Slack Founder Stewart Butterfield on AI, Software, and the End of the Tech Boom

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Tracey, you know, we've had a number of episodes about tech and some of the excesses of the VC boom, etc., the maybe the softening labor market. But it's one of these topics that like we can't talk about enough because it's so critical, I think, to the markets, to the economy. And so I think ambiguous about like where the industry is going next. Absolutely. So there's two big things that seem to be going on right now or two big questions. And the first one has to be we've seen a lot of layoffs in the tech sector. And I guess the question is, is that reflective of the broader economy or is that something tech specific as a more interest rate sensitive part of the economy? And then I guess the second thing is, you know, tech was one of the big winners of the pandemic era. And how much of that is getting rolled back now, how much of you mentioned excesses, how much of the excesses are being taken out of the system. Well, and then I would say the third thing, which is that, and it's just really leap to the public consciousness in the last several months, is people being very aware of AI. And these questions about like, okay, we had this sort of like era of what we thought of as like a software company over the last decade, the software as a service company, VC funded, etc. So in addition to the macro questions about hiring, in addition to the question about financing, there's this question like, well, what's going to happen with like tech business models and how like upended will be and what that's going to mean for existing talent and where the money is going to flow from all that. And I think like, you know, everyone has posts and threads on that, but I've never like found something that's like, Oh, that's that compelling. Now you're right. There's a lot to talk about. So I'm very excited because today we're going to be speaking with a guest that I would say has really been, I was going to say like at the forefront of two sort of like major apocal tech trends, but I kind of actually think it's two and a half because so there was the web 2.0 like sort of like social kind of like user generated internet. And then there was the sort of like the sass boom, software as a service, etc. And then in the last few years with work from home, like tech that enabled work from home, which is almost like its own distinct kind of story in my field. Yeah, someone who brings those mega trends together. And maybe maybe might be on the verge of another mega trend we should ask the perfect person to see if there's another mega trend. So we have the perfect guest, we're going to be speaking with one and only Stewart Butterfield, the co founder of Flickr, the photo sharing site, the co founder of Slack, the workplace messaging app that everyone used that eventually sold to Salesforce recently stepped down as the CEO of Slack. So Stewart, thank you so much for coming on. So I got to say, I meant to say what's also interesting here is both Flickr and Slack as far as I understood it originally started because you wanted to create an online game company. And both of them had to pivot into these like mega world changing hits. So I guess my first question is, are you working on a new online game? I am not I get asked that a lot. Maybe. Maybe. As the cliche question. It's like a good warm up. Okay, but you're not right now. No, I'm not. Okay. So I mean, maybe we should start with the pandemic boom, because I mean, Slack really became the sort of poster child for the success of SAS in 2020 and 2021. And you also had a kind of famous Twitter thread where you explained what it was like being on the front lines at that moment in time, but talk to us about how would you characterize that experience because looking back on it now, there is a lot of talk about maybe there was overhiring, maybe there was success in various ways. But how did you experience it? Yeah, that was a big moment to like that, you know, March of 2020. But I feel like it really started 2015 or something like that. I was looking back through some old interviews. And I think it was 2015. I might have the years a little bit off Slack raised money and a $2.8 billion valuation. And people were like, well, that's crazy. And even back then, it was apparent. And we would say interviews, this is just zero interest rate. Like, this is what happens. And so I think that kind of boost that that I don't know, just say rocket fuel by rocket makes me sound like a good kind of like rocket fuel propelled us all the way through. And even before going back, I guess, 2015 2016, we started to be launched in 2014, we had a million dollars of ARR that, you know, the following week. I think it took us about 18 months to get to $100 million of ARR. And that growth was crazy through that whole period. And then accelerated in March of 2020. I think the excesses are maybe not a different story, but I guess there's two parallel tracks. And one is like the Google Facebook track, which is, they make a lot of money. And so there's no real constraint on hiring. And then there's the VC bat company, which is they raised a lot of money. And so there's no real constraint on hiring. But absent those constraints, you hire someone. And the first thing that person wants to do is hire other people, right? Because they, it's a very obvious signal. And it's very true that the more people who report to you, the higher your prestige, the more your power and your organization, the higher your building. Yeah, exactly. And even, you know, even if it's like a two person empire, it's something like, you know, if you're a, you become a manager, you want to become a senior manager, if you're a senior manager, you want to become a director. And there's, it's a very powerful incentive. So if you hire a thousand people, you have, you know, 996 people or, you know, roughly 100%, we're like, I need to hire. So every, every budgeting process is, I really want to hire. And that to me is the root of all the excess, because if you don't have the constraint of, we just don't have the money, you