How Failure Led to Slack’s $2.8B Valuation


Ever wonder how Slack—the popular enterprise collaboration tool now valued at $2.8 billion—came into being? It’s not exactly the way you’d suspect. But learning the story of Slack may help your start-up or your ideas reach the next level.

After creating and selling Flickr, Stewart Butterfield and his buddies set out to create a multiplayer online game. Unfortunately, after three years of hard work, they had to abandon the project. Thing is, the team—which was distributed—had “hacked” Internet Relay Chat (IRC) to streamline its communications. They added ways to archive messages, search them easily and automatically notify team members when files were shared, among other things.

“When we shut down the game, we knew we were never going to work without a system like this again,” Butterfield told Aaron Levie, CEO of Box, in a recent podcast available below.

Slack was created in what Butterfield calls a “very indirect route to getting to enterprise software”. 

For the budding entrepreneur and the fresh-faced startup, this should be the biggest takeaway from the Slack success story: never give up, pursue your ideas and tap into your creativity. 

Frequently, accidental side projects can become the main story. Penicillin, microwaves, LSD… Slack: their creators never set out with these specific designs in mind, but open-ended goals and an awareness of opportunity resulted in industry-changing products.

In addition to discussing the genesis of his company on the podcast, Butterfield goes on discuss Slack’s insane valuation: “There’s no justification unless you believe that the rate of growth can continue.” Doubling revenue every 100 or so days seems like a pretty good start.

Slack serves an example to every one that we really don’t know where our initial failures will lead. Listen to the podcast in its entirety below.

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