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Stewart Butterfield, the CEO and co-founder of Slack, poses for a remote portrait from his home office using the video call feature on the Slack app in San Francisco, Calif., on June 2, 2020.

Laura Morton/The Globe and Mail

Thinking about the knock-on effects of the Great Pandemic of 2020 is enough to make anyone philosophical – and Stewart Butterfield more than most.

In the three months since companies worldwide switched off the lights and sent their employees home, it has become more obvious by the day that millions of workers are now permanently unbound from their cubicles. “There are second- and third-order effects to this,” Mr. Butterfield says via Zoom from his house in San Francisco, his hair dishevelled and face bestubbled (although not necessarily any more than was the case before the pandemic). “What does it do to the commercial real estate market, to the tax base and to the restaurants next to office buildings? What does it do to the distribution of high-income jobs around the country?” Do people in Toronto making $150,000, he wonders, continue making the same salary even if they decide to move back to Manitoba to be close to their elderly parents? And what does that do to the economies of smaller towns, where houses cost $80,000 instead of $800,000? “There are so many things you can’t really even imagine the net effect of,” he says.

Granted, Mr. Butterfield is prone to deep thinking, what with his master’s degree in philosophy from Cambridge. But he’s also the Canadian co-founder and chief executive of Slack, the company that has, in large part, enabled the dissolution of decades of office culture – a generational shift with massive cultural and societal implications.

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Slack’s workplace messaging app has become a lifeline for thousands of employers, big and small, frantically trying to keep their scattered work forces connected during the pandemic. That includes Mr. Butterfield’s 2,000 employees, who began making the shift to remote work in late February – first in Japan, then in all 10 countries in which Slack operates. By March 18, all of its offices were empty – and could remain that way long after the lockdown ends.

It might be hard to see the straight line from all these disruptive changes back to an app that started life as a company called Tiny Speck. At its core, Slack – for those few who haven’t either used it or heard a colleague evangelize about it – lets co-workers across departments connect through a stylish yet secure text-based chat service, while allowing them to organize those conversations in searchable topic-based channels. (It can also be wildly addictive, in the way social media is.) Often described as an “e-mail killer,” Slack offered companies facing an abrupt work-from-home revolution a ready alternative to the inbox overload, tangled threads and reply-all nightmares that awaited fractured teams trying to function through e-mail.

“Slack wasn’t built for a global pandemic, but we were well positioned when it happened,” says Cal Henderson, Slack’s co-founder and chief technology officer.

The result has been an explosion in Slack usage unlike anything the company has seen before – and it was already Silicon Valley’s reigning champ for hyper-growth. By the end of 2019, five years after launch, Slack was being used by 65 Fortune 100 companies. In the first quarter of 2020, it added 90,000 net new organizations, more than in all of the previous fiscal year; 12,000 of them signed up for Slack’s paid service, which starts at US$6.67 per user per month. (Slack’s business model hinges on converting more of those free users to the premium product, which features unlimited searchable message archives, full access to third-party apps and shared channels with outside organizations.) Among the large entities that have adopted Slack since March: Verizon Communications, Amazon and the U.S. Department of Veterans Affairs. That helped push revenue up 50 per cent in the quarter from the previous year, to US$202-million, although the company reported an operating loss of US$16.6-million, compared with US$33.8-million in 2019.

Slack has seen plenty of pandemic

momentum, according to its

latest results

Organizations

using Slack

Avg. hours connected

to Slack per day

10+

750K+

~9

660K+

April

2020

Jan.

2021

April

2020

Jan.

2021

Avg. minutes of active

usage on Slack per day

Net added paid

customers

12K

120+

85+

5K

April

2020

Jan.

2021

April

2020

Jan.

2021

JOHN SOPINSKI/THE GLOBE AND MAIL, SOURCE: slack

Slack has seen plenty of pandemic

momentum, according to its

latest results

Organizations

using Slack

Avg. hours connected

to Slack per day

10+

750K+

~9

660K+

April

2020

Jan.

2021

April

2020

Jan.

2021

Avg. minutes of active

usage on Slack per day

Net added paid

customers

12K

120+

85+

5K

April

2020

Jan.

2021

April

2020

Jan.

