Stewart Butterfield: How We Scaled the Fastest-Growing Business App Ever

I'm just gonna jump right into it we're suppose to be talking about scaling so the first question I want to ask you is there are there two ways to grow a company you can either you know just kind of reinvest your profits and organically brick-by-brick grow a company or you can take venture capital and use it to fuel crazy hyper growth and that is obviously the path that slack has chosen how did you decide that was the right that white right way to grow your company I guess part of it would be laziness because getting when we started the company is 2009 it was to do something totally different a web-based massively multiplayer game and it was easy to raise money in contrast to any other previous venture I had because it was good times in the economy and because we were coming up it's wait 2009 yeah well I'm just in the venture capital economy okay the crazy little subset of a little subset and if you can get a million and a half bucks for very little effort and a relatively small percentage of the company it makes your life lot easier and you know it's starting off and having the initial focus being good making money so I'm against everything else is an elaboration of that up to several hundred million dollars in the bank yeah there's there's a there's a big jump from that in 2009 raising a million dollars and what you did a couple weeks ago you know valued at over two billion dollars now how much you know money do you have in the bank you've hardly spent any of it how how did you make that decision uh well I mean I'm I have a lot of responsibilities but I'm responsible to like to our employees to our customers to shareholders to my partners and the the analysis was are we better off to have a hundred percent of what we have or ninety four point three percent of what we have Plus also one hundred and sixty million bucks and the latter seemed like the more prudent choice honestly it's not that we needed the money it's that it's the cheapest time to ever raise money so if you ever thought that you might want to raise money because bad might happen in the future then this was a good time to do it and I I'll say this very quickly but I was born in 1873 that was stagflation which was like economists thought was impossible my father was a real estate developer and went boston 82 because interest rates went to 18 said I graduate high school in 91 would look into a bad recession I worked through the dot-com crash I lost a lot of money in 2008 so like I'm very conscious of there being a cycle and if money is very cheap then I'll take it and and and and the business side of things I mean let's why don't you kind of walk me through how that giant bank account that you now have is translating into how you're growing the company it actually doesn't have that much of impact and I guess it in in this environment it's not burning a hole in your pocket you're not like dying to spend it no and we're like we're frugal as may be overstating it but we're definitely not spending but this is you know one aspect of capital being a super shape for in this crazy world is that San Francisco's mental so like I we we leased a new office like about a year ago for 65 bucks a square foot or 62 dollars a square foot and we had to move because we're growing really quickly and nine months later we subletter for 75 so I could sixty two dollars to $75 in nine months and salaries are like that you know everything is in this hyper inflationary twenty percent forty percent a year environment so to to have a company in San Francisco you kind of have to do that so what's your biggest challenge for real estate what's what's your biggest challenge right now in scaling slack the biggest challenge is always people I mean it's it's think the technology is like especially compared to when we started clicker hardware is now essentially free like in comparison to 2003 prices that's 98 percent cheaper there's a lot more and better open-source software that gets us a lot further there's a lot more experienced developers who have done this before and so it's easier for the technological scaling component is not trivial but it's close to trivial but when we begin of 2014 we were 14 people at the end were 90 people and now it's 130 people and by the end of the year it's gonna be 250 to 280 and that's crazy because everything every kind of practice that we develop for how to manage becomes obsolete in a 60 days so right like by the time we get a rhythm and like feel like okay now we're doing the right thing it's screwed and we have to start all over again so I mean this you're in a really unique situation to be observing this because not only are you a company that's you know experiencing hyper growth but you're also in the business of helping companies you know communicate with each other so I mean you can sort of give us some examples of what you've learned and studying you know the communication within your own company but also the way that all the companies that use your software communicate sure so how many people here you suck oh my god yeah but this is exactly the kind of like the sweet spot for the audience I mean for our audience you have a lot of people in tech we have a huge number of people in the creative industries and in media but those of you who use it probably notice that it's a big change in your behavior and then we were really conscious of this in the early stages that we were asking a lot of our customers we if we average over all of our daily active users so including people who are just getting started or don't use it that much they spend a little over 10 hours a day connected in 2 hours and 15 min in active use so that's a big chunk of your time and it's gonna be the software that you spend the most time with over the course the day other than perhaps whatever you do look as your job function so that might be Photoshop or that might be Excel or that might be you know email or it might be but the idea is that it's not gonna be email that you're going to kill even well no I mean that's will will kill email inside of most organizations that you slack over the long run but will never kill email in the general sense because it's a lowest common denominator it's how you cross organizational boundaries it's how we set up this like this talk right now and how people like us supposed to have talks like this five years from now in Kenya yes or no but there's like some sometimes a small group of people will take the slack and it's just perfect and it's exactly what they wanted other times there's a lot of resistance and sometimes the resistance is we did a bad job explaining what the functionality is or we had bugs or some people just don't like to change or there were really significant workflows that were built up around the way people had communicated at that company or that organization