Slack became a billion dollar company in 2015, just two years after first launching their product. It all began as an internal tool their company used to simplify communication within their company, before eventually evolving into a cloud based collaboration tool for teams around the world.
We’ve broken down the most important lessons Slack learnt and the strategies they used to become one of the fastest growing SaaS (Software as a service) companies in the last two years.
When examining their journey, it almost seems as though the Slack team found success by accident, though that would be furthest from the truth. In fact, Stewart Butterfield and his team were successful entrepreneurs that founded Flickr and started multiple ventures prior to starting slack in 2012. They understood the importance of gaining customer feedback, learning as much as possible and pivoting quickly – all of which contributed to Slack’s phenomenal success.
Lesson 1: Validated Learning
Slack constantly sought feedback and meticulously assessed every piece of data they received, even prior to launching their product.
‘We begged and cajoled our friends at other companies to try it out and give us feedback. We had maybe six to ten companies to start with…’
Almost immediately, the team learned that their product would have to function very differently as team sizes increased. As soon as they learnt this, the team readjusted the product and repeated the process of getting customer feedback.
‘The pattern was to share Slack with progressively larger groups. We amplified the feedback we got at each stage by adding more teams’
A huge factor contributing to Slack’s success was the team’s focus on adjusting their product based upon early user feedback, which enabled them to find a strong product market fit by the time they launched. More importantly, they did all this very quickly, grinding through the lean startup’s build, measure and learn feedback loop.
But validated learning didn’t stop there either. After launching, they spent the next 6 months sticking to their Beta release version, instead choosing to focus on learning as much as possible from their users.
‘We started inviting teams in batches and watched what happened. Then we made some changes, watched what happened, made some more changes…’
This reflects the saying where the startups that can learn the most, as quickly as possible are the ones that eventually win.
Lesson 2: Media Matters
Traditional media has the ability to help startups accelerate growth and gain initial critical mass when starting up. That’s how Slack got 8000 people to request access to the platform on the first day of launch.
Butterfield says you should always start planning months beforehand – reach into your connections and pull the strings you have – do not leave it until right before the launch.
Although Butterfield does not offer tips to get media coverage, Aeona have decided to share 3 tips with our entrepreneurs when seeking PR:
- Reach out directly to the journalist – do not cold email the newspaper. For example if you wanted to get an article in to TechCrunch, you shouldn’t email the company. Instead, you should find an article which relates to your startup and directly contact the journalist through email, Twitter or even Facebook!
- Pitch a story, not your startup – stories are emotional and take people on a journey whereas pitching your startup is basically selling. People hate being sold to and have subconsciously developed an aversion to selling – so pitch it as a story or issue!
- It’s a game of numbers – try and contact as many people as possible and expect to be ignored by most people you contact. However, the more you contact, the more likely someone replies to you. It’s simple – you just have to increase the probability!
However, it doesn’t end after the article is published. You need people to be talking and posting about that article. Slack utilised their social media channels to embrace all positive press mentions and constantly came up with new ways to give each mention new life, attempting to showcase their coverage as much as possible. They weren’t afraid to use repeated articles and made sure they were constantly at the top of their audiences minds.
This is how they made 8000 people request access to their platform on the first day of launch.
Lesson 3: Teach your Users
They found that a major hindrance to adoption was that users didn’t understand what Slack was, because nothing existed like that before.
Between 20% to 30% of their users came from some other centralised group messaging system that didn’t think of Slack as a category of software. Previously, users used a mixed bucket of products including Skype chat, company intranets and Facebook groups to perform what Slack now does.
As soon as Slack realised that they needed to effectively educate its users through its platform, they began to work.
‘We created materials to explain Slack to individuals – what it was for, how it worked, what you’re supposed to do – but we also built resources for team administrators.’
For a startup like Slack, they identified that a major focus of the company would be education. Hence, during the 6 month beta period, they focused primarily on education.
For many tech SaaS startups, a major focus should be upon developing a friendly user experience to encourage adoption. This involves quickly educating users on how to use the platform so they can realise its potential, before users lose interest. What can you do to reduce friction?
Lesson 4: Try a Bottom Up Approach
As Slack grew, they found it difficult to introduce the product to large companies. The process of getting approval from the CIOs and the C-level management to introduce Slack into an organisation took significant periods of time and was a hit and miss strategy.
Instead of the traditional top down approach for B2B businesses, the team tried a bottoms up approach that ended up as a key factor in Slack’s early enterprise success.
They marketed Slack towards smaller teams within larger organisations. Mid level managers would be able to use Slack within their teams without approval from those higher up. This led to organisations like Dropbox having 9 separate paid teams on Slack and meant they were able to bypass organisational politics of converting the entire company at once.
This shows it is important for startups to be constantly approaching difficult problems from different perspectives. For Slack, adopting a bottom up strategy instead of a top down strategy to slowly infiltrate a large organisation enabled it to grow exponentially.
Lesson 5: Be Fanatical about Customer Satisfaction
‘Every customer interaction is a marketing opportunity. If you go above and beyond on the customer service side, people are much more likely to recommend you.’
Slack gets approximately 8000 Zendesk help tickets and 10 000 tweets each month and they respond to every single one of them.
Butterfield says there is a misconception that customer service is a huge burden for companies, but rather it is an opportunity for growth. Slack has 6 people dedicated to working on managing Twitter 24/7, which he justifies:
‘Even if someone is incredibly enthusiastic about a product, literal word of mouth will only get to a handful of people – but if someone tweets about us, it can be seen by hundreds, even thousands’
It turns out that Slack was able to turn the burden of customer service into a huge opportunity for growth and marketing.
Slack was the fastest company in the world to get from a $0 valuation to a $2 billion valuation, but it wasn’t through pure luck. Being experienced entrepreneurs, Butterfield and his team knew they should gain immense customer feedback, learn as much as possible and adapt as quickly as possible. Many B2B and SaaS startups can take a leaf out of Slack’s journey and apply their strategies to their own companies.