2/25/2024 0 Comments Stewart butterfieldTo be clear, you can’t get rid of email entirely, and we have no intention to do that because it serves many purposes, but that’s the downfall in internal communication. So it’s actually a pretty big step up from things like text messages, WhatsApp, email and so on.Ĭould a client replace email entirely and just use Slack to communicate?īutterfield: Absolutely. It’s a double opt-in on both sides, and people have complete control over who is able to message them. There was an unforced error on our part of how the communication system worked and that was confused with the ability to send the messages themselves. “One billion is better than $800 million because it’s the psychological threshold for potential customers, employees, and the press.Butterfield: The announcement yesterday was making it easier for people to send direct messages outside of shared channels. “You have to choose some numbers,” he says. So why not pick the big, round number that helps with customers and recruiting? Butterfield acknowledges there’s quite a bit of growth baked into Slack’s valuation. “Every Tuesday is the best Tuesday we’ve had.” “Every single day except holidays is a record for that day,” he says. At its last public announcement, 45,000 teams with 365,000 daily active users were paying to use Slack. ![]() “We’re not in that position, obviously.” Put another way: Slack is growing too quickly for projections. “There are fairly precise methods for putting a value on future cash flow given steady business,” Butterfield says. “It helps a lot of those kinds of people as well.”īut is the $1 billion valuation actually based on any real metrics? Were any numbers crunched, any spreadsheets analyzed, or any public comps selected? Not really. “There is a class of employees who are more risk-averse and work at some company like Google or Facebook and they have a mortgage and kids,” he says. When negotiating with a Fortune 500 company on legal terms of service for some detail about what sort of deal they will get in the third year, then having the comfort of knowing we’re highly valued and financially secure, that really helps.”Ī billion dollars goes a long way with big hires, too. He elaborates: “It’s definitely a psychological threshold and it helps for certain kinds of customers. It means “we’re a part of that conversation about companies worth $1 billion.” The cachet of the figure is meaningful in an intangible way, he says. If Slack couldn’t get that, he wouldn’t raise anything. There’s another, slightly less rational reason Butterfield decided to raise more money: He wanted a $1 billion valuation. By April, Slack’s early traction was enough for it to raise $42.8 million, valuing the company at $250 million. The new product, a collaboration tool for desk workers, was an immediate hit. ![]() This is how you get to $1 billion so quickly.Īfter ignoring daily inquiries from venture capitalists all summer, Slack CEO Stewart Butterfield decided in September to take a week’s worth of investor meetings, “to see where things were at.” Slack had launched in February, a year after the company shut down a gaming product that never took off. The company has 100 employees and it’s only burning $100,000 per month. Slack has grown as much as 7% each week since it launched-a pace large companies aspire to hit each year-adding thousands of new users who pay for the service. How is that even possible? Is money even real in Silicon Valley?īut Slack just as easily serves as an example of how big an opportunity there is. Its namesake product is only eight months old and the company is worth $1 billion. The business software maker can easily serve as an example of why we’re in a tech bubble.
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