Cloudflare TV

🎂 Stewart Butterfield — A Conversation

Presented by Michelle Zatlyn, Stewart Butterfield
Originally aired on 

2020 marks Cloudflare’s 10th birthday. To celebrate this milestone, we are hosting a series of fireside chats with business and industry leaders all week long.

In this Cloudflare TV segment, Michelle Zatlyn will host a fireside chat Stewart Butterfield, CEO of Slack.

Watch more Fireside Chats 🎂

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Transcript (Beta)

All right, great. Welcome, everyone. Good morning, Stewart. Thank you so much for joining me today.

I'm really looking forward to this. So this is, I don't know, my millionth conversation this week.

No, I'm just kidding. But I'm one I'm really looking forward to.

So thanks so much for dialing in this morning. How are you? I'm pretty well.

Yeah, good. Well, as many people know, you're the co founder and CEO of a company called Slack, which is truly one of the amazing iconic smashing successes the last decade.

And this week has all been about reflecting the last 10 years since it's called first 10th birthday, and also looking ahead to the next 10 years.

So maybe we can start by talking about the last 10 years first, then we'll hear your predictions because you are such a great thought leader.

So maybe you can start by telling the audience what what is Slack for the for the couple of people out there who still don't know, although most of us do, what is Slack?

Well, if it's an analyst asking the question, and we say it's a channel based messaging platform, but essentially, it's a messaging app used by businesses.

And the difference between Slack and what people might be used to WhatsApp, iMessage, WeChat, things like that, is that the messages are principally directed to channels and a channel, this could be anything, any project, topic, office, location, business unit, functional group initiative.

And once you have a channel for everything, everyone knows where to go to ask their question, everyone knows where to go to give their update, everyone knows where to go to get caught up on stuff.

So yeah, we the company actually started around a little over 10 years ago, but originally founded to build a web based massively multiplayer game that did not work.

So the end of 2012, we shut that down beginning of 2013. We started working on Slack.

And then here we are, here we are a huge smashing success. And just to give a sense to the audience, like how big is Slack today?

Like how many people are using these chat rooms?

And how many rooms are Slack's are being sent daily? It's billions of messages a day, I think.

It's definitely over a billion. I'm not sure exactly how many there's 130,000 paid customers around the world.

And you know, they include companies like Amazon and IBM with hundreds of 1000s of users, and also like three person startups and, and everything in between.

It's about half us, we're half US and Canada put together and then half the rest of the world and our biggest country outside of the US is Japan, and it's growing really quickly.

So yeah, it's pretty.

We were an eight person software development team when we started working on it.

And we thought, Oh, this is going to be perfect for eight person software development teams.

And little did we know that it would find usage all over the place.

Yeah, that's amazing that that that those those sparks where it's you build something and then all of a sudden it almost like catches on wildfire around the world is a pretty amazing experience.

And so when you think back to when you started, I guess not quite 10 years ago in 2013, like the first iteration of Slack that you shipped, and what customers can do with it?

And then now to today, what's kind of changed along the along the way?

The basic idea is obviously the same. And it's funny, because every once in a while, I see a screenshot, or, or, like, some reference or something like that, the way things were back in 2013 2014 2015.

And it's hard to recognize.

Because it happens so slowly, it all seems very similar. But the let's see, two areas where I think it's changed the most.

One is on the enterprise side.

And you know, if it's gonna be perfect for eight person software development teams, we kind of made it work for up to 50 or 80 or something like that.

And really early on when we were still in a closed beta, we got the music service partio.

And if you remember them to use it, they had 120 employees, it's just like, Oh, God, now we have to rethink everything.

So when you have hundreds of 1000s of people using it, it's not there's a channel, and then there's a workspace, which is a container for that.

And if you have hundreds of 1000s of people, a workspace is enough.

If you have hundreds of 1000s of people, then you need a way to federate together multiple workspaces.

And that's our enterprise grid product. And then you just layer on the CSA star and sock to an ISO 27,001 and 27,018 and international data residency and encryption key management and just like all of this incredible stuff.