know, if you're manufacturing lysine or something like that, like, you know, a 70 year old industry, where there's a lot of competitors and all the margins been taken out of it, you can't do that. And if you have infinite money, either from being a monopoly on search engines or having VCs, give you lots of money, you can get rid of that constraint altogether. You know, you mentioned like the sort of like, this flood of VC money and maybe like the sort of zero interest rates or cheap money was like a sort of jet fuel or rocket fuel for it. But on the other hand, like, there was something real going on because the entire, like the entire way the world consumed software massively changed, probably between the great financial crisis between then and the pandemic. So like, how would you wait those two different factors? Like, sure, there's the cheap money and the VCs, but also like, there was this like real shift in corporate spend on technology. Oh, absolutely. Yeah, sorry, I didn't mean that. No, no, no, no, and I'm always like, but I, but I do think like, I do think like, you know, for listeners, like it's easy to characterize the last decade, like sort of dismissively, right? As like, well, cheap money VCs, but like something real like, really did change about how we use the, how the companies used to the technology. Slack launched in the beginning of 2014. So not quite 10 years ago, still, you know, it's like nine and a half years in. And it's at a $2 billion revenue run rate, you know, and we went public five and a quarter years after we launched and, you know, we're acquired by Salesforce a couple years after that. So that's, that's very real. Like, it's not, not many companies in the world ever get to a billion dollars in revenue. Right. And that's a real change in, in people's behavior. That's, you know, tens of millions of people who spend hours and hours a day in a fundamentally different way than they did before. So Slack launched in 2014, as you just mentioned, and since then, I think there's been a lot of competition from the big incumbents. Microsoft would be the obvious one. But I feel like there's always sort of mixed feelings in Silicon Valley about startups versus incumbents. Because on the one hand, you think of a startup, maybe they're more innovative, maybe they're more flexible in what they can do, you know, they can zig when others are zagging. But then you do have these giants that just have lots of money, lots of capital, lots of talented engineers that they can throw at these problems and either acquire you, or maybe do a similar thing with their own resources. Yeah, it's funny. I used to go back to Wikipedia's kind of registry of what the components of the Dow were, and you can look like 100 years ago today, it was American Leather Corporation and, I don't know, the US Steel maybe wasn't quite, but like the first companies were Westinghouse in general electric and a couple of years ago. Yeah. And everything has a, has a lifecycle roughly. There's a couple companies that that survive for 100 plus years. But all of the, and I was, no, we should all say the word H E G E M O N Y at the same time. So you can see what the real pronunciation is. But one, two, three, Jamie, me, okay. What's your Gemini? We actually did a whole episode about the US dollar or we said this quite a lot. Yeah. That eventually disappears. And I don't know how real the AI threat to Google is, for example, but Google has seemed absolutely invincible for, for a decade plus, like it just, it's inconceivable to me that anyone would compete with them on, on their ground, yeah, to build that technology and to build the infrastructure and to build the data centers and stuff like that, seemed impossible. But you know, maybe there's a way around. And obviously if you're a venture capitalist, you know, your job isn't to get a 15% return by investing in a basket of public tech companies. So you're very much incented to see the startups succeed. But they're also, you know, look back over the last 20 years or we didn't just make it from the great financial crisis the last 15 years, it's been a lot of value created. I mean, not just in, you know, funny money, but like a lot of revenue, a lot of shift in how business is done and a lot of huge successes. Well, you know, I'm sure we're going to talk more about like AI and how that's going to change the whole world. But it is interesting to me that like the one big publicly traded company that like a lot, people are giving a lot of credit to for AI is Microsoft, which was like the dominant tech company 30 years ago, 35 years ago, probably, like, is that surprise you that like the biggest like powerful juggernaut? And then of course, obviously with the teams versus slack competition, just like that there's this in this industry that's supposedly so disruptive and like so competitive that there's like this company and a couple of companies that are just so like seem rock solid. Yeah, I think that one, it's interesting. Very effectively done. But the AI tech is all open AI. Sure. It's a part of the show like ahead of it. And they like God, you know, they they did make that investment and people are excited like, Oh, they're going to get rid of a bird and all that stuff. So it's like tech aside, like people are giving the company a lot of credit for how they're positioned in this. Yeah, it's using their enormous resources, huge profitability as leverage to leapfrog into the next next thing. I think it is very impressive. This was sort of why I asked that question about, you know, Microsoft versus startups, but like what are the pros and cons of a smaller tech company versus a bigger tech company? And you know, you can shade it towards AI or talk about tech in general. I mean, I think it's just classic innovators a lot of people become when you have nothing to lose, then you can do take any risks you want. And if you have a lot to lose, then become much, much more conservative. I mean, I think Google and AI is a great example, because obviously if you asked anyone two years ago, who's the greatest company when it comes to AI, everyone would have said Google, you know, like 