The CEO of Slack on Adapting in Response to a Global Crisis
As the CEO of a company that went from a launch in 2014 to a public listing in 2019, I’ve been through plenty of periods of rapid acceleration, and so has the entire team at Slack. We’re now a global operation with more than 2,000 employees and 100,000-plus paid customers, but we haven’t lost our start-up mentality. Our vision is a world where organizational agility is easy to achieve, regardless of an institution’s size, and that agility is what we aim for ourselves.
But we have never moved with more speed—and clarity of focus—than we did this past March. As the magnitude of the Covid-19 crisis became clear, we realized that we would need to meet twin challenges: dramatically increasing customer demand and an extremely abrupt transition to working remotely.
The first week of March was not much different from the weeks prior. Because of the outbreak in China and fears of a spread in Asia, we had already decided to close our offices in Tokyo and Osaka. We also decided to make our annual global sales offsite, an 800-person gathering scheduled for March 9–13, an online-only event, and we issued an optional work-from-home policy and recommended travel restrictions for the entire company. We’d noticed an uptick in new teams based in Japan, South Korea, and Italy; we launched resources, including webinars and one-on-one live consultations, for people in those and other virus-hit areas who were shifting to remote work.
At the same time, however, we were of course continuing all our normal operations—closing customer deals, launching features, making hires, and so on. On Thursday, March 5, we held the regularly scheduled board of directors meeting at our San Francisco headquarters to discuss plans for the new fiscal year, including budgets and forecasts for various parts of the business, hiring, new-office leases, and the quarterly guidance we would soon issue—only our third earnings announcement as a public company.
To give you a sense of just how different things were then: Cal Henderson, Slack’s cofounder and our CTO, attended the board meeting in person even though he had just returned from Asia with sniffles and sneezes. One board member questioned Cal’s presence and suggested that we might not be taking the health crisis as seriously as we should, but his was the lone voice of caution at the time. (Thankfully, Cal had just a cold.)
Within hours it was obvious that the board member had been right. We learned that one of our Bay Area employees had been contacted by the Centers for Disease Control about possible coronavirus exposure and had begun self-quarantining. We immediately decided to temporarily close the offices where the employee worked and have them deep-cleaned the next day.
Meanwhile, the news from Europe and both the West and East Coasts was worsening, and calls increased for widespread social distancing. By Friday, just 24 hours later, we knew that we needed to close every other Slack office along with the ones in Japan—16 locations in nine countries.
Our own work was far from the only thing on our minds, though. In some ways Slack the company was ready for this: We live day in and day out with Slack the product, which keeps us connected whether we’re in the office, on the road, at home, or anywhere in between. But we knew that thousands of other companies would have to make a massive, rapid transition to remote work. And many—existing customers scaling up more rapidly and prospective ones desperate to do the same—would want our help.
I will never forget the energy, focus, and determination I saw from our employees over the next few weeks. It was as if everything I had ever hoped to accomplish for our team—a clear sense of purpose, widely understood shared objectives, and appreciation for the importance of our work, all inspiring genuine collaboration—was happening magically, by itself.
Of course, we will all remember this pandemic period for the rest of our lives. And like everyone else, I’m worried about loved ones, deeply concerned for the millions whose lives have been upended, preoccupied by the strain and craziness of quarantine (some days more than others), and profoundly uncertain about how things will unfold.
But for us at Slack, the time has also been indelibly marked by the experience of coming together to help one another, our customers (old and new), and so many groups on the front lines of this crisis. It was that month, March 2020, in which the company itself demonstrated the agility that we aspire to bring to our customers. I think our story offers lessons for other corporations and institutions, not just in times of crisis but whenever they need to adapt to unexpected changes, move quickly, and strategically scale up.
A Smooth Employee Transition
Slack’s origins trace back to the team that began working together at a company I cofounded in 2002. After giving up on the project that first drew us together—developing a web-based massively multiplayer game—we ended up creating the photo-sharing tool Flickr, which was acquired by Yahoo in 2005.