So that's the one and you I said two, but I'm gonna speak in three.

Second one is the depth of the platform. There's 2000 apps in the app directory.

So pretty much every major third party software package you've heard of.

There's also a close to 800,000 registered developers in the Slack platform who are active on a weekly basis.

So it's a really big number of people developing.

Most of those apps are very simple. They're just to glue two things together inside of Slack or post notifications into Slack or push commands out of Slack.

But the amount of activity is kind of like stagnant. The last one is Slack connect.

So it allows organizations to share channels to Slack using organizations or more can share a channel.

You're now in one of those shared channels.

And that's been huge. It's, it's, we count what's called the number of connected endpoints.

And if you imagine like old school telephone operator with the patch cords, you know, going into the bay of patches.

That's an endpoint, like when you plug someone in and as it's grown, the rate of growth has been increasing.

So Q4 last year, it was 140% year on year growth. And Q1, it was 160%. Last quarter was over 200%.

But that's actually driving a lot of the business now.

So there's a whole exciting roadmap. Well, it's almost the blending of your world and conversations that you're helping enable.

So that makes a lot of sense to me.

Well, congratulations. And so, you know, one other thing you we didn't talk about, but it's during this time, you've also taken this company public.

So now you're publicly traded. And we can look up it's under work, right? Yeah, yeah.

Ticker symbols work. But why did you know it was going to be a smashing success?

Like when was the moment because I think like, there's so many entrepreneurs listening.

There's so many people who want to follow in your footsteps, Stuart, but it's hard.

You're making it sound easy. It's hard. There's a lot of things that to line up.

When did you know, like, did you know on day three? Or did you know years in when it was going to be a huge success?

I think I was continually surprised by the magnitude of usage, because actually, we, before we started developing it, because we had raised money from VCs, and we were building a web based massively multiplayer game, and went to go tell them, like, hey, we're gonna shut down the game.

But we have this other idea. I look back at that pitch deck.

And I remember the meeting, we already had the money. So we didn't have to pitch them.

We were just telling them what's going on. And we thought one day in the fullness of time, if we've got like 100% of the market, then we would have $100 million a year in revenue.

So that was like, before we started the grand ambition.

And we, I don't remember exactly how long it took us to get there. But like, 18 months or two years after launch.

That $100 million you kind of, wow, that's very fast for anyone following along.

That is very fast. That is kind of like, off the charts, exceptionally good.

Yeah, it's definitely it's, it's the world record. Now we're, if we want to keep growing the fastest, the challenge gets a little harder in the in the later years, some of those companies service now and worked ahead.

Getting from a billion to 2 billion in revenue is is a new challenge. But so you didn't realize how big it would get.

But there was a moment. So we started development very beginning of 2013.

By March, we had enough done that we were using it by May, we started like begging our friends to please try it.

August, we did what we call a preview release, we didn't want to call it beta, but it was essentially a private beta.

And then in February of 2014, we officially launched it.

But in September 2013, after we had done a little bit of the preview release, we invited some teams, people were trying it out.

And we just saw it sounds crazy now, but this last for a long time, it was like 10 or 12 or 15% week on week growth, just like week after week after week.

Because once people started using it, they kept on using it.

And they, you know, got more and more of the people from their company on and, and they were all retained at a really high rate.

And we're used to the fundamental challenge with the game we were working on was there's retention was very poor, you would have like, you know, for 100 people coming in three or four of them would stick around with Slack, because we would invite one person who signed up for this preview with this private beta.

But they might have a team of eight behind them, or 10 behind them or 50 behind them or more.

It actually ended up like more than 100% conversion to not every single person who to whom we send an invite started using Slack.

But enough did that when they brought on their teams, it was actually more than the people who had signed up.

So anyway, at that point, knew it was going to be big, didn't quite get the magnitude.

Wow, that's amazing. That's pretty incredible that you kind of knew something you were on something big, even before you were publicly available.

So I mean, in your preview stage, which is, which is great.

