This is an excerpt of a live conversation held on October 5th, 2015 between Stewart Butterfield, Slack Technologies co-founder and CEO, and John Battelle, NewCo co-founder and CEO. The conversation was part of festivities surrounded the fourth annual NewCo San Francisco event, NewCo’s longest running festival.
John Battelle: Please welcome Stewart Butterfield. Thank you for coming, Stewart.
Stewart Butterfield:` You are welcome.
JB: I’m wondering, [to the audience] how many of you use Slack? [Hundreds of hands raise.] And how many of you are on Twitter? Wow. Slack wins! That’s amazing, because a year ago this probably would have been just 15% of the group.
SB: At best. Slack is ten times bigger than it was a year ago.
JB: I was looking at older reporting about Slack which tracked the growth. “Slack just passed 15,000 users, then 50,000 users, then 300,000, 750,000. It just kept going.” How much time passed between the gaps?
SB: In the early days the growth was often up to 20% per week, and that compounded pretty quick. We are now settled down to a more reasonable 3-4% now, and we’re currently at roughly 1.25 million.
JB: 1.25 million. It was only May of this year that you were at 750,000 users, is that right?
SB: It is. We’ve grown a lot. We were about 80 people in the company at Christmas last year. Now we’re about 250. So about 4 times growth internally over the year.
JB: What inspired the passion in Slack users? Can you tell us the founding story – was it an unlikely start?
SB: It’s not “unlikely”. “Insanely lucky” would be a good way to put it. The company that made Slack was actually founded six and a half years ago to make a web-based multiplayer game, but it didn’t work at all. Over the course of 3.5 years working on the game, we grew to about 45 employees. We developed a system for internal communication, and we decided to make that a product, Slack.
JB: How much time passed between when you thought there might be a product there, and when you released it?
SB: We started developing right at the end of 2012. By March of 2013, the tool was up and running. By May of 2013, we were pinging our friends at other startups asking them to try it. By August of that year, we did a preview release. It was essentially done at that point, but we didn’t want to say so until we had more time with it, because we didn’t want people to feel it was flakey. And then probably six months later, we officially launched Slack as a product to the public.
JB: I see. When did you get the sense that this thing was a rocket ship?
— Bianca W. Loew (@biankayam) October 6, 2015
SB: I think maybe a couple of months after the initial launch, February 2013. At the point, the growth was still really crazy. People were paying for it, and people were sticking around. That was really the main thing. With the game, we were always losing people. Even the most successful use cases would only stay engaged for five weeks or so. We had raised 17.5 million dollars in venture capital investment, but it turned out the game would never justify that, which means it just wasn’t going to work. If the game was something that six people had worked on for a year, I think we’d still be working on it now. The big problem was, people would sign up to play the game, try it out, end up leaving, and, simply put, be done. JB: This isn’t the first time you’ve made a “massively multiplayer” game player, and it didn’t work out. But you have sort of multiplayer game in Slack. It feels, in a way, like an operating system for work. SB: Yes, well Flickr is kind of like a “massively multiplayer” photo sharing tool, and all four of our founding team worked on the Flickr team, so I think that’s kind of in our DNA. JB: Do you see Slack as an operating system of work? SB: Yes. We ask our customers, “What did you use before Slack?” 80% of time they say “Nothing.” JB: Do they use email? SB: Yes. They use email and a little SMS and a little Skype chat and Google Hangouts, etc. The difference is, if you were to start a sales organization today, they’d make a decision about the CRM they were going to use. If you were to start a software development organization today, you’d definitely make a choice about source control before you ever wrote any code. You would never just start writing code and save it as a text file on your computer or something like that. If you’re going to start a new project or a new company, very rarely does anyone make an explicit decision about what one is going to do to communicate within the organization. JB: Why do you think this is happening now? What’s changed the code of work so much that this is embraced? Is there some anthropological insight here? SB: I think so, and I think the true reasons are probably something that will only get clearer. A lot could change. I first got online in 1992. I had a Blackberry when they first came out. Messaging has been part of my life since I was 19. My mom, by contrast, although she’s been using email for a long time, just sent me her first SMS maybe 2.5 years ago. For most humans, messaging is a new part of the picture. That’s part of it. It was only three years ago that we have been able to get Internet anywhere on our phones and utilize that advanced technology. Taking all of that into consideration, if we had started Slack three years earlier, I don’t know if it would have worked.
JB: There have been lots of “workforce collaboration” tools – Notes, for example, was initially a kind of workforce collaboration suite. That said, they all felt kind of imposed and hierarchal and, fundamentally, unfriendly, whereas Slack seems to have a voice. How considered is that voice?
SB: It is quite considered. We have a wonderful Director of Editorial, Anna Pickard. There was a time when I wrote every tweet myself. Then Anna and I started spending months workshopping every tweet to get it just right so that the language is approachable and friendly, but without being slapstick or whimsical. There’s a really fine balance there. My all time favorite Slack tweet is, “Absolutely!” It’s got that perfectly positive attitude.
JB: It strikes me that something has changed in the world of work. People want to embrace that “Absolutely!” sentiment in their work, as opposed to a “command and control” approach to workforce collaboration – one in which team members can’t let their hair down.
