Craig Kaes - SVP of Engineering at SendGrid

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(Joel Beasley at 00:01:03) Remember, great leaders grow companies. Visit leaderbits.io/clear to set up your CLEAR review today. Today, we are talking to Craig, the SVP of Engineering at SendGrid, and we discuss advice for CTOs going through a merger or acquisition, winning over the team by solving the problems that really matter, and why as a leader, the most important thing you can do is bring in the next generation of leaders. All of this right here, right now on the Modern CTO podcast. Here we go.

(Joel Beasley at 00:01:41) This is the Modern CTO podcast. Now, I was very excited about this episode because I'm just a big fan of SendGrid. You guys came out, and it was like, I think it was you and Postmark and maybe one other company sort of just dominated the space out of nowhere. And for transactional—you guys invented transactional email?

(Craig at 00:02:11) Yeah. So our founders, Isaac, Tim, and Jose were part of the first Techstars class, and we were the—I believe—the first Techstars company to go public. So we're a tremendous success from that side of things, and we owe a lot to the Techstars program.

(Craig at 00:02:39) And Isaac was a serial entrepreneur, and so each company he set up, he would have to go and solve the password reset use case and felt like it shouldn't be as hard as it was. The amount of unicorn magic that was needed to actually get that password reset email to the inbox was tremendous. And he thought, well, maybe I can solve this problem for some other folks and start a company around it. And here we are now, 80,000 customers later. Turns out it was a pain point.

(Joel Beasley at 00:03:20) How did you come across SendGrid? How did you get into the family over there?

(Craig at 00:03:24) Oh, my goodness. It was a convergence of just a bunch of things that was pretty magical. I'd realized that I had been in a big company, Cisco, for long enough. I have nothing but good things to say about Cisco, and it's a big company. It was time to get back to something smaller.

(Craig at 00:03:48) And I met with a friend of mine to find out, okay, so here are my list of 47 things I'm looking for in my next job. Who in Colorado could meet these sort of requirements? And he listed four companies. SendGrid was one of them. And then completely unrelated, SendGrid cold-called me the next week wondering if I was interested in leading engineering.

(Craig at 00:04:16) Yes, I am.

(Joel Beasley at 00:04:17) Yes, you are. I love those moments in life when the serendipity and the timing and everything just falls into line. Those feel like the good right moments, when you're at the intersection of life.

(Craig at 00:04:30) Oh, yeah. Oh, yeah.

(Joel Beasley at 00:04:32) And are you still in Colorado?

(Craig at 00:04:34) My family actually goes back four generations here. So my great-grandfather was a carpenter, and he built some of the historic buildings here in Denver. And so I left for five years, but came back as soon as I could.

(Joel Beasley at 00:04:51) Where was your visit to?

(Craig at 00:04:53) So I went to University of Oregon for my master's and then down to Santa Cruz, California for my first job out of school, and then came back so my kids could know their grandparents.

(Joel Beasley at 00:05:07) That's incredibly important. I'm a native, multi-generation native in the town that I live in.

(Craig at 00:05:12) Okay.

(Joel Beasley at 00:05:12) And so we've got all the family here, and it just—I mean, I've traveled everywhere, but the nature where you are is insanely beautiful.

(Craig at 00:05:12) It is.

(Joel Beasley at 00:05:12) And same here. I live in—it's been rated number one beach in the world multiple times in the past decade. And so it's called Sarasota, Florida. It's an hour south of Tampa. The sand is like this white baby powder. That's why everybody likes it.

(Craig at 00:05:39) Oh, wow.

(Joel Beasley at 00:05:39) And so I love the fact that we have the family nearby, and it's just very useful for the kid not to grow up alone.

(Craig at 00:05:48) Yeah, indeed. And so you do this program to help emerging leaders sort of understand what it takes? You do this from your home?

(Joel Beasley at 00:06:03) Yeah. No. So from the office, we have a team of about 11 people out there.

(Craig at 00:06:08) You have a homey office.

(Joel Beasley at 00:06:10) I know. Well, it used to be actually a therapist office.

(Craig at 00:06:14) Oh, okay.

