It’s late morning on a Thursday in September, and Slack Technologies CEO Stewart Butterfield has convened a meeting with his design and product heads in the company’s low-key San Francisco headquarters.
On the agenda is the question that’s been most on Butterfield’s mind lately: how his $US2.8 billion ($3.9 billion) start-up, which makes business-collaboration software, can be as good with 250, 500, or a thousand people as it was when he founded it with a team of eight.
For today’s meeting, Butterfield, sporting camouflage suede wingtips and argyle socks, has prepared a list of “teachable principles” he wants his people to internalise.
Butterfield is off and running when something distracts him: Brandon Velestuk, Slack’s design director, is video-conferencing from Vancouver, and his chair is squeaking.
“You know how those f—ing chairs make that f—ing noise?” Butterfield says. “Can you take all the squeaky ones and drag them out of there?”
For another CEO, this moment might qualify as a lapse of focus. For Butterfield, it’s a handy object lesson: if you’re willing to tolerate squeaky chairs, what else are you letting slide?
No element is too minor for his attention. All the bathrooms in Slack’s three offices play French radio because he believes no one should have to hear their co-workers’ bathroom noises. He personally wrote the first several thousand tweets from Slack’s Twitter account. Minutes before his chairs outburst, he was suggesting a new seating plan for Slack’s designers, to reduce competitive time-wasting.
Equal parts ADD and OCD, this extreme attention to detail has made Slack, by some measures, the planet’s fastest-growing start-up.
Twenty months after its February 2014 launch, it had more than 1.7 million users, 480,000 of them with paid accounts that cost $US8 to $US15 a month. That adds up to $US45 million in annual revenue, and blows away the conversion rate of other “freemium” enterprise software products.
Its user base grew 5 per cent each week for 70 weeks running. [Slack plans to open an office in Melbourne in early 2016, as a base for Asia-Pacific operations.]
Cody Pickens
COMMUNICATION THAT REALLY IS PAINLESS
Salesforce, eBay, NASA, HBO, Intuit, and Mansueto Ventures (which publishes Inc.) are among the estimated 90,000-plus companies using it. “We’ve been looking at our growth week on week for the past year saying at some point real soon, it’s going to slow down,” says Cal Henderson, Slack’s chief technology officer and a co-founder. “Otherwise, more people than live on the earth would be using Slack.”
But it’s how Slack has achieved its spectacular growth that explains why it’s Inc.’s Company of the Year. Communication is the essential activity of the information economy, and keeping that communication efficient is the essential challenge.
In survey after survey, knowledge workers report email and meetings as their biggest drains on productivity. Plenty of software companies claim they’re making work communication less painful and more fun, but Slack is the only one that is doing it so well that its product literally sells itself.
That’s right: Slack doesn’t have any salespeople. Only recently has it begun to advertise. Ninety-seven per cent of its new customers are referrals. People hear about how great Slack is – from friends who have it in their offices, or from co-workers who used it at their last job, or from people they follow on Twitter – try the free version inside their teams, then get so hooked on it, the corporate IT buyer is obliged to pay up, or risk mutiny.
That’s even more impressive when you consider that office software is not a product category known for inspiring warm fuzzies.
As a communications platform that lets team members message one another, one-on-one or in groups, its innovations appear modest enough. Conversation threads are easy to search later, flexible architecture cuts down on unnecessary chatter, and smart notifications let you concentrate on other tasks without missing something important.
CONVERTING THE MASSES
Slack plays well with other popular business applications, and there are cute flourishes such as emoji and animated GIFs. All nice ideas, but nothing mind-blowing.
Yet somehow they add up to the kind of product people proselytise about, in a way usually reserved for beloved consumer brands like In-N-Out Burger, Zappos, and Virgin America.
“It was instantly apparent how much better it was than anything we had,” says Harper Reed, the CEO of mobile commerce platform Modest. His start-up was one of Slack’s early test users. His team has stopped using internal email, and his endorsement on Twitter helped bring in several other early customers.
“People don’t feel this way about companies, and they definitely don’t feel this way about their work tools,” says Ali Rayl, Slack’s head of customer support.
Slack is the exemplar of a trend analysts have dubbed the consumerisation of enterprise technology. It’s the idea that the ubiquity of smartphones and the popularity of apps such as Facebook, Instagram, and Candy Crush have changed our collective expectations of how software should look and function, creating huge opportunities for business applications as intuitive and user-friendly as the ones people use for fun.
But it’s a big jump from user-friendly to user-adored. In his book Can’t Buy Me Like, longtime Advertising Age columnist Bob Garfield explores how certain brands, like Patagonia and Krispy Kreme, tip over into consumer cults.
The most powerful brands, he says, are the ones that people don’t just love, or even evangelise for, but also identify with. “It’s why people put public radio station stickers on their cars,” he says.
THE HUMANE TOUCH
That Slack users feel an emotional attachment to the brand is no accident. From its earliest days, Butterfield and his co-founders have sought to ensure that, besides useful, Slack, the product and the company, would be fun, thoughtful, humane, whimsical and erudite.
