Stewart Butterfield, founder of Flickr and Slack / Reuters

First, Stewart Butterfield came up with Flickr as a side project while creating a computer game – and Yahoo shelled out over $20 million for it. And now, just like that, the $20 billion messaging app Slack went public last week on the New York Stock Exchange (NYSE). It wasn’t a typical IPO – Slack became the second tech startup to go public directly.

Butterfield's business is now valued at $20 billion - a great result for a man who grew up without electricity and made his first millions by eating some nasty stuff.

The son of a deserter

In 1968, David Butterfield, Stuart's father, was 19. He dropped out of Harvard, went traveling to France, and was caught by a telegram from the U.S. Army: "Congratulations, you have been inducted into the finest military in the world!" David swore he was a pacifist, that he should have served in the medical corps, but the military ignored him. David was given sergeant stripes and sent to North Carolina to train new recruits.

Most of his soldiers were poor, uneducated blacks who were given a simple choice: either forced into prison or volunteered for the army. All of them were threatened with being sent to the Vietnam War. So one day, instead of returning to his unit from leave, David crossed the border into Canada, abandoned his car, and headed for Quebec, where the American Deserters Committee operated.

There he met Norma, his future wife. Together they traveled around the country in search of a refuge where they could disappear. The fishing village of Lund in British Columbia seemed like a suitable place. There lived a hippie community there, half a thousand people, who even had access to medical care: among their ranks were two doctors. True, they had degrees in psychiatry.

The Butterfields spent their first winter in the squatted house. Then David renovated the 19th-century log cabin. In 1973, Norma gave birth to a son there, named Dharma Jeremy. One of the psychiatrists delivered the baby.

As the media liked to joke, the future computer scientist grew up where there was no electricity or telephone. By the way, there was no running water in the hut either.

The hippies were burning with the idea of creating a new, better society. But the further we went, the clearer it became:

The commune is no better than the civilization they fled from.

In 1977, David and his wife gave up on the hippie life, moved to Victoria and got jobs. Their construction and repair skills came in handy: the couple began to earn a lot of money.

David grew a bushy moustache, bought a yacht (thanks in part to a nice tax deduction), and bought his son a computer when he was seven. Jeremy taught himself how to program Dharma. “I’m part of the first wave of kids who grew up with a computer,” he said.

How Dharma Became a Philosopher Stewart

From childhood, Butterfield Jr. was very independent. As soon as he turned 12, he went and changed his name from Dharma Jeremy to the more ordinary Stewart. He later admitted that he should have chosen an even simpler name: "Because you won't find a single positive hero named Stewart."

At 16, he organized a trip to China for himself. By that time, programming had been abandoned. Stewart Butterfield was captivated by a new passion – philosophy. In 1996, he graduated from Victoria University, and in 1998, he received a master's degree in philosophy from Cambridge University. He seriously aimed for the chair of a professor of philosophy, and in the meantime he worked as a teaching assistant.

Butterfield returned to IT thanks to music and friends. He played at amateur jam sessions and was a fan of the band Phish. Together with other fans, he spent hours on the Internet conference (forum) dedicated to the band rec.music.phish. Many of his crowd were into programming. They would go to San Francisco and tell exciting stories about startups. It soon became clear that they were earning three times more than a professor of philosophy with many years of experience.

Butterfield became interested and took a leave of absence.

His first job was to hijack domains, a practice known as cybersquatting, where people register websites that sound similar to famous brands and then sell them to those brands. Sometimes, to make a profit, they wait until the domain owner forgets to renew the lease.

Then Stuart remembered his old skills and started making money part-time by creating websites.

Blacksmith and Alpaca Driver

When Stewart Butterfield left Yahoo, instead of issuing a standard statement, he wrote a feuilleton. “As you know, tin is in my blood. My family has worked with this most useful of metals for generations. I joined Yahoo in 1921, <…> as the company grew and expanded over the decades, first making forge tools and dies, then copper, corrugated steel, synthetic rubber, tubing, milling, engines, tools, weaponry, etc., I still felt in my element because tin was still the heart of the business. But since the late 1980s, manufacturing, oil production and refining, logistics, hotels and casinos have taken over. I felt marginalized.” Then, he complained, the Internet era arrived and he was out of business altogether; not a single sheet of rolled metal has rolled off the assembly line at his plant in the last 30 years. So he retires: "I will be spending more time with my family, looking after my small but growing herd of alpacas and, of course, getting back to working with tin. Your old friend and fellow blacksmith, Stuart Butterfield." His letter was widely circulated online and even inspired an article in The Guardian.

