CEO of Slack Discusses Its Origins

Sam.

Hello, everyone. So this is my first time attending inbound as well, so this is really exciting. And I just want to thank Dan first of all for that really kind introduction. I'm also really excited to talk to Stuart, in part because I was a political reporter for NPR and we use Slack quite a bit. So I told him when I first met that in some ways it's like meeting the Oz behind the wizard of.

Oz, you know, or someone who worked on Imessage or something like that.

So we're going to chat for around 40 minutes or so, and I'm sure that we could fill that time on our own, but we'd love to hear from many of you. Unfortunately, we aren't in a position to have mics in the room. So we thought instead, if you all could tweet some questions at me, I'll be checking my phone periodically. I'm not trying to be totally rude when he's talking. And I'll be leafing through some of those Twitter questions that you all have for Stuart. So my Twitter handle is Asma mk. I'll spell that. It's A as in Alpha, S as in Sam, M as in Mary, A as in Alpha, M as in Mary, K as in Kangaroo. So it's Asma Mk. If you tweet me, I will continuously be checking my phone and be checking Twitter messages. So with that, I'd love to sort of get a pulse of the room from the get go. And if we could just see a show of hands of how many of you all first off have Slack. Oh wow, that's quite a Slack audience. Okay, so follow up question. Can we keep the hands up of who all has Slack? Okay, so the follow up question is who uses Slack every day?

All right, note to the comms team, this was a waste of time.

All right, great. I couldn't get a great. I'm not great at like giving percentages of rooms, but that was definitely like a majority of the rooms. So that's helpful to know in terms of just, you know, who all we're speaking with. So I'd love it. Sounds like most folks are familiar with Slack, but there were, you know, a few hands that didn't go up. So Stuart, can you start by actually just explaining, explaining to us what Slack is. I've heard it described a lot of different ways and I think of it a little bit as a modern AOL chat room. You might not like that description, but it is in many ways it reminds me of that. So can you explain to folks what Slack is sure.

And this is like the fill in the blank question that we keep on going back and forth on with our marketing team and comms team. Because if I say it's a messaging app for teams, then people hear it's a messaging app for team teens and then totally wrong impression. And then there's a, there's a feeling that messaging app diminishes the full breadth of utility that Slack offers and stuff. So I'm going to say it's a communication platform for the workplace.

Communication platform for the workplace. Okay, so I think of that and I often think of okay, we have email, we have other communication platforms for the workplace. So why did you decide that? Why did you decide to create Slack or what function do you feel like it fulfills?

Great question, because I don't know that we really did decide to create Slack. Some of you might already know the story, but there's four co founders to the company and we started it in 2009 to build a web based massively multiplayer game. That was a little bit after we all left working at Yahoo. And Yahoo had bought Flickr, which was also the side project or pivot from, from a failed massively multiplayer game. So we failed at making a game twice. But we spent from early 2009 to the end of 2012 working on this project. There was 45 people and a big variety of roles. So there's artists and illustrators, animators, musicians, a bunch of creative people. There's also serious back end programming, there's customer support, business operations. And when we first started the company, there were two, two of us in Vancouver, British Columbia, one in New York City and one in San Francisco. And the natural thing for us to use to communicate was an old system called irc, which stands for Internet Relay Chat. Predates the web by a couple years. It's a great system and this is one of the chief benefits, I think of moving communication from email to Slack because it has the concept of channels. And channels can exist before you arrive, they can exist after, after you leave. You don't have to be a member of a channel necessarily to see the contents of it. And this drives a lot of transparency inside the team. So this was not a plan. We never made new decisions. We didn't have a name for this internal communication system. But over the course of those three and a half years we kept on adding features to IRC and irc. Again, very old protocol, so it has many deficiencies. So if I wanted to send you a message and you weren't connected to the Server at the moment that I wanted to send it, I just couldn't send it. So we built a bot to log messages. Once we had the messages in the database, we thought search would be useful. So we built search and we started hiring people. And we had this dynamic where the more people paid attention to this IRC based system, the more information we routed into it. And the more information we routed into it, the more attention people paid to it until it became this like central hub for all communication at the company. So game didn't work, decided to shut it down. We were thinking about what we wanted to do next and we all agreed we would never work without a system like this again. And so we decided to make it a product and then here we are today.

Do you see it as replacing email?

