It was the moment of truth. Twilio CEO and co-founder Jeff Lawson called the number that gathers all of the company’s employees onto one conference line. Then he asked for a volunteer — little did any of them know he was sitting at a table with a panel of other well-known CEOs. Minutes before, a fellow executive had complimented Lawson on Twilio’s values, but wondered if his employees knew and could name them. A volunteer spoke up and offered: “Simple, easy, and powerful.” Lawson thanked her and she asked him if she did a good job. “You did fantastically,” he said. It didn’t matter that she’d been totally wrong.
The employee’s response told Lawson that his years of work on Twilio’s values still had a ways to go. She had chosen to speak to the nature of Twilio’s product, but not of its people. That moment revealed the disconnect between what values mean to different employees and the factors taken into account when expressing them. Over his career at Amazon, StubHub and Twilio, Lawson has become an outspoken teacher — and student — of company values.
At First Round’s recent CEO Summit, Lawson brought granularity to company values and culture by sharing both victorious and vulnerable examples from his time at Twilio. Specifically, he deconstructed his efforts into three parts: articulating, living and changing company values. Any startup that has been told to be its authentic self, but has encountered more handwaving than a tactical plan will find solace and guidance in Lawson’s account.
In 2010, when Lawson could count his employees on one hand, he did what most leaders do when their startups get serious: he wrote down its values. “Our goal was to get them in print — that way they would be in our control,” said Lawson. “We called a meeting, and came up with five descriptors: continuous improvement, detail-oriented, learners, humble, hungry. We saw these attributes in ourselves and thought they’d help us attract like-minded people. So we declared them our values and started to hire.”
With those values front and center, Twilio grew from six to 70 people. But after the public, aforementioned wake-up call, Lawson changed his tack. Instead of describing his values, he thought more carefully about what he wanted described. “I realized that whatever we came up with would probably have to speak to who the people are behind Twilio, what our product is and the various processes of the company,” says Lawson. “For us, if we’re going to have a value system, it had to incorporate people, product and process.” Here’s more:
People. In this category, your values should help you decide who you should hire, who you should fire and how you treat each other while you work together. Startups mostly think about people when they consider values.
Product. In most cases, it’s less instinctual to associate your product with your values. Your type of product, its features, how you treat your customers and how you respond to threats and opportunities around your product are built into your value system.
Process. Values associated with process link to how decisions are made in a company. This includes how you report progress, hold people accountable and trust each other. For example, most startups will say that trust is vital, but won’t construct a process that reflects and protects that priority.
These “3 Ps” may not be the entities you choose to define and describe, but it’s critical to choose your nouns before you champion the adjectives that you want to embody. For Lawson, that gets to the distinction between values and culture. “Culture is a word that Silicon Valley and startups everywhere toss around all the time,” says Lawson. “What does it really mean and how does it relate to values? What I landed on is that culture is living your values.”
Values are written words, and your culture is how you actually live those written words.
So how do you actually live your values? Lawson’s framework has helped his team both articulate Twilio’s values and help them abide by them every day. “It’s at this point that most companies’ values go astray. Many startups relegate them to posters and drink coasters,” says Lawson. “Our values are in motion, specifically through a three-stage lifecycle that gets us to the next stage of growth. First, we articulate our values, then live them and finally, test them.”
To start, your goal is to articulate, not create your values. “It’s not semantics. You cannot create your values. You cannot sit down and say, “Hey, what words sound good?” because that just makes them false,” says Lawson. “It just makes them empty words. You cannot create your values. I use the word ‘articulate’ very intentionally, because I believe all you can do is identify who you are through introspection and then pull out and articulate the things that you like.”
Be aspirational but know that the seeds of these values must already have been sown. “This is where timing comes into play. You should articulate your values not too early and not too late,” says Lawson. “Don’t establish your values right after you’ve just incorporated. Your company is not mature enough; it’s people, product and process are not known entities. But don’t do it in the company’s twilight years either.”
It’s not unlike the teenage years. The hard-earned realizations and character-defining mistakes haven’t happened yet. ”Humans need to go through the teenage years to discover themselves, to get comfortable in their skin. I believe more startups actually go through that process as well,” says Lawson. “You have to give it time to bake in order to know who you are as a company. But if you wait too long, then the values can go off in their own direction and you may not like what you find when you find them.”
Plan to articulate your values when you’re between 20-40 employees. Don’t express them when you’re three nor when you’re 500 people. Not too late, not too early.