2021

JOHN SOPINSKI/THE GLOBE AND MAIL, SOURCE: slack

Slack has seen plenty of pandemic momentum,

according to its latest results

Organizations

using Slack

Avg. hours connected

to Slack per day

Avg. minutes of active

usage on Slack per day

Net added paid

customers

10+

750K+

12K

~9

120+

660K+

85+

5K

April

2020

Jan.

2021

April

2020

Jan.

2021

April

2020

Jan.

2021

April

2020

Jan.

2021

JOHN SOPINSKI/THE GLOBE AND MAIL, SOURCE: slack

Those results fell far short of investor expectations, however. After soaring more than 50 per cent since May 1, Slack’s shares (which trade under the symbol WORK) closed down 14 per cent Friday when the company failed to convert as many free users to premium as investors thought it would. That’s the worst single-day drop since the stock began trading a year ago.

Even so, as state, provincial and local governments lift the restrictions that forced so many to flee their cubicles and open-concept workstations, Mr. Butterfield is positioning Slack for what comes next. The tectonic shift that occurred this spring has pushed the clock forward on a transition that might otherwise have taken years to happen. “If you asked 99 per cent of CEOs in January if they could transition their entire company to be 100-per-cent remote inside of a week, they’d say, ‘No, that’s impossible.’ But suddenly, the impossible became the possible,” Mr. Butterfield says. “There are all these benefits and costs. Now they’re thinking about what kind of hybrid we might want after.”

That’s already apparent in the spate of companies announcing that work-from-home regimes will continue even after the pandemic ends. Last month, Shopify founder and CEO Tobias Lutke declared the Ottawa-based e-commerce company to be “digital by default” and said the majority of its 5,000-plus employees would no longer work from its offices. Several other tech giants have made similar declarations, among them Facebook, Google and Waterloo-based OpenText. Bank of Montreal has said up to 80 per cent of its staff might adopt a blend of office and at-home work going forward.

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In many cases, Slack is central to those plans. “Whether connecting with our colleagues socially over a trivia game or checking in on the week’s goals and deliverables, we’ve been using Slack to stay connected,” Shopify’s director of technical infrastructure, Garth Pyper, said in a statement, adding Slack will play an even more “fundamental” role now that the company has decided to make remote work permanent. “Working from home companywide means less face time, so staying connected is even more vital.”

Slack is far from the only game in town, however. Microsoft has launched its own collaboration hub, Microsoft Teams, that comes as part of its ubiquitous Office 365 software. And the shift to remote work is sure to inspire a new generation of challengers. But as the work-from-home surge upends decades of entrenched thinking about how work must be done, Mr. Butterfield says Slack will play a starring role in the transformation.

“Slack is about getting people aligned and staying aligned, because organizations change, and reality changes,” he says. “Obviously this is the big, mother of all changes, happening all at once.”


In these times of pandemic isolation, even billionaire tech titans need a virtual shoulder to lean on.

Every Thursday afternoon for the past three months, Mr. Butterfield has logged onto a Zoom video conference call with the CEOs of 15 other publicly traded software companies to swap tales from the COVID-19 trenches. “It’s like a group therapy call,” he says. Mr. Lutke is a member, and so are the leaders of Twilio, Splunk, Atlassian and others.

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The idea behind the Zoom meetings, along with a cross-company messaging channel on Slack (of course), grew out of questions each boss had about how others were handling the crisis: Are you going to close your buildings? Are you giving employees a stipend to upgrade their home offices? What do you tell employees worried about layoffs? How are you planning for the next fiscal year? Should all new hires be remote workers?

But while Mr. Butterfield says the CEOs each have their own answers, “there’s 100-per-cent agreement on one thing: At this point, we’re never going back to completely normal.”

That’s an assessment shared by Wayne Wachell, CEO and chief investment officer of Genus Capital, an investment management firm in Vancouver. Like other business owners, he moved quickly to send his 32 employees home when the lockdown hit B.C. But he faced the additional challenge of co-ordinating a remote team while the stock market collapsed around them. Using a combination of Slack and the Google Hangouts video conferencing service, Genus overhauled its portfolios “without missing a beat,” he says. “At a very intense time, we were shoulder to shoulder in that virtual space, and it worked perhaps even better than if we were in the office.”

The Genus team was a tiny part of a wave of new users that swept over Slack as the crisis deepened. The company hit 10 million “simultaneous connected users” for the first time on March 10, four years after crossing the one-million mark. Within two weeks, that figure hit 12.5 million.

