Good morning. This year, I’ve reported on CFOs becoming CEOs more frequently. And it's a trend that's poised to continue.
A good example is Khozema Shipchandler, CEO of the software company Twilio, since January. His career journey at the company moved him from CFO to chief operating officer (COO) to president to chief executive in less than six years.
Twilio's focus is customer engagement. Its platform offers digital communications—text messages, calls, videos, email—and customer intelligence through the use of AI. Among its 320,000 customers are Lyft, Domino's, Nike, Toyota, and Intuit.
Some use case examples? When you interact with Lyft’s app via text—you’re also interacting with Twilio. And Domino's used Twilio's platform to create a universal view of its customer base by consolidating sales, marketing and support data gained through digital touchpoints. This led to an increase in customer loyalty and a decrease in customer acquisition costs, according to Twilio.
The San Francisco-based company's total revenue for Q3 2024 was $1.134 billion, up 10% year over year. Twilio reported a dollar-based net retention rate of 105%, which is up from 101% in the prior year. The gains were a result of focusing on three areas: financial discipline, operating rigor, and a focus on innovation, Shipchandler said.
‘Get in the rhythm of being ready’
Shipchandler joined Twilio as CFO in 2018, after a more than 20-year career at GE including serving in several CFO roles in GE Aviation. Coming to Twilio, he knew he wanted to expand his remit beyond finance.
“I talked to my predecessor about it at the time and said, ‘There's a lot more that I can do here besides just accounting and financial planning,’” he recalled. The two had a conversation about it and just after a few months, Shipchandler took over the cyber team. “I didn't have any real experience in cyber,” he said. “But it was a super interesting thing to take on and very intellectually stimulating.” And cyber was top of mind for the CEO and board, so Shipchandler was able to get a lot of exposure.
Every six months, he would take on a new challenge. First, it was cyber, then IT, then legal. Over the years, Shipchandler began to gain extensive knowledge of the operations of the company, and he ultimately was approached to become the COO.
After three years as finance chief, he took on the COO role. And, after about a year and a half, Twilio divided its operations into two business units. Shipchandler was tapped to become the president of Twilio Communications, the largest business with 93% of the company’s revenue, he said. Shipchandler gained experience he didn’t have in areas like go-to-market, and research and development.
He served as president until he was promoted to CEO of Twilio in January, succeeding Jeff Lawson, also the company cofounder, who stepped down.
Shipchandler's major takeaway for CFOs wanting to become CEOs: Get operational experience.
“I was really fortunate to have come out of the GE system, where you were really much more of an operator,” Shipchandler explained. “You were viewed as being the chief operating officer, even if that wasn't your title.” And when coming to Twilio, learning operations was a priority for him.
Through these different experiences, “you just kind of get in the rhythm of being ready for something when the opportunity presents itself,” Shipchandler said.
The openness he had to try new experiences at Twilio in his own career, also extends to his leadership style. For example, Shipchandler started an internal podcast to have direct communication with employees.
“Employees get to nominate other employees who they want to hear from,” he explained. “And we'll do kind of a fun interview back and forth. In every podcast, there are three questions they get to ask me that I've never seen before.” And the questions run the gamut.
“Literally, they ask whatever they want,” he said. “It's not vetted.”
Have a good weekend.
Sheryl Estrada
sheryl.estrada@fortune.com
The following sections of CFO Daily were curated by Greg McKenna.