In 2009 the four of us left Yahoo and cofounded another company to create…another web-based massively multiplayer game. Though we were more experienced and better resourced, the game, called Glitch, was wildly ambitious and ended up caught in a major technology shift as computing-for-leisure moved to mobile. We spent three and a half years working on it but again had to pull the plug. However, the software we’d developed to connect our cross-functional team—from software developers, customer support, and business operations to artists, animators, writers, and musicians—showed a lot of promise. We committed our remaining funding to its development, built the app and platform, and in August 2013 began a closed beta for Slack: a “searchable log of all communication and knowledge.”
Since then we’ve become an NYSE-listed company that grew revenue 57% last year, to $630 million, with enterprise customers including IBM, TD Ameritrade, GlaxoSmithKline, and Uber. We’re rapidly growing and heavily reinvesting, so we’re still not profitable. But we closed the past fiscal year (which for us ended on January 31, 2020) with 110,000 paying customers, nearly 900 of which spend more than $100,000 a year with us and 70 of which spend more than $1 million. That’s what we reported on our March 12 earnings call. At the same time, we were flying into the future, figuring out how we would work as an all-remote organization, how best to help our customers, and how to preserve momentum as the pandemic spread and a recession loomed.
First and foremost, our response began with the health and safety of our employees. Fortunately, the employee whose possible exposure prompted our first office closure never showed any symptoms and remains well. Our hearts go out to those who have been infected, and we are extremely thankful for the caregivers tending the sick, the scientists researching treatments, and all the frontline workers who have kept food and other essentials moving around the world.
We didn’t need to get people up to speed on Slack. We hit the ground running.
As an organization built around—and through—a channel-based messaging platform and made up mostly of knowledge workers, we transitioned to work from home relatively easily. Our entire business runs on Slack: communication and collaboration happen in channels, and we have a channel for every project, initiative, function, team, office location, large customer, event, and everything else. As a result, everyone knows where to go to ask their questions, give their updates, or catch up on decisions and results.
We’ve always invested in a strong and disciplined culture of communication. “Slack 101” and “102” classes are literally part of our onboarding process. We didn’t need to get people up to speed on Slack or scramble to find tools to help us connect with one another remotely. We were ready, and we hit the ground running.
This was a crisis, and we had a product that could genuinely help people get through it and continue to work efficiently, whether in individual teams or in large organizations. We realized that this was our moment. We all felt a new sense of urgency and alignment: If we add this feature today, our users will be able to work more easily and effectively tomorrow. If we provide the right resources now, thousands of new customers will sign up and stick with us in the future. If we help this group of researchers work together even though they’re apart, maybe they will defeat the virus.
Of course, most of that is always true, and as CEO, I’m constantly trying to hammer home how each little improvement matters. But the changes sparked by Covid-19 made that truth obvious. I didn’t have to say anything. Everyone at Slack had the same instinct to prioritize the most important work.
Meetings are a great example. The hesitation, equivocation, and desire for “more research” that can cause decisions to be punted from one recurring meeting to the next? Those stopped right away. Our first employee “all-hands” while working from home lasted 22 minutes instead of an hour. Business unit leaders scrapped their long presentations in favor of 30- to 90-second updates on what was critically important. I dialed in from my laundry room because that was where I had the strongest WiFi signal. When our CMO was talking, her two daughters unexpectedly popped up on the screen. She didn’t skip a beat. That got smiles at the time, but it was also called out later by employees as a significant moment in which our leaders demonstrated acceptance of the new reality. Our chief people officer, who has four young, rambunctious boys and a wife who also works, soon told everyone that he had a changed policy on meetings: He was available for them only between 11 AM and 2 PM. Many of us had added responsibilities and real challenges; it was important to recognize that and accept the need for flexibility. We didn’t have to strictly adhere to previous norms. We were focused on impact.
Courtesy of Slack
Butterfield (upper left corner) connects with Slack senior executives via videoconference during the coronavirus crisis.
Our customer success and experience teams turned on the afterburners and delivered support more or less around the clock, expanding online training tools; launching live, personalized assistance; and making it all free—both to existing customers and to newcomers who needed help getting set up with our product. Account executives sent emails to all their clients explaining our business-continuity plans and asking how we could help them through the crisis.
