The co-founder and CEO of Slack recounts the unlikely creation and adoption of the fastest-growing enterprise software the world had ever seen.
When Stewart Butterfield and three colleagues sold Flickr to Yahoo for around $22 million in 2009, they quickly identified online games as a promising sector for their next venture. Online technology had come a long way since they launched Flickr in 2004, and hardware was much cheaper. Their new company, Glitch, would run games on the Adobe Flash multimedia player.
For what Butterfield calls “a whole bunch of reasons,” Glitch failed to take off the way Flickr did. Then, Steve Jobs decided Flash would not be available on the iPhone. With around $5 million left in investor capital, Butterfield and his partners decided to change course rather than give up and return the remaining funds to their investors. Why? While building games for consumers, the Glitch team had also built something useful for themselves: a nameless, digital messaging system with the ability to direct message both individuals and groups of people. Glitch co-founder Cal Henderson had also added a mobile app and made the messages searchable, so it became a repository for institutional information at employees’ fingertips. But developing the system wasn’t what the co-founders thought of as traditional work.
“It was totally different from the normal process of software development, or any kind of product development, where there’s a lot of ego involved in the decisions and proposals,” Butterfield says. “This was only exactly the things that were valuable to us.”
The challenge would be convincing anyone else that it was valuable, or even useful. Just pitching the idea to friends was hard, as the team lacked a useful construct to explain it. Slack wasn’t an “Uber for pets” or a “Zappos for cars.” Eventually, the team convinced some friends at a 120-person startup to try what would become Slack. Then it broke.
“It didn’t work at that scale,” Butterfield says, explaining that it took about eight more months before it could be released to the world. But Slack successfully infiltrated companies by word of mouth, sneaking past IT departments as workers quietly downloaded the software. Paid accounts followed, and demand built up so fast that, once released to the public in February of 2014, the company hit $1 million in annual recurring revenue within 72 hours. Slack became the fastest-growing enterprise software the world had ever seen. The rest–from the 2019 IPO to the $27 billion sale to Salesforce in 2020–is history.
To hear the full episode, in which Butterfield talks about navigating Slack’s fast growth, click on the player above, or find What I Know on Apple Podcasts, Spotify, Stitcher, or anywhere you listen to audio.