When you open the app, it greets you with a welcome message like “What a day! What cannot be accomplished on such a splendid day?” or “You look nice today”.
Users can bring their own whimsy to the party by manipulating the programmable host, Slackbot. At Modest, it’s set up to alert staffers whenever the doorbell rings; through an integration with Envoy, the sign-in software, it sends around a dossier on visitors before meetings.
“It’s very, very, very quick for anyone who interacts with Slack to consider Slack the entity, their friend,” says Reed, who ran technology for President Obama’s 2012 campaign before starting Modest. “That’s super-weird.”
Slack’s work force, now numbering around 300, has grown so fast the company has had to find new San Francisco offices twice in the past 15 months.
Its current 4460 square metres of space is a sublet from Eventbrite; even though it’s far from full, Butterfield would like another 3000 square metres or so. Managing a company growing by the hour is a high-adrenalin task. He likens it to parkour, the high-velocity urban-gymnastics discipline based on military obstacle course training.
“If you slow down, you’ll crash,” he says. “You’re constantly surveying the landscape for a ledge you can bounce off or a wall you can run up or a handrail you can flip over.”
Slack’s $US2.8 billion valuation, attained when it raised $US160 million from Social Capital and other top-shelf venture capital firms last May, puts it on the list of Silicon Valley unicorns.
STAYING POWER
Firmer proof of its staying power can be found in how seriously big, established competitors like Microsoft, Google, and Facebook are taking it, and in the large number of start-ups hoping to eat some portion of Slack’s lunch.
When Microsoft unveiled the latest version of its Office software in September, the company’s head of marketing, hyping its new collaboration and chat features, hopefully described it as a “Slack killer”.
Jason Fried, co-founder and CEO of the office communications company Basecamp praises Slack’s growth, but cautions that chat is “not really a great way to have thoughtful, thorough discussions. It creates a lot of anxiety and fear of missing out”.
Butterfield knows better than to dismiss any of these threats, but he’s not exactly sweating. “In the plausible universe of worst cases for us as a business, it’s still fantastic,” he says. “There’s always a question of the magnitude of success, but it would be almost impossible for us to f—k it up at this point.”
Butterfield, 42, isn’t the guy you think of when you think of enterprise software. He was raised on a commune in rural British Columbia by hippie parents who named him Dharma. (He changed it.) He has a master’s degree in philosophy. He named his dog LMNOP. He plays ukulele.
Butterfield enrolled at the University of Victoria with the intention of becoming a professor of philosophy. Midway through grad school, however, he noticed his friends with PhDs were having trouble finding jobs, while his friends with programming skills were living large amid the dot-com boom of the 1990s.
Cody Pickens
GAME-CHANGER
Butterfield, whose summer job was building websites, changed his plans.
In 2002, he assembled a team to build an online video game called Game Neverending, a world-building fantasy adventure with social media elements. His collaborators included Eric Costello, Serguei Mourachov, and Henderson – the foursome would go on to be the nucleus of Slack – plus Caterina Fake, Butterfield’s then-girlfriend and later wife. (They divorced in 2008.)
It was a lousy time to be building a big online game: the dot-com bubble had popped, and Enron and WorldCom had further spooked the economy.
“We were pretty much doomed,” recalls Henderson. Butterfield hatched a plan to take some of the code written for the game and turn it into a photo-sharing tool, with the idea of spinning it out on its own to generate revenue.
The plan worked, sort of: Flickr, as it was called, was soon growing so fast, it couldn’t afford the new servers needed every week to host all the photos people were uploading.
When Yahoo offered $US25 million for Flickr, it seemed like the perfect answer. Shortly after the sale, however, Flickr got reshuffled into a division it didn’t belong in. While it languished, Facebook and YouTube rapidly overtook it as the biggest social sites.
“We felt like we’d been sold a bill of goods,” says Henderson.
Butterfield gritted his teeth through three years at Yahoo, and then left in 2008, ready for a do-over. He summoned his co-conspirators (minus Fake) and set about building a massive multiplayer game called Glitch.
Another social fantasy game, with a narrative involving giants and time travel, Glitch raised $US17 million from Accel Partners and Andreessen Horowitz, but the timing was again bad: they were building a desktop game at a time when users were migrating over to mobile devices.
TEARS BEFORE BAD TIMES
After some hard conversations, Butterfield and his partners made the decision to shut down Glitch in October 2012. Butterfield broke down in tears telling his staff. They offered the VCs their remaining money back, about $US5 million, but were told to keep it and try to build something else with a skeleton crew.
Taking stock of the IP they’d amassed, they hit on one idea so obvious no one remembers exactly who suggested it first.
While building Glitch, the team had been communicating via internet relay chat, a chat technology that organises conversations into channels. An effective messaging tool was essential, because Costello was in New York City, Mourachov in Vancouver, and Henderson in San Francisco.
With Butterfield splitting his time between the latter two, the whole team was rarely in one time zone. Over the years, they had written their own IRC application, refining it again and again to suit their needs.
