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u.s. markets saw the worst pre-christmas day on record. not quite a merry christmas. this is bloomberg. ♪ emily: this is what happened the last time we interviewed stewart butterfield. [laughter] [crosstalk] emily: oh my goodness, it's jared leto, everybody. yep, jared leto, the actor, who is also a tech investor, photobombed our chat with stewart butterfield, the seemingly quintessential serial silicon valley entrepreneur. but butterfield's story is anything but. in fact, he founded both of his companies by accident. flickr sold to yahoo for $27 million in 2004. today, slack, a workplace

collaboration app, is worth more than $7 billion and it's now battling microsoft, google, and facebook. joining me today is the slack ceo and cofounder, stewart butterfield. stewart, thank you so much for being here. stewart: my pleasure. emily: you had an unconventional childhood. your parents were hippies and chose to raise you off of the grid in british columbia. what was that like? stewart: i was a pretty little kid. so i am not 100% clear on it. it was, in many ways, an idyllic childhood. i was raised in a log cabin. it's a great story because i kind of sound like abraham lincoln with no running water until i was three and no electricity until i was four. my father was from new york, and my mother is from montreal, and they really had no idea what they were doing. it was pretty easy to grow a big zucchini, but you cannot live off zucchini. [laughter] stewart: but when i was about five, we moved to the city so i could go to a school.

it was a more normal experience. emily: your birth name isn't stewart, it's actually "dharma," which means "the way." stewart: yeah, it's a complicated concept, but central to hinduism and buddhism. emily: how did that shape you? and what kind of a kid was dharma? stewart: i was very curious. my mother tells this funny story. round the mile away from us there was another family and they had a son who was maybe six months younger than me, and his name was noah. he was the only other kid i knew. it turned out that i understood "noah" to mean "other child" and she took me on a train to see family back east. i've never been anywhere where there were so many people around. so i go on the train, and i was wide-eyed and went, "noah, noah," i didn't realize there were other children, so that was a little weird. emily: so, given that seeing other children was a rare occurrence, when did you see a computer for the first time?

stewart: by 1980, we had an apple 2e. and i was super into it. so, seven, i'm in second grade. i was in the first class in my school to have computers in the classroom. in apple basic, you could pretty easily do some basic graphics. you could make this little square this color. make this square, this color. so i made kind of an interactive multimedia experience for the other children, which was flags of the world, but only the super easy flags, like france and russia. basically any tricolor, big horizontal bars, not like brazil or mexico or any of the fancy flags. emily: you studied philosophy. in college. you wanted to be an academic? stewart: so, really big into computers when i was a little kid. but when i was an adolescent, i lost interest. it wasn't until i arrived in university and i discovered the internet, this is a 1992, before

the web started taking off. suddenly, i was back into computers because of networks. because of the internet, as soon as the web became popular, i taught myself html. i taught myself how to make a web pages and that was my summer job. by the time i finished my masters degree, i had no idea what i was going to do. except be an academic. because the big five philosophy firms aren't always hiring. it was 1998, and the dot com kind of initial boom was in the upswing, and i had some very marketable skills. emily: and so instead, you joined a startup. stewart: it was called communicate.com. it's too long of a story, but by the end of february 2000, a couple of weeks before the crash, i quit. i couldn't stand working there anymore. it was driving me crazy, i thought i was walking away from about $10 million in equity, and it ended up getting bought out

for $35,000, which was $35,000 more than anybody else made if you stuck around. and it was started by the person i sat next to my first day at this job, and i convinced him to quit. he had been running the app as kind of a hobby, so we started it up as a business, so we did. emily: and that actually sold, for a decent amount of money. you made something. stewart: i made something, and that was pretty fast, but now, it's 2001, and that trough ended. worldcom and enron are happening, and not long after, 9/11. and the economic outlook was pretty dark. the nasdaq was down 80%, s&p 500 was down 65%. and not a lot of optimism about the internet, but there was this burgeoning movement of self-expression online, which was blogging. from the late 1990's until the early 2000's, there was just such an active community of people who were really innovative, but there were also these relationships. it kind of hearkened back for me to what i had seen 10 years prior when i first got online,