— angela kyle (@realtimeangela) October 6, 2015
SB: That’s changing pretty rapidly, and it’s not just us. I don’t know when Zendesk started, but if you look at their marketing, they have a very friendly approach, what with their “big fat Buddha” logo. We are in a shift. We figured people on teams would want this. Therefore, they would make the decision to use Slack, even if that’s not how enterprise software is traditionally sold, or IT doesn’t like it. JB: Let’s talk about Flicker, another company you founded. You have said many times that you feel like you sold Flickr too soon. While Flickr still exists, and I’m sure you are proud of the fact that it does, it strikes me that photo sharing is probably not solved – at least not to your liking. Is that fair to say? SB: I think that’s fair to say, but I’m not sure it’s the kind of thing that can be solved. To a point, there is only one best application of technology. We launched Flickr in February 2004 and had completed the acquisition by February 2005, so most of what people know happened after then. Even by 2006, it was obvious that Facebook was ahead of us in terms of the social sharing of photos. With Instagram in 2010, it was obvious that there was a better way for most applications. JB: Let’s discuss your point of view around “venture capital,” because I, as an entrepreneur, love the things you’ve been saying lately – they’re not very typical. Your attitude seems to be, “if the money is there, what the hell, take it.” SB: I have to be quite sure – 90% to 95% sure – that we’ll grow into the valuation that we’re offered. Because if we were ever in a situation where we had to accept a lower valuation, for anything IPO or a future financing round, then that would be dangerous. But if I think that we can do it, and the terms are really good, then I say, “Let’s do it.” I was born in 1973, and I’m a product of stagflation, though I wasn’t conscious of it at that time. My father was a real estate developer in 1982 when interest rates went to 18%, at a time when every real estate developer in the world was going bankrupt. I graduated from high school in 1991, during the worst recession for 50 years, I went through the dotcom crash in this industry, so I’m aware of the cycles. But I’m also aware that it’s impossible to call the bottom or the top of the market. JB: You’re saying, now’s a good time to take money, if you can get it?
SB: We might look bad if the business continues to grow, if the market continues to improve, and there’s no bottom. If that happens, we could have raised money at a much higher valuation. In 2014, we raised money at a 250 million dollar valuation. Six months later it was 1.2 billion. Six months after that it was 2.8. Should we have waited? I don’t think so. That’s obvious in retrospect, but you don’t make decisions that way.
JB: What do you know—either from personal experience or from what you learned raising these last rounds—about selling companies? You sold Flickr, do you want to see Slack through to IPO or, perhaps, some other outcome? SB: I have the responsibility toward our investors. I want to make prudent decisions to the best of my ability. That said, I also know from our own investors, the team at Slack, and my own experience that I will never have an opportunity like this one again. We have great confluence of factors that have come together at the perfect time. It’s not that we are so much better at collaboration than anyone else but our timing is perfect. We had influential early users. Also, I am privileged because it’s easier for me to get access to the press. All of these things and—I think if you are at a startup you’ll relate to this—we made a number of decisions that were either Decision A or Decision B, and there were good arguments on either side of the coin. We were lucky enough to get them right several times in a row. So, there’s an element of luck in it, too. JB: I want to ask you a final question. NewCo is a celebration of San Francisco, and I have not seen rents in San Francisco at the level that they are at new since 1999, when I signed 80 million dollars of leases… that did not work out for me or our landlords. Are you concerned? SB: Yeah, I guess I’m concerned about multiple factors. There’s definitely an important conversation to be had about gentrification and the kind of city this is. If you take Hayes Valley for example, it was kind of a rough neighborhood, but that started to change after the earthquake. I lived near there 10 years ago, and it was mostly bodegas, liquor stores, and a couple cool restaurants. Now it’s all places that sell nice cheese, and desserts, stuff like that. And, I like fancy cheese and those things, but the sum of those changes is that that neighborhood is not nearly as interesting as it once was. I think that’s true of San Francisco generally. JB: There’s really high end weed shops too. SB: So there’s that. There’s the sustainability of the housing market. I spend time in Vancouver and, relative to salary, it’s even more expensive. Maybe there’s enough money in the rest of the world to keep these markets going forever but it’s certainly a worry. And third, San Francisco is a very hard city to change housing policy and I don’t know when that’s going to happen. JB: One or two more questions before we wrap up. Is it true, do you believe that messaging is the new OS?
SB: It’s not an OS in the traditional sense, but it’s a great analogy. Someone tweeted that Slack is the perfect blank canvas operating system for your company, and I think to a large extent that’s true. I think we have a lot of work to do as a platform, but the opportunity is there. When you look at how people interact with their boss, or handle HR organization, booking corporate travel, checking in on project management, scheduling meetings or learning the local jargon that the company uses— any of those interactions, we’ve found people spend about 2 hours and 50 minutes active in Slack every day. And that’s a lot. That‘s the one thing you have open alongside whatever really specific application you use for your work, that might be Salesforce, or Photoshop, whatever you need. To the extent that its not a portal, but kind of a bus that negotiates the messaging you have in all kinds of applications, that’s a huge productivity gain. So yes… sorry, that was a long answer.
— Owen Thomas (@owenthomas) October 6, 2015
JB: Do you see creating more kinds of Slack apps? Possibly different or adjacent stuff, or are you going to focus on one true app?
SB: The answer is probably not. There’s two reasons for that, one is, people can only do so much. One thing we’ve observed is that software’s being applied to more and more kinds of problems. And 20 years ago, most people got most of their software from Microsoft, but now Slack, as a company, we buy stuff from 50 different people. A lot of these product categories didn’t exist 5 years ago. So there’s just too much for anyone to make a suite anymore. Maybe incrementally we can do more, but I think we’re better served by letting people choose the best tools for them, and trying to make how they use them a little better. For example, of you and I are working together in Dropbox and Google Hangouts, I’ll send you a link to the Dropbox file and it won’t have any information about the file, just the URL. If I send it to you in Slack it will have the file name, give you a preview of it, and we’d index the content for search later. Do that radically change your experience of Dropbox? Probably not, but it’s just a little bit better, and if you can do that across the many apps that you use then we’re in a great position to be part of your work experience forever.
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