20VC Slack Founder Stewart Butterfield on Leadership Styles, DecisionMaking, The 3 Levels of Wealth, IPOs vs Direct Listings & Why Effective Entrepreneurship is Like Parkour

In a candid conversation on "20 Minutes VC," Harry Debbings interviews Stuart Butterfield, the founder and CEO of Slack, exploring his journey from a web developer in the early internet days to creating Flickr and ultimately Slack, which transformed business communication. Butterfield shares insights into leadership, decision-making, and the importance of a clear vision. He emphasizes the value of continuous product iteration and the role of intuition alongside data in making strategic choices. Butterfield also discusses Slack's future, highlighting Slack Connect's growth and the platform's evolution as a systems integration fabric. Throughout, Butterfield reflects on the nuances of leadership, the challenges of tying identity to a company, and the impact of wealth on personal happiness and motivation.

• Stuart Butterfield's exposure to the internet in college in 1992 played a key role in his career as a web developer.
• His first startup experience was with Gradfinder.com, which was acquired a few years after inception.
• Ludicorp, another venture, initially aimed to build a game but ultimately led to the creation of Flickr, which was acquired by Yahoo.
• Post-Yahoo, the original Flickr team formed Tiny Spec to develop a game, which did not succeed, leading to the creation of Slack.

"In 98, I got my first dot job, which I quit in the very beginning of 2000, actually quit in kind of mid late February 2000. So just before the crash and convinced one of my coworkers to start to take his side project, which was a website called Gradfinder.com, which is a competitor to classmates. And this is many years before Facebook. So many people used to organize high school reunions. I convinced him to let's make that a company. We raised a tiny bit of money and it got acquired a couple years later, started another company called Ludicorp to build a web based, massively multiplayer game called Game never Ending. That didn't work, but we made Flickr instead. Flickr got bought by Yahoo, spent three years at Yahoo, and then most of that original Flickr team got back together to start another company called Tiny Spec to build a web based, massively multiplayer game. That didn't work and then we ended up with Slack."

The quote outlines Stuart Butterfield's entrepreneurial journey, highlighting the transition from various startups to the eventual creation of Slack.

• Stuart Butterfield acknowledges that money does not guarantee happiness but alleviates certain life stresses.
• He describes three levels of wealth that change one's relationship with money: not worrying about debts, not caring about restaurant prices, and indifference to vacation costs.
• Beyond a certain point, wealth accumulation becomes more about keeping score than actual utility.
• The value of Slack and its success is a significant factor in Butterfield's sense of personal achievement.

"Well, money alone does definitely not make you happy. I know some people who have a lot of money and are fairly miserable. It definitely makes things easier, though. So while it doesn't magically make you happy, it creates the conditions where a lot of stress has gone from your life."

This quote emphasizes that while money can remove stress, it is not a source of happiness in itself.

"People who have a lot of money want more money, not because they're going to do something with it, generally they're going to give it away, but because it's how you keep score."

Here, Butterfield explains that for many wealthy individuals, accumulating wealth becomes a way to measure success rather than a means to an end.

• Butterfield believes that having a vision is beneficial, but it should not be too constraining or specific.
• He shared Slack's broad vision of enhancing organizational agility regardless of size.
• The internal mantra "make it inevitable" drove the belief that channel-based messaging would replace email communication.
• The importance of belief in one's vision as a necessary, though not sufficient, condition for success is highlighted.

"In the case where vision is talking more about the values or aspirations in the broad general sense, I think it's probably a good thing. A vision of a very specific outcome, like a state of the world, I think is probably less valuable."

This quote underlines the distinction between a broad vision and a very specific one, with the former being more advantageous.

• Butterfield feels fortunate with the timing of his ventures and believes that Slack's adoption is influenced by how well they communicate what Slack is and why it's important.
• He considers the company's role in actively driving market adoption rather than passively observing it.
• Patience is tied to the company's effectiveness in conveying its value proposition to accelerate adoption.

"It's not something that just is happening in the external world and we're passersby observing it. It's something that we actively cause."