and that has been a theme for the whole career. started a company to build a web-based massively multiplayer game. emily: a never-ending game, it was literally called game never-ending. stewart: exactly. and this was 2002, and guessed that people were investing in that at that time, can you guess? emily: unlikely. [laughter] stewart: definitely, there was an audience for that, a pretty small audience. we had raised a little bit of friends and family money, and put our own money into it. and we got to the point where the only person who got paid was the one person on the team who had kids. and we just couldn't do it, so we ended up making flickr which was, obviously, like a big turn. emily: so, in the wreckage of the dot com bust, you basically started flickr by accident. stewart: yeah. emily: what made you see that flickr could be something? stewart: desperation. fundamentally, we had developed a bunch of technology for the game that we thought was really interesting in its own right,

instead of an inventory of items in the game world, you had a shoebox of photographs. and it was really cool from a tech perspective. it demoed really well and people were super impressed. i didn't know you could do that in a browser. it wasn't really a great product, because you had to be online with the other person to share photos with them. emily: but the concept was very new. i mean, it sounds obvious today, photo sharing. stewart: the constant theme from 1992, to the game never-ending, flickr, is really this idea of use of competing technology to facilitate human interaction. and in some sense, i am agnostic about what the purpose of that is. it could be for play, it could be for creative expression, or for work. emily: are you agnostic about the result? because it could also be for good or for bad. stewart: yeah, i think technology gives us options. there is going to be good or bad things that people do with it.

part of the reason to have a career is right now -- when i was born and when i grew up, you and me are the last generation of human beings who will know life both before and after the internet. despite the fact that there are some negative consequences, like people now have better technology, so they can do the some bad things that they did before, with bigger consequences. it's a huge plus, and i think as a species, we should be grateful that we got the internet. emily: flickr was so hot that a year after you launched, yahoo! bought it. you sold it for $22 million to $25 million. is that the right number? stewart: i don't even remember at this point, but around there, yes. emily: you move to yahoo!, and you became like a dot com star. stewart: it was kind of the first thing that was like a phenomenon since the original dot com crash. in 2004, we were on the cover of "newsweek." me and my now-ex-wife, katerina, the cofounder. that issue came out, i was in new york city at jfk, and i get through security, go to the gate, and i see there's that magazine.

like, it's out now. i grabbed a stack of them and put them on the counter and the woman scanned the first one, she scanned the second one. and she said, honey, these are all the same. [laughter] stewart: i said, i know, i know, that's ok. and she looks up at me and it looks up at the magazine and she realizes it's me and got so excited. and then she reads the thing. i don't remember exactly what it said, but it was like, flickr and web 2.0, how flickr and myspace are changing the web. she was crestfallen. [laughter] emily: you talked about how one of the strengths of flickr was the culture, and how caterina would welcome every single user. today, that doesn't happen on facebook and instagram and in fact, online hate is a huge, huge problem. do you worry about hate on social media? stewart: yeah, i do. one of the things we say in my company is that your culture is the worst behavior you're willing to tolerate. not everyone tolerates the worst behavior on twitter, but collectively as a society, as a

business, as a culture, we tolerate it in a sense that it hasn't been eradicated. it shifts the boundaries of what's acceptable in a way that kind of encourages more bad behavior, and i think it probably has a negative impact. on the other hand, i think the net impact is hugely positive. i think it connects people in a way that they never would've been connected before. i think twitter, in particular, which gets a lot of criticism, has really been outstanding in amplifying the voices of people who would otherwise not be heard. emily: but it's also amplifying negative voices, as well. and should they be doing more to stop that? stewart: they probably should. my point is jus that it's not like an obvious, terrible thing that as a society, we would be better rid of, but people used to say terrible, nasty things on the radio, and used that to incite both mobs but also

political movements that were super damaging later on. as human beings, we take a little while to figure out how to use technology, and sometimes it takes generations. right? we have to figure out how to move technology towards the consequences we want and away from the consequences we don't want. 10 years ago, 20 years ago, we would have been public long before we got to this stage. ♪

emily: you left yahoo! you and caterina broke up. a lot of things changed. stewart: mmhmm. emily: but history actually repeated itself. stewart: yep. emily: you started another game. that failed. and you started another company by accident. stewart: yep. so, it was me and three other flickr of the original team who all worked at yahoo!.

we all left, and we said, this time, we can't fail. there's 10 times more people online. hardware is 90% cheaper than it used to be, everybody has faster computers, the internet is faster, and we are all more experienced. and we definitely failed again. so, we moved to a more ambitious project, and we were able to raise more money. emily: this was glitch. stewart: this was called glitch. we were working on the game, we were using irc. irc, for those people aren't familiar, is basically instant messaging. and it's based on what they call "channels." it's like a chat room. you can give it a name, you use a hash symbol to give a name to the channel, which is where twitter got its hashtags from. unbeknownst to us, we are developing this in the background, but in a totally subconscious way. it was so irritating to have a problem, and then we would address it in a number of minutes and then get back to what we were doing. and we'd let that kind of cook. emily: so, what was the moment you realized that slack was a thing and glitch was most certainly not?