Not in the broad sense. So email is fantastically useful and probably will be with the human species for another 30, 40,000 years or something like that. It's hard to imagine how it goes away because is now fulfilling so many roles for us. It's kind of this security ID like decentralized system for resetting all of your passwords. It's where all of your receipts or transactions go. It's a way for anyone in the world to send anyone else a message because this is one universal namespace which is really useful, but it's also incredibly overloaded and so it's difficult to use it in a concentrated way for just one specific task.

So I know and I mentioned to you, even when I was on the campaign, we used Slack in part because we would often be in different parts of the country and it was just easier with a workforce that's not all in one location. And that is sort of the nature of work. Right? There's disparate teams, often people, perhaps even in other countries. What role do you feel Slack plays in that effort in making those teams successful? Does it help sort of facilitate that communication?

Yeah, it definitely does. And I think it can also for the same reasons. It's useful for teams that are geographically distributed. It's useful for teams that are in the same room. So one of those is that it doesn't have to be synchronous. People can send a message and then the recipient can read it an hour later or a day later. And there's no, no requirement that they participate in real time. And it's also become something that's on the record. So if you walk into Slack's headquarters in San Francisco, we have a couple different offices because we've spilled out of the main one but in the big one, it's, for many visitors, eerily silent when you walk around the office. Because most of the communication happens in Slack doesn't mean that there aren't meetings. In fact, we have, just like every company, a meeting room crisis on an ongoing basis. But there's a real value to having that conversation on the record, because if I ask a question and someone answers it, it's not happening in a room that's closed, where those audio waves bounced off the wall and then are lost to the entropy of the universe. It's available for someone to read 15 minutes later on a different team who is coordinating with us. It's there for people to search and scroll back, even if they haven't started at the company yet. They're going to start next week. And that building of an archive that accrues in value over time is one of the other key benefits of Slack.

Okay, so we've gotten a couple questions already since I've been talking, so I'll try to dive in with some of these as we go. So, Andy Cook, I don't know if you're in here somewhere, but hopefully you are. Andy Cook was asking, what is the most challenging part of leading an organization with growth that has been as fast as Slack? And this is not a Slack infomercial, but candidly, yes, Slack has grown very quickly. Can you give us some metrics and talk a little bit about what the most challenging part of doing that has been?

Sure. So we started development at the very beginning of 2013. A couple months later, we had enough done that we could use it. A few months after that, we started begging our friends to please try it. And we realized instantly how difficult that was going to be, how hard it was to get a whole group of people to change a behavior all at once, especially something as ingrained as the way that you communicate on a team. So we begged, cajoled, we went back and back and back and were very persistent just to get the first couple of teams using it. And then we almost, the moment that happened, realized this was going to be pretty successful because when we were able to get a team to convert, and we weren't able to get every team to convert, but when we were able to, they stuck with it. The teams grew, people came back every week. It was. It was really like a daily habit. In August 2013, we did a private beta. We called it a preview release. February 2014, we launched. And at that point we had about 14,000 daily active users. I don't remember the exact growth over that first year, but probably 20x or something like that into the low hundreds of thousands a couple years later. Now we have 9 million weekly active users, 6 million daily active users, and it's really geographically distributed, so it's.55% of people who use Slack are outside of the U.S. we're obviously very strong in technology and media and creative industries, which is why I think we have such a presence here. But there's also big multinationals using Slack. There's retailers using Slack, there's dental offices using Slack, there's police departments, there's government research labs and federal agencies, there's state and municipal governments, there's farms. There's really just like no limit to the utility. So they'll get to the interesting part of the question, which is less of the infomercial. Yeah, sure. So 2015, we had 80 people at the beginning of the year and we doubled to 160 and then doubled again to 320. And there was one all hands, where we actually ran the stats. And it was. I don't remember the precise numbers, but something like a quarter of the company had been there for three months or less, 40% had been there for six months or less, and 75% had been at the company for less than a year. And holy smokes, is that hard. Because every time we figured out how to do something, it would be obsoleted almost instantaneously. We would get a group of eight people and we'd kind of figure out a rhythm for working together, how to do project management, how to prioritize the things we were working on, how to incorporate user feedback. And then suddenly that team would be 40 people instead of eight, and it would have to be split apart and we would need to hire new managers. And it's been incredibly challenging, I think. I'd like to think that our use of Slack was very helpful in our ability to grow like that, because it was faster to onboard people. So people had the whole history and you could find not just factual information, what's the origin of this decision? Or when did something happen? But also kind of the social protocols or the norms, the expectations. How do people treat one another? Who knows the answers to what kinds of questions? Who really makes the decisions in these areas? And that stuff can be very difficult to figure out. It can take a long time to triangulate your way around a new organization. But there's a real challenge, challenge in, I think in the generic things that you hear executives and leaders talk about. Getting alignment, breaking down silos, making sure people are on the same page that kind of shared consciousness and understanding of the goals. And there's also this really interesting phenomenon. Ben Horowitz, he's one of our investors, has an essay that was later put into his book, the Hard Thing About Hard Things, which talks about the inverse relationship between the degree of trust in the relationship and the amount of communication required. So there's a very high degree of trust. You can kind of get by with just a nod or like a quick ask and a response, and people will just go and do things. If there's a low degree of trust, there's a lot of communication required because there's a lot of clarification people need. There's a lot of, you know, trying to get to the point where I have clearly articulated these requirements so they can be unambiguously satisfied. And then there's also the phenomenon where when there's eight people on the team, 20 people on the team, maybe like 30, 40 people on the team, you can have more or less everyone understand what's going on across the whole company. We're now about 900 people. And obviously that's just completely impossible. And in that context, it can be scary for an individual to take on a project that has a lot of risk associated with it because they think rightfully so. My performance review is coming up in four months. If I work on this project, which maybe has a high potential upside but could definitely fail, I have the chance of going up for my performance review in the context of a project that failed versus this project, which is relatively safe, doesn't have a whole lot of upside, but has very clear requirements, and those requirements can be satisfied. And therefore, there's this, like, ineluctable draw towards work that I describe as safe. And when you're a big growing organization and you're trying to move quickly, we don't want only projects that are safe. We want projects that have some chance of risk because then they have some chance of some upside and really important improvements to the product.

