Learn about the secrets of HOW to START a Startup like SLACK did.
Have you ever heard of Stewart Butterfield?
He has more in common with Steve Jobs and Jack Dorsey, one of Twitter’s co-founders than you might think at first.
Stewart’s story is really crazy and very inspiring, too!
He was born into something like a British Columbian-based hippie community, never set out to get a tech or business degree. He majored in philosophy and started his career at a dotcom-business due to his fascination with the Internet.
In 2002, Stewart teamed up with his wife and a coder to create a massive online multiplayer game called Neverending. That was even before the release of blockbusters like ‘World of Warcraft’ or ‘Second Life’.
Even though fanatic fans loved Neverending, it wouldn’t appeal to a wider audience. After 2 years, the team decided to shut their game down and try something different.
When voting about what to do, they came up with the idea to turn image- sharing which was a feature of ‘Neverending’ into an independent service. In fact, Stewart actually claims that he came up with this idea originally in a fever dream while he suffered from food poisoning.
In a single night, they set up a ‘surprise announcement’ presentation for a tech conference where Stewart was booked for a Keynote speech at the next day.
The demo amazed people. Shortly after it, their new service that they named Flickr was already famous.
For those of you who are too young to remember: It was fucking groundbreaking for the whole Web 2.0 movement!
Some of today’s most essential social media features like activity streams, tagging people, giving various levels of permission to different individuals or using your social media account to log into other sites were either invented or popularized by Flickr.
Besides all of that, they also introduced major technical innovations like open APIs. Flickr was later sold to Yahoo!
Here’s the story from Stewart himself on how to start a startup:
Next up, you’ll read about how Stewart continued his incredible journey and started Slack — one of the fastest growing companies ever.
P.S. The following case on how to start a startup is meant to serve as an inspiration as well as illustrations for business and startup success principles. I concentrate on the things they did well and dug up metrics to help you see how successful companies start and grow.
What is Slack?
Slack is an instant messaging service that is meant to make communication in teams more efficient. Users can chat with each of their team members and co-create theme-based chat rooms which are called ‘channels’. Apart from that, Slack features easy file sharing and the integration of several other tools like MailChimp and Trello. For instance, you see when someone tweets about your company or a new paying customer signs up. Two chat rooms we used at my first startup and my Startup Ecosystem project with Compass.
Let’s hear what Slack is about from the founder himself:
How it all started?
Similar to Flickr, Slack was created in an unusual way. It all began when Stewart’s second unsuccessful gaming company called ‘Tiny Speck’ decided to shut their gates.
They had spent millions of dollars on their multiplayer online game ‘Glitch’ to realize that it wouldn’t attract a noticeable audience (yes, quite the same thing as with ‘Neverending’).
After the founders had made sure that their employees would get new jobs, they thought about what to do next. They still had some money in the bank which their investors didn’t reclaim because they trusted in Steward’s skills.
Suddenly, the remaining team realized what their next big thing could be.
Like Buffer, Tiny Speck had been working with a distributed team (located in different cities). To improve their communication, the team had created a messaging service for internal use.
When they saw that they would never work without a platform like this again, our heroes sensed that it might be a marketable product.
And the company today known as ‘Slack’ was born!
P.S. This reminds me of Twitter. Jack Dorsey and Ed Williams started Twitter as a side project to communicate internally and used it daily more and more. They didn’t expect it to become big, they just solved a problem they had. You see the pattern there? That’s, by the way, how Steve Jobs started Apple with his co-founder Steve Wozniak.
How Slack managed to scale so fast
However, you might still ask how Slack managed to grow so quickly. After all, their product was not even new. When they started, similar services from competitors like Campfire or older services like Skype or newer ones like Hangout were already around.
Fortunately, Stewart has shared the secrets of their success quite openly, so let’s analyze them!