By then, Slack’s own work force had gone remote. To help with the transition, the company gave each employee up to $500 to outfit their home offices and told them not to bother logging sick days. It was a time of intense energy and focus all around, Mr. Butterfield recalls. “A CEO gets on stage at an all-hands event to get people excited and create a sense of urgency,” he says. “In this environment, you get a lot of that for free.”

Everything was happening faster, including major decisions. During the second half of 2019, Slack had been working on the first ever revamp of its website, desktop app and mobile app, to make it easier for new users to get started. Over the years, new buttons and features had muddied the simple design that helped propel Slack’s initial popularity in the tech and media sectors. “The software had just grown too unwieldy for a hapless new user to understand,” says Johnny Rodgers, Slack’s senior user experience developer, who led the redesign.

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The original plan was to roll out the changes over nearly two months, testing it along the way. But with the influx of new users, Slack wanted to make the best first impression it could. So the team decided to go all at once. “We took a six-week rollout and compressed it down to a single day,” Mr. Rodgers says.

It was lost on no one at Slack that while their company was flourishing, many of their customers were in dire straits. “There is this heightened sense of importance about what we are doing,” Mr. Butterfield says. Slack provided free premium accounts to COVID-19 researchers around the world and was approached by massive organizations including Veterans Affairs, which needed to bring 20,000 of its employees onto the platform fast to reduce disruption to its services. Where it had once taken 15 months to add all of Oracle Corp.’s 100,000 employees to Slack, customers at the height of the pandemic were adding 5,000 users in a matter of days.

As the rush intensified, Slack offered 20-minute one-on-one phone calls to all its customers, whether they had free or paid accounts, to ensure they were getting the most out of the platform. Three hundred employees stepped up to handle the deluge of calls. Ali Rayl, Slack’s vice-president of customer experience and one of its first eight employees, took many calls herself. So did other executives. “You were just as likely to get our CFO as someone from our support team,” she says.

The experience also provided a window into the hardships companies were enduring. Time and again, she heard people stress that they needed to stay connected to their teams. For some, it was simply a matter of being able to direct their work. “At the other end of the spectrum were people who said, ‘I need to make sure my people aren’t lonely,' ” she says.

Slack has always prided itself on its ability to make collaborating at work fun. “When you contrast the way people communicate in Slack versus e-mail, people’s humanity comes out more on Slack,” Ms. Rayl says. And that only became more important once workers were cut off from one another. “We took personal connection for granted until it was taken away, and now it’s become a much more precious commodity,” says Matthew Quinn, chief operating officer of Tibco, a software company based in Palo Alto, Calif., with offices in 22 countries, including Canada.

Tibco got all its employees on Slack last year, and Mr. Quinn says it helped make the shift to working from home relatively effortless. But beyond the work conversations that happen over the platform, Tibco’s social channels – including #Social-Yelling, #Social-TV, #Social-Pets and #Social-Games – have been critical to remote bonding. “It’s created subcultures within the company, where people who have out-of-work hobbies can get together,” he says.

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In fact, Mr. Quinn believes COVID-19 has brought parts of the company closer together. “It’s almost like after a traumatic brain injury, where the brain rewires itself for different pathways,” he says. “The social organisms we are as people have found new ways through technology to maintain connections and create new pathways.”


In the startup world, the story of Slack’s rocket-fuelled rise is the stuff of lore. Mr. Butterfield – the son of a U.S. draft dodger who spent his early years in a log cabin in northern B.C., with no running water or electricity – had been working with a team of developers at Tiny Speck on a video game called Glitch since 2009. (An earlier gaming effort had spawned the photo-sharing site Flickr, which was sold to Yahoo for US$25-million in the mid-2000s.)

But Glitch didn’t exactly work out. “It was an utter failure,” says Andrew Braccia, a partner with Accel, a venture capital firm that invested US$5-million. Mr. Butterfield wanted to return the money to investors, but Mr. Braccia encouraged him to keep it and come up with another idea. “A venture capitalist’s job is to stay connected to people we think are really talented and are going to start a company,” Mr. Braccia says. “I didn’t really care what he did – I wanted to be a part of it.”

The result: Mr. Butterfield turned Tiny Speck’s own in-house messaging tool into a powerful collaboration hub for businesses, and Slack was born. When the company went public last year, Accel’s investment in Slack – a total of US$200-million – was worth US$4.6-billion. Mr. Butterfield’s stake today is worth US$3.2-billion.

