In 8 months, it was worth $1B & became the fastest-growing B2B SaaS startup in history. A success story of Slack you might not believe -
After two repetitive failures, Cal Henderson & Stewart Butterfield went on to build the most popular instant messaging and productivity tool used by 77% of the Fortune 100.
Slack launched in 2014, and it blew up immediately. Gaining 8K+ users in 24 hours of launch and earning 12,000+ join requests in just 1 week. It raised $120M only 6 months later valuing the company at $2.7B.
The company kept growing 5–10% PER WEEK and by 2015, it was worth almost $3 Billion. Within two years, they had raised $840M with a company value of $5.1B CRAZY!
Microsoft considered making a bid to acquire Slack (The same year it acquired LinkedIn).
All of this happened without spending a penny on traditional advertising or a Chief Marketing Officer. What makes their story crazier?
Slack was never meant to be a business software tool, but instead started out as a video game company.
The game was called Glitch. In the founder’s own words, Glitch was, “Monty Python crossed with Dr. Seuss on acid.”
Glitch’s surrealist landscapes and extensive customization options were quite famous amongst the fans.
So how the heck did the Glitch team pivot to Slack?
It turns out the team was struggling to communicate with one another. Especially those in other departments. So they built an internal chat app to improve internal company communications.
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Stewart Butterfield had a knack for building businesses. He had earned his stripes in Silicon Valley previously as an entrepreneur with a successful exit. If you’ve heard of Flickr, that was also Stewart’s company that he founded and sold to Yahoo in 2005 for $35M
But back to Slack… The team started using it in 2012, and shortly after began focusing all of its internal resources on its capability. They released Slack to the world in 2014, and the rest is history.
Many startups have tried to disrupt aspects of work, but few have managed to do it as effectively & quickly as Slack. 5 key things that enabled them to do just that:
- Tiny Speck’s expertise in gaming was a major competitive advantage Butterfield & his team already knew how to make repetitive tasks fun and engaging, as this is core to the gameplay experience.
Result? Slack made work communications fun. They ‘gamified’ them. - Product-led growth and a freemium model got people ‘hooked’. With every action a user takes in Slack, they become more invested in the product. Every message sent, every file uploaded, and every gif response shared, drives user buy-in.
Basically — The more someone uses Slack, the more invested in it they become. This is, in part, what made 2,000 messages sent such a crucial metric early on in Slack’s development.
- Avoided gating premium features behind paid plans Dissimilar to most software companies, there is almost no meaningful difference between Slack’s freemium tier and its paid product. Slack was free for teams, which created NO sign-up friction. The only real differences are the number of messages that can be indexed and searched, and how many integrations teams can connect to. This made Slack significantly more appealing to small and mid-sized teams interested in trying the product.
- The company had a crazy focus on retention When they launched, they already had a small customer experience team of three people working full-time to support new users. Slack’s CS team were all over Twitter, looking for comments good & bad. In an interview, Butterfield said: “If you put that all together, we probably get 8,000 Zendesk help tickets and 10,000 tweets per month, and we respond to all of them.”
- Slack didn’t just build a solid product, they built a great brand as well. Compare it to any other software made to be used by enterprises at that time. The contrast of colours, design, and playfulness makes Slack stand out.
Slack works incredibly well, yes. But the product’s success was just as much about fun as it was about function. Slack’s tagline — “Be Less Busy,” captures exactly what they enabled employees to be.
The key to Slack’s early success, beyond the features mentioned, was the “Founder Market Fit” (FMF) at the early stage” and most people missed getting this idea.
If you’re reading this newsletter, you likely know and have seen definitions for PMF, and may be familiar with FMF (but might not have seen it concisely defined anywhere):
- PMF → “When people who know they want your product are happy with what you’re offering”
- FMF → “When founders are obsessed with a big, fast-growing market they understand well”
The Slack team perfectly embodied FMF. The founders were intimately familiar with the challenges of team communication and collaboration from their prior experiences. They were passionate about solving those problems in a market they understood extremely well.
So if you’re a founder trying to get your startup off the ground, take a page from Slack’s playbook on knowing when to pivot and double down on what you and your team know like the back of your hands. That “founder-market fit” where you deeply grok the problems and have first-hand expertise? That’s what can supercharge your early traction and impact.