0% of people would have picked Microsoft at that time. And why aren't they in Microsoft's position today? I think a lot of it has to do with the conservatism, because you know, they see we can release this thing. And then it says dumb racist stuff, and then we get in trouble or we release this thing and someone relies on it and then someone gets injured or killed and it acts in it. You can come up with a million. You know, I was talking to the CEO of another company once and we were just talking about, you know, we're just complaining. We're like, Oh, yeah, our life is so hard. But he was saying, if they're at a board meeting and the board said, you really need to hire someone doing risk and compliance. And he's like, okay, so hires that person. And then the first thing that person does, like, started earlier was they need to hire two more people because they need, you know, there's a lot of work to do. We haven't you haven't had anyone in risk. We got to catch up, we got to make sure we have the right policies and stuff like that. Fast forward 18 months, and they're doing the agenda for this board meeting. And someone tells him that they're going to have eight people from the risk team show up. He's like, eight people? How many how many people work in that group? 23. So this is like, you know, over the course of 18 months. And every single one of the classic incentives, they get zero upside if they say yes to something. And they have this powerful incentive to say no to every downside, basically, if they mess something up. Yeah, it's beyond just risk. However, like thinking about Google and AI, like, it is, like, you know, AI inference, I guess is like costly, right? In a way that a search is not like people seem to like you kind of have to pay for it. Jad GPT is a service that people pay for, like Google has been free. This, you know, has always been free. Seems like some of the AI tools may not be as conducive to an ad sales model since the answer is right there rather than taking you somewhere else. And so I'm curious, like this tension that exists in Google, where that may be like AI is like kind of like a I hate to use the word paradigm because I don't know what it means, but a different business like the business model of AI is different than say the business model of search. All these companies like, well, many companies, whether large or small sort of find that in a more AI driven world, like there's a real business model shift, even sitting aside, like some of like the risks associated with it right now. 100%. And I don't know that either I'm smart enough where I've thought about it long enough to be able to protect all the way out, obviously. But something like, you know, image licensing for stock photos, that seems like a business that I wouldn't invest in today when you can just go to mid journey or whatever, then a bit better and better. I think some big some big stock photos, I just like had a buyout site for a buyout offer for people. I don't know what's going anyway. Oh, yeah, yeah, there's a funny story of it. Like I said, if someone gives me $4 billion, then I will buy a good image. I will do that too. If someone gives me $4 billion. Yeah. But yeah, so there's there's like a pretty trivial example. But I think the longer term, it's a little bit harder to know how the knock on effects. Could you think about previous ways of technological innovation? And I don't mean software computers. I mean, like just, you know, going back to steam power and stuff like that, it would have been tough in in 1840 to kind of predict the impact of railroads on the world. And then the automobile, all those technologies, but they really become part of us because you when you think about HDs, this example of slack all the time, it's your job is to dig ditches. You can only dig so many ditches a day. And if you are given a backhoe, you can dig a hundred times more, 500 times more, whatever the multiple is. But those technologies come with, I think there's a better word than risks, but they come with additional risks. You can like accidentally knock down a building with a backhoe and you can't accidentally knock down a building with the shovel. We get to the point now where there's this incredible augmentation to our memory, to our ability to think, you know, I remember going to the library when I was a kid and having to talk to someone, then they can maybe find the book, maybe they can't find the book. And now it's like anything I want to know. The little card catalog. Yeah, exactly. I can just like, I bet a couple of words, I don't even have to spell the words, right? Like I just have to kind of gesture at the words that I want and Google return everything I could want. What is that due to us long run? And I think, you know, we're living with the effects now and this is pretty well recognized of what social media does in the doom scrolling and the, you know, changes to our physical posture because we're looking down on our phone all the time. And I would really compare this to, give a couple hundred thousand years of evolutionary pressure to seek calories. And then not today, we live in a world of effectively infinite free calories for everyone. And so a lot of people get diabetes. And we have a couple hundred thousand years of evolutionary pressure towards acknowledgement and recognition and all these social signals that suddenly you can get a thousand X, what you used to be able to get. And you end up with a kind of cognitive diabetes. So when I say the long term effects are hard to recognize both in AI and just in what technology does to us as human beings in general, it can take a while for us to catch up, like the Thames and the Charles River used to catch on fire routinely in the end of the 19th century. And we kind of figured out how to have benefits of the industrial revolution without those negative consequences. I think we'll do that with all kinds of tech, but it might take a generation or two. At public.com, you can earn a 5.1% yield with a treasury account. That's a higher yield than a high yield savings account, all with government backed fixed rate treasury bills. It's one of the safest