Founders are navigating a tricky market: Funding levels are way down, VCs are growing more selective, and the economy is struggling to find its footing.
But Twilio cofounder and CEO Jeff Lawson and Atlassian cofounder and co-CEO Scott Farquhar have seen it all before. Both CEOs started their companies in a downturn: Farquhar cofounded Atlassian during the dotcom crash in the early 2000s, while Lawson started Twilio in 2008 amid the financial crisis. But for founders going through this downturn, Lawson and Farquhar have some key advice.
“Follow your customer,” Twilio’s Lawson said onstage at the Fortune Brainstorm Tech conference in Deer Valley, Utah, on Monday. He admits it “sounds so obvious, yet it is still so hard to remember that serving a customer is at the center of everything you do.” It’s something Lawson said he’s used as his North Star from the beginning: “In the early days of Twilio, when we couldn't raise a dime of capital—literally, we didn't have a bank account, because you have to have a check to open a bank account, [and] we didn't have that—we had customers who loved our product.” He recounted that when he and his wife got married, “we returned all of our wedding gifts in order to fund Twilio. And, like, that's the power of customers guiding you towards the right answer. It gives you that level of conviction and that's when it’s really fun and rewarding.”
And for founders who are struggling to raise funds right now—and by the looks of the data, that could be a lot of them—that customer focus could provide a bit of motivation. “That’s what gave us all the encouragement to just keep going and focusing on the business we were building,” Lawson recalled, “despite the fact that the investor environment was garbage at the time.”
But whether you’re raising your first check or have been in business for years, Atlassian’s Farquhar advises that, “As a CEO, you’ve got to take care of yourself.” He recalled advice he received a long time ago: That you’ll make “about a dozen decisions a year that actually make a difference. We’re replaceable most of the time.” But “when those big decisions come, [and] you don't know when those decisions are going to come...you need to be well rested, you need to be on your best behavior. People are looking at you. If you had a bad night, or you’re angry or tired or whatever, that has a ricochet effect across the entire organization.”
But it’s not just taking care of your well-being that’s important to your company—the people you hire are a critical piece, too. “It all comes down to people, and it's such a truism,” Farquhar believes. He says his judgment for whether you have the right people in the organization comes down to one question: “Would I enthusiastically rehire the person for the job that they need to do in the next 12 months? So, if I look that person in the eye, and I'm like, 'I'm super excited to have you here. If I had to hire you today, I would 100% hire you to do that job,' that's the bar you need to hold. And if you can't say that to every person that works for you today, you need to go back to the office and have a tough conversation.”
Atlassian and Twilio have been having those tough conversations lately, both having laid off employees this year.
“It’s a really difficult decision,” Lawson said, adding that in downturn cycles, “it’s kind of a reminder to all of us that every day we are building our companies, we need to build our companies for where we’re going,” he said, and “look forward to our future success and say, ‘Do I have the right people and the right focus and the right initiatives?’”
More from Brainstorm Tech: There’s lots happening here in Utah. Don’t miss these stories from Day 1:
— A.I.’s biggest short, medium, and long-term risks, according to Anthropic CEO Dario Amodei
See you tomorrow,
Anne Sraders
Twitter: @AnneSraders
Email: anne.sraders@fortune.com
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