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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Jackson Fordyce curated the deals section of today’s newsletter.
VENTURE DEALS
- Raft, a London-based intelligent logistics platform, raised $30 million in Series B funding. Eight Roads led the round and was joined by Bessemer Venture Partners, Episode 1, Dynamo Ventures, and Moguntia Capital.
- b:bot, a Rouen, France-based plastics recycling company, raised €16 million ($17.58 million) in funding from Eiffel Investment Group and Crédit Agricole Normandie-Seine Participations.
- nami, a Singapore-based multisensing platform for the Internet of Things industry, raised $10.5 million in Series A funding. Verizon Ventures, Amavi Capital, INSPiRE, and Aconterra invested in the round.
- RecruitBot, a San Francisco-based hiring platform, raised $8.2 million in additional seed funding. Slow Ventures led the round and was joined by OCA, Freestyle, Parade, and Kevin Mahaffey.
- Performance Livestock Analytics, an Ames, Iowa-based precision livestock platform, raised $7.5 million in funding from Builders VC and Alaris Capital.
- Administrate, an Edinburgh, Scotland-based enterprise training operations platform, raised $6.4 million in funding. Archangels, Mercia, the Scottish Investment Bank, and Hambro Perks invested in the round.
- Teachy, a Rio de Janeiro-based education platform for elementary school teachers, raised $1.6 million in pre-seed funding. NXTP led the round and was joined by Roble Ventures.
PRIVATE EQUITY
- Francisco Partners acquired Macrobond, a Malmö, Sweden-based financial data and technology company, from Nordic Capital. Financial terms were not disclosed.
- HCI Equity Partners acquired a majority stake in Grasshopper Lawns, a Larksville, Pa.-based lawn-care treatment services provider to residential customers. Financial terms were not disclosed.
- Law Business Research, a Levine Leichtman Capital Partners portfolio company, acquired MBL Seminars Limited, a London-based business information, legal analysis tools, and networking for legal markets. Financial terms were not disclosed.
- PAI Partners agreed to acquire a majority stake in Infra Group, a Temse, Belgium-based network infrastructure services provider. Financial terms were not disclosed.
- Providence Equity Partners acquired a majority stake in d&b Group, a Backnang, Germany-based audio technology solutions provider for live entertainment, from Ardian. Financial terms were not disclosed.
- Sverica Capital Management acquired a majority stake in Zyston, a Dallas-based cybersecurity solutions provider. Financial terms were not disclosed.
EXITS
- Clearlake Capital Group and Symphony Technology Group sold Archer Technologies, an Overland Park, Kans.-based integrated risk management cloud software solutions provider, to Cinven. Financial terms were not disclosed.
IPOS
- Apogee Therapeutics, a Waltham, Mass.-based monoclonal antibodies developer for inflammatory diseases, plans to raise up to $265.6 million through the sale of 15.6 million shares priced between $15-17.
- Sagimet Biosciences, a San Mateo, Calif.-based liver disease and cancer biotech, plans to raise up to $79.9 million through the sale of 4.7 million shares priced between $15-17.
FUNDS + FUNDS OF FUNDS
- Long Ridge Equity Partners, a New York-based private equity firm, raised $730 million for a fund focused on growth companies in the financial and business technology sectors.
PEOPLE
- First Reserve, a Houston, Texas- and Stamford, Conn.-based private equity firm, promoted Nick Lednicky and Ryan Nicholson to vice president.
- Outsiders Fund, a New York-based venture capital firm, promoted George Easley to principal.
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