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July 11, 2023
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4 mins
From teaching himself how to code at the age of 7 to coming up with a startup idea in a food-poisoning induced delirium - this is the crazy story of a founder who has changed the way we think about communicating with others.
Our story begins in the tiny fishing village of Lund, British Columbia where he grew up in a wood cabin with no running water until the age of 3. It was only at the age of 7 when his family moved to Victoria that he got his amenities of modern convenience, including his first computer,and eventually started to teach himself how to code.
This is the story of Stewart Butterfield. Butterfield started his first startup in 2000 when he joined his classmate Jason Classon’s startup, Gradfinder.com, at the height of the dot-com bubble. Gradfinder was eventually sold for a substantial amount despite the dot-com bubble bursting shortly after.
A couple of years later after Gradfinder, Butterfield married Caterina Fake. Caterina is another iconic founder with her fascinating story we will save for another day. Together, they created Ludicorp with the aim of developing an ambitious multiplayer game called Ga Game Neverending was finished and released in 2002, however it did not gain the success Ludicorp had wanted it to.
One night in New York, Butterfield came down with a terrible case of food poisoning and was up all night throwing his guts out. However, in that delirious state of mind, a brand new idea came to him. Game Neverending contained a feature which would allow players to communicate and share photographs with each other. Butterfield realized that the Game Neverending interface could be used for photo exchange instead.
With this in mind, Butterfield and his team transformed the code for Game Neverending into what is now known as Flickr, a photo-sharing app. After just a year, in 2005, Yahoo bought Flickr for approximately $22M.
Butterfield never liked working at Yahoo and even called it a “terrible joke” due to Yahoo’s inability to innovate and contribute to his creation, Flickr. Eventually, Butterfield left Yahoo after 3 years with a hilarious resignation letter inspired by The Onion.
The gamer in him wasn’t done yet. After finally leaving Yahoo, he decided to start yet ANOTHER video game company called Tiny Speck. Tiny Speck was building Glitch, which was a multiplayer quest-based game. Unlike their previous venture, however, they were able to raise over $17 million dollar for Tiny Speck. However, after burning through $10 million in development costs, Butterfield didn’t see a future in Glitch due to his game being “too niche”.
Instead of waiting for another miraculous answer in a delirious fever, he decided to scrap Glitch altogether. Despite having to abandon Glitch, Butterfield thought that the internal app his team has built to chat and communicate while working on Glitch was promising. The team loved this idea and turned this app into a platform called Slack.
Slack was launched in 2013 and quickly gained popularity. It transformed the way teams collaborate and communicate, especially in the tech industry. The aspects that drew people to Slack were the transparency and centralization of communication it provided. Never before was it an option to see what entire departments were working on or to send important files to each other in a single application.
In 2014, Tiny Speck officially changed its name to Slack Technologies. Slack was growing rapidly and raised tens of millions of dollars - including a $42.8M infusion as part of its Series C round led by Social Capital. At that time, Slack had around 60,000 daily users and 15,000 paid users stemming from purely organic growth.
Before even reaching series D funding, Slack had reached 73,000 paying members and more than $1 million in monthly recurring revenue which was a 386% increase in just 6 months. It then raised an additional $120M in its Series D round from GV and Kleiner Perkins. In its Series E round led by Social Capital, Slack raised another $160M. By April 2015, Slack was worth approximately $3 billion.
Cloud computing giant Salesforce bought Slack in a landmark acquisition for ~$28 billion in 2021. Despite the success, Butterfield described Slack as a “giant piece of shit” and acknowledged that he and his team have a long way to go before he can truly be proud of what he created.
So here we are, in a world where Slack has become synonymous with workplace communication, and at the heart of it all? A man who wanted to create a multiplayer video game, but also knew when to give up and grow through failure.
“We’re often told to follow our dreams and never give up,” Butterfield says, “but there’s also a point where you should stop throwing good money after bad, and realize that this thing just isn’t going to work.”
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