The quote indicates that the speed of market adoption is not merely a passive observation but an active outcome of the company's efforts.

• Butterfield admits difficulty in separating personal identity from the company's performance.
• He experiences personal challenges when Slack faces difficulties and tends to attribute success to external factors rather than personal merit.
• The quote also touches on the complexities of power delegation and scaling the company as it grows.

"Yeah, it's very difficult, to be honest. So it's hard not to take it personally when things aren't going well."

This quote reflects the challenge of not internalizing the company's performance as a reflection of personal worth.## Company Growth and Cultural Development

• Stuart Butterfield discusses the rapid growth of his company, from a handful of employees to 2,500 and from $0 to a billion-dollar billing run rate in six and a half years.
• He acknowledges that the company's culture may not be as strong as it needs to be, given the pace of growth.

"Probably haven't put enough effort into instilling or building a culture that's powerful enough that it has a lot of momentum."

The quote emphasizes the challenge of developing a strong company culture amidst rapid growth and expansion.

• Stuart Butterfield explains that he does not feel lost when away from his company, unlike the host, Harry Stebbings.
• He suggests that his constant concern for the company and other aspects of his life may stem from his emotional disposition or priorities.

"I'm constantly worried about the things outside of the company when I'm focused on the company, and constantly worried about the company when I'm focused on anything outside."

This quote highlights Stuart's perpetual concern for both his personal life and his company, indicating a balanced yet worried mindset.

• Stuart Butterfield admits to having moments of self-doubt, especially regarding his leadership style.
• He distinguishes between having conviction in certain areas like product changes and marketing strategies versus the uncertainties in leadership and management.

"Yeah, all the time. And it depends. It's really funny because there's certain things I'm quite certain about... I don't second guess on the management and leadership style. It's a totally different problem..."

This quote reveals Stuart's confidence in certain business decisions but also his self-doubt and the unique challenges he faces in leadership.

• Stuart Butterfield talks about not having a single leadership coach or mentor but rather an array of trusted individuals.
• He mentions John Donohoe and Chris Cordle as influential figures and appreciates the support from his board members.

"As the leader, not any one person. And there's kind of an array of people... Different board members at different times, but they've always been people that I can come to with big questions and get good advice."

The quote shows Stuart's reliance on a diverse group of advisors for leadership guidance rather than a single mentor.

• Stuart Butterfield prefers to start board meetings by discussing what's not going well, contrary to the practices of most founders.
• He believes in creating a culture where problems are openly discussed, following a principle he found validating in a Charlie Munger essay.

"I think that's just my natural disposition... The things that are going well are good... But for me, listing all the challenges or the problems or things that aren't going well is an expression of optimism, because I believe that we can do something about them."

This quote explains Stuart's approach to board meetings, focusing on challenges as a way to foster problem-solving and optimism.

• Stuart Butterfield reflects on his confidence in logic-based decision making, influenced by his study of logic as an undergraduate.
• He compares leadership decisions to playing Minesweeper, where logic can help deduce certain outcomes, but leadership requires a different approach.

"That's really ingrained... leadership, totally different... I've just tried it so many times to lay out thoughts or to explain them, and I find that they always end up kind of causing more confusion than benefit."

Stuart discusses the difficulty of applying logical decision-making processes to leadership, which often results in confusion rather than clarity.

• Stuart Butterfield talks about the importance of being explicit about what he does not know or have strong opinions on and leaving room for others' expertise.
• He acknowledges the challenge of influencing others' decisions without imposing his own views and the value of remaining open to better solutions.

"It is being very explicit about the things that I either don't have an opinion on, or don't have a strong opinion on, or I'm sure about, or I just have no expertise and nothing to contribute."

The quote illustrates Stuart's approach to leadership by openly admitting his limitations and encouraging others to contribute their expertise.## Deductive Decision-Making

• Stuart Butterfield discusses his deductive approach to decision-making, which follows a logical progression from premises to conclusions.
• He acknowledges that this approach leaves little room for others to come back with better answers in domains he is convinced about.
• Stuart highlights the importance of making decisions and keeping an open mind to change when proven wrong.