#1. Secret Sauce: Customer Service
Like Buffer, Slack cares a lot about customer service. Making their customers happy with great support is one of the things they focus on most. In their view, each interaction is an opportunity for marketing, for wowing people, for converting them into raving fans.
Until that point a few months in, they didn’t use any traditional advertising. Word-of-mouth and PR were their primary drivers of growth (I’ll tell you more about the latter one in a minute).
#2. Secret Sauce: Idea Validation Before Building
Just like Buffer, they validated and improved a lot before they launched. They leveraged their already existing platform and started their Customer Development efforts by successfully begging other companies to try their tool.
From their feedback, they realized that bigger teams had different needs. They needed to make a few adaptations to help larger companies communicate more efficiently.
#3. Secret Sauce: Big LAUNCH
When their tool had become somehow marketable, they started a public beta and created a massive press hype. They leveraged everyone they know — from important customers to well-known investors.
In just a few days, thousands of users signed up! Bam…that’s a successful launch.
As you can see, the power of traditional PR is not dead! If you use your resources smartly and prepare your launch carefully, you might get noticeable results out of it! But note: it rarely happens like this.
#4. Secret Sauce: Establish a NEW Product Category
From their beta users, they learned that most people didn’t know the benefits of an integrated messaging service. They would just use emails, Skype or SMS without realizing their communication could be done much more efficiently.
For them, using a messaging service had just not become a no-brainer tool yet – like using a CRM for managing contacts.
When they saw that, they decided to change their whole marketing approach.
They didn’t just market a list of Slack’s benefits anymore, but made crystal clear that ‘team communication’ was an actual product category which most companies didn’t care about!
For example, they improved the descriptions on their website and educated their existing users about the possibilities that their product holds. Even though their beta phase is finished now, the Slack team uses every opportunity to get feedback from their users. For example, they have simple buttons and commands (‘/feedback’) that each user can use to state his or her opinion.
#5. Secret Sauce: Work Against ONE Important Metric
But they do not only prioritize collecting feedback! They also know that the most important thing is processing it efficiently and making it actionable!
For example, they implement this by defining ONE key metric: ‘2000 messages per team’. When a team has written that many messages, the Slack guys assume that they have tried their service and will keep using it.
When assessing this quantitatively, they found that 93% of all teams that get over that border keep using Slack. Side note: Facebook wants everyone of its users to have 10 friends to be able to show an active stream of content.
Learn: The most successful startups define ONE metric as a benchmark of whether users will stay or not. This metric represents how sticky a product is. In ‘Made to Stick’, Chip Heath and Dan Heath outline ways to build sticky products. In ‘Hooked’, Nir Eyal goes even deeper in describing how to create products that change human behaviors and manifest new habits.
With this metric in front of their eyes, Slack can reflect about concrete measures that will get more teams to this point.
#6. Secret Sauce: Hire Carefully Even You Grow Like Crazy
Another of Slack’s major success factors is to build a great company culture. To do so, you need to hire the right people that believe in the vision and values of the founders and early team members:
“It’s been a lot of careful hiring, a lot of people who share the same values, a lot of people who aren’t exactly the same as us, but people who get excited at the idea of doing a really good job of something.”
#7. Secret Sauce: Do ONE Thing Great
If you’ve ever used Slack, you will know that it’s an incredibly simple tool. I remember when I first worked with it, I literally thought: ‘THAT is the tool everyone is so excited about. Doesn’t seem very complicated. Can it do more than messaging and file sharing at all?’
However, now I see that the Slack guys are actually following a smart strategy… The one that was initially summed up by Paul Buchheit (the creator of Gmail):
What Paul means is that if your product has a few features that feel really amazing for your users, the rest can be quite essential. It just won’t matter much to people. To cite Paul’s actionable conclusion:
The Slack team basically did that by providing efficient search options, a very convenient mode of synchronization and simple file sharing. And, of course, their system based on ‘channels’ is just really great because it gives every person who joins your organization the whole messaging histories for all relevant topics.