(Joel Beasley at 00:06:15) Yeah. So when we expanded—we started out in a small office, just two or three people, and then we did—so I'll give you the quick story if you'd like.

(Craig at 00:06:15) I would love. The origin story.

(Joel Beasley at 00:06:15) So I was at this point in my career, I had an app agency, and we just did contract work, had it for a decade, right? We had about 15 people, and I saved up some money. And as my first daughter was being born, I thought, I'm going on this 20-year career stretch right now. That's it. Everyone says it goes by so fast. I'm just going to listen to the smart people. And do I want to be doing contract apps for another two decades?

(Craig at 00:06:47) Yeah.

(Joel Beasley at 00:06:47) And I was like, not really. I have some savings. So I was looking at this idea of an AI startup. I wanted to build this standard that would be how it stores emotional stories, like memories and things like that. So I was considering that, and I figured if we built this large repo of data, then when the technology catches up, they will consume that, and we can use that to help create the AI personalities.

(Craig at 00:07:21) Mm-hmm.

(Joel Beasley at 00:07:21) But if my timing was off by two or three years, I'm out of money, and it doesn't have a direct benefit. There's no cash in the door today.

(Craig at 00:07:30) Yeah.

(Joel Beasley at 00:07:31) So I looked at that. I was like, okay, that's cool. But what would sustain any technology trend? And I thought, well, I was listening to this guy, Gary V. He's a marketing person who's popular in social media, and he was talking about adding value to a place where you have credibility and knowledge and sharing and helping others. And so I said, all right, well, I have this experience of CTO and engineer and all of that. So I'll just start sharing that. So it was a blog, then I wrote a book. And then before we publish the book, I started contacting CTOs to discuss the book so I didn't get flamed when I put it out, right? And those conversations ended up being really interesting. So we recorded it, put it out there to the world, and you just structure the topics around the book and how to help other people. And then people started listening, and we started getting—people would write us, subscribe to the show, and the listeners grew, and then it just got bigger and bigger and bigger. And at one point, I just said, all right, this is taking off enough where I can financially afford to put my focus here.

(Craig at 00:08:31) Mm-hmm.

(Joel Beasley at 00:08:31) Then about four or five months after we started, people were asking, they'd say, hey, we hear you on our commute, and you're talking about all these ideas with great leaders. How do we get our people to do that? To do what you guys talk about? We talk about giving credit and individual ownership and all of these things that we know we should be doing. How do I get my people to do it? So we ended up creating these small leadership challenges and built a platform in about 10 days, super ugly basic MVP. And deployed it, and they liked it. They got to see their engineering leaders doing these great things with their teams, and we then incrementally improve step by step as you build any product, right? And we got customers, and then, you know, I was Googling videos on YouTube on how to make a sale, how to do sales, because I don't have sales experience.

(Craig at 00:09:32) Sure.

(Joel Beasley at 00:09:32) And, you know, I learned how to do sales. I sold $100,000 in three months of annual recurring revenue. And I started talking to some of my friends I had in the VC space, and they said, wow, that's pretty good for never being in sales. And so we did a venture round, and then we grew. And so now I have a leadership company, and I spend my days talking to the greatest leaders on the planet, and it's honestly like a dream. It's the coolest. I couldn't have architected this idea five years ago. It's just unbelievable how it happened.

(Craig at 00:10:01) The amount of stuff that is available to people who want to learn today is astounding. So I know how to tie a bow tie because my son taught me. He knows how to tie a bow tie because he watched a video on YouTube. But you Googled, "How do I sell stuff?" And now you have a company. So that's pretty amazing.

(Joel Beasley at 00:10:24) Yeah. There's this guy named Brian Tracy who was popular in the eighties. He was like—you would buy his VHS tape, and it was like, do-do-do-do, like, the old eighties music. And it was like, "Today, we're talking about sell." His analogies were selling a vacuum door to door. But the thing about it was I had watched four or five different people, and there was something about his professionalism and his personality. I said, I want my brand to be that style as a person.

(Craig at 00:10:39) Okay.