"I feel like the process of convincing myself is very deductive. And when I say deductive, I mean proceeding according to known rules from premises to conclusion, and there's not a lot of room there."

The quote explains Stuart's method of reaching decisions through a logical and structured process, which he believes doesn't easily allow for alternative solutions once a conclusion is reached.

• Stuart Butterfield criticizes the Silicon Valley mantra of "fail fast," preferring a more decisive and observant approach.
• He suggests that making quick decisions in product design leads to more progress than prolonged deliberation.
• Stuart criticizes the reliance on presentations and mockups for decision-making, comparing it to judging a recipe without tasting the dish.
• He advocates for building and using products to gather actual evidence of their effectiveness.

"But just decide and keep your eyes open. And then when you're wrong, you change things."

This quote summarizes Stuart's philosophy of decisiveness in product design, emphasizing the importance of adapting based on real-world feedback and results.

• Stuart Butterfield compares the product development process to cooking, where constant adjustments lead to incremental improvements.
• He acknowledges that his position as CEO affords him the privilege to make decisions that might be seen as mistakes by others lower in the organization.
• Stuart uses writing as an analogy for the iterative process, suggesting that changing one's mind during the process should not be seen as a mistake but as part of learning and improving.

"If you enjoy cooking and you're kind of enthusiastic about it, you start making something and you just constantly make adjustments."

This quote illustrates the iterative nature of the creative process, whether in cooking or product design, where constant refinement is key to improvement.

• Stuart Butterfield differentiates between reversible and irreversible decisions, borrowing Jeff Bezos' concept of one-way and two-way doors.
• He discusses the importance of momentum in entrepreneurship, comparing it to parkour, where hesitation can be damaging.
• Stuart criticizes the overreliance on data-driven decision-making in Silicon Valley, advocating for a balance between data and intuition.

"So a lot of times, deep into a discussion about something, someone will say, well, that's a two way door, meaning we can just stop debating this."

The quote reflects the idea that some decisions can be easily reversed (two-way doors), allowing for more experimentation and less deliberation.

• Stuart Butterfield is a proponent of blameless post mortems, especially in technical operations.
• He emphasizes the importance of analyzing failures without defensiveness or ego to truly understand and learn from them.
• Stuart also touches on the subjectivity of taste in business decisions, suggesting that experience and intuition are undervalued in favor of data-driven approaches.

"I'm a big fan, and the model that's evolved from kind of technical operations, teams of blameless post mortems, I think is really important."

This quote highlights the value Stuart places on objective and blame-free analysis of failures to facilitate learning and improvement.

• Stuart Butterfield discusses the impact of a leader's words within an organization, acknowledging that offhand remarks can lead to unintended actions.
• He references the Tao Te Ching to illustrate the delicate balance required in leadership and the potential for unintended consequences from seemingly minor decisions.

"Governing a large state is like boiling a small fish."

By quoting the Tao Te Ching, Stuart conveys the idea that leadership actions, like cooking a delicate fish, require careful handling to avoid negative outcomes.

• Stuart Butterfield addresses the challenge of ensuring that his words are not misinterpreted or taken as directives within the company.
• He contrasts the ease of raising money as a successful entrepreneur with the internal dynamics of decision-making within a company.

"It's very rare that anyone just takes my word for anything, really."

This quote acknowledges that despite his success, Stuart's opinions are still subject to scrutiny and debate within his company, reflecting a culture of critical thinking and collaboration.## SPAC vs. Direct Listing vs. IPO Debate

• Stuart Butterfield shares his thoughts on the choice between SPAC, direct listing, and IPO.
• He believes the decision is highly dependent on the company's circumstances and there is no one-size-fits-all answer.
• Direct listings are preferable for companies that do not need to raise more money immediately.
• SPACs are a way to raise money but should not be seen solely as a hack around regulatory processes.
• The value of public company readiness (PCR) is emphasized, including the discipline and governance that comes with it.
• The actual mechanism of listing is considered less important than the readiness and internal controls.

"There's certainly no general rule today. About whether direct listing is better than a traditional IPO or a SPAC is better than either of them."

