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Marketplace Tech Host Ben Johnson talked with Stewart Butterfield, the CEO and cofounder of Slack about how the workplace communication tool has changed as it’s experienced precipitous growth, adoption by large workplaces, and a skyrocketing valuation. Plus, we (sort of) got an answer on whether Slack users are, by definition, slackers. Previously, Butterfield cofounded the photo-sharing site Flickr.
Stewart Butterfield: Hi Ben.
Ben Johnson: So let’s get some silly questions out of the way first. What’s the technical term for a person who uses Slack?
Butterfield: We try to avoid making that kind of specification. Although there’s plenty of people who say ‘Slacker.’
Johnson: [laughs] Okay, but you guys stay away from that. Fair enough. Can you tell me about an interesting Giphy Easter Egg?
Butterfield: You know, here’s an interesting Easter Egg: if you put in the weather and a zip [code], then it’ll give you an animated gif of that weather type and the actual temperature, currently.
Johnson: So, you guys are doing pretty well. You’re valued at $2.8 billion I think, last time I checked. You just did another round and raised $160 million. How does that impact the daily operations of the company?
Butterfield: In one sense, it shouldn’t have any impact because one of the things you try to avoid a feeling of complacency or “we already made it.” In another sense, it definitely preserves option value into the future. There’s a lot of things that we could do, and we’re not obligated by short term cash flow restrictions in the kind of opportunities we pursue.
Johnson: But I would imagine that operations of the company have changed as it’s grown. In the beginning, I think your customers were probably mostly tech startups, right? And now Fortune 500 companies are using Slack. Does that change how Slack does what it does, or what you’re thinking about?
Butterfield: It does change what we’re thinking about. Definitely, you have to put in a lot of effort to make it work better for much larger groups. When we first started working on it, there was a team of eight. And after the first three months or so, we had developed the perfect internal communication software for exactly eight people. And it took us a little while to figure out how that broke down at 50 people, and how that broke down at 100 people. And as we’ve grown, we get those problems directly in our face. But we’ve also been talking to, at this point, literally thousands of customers. Everyone from the 5-person graphic design firm in Omaha to, as you mentioned, some of the biggest companies in the world. So it’s an evolution, but it’s to expand the range of customers who are able to use Slack as opposed to moving from one category to another.
Johnson: Have any companies, big or small, used Slack in ways that have surprised you? Or kept you on your toes, or made you change the functionality of the software?
Butterfield: There’s all kinds of little surprising use cases, but I think the thing that’s the biggest surprise for me is the range of applicability. So we have the Jet Propulsion Laboratory at NASA using it. We also have the Teen Text Crisis Line using it, so suicide prevention workers coordinating. And, obviously, all kinds of commercial applications. You’re using it, and the New York Times, and the Economist, and pretty much everyone in the tech press. But also, creative industries, video post production, law firms, so it’s actually a much broader applicability than when we first imagined it.
Johnson: But I mean have any companies sort of done something specific with Slack that have sort of surprised you?
Butterfield: There’s all kinds of little ones. So mostly the kind of information that they post into the channels. Whether that’s the election results as they’re coming in so that all the journalists covering an election have the latest stats. Or, in a shipping and logistics company, new deliveries at the warehouse. So it’s not surprising in the sense that we could never have imagined any of those things, but it is surprising in the sense of just, you know, the range of possible types of information that people need to distribute and be aware of on a day-to-day basis across different industries.
Johnson: Are you Microsoft Excel or Lotus 1-2-3?
Butterfield: [laughs] We hope for Excel in that analogy.
Johnson: You want to be around in the next 10 years. What are people going to be using Slack for 10 years from now?
Butterfield: I think we’ll see it, you know, more or less the same thing that people are using now, but more and deeper integrations with the other tools that they use. One of the things that we’ve seen over the last couple decades is increasing fragmentation — and this will sound pretty nerdy — across the different software vendors that business select from. So at one point in the past—
Johnson: Yeah, let’s get nerdy. Yes, go on.
Butterfield: Alright, so at one point in the past, most businesses would have got most of their software from Microsoft, unless you were big enough to get most of your software from SAP or Oracle. And now, companies like ours, we have something like 50 different software vendors. And that’s for customer relationship management, it’s for business intelligence, it’s for marketing analytics, it’s for the crazy number of tools that the software developers have. Everything from source control and continuous integration testing and application performance monitoring, so this list is really crazy. We tend to, today, choose the best vendor in each category. And no one offers a suite of all the things that a company could possibly use. Some of that is just that software has much broader applicability than it did 20 years ago. It’s cheaper to make, it’s more powerful, it’s easier to use, and that means that we’re starting to see software applied to domains that didn’t previously had it applied. Things that people would manually do with spreadsheets, they’re now software packages to use. So the good side of that is that there’s a lot of great tools and people get a lot of productivity out of them. The bad side is that they’re all coming from different vendors and none of them integrate with each other. So one of the key points in Slack’s evolution, is to continue to be the place where all of those things come together. We say internally —
Johnson: So, I’ve used Google Hangouts, for instance, through Slack. It’s a little bit tricky to make that happen. But you’re saying the future for Slack is really smooth functionality with different software being folded into Slack, and being useable in Slack.