(Joel Beasley at 00:10:39) And so I learned his selling style, which is—now that I'm learning more about—so it's just, we're only useful to people who have the need. And so it's just really, raise your hand, who has this need? Okay. Here is the information about our product, and then, you know, you go through it. And because, you know, that's, I don't know, we're just really good at the one thing that we do, and I like that. It makes it simple.

(Craig at 00:11:12) That's excellent.

(Joel Beasley at 00:11:12) But that's the story of how the podcast got started. And then—but here's the cool thing. Now that we have the leadership company, financially, it allows me to—now I go around the world and I speak, and I share what I learned on the podcast in a talk. I have a talk. I go to big companies, technology companies, and I share with them and their engineering leaders and just—it's packed full of value because I hate talks that are ambiguous or not clear. It's like, oh, we're going to talk about this idea over here and maybe some things you could possibly do in the future. I was like, we need tactical—I'm an engineer by trade. I need some steps, you know?

(Craig at 00:11:48) Yeah, yeah. So how can I help you today? What can I tell you that would be interesting?

(Joel Beasley at 00:11:55) Your biggest lesson as you became a first-time leader.

(Craig at 00:12:02) Oh, my biggest lesson as I became a first-time leader was that I needed to wear my big boy pants to work every single day. Biggest mistake I made in my career was around configuration UI for a pretty technical product that we had developed. I felt like we needed to burnish off all the magic that the thing could do and just focus on some simple customer use cases and hard-code the UI around that. Our architect felt like we needed to auto-generate the UI from XML. And we fought and we fought and we fought. And finally, I gave, and I knew it was the wrong answer. And lo and behold, a year later, we ended up throwing that thing in the dustbin, and it wasted a lot of money. And that was my realization that, oh no, my decisions matter a ton, and sometimes being a leader means not being enjoyed in the moment. And I just need to wear my big boy pants and take it.

(Joel Beasley at 00:13:26) I love it. That's like amazing advice. Wow. I mean, just take a moment and take all that in. What's your leadership style as a whole now?

(Craig at 00:13:37) Leadership style as a whole varies based upon stage of company I'm at. So SendGrid, now Twilio, is my third run at taking a company that was relatively small and chaotic and growing it into late growth stage, putting structure, order, and these sorts of things. In the early moments, it's a lot more hands-on benevolent dictator. And once a team is in place, once people understand how we're going about things, it becomes much more coach, mentor. These days, I'm actually working with the skip level, the next generation beyond my leaders, trying to help them understand how to be subversive within the system that we've got right now. How to accomplish what they need to get done by working around the rules that we've got in an intelligent way.

(Joel Beasley at 00:14:57) Do you have any examples or situations off top of your head that—

(Craig at 00:15:03) Great example. We have a just brilliant front-end principal engineer who has been very passionate about the way that we've done things and the need to rearchitect here or there. I encourage him to take that next step and actually work with teams from other sites to come up with a framework that would support all of the different UIs that we were trying to develop and then not ask permission so much, but just go ahead and start making that happen. And he went ahead and formed a tiger team around it, built the framework. We pulled in somebody from one of our other UI teams, so that's now making its way back over there. But given the timelines that we had, it would have been really easy for him to say, you know what? Let's just go ahead and use the thing that we've got and add incrementally onto it. I think it's more important that we let people who are passionate and who show a sense of ownership around something take risks once in a while. He took one. It paid off big time for us.

(Joel Beasley at 00:16:28) You mentioned something that I haven't heard, and I always ask questions when that happens. You said tiger team?

(Craig at 00:16:36) Oh, boy. We love the tiger teams. Yes. So pulling a few people who are highly skilled from different teams together and putting them in a focused situation. So maybe they even go so far as to isolate in a conference room over the course of a couple months, just so that they can make heads-down progress on one focus thing and leave their day job behind.

(Joel Beasley at 00:17:07) It's like an internal on-demand think tank.

(Craig at 00:17:10) Yeah. That's a great way of looking at it.

(Joel Beasley at 00:17:14) Is this from a book? Do you have a continued reading on this? I mean, I get it high level, but if I wanted to dive deeper into the tiger team concept, is there literature on it?

(Craig at 00:17:24) I bet you could find a YouTube video.

(Joel Beasley at 00:17:26) I bet I could. I didn't know if it was something Craig came up with.