This quote underlines the lack of a universal rule in choosing the method of going public, emphasizing the importance of assessing individual company needs and circumstances.

"I think that we started three years or so before, maybe four years before we went public for what we called public company readiness."

Stuart Butterfield explains the significance of preparing for being a public company well in advance of actually going public, highlighting the acronym PCR used internally to denote this phase.

• Stuart Butterfield recommends three books: "Leadership and Self-Deception," "Crucial Conversations," and "The Courage to Be Disliked."
• He suggests "Leadership and Self-Deception" as the top choice for podcast listeners interested in leadership.

"For listeners of this podcast, I would recommend one of three leadership and self deception, crucial conversations, and the courage to be disliked."

Stuart Butterfield provides book recommendations that he believes would be beneficial to the podcast's audience, particularly those interested in leadership and self-improvement.

• Stuart Butterfield would like to see more space for art and creative disciplines in the tech scene of Silicon Valley.

"I think more space for art or things that have traditionally been characterized as the creative disciplines."

This quote expresses Stuart Butterfield's desire for a more inclusive Silicon Valley environment that embraces art and creativity alongside technology.

• If given the benefit of hindsight, Stuart Butterfield would do everything differently in starting Slack.
• His biggest strength as a leader is understanding how others perceive things, which is crucial across various aspects of the business.
• His biggest weakness is the allocation of time and attention, with a tendency to focus on immediate issues over long-term strategic goals.

"I mean, if it had the benefit of the knowledge of how everything went, then, God, I would do every single thing differently."

Stuart Butterfield reflects on the journey of Slack and acknowledges that with the knowledge he has now, he would approach the building of Slack differently.

• Prioritization is a challenge that can cause internal confusion.
• He emphasizes the importance of focusing on understanding and comprehension of a product like Slack rather than just reducing friction.
• The key is to address the issue of potential customers not knowing what the product does rather than just making the purchase process smoother.

"The problem is almost always comprehension, but we treat it as if the problem is friction."

Stuart Butterfield explains the misconception that the main obstacle for users adopting a new product like Slack is friction, when in fact, it is often a lack of understanding of the product's purpose and benefits.

• Stuart Butterfield values the contributions of different board members at various stages of the company.
• He mentions Andrew Bracha for his consistency since 2009 and Sarah Friar for her intellectual prowess.
• Memorable board meetings often involve arguments and strong opinions, with Chamath Palihapitiya's input being particularly memorable.

"If I had to choose this one, I would say Andrew because of that consistency."

This quote highlights the value Stuart Butterfield places on long-term consistency and support from board members, exemplified by Andrew Bracha's tenure.

• Stuart Butterfield is focused on customer centricity, excellent service, and continued innovation for Slack's future.
• He is excited about new features such as "huddles" and "stories," which leverage the structured attention within Slack channels.
• Slack Connect and a more robust platform for hosting code are key drivers for the business.
• In five years, Slack aims to function as a lightweight fabric for systems integration and encompass most frequent communication, even with external partners.

"The slack from five years from now, I think, will continue to iterate and improve on the core user experience and the way that we deliver the service and the excellence in support and all that."

Stuart Butterfield outlines his vision for Slack, focusing on continuous improvement and expansion of services to facilitate better integration and communication across organizations.

• Hello Sign and Pendo are highlighted as examples of companies with a strong focus on user experience.
• Hello Sign's success story includes raising $16 million in funding and being acquired by Dropbox for $230 million.
• Pendo is expanding in Europe and offers a product cloud service that is specifically designed and priced for startups.

"Hello Sign is an effortless esignature solution used by millions to securely send and request legally valid digital signatures and agreements."

This quote illustrates the success of Hello Sign, emphasizing the importance of building a product that prioritizes user experience, leading to significant funding and acquisition outcomes.

"Pendo, the product cloud company, is expanding rapidly throughout Europe and recently released a version of their product, which is designed and priced specifically for startups."

The quote showcases Pendo's growth and its commitment to supporting startups through tailored product offerings, demonstrating the value of catering to the unique needs of different market segments.