That's a good that's a good ambition for all the entrepreneurs to aim for.

So when you think about, you know, building Kloppler, what was not Kloppler, Slack, what were some things that you thought would be true that turned out to be really important?

And what were some things that you thought would be really important that ended up being less important than you thought?

Oh, that's a good question.

I'm kind of in nostalgia mode kind of walking down memory lane. I know you have your your user conference next week.

So you it actually some of this nostalgia walk down memory lane might help you for that too, as you think about reflect in the last few years.

Yeah, so the first one, I think is relatively easy, because it was, it's Slack Connect, the idea of shared channels.

And it might be people, anyone can send anyone a message already anywhere in the world, like, if you have their phone number, you can text them, if you have their email address, you can email them.

But also they can email you and everyone can do it and their spam and phishing and scamming and like all kinds of stuff.

And this kind of eliminates that increases the security of these conversations, because you can have your own digital loss prevention and discovery tools and all that.

And we thought that it would be a big driver.

And it turned out to be a huge driver. So it's like always part of the dream.

It took us forever to get it to the point where I was out in market because it's complex.

You asked about Slack's scale before, and I actually don't know the number of messages every day, billions, but at peak, it's like 65 million events per second.

So it's just a lot of stuff happening. I don't even know how many servers there are many 10s of thousands.

Things that I mean, there's so many and I think most of them are either approaches to marketing or approaches to like the new user experience and how we explain Slack, that seemed like they were going to be really good, and then they didn't have the impact that we hoped.

But I'll tell you, to me, that's always been fine. I feel like I'm like, I'm very good at software development after 25 years of doing it.

But I'm wrong, like 70% of the time, I would say, I just do it a lot.

And I don't I don't like the 12 weeks of looking at slides in the conference room trying to decide whether this is a good idea or a good design.

I like just doing it. If it doesn't work, cool, take it back.

You know, obviously, that doesn't work with with everything. But I think the, you can make up in volume, what otherwise might seem like you're not doing a lot of research and blah, blah, blah, blah.

So it's not quite failing fast, but just being comfortable with being wrong about that stuff.

Well, it sounds like you have a huge bias to action, try and get it out there.

And it also helps when you have a lot of users, right?

You have a lot of customers, you have a lot of users, you can let a small set try things.

And there's probably some that raise their hand who say, yeah, send me everything new.

I'll let you know whether we like it or not.

And others who say no, no, just give me the most battle tested version of Slack.

I don't want to ever try anything new. And, and that's a huge advantage when you have such a big community to, to, I don't interact with.


Yeah. So now we have so many enterprise customers that there's the process of releasing a feature is multi month for all the change management and training programs and stuff like that.

So usually non-enterprise users get the features more or less right away.

But yeah, there is quite a process. Well, do your parents use Slack or like any like, Um, my dad's now passed away, but, but before he did, he actually used it a tiny bit.

He didn't really like computers, like at all, didn't really use computers.

And my mom might still use it a little bit, but, um, yeah, I think they were, they were mostly past their prime working age by the time it came out.

I think in another generation, they would have. Okay. Um, okay.

So one more question about looking back, then we'll go to work forward.

So, you know, again, and you've been, you've been working technology for 25 years, software development, again, this kind of last decade, because we could go way back.

What are some places where you think technologies has, um, uh, some things that have gotten easier because of technology, and maybe some things have gotten harder because of it?

Hmm. I mean, access to information is the big one. I really remember, um, going to the library when I was a kid.

And, um, it's just, it's pretty remarkable.

Going way back more than 10 years, I think it was like 93, something like that.

I got in an argument with with someone about how the Richter scale worked, and I was saying it's logarithmic, and they said it's linear.

And it was the first time I ever, like, use the Internet to look up something to settle an argument.

And it was, we went to the US Geological Survey's Gopher server, so a little bit before web servers were as popular, and, and look this up.

But you think back, like, before that, no, it's like, everything, every, every math problem, stock price, statistic, every fact about geography, like the, um, I think it's still, it, I don't think people appreciate Google Maps enough, basically, is what I'm, what I was gonna get to.

