Slack co-founder: ‘No one in business software thinks of the users’

3 Apr 2017

Cal Henderson, CTO and co-founder of Slack. Image: Slack

In his constant attempts to build a video game, Cal Henderson ended up creating Flickr and Slack. He still hasn’t built the game, but has stumbled into the biggest play of his lifetime.

The problem with the business software world is that the players are selling to CIOs, not the individual users. That’s the secret of success in a nutshell, says Slack co-founder and CTO Cal Henderson.

Even if you have never heard of Cal Henderson, the chances are you use the technology he has built.

I was mulling on this point while appreciating Slack’s stylish new offices in Dublin when, out of nowhere, Henderson bounds across the room with a sunny smile, made all the more sunny by his beach shorts and short-sleeved shirt. The summery attire makes me conscious of my sensible winter coat. It’s summer inside at Slack while outside, we’re adjusting awkwardly to spring.

The Californian appearance of Henderson is belied by his English accent. The interesting thing is, despite all the start-up fury in Shoreditch and other trendy parts of London, Henderson has already done it all – yet very few people there really know who he is. But they all use his technology. And they love it.

Henderson has been part of the teams that created the original Web 2.0 photo-sharing platform Flickr, a failed video game called Glitch and the business communications software platform currently taking the working world by storm: Slack.

Slack, which is headed by Henderson’s long-term colleague Stewart Butterfield, is creating 100 new jobs in Dublin this year. It aims to revolutionise how businesses work and communicate, taking the social tools young workers have become accustomed to and right-sizing them for the workplace in a fun and engaging way.

The platform – which integrates with other powerful work tools such as Dropbox, Trello, Asana, Stripe and Google Docs, to name a few – has 6.8m active users, 5m daily active users and 1.5m-plus paid users.

Slack was founded by Butterfield, Henderson and Serguei Mourachov after they shuttered Glitch.

Prior to Slack, Butterfield co-founded Flickr with Caterina Fake and Jason Classon in 2002, also originally as a video game business. Henderson and another Slack co-founder, Eric Costello, were also on the start-up team. Flickr was acquired by Yahoo in 2005, and Butterfield and Henderson stayed on as product managers for three years.

Last year, Slack raised $200m in a massive funding round that valued the company at $3.8bn. So far, Slack has raised $540m from some of the biggest investors in Silicon Valley.

The internet’s own boy

Slack co-founder Cal Henderson: ‘No one in business software thinks of the users’

Slack co-founder and CTO Cal Henderson. Image: Slack

‘I figured I would grow up and get a sensible job at Microsoft and build desktop apps’

The first question I ask Henderson is how on Earth does a nice English chap end up co-founding not one, but two of the most pivotal and best-known internet companies of our time?

“It was an accident actually. I wanted to be a programmer from an early age … the first computer I got when I was seven was a ZX Spectrum, which had a floppy drive. My cousin also had a Texas Instruments 99 with a weird cartridge thing, but both of the machines had a Basic interpreter and I got hooked.

“I figured I would grow up and get a sensible job at Microsoft and build desktop apps,” he said, appreciating the irony that now Microsoft is trying to take on Slack with its own rival called Teams.

“Anyway, in the mid 1990s, I found the internet and decided this is what I want to do.”

Sure enough, Henderson found himself in London working with web design agencies. He sated his thirst for tech by playing multiplayer internet games and hanging out in pubs with other techies, talking about blogging before there was any such thing as blogging.

“This small company in Canada had started a video game company and I thought their game was amazing, and I just emailed them and asked could I join their company.”

That company was a Vancouver-based games firm called Ludicorp, led by Butterfield and Fake.

“This was in 2003. It was post dot-com bust, post-Enron and WorldCom, and broadband was just rolling out. There were no online games that made money at that point, and it was a small team of three with no experience. They were fucked and had no money.

“I worked remotely with them from London and we agreed that we’d build another product on the side to fund development of the game. And that’s how Flickr came about. We couldn’t afford the domain so we dropped the ‘e’ and called it Flickr.”

Flickr was forged in the days before smartphones were a thing. “Point-and-shoot cameras and digital cameras were quite hot, and the only web services that existed were there to print your photos off for a fee.

“Storage was so low on devices that people were having to delete photos just to take more pictures. Flickr was the first website that allowed you to just upload your photos and show them to someone else on the web. It sounds like an amazingly simple idea today, but it didn’t exist at the time. It was a weird chatroom that functioned as the Twitter or Slack of its day.

“Instagram was a similar idea, but that came much later and seized on the rise of the smartphone.”

It didn’t take long for the team to realise that Flickr was no longer going to be a product on the side – it was the company.

“While all of this was happening, I never met the others physically. Stewart was in Vancouver, Eric was in New York and I was in London. I only met them in 2004 when we formally launched Flickr at the Emerging Tech conference in San Francisco.

