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Stewart Butterfield (Rachel Idzerda for The Globe and Mail)
Stewart Butterfield (Rachel Idzerda for The Globe and Mail)

The Lunch

From Flickr to Slack: B.C.'s Silicon Valley golden boy finds success in failure Add to ...

The “About” line of Stewart Butterfield’s Twitter account includes a little stick figure happily shrugging – a visual expression of “c’est la vie” for the emoticon generation. It looks like this: : ¯\_(ツ)_/¯

It seems an oddly casual self-descriptor for Silicon Valley’s current golden boy, the Canadian mind behind one of the most popular photo-sharing services of all time and a new productivity app startup that has reached a billion-dollar valuation before its first birthday.

But during our hour-long lunch in a downtown San Francisco restaurant, the 41-year-old serial entrepreneur who hails from tiny Lund, B.C., will make that very same shrugging gesture on more than one occasion.

“I’m definitely never going to have an opportunity this big again,” he says, casually. “Why not see how far we can take it?”

“It” is a new startup called Slack, built around a productivity tool that combines all manner of interoffice communications – from instant messaging to document transfers – into one central hub. Founded in January of this year with a staff of just eight people, the company now employs 65, and recently completed a round of funding that implies a valuation of $1.1-billion (U.S.). In a town full of big new things, Slack has suddenly become the biggest and the newest.

In fact, the only thing bigger than Slack’s rapid rise is Mr. Butterfield’s plans for its future. In the same casual manner, he says his goal for Slack is to do for communication what Microsoft’s Windows did for software: become the unifying hub.

“The useful part of Microsoft was that everything worked together,” he says. He speaks softly and without much emphasis. He swears casually and frequently, not for shock value, just as a matter of habit.

“Now, for every product category Microsoft once dominated, you have a dozen great competitors. In every respect … everything is way better – except nothing works with anything else.”

None of this was supposed to happen. Mr. Butterfield’s degrees – the first from the University of Victoria, the second from Cambridge – are in philosophy. His early career trajectory was focused squarely on academia, until his own professors warned him against it, predicting a glut of new PhDs would soon have a depressing effect on job opportunities.

But even as a young boy, Mr. Butterfield spent considerable time tinkering with computers. As a teenager he developed a liking for old-school stoner rock – Phish, The Grateful Dead. On Usenet, the newsgroup system from which modern Internet forums descend, he found vast communities of like-minded fans to chat with.

“Using the Internet for music distribution at that point was, you find someone who will dub a cassette and mail it over in a padded envelope,” he says.

Hooked, he taught himself HTML, and spent his summers building websites. Eventually he landed a job at a Web design agency in Vancouver. The agency’s founder purchased countless domain names, such as Dance.com and Brazil.com, hoping that as the web exploded in popularity, he could one day sell them at a huge profit. It’s a practice commonly known as domain-name squatting, and it’s rarely a sign of a tech firm that’s going anywhere.

“It was a disaster,” Mr. Butterfield says. “I quit literally two weeks before the dot-com crash. I thought I was walking away from 10 million bucks in equity.”

A few weeks later, the company Mr. Butterfield left was sold – for $35,000. The bubble had burst.

It was in the shadow of the dot-com crash that Mr. Butterfield first began chasing the project he has yet to complete – building a video game.

Before Second Life, Farmville and a slew of “social” games burst onto the scene, Mr. Butterfield decided to explore the concept of a game in which the gameplay itself was secondary – a mechanism for facilitating the game’s true purpose: interactions among the players themselves.

“My father really likes to play bridge,” Mr. Butterfield says. “He doesn’t like to play against the computer, but he also wouldn’t invite [the people he plays with] over to his house just to hang out. There’s something about the context of a game – the context of play – that enables a type of interaction that’s more interesting.”

He founded a small startup called Ludicorp and began working on a project called Game Neverending – and it flopped. It turned out that 2002 – in the direct aftermath of the Sept. 11 attacks, the tech bubble bursting and a slew of big-name corporate accounting scandals – was not a good year to be trying to raise startup money. But Mr. Butterfield and his fellow developers were working on something else while trying to design the game. It was a kind of photo-sharing site that allowed users to do things such as upload photos through e-mail and tag their friends. As the video game’s prospects began to dim, the team decided to focus their attention on this photo-sharing project. They decided to call it Flickr.

“It’s hard to remember now how different things looked back then,” says Mr. Butterfield. “I don’t think we saw what the potential was, how big it could get.”

It got big. By early 2005, Mr. Butterfield and his team had two offers on the table – one from a private investor, another from Yahoo. They decided to go with the search engine, for a price tag of about $25-million. It was a steal for Yahoo – and a decision Mr. Butterfield now regrets.

After three years of frustration at Yahoo – during which the Flickr team constantly had to fight for resources to improve and expand the service – Mr. Butterfield quit. His resignation letter, an absurdist kiss-off that imagines Yahoo as a century-old tin-mining concern, has become the stuff of Silicon Valley lore.

It was a tough time. A few months after the birth of their daughter, Mr. Butterfield and his wife Caterina Fake – who had worked with him on Flickr – divorced. Feeling somewhat dejected, Mr. Butterfield returned to B.C. and eventually turned his attention to his white whale – that video game. He started another company and began working – alongside many of his original Ludicorp colleagues – on a multiplayer game called Glitch.

Once again, the game flopped. This time, there were fewer outside factors on which to lay blame. The game simply didn’t find a large enough audience. In late 2012, Mr. Butterfield pulled the plug on Glitch.

“I hope you’re never in this position, where you have to tell 37 people all at once they lost their jobs,” says Mr. Butterfield. “People you convinced to move with their families, to put their kids in a new school so they could come work at this company and then, four months later, no job.”