I don't mean that they should like Google better or anything like that.

But just, it's so incredible what we what we have now.

And it's like, we've enveloped the world in sensors, and we all have access to it.

So our sensing organs are not limited to our physical bodies, but like this collective activity, and it includes weather patterns and space and all of history.

And that's a, if you look at it on a, you know, the scale of civilizations, it's a pretty big difference.

Because when the library in Alexandria burnt down, that's like a lot of stuff that humans had accumulated over hundreds, and in a couple cases, thousands of years, that was just lost forever.

Like, now, now we don't know that thing anymore.

So yeah, I think the Internet on on the whole is, to me, kind of right behind the development of written language and the development of spoken language as like, one of the biggest things to ever happen to us as a species.

Yeah, no, I love that. I agree. It's amazing. And you said it much more eloquently than I will.

It's like, I'm getting poetic Stuart, which, which is incredible.

But the sensing organs, I mean, the access to information really is amazing.

And it kind of democratizes a lot of different sorts of things.

And even, you know, as an entrepreneur, the rate at which you learn is so important, right?

You don't know everything when you start out, but you can go look things up and go find people who know these things.

And, and for most of it, it's free.

It's just right there, you just go look it up. And I feel like it's a great equalizer, which, which is very empowering.

Which leads me to my next topic.

You've been a huge champion for diversity, inclusion and technology, like, how, how come?

Um, I feel like there's, there's a lot of different ways to answer this, but the story works well.

So I started Flickr, the photo sharing server, was a co founder. And we got bought by Yahoo.

And so worked at Yahoo 2005 to 2008. And the people who I worked with at Yahoo, like people on my floor in this building, included Jeff Weiner, who was the CEO of LinkedIn until very recently.

Bradley Horowitz, who's a senior vice president at Google, Andrew Bracha, who's a venture capitalist who invested in me, Rob Solomon is the CEO of GoFundMe.

There's, there's more. And it's not, it doesn't have the fame of the PayPal mafia.

But I think like, you could have worked more or less anywhere, eBay, Yahoo, Genentech, definitely on Google and Facebook and many other companies in the in peak days, and it's likely that some of the people passing through there would be successful.

But anyway, the reason I bring up that group of people is, with the exception of Andrew, and I could have mentioned five more, all of us are Jewish, including me.

And that's not a conspiracy, but it's also not purely a coincidence.

Because people bring their networks in. And I remember, there's an organization called the Indus Entrepreneurs, the TIE, T -I-E, hugely successful, super well run organization.

It's like a lot of support for people from the Indian subcontinent.

So, mentorship, investment, hiring, looking for opportunities in technology.

And there's nothing wrong with that at all.

The groups that were excluded from that, given the kind of magnitude of wealth creation in the tech industry, when things work out well, I think has an impact not just on the individuals, but like, on their communities and their families and stuff like that.

So it felt important that we create those opportunities.

And again, there's nothing about Yahoo that like, there's all kinds of populations of different people.

My point is just you bring in people who are like you.

And if you don't have those seeds there, then I think it's much more difficult to happen.

I think we were, I don't remember, 20 employees or something like that, when we looked around, we're like, wow, this is a pretty, pretty white group.

And so we started making an effort early on, and then there's increasing returns.

So if you're a black woman engineer, and you walk in, and you see on your way to the interview room, another black woman doing engineering work, you think maybe this is, you're more likely to think this is a place that I could work.

So I think, I don't know that if Slack is like, does anything so magical or so special, I think a lot of it is just increasing returns.

But yeah, it's something important to me, because mostly, I just feel like we have a moral responsibility to ensure that that is spread around.

Yeah, no, that's great. I mean, I, some of that intrinsic experience that you've had is, it's great that you're willing to share that.

And like you said, do better at Slack, and it sounds like it's working, right?

Like bringing in lots of different types of people, and they bring in their networks, and all of a sudden you look around, you're like, wow, we actually have a lot of diversity and inclusion here.