Primarily, it is the CEO’s job to articulate the values of the company — but not alone. “In fact, if you think it’s only the CEO’s job, I suspect the company will fail. Be inclusive because these values are not just yours, Mr. Founder or Ms. CEO,” says Lawson. “They are the tribe’s values, and what you’re doing is creating a tribe. Human beings are tribal creatures, because it took congregation and community to survive. So, the group has to be bought into the values as well.”
Here’s how Lawson led the effort to articulate Twilio’s company values:
Convene a diverse dozen. To start, Lawson assembled twelve people from across the company to discuss Twilio’s company values over dinner. It wasn’t a lottery — he selected those who he thought could thoughtfully consider the long term success of the company. Open the conversation informally but with insistence that it’s important: “We’re together to work on articulating the values of the company. Let’s start by voicing what you value about your interactions with each other and the kind of people we’d like here.”
Record ideas until they’re in the triple digits. Let your group riff. Some will be prolific; others will need some time to rev their engines. But everyone needs to push past the obvious or nebulous answers that come first: honesty, hard work, teamwork, etc. These may be right, but they shouldn’t be unchallenged incumbents. Collect all ideas without qualification. Then tell the dozen participants thank you, and that you’ll follow-up.
Be the Chief Editor Officer. Group and consolidate the ideas. When Lawson did this exercise, he combined 100+ ideas into about 25 values. A weeks later, convene the group and evaluate the consolidated ideas. Ask this question: Which of these ideas resonate with you and which do not?
Put them to The Oxygen Test. After the first round of feedback, the CEO should do another round of consolidation until there are about 10 values left. The final step is to put each value to the test with one question: Which of these couldn’t you live without out? The goal is to keep those only that are natural and indispensable, like oxygen.
After the final session, Lawson and his team arrived at nine company values through a thoughtful, inclusive process. “Getting your tribe bought in on the articulation of values is as important as the values themselves. When we rolled them out to the company, there were a lot of people who were invested in their success because of their hand in drafting them,” says Lawson. “In fact, when we presented them at All Hands, I had those who were involved introduce the values to the company. The group conceived of them together, so it had to come from all of us. It’s much better than Moses coming down from the mountain with tablets, and an important part of the values getting accepted.”
Here are Twilio’s Nine Values:
Notice that all the values are commandments and nearly each one begins with a verb. They contain five words or less, none of which are $10 vocab words. “The language you use here matters a lot. Use human, actionable words — especially verbs. That way, they are action-oriented, resonate better and feel more implementable. That was very intentional for us,” says Lawson. "We landed on these words because we felt that the people at Twilio and really any human being can understand and act on them. It’s the only way they’ll be lived.”
One strong example of using human, actionable words is “draw the owl.” This Twilio value originated as an internet meme that coursed through the company like wildfire in its early days. “Yes, it was a meme, but it’s a great representation of our job. There is no instruction book and no one is going to tell us how to do our work,” says Lawson. “It’s now woven into our culture and used as a cheeky, but encouraging reply to those who email colleagues at Twilio asking how to do something. It reminds them that they have — or are empowered to find — the answer. Plus, part of the opportunity and the fun of a startup is figuring it out yourself.”
Now juxtapose these with a more corporate example of values: respect, communication, integrity and excellence. “If you haven’t guessed, these were the corporate values of Enron. This goes to show that on paper all values look good,” says Lawson. “These values are tempting to choose because they look perfectly reasonable. I'm sure you can apply them to all your companies and want these attributes, but living them starts with articulating them in a livable way. Enron didn’t do that.”
In a way, Lawson sees a lot of parallels between the supposed values of Enron and the values of Twilio. “I'm able to map their values directly to ours, but let me explain why I think ours are better. At Enron, you had ‘respect.’ Sounds good, right? But respect can be such a vague word, and it’s hard to know if someone is being truly respectful,” says Lawson. “At Twilio we have: be humble. It’s a more specific version of respect and it’s actionable. We all know what humble is, we all know what humble is not. We have a pretty good sense for that.”
Now take the value of “integrity.” “How many of you really know what integrity means? I don't know what it means. I get it in a conceptual way, but I don’t really know if what I'm doing has integrity at this very moment,” says Lawson. “However, at Twilio we have a concept called ‘no shenanigans.’ People know if they’re doing something that’s shenanigans. We have a gut feel — and license to call someone out — when there are shenanigans.”
