Slack & Flickr: Stewart Butterfield

In the early 2000s, Stewart Butterfield tried to build a weird, massively multiplayer online game, but the venture failed. Instead, he and his co-founders used the technology they developed to create the photo-sharing site Flickr. After Flickr was acquired by Yahoo in 2005, Butterfield went back to the online game idea, only to fail again. But the office messaging platform Slack rose from the ashes of that second failure — a company which, today, is valued at over $5 billion. PLUS, for our postscript "How You Built That," how a peanut butter obsession turned teenager Abby Kircher into a CEO before she was old enough to drive. See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Guy Raz?

  Hey, before we start the show, I just want to remind you that tickets for the How I Built This summit are selling fast. We now have fewer than 50 tickets left, so don't miss your chance to learn from some of the world's most inspiring entrepreneurs and also to meet hundreds of other innovators and builders. The summit is on October 16 in San Francisco, and it's supported by American Express. Go to npr.org/summit to find out more and to get your tickets. And I hope to see you there.

• 0:32Speaker 01

  We were sure that this was going to be something that was big, but we went back to our investors, so including Andreessen Horowitz. And we went in there and told them our plan. And, you know, we could one day get to $100 million in revenue with this business and thereby be a billion-dollar business. And they were just like, you guys have no idea what you're doing. You don't understand what it is to sell into companies. You're going to need all of this expertise. And they were like, good luck with your stupid little thing.

• 1:06Guy Raz?

  From NPR, it's How I Built This, a show about innovators, entrepreneurs, idealists, and the stories behind the movements they built.

• 1:19Guy Raz?

  I'm Guy Raz. And on today's show, how Stuart Butterfield perfected the art of the pivot by turning a failed online game company into Slack, a messaging program now valued at over $5 billion.

• 1:38Guy Raz?

  So you might remember a story we did a while back about Kevin Zystrom and Mike Krieger. When they joined forces to build a tech company, they came up with something they called Bourbon. It was a check-in app that was going to take the world by storm. You'd take out your smartphone and declare, hey, I'm on Bourbon and at Starbucks. Anyone there? Well, the problem is, there was no one. No one used Bourbon. At least, not in the way it was intended. But what Mike and Kevin discovered was their small user base really loved the photo sharing feature. That was special. Bourbon was a failure, but that cool photo sharing feature? Well, they decided to make that their business.

• 2:21Guy Raz?

  And that business is better known today as Instagram. So now, imagine you're working to build a massive multiplayer online game. A weird, utopian fantasy world, like Burning Man, but in cyberspace. Well, that was Stuart Butterfield's big idea. This was gonna be his life's pursuit, his great achievement. So he tried it. Not once, but twice. And both times, he failed. But something else happened both times. Two entirely different, entirely unintended products were born from those failures. The first one was called Flickr. It was an early image-hosting website where you could store and share photos. The second one?

• 3:04Guy Raz?

  Well, if you work in an office, I'm pretty sure you've heard of it or use it. It's called Slack. And if you don't know what it is, it's a messaging app designed for team collaboration. Slack is one of the fastest-growing business apps ever, and it was kind of an accident. But we'll get to that story. What you need to know about Stuart Butterfield is that he had kind of an unconventional childhood, like off-the-grid, back-to-the-land unconventional. Because his parents were counterculture hippies who decided to live in the remote backwoods of British Columbia in Canada.

• 3:38Speaker 01

  Yeah, they had restored an old log cabin that was built around the turn of the last century. Didn't have running water until I was three. Didn't have electricity until I was four. There's actually a funny story of my mother's father. Who came from Poland to Montreal in between World War I and World War II, coming to visit them. And they had a bathtub in the front yard and, you know, just like trying to eat the food that they were growing and didn't have many possessions. And he was like, I can't believe I escaped the stedl in Poland and sent all of you to university and then now you're back living in this dump.

• 4:14Guy Raz?

  Oh, my god.

• 4:15Speaker 01

  So they were like real live off the land hippies.

• 4:18Guy Raz?

  Wow.

• 4:18Speaker 01

  My name was Dharma when I was born.

• 4:21Guy Raz?

  Your birth name was Dharma?

• 4:23Speaker 01

  Yeah, the Hindu and then later Buddhist concept of like the path, the way.

• 4:27Guy Raz?

  Wow.

• 4:27Speaker 01

  And when I was 12 years old, like most 12 year olds really wanted to be normal. So I changed it to Stuart because for some reason I had the impression that Stuart was the most normal name you could have.

• 4:37Guy Raz?

  You didn't want to be Dharma?

• 4:39Speaker 01

  No, I regret it now because Dharma Butterfield.

• 4:41Guy Raz?

  It's an amazing name.

• 4:42Speaker 01

  Totally amazing.

• 4:45Guy Raz?

  Stuart eventually went to study philosophy in college. But while he was in school, he also got really interested in computers. And on the side, he taught himself to code in HTML. And so during the summers, he started to make websites for local businesses. But his master plan, his main goal was actually to become a philosophy professor, until he realized that working in tech might be a more stable job. So he moved to Vancouver and he got a job at a tech startup called Communicate.com.

• 5:16Speaker 01

  The guy who founded it had bought in 1993, all of these domains, like Vietnam.com and Brazil.com and makeup.com and perfume.com.

• 5:25Guy Raz?

  Who was this guy?

• 5:26Speaker 01

  His name was Brian Liu. He's unfortunately passed away since then. But so this is like 98, 99.

• 5:34Guy Raz?

  Owned Brazil.com and Vietnam.com. Wow.

• 5:37Speaker 01

  Yeah, but also like dance.com and electronic.com. Like he had hundreds of them, really, really valuable.

• 5:42Guy Raz?

  So that was the guy who was buying them all up?

• 5:45Speaker 01

  And bought them up. I didn't even know you could buy .com domains in 93. Like that was really, really early. So he's sitting on this, what at that time was like a goldmine. And the way that we thought back then was we would develop one universal ecommerce back end and then have all these domain names be the front end.

• 6:04Guy Raz?

  And it was the idea was that they were going to have a bunch of websites and they would all basically direct users to this one ecommerce site where you could get anything, makeup or whatever it was.

• 6:14Speaker 01

  Or tickets to Brazil or boxing paraphernalia or whatever they had. But no one had anything really to do, like no one knew exactly what we were doing. It was really early dot com. It seemed like this was incredibly valuable. We're going to have a contest giveaway of BMW Z3, which was like in that James Bond movie. So it was like the hot car at that time. So that we got people to sign up. What are they signing up for? I don't know. It got worse and worse and worse, like day by day, because no one knew exactly what they were supposed to be doing and the management meetings turned into screaming matches. And so around the end of February of the year 2000, I quit. I walked away. I thought I was walking away from like $10 million in equity and I got bought out for

• 6:59Speaker 01

  $35,000 on my way out. And of course, like 10 days later, two weeks later, was the first dot com crash. And so in the end, I got $35,000 more than I would have had I stayed. Yeah.

• 7:12Guy Raz?

  So what did you decide to do next?

• 7:16Speaker 01

  Well, I convinced one of the guys who happened to sit next to me, Jason Klassen, who was running a website on the side called Gradfinder, which was a competitor to Classmates. So this is many years before Facebook existed.

• 7:30Guy Raz?

  Yeah.

• 7:31Speaker 01

  And I convinced him to leave when I had my $35,000 and we went out and raised a whole $50,000 of money from other people and started it up as a real business.

• 7:39Guy Raz?

  This is gradfinder.com?

• 7:40Speaker 01

  Yeah.

• 7:41Guy Raz?

  And this is a way to find other people who graduated from your college, basically?

