The days of failure behind it, Slack forges onwards with $42.75M, buoyed by a list of famous angels

By Carmel DeAmicis , written on April 25, 2014

From The News Desk

There were days when Flickr co-founder Stewart Butterfield did not want to get out of bed while building his company Tiny Speck. Even though he was chasing what amounted to a lifelong dream — creating a never-ending game that users could play forever — the pursuit didn’t go as planned. Consumers didn’t adopt the product in droves. Users were confused about how the game worked, and no amount of explanatory videos helped them understand. His $17.2 million in venture money was quickly running out on expensive, talented hires like Japanese designer Keita Takahashi and on thousands and thousands of illustrations and drawings.

“No matter what we thought of, it didn't work,” Butterfield told Pando. “The thing about game design is it's really hard." He found himself wondering whether he’d be a one hit wonder, known only for founding Flickr, but not good enough to build anything else.

These days Butterfield can put such fears almost to rest. After firing most of Tiny Speck’s staff, placing them in other jobs, and doing a quick pivot at the end of 2012, Butterfield and his remaining team built an enterprise communication app called Slack. It's a chatting program to rival the likes of HipChat and Campfire, one that prominent users -- like Stack Overflow's Jeff Atwood and Microsoft's former CTO Ray Ozzie -- have fallen in love with and a range of companies -- from Walmart Labs to Buzzfeed -- have adopted. It took off through 2013 and early 2014, seeing what Marc Andreessen* calls unprecedented enterprise viral growth.

Today marks a big milestone for the company. Slack has announced it has raised $42.75 million in venture funding. This is a nice stockpile of cash to replenish the much-depleted reserves from the Tiny Speck days. It’s also official confirmation that Slack is on the up-and-up, and that Butterfield has managed to turn his failing company around.

What’s more validation than Slack’s big milestone of money is perhaps the names behind that cash. In addition to participation from existing investors Andreessen Horowitz and Accel, the list of angel investors in what amounts to the Series C is impressive. For one thing, Om Malik has picked Slack as his first ever angel investment — not connected to True Ventures firm. This is Malik’s earliest foray into the world of angel investing, a big step after retiring as a professional journalist earlier this year.

John and Patrick Collison — the teen prodigy brothers behind payments processing company Stripe — have also personally invested. When we last checked in with Flickr at the end of March, the Stripe team had recently adopted the technology as their in-house communication platform. Now it seems the Stripe founders were so impressed they wanted to throw their own weight behind the tool.

To round out the all-star angel cast, Yelp’s Jeremy Stoppelman, Squarespace’s Anthony Caselena, True Ventures' Tony Conrad, and RRE Ventures' Adam Ludwin have also joined the round.

In addition to this angel A-team, the Social + Capital Partnership, a firm “of philanthropists, technologists and capitalists” that by its own decree focuses on “utilizing venture capital as a force to create value and change on a global scale,” made its biggest investment to date by leading the entire round. Slack is a far cry from solving any big social good issues like healthcare or education, but I guess Social + Capital figured they could make their fund money here while investing in other, potentially riskier social good startups.

All in all, it’s further confirmation that Slack is surging, and shows little sign of slowing down anytime soon. That said, the enterprise space is a competitive landscape at the moment, and Butterfield is no stranger to well-funded flameouts. With only a few months officially under its belt, Slack has a long way to go before being hailed a definitive success.

*Marc Andreessen is an investor in Pando

[illustration by Hallie Bateman for Pando]