ways to put your cash to work. And it's one of the easiest to. There are no minimum hold periods, no settlement delays, just a safe place to park your cash and earn a reliable yield. Your account will automatically reinvest your treasury bills at maturity and you can access your cash at any time. Earn 5.1% with a treasury account only at public.com. The race to shape Africa's future is a contest for influence, access and alliances across the continent. Rich in culture, abundant in natural resources and bursting with human potential, Africa is primed to become the next hub of global industry. On June 13th and 14th, Bloomberg New Economy gathers leaders to confront the pressing issues facing Africa's economy. Rising food and energy prices, supply chain shocks and financial constraints. Request an invitation to the live event in Morocco at bloombergneweconomy.com. Just on the business model idea, can you talk to us about how tech companies actually make money off of AI? And here is where I very embarrassingly confess that I still don't really understand what Salesforce does and how they make it. This is the big question. We're going to have to segment this for like TikTok because a bunch of people have this question and no one has ever had the chance to get an answer. So we're going to have to do a little online segment of Stewart's answer to that. So I guess my question is one, what does Salesforce actually do? How do they make money? And then secondly, if a company like Salesforce were to build something like open AI, how would they actually derive money from that product? Yeah, that's a good question. I think that Salesforce is actually really well positioned to take advantage because here's what it does. I mean, obviously, it makes money by selling software to people. And it was the first to say, rather than just pay as $100, and you can have the software and run it on your computer, like we used to do with floppy disks and stuff, we're going to sell it to you for much cheaper, but you got to pay us every month for every year. But what the software does, I think is interesting because the original Salesforce product was CRM or customer relationship management. And it's just it's a database, right? It has like, here's what my customer is. Here's depending what's important to me, their phone number, or if I'm a dentist, the last time they had a checkup, or if I'm a retailer, the total of all their purchases, and you can kind of extrapolate from there to more and more sophisticated products. So being able to do marketing segmentation and send the right promotional email to just the right people. And that's incredibly valuable to people. It's hard to build. It's expensive. And so Salesforce has a lot of customers that kind of rely on it for this core set of services that the branch out to a lot of things, but are roughly around customer relationship management and marketing. So what do people do with that software? Well, they have, they sit in conference rooms and they show each other slide decks saying, this would be a great promotional idea, which is very relatable. Yeah. That's what most. Yeah. You were who said this, but someone's a description of like, here's what a lot of people's job are, and this is this is actually a great opportunity for Slack. Their job is to get some data, put it into Excel, make a chart, take a screenshot of the chart, paste into a PowerPoint, and then email the PowerPoint to people. And then it really is like, that's what 70% of people with desk jobs do ish. But so sorry, people are trying to decide how can we use this database of customer activity or marketing to be to make more money, to be more effective about our business. And that's almost certainly something that AI will do better, or at least having an AI co-pilot alongside you. So AI could, for instance, like look at your proprietary database. I mean, the software itself is not proprietary, but the data within it is unique to your company and maybe spot like opportunities within it that you as a human wouldn't have thought of. Yeah, absolutely. I mean, so both like people who are professional investors, I love the stories of, you know, they drive outside some parking lot at the mall and see who's, which retailer has the most cars parked in the, you know, This is my favorite genre of sell side research. It's when they send the analysts to like the shopping mall to look at foot traffic and stuff like that. But people do that inside their company too, right? They're looking for opportunities. Should we sell more of access to some or of why? Should we sell more online? Should we, you know, open more smaller retail outlets so that customers can come in and see the product? Or should we concentrate on whatever? I think most of that stuff is you're going to do a better job with, with some companion, let's say, that that finds those patterns more easily because they can just do the AI. I have this image of Clippy coming back and being like, have you considered? Well, think you think about things much faster to you. Well, the, I mean, the other area and just as you said, customer relationship management, it seems like AI would be really great at like remembering birthdays and for a sales person specifically, it's like, Hey, how did, you know, oh, your daughter turned 16, you know, she need driver's insurance or something like that. And then it's like, well, just the sales person even need to like pay attention or can they just put in a role that says every time I have a client that, you know, has someone in their family that has a major life event and just send them a message and something that seems like it's coming from me. And so like, a, like, will it be good enough so that like sales per sales people can like talk to 100 clients in a day versus 10 and not maybe like two out of those 100 thing times say something so embarrassing that it destroys their entire reputation. Yeah. Well, the, I don't know if it's good news or whatever. The fact is that people who have done that for a while, you're leaving your AI to kind of like automatically get a prompt, you send your desk and pops up and says you should email. I