• 7:44Speaker 01

  Yeah, so it was like a giant directory of high schools.

• 7:47Guy Raz?

  Right, right.

• 7:48Speaker 01

  And in each high school, you could have a graduation year and people would just sign up and message each other and stuff like that. We worked on it for like six or eight months and it got acquired by...

• 7:59Guy Raz?

  Wow.

• 8:00Speaker 01

  Yeah, so we were lucky.

• 8:01Guy Raz?

  Amazing.

• 8:02Speaker 01

  By one of like these dot coms that had raised a ton of money, like I don't know, $150 million. I don't even remember what it was called now. And this is like the last gasp, so this is the end of the year 2000. And they ended up going bankrupt a year later.

• 8:15Guy Raz?

  So when you guys sold Gradfinder, when it was acquired, did you walk away with a bunch of cash yourself?

• 8:22Speaker 01

  Yeah, I mean, a bunch of cash, you know, more tens of thousands. I don't even remember exactly what it was, but it wasn't like, you know, millions of dollars.

• 8:28Guy Raz?

  But it was probably a decent amount of cash for, you know, a guy in his mid twenties.

• 8:33Speaker 01

  Yeah, no, definitely.

• 8:34Guy Raz?

  Yeah.

• 8:34Speaker 01

  You know, I took a lot of the next year off. I did consulting work, but relatively little.

• 8:40Guy Raz?

  I guess it was around this time, like 2000, where you met someone and you got married.

• 8:45Speaker 01

  I did, yeah. In like 99, I started a weblog and there was a couple hundred people or so around the world who had blogs and we all knew each other. And one of the bloggers whose blogs I admired was a woman named Caterina Fake. She had a website called caterina.net and it still exists now 20 plus years later. So, yeah, around that time, we met and a year-ish later, we got married. And it was an interesting time because all of the dot com era hype had completely dissipated. A lot of companies had imploded, but there's

• 9:27Speaker 01

  a lot of creativity. So in late 99, I started this competition called the 5K, which was to build the smallest, you know, any website or webpage that could be done in five kilobytes of data. And one of the people who entered the competition was a guy named Eric Costello, who lived in, at the time, in St. Louis. And I sparked up a friendship with him. And by this time, Jason had come back from the Gradfinder acquisition and we all started working together on a project called Game Never Ending, which was an attempt to build a web-based massively multiplayer game.

• 10:04Guy Raz?

  And it was a never-ending game, presumably?

• 10:06Speaker 01

  Yep.

• 10:07Guy Raz?

  You never ended, okay. This was you and Caterina, your now wife, and Jason Clausen, who you did Gradfinder with.

• 10:15Speaker 01

  Yep.

• 10:15Guy Raz?

  And with this guy Eric Costello, you decide that you wanted to create a game, a massive multiplayer online game.

• 10:22Speaker 01

  Yeah, so there's a whole type of K-me that existed before. The graphical games took off and they were the precursor for everything that came after, World of Warcraft being the example that most people would know.

• 10:34Guy Raz?

  Yeah.

• 10:34Speaker 01

  But we weren't interested in fighting games. We were interested in creativity and play as kind of a pretext for social interaction. So this idea still has a lot of appeal to me. It's a horrible idea commercially. Like it's just, there's not enough people who are interested in it. But, you know, there was a group who, who used the prototype and were very enthusiastic and the seeds of this incredible community. And we thought, hey, you know, we built this prototype, people liked it, we can make this into a real project.

• 11:02Guy Raz?

  And what, what would the game look like? Would you be in front of a screen looking at like a Minecraft type interface?

• 11:09Speaker 01

  Yeah, so it was, it was 2002, 2003, so the graphics weren't even Minecraft quality. It was more like there was a map, you could, there's like different objects and you could click on them to pick them up or click on them to do stuff with them. Really rudimentary. So we tried everything to raise some money for this and there was zero interest in investing in this because now it's, it's like the middle of 2002.

• 11:34Guy Raz?

  Yeah.

• 11:35Speaker 01

  And no one wanted to invest in anything that had anything to do with the internet.

• 11:40Guy Raz?

  Yeah, well, how are you even going to make money off this? What was the business model?

• 11:43Speaker 01

  People would pay a monthly subscription.

• 11:45Guy Raz?

  I see.

• 11:47Speaker 01

  So I put my money into it. Some of us working on it put our money into it. We hired a couple of people. We raised a couple hundred thousand dollars of friends and family money. And when I say friends and family, I mean like literally friends and family. And by the middle of 2003, you know, we'd now been working on it a year, it was clear how complex this was going to be and would you realize we're never going to be able to finish it, like for the amount of money we raised. And we were desperate for something else that, that we could complete in a shorter amount of time. And that thing ended up being Flickr. And I think when we started it, the intention was we'll build this and someone will buy it for like a million dollars and then we can use that million dollars to finish the game.

• 12:30Guy Raz?

  Yeah.

• 12:31Speaker 01

  And of course, that's not what happened at all.

• 12:33Guy Raz?

  Wait, wait, let me, let me go back for a second. Because you've got this idea to build this game, very expensive. You just, you just don't have enough money to do it, right? So then you decide, I mean, it leads you to starting up Flickr, which is like a photo sharing website. How did that even happen?

• 12:50Speaker 01

  Well, we had, at that time, developed a whole bunch of really interesting and relatively novel technologies. So we had a game that you could play in a web browser. And despite the fact that it was pretty rudimentary graphics, it was still, from a technological perspective, totally fascinating and new.

• 13:07Guy Raz?

  Yeah.

• 13:08Speaker 01

  And this story sounds like too good to be true and kind of ridiculous, but a group of lawyers had organized a conference called Law in Virtual Worlds in New York, and they invited all these people, and I went with Caterina. And on the plane on the way there, I got food poisoning. So when we got to JFK, I was just throwing up and getting in the taxi, pull over on the Van Wick to throw up, and then get to the hotel and like open the cab door and throw up all over the carpet. It was like really sick, I couldn't keep anything down, kind of like fever dreams. And the part that sounds apocryphal, but it's, I swear it's true, is the whole idea for Flickr came to me that night. I literally wrote it out on like scraps of paper in the hotel room while I couldn't sleep in five in the morning.

• 13:50Guy Raz?

  You wrote out, you wrote out what?

• 13:52Speaker 01

  Um, a way to take the interface that we had developed for the game, which let people chat, which let people change locations, which let people manipulate these objects, like to pull them into their inventory and do stuff with them. And instead of the objects, we'll just have photos. So you can upload a photo, and then you could do stuff with it. So when I say do stuff, I mean, people could draw a little rectangle on the photo and then make an annotation of that part of the photo. They could chat about them, they could send them to other people, they could change the title, and everything happened dynamically. So like, when I did something, you would see what was happening on your computer. So, again, technologically, for the time, amazing, like just mind blowing, people were incredibly effusive.

• 14:36Speaker 01

  Then let me just pause for a second to say, this was the first version of Flickr, which was, which was not good, and which we quickly changed, and the reason we were successful is because we changed it. And this is, I think, a good point to introduce another character. I've got, we've got so many threads going here, but so one of the players of the game was like early twenties.

• 14:56Speaker 01

  Hardcore, just nerd, who lived in a tiny village in England and had a job in London. He commuted to London every day on the train for a couple of hours. And he had developed a bunch of stuff to illustrate the social networks inside the game. Kind of, we didn't have any APIs for him to use, but it turned out had hacked into our internal mailing list when we were working on the game and had been reading all of our messages, which is why he was able to develop all this stuff.

• 15:21Guy Raz?

  Well, he was like a, just a person who played game Neverending?