over at the course of decades but sometimes there's like there's just bad habits and one of those is information hoarding particularly by people in minute middle management positions that kind of protect their position by controlling who knows what and when and one of the benefits of slack is that it's increases the sense of transparency and I don't mean transparent need you know not you know political stance like it's not Edward Snowden like transparency but it's that people can see into other parts of the organization and see what their peers are doing and that that's can be threatening to some people and it's usually only threatening when there's a bad situation so I feel like it's it causes positive change I mean if it's interesting that because not only are you it this is just a you know it's not just a productivity tool you're actually kind of taking a philosophy of how companies should operate and kind of forcing them a little bit into that where that's okay that's a fairly and recei because we are we deliberately try not to force that the the idea of a message inside of an organization being the lowest common denominator format so it can be a person sending a message to another person and they can be a long elaborate format and bulleted plain messages or it can just be like a question mark or just a single emoji or something like that but we don't want to be prescriptive and how people use it so that's a side effect of its usage is transparency but it's not like we're trying to voice that on organizations we don't want it and another place where that shows up is in kind of time and information management so here's it just a really quick example we designed it initially so that you would only get a notification if someone mentioned your name or someone sent you a direct message because the assumption was that they wanted your attention and so you should get a notification and otherwise we won't give you a notification if there's just people talking in a channel and we won't show you a number because a number is just gonna stress you out but people would install the app and they'd sit next to each other and someone would send a message to your channel and the other person would say oh I didn't get a notification this this app is crappy it's broken because what they expected was that every message would cause a notification and so we had to set it up so that at first every message will cause a notification and then once you get to I think it's like a hundred messages and three people on the team you get a little message from slack lot that says hey that's a pretty stressful set of preferences you have right now how about we change it so they only get notifications when someone mentions your name and almost everyone will do that similarly when you install the mobile app and enable push notifications we say hey maybe you don't want to get email notifications anymore we've just turned that off for you and if you want to turn it back on you can go here there's a lot of that because there's a lot and we feel this so when we first started making it was eight people on the team and we had designed literally the perfect product for teams of eight people exactly if you were more than eight people sorry it was terrible and one of the very first external customers we had was our do the music service and they had about a hundred employees and god we got so many complaints from them about this is impossible to manage and there's too many channels and there's all these problems so it took us a little while to figure that out but inside of our company because you're growing so fast is the same problem that I just referenced about management when it's 8 people everyone weighs in on every decision doesn't matter whether it's your domain or not look more there's your expertise because only you know five are the eight will care about any particular decision and it's fine for everyone to speak up because you know the other seven people can read the messages generated by that person but when it gets exponentially harder to do that as you get bigger so when we've got 40 people and now there's like 36 people giving their opinion about the color of a button or something like it's the equivalent of the email chain from hell yeah yeah and it and also like it you know every single message of someone sends has to be or it doesn't have to be but it often is read by many other people so we got to the point where we had an internal memo the title of which was slack as a distracting menace but the judgment we had to evolve how we used it and what the expectations were and what the kind of social protocols were and we definitely feel that because we get about 15,000 tweets a month from people 15,000 15,000 and about another 15,000 help tickets a month through Zendesk and if you work at slack then every single person you know and the industry also use a slack so like you go to dinner with some friends and it's like there's a bug let's feature class feature so we get a huge amount of feedback and a lot of it is about that it's like how to adjust the way we work and how to adjust the way to communicate to a system where anyone can send you a message at any time including them at 2:00 a.m. yeah I mean I just wonder I I love the idea that slack bot is kind of like the exact opposite of Clippy right it should be like trying to help you instead of stress you out so so I want to talk about design because I know that's kind of like a big a big feature event of this conference and you have a design background so I'd love to hear you kind of talk about you know how the skills of a designer are applicable to someone like you on the business side if any of you had ever heard my name before Flickr and if you were in this industry like in 99 2000 2001 then maybe you heard of the 5k contest which is something that I started in reaction to a designer who I managed she said we were making templates this is like like 1998 or 1999 templates for some client of ours and I said they had to be under 10 kilobytes to the naked template for the page he said that's impossible you can never do anything good so I made a web design competition that was 5k and I didn't really know this at the time but as part of this really big tradition of highly constrained design competitions and creative competitions in general so there was like the 4k demo scene for graphics programmers there's two color print design competitions for students in graphic design schools often there's like the 48-hour filmmaking competitions and the one month novel writing and if you back up a little bit and think about creative practice in general often it's about the selection of constraints so the music in tempo you haven't you know the key that you're playing in and poetry you have a meter and you have a rhyme scheme often and people will arbitrarily select constraints in order to highlight some aspect