Mr. Braccia, who sits on Slack’s board of directors, remains bullish on the company’s future. “My general belief as a technology investor is that something like Slack, in every business around the world, is inevitable,” he says.

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The operative words there are “something like Slack.” In 2017, Microsoft announced Microsoft Teams as its “chat-based workspace” response to Mr. Butterfield’s company. Businesses that adopt Slack dramatically reduce their use of e-mail for intracompany communications, and that diminishes the value proposition of Microsoft’s Office 365 suite, which includes Word, Excel and Outlook. As such, the software giant has ploughed its immense developer resources and marketing dollars into targeting Slack, to the point where Mr. Butterfield recently told a U.S. tech news site that Microsoft is “unhealthily preoccupied with killing us.”

Slack has a lot going for it in its battle with Microsoft Teams, a rebrand of Skype For Business that’s more oriented toward voice and video calling. Slack seamlessly integrates with 2,200 apps (including Word and Excel files) – four times more than Teams. That’s a draw for companies that now use a dizzying array of specialized software-as-a-service applications. Slack is also bolstering the ability of multiple distinct companies and organizations to share files and messages with one another, which could further lessen their dependence on e-mail.

Meanwhile, users who have tried both systems are quick to observe that Teams lacks the elegance and design ethos that characterizes Slack – for instance, the way users view and interact with shared photos on Slack is very similar to that of a Mac compared with, well, a PC.

Still, Microsoft’s war chest is nearly 100 times larger than Slack’s. And while Slack does boast a free version, businesses that want all its features have to pay for them. All of Office 365’s 200 million users can get Teams for free.

So is Teams a genuine threat, or will it prove to be the Bing of workplace communication tools?

For what it’s worth, when Mr. Wachell and his team at Genus Capital overhauled their portfolios to identify companies they believed would be winners in the new digital-dominated world, Slack didn’t make the cut. “Slack is great, but it has lots of competition,” he says, adding that Genus is in the process of evaluating Teams with an eye to switching.

Rishi Jaluria, senior research analyst with D.A. Davidson & Co., however, sees an opening for Slack tied directly to Microsoft’s clout. As companies in more traditional industries such as financial services, consumer products and health care adopt real-time messaging and collaboration tools for the first time, they’ll likely default to Teams because they’re already Microsoft customers. “But once companies make that shift, that creates even more prospecting opportunities for Slack,” he says – after companies have gotten a taste of real-time messaging, Slack can woo them away by promising a better experience. “I’ve used both,” Mr. Jaluria says, “and Slack is a much better product.”

It’s clear Mr. Butterfield is growing frustrated with the narrative that Slack’s demise at Microsoft’s hands is imminent. “Almost our entire business has come to be in an era when Teams was given away for free,” he says. “If they were truly competitive, at what point does the empirical evidence of our continued success chip away at people’s belief that Microsoft will inevitably kill us?”

One thing is certain: The market for helping far-flung co-workers stay connected just got dramatically bigger. In May, Statistics Canada estimated that 40 per cent of Canadian jobs “can plausibly be carried out from home” (roughly the share of the work force that was teleworking during the last week of March). In some industries, including financial services, educational services and professional and scientific services, the potential for remote work applies to more than 80 per cent of jobs.

teleworking capacity in canada

By industry, per cent

Finance, insurance

85.3%

Educational services

84.6

Prof., scientific and tech. services

83.9

68.5

Information, cultural industries

Public administration

58.2

Wholesale trade

57.3

Real estate, rental and leasing

47.8

40.1

Arts, entertainment, recreation

Utilities

38.6

Admin. and support, waste mgmt.

35.1

Other services (except pub. admin.)

31.4

Health care, social assistance

28.8

Transportation, warehousing

24.5

Mining, quarrying, oil/gas extraction

23.9

22

Retail trade

Manufacturing

19.1

Construction

11.1

Accommodation, food services

5.6

Agriculture, forestry, fishing, hunting

3.9

JOHN SOPINSKI/THE GLOBE AND MAIL

SOURCE: statistics canada

teleworking capacity in canada

By industry, per cent

Finance, insurance

85.3%

Educational services

84.6

Prof., scientific and tech. services

83.9

68.5

Information, cultural industries

Public administration

58.2

Wholesale trade

57.3

Real estate, rental and leasing

47.8

40.1

Arts, entertainment, recreation

Utilities

38.6

Admin. and support, waste mgmt.