Reflect on Enron’s value of “communication.” “At Twilio, we 'start with why' as a more specific actionable tenet of communication. Starting with why demonstrates that understanding exactly why we’re doing something is critically important,” says Lawson. “It is always a valid question to ask why at Twilio. On the other hand, ‘communication’ is so vague that it’s meaningless.”
When you’ve chosen your guiding principles, resist the urge to call them “core values.” “The phrase has been ruined. Nobody understands what it means because they describe esoteric nonsense most of the time,” says Lawson. “So, at Twilio, we call them our ‘9 things,’ because we want to detach our values from what most people think of as vacuous values. A ‘thing’ is something anyone understands.”
Lawson admits that even if they are specific, nine ‘things’ is still a lot. “Researchers say that human beings can remember seven plus or minus two things. If you ask the average Twilio employee if they can name the nine things, the answer is likely no. I’d probably leave one out. But the way to think about it is that people will pick the ones that resonate most with them — which they can live most fully,” says Lawson. “Three to five just won’t work for us. When you try to narrow it down to such a small number of things, what you end up doing is making that small number of things more abstract and all-encompassing. Don’t trade ‘draw the owl’ for ‘integrity.’”
There are no hacks to living your values — it inevitably starts with the leader. “That’s my first fundamental belief. The CEO and founder must exemplify the values. Full stop. Everyone looks at everything you do. If you aren’t living them, nobody else will,” says Lawson.
Your goal is not to hire people who exhibit your values, but who are not incapable of living your values.
As your company grows and you hire, give consideration to those who have the capacity to live your values, not just candidates who exhibit them. “They may not live them today and that’s fine, because again, we are tribal creatures who want to fit in,” Lawson says, “When they come in to your company, if they are not incapable of it, they will likely try really hard to adopt the values of your culture. With candidates, you’re identifying direction and momentum toward company values, not a bullseye.”
The challenge with searching for a candidate who’s a complete reflection of your company values is that you run the risk of hiring people who look and sound exactly like you. “That’s not the right way to build a company. Your job is to weed out people who are incompatible with your values and train those who are to integrate into your culture,” says Lawson. “One of the hard things is when someone who is capable of living the values doesn’t do it. The way you get somebody back to living the values is by correcting them immediately when you can.”
Lawson’s favorite illustrative example comes from a world beyond Twilio and technology: the foodservice industry. In Setting the Table, New York restaurateur Danny Meyer reflects on when he first learned about how to make a service business work. When Meyer was green and relatively unknown, he once asked a more seasoned restaurateur how he learned to get all of his employees to do exactly the right thing to be hospitable to their guests. The man cleared the table and asked Meyer to put the salt shaker in the middle of the table. As soon as Meyer puts it in the middle, the restaurateur moves it off center and asks him where it is. Meyer points to it and the restaurateur asks him to put it in the middle. This pattern repeats five or six times until Meyer is about to throw in the towel.
The restaurateur stops moving the shaker and catches his eye. “Here’s the point. Your staff and your guests are always moving your salt shaker off center. That is what they do. That’s their job. It’s the job of life. It’s the law of entropy,” paraphrases Lawson. “Until you understand that truth, you’re going to get pissed off every time someone moves the salt shaker off center. It is not your job to get upset, you just need to understand that’s what they do. Your job is just to move the salt shaker back each time and let them know exactly what you stand for, let them know what excellence looks like.”
When it comes to the tough work of orienting your team with company values, don't get mad. Just put the salt shaker back in the middle and people get the message.
For Lawson, there’s a key lesson to extract from Meyer’s story. “If someone is incapable of living your values, it’s an easy decision. Even if she is a high performer, you exit them,” says Lawson. “However, the very hard part is when they are capable of living your values, but aren't doing so for some reason. Then you need to move the salt shaker until they do.”
That’s another reason to tune your senses to everyday signs of values taking hold. “You know they are working and meaningful if they are infused in the decisive and dull moments of the day. Are you hearing them in the hallways, in board meetings and at conferences? These are signals that they are working,” says Lawson. “We hear people finish conversations or debates by saying ‘No shenanigans.’ But one of the most encouraging signals that our values are working is when people outside Twilio — who don’t work with us daily — are taking notice of them.”
For example, Twilio’s value of ‘being frugal’ was recently spotlighted in technology media. “A reporter interviewed me for a series entitled ‘Lunches With Unicorns.’ She described our office as a ‘far-from-luxurious’ building ‘tucked in the back of a dingy structure. She called out the ‘grungy beige carpets’ and ‘a battered orange cone’ standing guard next to the elevator,” says Lawson. “A lot of people would be horrified with this description of their company, but I'm actually proud. Our value of ‘being frugal’ is being lived and visible to those who observe.”