And hopefully those help build the best products for your customers who are global and around the world, right?

They look like a lot of different sorts of things. And so, you know, again, you've been a champion, a leader, kind of back to top quartile, kind of like your original idea.

What advice do you have for other leaders who want to maybe somewhere where they want to lean in, and they don't even know where to start?

I think some leaders don't know where to start, and they're worried about who to put in their mouth.

Yeah, I think that, so I worry about that sometimes, too. But I think that's the first thing, that may be the only real bit of advice I have is just don't worry about it.

You know, if, if you're like spouting the KKK, like party line or something like that, then that's not putting your foot in your mouth.

But yeah, there's a lot of awkwardness about it.

And if you can just get over that, I think it makes it much easier.

And it's like, it's, there's a lot of nuance. So I mean, I think really being open minded or committed to active listening, I think helps.

And also getting, you're making some progress makes it much easier to get the next bit.

So the whole thing can seem very daunting, but it actually gets easier as you make progress.

Well, there's a lot of same with early stage. I mean, this is different, but early stage founders, I feel like sometimes I'm just like, have you done anything?

Have you shipped anything? Just get some momentum going? Because once you momentum, I would say best friend, because once you have a couple users who either love or hate it, it's much easier to go to the next thing versus just talking all day.

So it is like, yeah, I really so off your off your question, but um, so I really believe that too.

And I think about there's these magic thresholds where if you're on one side of them, you just you benefit massively.

If you're on the other side, it's like can be a real downward spiral.

And if you're talking about startups and entrepreneurism, there's really, I think back to the early days of Slack, I think Slack was did have more product market fit, and it was a good product, and I'm proud of it and all of that.

But the success was out of proportion to that, because what happens is, it has product market fit, people like it, they start using it, so it starts growing.

That makes investors excited, and they want to put money in at a high valuation.

And that means it gets written up in the press, which attracts more users, which causes more growth.

And it just becomes like a little bit of a self fulfilling prophecy, because I just mentioned those things.

But it's also because of that prominence, you attract better employees, more talented people, and they make the product better.

So users like it more just like all of these.

And then the the opposite is also true, right?

You know, the lack of growth leads to a lack of investment. And it becomes harder to hire people, which makes it harder to ship great product, which makes it harder to get the users in the first place.

Now, I am someone who like, it was a very difficult, but I think the correct decision to shut down that game, I don't normally come back to that so much.

But the reason I bring it up is, we had raised all this money, we'd hired all these people.

And there's a lot of there's people get told, like, resilience and resilience is absolutely good, but you know, never give up, always persevere, just keep going and stuff like that.

There is some wisdom to understanding when you shouldn't keep going with something.

And then conversely, the belief in yourself or belief in the product can also be contagious.

We had a saying in the early days of Slack, make it inevitable, and just figure out what, if this was inevitable, that everyone in the world was going to use something like this.

What would that look like? And let's just make it like that.

And I think that has an impact as well. Yeah, that's good. Well, I mean, that big thinking that that's hard to do.

I mean, that's true leadership from you and vision.

You know, you mentioned talent about, like you said, product market fit, the getting people hiring great people, and they want to hire other great people that want to come work on things that are going to be inevitable and work at huge scale.

I mean, it's hard to find winners like yours. You again, Slack has been a massive winner of the last decade, and very well positioned going forward.

And now a pandemic hit, and all of a sudden, we're all working in a very different way than I think we were pre pandemic.

What are kind of your predictions for where we go post COVID in a post COVID world where it comes for how people work?

Do you do envision people going back into offices? Or do you think it's gonna everyone's gonna work from their home offices?

Yeah, well, I mean, she pointed out that working, some people are better off in this environment in the sense that you forget the stress about politics about the global pandemic and stuff like that.

A lot of people are like, actually, like my family, my house is big, I have a backyard, I'm quite comfortable, I don't miss the, you know, hour and 15 minute commute.

So this is a pretty good setup. And then there's people who are absolutely miserable.

If you have young children and no childcare, especially if you're a single parent, it's like a nearly impossible situation.