(Craig at 00:17:30) No. It is not a Craigism whatsoever.

(Joel Beasley at 00:17:33) There's a word for it. It's Craig. There's not a Craigism. We've got the list of those on there.

(Craig at 00:17:38) That is by no means a Craigism, something that we do here that's actually a little bit unique with respect to tiger teams. When you pull a tiger team together, they've got just something that is mission-critical for the company. They get isolated from all the day-to-day. When they are successful, it's so easy to give them all of the accolades and just purely the efforts that they've made. And a lot of times, people who are just very thoughtful in their planning and diligent in their execution produce great results, but also produce no drama to go with those results. And so it's very easy for them to fly under the radar. And so we actually have an award that we give out on a regular basis within engineering that's the Ghost Tiger Award that goes to the team that provided the most value with the least drama. That's what I want. That's the one everybody should want.

(Joel Beasley at 00:18:52) Right? It's like I just did my job so well and created so much change and it didn't even cause any problems.

(Craig at 00:18:59) Yes, exactly. And it's so easy to ignore those folks, and they look over at, you know, diving save after diving save, get pats on the backs and wonder, you know, does something need to blow up for me to have a chance? And at least within Twilio SendGrid, no, you don't have to have something blow up to get recognized.

(Joel Beasley at 00:19:21) So the acquisition, that happened fairly recently, right?

(Craig at 00:19:25) We closed on February 1st.

(Joel Beasley at 00:19:28) I had interviewed at a conference in person one of the platform directors for Twilio's offering that they had where it was, if I'm remembering correctly, because it was last year, they had taken this call center application that was a bunch of components, and they've done some really unique engineering around it so you could pick and choose what components you wanted of theirs and then build on top of it yourself. It was really unique. But when I saw them, they were huge. They had the biggest booth. They were a very cool, modern company doing some interesting stuff on the engineering, but also had beautiful products.

(Joel Beasley at 00:20:04) I know SendGrid in my mind for having a beautiful brand. That was one of the first things I ever noticed about the organization. And so it seems like you guys pair well on the beautiful brand inside. But let's say that there's a CTO listening or, you know, director of engineering that is a little nervous about a pending merger or acquisition that may happen. What advice would you give to that individual?

(Craig at 00:20:30) Oh, golly. If the merger or acquisition is a good one, and so far in my career, I've been blessed to only be part of good ones—this is my third—there is so much opportunity for folks. So back in the day, I led engineering for Jabber, which got acquired into Cisco.

(Craig at 00:20:59) When we got acquired, it was a small team, maybe 30, 35 engineers. And over the course of a couple years, my team scaled up to about 150 across different sites. So we were able to do, oh, so much more. But Cisco recognized the value of the technology that we had at the time. And so 12 different business units were using the software by the time I left that group, doing all manner of things that we had never envisioned.

(Craig at 00:21:38) And so it was a really cool opportunity to see our baby grow up and just be wildly successful, more so than we thought it ever could be. I've also seen through acquisition, Cisco acquired a small company called Broadhop, maybe 50 people. There was a sales director there that they tabbed to lead the product organization. Today, and this is only four years later, five years later, today he is the general manager for their Mobility and Automation group, which I think has revenue north of $1 billion.

(Craig at 00:22:31) So opportunity that never, ever, ever would have been there within a small company. The acquisition of SendGrid by Twilio actually lets us both realize our dreams. So our dreams were very, very well aligned. Our vision was to become the world's most trusted customer communication platform. Their vision was to create the leading customer engagement platform for developers and companies.

(Craig at 00:23:02) So you can see these things are very, very much alike. To be able to provide that customer communication platform, you need different channels that you can use to speak to your customers. You need voice and video and SMS and push and email and so on. But you also need applications that those companies and developers can use to orchestrate that higher order communication, whether it's, you know, contact center or marketing campaigns. And we had a channel that Twilio did not. Twilio had multiple channels that we did not. They had the application that you're describing, which is Flex. That's a contact center application.

(Joel Beasley at 00:23:52) That's it.