That said, while it’s inevitable and important that people interpret your company values, the leadership should always weigh in on how they’re applied. “On the value of frugality, I’ve seen it manifest in exactly the wrong way,” says Lawson. “How many of you have a Hanes Beefy-T in your Goodwill pile at home that you got as swag from a company? If your company value was to be frugal, you may opt for the the $5 Hanes Beefy-T over the better fitting $7 American Apparel shirt. But the correct answer is that $5 that gets thrown away is not being frugal, but $7 that actually is appreciated by the customer is a much more valuable use of your money.”
It takes some forethought to think about how your values ring truest in various situations, but intelligently applying them is a must. “Keep your eye out for ways in which values are being interpreted in ways that you did not imagine. That may be in both a positive and negative way, depending on the scenario,” says Lawson.
Twilio’s ‘draw the owl’ value is the perfect case study. “In a symbolic, self-referential way, some employees took it on their own to create a mural in our office by literally drawing the owl. I thought that was really cool and a direct result of living the value. When people evoked values on their own without prompting, that’s when you know it’s going well,” says Lawson. “Alternatively, several years ago Twilio had five different build-and-release systems for its software. What happened was that five separate teams wanted a slightly improved version of the system, so they each “drew the owl” and built their own. The end result was various degrees of quality, test coverage of availability of those systems. It was a mess. When I caught wind of it, I asked why the hell would we have five different build systems. The response was: ‘Well, draw the owl. We had a problem; we solved it.’ That was an interesting and unintended application.”
Expect your people to build from your values in ways you never thought. But their interpretations may not be the ideal application. Monitor how values manifest.
The bottom line: frequently assess how your values translate into reality throughout your company. “I never would have thought that draw the owl would be interpreted in a way that, in retrospect, looks silly,” says Lawson. “We concluded that it’s actually good to draw the owl, but that, at some point, it’s leadership’s job to see what’s happening in context. If there’s a problem that needs to be solved, go in and solve it in a more holistic, thorough way.”
If companies work so diligently to articulate and live their values, it’s easy to see how they may resist changing them. But the truth is that a company’s values, like the organization itself, follow a lifecycle. “Say you’ve articulated your values, lived with them for a few years and realize that they may not exactly fit. It happens,” says Lawson. “Remember the analogy to the teenage years? How many of you perfectly articulated and instituted your life’s guiding principles at 13 years old? You shouldn’t expect to flawlessly express your company values when so much is changing: headcount, product, your founders as leaders — you name it.”
Be open to changing your values, but not too often. “If you change them quarterly, they’re no longer your values, they’re strategies. In order to be meaningful as values you need to have continuity. You can change them, just don’t do it too often. Every couple of years, make tweaks,” says Lawson. “There are two of Twilio’s values that I’d like to alter: ‘Live the spirit of challenge’ and ‘Think at scale.’ I don’t believe the first is actionable enough and the second is a very mixed message. Thinking at scale was meant to inspire people to think big, but it’s actually giving a free pass to never ship until you create a big solution — versus shipping iteratively.”
About a year ago, Lawson convened a diverse set of his people to address the two values that didn’t resonate with him. He didn’t know what the best solution would be, so he took the same approach as he did with the team that helped express the initial set of values. Lawson asked a simple question: If we were to change some of these values, what would we change them to? “Across the board, people were against altering or swapping out the values. I couldn’t get them to budge,” says Lawson. “But remember. It’s the tribe’s values, not mine. I can’t force these changes. People were so attached to them because they had been living them every day.”
Twilio has a tradition of taking an annual company photo. From the six members on the team in 2010 to his 400-person strong company today, these images remind him of the values that have attracted, retained and evolved Twilio. Behind Twilio’s growing team is the three-stage company values system that Lawson has put in place. First it’s articulating — not creating — what your people, product and process represent in words. When your values are lived and interpreted inside and beyond company walls, they become your culture. Finally, your values mustn’t be too sacred to be periodically evaluated, even if the company keeps them in the end.
“Leading a company means being a conscious custodian of its values. It’s a requirement, not a nice-to-have. Because, here’s the reality: every company has a culture and has values whether or not you put them into words,” says Lawson. “You might as well articulate them so that they stay in your sight and you can guide them.”