“I was like, ‘These people are great!’. A few weeks after the launch, I decided to visit Vancouver and ended up staying there for another year and a half.”

San Francisco after the dot-com bust, before the digital boom

Flickr had become the hottest property on the internet and a visual workhorse for the earliest bloggers, and movers and shakers of the internet world. Today, it is still one of the busiest properties on the internet with more than 121m users and 10bn images.

‘There was something special about the time. Everybody was trying to create stuff. There is a relentless optimism in the Bay Area that is quite unique and back then, in spite of the recent dot-com crash, everybody wanted to change the world’

When Yahoo acquired Flickr in 2005, Butterfield, Henderson, Costello and the rest of the founding team moved to the Bay Area of San Francisco.

It was an interesting time to be in the Silicon Valley ecosystem. Facebook was still a minnow and had also moved to the Bay Area from Harvard. YouTube hadn’t yet been bought by Google because the search giant was still finding its own feet.

“Flickr was one of the first Web 2.0 companies and it was the early days of web apps that were social. It was a very different web because there was no Facebook [or] Twitter, and Friendster was just becoming a thing.

“But there was something special about the time. Everybody was trying to create stuff. There is a relentless optimism in the Bay Area that is quite unique and back then, in spite of the recent dot-com crash, everybody wanted to change the world and they wanted to do that by changing how people interacted. And it turned out to be true. They did change the world as we know it.”

Despite the dawn of a new digital age, it appears that Yahoo’s acquisition of Flickr, which had so much promise, turned out to be yet another opportunity squandered by the former.

The Flickr team found themselves left to their own devices.

Was Yahoo a company that never got over its heyday as an internet pioneer, I venture? “Yes, that’s definitely true. They rose to prominence in a time when they won a lot of markets by being the first-mover; the first to do fantasy sports, webmail, instant messaging; and the first to do news well on the internet and, for a while, they were the dominant player. They survived the dot-com crash and took an interest in social by acquiring Flickr and Delicious.

“But they were constantly changing direction. For six months they were all about search, then all about social or user-generated content. It seemed like they were just pandering to whatever executive was flavour of the month and that’s what was driving strategy. Lord of the Flies? Yeah, it was a bit like that.

“Flickr wasn’t a big piece of the overall revenue pie, so nobody cared and we were left to do our own thing – but without the money to do our own thing. We didn’t hire anyone for the first nine months, which was crazy because we were this eight-person team running the biggest social web property on the internet at the time. We were struggling to keep up with the demand but Yahoo wasn’t interested in investing in it.”

Henderson pauses for a moment, lost in thought. “Who knows what would have happened if we weren’t acquired. It is possible that we would have gotten nowhere at all or messed it up by ourselves. But if we had been given more resources from Yahoo, Flickr would have been a much bigger force. We missed out on the rise of the smartphone, for example, which was what made Instagram a success.

“We weren’t able to capture that movement for Flickr, but it has been very different for Slack.”

Butterfield, Costello, Henderson and Mourachov left Yahoo after three years. “When we left, the Flickr team was just 30 people in a pool of 14,000 people. But despite this, even today, Flickr is a fundamental piece of the web’s machinery. Did we leave out of frustration? Yes. If we had been able to execute against our original vision, then we would have stayed.”

The seeds of Slack

The team decided that after the Flickr experience, they wanted to get back to building the video game they always wanted to build, and Glitch was born.

‘When we shut Glitch down, we had a little bit of money left and rather than take the money back, our investors told us they had invested in the team and would rather see us do something with it’

“We love our games. We wanted to do for online social games what the Nintendo Wii had done for console games. It was meant to be a kind of interactive world with experiences, where people could buy stuff. But even after four years, I still can’t describe the game, which is probably one of the reasons it wasn’t successful.”

Glitch had attracted a significant chunk of venture capital, and built a team of more than 50 people in Vancouver and San Francisco, but the game wasn’t attracting the massive online multiplayer crowd it sought to serve.

Four years in and the team saw the writing on the wall. It was a formative but crushing experience for Butterfield and Henderson to let most of the staff go in the winter of 2012.

“We had a few thousand rapidly loyal players but it wasn’t going to turn it into a business that would make back the money we spent developing it.”

Henderson appears to have been deeply affected by the experience. “It was a terrible situation. We had to lay off 50 people who had moved from all over the country and the world because they bought into our idea … we had to let them down.”

While the game was being built, getting designers, programmers and other components of the business to communicate was critical. Rather than using email, they took Internet Relay Chat and modified it to enable the speedy transfer of artwork and customer queries.

“When we shut Glitch down, we had a little bit of money left and rather than take the money back, our investors told us they had invested in the team and would rather see us do something with it. It was enough of a push to get the remaining eight of us to do something new.

“We drew up a list of 10 ideas for what we wanted to do next and none of them inspired us. Stewart was, for some reason, obsessed with starting a bank, for example. We agreed that whatever we decided to do, we wouldn’t want to do it without the cool communications tool we had built at Glitch.