• 15:24Speaker 01

  Yeah, like a fan. And his name was Cal Henderson. Cal was such a geek, like one of the nerdiest people I'd ever met in my life. He was also like a prodigy programmer. And so when I convinced him to start, to work with us on, on making Flickr, he was really into it. And on the train to London every day, two hours in, two hours out, he wrote almost all of the guts of Flickr. The way to upload the photos and to process them, to store them, display them. The original payment he got was me buying stuff off his Amazon wishlist. So it was like Radiohead EPs and like, you know, rare vinyl and stuff like that.

• 16:06Guy Raz?

  So here's what I don't get. Everyone's like focused on this game, but everyone kind of knows that it's, the money's running out. How did you then convince everybody to pivot? Did you say, hey, guys, you know what? Let's just dump this gaming thing. Let's go all in on a photo sharing site. Like, did anybody say, what are you talking about?

• 16:24Speaker 01

  Oh, yeah. So I actually forgot about this until a couple of years ago, when I was reminded of it. I kind of laid out everything and said, this is the situation. We're just not going to be able to finish the game. And I let everyone vote.

• 16:36Guy Raz?

  You said to them, you let them vote on whether to actually go through with this plan?

• 16:40Speaker 01

  Yeah, whether to, to switch our efforts to Flickr and to really pursue that instead of the game. And then I lost.

• 16:48Guy Raz?

  What was the argument you made? How did, I mean, why did you even think that was a good idea?

• 16:53Speaker 01

  Because it was something that we could complete faster. You know, like, we could actually get it out.

• 16:57Guy Raz?

  Right.

• 16:58Speaker 01

  We would, and we were, at this point, Eric was the one person on the team who had kids. So he was the one person who got paid. And we just weren't able to pay anyone anymore.

• 17:05Guy Raz?

  Yeah.

• 17:06Speaker 01

  So we had this vote. I lost, you know, or Flickr lost in game one. So then I had to call Eric on the side and like, you know, do some, what I imagine happens in the Senate, some kind of like horse trading to convince him to change his vote. And that worked. And, um, you know, that decision was December 2003. And in February 2004, we launched Flickr. We all flew to San Diego for this conference.

• 17:33Guy Raz?

  And were people like, super excited about it when you launched?

• 17:36Speaker 01

  It was a, it was a pretty big deal when it launched in that closed community, you know. There wasn't nearly as many people online. You know, this is like, probably a decade before the majority of people got smartphones. The internet wasn't, was still perceived as this kind of like weird creepy place. Like, if you saw a popular image of an internet user, it would be like a really overweight guy in the basement.

• 17:59Guy Raz?

  Yeah, like that guy in The Simpsons.

• 18:01Speaker 01

  Yeah, exactly.

• 18:02Guy Raz?

  Yeah. So you guys, uh, so it's like 2004. You put Flickr out there and, and people who were on the internet were like, cool, a place to, to put our photos up online?

• 18:14Speaker 01

  Yeah. Um, so around that time, Google had bought Blogger, um, which was one of the early blogging programs. And, uh, they didn't have a way to host photos. So they put, you know, in their help materials online, when people said, how do I upload photos? They said, use Flickr. You know, it was like the one standout of that time where the, the world had kind of soured on the internet that kind of rose from the, the ashes of all that destruction and became like a, a cool, interesting thing that people could get involved in that was fun about the internet again.

• 18:49Guy Raz?

  And, and how, how is Flickr gonna make money? Because if all these people are coming on to it, presumably you had to buy like server space, which was a lot more expensive then before like cloud computing.

• 19:00Speaker 01

  Yeah.

• 19:00Guy Raz?

  How, how, how did you deal with that?

• 19:03Speaker 01

  Um, we sold what we called pro accounts, which let you, um, I believe it was, you could see the whole history of your photos, whereas if you didn't buy a pro account, you could only see 200 and... And that actually went pretty well, but you're right. The hardware at that time was just astronomically expensive.

• 19:21Guy Raz?

  And memory storage. You were storing all these people's photos.

• 19:25Speaker 01

  Absolutely. So every week, we would put in order to Dell. You know, UPS would deliver boxes from Dell. And then every Friday night, Jason and I would go down to where the servers were and look at the screwdrivers and put servers onto the racks and to set everything up. And but because Flickr was really taking off in the public imagination, we actually got some people who were interested in investing. So we actually raised a little bit of money. So we were able to buy the servers and we were growing really quickly. And we actually had people buying Pro accounts, not very many, but we also didn't pay ourselves very much. So we're covering a bit of the cost through actual usage. And suddenly, companies wanted to buy us.

• 20:06Guy Raz?

  Like which companies?

• 20:09Speaker 01

  We were talking to Google, to Yahoo, to, I don't know if people remember this anymore, but to Ask Jeeves.

• 20:17Guy Raz?

  Oh, yes, of course.

• 20:18Speaker 01

  And to some of the other existing photo sharing sites. You know, fast forward another six months or so. Now it's Christmas of 2004, so it's about to turn into 2005. And we also had a bunch of venture capitalists who were interested. At the same time, Yahoo is getting really, really serious. So the search part of Yahoo made an offer to buy us. And then over that Christmas, New Year's period, 2004, 2005, we had to choose, do we want to take this money from the investors and build this into something bigger? Or do we want to take the money now from Yahoo? And we got a great pitch from them. And the promise was, come work at Yahoo, we'll buy the company, we'll give you this money, but we'll also give you all of these resources. And we have all of Yahoo's hundreds of millions of users

• 21:02Speaker 01

  and all of our technology and all of our servers. And you can build this into this great and wonderful thing. So that's, in the end, what we decided to do.

• 21:11Guy Raz?

  What did they offer?

• 21:12Speaker 01

  It was around 20 million bucks.

• 21:14Guy Raz?

  So 20 million bucks. Wow, you were a rich guy overnight.

• 21:19Speaker 01

  Yeah.

• 21:21Speaker 01

  So suddenly, all the friends and family who invested in the dumb game a couple of years prior were in a good position. And everyone who worked there, who had deferred their salaries and kind of sacrificed along the way, was in a good position. And the feedback that we got from our investors was, hey, look, you know, this is going to be a life-changing amount of money. You'll be able to do what you want to do after. And who knows if this opportunity will stay around. So you should just take the acquisition.

• 21:45Guy Raz?

  So smart move.

• 21:46Speaker 01

  Smart move, for sure. Like 100% of the time, they would give the opposite advice today.

• 21:50Guy Raz?

  Yeah, right.

• 21:51Speaker 01

  But it was really, yeah, Flickr was like a really singular thing in the internet at that time.

• 21:55Guy Raz?

  I mean, you guys, you and Katerina were like kind of internet, more than internet famous. You were famous, like after that acquisition. You landed on the cover of Newsweek.

• 22:04Speaker 01

  Yeah, so I would say still a little bit internet famous, because I was in New York and I was flying back to the West Coast when that Newsweek issue came out.

• 22:13Guy Raz?

  What did the cover say, by the way?

• 22:14Speaker 01

  Well, I'll tell you. I grabbed a stack of them at the newsstand inside of JFK and I slapped them down. It's like, you know, I have like a dozen copies or something like that. And the woman who was checking me out, didn't, she didn't look up. And she scanned one magazine and she flipped it over and scanned the other one. And she said, honey, you know, all these are the same. And I said, yep. And then she looked up at me. And then she looked down at the magazine. She looked up at me again. And she was like really, like her eyes lit up. She was so excited. And then she read the cover of it and said something like, Web 2.0 from Flickr to MySpace, something, something. And she was just crestfallen. She was just like, oh, my God. I thought you were going to be someone important. Like, you were going to be a movie star, or like American Idol contestant, or something like I cared about.