(Craig at 00:23:52) And Flex will deploy a basic contact center out of the gate if you make no customizations along the way. But you can pick and choose the way you want it to function, which gives a greater degree of configurability to the company. So it's still SaaS, but it's SaaS with customization, which is somewhat a novel concept. So they had contact center, which we didn't, and we have a marketing campaigns application, which they did not.

(Craig at 00:24:30) And so we have the same vision. We have missing pieces of the puzzle on both sides. No brainer. Let's put those things together and accelerate our joint vision. So to that CTO or director, so much opportunity if the acquisition has been well vetted. Many acquisitions fail, but that's generally because of poor vetting upfront. That's not because of integration angst post-acquisition.

(Joel Beasley at 00:25:05) Now, is SendGrid engineering, was that technically considered, like, hyper-growth where you were prior to the acquisition? Like, where you've been in the past year?

(Craig at 00:25:19) On the revenue side, we were growing north of 30%. So we were a high-growth company. Within engineering specifically, if you want to measure maybe by headcount, we have doubled in headcount over the last four years from about 80-ish to 170-ish, and we'll be 200 in the next quarter or so.

(Joel Beasley at 00:25:50) So you were 80-ish to 170-ish when?

(Craig at 00:25:53) In 2015, when I started. Okay. And then you'll be 200 by, like, next year? We'll be a couple hundred in the next quarter.

(Craig at 00:26:04) In the next quarter.

(Joel Beasley at 00:26:05) Yeah. That's exciting. Are you hands-on involved with the talent acquisition, or is there, like, a small team that handles that? How do you set up your talent pipeline?

(Craig at 00:26:17) Yes. That's one of the things that I had my hands in early at SendGrid. Coming in, the recruiting process, the interviewing, all of that had grown somewhat organically, and it needed a lot more structure than it had. It was the one thing. So when coming into a new job, there's a great book out there called The First 90 Days that I would recommend to anybody that lays out, you know, how do you identify what type of situation you're coming into? How do you adjust your strategy based on that? How do you manage up? How do you set your list of criteria that you want to start knocking off?

(Craig at 00:26:56) And it makes the great point that, you know, first 30 days should be all about note-taking and listening and not getting involved in making big changes. And I think I was in SendGrid for a week when I froze all open reqs until we could fix the interviewing process.

(Craig at 00:27:29) Because there's not much that you do as a leader that's more important than bringing in that next generation of leaders and making sure you get that right. And we didn't have a system in place that would ensure that. So we have revamped the recruiting process a couple times now. I would say that we put more of the burden on the hiring manager's shoulders than most companies. I've seen recruiting used as a crutch.

(Craig at 00:28:12) We have very effective recruiters who can go out and source talent and do basic screening and get the right candidates and close and all of that. Where we really needed to step up was on the ownership from the engineering manager's side, just driving the entire process and providing a level of clarity to the recruiting team so that they could actually do their jobs. And so what that looks like is putting together a very clear job description, then going out to LinkedIn, finding a handful of people that would look like ideal candidates, describing why each one of those is an ideal candidate so that the recruiters have a great idea of what to go after, then letting the recruiters batch up a number of resumes, pass those over so that there can be a pre-screen before the phone screens. And the reason for that is a little bit of customization on those phone screens based on resume can actually help weed out a bunch more. But then engineering managers, you have an engineering background. You know, you're much more likely to respond to an engineering leader than you are to a recruiter.

(Joel Beasley at 00:29:41) Oh, yeah. They just hit the spam box all the time. It's like, nope.

(Craig at 00:29:46) Exactly. And so I look for my engineering leaders to go and look in all of those places where I don't expect a recruiter to make much headway. So if we're looking for somebody who's an expert in search, then I want my engineering leaders poking in the Apache Solr project reaching directly out to contributors over there. And so it just ends up being a much more active process on the part of the hiring manager. Actually, one of the—I'm an engineer, so I have crazy ideas all the time, right?

(Joel Beasley at 00:30:21) Like, products. It's just something that happens to us by default. And one day, I was thinking, you know, all these recruiters are contacting me, and there's no way—and I got on the phone with one of them once, right? Talked to them. There's no way for them to know the quality of, like, they have no concept of the code or quality. They can't vet anything, yet they're spending time with all these people and then trying to refer them into interviews. And I was like, why don't we just create some system that goes and scans, like, all of GitHub and starts running an analysis on their static text?