New Slack channels were spun up to manage all the new workstreams, including changing hundreds of on-site interviews with job candidates to videoconferences and redesigning our employee onboarding process to be completely remote. Our marketing and communications teams postponed in-person events and, in less than a week, developed our first television ad as a listed company: a public service announcement committing to help any groups (scientists, doctors, academics, researchers, designers) that were working on a Covid-19 response.
Our network operations and infrastructure engineers not only ensured that our systems were operational 99.99% of the time in a period of soaring demand, but also rolled out a planned redesign on March 18. Members of our facilities team, who couldn’t go into our offices, volunteered to get trained and support the customer service team by helping answer incoming questions.
Decisions were made faster as the usual concerns and hesitations and reasons not to move forward fell away. Even better, we all acted on a new, unspoken mantra: If you see something that needs to be done, just go ahead and do it. The natural transparency of Slack itself, of course, made it easier to move at this kind of speed while staying aligned.
All this work, especially under these radically new and different circumstances, can be its own reward, but it can also be a serious source of stress. Mental health, always critical, is even more so during a crisis. Employees can’t perform well if they think they might be let go or are pushing themselves too hard.
We were fortunate in that people didn’t need to worry about their job security. Instead I found myself reminding them all to take care of themselves. At the start of the second week of March, I sent a message assuring everyone that we were confident about our overall financial health and the long-term growth potential of our business, and that we had no plans for layoffs. In fact, we would keep up hiring across the company (and even accelerate it for customer support roles), and we continue to pay contractors and hourly workers.
Facts & Financials:
Founded: 2009 (as Tiny Spec)
Headquarters: San Francisco
No. of employees: 2,000+
Offices worldwide: 16
At the end of that week I sent another note encouraging employees to prioritize their own and their families’ well-being. I am fortunate to be holed up with a supportive fiancée, who’s the cofounder and chief brand officer of her own company, along with two dogs (one a puppy, who provides a welcome diversion). But I knew that some people were managing young kids at home with neither school nor childcare, while others were completely on their own and feeling isolated. This was not going to change in the short term (at the time of this writing, we plan to keep our offices closed through September), so things like breaks, exercise, sleep, and eating well were more important than ever. We also wanted people to ask for help if they needed it. I knew that with sufficient focus, we could accommodate all this and still get more done. And that’s just what happened.
A Surge in Customer Demand
Although the growth in new teams using Slack in Asia and Italy was a harbinger of things to come, none of us were prepared for the global surge in customer demand that hit us in mid-March. Companies that already had all their people on Slack were using it much more—20% more messages per person per day than before the crisis hit. Our record for simultaneous users jumped from 10 million on March 10 to 12.5 million on March 25 (25% growth in two weeks!), and our active use time on weekdays increased to one billion minutes globally.
Customers with 1,000 or 10,000 Slack users suddenly wanted to expand to 50,000. A large U.S.-based grocery chain had about 1,200 people on Slack and asked for a plan to roll it out to 100,000 people in 72 hours. The last time we’d ramped up at that scale for a customer, it had taken 15 months.
New customers wanted comprehensive proposals immediately. Existing ones wanted more training programs and more-sophisticated features, which caused our app installation rate to more than triple. We’d been on pace to add 5,000 new paying teams per quarter; as of mid-March, just over halfway through the first quarter of our fiscal 2021, we had already added 9,000.
Customers with 1,000 or 10,000 Slack users suddenly wanted to expand to 50,000.
Suddenly organizations of all kinds, small and large, private and public, needed to transform the way they worked, all at once. Many leaders were under pressure to develop transition plans. Managers were trying to figure out how to handle newly remote teams. Our job was to use our expertise to help relieve that burden, and we worked flat out to guide people to more-effective Slack use.
It was especially satisfying to be able to facilitate the work of teams key to Covid-19 mitigation and relief: government agencies, medical professionals, equipment makers, treatment and vaccine researchers, media and scientific organizations covering the crisis, and nonprofits providing relief to those suffering the most from it. We continue to offer free trials and have expanded the features those organizations can use while offering free upgrades to paid plans.