• 22:59Guy Raz?

  Just like some Web 2.0 dude.

• 23:00Speaker 01

  The look on her face was just amazing. And then she just scanned the rest of the magazines and checked me out. And that was it.

• 23:06Guy Raz?

  So Yahoo gets a pretty good deal now that we know now, in hindsight, on this product. You walk away with probably a good amount of cash, probably not set for life, though, right?

• 23:17Speaker 01

  No, not set for life. And part of that acquisition, what's called earnout. So it's conditional on the employees staying with Yahoo for a time.

• 23:27Guy Raz?

  How long did you have to stay with Yahoo to fully vest, get all your money?

• 23:31Speaker 01

  Three years.

• 23:33Guy Raz?

  And you lasted how long?

• 23:34Speaker 01

  Three and a half.

• 23:35Guy Raz?

  So you basically, you made it.

• 23:40Guy Raz?

  So how were those three years at Yahoo?

• 23:42Speaker 01

  I think I was never in the army, but I looked back at that time the way I would imagine some people look back at bootcamp, which was, it was horrible at the time, but like very rewarding and enriching. And I learned a lot and developed character and stuff like that.

• 23:58Guy Raz?

  What was horrible about it?

• 24:00Speaker 01

  Well, at the time we required, it was nine people. So nine people being acquired by what at the time I think was like an 11,000 or 12,000 person company. And suddenly, everything that was just easy, like we would just decide something and then it would be decided, became this massive process. Now, when we wanted to get more servers, we had to go to the hardware review committee and you had to make an appointment and you couldn't get an appointment for like five weeks. Meanwhile, the site's gonna fall over.

• 24:27Guy Raz?

  Wow.

• 24:27Speaker 01

  And when we wanted to blog something, you know, like make an announcement publicly or add a feature, we would just do it before we required. And then after we required, there was like, you know, a whole comms team.

• 24:36Guy Raz?

  Approval, right.

• 24:37Speaker 01

  Yeah. It just took a lot of getting used to. So it was just like, you know, almost all my energy went into things other than making Flickr a great product.

• 24:45Guy Raz?

  It sounds like you were just counting down the days. You wanted, you really wanted to get out.

• 24:50Speaker 01

  Yeah, I said that. And there was also, there was good parts as well. And I gotta say, you know, I use the bootcamp analogy in a deliberate way. I learned an amazing amount. Some of it was negative lessons, like, you know, don't do this. But a lot of it was positive lessons. And also, it was just really eye opening. You know, it's like, I certainly, I learned a lot more than I ever would have learned in any MBA program.

• 25:11Guy Raz?

  Yeah.

• 25:11Speaker 01

  Just being exposed to, because Flickr was pretty high profile, I had access to all of the executives and I could see all the decisions and I was involved in all these things that I never would have been involved in otherwise.

• 25:24Guy Raz?

  So when you left Yahoo, was it, was it with a feeling of joy and possibility? Or was it a feeling of like, okay?

• 25:33Guy Raz?

  I don't know what I'm gonna do now.

• 25:35Speaker 01

  Um, I'd say halfway in between. It wasn't overwhelmingly positive or negative.

• 25:42Guy Raz?

  Because you, I guess, and this is a kind of a personal thing, but your marriage was breaking up at that time.

• 25:47Speaker 01

  Yep, it was. We had only recently had a kid and we didn't work together that closely at Yahoo. But it's pretty challenging to work with your spouse, especially in the early days of a startup. So this is going back many years now, when we first started working at Flickr, like out of money. And it's not just the business is out of money, it's like we're out of money.

• 26:10Guy Raz?

  You're out of money.

• 26:12Speaker 01

  And that stress isn't like, okay, I can leave it at the office and go home to my family, which is totally independent. It's, you know, they're really interwoven. So I think that was, you know, it was a difficult time. And by the time that we'd left Yahoo, like pretty soon after that, it was just over.

• 26:30Guy Raz?

  And I guess you still had to work, you still had to figure something out. So what did you do when you walked out of Yahoo? What was your plan?

• 26:39Speaker 01

  There wasn't an immediate short-term plan. It was definitely to take some time off because that had been a real whirlwind. But it didn't take long for a lot of the same people who worked on Flickr and had worked on the previous game to decide that we wanted to work on the game again.

• 26:53Guy Raz?

  You wanted to go back to gaming?

• 26:55Speaker 01

  Yeah.

• 26:56Guy Raz?

  You didn't learn your lesson the first time around?

• 26:58Speaker 01

  Yeah, we apparently didn't. I mean, so the world looked pretty different at that point. So now it's the beginning of 2009, there was at least an order of magnitude more people online. Whereas in 2002, the majority of people didn't have internet access at home. Now the majority did. Computers are way faster. All the hardware was way cheaper. Online games were something that were really popular. And so we figured like, oh, this time we can't fail. Like, you know, all of the conditions are perfect, so we should do this.

• 27:27Guy Raz?

  When you say, when you say we, you're talking about the people who worked on the previous game with you, all those guys?

• 27:33Speaker 01

  Yeah, so there was me and three of the engineers, including Cal Henderson and Eric Costello and another one named Sergey Morachov, who's in Vancouver.

• 27:43Speaker 01

  And what we decided to do, which was called Glitch, was completely different than anything that anyone had ever seen before.

• 27:49Guy Raz?

  The game was called Glitch?

• 27:51Speaker 01

  Yes. So in this game, it was a bizarre, fantastical world, really tried to encourage individual creativity and people could create stuff inside the world. But in the world, you would like milk butterflies in order to get butterfly milk. And you could, like, eggs grew on trees. And the look was kind of like Dr. Seuss meets Monty Python meets like modern day graphic novels. So as you moved around the world, the look changed dramatically.

• 28:19Guy Raz?

  So you had a track record with Flickr. Like, you already had a reputation. You'd been on the cover of Newsweek. You'd worked for Yahoo. So when it came time to raise money, was it pretty easy?

• 28:30Speaker 01

  Yeah, absolutely. It was very easy for us to raise money. So we started off with like a million and a half dollars. We were able to hire someone. We were able to afford all the technology we wanted. And as we started developing the game, we had a bunch of really positive early indications. So we charged people money and they were, they paid a lot. You know, like the average person who paid was paying $70 a year.

• 28:53Guy Raz?

  And this is like, what, 2010, 2011, something like that?

• 28:57Speaker 01

  Yeah.

• 28:57Guy Raz?

  And people were already paying for it. It was that good?

• 29:00Speaker 01

  Well, it was that good for a very small population. So in fact, it was really hard for us to get people, even to go through the first few minutes of the game, because it was just so different and so weird. Most people who tried it were like, what the hell is this? And just pissed out in the first three minutes of gameplay.

• 29:17Guy Raz?

  All right, so you guys launched this thing. There's some early success. You raised lots of cash. And then November of 2012, you shut it down. What, what happened?

• 29:29Speaker 01

  Well, being in business and especially being a CEO requires a lot of unnatural optimism. And at some point... It's just that optimism is exhausted. So we had what's called a leaky bucket. So people would come in the top of the funnel. And the funnel is kind of describing like first people hear about your thing. Then they go to the website, then they sign up. Then they, in our case, play the game a little bit. Then they end up paying you. And each of those stages, you kind of, some people fall out of the process. So that's why it's called the funnel. The leaky bucket is you get people in the top, but they just fall out. Like they fall out the process too early. Not enough of them make it all the way through.

• 30:09Guy Raz?

  They didn't stick with it.