got a happy birthday from the dentist. And it's like, yeah, I'm not, I'm not under the illusion that the dentist is like paying attention to my own. But I also, I get a lot of, and like the dumb version of this is SDR sales development representatives or like kind of people who are trying to drum up some business for a company send a lot of email. I think I probably get a disproportionate amount of this because I'm in a bunch of databases as a CEO of a company who will buy software from you. So I just get all of these ridiculous pitches like, hello, Stuart, I couldn't help but notice that you are the CEO of Slack Technology Incorporated. And, you know, like, I mean, they're human, whatever, right? We get that people think that we can make purchasing decisions on behalf of Bloomberg all the time. So I think better versions of that. But I think even more, I remember Google demoed that voice assistant that would call and make an appointment at the hairdresser for you. And it was like, it even like it paused and said, um, and stuff like it's very convincing. This image of like, I'm a salesperson and, you know, you're a buyer at some company. And my AI automatically generates this long email to you. And then your AI reads the email and summarizes it and just says like, Stuart has widgets to sell. And then, you know, your AI generates this long response to me. And then my AI reads it. I can imagine a lot of activity just becoming like AI. This was going to lead into my next question. And I'm trying to think about how to phrase this, but you can imagine how AI would be very, very relevant to an application like Slack. But I guess the question is, how extreme do you think companies will go here? Because, you know, there's a big difference between having a companion as you put it, who is helpfully pointing stuff out and maybe, you know, going over your data and spotting things that you wouldn't have seen otherwise. And then at the other end of the spectrum, you can also imagine where you have, you know, someone who actually uses AI basically to do their whole job. You know, you could just automate responses to Slack and retreat completely from that communications platform. So how far do you think companies will go with this tech? Yeah, I think they'll go all the way and where, I don't know what all the way is, by the way. But I see this example all the time, Ben Evans, who is a former VC, I guess, Andreessen Horowitz wrote this great article called Office Messaging and Verbs. And in the beginning, he takes these stills from the movie, The Apartment, Jack Lemon and Shirley McLean. It's 1960 and Jack Lemon works at an insurance company. And there's like all these, you know, like early in the days of office buildings, all these shots of like long rows and columns of desks. And on his desk, there's an adding machine, there's a typewriter, there's a telephone. And then the people come by with a pushcarts, you know, with paper on it, and they like, they'll put some paper on his desk and then he'll perform some calculations and then type up the results. And they put the paper on the other side of his desk and his outbox and someone will come along with a trolley and take that. He's literally a selling a spreadsheet. Like, it's exactly what he's doing. It's like, take input, you know, execute formula, produce output. And that's what each then talked about, each floor of this insurance company's office is like one worksheet in a big spreadsheet. The same number of people who work in insurance companies today, no one does that anymore. So when you say that people do their whole jobs with AI, that'll last for a little while, but, you know, let's say if you're, you know, content marketer, and honestly, you couldn't AI couldn't do worse than most of the garbage content. But eventually people say, well, that's not your job anymore. Like, no one's job is to perform a record. That's a good way of looking at it. I just remembered my first job at Bloomberg when I was an intern was to monitor the fax machine and to actually like bring the important faxes to someone. And that has that job has thankfully gone away. And I don't feel that bad about it. Over the last, I think, hundred years, the pace at which jobs become obsolete has definitely increased. I mean, this idea that, you know, tech will not end employment as we know it, it'll likely change in certain specific careers or categories will go away and new things will created. But as someone obviously in your career who has hired many engineers and coders, and this is a whole another aspect of AI is like, people are kind of blown away frequently. Like, how do you see like that specific changing or specifically are freaked out, right? And is there going to be an infinite demand for the skills that we call coding or engineering today? Or will like, what we think of as a coder sort of be a different skill set? It's a little bit harder to extrapolate, but it definitely will become different. But even people kind of tending to these machines who are generating code for them. Software is really hard to make. And it's like surprisingly hard. And that's why there's so much crappy software. I don't know exactly what their supervisory duties will be, but it is going to be just like any wave of technology. It's like this massive augmentation that people end up moving higher up the value chain. Just like, you know, I sometimes think about banks in, I don't know, 1910s or something like that. I have no idea how they knew how much money anyone had. I think about this all the time. How did, how did card catalogues, like, how did stocks work before you opened the vaults and you know, I'm glad you said there's no sense to me that we had any banking and finance before computers. I just cannot wrap my head around. Well, you also had a lot of bank failures, which suggests that they weren't maybe very good at it. But then imagine being like a stock trader in the 1960s, then in the 80s, and then in the 2000s. And now, you know, like the 13 milliseconds you get by moving your servers closer to wherever a New Jersey maker will difference. No one was doing that before. But there's, again, there's