Our hope is that people who’ve tried Slack during this crisis will appreciate its benefits and never go back to email. More broadly, I think any company that enables businesses’ transformation through software will have an easier time of it going forward: All kinds of things that seemed impossibly hard a few months ago turned out to be manageable once it was clear they had to happen.
However, until testing spreads and a vaccine is developed and rolled out, we will be coping with a pandemic and its terrible fallout. The number of deaths is staggering. Tens of millions of people are now unemployed. Businesses are closed, and many will never reopen. National economies are entering what will probably be a prolonged recession. We don’t know what that means for Slack. It’s likely that some of our existing customers, particularly small companies and those in the travel and hospitality industries, will drop off—although we’ve been working with those hardest hit to find workable solutions. Large enterprises are likely to clamp down on new spending and cut existing costs. I heard from one executive that the wall-to-wall contract his company had just signed with us in the second week of March was its last big purchase before tightening up.
These competing dynamics—a clear increase in short-term demand coupled with a murkier outlook for the rest of the year and maybe beyond—are our new reality. That’s what we had to communicate to investors.
Transparent Investor Communication
Less than a week after that relatively run-of-the-mill board meeting on March 5, I was in New York, prepping for our earnings call. Things looked good: We were growing quickly and felt well positioned against competitors, most notably Microsoft Teams. The evening of March 11 I worked late with our CFO and investor relations and communications teams and then met friends at an oyster place on Canal Street for snacks and a drink.
I vividly remember that night for several reasons, not least because it would be my last in-person restaurant meal for some time. Tom Hanks announced he’d tested positive for Covid-19; the NBA suspended its season; and President Trump imposed a travel ban from some countries to the United States. Suddenly the financial guidance we’d prepared to release on the earnings call seemed out-of-date. And now that we were in a situation that could result in millions of deaths, it felt surreal to be thinking or talking about macroeconomic headwinds or tailwinds. In debating whether and how to change our financial forecasts, we realized there was no down-the-middle scenario. The pandemic was going to affect our business. We knew, however, that even if we were badly hit, we would be better off than many other companies. So we tempered our first-half growth expectations and acknowledged the increasing market uncertainty but presented the same case we’d intended to, with undiminished confidence.
We soon had to make another decision. We’d considered doing a $600 million convertible debt raise in March. One of the reasons we’d gone public was to gain access to the public debt market. At first it seemed that the pandemic would prevent us from pursuing that financing; we thought, Too bad we couldn’t pull that off before the markets went crazy.
But even in the craziness we realized that we could, and should, follow through with the financing. As someone who’s weathered more than a few financial and tech industry crises, I’ve learned that raising capital when it’s available, even if you don’t need it, is rarely something you’ll regret. If sources dry up, the cash you secured will be a big advantage: Acquisitions will become possible, and you can invest in new hires, marketing, or infrastructure in an environment where most others can’t.
We set up a multi-organization Slack channel with the investment banks Morgan Stanley and Goldman Sachs, and instead of an in-person road show, we did video calls with potential investors. Demand was so great that we increased the offering size to $750 million and still found ourselves oversubscribed. That was gratifying. We’d chosen to enter the debt market during a very turbulent period and had been rewarded for it.
I’ve always believed in the adage “Never waste a crisis,” and during this one I’ve tried to encourage Slack’s executive team, employees, customers, and investors to lean into that idea. Covid-19 has created an opportunity for us and others to become more agile, to take on changes that once seemed daunting, to reimagine organizational culture, to rethink work plans and productivity, to learn from and rapidly correct mistakes, and to reposition for future growth. Perhaps most important, Slack has refocused on our core goal—to help our customers work more efficiently and more productively.
What leaders must do above all else in times like these is remind people of what’s important, emphasizing an organization’s foundational tenets, its purpose and mission, and the impact it can have, and constantly expressing gratitude for the hard work they’re doing to execute on those things. As I wrote to Slack employees on March 12, “We can emerge from this stronger than ever….We will look back at this time and realize how much it redefined our belief in what we can accomplish as a team….Everything you’re doing matters. I’m so proud of this company, and all of you. Let’s go!”
A version of this article appeared in the July–August 2020 issue of Harvard Business Review.
Stewart Butterfield is the CEO of Slack.