• 30:10Speaker 01

  Yeah, they didn't stick with it. And it was always the next thing that was going to fix it. Like the next game dynamic we added, the next bit of customization, the next, the next thing, the next thing, the next thing. But as we continued to try those things, we just never found that magic formula that would make it work economically. Like it would have been a fine, what people call lifestyle business. But it was never going to become the kind of business that would justify seventeen and a half million dollars of venture capital investment.

• 30:43Guy Raz?

  So at what point did you come to the decision to shut it down?

• 30:48Speaker 01

  Well, so I was, I was losing a lot of sleep in those days. And I was, I was up really late one night. And it was like two or three in the morning. I was in bed and I hadn't been sleeping for hours. And I just realized like, I don't believe this can work. Like, I don't believe it anymore. And I realized right in that moment, like, there's a saying, if you're thinking about firing someone a lot, you should just fire them. Meaning that like that intuition, if that keeps coming up, it's almost certainly correct. And you wouldn't be thinking that all the time if there was a real shot at making their relationship work. I think it's exactly the same thing with a business. Once I began, not to have little doubts, but once at a fundamental level, I was just like, I don't think this is going to work. It's not going to work.

• 31:33Speaker 01

  So, you know, first thing that morning. I wrote to all the co-founders and then to our board of directors and just said, "It's over." And that definitely was not a unanimous point of view. And there's a lot of contention and argument.

• 31:48Guy Raz?

  I bet.

• 31:49Speaker 01

  Because we had developed an enormous amount of equity, like a really...

• 31:53Guy Raz?

  Content, you had content, tons of content.

• 31:55Speaker 01

  Yeah, millions of frames of animation, hundreds of hours of original music.

• 32:00Guy Raz?

  So how did you break the news to the team? I mean, it must have been excruciating.

• 32:05Speaker 01

  Yeah, it was a horrible experience. And I say, "We're going to have an all-hands meeting." And everyone files in and gets together. People have their coffee in the morning and they're chit-chatting. And finally, I stand up and the meeting starts. And I start to tell them that we're going to shut down the game. And before I could even get the first half of the sentence out, I was crying. And almost everyone in the room, I had personally convinced that they should come work at this company, that they should accept our stock options, that they should believe in the project, that they should believe in me. And so it's humiliating, there's a real sense that I had failed all these people, that I had an obligation to them.

• 32:47Speaker 01

  And I had locked eyes with this one software engineer, who had, just three months before, moved. He had an infant daughter, I don't know, like maybe six months or a year old. He was moving away from his in-laws, who were helping take care of the kid, moving to a new city with his whole family. And now I was telling him he didn't have a job anywhere.

• 33:12Guy Raz?

  When we come back, how Stuart's second failure to build an online game had a silver lining, and how the idea for Slack was hiding in plain sight. Stay with us. I'm Guy Raz, and you're listening to How I Built This from NPR.

• 33:43Guy Raz?

  Hey, welcome back to How I Built This from NPR. So in November of 2012, Stuart Butterfield decided to shut down development of his multiplayer online game called Glitch, and he laid off almost all of the employees. Now, at the time, he really didn't know what his next move was going to be, but he decided to do something kind of unusual, which is to help out the people he just fired.

• 34:08Speaker 01

  This is where I feel glad that we made the decision when we did, because we still, we had raised all this money. We still had like over $5 million in the bank. It was late in the year. We were going to keep paying everyone for several months so they had a chance to find another job. We built a website called Hire a Genius, and we had everyone's portfolio, their name, and endorsements. We wrote reference letters. We helped people with their resumes. We made introductions.

• 34:36Speaker 01

  By the end of that process, we had gotten, every single person who worked there who was getting laid off, and there was like 37 of them, I believe, every single one of them got another job. And in most cases, they got a better job than the one that they had. And I think that making sure everyone got hired generated an enormous amount of goodwill, like in the community at large. And I think that was very helpful for us down the road when we started Slack, and people were more willing to give us a chance.

• 35:01Guy Raz?

  OK, so you were left at the helm of this now rump of a company or non-company. And what was your next move?

• 35:10Speaker 01

  Well, so the interesting thing about Glitch was while it wasn't successful as a business, we were extraordinarily productive. And there was a system for internal communication that we had developed that we didn't think about as a thing. Like, it didn't have a name. We never talked about it. It was just how we happened to communicate. And it was all built around the concept of a channel. And you can have a channel that, create it for anything, for a project, for a functional group, for a topic of conversation. And the channel exists whether you're a member or not, and it can continue to exist after you leave. And it's kind of an inversion of the typical inter-office communication, which is entirely based on email now.

• 35:51Speaker 01

  An email, if you join a company that has been around for 30 years and has been using email since its inception, you get an empty inbox. You're completely cut off from the whole history of what's happened before you got there.

• 36:03Guy Raz?

  Right.

• 36:04Speaker 01

  And almost all of the email, like 99.99% of it, is going into individuals' inboxes and is not visible to anyone else. And you can be CC'd into something that was already going on, or someone can forward you a conversation, but it's not accessible. You know, someone else has to give it to you. Whereas while we were working on the game Glitch, we would hire someone new in customer support and they would have the whole history of all of the conversations the customer support team had had before they got there. They would have the whole history of the topics that the designers were working on. Everything else that was going on was visible to them.

• 36:40Guy Raz?

  But my assumption is that like you weren't sitting around going, oh my God, this internal chat system that we created is revolutionary. Like you were focused on Glitch and this thing was kind of cool and it just made things kind of, it greased the skids. But, or am I wrong? Were you, did you actually wake up in the morning like every day and say, oh my God, this thing is amazing?

• 36:57Speaker 01

  No, you were right in the first place. We didn't even think about it. Okay. I think if someone asked me, what do you do for internal communication? And I would just shrug my shoulders and say, I don't know, like whatever everyone does. Yeah. We didn't think about it at all. And it was only once we had decided to shut down the game that we realized like, hey, this system is actually pretty good. We would never work without a system like this again. Like it's so much better than anything else we had used before. Maybe other people would like it.

• 37:25Guy Raz?

  So at what point do you decide, let's see if we can take this like chat thing that we built and turn that into a business?

• 37:33Speaker 01

  It's funny. We have these conversations and we had them in our internal communication tool, the thing that predated Slack. And so there's timestamps. My memory is very different than the reality. My memory is, is it took us months to decide this. And there's a lot of debate. In fact, it took us like less than a week. The core was there like almost instantly.

• 37:54Guy Raz?

  And so who was left? Who, how many people stayed to see if you could make this new thing work?

• 38:00Speaker 01

  So it was myself and the other three co-founders. So there's four of us. And then there's four employees that we kept, one of whom we had worked with back in the Flickr days, who's a backend programmer, iOS or mobile engineer, our head of QA, and one designer.

• 38:17Guy Raz?

  So you decide, hey, let's see if we can take this side thing that we've built and see if we can turn that into our business. Were they passionate about this? Because everybody went into this thing to make a game, a video game. Were they like, yeah, woo-hoo, let's make an instant communication tool?

• 38:36Speaker 01

  I think we were. You go through a trauma with a group of people and you really get bound to them. It makes you very close. And so I think we all wanted to continue to work together. In fact, we wanted to work with many more of the people that we didn't have the opportunity to keep. The happy story is we ended up hiring back quite a few of the people who worked on the game, including that one software engineer I mentioned, who I had just convinced to move. He's been an early Slack employee for a long time. They might sound completely different. One's enterprise software that has all these Fortune 100 customers and the other one's an online game. But to me, they're fundamentally similar for two reasons. One is, I just like making software and I like doing it with these other people. They all like making software as well.

• 39:21Speaker 01

  And then, on the other hand, whereas there were two massively multiplayer games and there was a massively multiplayer photo sharing, Slack is massively multiplayer communications at work.