(Joel Beasley at 00:30:56) You know? This was a little bit before—now it's commonplace with, like, our Code Climates and our deployments and everything, but this is before this one. And then we could analyze the quality of their code, right?

(Joel Beasley at 00:31:07) And then we could give everyone a rating. And so now if a recruiter needs someone that's really good in Ruby that has experience with these gems, they could go Ruby Gems and then see who has the highest code quality scores. And then now they know how to recruit up that. But then I thought, I don't want to build a gun and give it to my enemy. I was like, pass.

(Craig at 00:31:31) Pass. Yeah.

(Joel Beasley at 00:31:34) I like that book. I want to learn more. It was called The First 90 Days?

(Craig at 00:31:39) The First 90 Days.

(Joel Beasley at 00:31:40) That's good. So we just put out, or it's not actually out yet—it's just hit design, like our design team—a guide called Your First 90 Days as CTO. And so the interesting thing was, like, that's the beginning, like, analyzing. And so I want to go look at this book to see if I can add more value to the guide through the content that's in this book. So you recommend this book? You like it personally? Highly?

(Craig at 00:32:12) Highly. Oh, so there's first 30 days is all about analysis, figuring out which situation you're in. The next steps vary based upon whether, you know, you've got a turnaround or you've got some other sort of situation. But it gives just very helpful pointers about how to manage upset expectations such that, you know what? Everything's on fire. The world has been napalmed.

(Craig at 00:32:43) I appreciate that there are trash can fires over there. These are the top three things that we're going to address over the next 60 days. And all the rest of those fires, they're going to get pushed out. And just taking the time to build the comprehensive plan so that you're not coming from a position of reactivity, but you're actually looking at the problems strategically. It was something that I actually talked about when I was interviewing for my leadership team, which is, okay, I need to understand how you can identify problems, priority sort, and then not select all. Because I guarantee you, if you go after the first fire you see, you're probably going after the wrong thing.

(Joel Beasley at 00:33:33) You're trying to identify, like, oh, here's the—I'm going to go get an early win. That's like the lure, right? I'm going to go get an early win, and I'm going to prove myself. I'm going to show myself, and then you end up solving a trash can fire while there's a blaze happening.

(Craig at 00:33:44) Yeah. Yeah. And the early wins are important. I wouldn't diminish them, but early wins without taking the time to look at the context, they don't provide as much value.

(Joel Beasley at 00:33:56) You want contextually aware, strategic early wins. Yeah. All early wins are not equal.

(Craig at 00:34:03) Yeah, that's right. There was a class at MIT Sloan where they talked about winning over a team. And the example that they gave was about a naval admiral who came in and was taking over a particular carrier. And the morale of the troops was just in the toilet.

(Craig at 00:34:36) And as he took time to analyze the problems, it came around that the thing that they hated most in the entire world was the fact that they had to strip the paint off the boat and repaint it every single year. That was a ridiculous waste of time. He agreed. Yes. Okay. Total waste of time, but it's got to be there for a reason, so let's figure it out. And what it came down to was that the bolts on the boat had to be protected so that they would not rust, and that was the reason for it.

(Craig at 00:34:58) And so with a very, very, very small purchase order, he ordered stainless steel bolts for the entire boat and ended the annual painting process, and now everybody's on board. Fantastic, small, quick win. But he could have just as easily come in and heard that they don't like the food and gone after that and have missed the real problem where the quick win would have mattered more.

(Joel Beasley at 00:35:44) I love that story. That's a good one.

(Craig at 00:35:46) Yeah, it is.

(Joel Beasley at 00:35:48) So do you have specific techniques that you use to drive innovation? Or I know that's a big buzzword, and it's kind of ambiguous, but let's talk about it. First of all, we can start with—so I got asked, the reason why I bring this up, right? I got asked for, like, a conference was happening and they're doing the pamphlet, the paperwork. You know, they hand everybody the book you get for your bag, the, you know, you can throw it away later. I mean, that thing.