That’s similar to Buffer. They focused on one key feature and made it great.
That’s it! One.
It’s easy to make simple stuff complex, but it’s damn hard to make complex stuff simple!
For Instagram as well
Slack may not provide you with rocket science stuff, but they get the most important things right… And that is always better than having the most flashy high-tech solution on the market.
That’s the beauty of success that comes from simplicity. It almost looks too easy, too simple as if it can be achieved overnight.
But the reality it, it’s so hard that hardly anyone ever reaches it – or to the say the least: Aims for it!
That is what Stewart Butterfield has in common with Steve Jobs and Jack Dorsey!
Lessons to be learned from Slack on How to Start a Startup:
- Don’t worry about your educational background: Depending on whom you listen to, you either might think that you need a stable business or tech background to start a startup. You don’t. Assembling the right people just might work out as well. Stewart studied philosophy, Peter Thiel studied law and philosophy… Stop worshipping individual credentials too much!
- Don’t let failures stop you: Stewart kept going through all ups and downs. He created a gaming company and fucked it up. Suddenly he had the idea to turn photo sharing – which was a feature of their game – into an independent web-based service. Flickr was born! After that, he again created an unsuccessful gaming company. No reason for despair! Instead of losing his faith, he just thought about the next thing to do. Slack was born! As you see, your big success might always be closer than you think…
- Pivots can create great companies: Sometimes it’s about changing a few features, sometimes it’s about changing your product radically. A tech company can be a playground for your entrepreneurial creativity! Don’t be afraid of radical changes – some of the most successful startups need to pivot. Sounds crazy? But no one or nothing is right the first time!
- Be ready to introduce a new product category: Some tech companies build stuff that is not immediately relatable for most of their customers. They simply don’t understand why it would improve their life. This was the case with Slack and also with Dropbox. If you build such a product, you won’t sell it to people by just outlining why it is a beautiful solution. Explain the whole concept to them and get them to try and experience it!
- Find ONE metrics: Don’t look at everything, but pick a few indicators that really matter and focus on improving them. That will give you excellent guidance for moving your company forward! Actually, focus on ONE metric!
- Make the most important features of your product great: A good user experience always beats high-tech. Always. If your product can do everything, nothing will feel really amazing… Focus on a few things and forget about the rest!
#EntrepreneurHack: Remember the following…
Do ONE thing insanely great and work against ONE important metric to measure the thing’s greatness.
If your product is great, it doesn’t need to be good! So, pick three key attributes or features, get those things very, very right, and then forget about everything else.
If your product is great, it doesn’t need to be good!
Pick three key attributes or features, get those things very, very right, and then forget about everything else.
- Mat Honan: The Most Fascinating Profile You’ll Ever Read About a Guy and His Boring Startup – A great Wired report about Stewart’s crazy life story.
- Alec Scott: How Stewart Butterfield built a billion-dollar company in eight months – Another great article that goes deeply into Stewart’s entrepreneurial history.
- Drake Baer: Slack’s CEO reveals what it’s like building the fastest $2 billion startup in history – an Interview with Stewart where he talks about the creation of Slack and how he managed to build it successfully into the hit company it is now.
- Video: An interview with Stewart Butterfield in 2013
- Video: DLD15 – Interview with Stewart Butterfield in 2015
- PandoDaily: Third life: Flickr co-founder pulls unlikely success from gaming failure. Again
- Business Insider: Slack’s CEO reveals what it’s like building the fastest $2 billion startup in history
- First Round Capital: From 0 to $1B – Slack’s Founder Shares Their Epic Launch Strategy
- Paul Buchheit: If your product is Great, it doesn’t need to be Good.
- Book: ‘Made to Stick’ by Chip Heath and Dan Heath
- Book: ‘Hooked’ by Nir Eyal
- StartupGeist: Startup Success: Why Startups Succeed?
- StartupGeist: How to Get Startup Ideas
- StartupGeist: How to Validate Startup Ideas