The Truth about Luck, Unicorns & #Slack

Yesterday I had the privilege of spending some time with Ali Rayl (Director of Customer Service at Slack) as part of the above all human conference which I got some free tickets to from the Wade Institute.

Ali is an incredibly nice, honest and humble person who is very generous with her time. She’s currently responsible for building out a customer service team to serve some 5K+ customers across all time zones in East/West Coast USA, Dublin (Europe) and Melbourne (APAC).

What I learned from our short chat blew my mind about the power of connections and trust.

Unicorns clearly don’t just happen, they are the product of some immense social capital in the right spaces and being “lucky”, which was a recurring word used to describe how they got there, is totally wrong and incredibly misleading.

Lesson 1: Connections, Connections, Connections, Connections

Glitch (the original predecessor to Slack) was a game which was venture funded by Andreessen Horowitz (also funded Facebook, Digital Ocean, Airbnb etc etc.) to the tune of $16M, but on the surface of it I wouldn’t exactly describe Glitch as a business that had a strong case for funding.

From the way it was described to me it sounded like the game ‘Glitch’ didn’t even exist prior to being funded (I may be wrong there and happy to stand corrected). So it begs the question why AH was basically writing a blank cheque to a team of founders who had no product, no traction and entering an incredibly competitive marketplace?

The truth of it is they got funded because of the personal relationships the founders had with the VC’s. No doubt, the Glitch team also had some serious pedigree and had an incredible track record from Yahoo fame (Flickr and I’m sure many other projects) but really that was it. They were being funded based on their pedigree rather than their business which is not something other entrepreneurs have the ability to do.

So luck had nothing to do with getting $16M seed funding.

Ali confirmed this when I asked her about what impact ‘networks’ had on the business both in the founder’s ability to attract that type of funding in the first place, and also their eventual success in what would eventually become Slack.

But the power of connections also came up in other ways in our conversation when Ali was referring to all of the international US based speakers at the AAH conference being well known to each other. In Ali’s words “they were the first generation of bloggers” in the early internet, they met through those circles and were personal friends (had even been to each other’s weddings), and had worked and socialised together over years.

I’m sure it’s not a coincidence that they were sharing the stage together and it wouldn’t surprise me if they had all played a part in getting each other the opportunities, recommendations throughout their careers that placed them as leaders in their fields.

Being well connected is not luck. That takes years of doing good work with people in the same industry, earning a reputation as being a trustworthy and nice person, and having a healthy commitment to ‘turning up’ to build deeper relationships with a particular subset of successful peers and mentors.

Lesson 2: Talented Founding Teams can fail. Spectacularly.

Cutting a long story short, in something like three years the Glitch team burned through $11M of that cash and only had a game that generated $20K p/m to show for it.

That’s pretty bad, so the founding team decided to shut the game down because they couldn’t see a way forward and offered to hand back the last $5M back to the VC’s.

And the VC’s TURNED THEM DOWN.

Instead they said to the founding group, “No, we trust you. We believe in you. Try something else and keep going until you have no more money left.”

So they let go of 35 people and the new ‘Slack’ team was now an 8 member ‘A-team’ with $5M, next to no accountability and no expectations. Or as Ali put it, they “basically had an unlimited runway”.

That type of freedom and resourcing to explore and build is completely unheard of and I don’t think they got it because the partners at AH had lost their minds.

That abnormal amount of trust is a product of the founding team’s connections and quite clearly in this case, they had some pretty exceptional connections.

It also illustrates the difference in culture that separates entrepreneurship (and funding culture in the Bay area specifically) from anything else I know.

Where in the right circles failure is an accepted part of the process towards success and investors are willing to back you harder the next time around after it.

So if you’ve failed before (like I have), keep going! Pick yourself back up and learn from your mistakes and definitely build deeper and broader networks to give yourself every opportunity to be successful.

Lesson 3: The 3 years of Product Development you don’t hear about

Cutting a long story short again, somewhere along the way the Slack team pivoted to sell their internal communication and productivity tool. This internal comms tool that would eventually become #Slack was built over 3 years and tested everyday by a 35 member team trying to build the game Glitch.

Keep this in mind when you hear stories about Slack being ‘less than 2 years old’ and the fastest company to get to $1B valuation unicorn status.

Now building a unicorn is no mean feat (to put it mildly) and Slack is a product that is well built and people really like and advocate for it, but that doesn’t happen by luck.

As a personal advocate of User Experience Design and Lean startup I believe that great products that people ‘love’ are built by following an iterative and intentional design process based on customer feedback — despite the perceived higher cost. Part of the reason for that is that you also can’t predict where you’re going to end up as at the start of the process and Slack’s story parallels that of MailChimp (and no doubt many more big companies) where the tools built internally in a struggling business eventually ended up becoming the core business.

In Ali’s opinion what separates Slack from all other similar online tools is deep commitment and focus on the customer and solving their problems by the whole team.

There was clearly a significant amount of time devoted to product development under a different company name where a lot of thought, design, testing, development and feedback. There are no shortcuts there and unfortunately that gets omitted along the way by the press to create a more compelling story.

Lesson 4: Marketing is much better with connected co-founders

Another thing, I learned from Ali is that the marketing success of Slack was no accident either.

As a function of the team’s previous experience and connections they didn’t have to convince anyone to try their product, they actually had the elite businesses of Silicon Valley knocking on their door consistently asking to try it before it was launched.

As an example, they had Stripe as an early user of Slack and they got them on board because Ali knew the founders because they built Stripe off an online payments product she had built previously.

Multiply that out several times as a function of the previous experience and connections of that 8-person ‘A-team’ and the VC’s who backed them and you have your ‘who’s who’ of Silicon Valley cheerleaders who are now promoting your product vocally on Twitter and other platforms.

Personally I struggle to see how Slack is ‘that much better’ than any of the other internal communication and productivity tools that existed before it. Perhaps it is, but and I would definitely imagine that it would have taken a lot longer than 2 years to get to unicorn status without the large number of these types of endorsements.

So there you have it…the secret to building overnight unicorns: a great team with unparalleled connections, lots of money, a good product, a change of name, and a celebrity list of promoters.