(Joel Beasley at 00:36:11) And they asked me for a quote, and the question was, what is innovation to you? And, I mean, I felt like it was a boring response because I was like, it's just small incremental improvements over time. Like, that's just what the word means.

(Joel Beasley at 00:36:28) But companies sometimes will take innovation and make you think that it means something, like, entirely new and different, and a market can really only withstand, like, 10% innovation at a time. And so, like, do you talk about—first of all, let's start at the beginning. Do you talk about innovation on your team? How do you talk—what's the—if I say that word over there, if I talk to your leadership team over there about innovation, what are they going to tell me?

(Craig at 00:36:50) Oh, golly. Probably depends on who you talk to. So number one, I agree with you that innovation is often just small improvements over time. And it's really easy to focus on innovation as, oh my goodness, brand spanking new product, new market that you're going after.

(Craig at 00:37:18) We do have a process around that that I'll talk about in a moment. But I think that what gets lost is that innovation shows up in your process. Innovation shows up in your tooling. Innovation shows up in how you lead. It's not just about product innovation.

(Craig at 00:37:40) And I think that you would lose people talking about innovation. For those contexts, people here would know it as ownership, acting like an owner. Like, if you see problems, fix it. If you have great ideas, feel free to be subversive. And, in fact, I'll even happily coach you on how to get around the system that's causing you problems.

(Craig at 00:38:14) If you want to get around dependencies between teams and you want to develop together, have an internal open source movement. Like, just get around the system. That's innovation. On the product side, we actually do think about the world in terms of horizons. So Horizon One is, for SendGrid, has historically been around transactional email. It is a problem that is solved well where we can be the market leader, and we look to drive continued differentiation, higher scale, more trust with the customers.

(Craig at 00:39:03) But that's not groundbreaking sort of feature changes. The second horizon is that next business that's going to launch, which for us has been marketing campaigns. And there, there's a lot more opportunity to do new things and go after new markets. Then there's horizon three where we've traditionally had a labs program, and the labs program has a formal process around how they validate that the innovation is something that the world would actually want. And so it starts with the press release.

(Craig at 00:39:45) So they put together the press release around, hey, this magical thing that doesn't actually exist has just been created, and then they get that in front of customers to get their reaction. And they look to make sure that the reaction is actually visceral because people will be polite. They'll tell you your idea is a great idea, but they wouldn't buy it. And so there needs to be an emotional reaction to that press release to say, okay, now we're on the right track. And the next step is that prototype. It's the looking at your article on LinkedIn today, it's the Styrofoam hairbrush.

(Joel Beasley at 00:40:28) Right.

(Craig at 00:40:30) Getting that in front of customers and saying, you know, here's our interpretation about what a solution would look like that addresses the problem that we talked about in our press release. And, again, you're looking for that visceral reaction. You're getting it in front of the original customers and a new set. And so that's how we have generated ideas for that next thing that's bleeding edge. And in terms of investment profile, it has been sort of 65% toward horizon one, 25 to 30% to horizon two, and like 5 or 10% to that, you know, groundbreaking stuff that probably won't pop up for two or three years.

(Joel Beasley at 00:41:18) How do you run your labs? Do you have a dedicated team to it? Is it like what you mentioned before where you have a couple people come together, like, in a think tank style? Or how do you run your labs area?

(Craig at 00:41:31) So, historically, we have run labs as a completely separate team. The skills that it requires, the rapid prototyping, the customer engagement, they're specific skills. Recently, we have made the decision to distribute that wealth. We'll see how it goes. So our labs group is actually going to now embed in a number of different engineering teams and drive that discipline and teach those skills to the engineering team so that we can do this at greater scale.

(Joel Beasley at 00:42:12) And as we wrap up, what are you most excited about today? Like, what are you jumping up out of bed for? Like, what's the project or what's the area of the business that you're just really excited for?

(Craig at 00:42:24) It goes to the merger between SendGrid and Twilio. Getting that right is going to be critical for us to realize now our combined vision. And there's a lot of intrigue in how all of it comes together technically. Customers don't want two bills. They want to be able to have a platform that provides insights that are independent of channel.