Insight in the toilet

In 2000, a friend invited Butterfield to join his startup Gradfinder.com, a social network where you could find classmates and fellow students. It seemed like the timing was extremely unfortunate: the dot-com bubble had just burst. But just six months later, they were able to sell the company. For how much is unknown, but, according to Butterfield, it was very, very profitable. The friend got a job at the company that absorbed them, and Butterfield went freelance.

He started making websites again on a freelance basis. For fun, he created the 5K Competition, which challenged people to create the best web page in 5 kilobytes or less. The Internet was slow in those days, so size mattered. “It suddenly became a worldwide competition,” Butterfield recalled.

During one of his visits to San Francisco, Butterfield met blogger Katrina Fake. She returned his visit to Canada, and in 2002, everything ended in marriage. Returning from their honeymoon, the newlyweds and their friends founded Ludicorp and tried to make a multiplayer online game called Game Neverending. The main idea of the game was that no one lost or won, the game lasted forever.

None of the investors liked the idea. The young family and their friends were running out of funds, and they couldn’t find a venture capitalist.

Butterfield went to New York to look for money, but there he ate something bad and found himself in voluntary confinement in a hotel: he was afraid to go far from the toilet to avoid embarrassment.

At the same time as the game, Butterfield and his friends-partners wrote a program for exchanging photos so that they could send each other frames from the game. At the same time, as it turned out, you can exchange interesting personal photos. Bored on a sleepless night in a hotel room, the sick Butterfield discovered the main drawback of their idea: the photos could only be viewed when both users were online.

And he fixed that flaw. “Basically, the idea for Flickr came to me after I had spilled my guts in that hotel,” he told Business Insider.

How Butterfield Didn't Get a Billion

In April 2004, Butterfield gave a talk at the ETech conference in San Diego about the developments used in Game Neverending – APIs, REST, RSS. But all of them were also used in Flickr. And Butterfield unexpectedly decided that the talk should be devoted not to the game, but to the photo hosting service, despite the fact that it had not yet been brought to mind. The team reworked the presentation all night. But the next day, Flickr became famous among geeks.

The timing for the birth of photo hosting couldn't have been better. Almost everyone had cell phones with cameras. A simple cloud service where you could write captions under photos and leave comments was simply doomed to success.

But it wasn't just that. When you tag someone on Facebook or Twitter, you have Flickr to thank for the ability to do so, Wired assures. When you automatically sign into the social network without having to type in your username and password each time, that's another innovation that Flickr has implemented.

It is not surprising that a contender for the startup was quickly found. The search engines AskJeeves and Yahoo fought for it. The latter won. Yahoo was developing its own social network at the time, and the ability to share photos was absolutely necessary.

Butterfield said their business was valued at $22–25 million. He admitted in Wired that he rushed the sale: “If we had waited six months, we would have gotten a lot more money. If we had waited a year, we would have gotten 10 times more.” And indeed, his millions pale in comparison to the sales of WhatsApp, for which Facebook paid $19 billion, Beats, for which Apple paid $3 billion, or Instagram with its $1 billion from Facebook.

Perhaps that's why he's not rushing to sell Slack right now.

The game is lost

Yahoo acquired Flickr in 2005. Butterfield and his partners dreamed that joining a huge holding company would give their brainchild unlimited funding and countless terabytes of storage. Instead, they had to fight internal battles for everything: employees, server space, computer time.

In July 2007, Butterfield's daughter was born. By this time, he had no business being in the office. He didn't show up for work for months, and no one seemed to care. Finally, he told his manager that he wanted to quit. "No problem," the manager replied. "Just email HR."

Butterfield's scathing resignation letter eventually became one of the most quoted on the Internet.

In 2008, Butterfield and his wife officially left Yahoo and divorced. “I felt like my life was passing me by and I should go and live in India or somewhere,” he complained to Wired. Instead, he returned to the Vancouver suburbs and founded a new startup to make another endless game. This time, it was called Glitch.

“We raised $17 million in three rounds. We had a team of 45 people. But by 2012, it was clear that Glitch wasn’t going to be a business worth $17 million in investment,” Butterfield recalled. He later acknowledged that the game was too weird for most people. Glitch lets players grow flowers, talk to rocks, sing to butterflies, and meditate, the WSJ quipped. But there was no fight for survival or other conflict.