So, Stuart, I'd love to ask you kind of a personal question since our theme here today is the future of work. You mentioned that Slack is at about 900 employees now. Can you talk to us about how you see the future of communication within your own organization? And a piggyback question to that is, someone had actually asked specifically, do you all allow remote work at Slack?

Yes, we do have some remote work. We have offices in seven cities around the world and are in the process of opening an eighth. So there's just some remote work that comes with that. We hadn't hired at least very many remote members of the engineering team, partly because we were growing so fast and because coming into a network of human beings that has some stability, that has that high degree of trust that I was talking about earlier, that has that coordination, that has established processes, I think that's a much easier scenario to incorporate people who are working remotely, whereas where the team is brand new, most of the people have been there for six, seven, eight months. It can be much more difficult to incorporate them.

I'd love to shift gears a little bit because I know that many people in our audience are from a marketing background. And we got a question from Jessica Rhodes. Jessica's probably somewhere out here asking if you can specifically talk about Slack's brand and how many interactions of your logo and company name you went through before you theoretically hit your home run. And if you all still think you've.

Hit your home run, it's a good question. So a lot of hands went up when we asked how many people use Slack. How many people, when they first heard of Slack, thought, that's a stupid name? Okay, actually, that's better than I would have thought. It certainly has some connotations that people think of as negative slacking off and slackers and things like that. There's maybe a conceptual aftertaste of some of the positive connotations, people picking up the slack, or cut me some slack. This is definitely not why we called it this, but slack is also a technical term in project management that describes the amount of excess capacity that the system has to take on work. So. So I really like that one, because the hope is, and the company's mission is to make people's working lives simpler, more pleasant and more productive. And if we're successful in that, then you do get some Slack in the system. You do get some room for creativity, for growth, for exploration. So we think about the brand. There's the logo and the name. I definitely remember. Well, I remember the contents of the book, not the name of the book. Al Rice's 23 immutable laws of Branding or something like that. I'm sure someone can tweet the correct title. And one of the bits of guidance that I got from this book, like, 24 years ago was choose a name that you don't have to spell for people. So when you say the name out loud, they know how to spell it. And it's kind of silly, but that's like, I think, an important rule because you want people to be able to talk about it. We want to be able to talk about Slack in a way that people can pass it on. But if you go back to the.

First name you all came up with.

