 

Jeff is a serial inventor with over 15 years of entrepreneurial and product experience. Prior to co-founding Twilio, Jeff was Founder & CTO of NineStar, Founding CTO of Stubhub.com and Founder, CEO and CTO of Versity. He was also one of the original product managers for Amazon Web Services. Jeff grew up in the suburbs of Detroit, started his first company in middle school, and earned his BS in Computer Science & Film/Video from University of Michigan.

ADM: How do you define the API economy?

Lawson: We think of APIs as building blocks that are the raw ingredients of innovation because they allow developers and organizations of any size to rapidly build new ideas.  

While virtually everyone has an API these days, we define the API economy as access to the APIs that enable you to do business without the need to buy prepackaged solutions that don’t necessarily meet your specific need. As infrastructure, great APIs are components that let you pick and chose what you need and in most cases pay for only the services you use.

ADM: How has the API economy changed over the last couple of years? What trends do you see upcoming?

Lawson: The API economy is developing much like the web developed in the mid to late 90’s. There are products and consultancies that help companies adopt APIs - just like Scient & Viant in the early days of the web. There are legacy companies bolting APIs onto their existing products - just as Borders bolted a website onto their bricks and mortar business. And lastly, there are API-native products (like Twilio, Stripe & AWS) that are built from the ground up to serve developers - just as Amazon was a web-native company in the 90’s. It’s amazing how the technology adoption curve repeats itself.

Two years ago, startups were really still the primary users of the services and were quick to leverage APIs to acquire new capabilities without building it for themselves or putting up a lot of capital investment. What we’ve seen in our own customer base over the last couple years, is that enterprise adoption and integration is taking off. 

Enterprises often have legacy systems to deal with, but on the communications front they are finding they can easily add capabilities that have an immediate impact on things like customer experience. Even adding SMS as an option is one way we’ve seen enterprises provide more choice for customers in how they can communicate with a company. Toll-Free SMS even lets enterprises offer an 800 number to communicate via text. We think we’re just at the beginning of what’s possible when you make all these capabilities possible via API’s.

Generally speaking, the shift towards cloud-based technologies available via API’s is creating an almost permanent state of disruption in enterprise IT and what we see is that to remain competitive, enterprises are looking to accelerate innovation. We see that accelerating on an almost daily basis. 

ADM: How are enterprises leveraging APIs for their business?

Lawson: Enterprises today are using API’s for everything from AWS for compute and storage, to Stripe for payments, and Twilio for communications. Our customers in particular are using communications to create more relevant and contextual communications.  

For example, Nordstrom sales associates use Twilio text messaging to communicate with their shoppers. So if you need a new dress to wear and don’t have a lot of time to shop, sales associates can send picture messages of items you might like. If you decide to buy, you do so from right within the text. Nordstrom is the first to make buying within text possible for their customers.  

ADM: Which industries have been slow to adopt API economy principles? Which industry is the next in line for disruption?

Lawson: Well, communications is a 150 year old industry that has historically been tied to its legacy in physical networks, and slow to adopt software in a meaningful way.  Since the invention of the phone call 150 years ago, we’ve invented vacuum tubes, transistors, integrated circuits and shrunk all this technology down amazingly. Copper wires became fiber optics, wireless and satellites, and we’ve literally wrapped the planet in this technology. 

But when you think of what has really changed with the phone call over this time of astounding innovation 150 years, you realized it’s barely changed at all! Sure, we’ve gone from dialing with an operator, to a rotary dial, to a push button - but what you do on a call hasn’t changed a bit. We believe that in the fullness of time, communications will be embedded within every single app we use - and our communications will become much more meaningful and relevant as we incorporate the context of those apps and the advanced features of the phone into our communications.  

ADM: What are things to consider before opening APIs to developers?

Lawson: You have to commit 100% for a long term to your API strategy, because developers need to trust you in order to build upon you. If you build an API, and then kill it 6 months later, developers will remember that for a long time. Developers trust Twilio because our livelihood depends entirely on their success - but for a company adding an API to an existing business, developers have learned to be skeptical.

ADM: How do you onboard developers?

Lawson: Well, as a developer myself, I can tell that you that developers are a different breed. We don’t like to be marketed to.  Developers want to be empowered with information about what your API does and how much it costs - up front - before they commit their development time. 

Our job is to empower developers with information, and then get out of their way. As far as meeting developers out in the world, we always try to be genuine and helpful, and just be a part of the communities we’re serving. We take part in hundreds of developer events a year - and our goal is always to be helpful and present.

ADM: Any important lessons learned working with developers?

Lawson: Don’t BS them.

ADM: What is the most valuable thing about an API strategy?

Lawson: The flexibility and agility it provides. We’ve been talking about “agility” for years in technology, but API’s are making it possible like never before! No matter what the area, those who look to software-defined and cloud based solutions via API’s will outmaneuver those who look to monolithic platforms. They’re easier to procure, highly scalable and probably most importantly they let you adapt quickly to address business challenges.  

Contrast that to monolithic platforms where maintenance and customization is costly and can’t easily adapt to the changing needs of your business. The agility you have with an API strategy is where enterprises have to head to remain competitive.

ADM: What other companies do you see as major players in the API economy? Why?

Lawson: Obviously AWS is the big kahuna because it currently has the most capabilities as a cloud infrastructure vendor. Companies like Stripe and MixPanel are also interesting because they provide the tools for organizations to easily add payments and then monitor their applications.