While working on the game, however, the development team had become fed up with traditional messaging and collaboration software. So they built a tool, purely for their own use, that wrangles disparate communication animals into one digital pen. The software proved so useful that the team members swore never to work on another project without it. Slack was born.

Essentially, Slack is a piece of collaboration software for internal corporate teams. The software is designed to integrate everything – from instant messages to document sharing – and make it easily searchable. It’s also designed to work with a slew of outside services, such as Dropbox, Google Hangouts and Soundcloud. Everything is synchronized across desktop and mobile devices. Everything is in one place.

Betting that other corporate teams would find it as useful as they did, Mr. Butterfield and his team launched Slack as a standalone product. The response was massive. Since launching early this year – and with almost no marketing whatsoever – user growth has skyrocketed. In the span of about six months, the service gained some 300,000 users. Today, user growth hovers at about 6 to 8 per cent a week. Once again, Mr. Butterfield failed to make his video game – and once again, he’s found massive success in the process.

Perhaps because of the serendipitous nature of his career trajectory, many of Mr. Butterfield’s mannerisms suggest an urgent desire to remain (or at least appear) grounded in the face of astronomic success. He’s quick to acknowledge the advantages of privilege he didn’t earn.

“I’m very conscious of the fact that being born middle-class, white, male, straight, in a country where people speak English and doesn’t have wars – that’s definitely a pretty [expletive deleted] big factor,” he says.

“Also, I’m smart. I’m not saying that in a braggy way, I was just born with an aptitude for standardized testing … and I can do math in my head quickly, and it’s not like I did that; I was just born that way.”

In a town with two elevator pitches for every venture capital dollar, Mr. Butterfield is in the envious position of having to turn potential investors down. Slack has more backing than it needs.

But Mr. Butterfield is also keenly aware that all those deep-pocketed investors who turned Slack into a billion-dollar company are expecting billion-dollar returns – and for all of Slack’s early-days growth, it is nowhere near that level yet.

“It’s very easy to pat yourself on the back and congratulate yourself and feel like you’ve now accomplished something,” he says, “when now we have to earn that valuation.”

On the way out of Trou Normand, the downtown restaurant where we met for lunch, Mr. Butterfield stops to take a quick cellphone picture of two severed pigs’ heads on a kitchen table. Trou Normand is a charcuterie joint, and almost everything on the menu likely originated from one of those two animals. The decision to eat here regularly came back to bite Mr. Butterfield recently, when he took one of his company’s most famous investors, the actor Jared Leto, to the restaurant. Mr. Leto is vegan.

Slack’s office is just a couple minutes’ walk from Trou Normand. It occupies a largely open-concept space on the first floor of a nearby office building. A painting of the founder, drawn in a parody of a banana republic despot’s portrait, hangs on the wall.

Mr. Butterfield is good-looking in an easygoing, clean-cut surf-bum kind of way, with a couple days’ worth of copper stubble. These days, he splits his time between San Francisco and B.C. In the Valley Mr. Butterfield spends most of the time doing interviews (both with media and prospective employees), and talking to investors. He retreats to Vancouver to do most of his thinking about Slack’s design and functionality. Wherever he goes, there’s usually a ukulele nearby (there are two floating around in the Slack offices) – he plays old Irving Berlin and Cole Porter standards for fun.

If that laid-back attitude is an act, a means to seem grounded in a cutthroat and outrageously cash-rich industry, it certainly doesn’t show. And beneath the B.C. hippie-kid exterior is a CEO who understands – from a slew of previous failures – that Slack’s future is far from certain. For all its early success, the company is operating in what will soon become a very crowded market. Everybody from LinkedIn to Evernote to Google to Microsoft is eyeing the collaboration software space. And with massive user growth comes massive pressure – especially on fixing areas where Slack still lags behind some of its competitors, such as e-mail integration. In an industry where million-user startups come and go every day, Mr. Butterfield understands that being Silicon Valley’s newest darling is no guarantee of long-term success.

“It would not be difficult for me to [expletive] it up,” he says. “I can [expletive] it up today.”

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Calling it quits

Stewart Butterfield’s Yahoo resignation letter, addressed to his former manager, Brad Garlinghouse, in June, 2008:

Dear Brad,

As you know, tin is in my blood. For generations my family has worked with this most useful of metals. When I joined Yahoo! back in ‘21, it was a sheet-tin concern of great momentum, growth and innovation. I knew it was the place for me.

Over the decades as the company grew and expanded, first into dies and punches, into copper, corrugated steel, synthesized rubber, piping, milling equipment, engines, instruments, weaponry and so on, I still felt at home because tin was the core of the business… Since the late 80s, as the general manufacturing, oil exploration and refining, logistics and hotel and casino divisions rose to prominence, I have felt somewhat sidelined.

By the time of the Internet revolution and our expansion into websites, I have been cast adrift. I tried to roll with the times, but nary a sheet of tin has rolled of our own production lines in over 30 years.

In my 87 years service, I’ve accomplished many feats, shared in the ups and downs, made great friends and learned a tremendous amount … but there is a new generation now and it would be unfair not to give them a chance. Those that started in the make-work programs of the depression, on the GI programs in the late ‘40s and even those young baby boomers need their own try without us old ‘uns standing in the way.

So please accept my resignation, effective July 12. And I don’t need no fancy parties or gold watches (I still have the one from ‘61 and ‘76). I will be spending more time with my family, tending to my small but growing alpaca herd and of course getting back to working with tin, my first love.

Your old tin-smithing friend and colleague,

Stewart Butterfield

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