It was the, I think the very first name. And then we went through like dozens and dozens of iterations. It was very nearly called Honeycomb and then there was a trademark issue. But we wanted something that we wouldn't feel embarrassed if we had to say it to someone. Like what your new project called. People could spell it from hearing it. Ideally, it was a real English word as opposed to a made up, kind of fake Latinate name, because those can be hard to remember. It had some emotional resonance. I think both the positive and negative connotations give it that and then of course, trademark and stuff like that. But the. I don't think that the logo was a real driver of our success. It's nice, you know, it's like the hash mark with overlapping color areas. It makes an interesting looking kind of plaid pattern. We've definitely spent a lot of hours at it, like, you know, adjusting bezier curves on the shape of the S. And there's been a couple iterations of that. But I think it matters much less than the way that we present ourselves into the world. In three and a half years in market, we've had 750,000 ish tweets at @us and we have individually read and responded to every single one of those. And I personally responded to the first several thousand and sat with a woman named Anna Picard, one of the early members of the team and a great writer, to kind of mind meld on the next couple thousand so that we could have something that was tightly consistent, that was respectful, friendly, that started to incorporate some of the personality characteristics. But I'm definitely a believer that the brand is the sum of all the interactions that people have with the company. So we're not always living up to all of these in the way that we would like to, but things like fast loading pages and clearly written copy. We've also had the same number, about 750,000 customer support tickets over those years. And we've responded to every single one of those as well. And we think of that as a marketing cost. So we don't think of that as like, you know, a cost of the service we're providing that we're trying to drive down so that there's more margin. We think of that as an investment because if you. I'm hesitant to say it in this larger crowd, but if you type slash feedback into any slack channel and Type something out. That message will get routed to our customer support team and they will read it. And in the 95th percentile, you will get a response in 65 minutes. It's a 98% customer satisfaction rating. And that's when people talk about brand. That's the part that matters to me much more that people have this experience that is thoughtful, that ideally anticipates some of your needs. And all of us will have had the experience of going to a good restaurant. And I really don't mean an expensive restaurant, I mean one that's well run, where the ambience of the room is thoughtful in consideration of the needs of the diners. Like the. The noise is baffled. Well, the presentation of the food is good. The servers are attentive, but not in your face. You know, like the whole experience is very thought through. And that's by far the most important aspect of branding as far as we're concerned.

Okay, Stuart, I've gotten a few different iterations of this question, and that is, you know, fast forward a couple of years. Maybe we should say five years. I'm curious if you'll see five years is different than, say 10 or 15 years. How do you see communication in the workplace changing? I mean, how do you see, say, the communication of Slack is still around.

Changing at Slack, Hopefully Slack's still around in five years. I was after really screw things up. So a couple years ago, let's say two and a half years ago. So I'm going to make this seven and a half years instead of five years. But the difference, we started saying within 10 years, everyone in the world will use Slack or something like it. So we don't necessarily win that. I'm not going to claim that everyone in the world will use Slack, but I think everyone in the world will use something like it in the workplace. Just for those, like, going back to the two fundamental benefits I talked about at the beginning. One, transparency. So people can see what their colleagues are working on. And that means like the marketing team can see the conversation that the sales team is having, and they can see where they're falling down, where they're running into resistance, where they maybe need better materials. The technical operations team can see what the customer support team is dealing with. The designers can see where the engineers are in the implementation, where maybe they're running into difficulties and we can make some adjustments. And that's like, especially the, you know, the burden becomes exponentially larger as the company gets bigger. But that's where like most of the effort of management at a company is expended, it's in coordinating people, in getting people to understand. And you think about like the all hands meetings, the status reports, the daily one on ones, all, all of the like, almost every meeting is about exchanging information laterally across an organization. And Slack makes that super easy. And then again the second one, the power of that archive. So I think those are irresistible. And again it's more valuable the larger the organization is. Which is not to say that it's not valuable for small organizations, but if you go to work at a 10,000 person company that's been around for 40 years, your first day in the job, you have an empty inbox and there might have been like literally billions of messages that were exchanged before you got there and you have access to none of them. And also by the way, because of the privacy model of email, all of those messages are locked up in inboxes. Some, many of those inboxes are now dead. Like the person is gone, no one has access to them anymore. And the desirability of having that be something that increases in value over time, that you get great search, that there's machine learning and AI based approaches to try to extract as much value out of the active communication, just irresistible. So I think our product will evolve certainly over that time. But the fundamentals are there and most of the areas of effort over the next couple of years are going to be in extending the platform capabilities which hopefully is of interest to you. We have a couple of important features. Just last week, or I guess the week before last, we launched Shared Channels, which allows two organizations to create a channel and then each manage membership on their side. And for those of you who like.