not fewer jobs. In fact, there's probably a lot more jobs that are trying to make money off trading than there were the 60s or the 80s. So I think the same thing is true of coders, whatever that rule evolves to be, you know, like no one in the 60s was hiring physics PhDs to be quants and some hedge fund. But now look, there's another pathway for people who do PhDs and physics. And so the same thing will be true of coding as well. Since this is now firmly an AI conversation, can we ask, you know, is this something that you're interested in? And is this maybe what your next project could be? Weirdly, not really? I mean, so I'm sorry, I'm interested in it as like a human as a citizen. I haven't come up with anything where I'm uniquely able to contribute. I don't think in an AI, maybe that'll change because it'll become part of the background of everyone's roles and we'll come to rely on it more and more. Just like, you know, this is probably a crappy example, but word processing or, you know, I would never would have been someone who is doing letter press layouts and moving bits of lead around and something like that. But I definitely changed the way word process and change the way I wrote because it's not long-hand and I can infinitely edit it and I wrote a thesis and for my grad school and all that stuff. But maybe a better idea or a better comparison is Excel because I think about in my life, I might have done as much financial modeling as all of humanity did until 1965 or something like that because when you because you can just like make a spreadsheet and then be like, oh, change those changes, changes, changes, everything cascades through. Whereas before, that was, you know, like a lot of people with ledgers and calculators and pencils and paper and allows you to think at a much higher level. So I think about AI again in that augmentation capacity and what it'll enable us to do. At public.com, you can earn a 5.1% yield with a treasury account. That's a higher yield than a high yield savings account, all with government backed fixed rate treasury bills. It's one of the safest ways to put your cash to work and it's one of the easiest to. There are no minimum hold periods, no settlement delays, just a safe place to park your cash and earn a reliable yield. Your account will automatically reinvest your treasury bills at maturity and you can access your cash at any time. Earn 5.1% with a treasury account only at public.com. The race to shape Africa's future is a contest for influence, access and alliances across the continent. Rich in culture, abundant in natural resources and bursting with human potential, Africa is primed to become the next hub of global industry. On June 13th and 14th, Bloomberg new economy gathers leaders to confront the pressing issues facing Africa's economy. Rising food and energy prices, supply chain shocks and financial constraints. Request an invitation to the live event in Morocco at BloombergNew Economy.com. Just actually going back to the last decade or two decades. Slack was the to my mind, one of the prototypical software as a service company. There were all these other ones and many of which we've never heard of that probably made a bunch of money by we're going to improve dentist billing or ticketing sports events. There's all kinds of niche categories that someone found an opportunity for. Is there still low hanging fruit? Is the right word, but moderate hanging fruit in that world that has not been exhausted of essentially still taking tech 1.0 and really legacy tech. We've talked about a little bit with Patrick McKenzie and some of the old whether it's government. Is there still a lot of the economy that hasn't really even got to 2010s tech yet? Yeah. I think anytime you see you're in a financial transaction with someone and there's pen and paper involved. There's an opportunity there. I think a lot of the blockers tend to be regulatory. It's like, when you go to the doctor and you're given seven pieces of paper, and you have to write your name on five pieces of paper. Sometimes you have to write your name two times on the same sheet of paper and the date over and over again. That's a regulatory block. This is also my big gripe about FinTech, which is you got a bunch of people going like, oh, it's ridiculous that we're still writing checks nowadays or doing this or doing that. But often the reason is a regulatory constraint versus a technological one. Yeah. I think eventually those regulatory dams break because, well, maybe a mission to go with such confidence. I can't imagine that 100 years from now, we're still getting seven pieces of paper when you go to the doctor's office and have to write our name on five of them. I think there's a lot of opportunities for real improvement and the low-hane fruit may be never ends because as soon as you automate some layer and people start operating at a higher level, the people who are doing financial modeling aren't doing arithmetic anymore. They're thinking about the business, then there's new opportunities for automation that comment higher and higher levels. That's what we really thought about at Slack. The ability to, there's maybe a little bit abstract. We thought about Slack as a messaging bus inside of a computer. It's the interchange or the traffic controller for all the thoughts that people are having. A lot of those are just like, yeah, want to get lunch or something like that. Some of them are, here's my extensive proposal for next quarter is blah, blah, blah. When you're able to improve the efficacy of communication versus the offset of paper memo that can schedule a meeting and it's three weeks from now or something like that, it opens up new possibilities. The same thing is true with every bit of automation that you can do. There's a huge amount of business processes that are essentially humans translating between one database and another because the databases aren't connected effectively. Eventually, those databases become connected effectively and people move up the chain again and get to work on harder stuff or stuff that produces more value. AI to standardize databases would be amazing. Just on the