35.1

Other services (except pub. admin.)

31.4

Health care, social assistance

28.8

Transportation, warehousing

24.5

Mining, quarrying, oil/gas extraction

23.9

22

Retail trade

Manufacturing

19.1

Construction

11.1

Accommodation, food services

5.6

Agriculture, forestry, fishing, hunting

3.9

JOHN SOPINSKI/THE GLOBE AND MAIL

SOURCE: statistics canada

teleworking capacity in canada

By industry, per cent

Finance, insurance

85.3%

Educational services

84.6

Prof., scientific and tech. services

83.9

68.5

Information, cultural industries

Public administration

58.2

Wholesale trade

57.3

Real estate, rental and leasing

47.8

40.1

Arts, entertainment, recreation

Utilities

38.6

Admin. and support, waste mgmt.

35.1

Other services (except pub. admin.)

31.4

Health care, social assistance

28.8

Transportation, warehousing

24.5

Mining, quarrying, oil/gas extraction

23.9

22

Retail trade

Manufacturing

19.1

Construction

11.1

Accommodation, food services

5.6

Agriculture, forestry, fishing, hunting

3.9

JOHN SOPINSKI/THE GLOBE AND MAIL, SOURCE: statistics canada

Yet, before the pandemic hit, the share of employees doing scheduled work from home had remained unchanged for close to two decades, around 11 per cent to 13 per cent.

Murtaza Haider, an associate professor at Ryerson University’s Ted Rogers School of Management, puts that down to a “lack of managerial imagination.” Bosses couldn’t stop equating an employee’s physical presence with productivity. “The employee who shows up at 6 a.m. or stays late is considered a harder worker than the employee who could do that same job in three hours from home,” he says.

The pandemic, however, is what Prof. Haider calls a “limited-time disrupter” – a short-term shock that will lead to long-term changes in behaviour, similar to what happened in the wake of the Arab oil embargo of the 1970s. That means we’ll need to make adjustments, including converting large volumes of redundant office real estate to residential use and redesigning homes to incorporate workspaces. “We’re going to have to revisit our thinking and make the best use of technology,” he says.

Mr. Butterfield plans to be right in the middle of the action. And even as he reasserts that “remote work is here to stay,” he has some reassuring words for anyone who might not be thrilled with their first taste of working from home full time.

“The good news for a lot of people is that what we’re doing right now isn’t remote work,” he says. “If you could go out for a beer at 6 p.m. or get your hair cut, or if people could take care of your kids, then this would be really good. If we can combine the best of what we’re experiencing now with the best of normal life, this would be great.”


Mr. Butterfield on...

Inequality: “I don’t think most people really understand how disproportionate the benefits of government are depending on your financial situation. For someone to be really rich in the 15th century, that meant they had their own army and built their own castles; otherwise, someone would come and take your money. You don’t worry about that now – that someone will just come and kill your family and take your money, because we’ve got police and laws and contracts. On the other hand, if you’re very poor, the government is a net detractor. It makes your life worse. If you’re a poor Black kid in South Side Chicago, mostly the police don’t make your life better.”

Taxing the rich: “I definitely think rich people should pay more tax, no question. I am also sure that is not going to solve very many of our problems. Someone had said if Dwayne (The Rock) Johnson paid $50-million more in taxes, that would have been enough to solve the Flint water crisis. Here’s the thing: The U.S. federal budget in a normal year was US$2.7-trillion. It’s not money that makes this stuff hard to solve. We don’t have the political will. We don’t have the passion. And we don’t have the correct incentives in place. But there are really easy reforms that would make an enormous difference, and the biggest one is we tax capital at half the rate of labour. I could work my ass off planting trees and make $40,000 a year. Or I could have a couple hundred thousand dollars that produces $40,000 over a year. Why is that person paying half the rate of the person who is breaking their back?"

Basic Income: “You are disproportionately vulnerable if you’re poor, and you’re very secure if you’re rich. So you take away some of that vulnerability so people have enough to survive. People worry that if you give people money then they’re just going to get high and play Xbox all day. But first of all, most people wouldn’t, because they want to accomplish something in their life. But I’m also not talking about giving them $100,000 a year. I’m saying make it so they don’t have to choose between diapers and food, and then they can’t be taken advantage of.”

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