Shortly after ringing the opening bell at the New York Stock Exchange, Stewart Butterfield, chief executive and co-founder of Slack, said going public had benefits. It opens the company up to a degree of scrutiny that large customers will find helpful, he said. When Slack was private, some customers asked to see its financials to ensure the company was sustainable, he said.
“Now that doesn’t have to happen. Now there’s a lot more transparency,” he said. “Starting three years ago, we started trying to run Slack as a public company. We have been building toward this for a long time.”
[Read about how Slack’s chief executive, Mr. Butterfield, had to learn to dial back his mouthiness.]
Slack grew out of TinySpeck, a gaming start-up co-founded by Mr. Butterfield in 2010 that did not catch on. TinySpeck’s internal chat tool, which uses an early internet protocol called Relay Chat to let colleagues exchange messages and collaborate, showed promise. Mr. Butterfield reoriented the company around the chat product, publicly releasing Slack in 2014.
The tool quickly spread among tech start-ups, catching the attention of Silicon Valley investors. Slack became a “unicorn,” a term used to describe start-ups that are valued at $1 billion or more, in less than a year. At the time, Mr. Butterfield said in an interview that the valuation was somewhat arbitrary and not based on the precise methods of valuing a business, given how young Slack was and how quickly it was growing. Over five years, investors poured more than $1 billion into the company.
As it grew, Slack also attracted potential acquirers such as Microsoft, Google and Amazon. But Mr. Butterfield rejected any deal and Slack is now used by more than 600,000 organizations with 95,000 paying customers. Some of the rebuffed tech giants, such as Microsoft, have gone on to challenge Slack with their own workplace collaboration products.
Wayne Kurtzman, a research director at IDC, said Slack was part of a shift in the workplace where people are moving from static files to collaborative applications. “It’s a battle for the work space and where work will get done,” he said. Slack’s challenge, he added, is to show customers it is more than just a messaging app.
In its investor materials, Slack differentiated itself from the incumbents by saying it was focused on collaboration and was not distracted by old products or other priorities. The company promoted a directory of 1,500 applications built by partners, designed to let people automate aspects of their jobs, like responding to customer service messages or monitoring social media comments.