Why Twilio’s Lawson Didn’t Have to Cave to Activists

Well, that didn’t turn out to be too much of a fight. Twilio CEO Jeff Lawson on Sunday exited the company he founded, the enterprise software company said today, surrendering to activist Anson Funds with barely a shot fired. It didn’t take much to scare Twilio. Anson had hinted it could mount a proxy fight to win board seats if Twilio didn’t make changes, according to a report by my colleague Maria Heeter in late November. That was all it took! Perhaps Twilio could have held out a little longer. While Anson might have been well positioned to win a fight, victory wasn’t assured, particularly given how few shares the activist owned. Recall how Aaron Levie at Box, in a situation very similar to Lawson’s, fought off Starboard Value, a much bigger shareholder, in 2021. 

Sure, Lawson certainly looked to be extremely vulnerable to activist pressure. Last June, Twilio dissolved its dual-class shareholding structure, as it promised to do when it went public in 2016. At that point, supervoting shares converted into single-voting shares. Lawson’s stake evaporated from 21.8% to 3.7% overnight. The timing couldn’t have been worse for him. Since early 2021, Twilio’s stock price had fallen nearly 90%, after its revenue growth decelerated sharply and red ink began spilling out of every crevice. Predictably, as Maria chronicled in detail over the past few months, activists surfaced—initially First Legion, then Anson—starting last spring.