“And then we went, ‘Wait a minute … maybe this could be a tool for teams like us; small teams from three to 100. And even for companies with 10,000 or 100,000 people, it still comes down to focused teams.

“Slack won out as the name of the product. Stewart came up with it and I hated it for a long time. It became a holding name as we considered other titles like Honeycomb or Maple. None of them felt right and, in the end, Slack stuck.

“The idea for the name comes from two critical angles. In project planning, slack on your critical path is how much leeway you have. The other is if you can increase efficiency around working, then maybe you can slack off – but I had a problem with the negative connotation of slacking off.

“In the end, the name stuck – and I have come to love the name. It fits. It’s a five-letter domain name, it’s an English word that we could actually get – it doesn’t get better than that. We bought the domain from a guy who had been using it as a personal website for pictures of his cats. It’s what the internet has been good for since the early days.”

Defining the future of business software

Slack co-founder Cal Henderson: ‘No one in business software thinks of the users’

Slack CTO and co-founder Cal Henderson. Image: Slack

‘One of the reasons we have been successful is because we come from a consumer tech background’

Slack was part of a movement tackling a growing problem that software giants in the enterprise space had ignored for a long time.

Productivity suites were overladen with unnecessary bells and whistles, and email is still being destroyed by spam, when all users want to do is communicate clearly and collaborate in a cohesive way.

As a result, Slack has become the fastest-growing business application in tech history.

The cues were in social media and smartphones, and a new generation of software players emerged to fill the gap left by the bloated business software giants.

The advent of Slack coincided with the rise of players such as Trello, Wrike, Intercom, Atlassian, Sunrise and Wunderlist, to name a few.

“One of the reasons we have been successful is because we come from a consumer tech background. One of the things we realised about the enterprise software world was that products were designed for the CIO to tick a number of boxes. No one was considering the users or their experiences of using the products.

“This is where business software is going. If you look at Facebook or Instagram, they work because consumers continue to use them, but if they weren’t easy or fun to use, the consumer would stop using them and those companies would fail.

“Up until now, enterprise software was proscribed and people had to use what they were given. But with ‘bring your own device’, the rise of the app stores, the workers have become very discerning about their experiences and work tools.

“This is why Slack has been so successful; because people chose to use it and influenced their friends and colleagues to use it, and it has grown from the ground up.”

In a way, Slack is tearing up the original business software model.

“We have a fair billing system. We are freemium to begin with and even when you get to the size of team where you have to pay for the service and then you stop using it, Slack will refund you. We can only continue to be successful if people continue to use it. And they do. So it is a nice space to be in.”

The next challenge that Slack is embracing is interoperability between the various new apps and tools that are proliferating.

“There is more choice than ever before but people need these tools to be able to talk to each other, so we’ve built an App Directory that has more than 1,000 apps on it.”

Power and responsibility

Despite never building the video game they wanted to build, the founding team members of Flickr and Slack are enjoying the recognition they sought through the various phases of their careers.

‘With Slack, people are running their businesses on it and we hear from lots of people who tell us they can’t do their jobs without it and that is a great opportunity, but also a huge responsibility’

“We are still a bunch of geeks at heart but what we do on a day-to-day basis is very different. Yes, it is still a business, but there is no reason why it cannot be fun.

“For us, it is about impact. We built Flickr and a lot of people use it and continue to use it. It has impacted their lives.

“With Slack, people are running their businesses on it and we hear from lots of people who tell us they can’t do their jobs without it and that is a great opportunity, but also a huge responsibility. We are making people’s lives easier, whether it is a software team on a start-up, or charity workers at an NGO.”

Slack now employs 800 people. The product and engineering side that Henderson is responsible for amounts to 300 people, including a research team focused on employing AI in Slack.

“We have 50 people in Dublin and our plan is to get to 150 by the end of the year.”

As start-ups are in vogue across Europe, with the epicentre being London, I ask Henderson if it is not a little ironic that he is under the radar when it comes to the UK start-up success stories.

“Yeah, I’m not sure anyone there would recognise me if I didn’t have a name badge on. I don’t get back to the UK much. The thing is, most of the generation of techies in London that I knew have moved out to Silicon Valley and the Bay Area anyway or have left tech altogether.

“20 of us were bloggers and we used to meet in a pub in London and talk about the internet – now most of those people are in San Francisco. It has been an exodus but no one’s journey has been the same.”

So what are his ambitions for Slack?

“The first time around with Flickr, everything was against us. The second time around with Glitch, we had the money and the resources and, despite our passion, we were bad at making video games. I am still haunted by the experience,” Henderson concludes.

“But right now, Slack will be a company that will be around for decades and we still feel the same. We want to work on it as long as it remains an exciting challenge and stays interesting. It has to be interesting.”

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years