topic of constraints and going back to the first part of this conversation where you were talking about how a lot of the empire building or hiring boom that we've seen in tech companies was potentially driven by low interest rates. And you didn't have a financial constraint on the amount of resources you could accumulate. It does feel like in 2023, Silicon Valley, the tech industry in general, is in a very different financial environment. We have higher interest rates. We just saw Silicon Valley Bank fail and that seems to have taken a big chunk of potential liquidity out of the market. How do you expect that to impact the industry? What are you saying now? Obviously, we've seen a lot of layoffs. I'd never want to suggest that being laid off is a good experience for anyone. For the companies, it's almost certainly a healthy thing because a lot of companies that have 20,000 people could probably do what they're doing with 12,000 people or something like that. The higher interest rates, I think, I don't know. I don't want to say that they're good, but you go back to 2009, which is when the company that ended up becoming Slack was founded. This is March of 2009. I just said, we're still probably in the financial crisis or maybe just getting out of it. And if you're a venture capitalist like Excel, you could buy 20% of what became Slack for $5 million. And then you end up making $4 billion or something like that. So I think if you're a VC, it's probably not all bad. Some of your existing investments, I think, lost a lot of value. And maybe we're going to have to defer realizing a lot of gains that you might have realized much more quickly a couple of years ago. But over the long run, I don't think it's a net bad for them. For the companies, it could be a net bad. Can I just get a sort of cultural slash economic question, which is like, I think Slack is an acronym for something, right? Yeah, it's unclear. So we have a lot of the conversation. You're the one who created it. Well, there's we have a transcript of a conversation we were having internally, where I suggest it as searchable log of all communication and knowledge. But I'm not sure if I, yeah, I'm sure if I, if we came up with the name Slack first, I think Slack is catchier, I got to say. But the reason I actually asked the question is because the last decade in addition to everything else was characterized by labor market Slack. And so I was thinking sort of interesting that this big company Slack was like came up the decade of like loose labor markets. And it also seems like that your technology changed in many ways, the relationship between management and employees and employees and places can unionize more easily because they have Slack channels and they can communicate in ways that maybe the management doesn't love or maybe managers at companies want all their workers. I want them back to the office and it's like, well, yeah, but we can communicate on Slack, etc. Do you have any like sort of like broader reflections on the way like, because this is not really like a software question. It's a very Slack specific question of like how you saw firsthand your software like changing this sort of employee management or just this sort of corporate environment. Yeah, I think going back to that idea of the ditch digger given a backup, most technology kind of amplifies our ability to accomplish something or augment us or gives us extra power. So that's true everywhere. Obviously, where you intend it to be true, that's great, or you don't intend it to be true. Sometimes it's great, sometimes it's terrible, sometimes it's somewhere in between. But the super power in people's ability to have conversations at work will include conversations that sometimes managers where they didn't have. I do think that's something that works itself out relatively quickly. And I also think interestingly, internally, we will call that slacktivism. And probably someone else came up with that outside. But I think that's probably moderated quite a bit over the last year, just because the environment has changed. Because the other fact that comes with the low interest rates is that people pay a lot of money for engineers and engineers can always change jobs and get paid more money. And that's less true today. People are more worried about job security. So there's less, and I'm not saying this is a good thing, necessarily, but there's certainly less labor organizing happening on people's slackens, that there would have been two years ago. This is a slightly weird question, maybe. But I mean, one of the debates about work from home is are people actually more productive in an office environment or at home? Within slack, did you ever have conversations about maybe measuring productivity in some way using the communications channel? We did. And they all seemed kind of doomed. There's a head, I don't know if she's still the CIO, but a woman named Laurie Biro was the CIO of JP Murray, maybe still is, if so, hi, Laurie. And we had the great conversation once, a breakfast at a conference, and we're talking about the history of trying to measure the productivity of software engineers, which is famously impossible. So you would say, well, how many lines of code do they produce? And then people would just change their coding style to be... Yeah, exactly. Or you would say, how many bugs get closed? And then instead of just fixing something right away, people take the time to go file the bug and then fix it and then close the bug. Insert a bunch of bugs and then you're the solution to your own property. That's a hard flaw, right? As soon as you start to measure something, then it's the work. Yeah. Yeah. And so you kind of... I don't know what we came up with. The way the conversation kind of ended was looking at employee engagement surveys, if engineers are happy, it doesn't necessarily mean that they're productive. But if they're unhappy, I think... Do I have the backwards? No, no, that's not right. If they're unhappy, it probably means they're unproductive. Yeah. Because no engineers are not productive and happy. It's frustrating to feel like you come into work and you put all this