stewart: it happened the other way around. there was a moment, late at night, i hadn't been able to sleep well for a while. i was just really worried. the was always just one more thing we could try. and it was always like one more thing that would make a difference. again, it was a little too weird, a little bit esoteric, a little bit too unfamiliar for people. and i just realized, i don't believe it can work anymore, so the next morning, i told the board and i told the cofounders that we have to shut it down. while that was happening, we were like, what do we want to do next? we all wanted to work together, and we realized we had never worked with the system like this, which we had developed inside the company that was making glitch. maybe that was something that other people would want. emily: slack now has eight million daily active users, three million paid users, 70,000 paying teens, 65% of fortune 100 companies. stewart: yes. it's not what i expected. and the potential seems, like, unlimited. emily: so, what are the goals now that you far outpaced your

own expectations? stewart: well, i mean, i think we're unbounded in terms of our opportunity. and we're unbounded in terms of resources. and the market is just way bigger than we thought. there are, ex-china, maybe 200 million people in the world who will inevitably be using slack or something like slack. so we don't necessarily win, but the advantages are just so big. everyone will eventually switch, and there are 100,000 plus people using slack every day inside of ibm, but there's also farms and dental offices and small tax preparers. there are police departments using it, the norwegian department of welfare and labor uses it, most all academic labs in san francisco, uc berkeley, stanford, uses it. the federal government. the range of utility was way greater than we thought when we first got started. emily: so, you've raised hundreds of millions of dollars, and in the past, you said it was easy money, you didn't need it.

is it that easy to raise now, or how have economic conditions changed? stewart: certainly not for us. i mean, i think what's happened is there has been an increasing separation between the most successful companies, and everyone else. hotarkets still seem pretty in the broad sense. i worked through the dot com crash. i literally and personally held shares in lehman brothers the weekend they went bankrupt. i didn't think that stocks could go to zero, but they can go to zero. so, i'm conscious of the cycle. emily: so, you're holding it for a rainy day? stewart: yeah, it's a great hedge against significant market conditions. emily: now, microsoft has free team, facebook has workplace, they are built as a slack killer. stewart: yep. emily: is that cutting into your share at all? stewart: no. it hasn't really shown up in, like, actual usage of customers yet. where it does show up is in the

sales process. i think what will be really interesting is, you know, people talk about new microsoft versus old microsoft. where i think that will make a big difference is what the policies are for customers. first of all, that's good validation for us, and second of all, we are way ahead on the product side. emily: so you're not worried about it? stewart: no. emily: ok. you said you're getting the company ready to go public but you're not necessarily going public. where are you now on that? stewart: i think we're kind of in the same position. it's difficult to contemplate. there are not many outcomes where we don't end up going public. i don't have any kind of timeline. we're not in a rush to achieve that. it's an unusual circumstance because i think 10 or 20 years ago, we would have been public long before we got to this stage. you know? like, we're a big company with hundreds and millions in revenue, and we're still private. emily: would you consider selling? i mean, we've chased speculation

of there's a buyer out there for slack at this insane valuation. stewart: there are definitely people who'd be willing to buy it. it doesn't work that way in private companies. it's a much kind of circumstance conversation. hey stewart, if you would be interested in talking about how companies can work more closely together, we would be interested in having that conversation, or something like that. and if we don't respond positively to that, like if we don't say, yeah, it sounds great, let's talk about it. there is no offer. nobody ever says, here is a check, do you want me to sign it? we are so optimistic about the future and having so much fun. i personally would like to do this for 20 more years. it doesn't make sense to sell it. and also, i feel like, when i say unbounded potential, i mean we should end up as big as microsoft if we are able to execute in a way that i hope we can. by the time i figure something out, suddenly we are 50% bigger and that doesn't work anymore. ♪

emily: you haven't shied away from speaking out against president trump. you spoke out against candidate president trump. when i interviewed you for my book, i remember you talking about how you thought the world was getting better, and then the day after the election, you realized it wasn't getting better. what do you think about the world today? stewart: that's pretty dramatic of me. i like to think about this in terms of policies at this point. and there are all kinds of policies, which i think are worth vigorous opposition, for different reasons, right? so, immigration policy, for example, both on moral grounds and understanding of what made this country great historically. at the total other end of the spectrum, the trade policy is something that could have a really significant, damaging effect on both the american and the world economies. i still think we're going to have some repair to do, but 10, 20, 50, 100 years from now, i

