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FORTUNE.COM // SEPTEMBER 2019
While Microsoft is a highly profitable ma-
chine that can easily plow cash into improving
and promoting Teams, Slack is losing money.
It hemorrhaged $139 million in its latest fiscal
year on $400 million in revenue. But here’s the
good news for Slack: Its roster of paying cus-
tomers was up nearly 50% during that period
compared with the year before, a growth rate
that many other enterprise tech players, large
and small, would envy. That kind of momen-
tum is Slack’s ticket to achieving profitability,
assuming it can continue at a similar pace.
Slack’s trajectory hasn’t always been so
clear. Butterfield, 46, started Tiny Speck, a
maker of online games, in San Francisco in
- He pivoted to Slack, the chat tool his
team had created to communicate internally,
in 2014, when it became clear that the original
game idea wouldn’t catch on. The Canadian-
born chief executive officer now splits his time
between the San Francisco Bay Area and New
York City, along with Slack’s other major hubs
and visits to its customers, who are located
across 150 countries.
It’s not Butterfield’s first time in the spot-
light. Previously, he cofounded photo-sharing
site Flickr, a hot startup during the post–
Internet bubble era. Yahoo eventually bought
the service in 2005 for a reported $35 million
(a respectable “exit” at the time). Butterfield
stayed on at Yahoo as general manager of
Flickr, but he left three years later, disen-
chanted with the web portal’s bureaucracy,
lack of innovation, and huge size.
It’s no surprise, then, that despite Slack’s
rapid growth and its transition from private
to public, Butterfield remains convinced that
being bigger isn’t always better. His customers
tend to agree.
“Slack is a very nimble company,” says
Vijay Sankaran, chief information officer at
financial services firm TD Ameritrade, where
11,000 employees have access to the chat app.
“We’ve got a direct relationship with the CEO.
We work with the product engineering team.
That’s a real strength of theirs.”
Kaitlin Norris, “culture strategist” at
e- commerce company Shopify, another
customer, says she has asked for—and re-
ceived—specific new features from Slack for
her company’s 4,000 workers. She is cur-
rently waiting for Butterfield’s crew to create
a feature that would let employees manually
organize channels, tabs created for specific
projects or topics, which otherwise appear in
alphabetical order on the service.
Much of Slack’s appeal to customers is that
it integrates with online services from other
companies. There are more than 1,500 such
apps on the platform, from videoconferencing
service Zoom to Google Drive, the online stor-
age service that enables users to collaborate
on documents. And Slack offers its customers
tools that let them easily develop their own
features that can be tied into Slack. Shopify,
for example, has created an artificial intelli-
gence–based bot called Tally that tracks what
employees spend and allows them to file their
expense reports, all within Slack.
“Slack acts like a pseudo operating system
for the modern enterprise” that lets businesses
access all their apps in one place, writes Suri,
the William Blair analyst.
If becoming the one-stop shop for corporate
software sounds a lot like Microsoft’s pitch, it
is and it isn’t. Ironically, for Slack to succeed,
at least in the eyes of Wall Street, it will need
to become an enterprise giant much like its
rival. But Butterfield is convinced he can
continue to push the company into adulthood
without forgetting its roots—the simplicity
that helped Slack catch on in the first place.
Slack CEO
Stewart But-
terfield and his
mother, Norma
Butterfield, in
June outside
the New York
Stock Exchange,
celebrating the
direct listing of
Slack’s shares.
“It gives
us some
credibilit y. ”
—Slack CEO
Stewart
Butterfield
on his
company ’s
recent
high-profile
public
listing
COURTESY OF STEW
ART BUTTERFIELD