of it there's a kind of term of his name now but in in Don Norman's book the design of everyday things he quotes someone else in a letter who has a definition design has design is the successive application of constraints until only a unique solution remains it's a part of the process of design is to identify the constraints and then apply them in the right order that's absolutely true in business all the time and it is I mean how do you how are you doing that in slack as yeah um well it's organizational design there's a lot of it so um who do we need how many people do we need how do they work together like at what point does there need to be another level of management in the organization who is missing from this team that's trying to get something done and who do they absolutely need because there's a lot of organizational drift is the natural state like organizational drifts drift yeah like it'll whatever is happening on Tuesday will be the thing that happens on on Wednesday except some random change than someone made so you're talking about staying focused also yes stay focused and making sure that you're you're continually optimizing and there's a bunch of constraints of business obviously and so we talked about this backstage obviously that's not a constraint for you yes but you should be making money and people should feel you know like that they're doing work that's interesting to them and that they're being recognized for it and that they're motivated to do a good job and all of that kind of stuff but there's a there's a very long term like a long term design challenge where you don't get any feedback on whether the design of your organization is good or the design of your business model is good for like a year or five years or in some occasions ten years is it everything's easy in retrospect but it's so you have so little information at the time to make it so how do you keep how do you keep yourself in check that way um lots of smart people that I work with a newly challenging one another I'm gonna get a lot of I feel like incredibly fortunate in many ways but incredibly fortunate that we got very good and supportive investors and there's a lot of actual wisdom there so people complain about BC is in the same way that people complain about lawyers I'd like you to his lawyer jokes there's feces jokes some of my best friends are lawyers and I don't mean that as like a euphemism or anything like that it's literally one of my best friends there's a law professor here at Fordham and the same thing can be true of these C's they can give really good advice but also we have a lot of internet here yeah we have a lot of employees who have a lot of different backgrounds and so one employee that that you've told me that you specifically are not hiring is growth hackers can you can you tell me about why you hate that position it's so easy to fall into the trap of like maximizing for some local we're or juking the stats in the new came the stats yeah and the wired turn the wires terminology so a quick example of that is an email that Twitter would send that would give you the top five interesting tweets from your network today and they would show you the tweet but they didn't link directly to the tweet they like just to the timeline of the person you wouldn't it and the inference and I'm almost positive this is why they did it is because you would go click on the timeline and then you would try to find that tweet and you would end up frustrated and angry at Twitter but you spent a few more moments on the site and so like when they did the a/b test if some people got this you know some people and this email they're like oh well people who got this email spent a little bit longer on the site and that's the result that I want so that when my performance review comes up in April I can say we increase this number by 17% yeah that's very tricky Twitter all right I think I have time for one more question and I want to refer to something you just showed me which is an article that you wrote for design magazine and and one of the pieces of advice you included was related to the mission and like everybody needs to know why they're doing something so can you you know tell everyone a little bit more about what that means yeah we two and a half four not even quite two two and a quarter years ago we started an alpinist lock and we ended up making again huge number decisions that were based on very little information so they could have gone either way but the roadmap that we set out was exactly what we've done and the mission that we chose then which was to make people's working life simpler or more pleasant and more productive is something that we can get behind it's not like we're changing the world you know like like saving people's lives or anything like that but it is nice are you allowed to say that in Silicon Valley you you have to say we're changing the world or changing the world and making the world a better place through office communication software well that there's two parts that come with that so one part is the internal side one part is the external expression of that so the number one quality of people we look for in hiring is empathy because if you empathizer people you're just you're not gonna be able to do a good job in many things maybe not not every job requires empathy but it's it's a huge bonus even if you're a back end program the outward expression of that is courtesy and courtesy not in a like a fake polite way but in genuinely trying to anticipate what people need and it turns out that that mission for the microphone a product this is a great mission to turn back into the company so that if all of us are continually trying to make each other's working life simpler more pleasant and more productive then you take a little bit more care and how you communicate something if you're gonna ask someone a question you give them a little bit more context if you're gonna call a meeting you have some result you want out of that meeting and you communicated in advance so people don't come and feel like they're wasting their time and that you know triples down into into everything that people should feel like they're being respected and they're being taken care of it's that manifest itself in the software then people are gonna love it and they're gonna recommend it and then the people who to whom they recommend it will also love it and they'll also recommend it which is the best case scenario but also it'll be a good and healthy place to work it sounds like a great place to work alright well that was really insightful we have like 14 seconds left so everybody please join me in thanking Stuart

Channel: 99U

Views: 14,465

Keywords: Making Ideas Happen, 99U, 99U conference, 99 percent conference, 99% conference, entrepreneurship, Behance, design

Id: ayQeYjSVd3Y

Length: 20min 25sec (1225 seconds)

Published: Mon Nov 09 2015