The Entrepreneurial Journey of Stewart Butterfield

Stewart Butterfield's Pivots: From Gaming to Communication Platforms

In 2002, Stewart Butterfield created an experimental video game called Game Neverending, which was a role-playing game that focused on social interaction and building structures with other players online.
Game Neverending was a precursor to Minecraft and had a cult following, but Ludicorp, the company behind it, couldn't raise any money for the game due to the dot com bubble burst and lack of interest in gaming as an online experience.
Stewart and his co-founder Caterina Fake got on a plane to attend a video game conference in New York to stall for time, but Stewart got food poisoning on the plane and came up with the idea for Flickr, a photo-sharing site.
Flickr was initially a way out of Ludicorp's financial mess, but it caught fire with users and investors and became a game-changing platform that paved the way for Facebook, Pinterest, and Instagram.
Ludicorp was still operating, and Stewart had to make the difficult decision to pivot away from Game Neverending and fully focus on Flickr.
The pivot was rough on the team, and there were differing opinions and arguments about what the company should be doing.
After a vote, Stewart had to do some backroom politicking to convince one holdout co-founder to stop working on the game and focus on Flickr.
The pivot from Game Neverending to Flickr was a success, but Ludicorp's second attempt at a game, Glitch, failed to catch on with users and was shut down.
Stewart's interest in games stems from his love of board games and card games and their ability to bring people together socially.
He believes that play is an excuse to interact with people socially and wanted to bring that same sense of community to video games.
A pivot typically springs from failure, and it's the founder's responsibility to make the difficult decision to pivot away from an idea that isn't working and fully commit to a new opportunity.
Pivoting can be brutal on a team, but founders owe it to their team to force a decision and choose one idea to pursue. Trusted relationships with co-founders can permit tough conversations about paychecks and the future of the company.Stewart Butterfield's Journey: From Game Neverending to Flickr to Glitch to Slack
Stewart Butterfield's initial startup was Game Neverending, an online social game that failed to gain traction.
Game Neverending was pivoted to become Flickr, a photo-sharing platform that revolutionized social interaction online.
Flickr's success was due in part to its strong and positive community culture, which was fostered by the founders.
Flickr was sold to Yahoo in 2005, and Stewart left Yahoo in 2008 to start a new project called Glitch.
Glitch was an online social game that failed to gain mainstream popularity despite being backed by $17.5 million in funding.
The Glitch team tried multiple pivots and experiments to save the game, but ultimately had to shut it down.
Stewart and his team decided to use the technology they had developed for Glitch to create a new product.
This product was a communication tool called Slack, which was initially used internally by Stewart's team.
Slack eventually became a standalone product, and has since become a major player in the business communication software market.
Stewart's experience with pivoting and managing transitions taught him the importance of taking care of employees during a pivot.
By treating his employees well during the shutdown of Glitch, Stewart was able to maintain their loyalty and eventually hire some of them to work on Slack.
Stewart's journey from Game Neverending to Flickr to Glitch to Slack demonstrates the importance of pivoting and adapting to changing circumstances in the startup world.The Power of Pivots and Persuasion in Building a Billion-Dollar Business
Successful pivots usually stay close to the company's original mission, but Stewart Butterfield's pivot from an online game to a chat-based communications tool was an exception.
Butterfield's team developed the tool to meet their own needs for quick, transparent, and permanent communication, which they lacked in an old internet protocol called IRC.
The team realized the value of their tool and created a pitch deck to convince others to use it, even though they didn't realize they had already created a hit product.
Convincing people to switch to Slack was harder than expected, as the team was not competing with anything else other than email, which is hard to supplant.
Butterfield's ability to tell a great story and persuade people was crucial in winning hearts and minds to adopt Slack.
The company had to create social proof by getting other teams to use it, which was challenging as it required a whole group of people to change at once.
Slack had little network effect between companies but a huge binary effect inside companies, making it a challenging product to scale in the early days.
Butterfield's entrepreneurial superpower is storytelling and convincing people, which is more critical than having a good product or idea.
When Butterfield knew it was time to slash and burn the business, he turned it into a great story to bring his team along with him, and even laid-off employees returned to work for him when Slack took off.
Butterfield's team underestimated how big of a deal Slack could be, as they thought it could only reach a hundred million dollars in revenue and become a billion-dollar business.
Slack's success was due to Butterfield's pivots and persuasion, as well as his team's ability to create a valuable tool that met their own needs.
The power of pivots and persuasion can help build a billion-dollar business, even when the path is uncertain and challenging.