Butterfield: Yeah, and we see that today. So, we interact with our customers quite a bit on Twitter. We have about 15,000 tweets at us a month, and every one of those gets posted into our Slack instance. We use a tool called ZenDesk for customer support ticketing, and we have a similar number, maybe 15,000 or 20,000 support tickets a week. And all of those are posted into our Slack instance as well. So rather than everyone just receiving an email individually, and have that closed off into different inboxes, it’s visible to everyone. It’s searchable. So I can search for every time someone has said something to us on Twitter. But it’s not just that. It’s also every bug that’s ever been posted, every code check in, every time the site gets deployed, every time we make a sale, every time someone signs up. Having all of that information in one place is incredibly valuable.
Johnson: We’ve mentioned Microsoft a couple of times here. Have they tried to buy you?
Butterfield: [laughs] Um, uh, I guess it depends on how you define ‘try to buy.’ But I’m sure that there’s some strategic interests.
Johnson: Would there be a scenario in which you would consider selling to a company? Or are you staying away from that right now?
Butterfield: We are staying away from that right now. There’s four cofounders here, all of whom were on the original Flickr team, and so all of whom went to Yahoo when Yahoo acquired Flickr in 2005, and worked through that for several years. So I guess we feel like we’ve done that already. I think we’re also conscious that we’re not going to get an opportunity of this magnitude again over the course of lives. It’s fun to work on it and see how far we can take it.
Johnson: I suppose some might make the argument that Flickr was a lot better before it was purchased. Some people have complained to me recently about Flickr. Is that part of your calculation, too? That you want to sort of stay true to the original functionality and ideas behind Slack?
Butterfield: Uh, yeah. I think that’s a big part of it. There’s things that’ll make sense for us to do as an independent company that may not make sense as part of a larger organization, but there’s definitely plenty of things that would make sense as part of a larger organization that don’t make sense when we’re independent.
Johnson: Sure. So this is kind of your second company that started really in some ways as a gaming platform but then changed into a sort of sharing tool. Does that make you a great entrepreneur or a terrible one?
Butterfield: I think the answer is both.
Johnson: [laughs] Why?
Butterfield: Well, um, the pivot is really, it’s important and it’s almost impossible to get right. So I don’t mean that there’s a great amount of skill in it, though there is some skill, it’s a matter of timing. And for every one that works out in the way that the move from Glitch, the massively multiplayer game we were working on, to Slack, there’s plenty that do not work out at all.
Johnson: Sure. You know, I’ve had instances when I have been using Slack with a coworker and we’ve wanted to have a conversation that we’re a little bit concerned about who might be listening in, so to speak, to that conversation. So we’ve moved it outside of our work Slack. Tell me a little bit about how you guys think about the data that you’re collecting on the folks that are using the program, and how you try to be responsible with that data, and give the right people access to it.
Butterfield: I wouldn’t even say that we think of ourselves as collecting data. I think we think of ourselves as stewards of our customers’ data. So we have a lot of internal processes and controls. In fact, we’re 250 people now. But our 50th hire, which is unusual for a tech company, was a Vice President of Policy and Compliance Strategy. Because we knew that we were going to end up with customers who are in regulated industries, but we also knew that there was going to be a complex set of policies around customer data access and controls. Not so much for us, but for the companies themselves, for our customers. There are some companies that require access to all internal communications. For example, if you’re a financial services company and you’re subject to FINRA [the Financial Industry Regulatory Authority], there has to be a way for you to get access to every message, even if it was subsequently edited or deleted. But a lot of people don’t want that — either that control or that responsibility — a lot of our customers. So that’s something that you have to separately enable and when you do, all of your employees are notified. And the manager access to internal communication is not retroactive, so it’s from after the point at which it’s enabled.
Johnson: What’s your biggest fear—
Butterfield: To be honest —
Johnson: about the future of your company?
Butterfield: It’s the people. We were at Christmastime, last Christmas, and we were 80 people, and now it’s 250. And that’s obviously a lot of growth. That means we ended up with teams that were two people now are eight people, but 75 percent of that team has been at the company for less than 90 days. It’s really difficult to preserve both the understanding of the mission and what we’re doing, preservation of the culture, but also just to try to maintain the same level of productivity or efficiency. Because as we grow, every process we develop becomes obsoleted within 45 days of getting it nice and smooth. So it’s hard to grow this fast.
Johnson: Do you have any personal rules for how you use Slack? Do you have to log out at a certain time, do you stick to that? My rule is that I don’t have it on my phone. I only have it on my desktop.
Butterfield: That sounds like a fantasy to me.
Butterfield: That wouldn’t work for me. And I probably should institute some rules, but I do not currently have any.
Johnson: Okay, so you’re Slacking at all times of the day, day and night.
Johnson: Stewart Butterfield, he’s the cofounder and CEO of Slack. Stewart, thank you very much.
Butterfield: Thank you.
Editor’s note: We use Slack at Marketplace at no charge; a courtesy they extend to nonprofits.
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