People who have, you know, tiny apartments in cities, because they went to work most of the day, they weren't home, they didn't.

Anyway, so there's a lot of stuff about this world that it's, it's difficult to make inferences about what we would actually want in the future.

But the one thing I think that is for sure is people want more flexibility.

Now that we all know that this is possible, and I'm definitely one of those people who didn't think it was possible.

I'm guilty of that, too, by the way.

Yeah, this has been a big eye opener. Yeah, I think like everyone, if you asked us in February of 2020, you know, could you just get the whole company to work from home inside of a week and maintain your productivity over the next nine months?

No, for sure. Sometimes when you got to do it, what was impossible becomes possible.

But anyway, now that people know it, we actually we started an organization called Future Forum.

And the idea was, this is a great opportunity to reimagine management, how you report on a business, how you manage, how you plan, all of those things.

And the first bit of research they did was 12% of knowledge workers globally want to go back to being in an office five days a week.

And it's not the rest want to work from home all the time.

I think many people are attracted to an idea that's something like this, like, our team gets together every other week, for two days, or maybe three days, we do all this brainstorming, planning, prioritizing, and kind of resolve all these issues.

And then generally, over the rest of the balance, you know, the other week and a half, people are just heads down working, they might have questions for one another.

So they can communicate, of course. And it doesn't really matter.

They can communicate over Slack. Yes, they can. Absolutely.

And obviously, we have the tooling, obviously, we're able to do that, because we already did it.

And you get the benefit of face to face without the requirement.

Now, some people might, some people like going to the office, some people just got out of school, this is like essentially their social life, they're being cut off from it is really tough.

Some people just want the separation, you know, I wanted to like leave my home and go somewhere else and work and then come back to my home and have those be separate parts of my life, which totally makes sense as well.

Some people might want to come into the office sometimes, you know, during that week and a half, maybe they come in a different, you know, three days, but it's half the day because they had to go to the dentist, and they figured might as well work in the office in the afternoon.

The thing that I think people don't appreciate or realize is that this is not a choice that companies are really going to make on an individual basis.

Like I've heard a lot of leaders say, we're going back to the office after this is over.

And a lot of companies at this point have announced that they'll support remote work and flexible staff in the future, including us.

And one of the big factors in making that even a public announcement was other companies have done it.

And especially during the pandemic, we have employees who are like, I hate my place.

And if I'm going to be working from home anyway, I'd rather move an hour further out of the city, be able to afford a house with a yard and my kids can have more space to play.

Or I want to be closer to family or I want to be, you know, someplace where I can see a mountain or a lake or something like that.

And if we say we require you to be in the office five days a week, and some Twitter doesn't, Salesforce doesn't, whoever, and those offers are about equal, they'll take those ones.

But I think also, we would lose existing employees if they didn't believe that they had that flexibility.

Once you do that, that affects the market for talent. You know, if half of the companies support distributed work or, you know, flexible hours and flexible time in the office, that's, I mean, you can compensate for that.

But I think you just got to pay a lot more or something like that, because that optionality is valuable to people, you know, the being able to live two hours from the city.

And that is an impossible commute, if you have to do it every day. But if you have to do it twice a week, but you know, not that bad.

Every two weeks, then it's like, it opens up many possibilities.

Yeah. And so like, we know, you know, we have employees starting to move, we can't undo that we can't later on say, okay, we changed our mind.

And the last thing I would say, well, I guess I forgot something from before.

20% of our employees started post pandemic. 30 seconds, Stuart.

So go ahead. 30 seconds, go. All right, one in five employees started post pandemic.

So like, it's, that's real. That's a lot of people. And I just hired my first exec who doesn't live in San Francisco.

So she lives in Chicago, and she's not moving.

So that becomes like a one way street. Awesome. That's great. Well, Stuart, this was fabulous.

Thank you. Congratulations on all your success. Can't wait for the next 10 years.

It's like, thanks so much for being here. Thanks, everyone for joining in Stuart Butterfield.

All right.