• 39:31Guy Raz?

  So what did you tell your investors? Did you just say, hey, we're just going to shift. We're no longer going to do games. We're going to focus on this communication tool. Is that what you said?

• 39:41Speaker 01

  Yeah, that's pretty much it. None of them wanted their money back. And not for altruistic reasons, but we had already spent 2/3 of it. So their options were, we can get back 1/3 of what we gave you, or they can buy one more lottery ticket and say, keep the money, we'll keep our ownership of the company and see what you can do. And that turned out to be...

• 40:02Guy Raz?

  A wise move.

• 40:03Speaker 01

  Yeah, the best decision any of them had ever made in investing.

• 40:07Guy Raz?

  All right. So at this point, at the end of 2012, was Slack... Did you guys call it Slack, this internal communication thing?

• 40:16Speaker 01

  Yeah. I was really wedded to the name and it was not really popular internally.

• 40:22Guy Raz?

  Where does it come from?

• 40:24Speaker 01

  There was a bunch of criteria we had. We wanted it to be a regular English word. We wanted people to be able to spell it if we said it. We had to be able to get the trademark and we had to be able to get the domain. There's the negative connotations that, you know, the slacker.

• 40:37Guy Raz?

  Slacker, yeah.

• 40:38Speaker 01

  Slacking off, but there's also these positive connotations to pick up the slack or to cut me some slack.

• 40:43Guy Raz?

  Yeah, right.

• 40:44Speaker 01

  And I think that the negative connotations, I felt like because they would be, this would be an unexpected and unusual name, it would be more likely to stick with people. Having said that, we spent like the next four months arguing about different names, like dozens of different names, and all of them in the end either ran into like, we couldn't get the trademark or we couldn't get the domain name. And Slack, speaking of dot com registrations, was registered by this guy in 1993, lives in somewhere in the Midwest, I think Wisconsin, who is an electrical engineer, and there's no more iconic internet thing than this, he had it as a website with pictures of his cats. So it's just like, the domain was just sitting there, slack.com, and you can go in the Internet

• 41:26Speaker 01

  Archive and look at his old website with pictures of his cats.

• 41:30Guy Raz?

  And he sold you the domain name?

• 41:31Speaker 01

  He sold us the domain name, yeah.

• 41:34Guy Raz?

  So when you pivot from Glitch to Slack at the end of 2012, early 2013, was it fully formed? Was it essentially ready to go?

• 41:45Speaker 01

  No, we, there was two things. So one was the internal communication system that we had built. That was just really jury rigged, but what was as a blueprint for what we wanted to build, it was more or less perfect. So we had that, we started development completely from scratch in like December 2012, January 2013. Couple of months later, we had enough done that we could start using it. Couple of months after that, we had enough done that we could invite some friends to try it, and then suddenly we realized like, oh, oh, here's a challenge. We had been working like this for years, and it just felt perfectly natural for us, and the advantages of it were just obvious.

• 42:21Guy Raz?

  Yeah.

• 42:21Speaker 01

  In fact, so obvious that it was hard to articulate. And we tried to convince our friends at other companies to use it, and they were like, why would we do that?

• 42:29Guy Raz?

  Right, it's another thing to check.

• 42:31Speaker 01

  Exactly. And the really hard part of it was, unlike most software, now you can't unilaterally decide to use Slack with your colleagues, everyone has to buy in.

• 42:40Guy Raz?

  Yeah, everybody, yeah.

• 42:41Speaker 01

  Yeah, I can't send you a message unless you're also using it. So it has this real challenge at the beginning. Especially when no one's heard of it. No one knows anyone else who uses anything like this. It's brand new software from this flaky company that just failed to make it a massively multiplayer game. So who knows how long they're going to be doing this? Why am I going to trust them? And what we imagine would be a really easy sell. We would go and say, hey, you should try this. It's great. It worked amazing for us. Was just received with cold stares. We'd go back to the same company like five, six, seven times and we would show them demos and we'd try to explain. It was great practice, though. We got much better at kind of refining the pitch and explaining what the value of everything was.

• 43:23Guy Raz?

  Okay, you say this to me in 2013. I'm your friend. I'm gonna say, Stuart, I've got emails coming in, phone calls and texts and like Facebook. I don't need this other thing. This is just gonna be another time suck. And then you say.

• 43:37Speaker 01

  And then I would say, oh, this will be like a huge boon because you'll start to consolidate all the communication that's happening in all these other channels. And critically, you'll build this archive and the archive increases in value over time. So the longer you use it, the more you get out of it because you can find the answers to questions that people had had before. It's this resource that's shared across everyone. You have to spend a lot less energy. And then, of course, you would object again and I would.

• 43:59Guy Raz?

  More stuff to read, Stuart, more stuff to read.

• 44:02Speaker 01

  Yeah, so we would go back and forth with this for a while. There's like always a million objections. So it took us a long, like to get the first three or four external teams using it took us forever. And then finally, we convinced a company called Ardio to try it. And they were much bigger than us. They were like 120 people.

• 44:18Guy Raz?

  And you guys were at this point, how many?

• 44:20Speaker 01

  We were still the same eight people.

• 44:21Guy Raz?

  So you guys were just working like dogs on this thing.

• 44:24Speaker 01

  Yeah. But the more we worked, the more we realized like, hey, this is actually, this totally makes sense. Like, you know, we probably from the practice of trying to convince people, we had definitely convinced ourselves. Like, we were sure that this was going to be something as big. What's funny is we went back to our investors, so including Andreessen Horowitz, which is now like a really big, successful venture capital firm. And this group had a lot of experience in enterprise software, which suddenly we were an enterprise software company instead of a game company. And we went in there and told them our plan and, you know. Our grand ambition, which was, hey, we believe that there's, you know, we could one day get to $100 million in revenue with this business and thereby be a billion dollar business.

• 45:06Speaker 01

  And like they were just like, you guys have no idea what you're doing. You don't understand what it is to sell into companies. You're going to need all of this expertise. You're up against XYZ, different, you know, different companies, different technologies.

• 45:18Guy Raz?

  Yeah.

• 45:18Speaker 01

  And they were, they were like, good luck with your stupid little thing.

• 45:23Guy Raz?

  But did you think those investors were wrong? I mean, it's, it sounds like they made some good points, right?

• 45:30Speaker 01

  Well, so by the time we officially launched, it was evident that this was going to be something. The leaky bucket problem that I talked about in the context of the game was completely eliminated. Like, we found that once people started using it, as hard as it was to get people to start, once they started, they almost never stop. And, um, you know, at that point, people weren't paying us. They were just using it for free.

• 45:52Guy Raz?

  Yeah.

• 45:52Speaker 01

  But we could see that they were getting utilia. They were, they were logging out at the end of the day and first thing in the morning, they were right back in there.

• 45:59Guy Raz?

  So you launch in, in February of 2014 officially? It goes out into the App Store or whatever and out into the world?

• 46:05Speaker 01

  Yep. Um, and we also told all the people who had been using it for free, like, hey, the grace, you know, this, this is now you're going to have to start paying. We'll give you a nice, healthy credit to thank you for being one of our early pesters.

• 46:17Guy Raz?

  Yeah.

• 46:17Speaker 01

  And we found the conversion was excellent. You know, like within, um, maybe two weeks or three weeks of, of launching that officially, we had sold a million bucks worth of Slack.

• 46:26Guy Raz?

  A million dollars? How does it, how do people, how does it work, by the way? What does it cost?

• 46:30Speaker 01

  It costs, um, $80 per person per year. So you would pay, you would only pay for the people who are actually using it. So if you have a 50 person company and there's 20 people using it, then you just pay for 20 people.