(Craig at 00:43:00) And so being able to pull that together such that we have the contact center app or a marketing campaigns app that can look at all of the communications across all the different channels and say, you know what? Bob engages at a higher rate on email than on SMS, so we're going to optimize and tune the communications we do with that bias for these types of communications. There's a huge opportunity for the platform that we jointly build to be a truly better together sort of platform. And there's so much technical and so much ideation that needs to happen around that to make it a reality.

(Joel Beasley at 00:43:54) That's the exciting part, figuring out how these are going to come together.

(Craig at 00:43:57) Absolutely.

(Joel Beasley at 00:43:58) Nice. I like what you mentioned too, the specific feature example, because you're engaging that individual based on how they want to be engaged. And that'll change per product too. Like, I could have one company that's on your platform sending me stuff, and I want to communicate through email, and then another customer on your platform is sending stuff. But for that product, for whatever reason, I'm communicating on text.

(Craig at 00:44:21) Absolutely. And so being able to tune that is critical. The other aspect of the integration that I'm super excited about is there's a lot of change, and there are a few people who love change, who get excited about change. That is not the natural normal reaction. And so just being able to help shepherd a large body of people into a new world in a way that they can actually wake up excited, it's a real honor to be able to lead in that way.

(Joel Beasley at 00:45:05) And then as last question here, last bit of value. Are you a fan of Elon Musk? Like, in general of what he's doing for the world, not his recent media issues.

(Craig at 00:45:20) So I drive a Tesla. So at some level I've got to be a fan. The notion of being the world's biggest battery company that happens to sell cars as an example of where you can use them, I love that. I was actually having a conversation about Elon with my son who's in a computer science program. And just when somebody is able to have an idea that's that big and that's that far outside the box, it's because they spend a ton of their time thinking outside the box.

(Craig at 00:46:05) And that box is there for a reason. And so they'll miss on more ideas than they hit. So that, like the media stuff that you're talking about right now, you would expect somebody who hits on something as big as what he has to look like a buffoon in 27 other areas because landing outside the box is not always the right choice. That's how we get innovation, and we just sort of accept the oddness that comes along with it.

(Joel Beasley at 00:46:41) So let's say he invites you over to his house. He texts you, text invite Twilio. He texts you, and you go over to his house, and he's done this nether outside the box thing, and he has a time machine. And you get to go into the time machine and give yourself one piece of advice. Right, one piece of advice in the past, you go to any point in the past you'd like, what would it be?

(Craig at 00:47:11) It took me forever to figure out not to separate business and personal. And I think the advice I'd give me, I'd go back to just starting out engineering line manager me and let me know, you know what? It's okay to have all the personal relationships with all the people and be your authentic self and let folks know, you know what? Today, I'm just having a really rough day, and I'm probably going to be cranky, and it has nothing to do with you, and appreciate people for their authentic selves. Listen better, it would have made a huge difference.

(Craig at 00:48:07) What I admire in the leaders who I respect the most is that they're genuinely good human beings first.

(Joel Beasley at 00:48:21) I love it. That's like our tribe. I love it. It was fantastic. Craig, you are a wealth of leadership knowledge. I mean, I'm so grateful that you came on today and shared. I think this podcast is, like, the most valuable podcast we have ever done. So I'm so glad we went forward and had the conversation.

(Craig at 00:48:45) Thank you very much for having me on and for spending the time with me. And I am looking very forward to getting a princess.

(Joel Beasley at 00:48:56) Yeah. Princess Chloe will reach out and get your address after the show. Okay. And then we will ship it out, and you'll receive it in a couple days. Alright.

(Craig at 00:49:05) Awesome. Thank you very much.

(Joel Beasley at 00:49:06) Fantastic day. Thank you so much, Craig. Thank you so much for listening. If you'd like to help, please take a moment right now to open up the iTunes app and leave a review of the podcast. If you take a screenshot of the review and text it or email it to a friend who needs to listen to the podcast and then CC me, [email protected]. If you CC me on the email, I'll send you a copy of the Modern CTO book or give you a shout out on the podcast, whichever you prefer. We're trying to get listed on the top 100 for iTunes, and I need your help in order to do this.