Here’s Why Stewart Butterfield Thinks Slack’s Success Is a ‘Historical Accident’

March 15, 2016, 7:37 PM UTC
Photograph by Kia Kokalitcheva/Fortune

Slack, the three-year-old workplace chat tool, has been hailed as one of the hottest tech startups at the moment with thousands of users praising it for changing the way they communicate at work.

But co-founder Stewart Butterfield doesn’t want to take all the credit, calling Slack’s success a “historical accident.”

“I think timing makes a big difference. If we had launched three years before we did, it wouldn’t have taken off,” admitted Butterfield while on stage Tuesday at the annual South by Southwest tech festival in Austin.

Though Butterfield certainly believes Slack and its features are well designed and superior to alternative products, he’s not one to delude himself in thinking that his company came up with a novel idea. Yammer, eventually acquired by Microsoft (MSFT), has been around since 2008, while Atlassian-owned (TEAM) HipChat became publicly available in 2010, three years before Slack’s launch, just to name a couple of competitors.

Part of Slack’s luck was also how quickly its reputation grew thanks to word-of-mouth among tech startup employees, fueling it to spread like wildfire while earning it “increasing returns,” as Butterfield says. Once it got going, Slack’s growth appeared to have just increased exponentially.

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This momentum in growth and Silicon Valley buzz are also at the center of Slack’s massive fundraising—and high valuation. Last April, the company raised $160 million in new funding at a valuation of $2.8 billion. Just a few months prior, Slack had raised $120 million and joined the “unicorn” club of startups with a valuation of $1.12 billion. Butterfield previously told Fortune‘s Dan Primack that he raised the new funds simply because he easily could. Having extra money in the bank and an attractive valuation to flaunt in front of prospective employees could only be good thing—or at least in his case. At the time, Slack hadn’t even dipped into the $120 million it had raised.

“The reality is that over the last two years, the compensation has gone crazy,” Butterfield reflected this week, adding that when it comes to hiring competition, Slack has to compete with stable public companies such as Google (Alphabet) (GOOGL) and Facebook (FB), not just other startups.

Earlier this month, rumors surfaced that Slack is raising funding again, this time to the tune of $150 million for a valuation of $4 billion.

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But raising more money is also about, well, having money to spend.

“If we can find efficient ways to grow, then we’ll spend money,” Butterfield asserted. Recently, the company started to experiment with advertising as well as other paid marketing tactics—a departure from its word-of-mouth success story. According to Butterfield, the beauty of advertising is that it “scales,” to use a common Silicon Valley parlance, because the more money is spent, the higher the returns, and it can be turned off immediately if the company doesn’t find it fruitful.

But one thing is certain: Slack is indeed on a path for success. With 2.3 million daily active users, 675,000 of which pay for the service and 10,000 new paid users joining every week, Butterfield has no plans of screwing up or selling to a bigger company.

“I will never have an opportunity like this in my lifetime again,” remarked the serial entrepreneur, whose 42nd birthday is approaching. In 2005, Butterfield and then-wife Caterina Fake sold Flickr and its parent company to Yahoo (YHOO) for a reported $22 million to $25 million.

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