• 46:40Guy Raz?

  But in the beginning, it was like six, seven bucks per user per month, something like that.

• 46:45Speaker 01

  Exactly.

• 46:45Guy Raz?

  So you launch it and within weeks, you have a million dollars in revenue?

• 46:50Speaker 01

  Yeah. To be fair, it took us many, many more weeks to get to second million because that was all the pent up demand.

• 46:55Guy Raz?

  Right.

• 46:55Speaker 01

  But yeah, we were off to the races. Unlike almost any enterprise software ever, people would talk about it. Like they would be in line at a coffee shop and they would say, oh my God, you gotta start using Slack. It's amazing. It's changed my life. And they would, they would post to Twitter and say like, I, you know, I recommend. And that, you know, no one ever says that about the software that they have to use at work.

• 47:14Guy Raz?

  No.

• 47:14Speaker 01

  So it was a completely different experience. This was like as, as good of a result as you could possibly hope for.

• 47:23Guy Raz?

  It's amazing. By October of 2014, so this is just two years after you shut down Glitch and like have to break the news to all these people. You raise 120 million bucks. It has a $1.2 billion valuation. I mean, that's nuts. That's totally insane.

• 47:42Speaker 01

  Yeah, it was completely insane. And, you know, at that same period, we're still growing like somewhere between 5% and 10% a week.

• 47:49Guy Raz?

  How are you dealing with that growth? How are you hiring enough people? I mean, how are you getting through the day?

• 47:55Speaker 01

  It was a pretty mad scramble, you know? And that year, we went from maybe 10 or 11. We hired a couple of people. At most 12 employees, up to about 40, 50. We might have ended that year at 80 people. And it was breakneck. We had to move offices and we don't have enough desks. People are sharing desks. Gradually, we put some systems into place. We started hiring professionals to manage different parts of the business. And now it's, you know, it's 1,000 people. It's amazing.

• 48:27Guy Raz?

  Yeah. So this has been called the fastest growing business app ever. It went from launch in February 2014 to the latest valuation is like $5.1 billion. That was in September of 2017. It probably is higher now. Those numbers are just staggering. I mean, for something that was just a side project that was never intended to be the business.

• 48:53Speaker 01

  Yeah. You know, it feels like all of the years of like sweat and toil and sacrifice, all of the years pressing on with a game, you know, like kind of failure after failure have been, you know, more than rewarded, like rewarded dozens of times over. Because we thought like all of the other eight-person software development teams in the world would use this. And that happened like not that long after we launched. And now there's like... Three-star Michelin restaurants using it. And there's like the Norwegian Department of Labor and Welfare Administration. There's like the Hartford, Connecticut Police Department. There's like NASA's Jet Propulsion Laboratory. There's all these enormous companies. There's all these small companies.

• 49:38Speaker 01

  We never thought it would become this big. Like even in our grandest ambitions, it was like a tenth of what it is today.

• 49:44Guy Raz?

  Do you think there was a possibility that you would not have discovered Slack? That this thing hiding right under your nose, you just wouldn't have thought this should be our business? Was there a possibility that could have happened?

• 49:55Speaker 01

  Yeah, absolutely. Or that, you know, I mentioned the difficulty in telling the team and kind of what that felt like. It was hard not to let that just like crush me because it is so embarrassing, like it's so humiliating. And it's such a, it was such a hard decision to make. I think partly because what you hear is the never give up in your dreams, you know? Resilience, grit. You gotta keep going. It's all about the fight. It's the slog. And I think that's generally true. And I think it's really important to persevere through things that are difficult. But there's also a point beyond which you're just making a mistake.

• 50:36Guy Raz?

  What, what keeps you up at night now? Anything? I mean, are there potential competitors? Or are you like, I'm set now? I mean, you are. You've got, there are many reasons for you to kind of chill out and relax, right?

• 50:52Speaker 01

  No, I lose all kinds of sleep. And this is where it gets really interesting. And this is like, to me, the most fascinating part of the journey. So through a combination of inexperience and probably arrogance, when we were smaller, I thought like my job is to be smarter than everyone and to make all of the important decisions. And if I make all the right decisions and I'm smart enough, then we'll be successful. Because that's the story that we tell after the fact around a lot of companies. That it was like a series of strategic decisions that made all the difference. But what I've found is what matters is performance at the level of the organization. Because to the degree that everyone's pushing in the same direction, you're able to achieve something. If people are pushing in opposite directions, then you know, you can put as much energy as you want in and nothing happens.

• 51:35Guy Raz?

  Yeah.

• 51:36Speaker 01

  So, you know, when we were eight people, it's trivially easy for everyone to understand what's going on. You get to 100 people and that's, suddenly it's hard. In 2016, we went from 80 people to 320, so we doubled twice. And that meant, you know, we have an all hands. I say, hey, put up your hands. You've been here for less than a year. And like 75% of the company puts up their hands. And it gets really difficult when the average tenure is so low. And not only that, but like, there's two people or whatever on the Android engineering team. And then they're, you know, they're working their butts off developing the app, but they're also trying to hire the third person. And the third person starts and they have all these questions and they don't know what they're doing. And then meanwhile, you're trying to hire the fourth person.

• 52:17Speaker 01

  And in that, that chaos, it can be really difficult to kind of, to hold it together. And a lot of this has just kind of dawned on me over the last year. And I think I was probably, I feel like as a CEO, 18 months behind where I should be. And those challenges are starting to become clearer and clearer.

• 52:38Guy Raz?

  Let me ask you about, one final question about your personal life. So you, you mentioned that when your marriage broke up, it was sort of, it'd been building. You had financial stress and you know, you were worried about this and that. You are now a billionaire, I mean, at least on paper. Does that eliminate stress in your life? Does that mean that everything's set? Everything's taken care of?

• 53:01Speaker 01

  You know, one nominal correction. We've been around for a long time as a company and I have four co-founders. So not even, I'm not even a billionaire on paper.

• 53:07Guy Raz?

  Okay, I sure, I got you on paper, okay, sorry.

• 53:10Speaker 01

  Perhaps.

• 53:11Guy Raz?

  But on paper, you've got lots of money.

• 53:12Speaker 01

  Yeah, it certainly makes my life easier. And you know, there's all that research and I don't remember where we're at with the latest version of this. But like beyond a certain amount of money, it doesn't make your life any better. I really feel like there's kind of, there's three levels of wealth in the world. The first level is I'm not stressed out about debt.

• 53:28Guy Raz?

  Right.

• 53:29Speaker 01

  People who no longer worry about their credit card bills or their student loans. That's like level one of wealth. Level two is I don't care what stuff costs in restaurants. You know, you're like, oh, I really want this thing, but it's $18. But the other thing is $12, so I'll get the $12 one. There's, there's a level where like suddenly it doesn't really matter which, how much you spend on a particular meal. And then the ultimate level of wealth is I don't care what vacation costs. Like, I don't care how expensive the hotel is or which flight we go on. Beyond that, I really don't think it makes any difference. So I'm feeling incredibly fortunate and it's great to have all these resources. But I'm just going to give almost all of it away because I there's no I don't get any additional happiness in spending it.

• 54:10Guy Raz?

  Yeah.

• 54:12Speaker 01

  And there's a lot of suffering in the world and there's a lot of inequality. And I think that's the place where not just me, but the whole company can make a difference.

• 54:23Guy Raz?

  Both of your companies, you know, your well-known companies were the product of pivots. Like, you were working on something completely different. Both happened to be games. And then when you realized it wasn't going to work, you shifted first to Flickr and then to Slack. How do you think you were able to see that? Because it's easy to look back on it with hindsight and say, oh, my gosh, Stuart Butterfield, what a genius, what foresight he had. Is that, would you think that's a fair assessment?

