Slack - A Side Project That Changed Workplace Communication Forever

Slack - A Side Project That Changed Workplace Communication Forever

Can a side project turn into a global phenomenon like Slack? From a small idea to transforming workplace communication, discover Slack's remarkable journey.

Sifar Jirgale

Sifar Jirgale

Jun 25, 2024 6 min read

From the boardrooms of multinational corporations to the creative hubs of startups, one name echoes through all industries: Slack. Its widespread adoption is a testament to its unparalleled effectiveness and adaptability in workplace communication.

Could you ever imagine that a mere side project could transform into a global phenomenon like Slack? Slack, a workplace communication tool that has revolutionized how teams collaborate, was not always the household name it is today. How did this unexpected journey lead to such a groundbreaking innovation? Let's embark on Slack's narrative and uncover how it emerged as the epitome of workplace communication, a journey that is nothing short of awe-inspiring!

Slack’s story begins in Vancouver, Canada. In 2005, after selling his photo-sharing app Flickr to the software giant Yahoo, Stewart Butterfield decided to develop a role-playing game called Game Neverending. However, the path to success had its challenges. The team faced technical issues, struggled with game design, and struggled to attract a large user base. Despite their best efforts, Game Neverending failed to gain traction, and Butterfield decided to abort the project in 2009.

Stewart Butterfield — Co-founder of Slack
Stewart Butterfield — Co-founder of Slack

Butterfield's determination to pursue game development was not the only driving force behind his next venture. He understood the power of collaboration and the strength of a shared vision. With this in mind, he recruited former Flickr employees Cal Henderson (the chief architect at Flickr), Eric Costello and Serguei Mouracho. Together, they would form the quirky game studio Tiny Speck. Each team member brought their unique skills and perspectives, which would prove instrumental in the development of Slack.

Due to its accomplished team, Tiny Speck immediately gained recognition in the American software circle. Following several months of anticipation, Tiny Speck announced its game, Glitch, in September 2011!

Glitch — A game by Tiny Speck
Glitch — A game by Tiny Speck

Initially, everything went well for Tiny Speck. They were able to attract significant investment for Glitch, which they used to make a team. Butterfield was confident that Glitch would be the breakthrough he was searching for.

Well, he could not be more wrong. Glitch would be shut down a mere 18 months after release.

Many players thought Glitch was unnecessarily complicated. Moreover, it ran on Adobe Flash, which had become highly obsolete by the early 2000s. Butterfield attributed Glitch's failure to the lack of a capable mobile component.

Even though their main product, which they had worked so hard on, failed, Tiny Speck had an ace up its sleeve. Butterfield told Tiny Speck's investors he was ready to return their money unless they were willing to invest in his novel innovation.

After Glitch officially shut down, Butterfield gave the world a glimpse into Tiny Speck's new product. On the company's blog, he wrote that his team has "developed some unique messaging technology with applications outside of the gaming world and that a smaller core team would be working to develop new products." Unlike traditional messaging tools, this technology focused on real-time collaboration and was designed to enhance team communication and productivity. With his new tool, Butterfield had revived interest in Tiny Speck.

In late 2012 or early 2013, Butterfield revealed to Tiny Speck's investors that they had been using a messaging tool to communicate. Butterfield and Mourachev were based in Vancouver, Henderson in San Francisco, and Costello in New York City. To streamline communication between them, they developed a collaboration tool. This tool was not just a simple messaging platform; it was a unique solution that allowed for not only real-time communication but also the creation of channels, file sharing, and project management, all in one app! Butterfield believed offering this tool as a service to other companies could be rewarding.

All confident and rejuvenated, Tiny Speck went all in on their new idea and renamed the company Slack. Slack, however, instantly faced a problem.

The Series A and Series B investment rounds for Slack had already happened before the release of Glitch. Finding investment for a Series C round for a completely new idea was challenging.

Like all of their previous setbacks, this hurdle did not faze Slack. Accel backed Butterfield once more, and he also secured investment from the VC fund Social+Capital Partnership (which was managed by early Facebook executive Chamath Palihapitiya and veteran investors Mamoon Hamid and Ted Maidenberg). In the end, Slack raised a whopping 42.8 million USD in the Series C round.

Slack's success is a testament to the unwavering resilience of its creator, Stewart Butterfield. A creative and passionate entrepreneur, he believed in himself and his team, undeterred by failures. Instead, they fueled his determination, propelling him forward on his journey to revolutionize professional communication.

Butterfield was ingenious, always trying something new. He was also very opportunistic and observant, enabling him to identify Slack's potential. Investors noticed this, so they supported him despite his past failures.

Slack was made available to the public in 2013, and its impact was immediate. The platform's unique features and user-friendly interface quickly gained popularity, and within a short time, it became a staple in workplace communication.

However, gaining this popularity took work. Slack had to persuade entire teams, not just individual users, to use their app. Furthermore, different teams have varying needs. Also, if even one employee does not like Slack, the company will likely not use it. However, Butterfield did not see this as a hurdle but as an opportunity—an opportunity to change the B2B SaaS landscape forever.

Butterfield rapidly propagated Slack by keeping its prices super low. Due to the powerful free app and nominal premium costs, managers often used their own money if their company wasn't willing to finance Slack for their teams.

Due to these strategies, Slack had an impressive 73,000 paying users by October 2014. Its revenue was now more than 1 million USD monthly. These numbers helped them to raise an investment of 120 million USD in its Series D round led by Google Ventures and Kleiner Perkins Caufield & Byers.

Slack maintained its exemplary growth due to innovative strategies. Firstly, Slack made workplace communication fun. Its vibrant colour scheme made Slack more playful than other messaging apps. Emojis, icons and mascots combine to create an enjoyable Slack experience. Their tagline, "Be Less Busy", perfectly encapsulates how one feels while using Slack! Ironically, even their name, Slack, adds to this branding!

Slack continued to increase in popularity, allowing Butterfield to raise Series E for $160 million USD in 2015, Series F for $200 million USD in 2016, and Series G for $250 million USD in 2017. In these three years, Slack added iconic features such as threaded messages and chatbots!

On June 20, 2019, Slack declared its IPO at $26 USD per share on the NYSE. They named their stock ticker after what they transformed forever: WORK!

Slack was listed on NYSE
Slack was listed on NYSE

Slack's impact and increasing adoption caused cloud-based software mogul Salesforce to acquire them for a hefty $27.7 billion USD in 2021! After the acquisition, one WORK stock was valued at $45.2 USD, evidence of the company's monumental growth. Indeed, in 2022, Slack had 25 million daily active users!

In January 2019, Slack reached 10+ million DAUs.
In January 2019, Slack reached 10+ million daily active users.

Slack's story is about resilience, determination, and innovation. It is about how Butterfield never let failure get the better of him. Slack perfectly understood employees' struggles, making work less tedious and more exciting. The side-project-turned-hero-product story of Slack will indeed be studied as a case study of persistence and good execution for many, many years to come!