S01E10

Talking Leadership, Failure, Side-Projects and Success with Cal Henderson

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Cal Henderson Co-Founder and CTO of Slack talks about how he built Slack and Flickr out of two side-projects he was working on. He speaks about the role of a leader and what companies should do differently coming out of COVID.

Q: Cal, tell us about your early days, about your life as an entrepreneur and how it started.

A: I never meant to be an entrepreneur, it happened accidentally about 20 years ago, I was working in London and my now co-founder, CEO Stewart Butterfield, had started an online video game company and was making a game called Game Never Ending. It was only in the prototype phase with a couple of hundred players and I ended up breaking into their emails to join their internal company mailing lists and then eventually convinced Stewart to hire me, to be able to work on the game because I was a big fan of it. But, the game wasn’t really working out for a number of reasons and so we started a side project to try and get some revenue into the business to be able to pay the employees and that side project was Flickr the photo-sharing website. We lucked into that at the time we did and the timing ended up perfect. It started growing and we realized we’re going to have to focus on the side project- Flickr, not on the game.

About a year after it launched, we were acquired by Yahoo, and we moved to San Francisco as part of the acquisition but then we realized we really wanted to get back to the game we had originally planned to build. So we started another company, to try and make an online game again. This game was called glitch and we worked on it for four years and spent a lot of our investor’s money, and we ended up with a game that could not really be a successful business. It was never going to be successful enough to warrant the amount invested in it, from a money and time perspective. 

In the course of the four years that we had been building that game, building that company. We built a set of tools when we were working together and we thought maybe other companies like us, other small teams, building products would also want that set of tools and that was the inspiration for Slack. So Slack was really a set of tools and practices that we built over four years of having a semi-distributed company.

Q: As a Co-Founder, you’re working on something and then you actually decide to take a side project and make it the main business. Can you talk to us a little bit about it? What helped the decision? 

A: I’ll talk about Slack. We realized the game was not going to be a business and we needed to figure out what we were going to build next. The set of proto Slack tools that we built over the course of building that game had not been designed as a product for other people. 

Over the course of four years, while building the game, we built tools to make it easy, to manage workflows within our company, to upload artwork and get it approved for animation, to get an alert when a server was rebooting or when a customer paid for something.

All this information was flowing into our system. We hypothesized that it could be a product we could sell to other people. When we switched to building Slack, our first few months were to build a prototype version for ourselves as quickly as possible and then start getting other people to use it. This was a real challenge one of the tricky things about Slack as a category of tool is that we didn’t just have to convince somebody to give it a try, we had to convince somebody to convince the whole team to give it a try. The barrier of initial, not even adoption, but just giving it a chance was really high. We spent quite a lot of time in our first few months convincing our friends in the Bay Area and the Valley to give the product a try. 

Q: We know that many entrepreneurs in the Valley start with a vision to change the world. And today Slack is a $20 billion company. Did you at any point in time when you started, think it would become this big?

A: No, absolutely not. When we were talking to our investors who had invested in the company, we said that in the fullness of time, if everything goes perfectly, Slack could be a hundred million dollar business. but we definitely couldn’t imagine how it has turned out.

When we first built the product, we thought that it would work for small technical teams, one like our company. What we really missed, which in retrospect is really obvious, is that if you work in a 10 person company, you work in a team of 10 people. If you work at a 10,000 person company, you don’t work on a team of 10,000 you work on a team of 10, 20, or 30. 

The problems that we were trying to solve for ourselves and primarily our customers are exactly the same problems that larger organizations are facing, We’re solving the same challenge. There’s a lot of other things that larger companies need, especially security and compliance administration and the pure scale, but really we were solving that same core challenge. 

We didn’t realize that at first and that was one of the things that has enabled us to grow really far beyond what we originally envisioned. 

Q: Co-founder dynamics is an important aspect for the success of any startup. What lessons can you share with us in terms of how you’ll work together. Any interesting lessons that you can share for other startups? 

A: There are some key things that go into that. The first one is – a shared vision, not necessarily for the company that you’re building, but for the work you want to do, the thing you want to produce. When I look at Stuart, and the projects that we’ve done over the last few decades, it’s been oriented around using the internet as a way for people to communicate whether that’s in the workplace, whether that’s, sharing their photos in the social space or playing together in the form of the games. It’s really a love of using the internet as a way of drawing people together and creating a community collaboration. So there’s like a philosophical alignment. 

We also have different sets of overlapping skills. Stewart is a creative person who was a designer and loves to create and design. I’m an engineer, I love making stuff and getting it into people’s hands and that complementary skill set is important. 

You also want your co-founders to be people that you still want to work with when things are going badly. Through that second game, we spent four years and realized that we would have to shut it down. We laid off 40, 50 people from the company, it was a terrible experience. 

There are failures, stumbles and learnings along the way and if you can’t work with your co-founders when things are going badly, that’s an indication that it’s not going to work out. So it needs to be people that you are happy to work with when the chips are down. 

Q: As a company scales how did your role as a founder change? 

A: At the beginning of Slack, we were eight people and today we’re 2,500 people. My role has changed significantly over that time. You have to be willing to delegate and not just the parts of your job you don’t like, but the parts that you do like too. 

When we started the company, I was writing a lot of code every day. I don’t do that anymore. Giving that up was tough because being hands-on was how I viewed myself and how I derived worth from the work that I did. I needed to delegate that to my leadership team and over time they had to delegate that to their leadership team. 

You step away from the day-to-day work that you used to do. What I do hour-to-hour now is very different from what it was a year ago. Growing with an organization is a constant process of working yourself out of a job, delegating what it is you do to other folks and figuring out what it is you need to do to get the organization into the position you want to be in 6 months or 12 months or 18 months from now.

Q: Did you have any learnings that you can share, from your life or from other leaders that you’ve worked with in terms of, how to balance a personal vs work mindset

A: As a founder, you end up bringing a lot of yourself and your emotions to the organization. In the early days of a startup, it’s a sprint. Once you’ve hit that product-market fit, it’s a marathon and you’re in it for the long haul. You have to think about not just showing up today but showing up this week, this month and this year. 

In this time of the pandemic, something that I’ve seen across our organization is people aren’t taking vacations and aren’t taking breaks from work. If you want to be in it for the long haul you need to take time off, to disconnect from work, at the right time, at your own pace 

One of the roles of the leader is in times of stress, to absorb stress from your organization and in times of low stress, when an organization is doing well, to inject some stress into your organization to keep it at a healthy level all the time. During this pandemic the role of leaders has often needed to be, to remove stress from the organization. The shift to working from home has been straight forward for some and for others really difficult. Especially people who don’t have a great work from home set up or people with young kids.

One of the most expensive and time-consuming things we do as an organization is to recruit – find people, interview them, bring them on board and bring them up to speed. Employee retention at a time like this is hugely important. 

Q: What would your advice be to startups specifically, in terms of succeeding in the post COVID world? What should startups do differently 

A: Figuring out the best way for organizations to work remotely and distributed. Pre- COVID, I was quite a remote work sceptic but yet here we are. We succeeded in that, many organizations did and the tools and the technology that’s been built over the last decade has really helped us get there.

Organisations that work in an office and try to replicate that in a distributed environment, are not going to be as successful as those that think – what’s our opportunity to do things differently? 

The way that we work now makes work asynchronous, so recording the decisions of meetings and discussions and making sure they’re available to everybody using a host of interesting apps and services to allow people to casually meet and fill in the role of conversations over lunch or hallways. 

Giving visibility to more people in your organization about what’s happening to the entire organization is hugely important in a world where not everybody is in the same room together. 

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