What'S the benefit of that? Right, like, as opposed to say you and I communicating over an email exchange, what would be the benefit of having a shared channel?

Well, Shared Channels is a successor feature to Guest Accounts and we've been using Guest accounts for a long time. There's about a million such accounts have been created. And we at Slack are pretty typical in our use of that feature. We use it with kpmg, who's our auditors. We use it with Colliers, who's our leasing agents. We have like three outside law firms that we deal with, multiple creative agencies, PR firms. The issue with using Guest accounts for all that is that the burden is on someone to invite someone and then manually remember to deprovision that account later. And when you get to our scale over the years we've created 2,000 guest accounts and that's a lot of extra management. But it also means consider one of our San Francisco based PR agencies. They deal with tech clients or in San Francisco, literally 100% of their clients use Slack. And so they're in the Slack channels as guests of all Slack teams, as guests of all of their customer companies. So they're in 15 different Slack instances all day. They're constantly toggling between them. There's no one search box that search across all of them because those messages are the property of the customers of which they are guests. And the shared channels means a that the membership stuff is handled, the administrators opt in and create it and both sides have that archive. Okay.

I have a sort of question of curiosity which a few people have also asked and it's been on my mind as well. And that is, as you look at your company down the road, how do you see it as remaining a standalone feature? Or does it remain a standalone feature, not something that sort of co opted or designed similarly say for Microsoft or other companies.

So maybe we chose the right logo and Slack was a good name. We are clever and we work hard. But we also just had like almost unbelievable luck and we had that bizarre experience, which is impossible to replicate, of subconsciously working on a product for three and a half years, like deeply embedded in testing it and having all of the design decisions made by the bubbling up of real desires like genuine opportunities to make improvements or genuine frustrations that we were trying to surmount. Capital markets were super friendly, like just everything lined up. And I'm definitely conscious that I'll never have that opportunity again. So if you ever wanted to see how far we could take it, this would be the time. All four co founders have already had the experience of being acquired by a larger company. And I don't have any regrets and I learned a tremendous amount. But this also would be repeating things. Having said all that, I, the fiduciary and response have a responsibility to not just our customers, but to our employees and our shareholders and blah blah, blah, blah blah blah. So I can't definitively say we would never be acquired by anyone. It's definitely not the plan. And I also think that the opportunity here is so big. There's 50,000 plus paid teams around the world and 43% of the Fortune 100, which is great, but there's only 100 in the Fortune 100, right? There's only bizarrely 3,000 in the Russell 2000 and there's tens of thousands of organizations using Slack aside from that. And almost all of that was bottoms up, like We've done a great job on comms and taking advantage of our natural advantages that we got kind of for free. But there's definitely something of value that people are getting out of their use of Slack or that wouldn't have happened. And the signal that we get out of that, having grown to a couple hundred million dollars in revenue in three and a half years and having this growth rate which is at least so far unabated by any external factors, by like, you know, either the law of large numbers or competition or any of those things, it seems like it would be a banana's decision, which is my new combination of bananas and bonkers, to. To not pursue that, you know, to see how far we could take it. Because, yeah, we should be the giant company that goes acquiring other companies.

All right, Stuart, you've spoken about making Slack smart, right? In certain ways. So that essentially it would be able to serve as a virtual, say, chief of staff, right? Or sort of assistant. Where are you in that process and what else needs to happen to make it sort of smarter than it currently is?

We are early in that process. So we've done a bunch of things which I think are really useful people search and expert search. We've been improving just basic keyword retrieval of documents and messages. We have a feature called Highlights, which looks at, like, about 100 different signals to figure out which messages, of all the ones that are currently unread, are going to be the most important for you. I think in 2017, what we have to offer in that area is good. And in a couple years it'll be very good. And in like, maybe five years, it'll be excellent. And in 10 years, no one will be able to live without this stuff ever. And when I say this stuff, I think the holy grail for us is something like a virtual chief of staff that on your behalf, reads every single message. And because of its growing understanding of your preferences and priorities, proactively suggests the small number of things which are.