• 54:51Speaker 01

  Well, I'm trying to remember where I read this, but there's this nice visual. And that's there's a billion blades of grass on this massive field. And people are playing golf and every blade of grass says, like, I believe the golf ball is going to fall on me. And someone hits a golf ball and sure enough, it falls on some blades of grass. And they say, see, it was me all along. And like, the ball was going to fall somewhere. This is the kind of like the, I was on the cover of Forbes magazine when Slack was really successful. If I didn't do this, if Slack wasn't successful, if it wasn't me, it's not like Forbes was just like, okay, well, we won't publish a March issue.

• 55:28Guy Raz?

  No cover this month.

• 55:29Speaker 01

  Yeah. Someone was always going to be on the cover. Someone was always going to be successful. And I try to remain very conscious of that fact. Like, there's, we did work hard and we're clever and, you know, we're able to call in a lot of experience and I think we did a lot of things right. But there's a real increasing returns dynamics. Like, once you start to have some success, the rest of the success becomes easier and easier. And you look at Slack, Slack is like the ultimate example of this. We were growing really, really quickly, even before we launched. And because of that, the press would write about us. And because the press wrote about us, investors were interested. And because investors were interested and wanted to invest, we were able to raise all this money. And that got us more headlines. And that got us more interest from great applicants who wanted to come work at the company. And the opposite is absolutely true as well.

• 56:14Speaker 01

  You know, one stumble and you lose a couple of good employees. And now investors are kind of skeptical. You have to scale back your ambitions. Now you're not doing anything interesting. No one writes about you. No one wants to come work at your company. Investors are really not interested and you go to business. So, um, you know, while I am proud of all that we have accomplished and, you know, there's been an enormous amount of hard work by a lot of people. There is this real, um, tailwind that we have that really just, it makes it all of that stuff a lot easier.

• 56:45Guy Raz?

  Stuart Butterfield, co-founder and CEO of Slack. By the way, in the early days, when Stuart was interviewing job candidates for the company, he would always ask three questions. First one, what's three times 17? The second one, name three countries in Africa? And the third question, in which century was the French Revolution? Now, it wasn't like you were disqualified if you got the answers wrong, but it was just a way to start a conversation. Stuart wanted to make sure that people working for Slack were curious.

• 57:22Guy Raz?

  And please do stick around because in just a moment, we're going to hear from you about the things you're building. Hey, thanks so much for sticking around because it's time now for how you built that. And today's story starts in Charlotte, North Carolina, where about three years ago, Abby Kircher was a teenager with a food obsession.

• 57:41Speaker 02

  I've always loved peanut butter flavored anything. Peanut butter, um, cups, peanut butter ice cream. I loved peanut butter and jelly sandwiches, heavy on the peanut butter.

• 57:52Guy Raz?

  But one day, Abby did something that you probably shouldn't do with a food you eat every day. She looked at the label.

• 58:00Speaker 02

  And I was just like, oh, my gosh. This is so much sugar, tons of additives and preservatives. And so it just doesn't feel like it's almost peanut butter anymore. You know, it just feels kind of like a sugar spread.

• 58:11Guy Raz?

  So Abby decided to go cold turkey on peanut butter. But of course, she missed eating it.

• 58:17Speaker 02

  So I was like, I might as well make my own. You know, there's no reason why I couldn't make my own. So that's when I just whipped out a food processor and just tried it out.

• 58:26Guy Raz?

  This was, by the way, her mom's food processor into which she put some nuts and coconut oil and salt.

• 58:33Speaker 02

  And eventually, it took forever. It turned into a creamy texture. I was like, wow, this is so cool. I got very excited. Um, then I was like, OK, how do I want to flavor this or sweeten it? So I threw in some dates, processed that a little bit, and it was so good.

• 58:50Guy Raz?

  So good, in fact, that Abby started spreading the nut butter on everything. Apples, sandwiches, pancakes, even salad. And she began sharing it with her family and friends. And then, one night.

• 59:03Speaker 02

  I went into my room and it was quite literally an aha moment. And I just ran back into the kitchen and said, Mom, I could start a business. And she just kind of was like, oh, right. Yeah, absolutely.

• 59:15Guy Raz?

  Now, it's a good thing Abby's mom and dad were on board because remember, Abby was like 15 at the time. So she needed her parents' help to track down jars and labels and a commercial kitchen to make the nut butter. But Abby was still making a lot of the big decisions, like early on, she actually decided to forget about peanuts and to branch out into other types of nuts.

• 59:37Speaker 02

  I wanted something a little different. And I, I realized there weren't a lot of pecan and cashew butters out there at the time.

• 59:44Guy Raz?

  So Abby came up with five recipes, each with just a handful of ingredients, flavors like date pecan or strawberry cashew and coffee almond. And she and her mom, Anna, set up a stand at a big farmer's market just outside Charlotte.

• 59:58Speaker 02

  And we would just, you know, call people over. They were all incredibly intrigued by the story and how young I was. They would always look to my mom and be like, so you started this? And she'd be like, nope.

• 1:00:09Guy Raz?

  Anyway, they kept selling out at the farmer's market and people kept asking for more. That was getting hard because they were still packing the jars of nut butter themselves. And how were they doing that?

• 1:00:20Speaker 02

  Spoons, believe it or not. Many spoons, many, many hands. That was the worst part for sure. It just took so long.

• 1:00:30Guy Raz?

  So a few months later, they got a machine to do the jarring for them. And soon, they were pitching their nut butter at local grocery stores.

• 1:00:38Speaker 02

  For a young girl and her mom to walk in there excited about a product, it made them excited. And I think that was a huge factor in our growth.

• 1:00:47Guy Raz?

  Less than two years after Abby started making nut butters, they were selling in like 300 grocery stores in the Charlotte area. And over time, it wasn't just Abby and her mom doing this. Her older brother joined the business and her dad actually quit his job to join them as well.

• 1:01:04Speaker 02

  Technically, I'm the boss of my parents and brother, yes, which is definitely a learning experience, trying to figure out, OK, what are our positions in the business, regardless of our positions in the family?

• 1:01:17Guy Raz?

  Abby's now been at this for three years, and her nut butters have spread to nearly 1,000 stores across the East Coast and Midwest, including some pretty big chains like Wegmans and Lowe's.

• 1:01:29Speaker 02

  Now we're set to hit $1 million in revenue by the end of this year.

• 1:01:33Guy Raz?

  Which is pretty crazy, because Abby Kircher is still just 18. Her business is called Abby's Better, as in B-E-T-T-E-R. And if you want to find out more about it or hear previous episodes of our show, head to our podcast page, howibuiltthis.npr.org. And of course, if you want to tell us what you're building, go to build.npr.org. And thanks so much for listening to the show this week. You can subscribe to it at Apple Podcasts or wherever you get your podcasts. And while you're there, please do give us a review. You can also write us at [email protected]. And if you want to send a tweet, it's at howibuiltthis. Our show was produced this week by Casey Herman,

• 1:02:16Guy Raz?

  with music composed by Ramtin Arablouei. Thanks also to Noor Kutsi, Neva Grant, Sanaz Meshkhanpour, and Jeff Rogers. Our intern is J.C. Howard. I'm Guy Raz, and you've been listening to How I Built This from NPR.

• 1:02:45Speaker 03

  Your next great read is out there waiting for you, and NPR can help you find it. Visit npr.org/bookswe love to browse hundreds of books we loved, published this year, plus thousands in our archive. And, you know, books make great gifts for everyone on your holiday shopping list.