effort into nothing happens. No one wants to work on dead-end projects that get canceled and all that. So the same thing I think is true. If you think it's hard to measure the productivity of a software engineer, like marketing, it's impossible to measure. People just have no idea whether their marketing department needs to be five times bigger or five times smaller or do they need one at all? I'm not sure what you do about that. The measurement, because there's a lot of just kind of hand feel and in management. It would be great if you could, in some sense. But I think you also run the risk of eliminating all the opportunities for serendipity and accidental discoveries and cool innovation. I have one last question, and Tracy's going to hate me for asking it. I already asked the cliche question about whether you're going to start another games company. Do you still support minting the coin to avoid a debt-silling disaster? It's unavoidable. We cannot have a similar conversation. No, we can. We can't find you talking about the coin. But when there's a prominent, famous person who on Twitter has expressed support, I mean. Yeah, I feel like that's you and me, we bonded over the coin. Yes, I think you definitely could. I think it's really funny. The debate about modern monetary theory seems to have come down to should we spend lots of money? If you think, yes, then MMT, and if you think no, then you're against MMT, which doesn't seem to capture it at all to me. The idea that the deficit is a myth seems just obvious and that the government's role in the amount of money is like the adjudicator or a basketball game deciding how many points. You can have too many points. I mean, you can mess up the game of basketball, so it's not fun for anyone. Like, you can cause a lot of inflation, but that idea that you need to have the money in order to be able to spend it is obviously not true if you're the government. For what it's worth, I'm not a big fan of MMT, but I do think the government should spend money. So there we go. There we go. Stuart Butterfield, this is such a treat to have you on. Kind of funny that our first guest in our new like physical video studio is the founder of Slack, which more than anyone else contributed to the ability to work and operate and communicate remotely, but such a treat to have you in. And thank you so much for joining us. Thank you. Next interview, we can do via Slack. Just to even it out. Tracy, I thought that was a lot of fun. That was a real treat. That was just very, I don't know. In my mind, I had that hyped up and I felt like in my mind, it lived up to my own hype. It was a wide ranging conversation. And I love that we went from like, how did banks used to do this in the early 1900s to like the future of AI and the labor market? We were going to have to do an episode on just like how a bank worked 100 years ago. Because in my mind, I do not understand how they kept track of anyone's how much money anyone had before digital technology. Like, they really just went ahead a piece of paper for everyone. They just opened the vault and see what's in there. No, we're all good today. We're all good today. We're all good. No, there was a lot to pick through that conversation. I mean, I do think the idea of finances being a constraint on resources and the workforce, I mean, it is kind of obvious. But also, we are seeing it play out in real time right now. So it was good to hit that. No, and just like this idea, it does feel like there's multiple turning points at once. And I don't feel like anyone knows. It's like pretty clear, right? Like, this is like, oh, well, this is who's going to win. This is who's going to make money. This is going to be the business model. Like, it does feel like even if we didn't have this sort of like macro change, there would be a tremendous amount of ambiguity about like, how value is going to occur and how companies are going to work and all of that. Well, also the conversation about Microsoft and how, you know, two years ago, no one would have expected Microsoft to be the sort of front runner in the AI game. And yet here we are today. That was really interesting. Do you have any bets on what Stuart's next project is actually going to be? Even though he said no, I bet it I still feel it's like, well, you should probably do a game. Can I resist the lure? I just feel like you really tried twice. It's like, what? Well, I know a third time. Yeah, that's my bet. And then it'll pivot to something be another world changing thing. That's my guess. Shall we leave it there? Let's leave it there. All right. This has been another episode of the Odd Lots podcast. I'm Tracy Alloway. You can follow me on Twitter at Tracy Alloway. And I'm Joe Wiesenthal. You can follow me on Twitter at the stalwart. Follow our guest, Stuart Butterfield, under the handle at Stuart. Follow our producers, Carmen Rodriguez at Carmen Arman and Dash Obanet at Dashbot and check out all of the podcasts at Bloomberg under the handle at podcasts. And for more OddLods content, go to Bloomberg.com slash OddLods. We're in post transcripts. We have a blog, Tracy and I have a weekly newsletter and check out our Discord Discord.gg slash OddLods where we chat 24 seven and stream Bloomberg originals on Apple TV, Roku Samsung TV and more tune in at 10 p.m. Eastern time. You work hard to save money, but what does your money give you in return? Fractions of a percent on interest in a traditional savings account? Make your money work as hard as you do with a treasury account on public.com. It could be earning 5.1 percent, a higher yield than a high yield savings account, only at public.com. The race to shape Africa's future is a contest for influence, access and alliances across the continent. Rich in culture, abundant in natural resources and bursting with human potential, Africa is primed to become the next hub of global industry. On June 13th and 14th, Bloomberg New Economy gathers leaders to confront the pressing issues facing Africa's economy, rising food and energy prices, supply chain shocks and financial constraints. Request an invitation to the live event in Morocco at BloombergNew Economy.com.