“We knew that whatever it was we did next, we didn’t want to do it without a similar system,” says Henderson. Maybe that meant other companies might want it too?
It was Butterfield who came up with the name Slack in a middle-of-the-night fit of inspiration. He visualised it as a loose piece of string connecting two tin cans.
“Communication is one of the things that causes tension in an organisation, and we wanted to relax that,” he says.
NAMING RIGHTS
Almost everyone else hated the name, pointing out that slacking is the opposite of working – bad advertising for productivity software. Butterfield, who liked the cheekiness and loved the sound of the word, coined a “backronym” to justify it: searchable log of all communication and knowledge. He got his way.
Over the next 17 days, Butterfield typed out a pitch deck explaining what Slack would be: all your team communication in one place, instantly searchable, available wherever you go, a platform that “builds up to the edge” of other applications, like Excel or PowerPoint, but doesn’t seek to reproduce them.
Almost to a letter, it’s the road map Slack has followed. That sort of straight-line progress is rare.
“In software design, it’s all about making a guess, trying it, and then learning from the experience,” Butterfield says.
He believes he and his co-founders created a perfect product because, in a Zen twist, they weren’t thinking about it as a product at all.
“We were totally non-self-conscious about it,” he says. “It was just, ‘It’s driving me crazy that I can’t search’ or ‘It’s driving me crazy I can’t post from iOS,’ and then we’d spend the minimum number of minutes fixing it.”
“It’s not how you want to start companies, necessarily, but there’s something to be said for the organic nature of it,” says Accel’s Andrew Braccia, who sits on Slack’s board.
Also present from the very beginning was Slack’s unique approach to customer support. Rayl, who oversees it, was one of Slack’s original eight employees; her team is now the company’s largest.
It’s her job to ensure that what is often the most frustrating experience a user has – trying to get answers when something’s not working – is among the most delightful.
“We’ve always thought Slack is not just this thing you open on your computer or your phone; it’s every interaction someone has with us,” Rayl says.
Thinking about what she wanted Slack’s interactions with customers to feel like, Rayl considered the companies best known for inspiring loyalty, like Virgin America and Zappos.
BURRITO INSPIRATION
But the one that stuck with her was a Filipino burrito truck called Señor Sisig. Family lunch is a tradition at Slack, and when Señor Sisig comes to the neighbourhood on Thursdays, scores of Slackers line up for it. Somehow, the woman who works the window seems to know every regular’s usual order.
“The experience of that super-personal touch, where I am a person to that person giving me a burrito–that’s f—ing amazing,” Rayl says.
To recreate that feeling, Rayl tries to hire customer support reps with emotional intelligence and writing ability. Technical knowledge can be taught; personality is paramount.
“We are a very liberal-artsy company,” Rayl says. “You need to feel like you’re talking to someone who has read a few books – someone who has a lot of interests outside the office, but right now they’re just hanging out with you, talking about Slack.”
It’s 6.30pm, and Butterfield is hanging out, talking about Slack. He has read more than a few books; last night he finished Ta-Nehisi Coates’s Between the World and Me and then fell asleep starting Judd Apatow’s Sick in the Head. Now, at the end of a 12-hour workday, he’s a little spent.
It’s Slack’s moment to seize, and Butterfield has the anxiety level to match. Having all that cash in the bank is useful, but with it come high expectations. People quit great jobs at Google and Uber to work for Slack on the assumption it will get bigger still.
GREAT EXPECTATIONS
“Not that the expectation that everyone should make millions of dollars is all on me,” Butterfield says, “but the expectation that they didn’t make a dumb decision that was harmful to their families is.”
His job these days, especially when he’s in San Francisco, is less about making stuff and more about communicating values. The only way to prevent the organisational drift he fears as Slack scales up is to “continually remind people” what it stands for.
Hence those teachable principles. Butterfield even hired someone with a doctorate in education to oversee internal training.
Having been part of two failed start-ups, Butterfield has no illusions about how often opportunities this big come around. But by this time of evening, Slack’s offices have pretty much cleared out. That’s how Butterfield wants it.
Back in the Flickr days, he worked 60-plus hours a week and expected everyone else to keep up. Since then, he’s become a different kind of boss. He and his co-founders are all parents, and they’ve been careful to make Slack a place where grownups with lives feel welcome.
“Work hard and go home” is a motto around the office. One of the features coming next to Slack: a do-not-disturb mode.
Note the irony here. The guy whose company allows teams to defy the constraints of time and space believes the best work happens when people get together in a room, have lunch together, go home on time.
“Most people will have a small number of effective hours to work, and to the extent those hours can overlap with other people’s, the net effect will be more impact,” Butterfield says.
It’s a compelling premise: that you can get more done at work, better understand your co-workers, and generally like your life more if you take some of the tension out of the string.
Just as Butterfield and his team developed their product by using it, they’re creating the culture they want to project by living it.
The secret of Slack’s success? It’s right there in the name.
© 2015 From Inc. Magazine/Mansueto Ventures Ltd. LLC.