think we'll be in better shape than we were. emily: you've come out in support of planned parenthood, you spoke out against the travel ban. when you make and take these political stands, how do you decide to do that? is it a personal thing? you have a company -- stewart: i think we have to pick our battles as the company. i think as individuals, we are absolutely free to make our own choices. i to try to separate my activities as an individual person from those of the company. emily: i know you're nervous about being held up as a model for diversity, but the truth is, your numbers are far above the industry average when it comes to diversity. and you, personally, decided very early on in the slack's life-cycle to make it a priority. what was the spark that sort of brought you that realization? stewart: first of all, it wasn't just me.

it was a company-level decision. and it was when we were around 30 people and we were looking around and it was looking like any other tech company. it just caused a lot of conversation about what we can do to make a difference. the real impact was more likely to come in building an inclusive culture, one where all different types of people can thrive, where critically, people are less likely to fall out of the industry. because the longer someone from an underrepresented group or a woman in technology stays in, the more success she has in her career, the greater the odds that she's going to bring people from her network. that she will be a mentor, that she's going to be a role model. that is the way we are going to get lasting change. we don't have it figured out, but what we've seen happen is we have made some positive moves and we've taken a very open, experimental approach to things were willing to try to increase both diversity and inclusion. and as a result of that, we have attracted a lot of people, and success begets success. emily: 43.5% of your workforce is female, versus 30% industry average. your numbers are way better

across the board, whether it's women, african-americans, others. facebook and google, meantime, just released their diversity reports, and the numbers have barely moved. how can the rest of the industry move this in a substantial way, and what is your advice to young entrepreneurs who are starting at the beginning? stewart: well so, the second question is much easier, which is start as early as possible. which i guess answers the first part of the question, which is once you get really big, it's hard to move things on a percentage basis. i think people have unrealistically high expectations of what kind of change we can see in the short term, but in the long term, i think we will see a much bigger and more profound change that anybody realizes at this point. emily: slack is dramatically changing the future of work. in many ways, slack increases flexibility, but it also means we're connected to work all the time. do you think about the irony of that? stewart: yeah, absolutely. i think about all of this stuff. when your company has cultural really serious cultural problems, slack can exacerbate it.

it can actually make it worse. if there's a high level of trust and respect, high-level communications, slack can make it even better. i think what's interesting about the future of work is, when you look at people in their individual functional roles today versus a few decades ago, they are just massively more powerful in their ability to get things done. but where we haven't seen as dramatic and improvement and what ends up being a limiting factor on performance is communication, how difficult or hard it is to gain the alignment you need. because the difference between the best and worst performing teams is far greater than the best and worst performing individuals. but we've concentrated most of our effort on individual worker productivity and time management skills and life hacks and to-do lists, getting things done, stuff like that. and far less on what is probably the more important thing to change is the degree of transparency, clarity around goals, trust, respect, alignment. the output there can be an order of magnitude or several orders of magnitude greater.

emily: how do you see your role changing over the next five, 10, 20 years? you said you want to keep doing this? stewart: i feel like i am perpetually behind where we should be because we're growing so fast. we've only been in the market for 4.5 years, and by the time i figure something out, suddenly, we're 50% bigger and it doesn't work anymore. i am sure i would not have said this out loud, if you had asked me two years ago what my job was as ceo, but what i would've thought privately inside my own head is, i would have said that my job is to be the smartest person either in the company or in the room, or whatever, and make all the important decisions. that's definitely not the job. but the fundamental responsibility is to increase the performance of the organization as a whole. in an environment where you have no limit on the opportunity or no limit on the resources available, it's really just a matter of figuring out how to amp it up, how to grow more quickly, how to make customers happier, how to do all of that better. and the continual learning and

improvement for the whole organization is going to be the driver of our success. emily: we'll see how amped up you are in five years. stewart: yeah. emily: stewart butterfield, thank you so much for joining us. great to have you. ♪

haslinda: it is 9:00 in singapore. here are the first word headlines. president trump expressed support for treasury secretary steven mnuchin and after questions about why he discussed bank liquidity when it did not seem to be a problem. the president said stephen mnuchin is talented and appeared to roll back his criticism of jerome powell. but he is raising rates, is confident policymakers will quote, get it. china has released new regulations promising to treat all companies equally, whether they are state-owned, private, or foreigners. the rules go into effect immediately and complain four bad