I think it’s important to understand the context.
Slack was a second-timer founder success story 6 years in the making.
Stewart Butterfield managed to raise decent seed / Series A rounds based on the modest but impactful success of Flickr and the fact that prominent angels and VCs thought he was amazing:
This was before Slack the product existed. The investment was in what was then a gaming company, Glitch. But this money enabled Slack the product to be built as an internal tool to support Glitch, and gave Stewart time to pivot this tool into “Slack” the paid product and company it is today.
So this is not really an overnight success story per se, at least, in some sense.
The answer to Phase 1 is that second timers can raise $2-$10m or sometimes, much more (if the first exit was big) just based on their prior success and potential.
So the Seed and A story is a repeat founder bet.
Then Slack the product takes off and becomes Slack the company.
Once Slack starts to grow at an “outlier” rate, the capital comes in, and then ever faster.
Slack, perhaps, may stumble and fall. But most VCs will tell you Slack the business that exploded in 2014 has grown faster than 99% of the paid freemium / SaaS businesses the’ve seen.
You pay up for that:
As that compounds to tens of millions in ARR, combined with Top 1% growth … you get Top of Market pricing.
Or valuations in the billions at that point.
But it had to build to there.
A six year overnight success story.
Chart from SaaStr Annual here: Software-as-a-Service (SaaS) Secrets to Raising Venture Capital