Butterfield reportedly cried when he told the team he was shutting down the game. He made most of the content, from the music to the code, publicly available and helped everyone on the team find new jobs.

Luckily, there was money for this. It came from a by-product of the game's development. One team of developers was based in Vancouver, another in San Francisco. Butterfield lived there for a week, here for a week. A messenger called Slack was written to coordinate the development. It turned out that this was exactly what programmers around the world were missing.

All data in one place

Slack has been called the email killer. Email is a terrible way to communicate in a large group. Important work messages get lost among requests to find a home for a cat and funny photos. Slack instead creates separate threads for each topic.

Slack unifies the various services used in software development. “Right now, you have a little bit of data on Twitter, a little bit on Zendesk, a little bit on GitHub. Slack is a single platform where all of that data is in one place,” Butterfield explained. Imagine you’re developing software and you suddenly die, Wired writes. Your coworkers have to sift through fragmented folders in Dropbox and other services, dig through your email — or just look at your Slack history.

Butterfield wants his software to be the only tool used by developers around the world. “We want to be the next Microsoft ,” he told Wired.

Bill Gates' brainchild has launched a competitor, Microsoft Teams, which is distributed as part of Microsoft Office 365 - but so far, Slack is doing better.

Trojan Horse

Less than two years later, Slack has more than 1.1 million daily active users, over 300,000 paid accounts, 180 employees, and revenue of $25 million.

Butterfield is betting on winning companies from the bottom up. A small number of employees start using the free version of Slack. Gradually, more and more of them join. The IT department is forced to install the program for everyone. Features available only in the paid version become critical: integration with other programs, unlimited search, etc. That's it, the company is hooked.

Business Insider cites Butterfield's fame as one of the reasons for Slack's success: journalists knew him well after the Flickr story and quickly trumpeted his new project. In addition, Slack is used by BuzzFeed, The Wall Street Journal (WSJ), The New York Times, and many other publications, including Business Insider itself.

An interesting story happened with the online tabloid Gawker Media. For 10 years, its journalists used the Campfire messenger to communicate with each other. But in 2014, they stopped doing this for a banal reason: the developer stopped supporting the product. The editor-in-chief decided to switch to Slack and wrote about it on Twitter, making an excellent advertisement for the messenger. However, the journalists used the free version - the price of $7 per month for each copy seemed too high to them.

But Butterfield was calm: “They’ll bend.” And indeed, the tabloid soon came to the conclusion that it couldn’t avoid spending money on a paid version.

Billions for Eudaemonism

In April 2014, eight months after its launch, Slack raised $43 million in funding. In October of that year, it raised $120 million, valuing the business at $1.1 billion. Butterfield insisted that the money was still sitting idle in the piggy bank when the next round of funding closed in April 2015. Investors, including Yuri Milner’s DST Global, gave $160 million, valuing the startup to $2.8 billion. Since then, the startup has raised several more rounds.

The money came in handy. In the fiscal year ended January 31 of this year, Slack had revenue of $400.6 million (up 81.6% from the previous year) and a loss of $138.9 million. It has remained roughly at those numbers for the past three years.

In the new financial year, the company plans revenue of $600 million, but the loss could grow to $190 million.

Butterfield is a bit crazy, the WSJ writes. He is prone to suddenly jumping up from his chair to draw a graph on the board that requires all the colored markers in his possession. In conversation, he flaunts his erudition, referring his interlocutors to quantum mechanics, genetics, eudaemonism (an ancient Greek concept that happiness is the highest human good), and various philosophers.

He also did not take the traditional route, deciding to take the company public. On June 20, he placed shares on the New York Stock Exchange via a direct listing (DLP). A regular IPO is organized by investment banks, which determine the price corridor during the road show, usually guarantee a minimum sale of shares, and after the listing, maintain the quotes for some time. For this, they take a few percent as a commission.

Slack didn’t really need the extra capital — so it decided to take a chance, Butterfield explained. The NYSE, after consulting with Slack’s financial advisers and analyzing recent deals with similar companies, set a reference price of $26 per share for Slack. That gave it a market cap of $13.1 billion, excluding employee restricted stock units (RSUs). But the first deal was 48% higher, at $38.50. Since then, the stock has peaked at $42, and is currently trading around $37.

Last year, Money magazine estimated Butterfield's net worth at $650 million - $2.14 billion. The question remains whether he'll want to use some of that money to finally create a hit video game. And the more interesting question is what the spin-off that becomes the real hit will be.

How a Deserter's Son Stewart Butterfield Accidentally Got Rich