How to Startup: Turning a Glitch into Success

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Welcome to this edition of "How to Startup," where we dive into real founder stories that offer practical lessons for early-stage ventures. This time, we explore a company that emerged from the ashes of a failed dream, transforming an internal tool into a communication platform that redefined how teams collaborate. It’s a powerful lesson in adaptation, recognizing hidden value, and the art of the pivot.

Founder Spotlight: Stewart Butterfield, Co-founder of Slack

The Beginning of Slack (via Glitch)

The story of Slack doesn't start with Slack. It starts with a video game called Glitch. Stewart Butterfield, already known for co-founding the photo-sharing site Flickr (which was acquired by Yahoo!), founded a new company called Tiny Speck in 2009. Their ambitious goal was to build Glitch, a quirky, browser-based massively multiplayer online game.

As Tiny Speck's team grew and spread across different cities (Vancouver, New York, San Francisco), they found traditional communication tools like email and IRC cumbersome. To solve their own collaboration problems, they built an internal chat application. This tool allowed them to have organized, searchable conversations in channels, making their remote work significantly more effective. They used it heavily every day while continuing to develop Glitch.

However, despite launching in 2011 and attracting a dedicated cult following, Glitch failed to achieve sustainable commercial success. In late 2012, Butterfield and his team made the difficult decision to shut the game down.

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Early Challenges (The Pivot & Launch)

The failure of Glitch was a significant setback. The team had poured years of effort and millions in funding into the game. However, amidst the process of winding down, they had a realization: the internal communication tool they'd built to make Glitch was incredibly useful and perhaps more valuable than the game itself.

This led to the crucial decision to pivot. They would bet the remaining company resources on commercializing their internal chat tool. This involved several new challenges:

• Making the Hard Pivot: Letting go of the original vision (Glitch) and convincing the team and investors to rally around a completely different product.

• Defining the Market: While they found the tool essential, they needed to convince other businesses that they needed a new way to communicate beyond email.

• Competition: Existing tools, from email to other chat platforms like HipChat and Campfire, were already established.

• Product Refinement: Turning an internal tool, however effective, into a polished, scalable product suitable for external customers required significant work.

• Rapid Scaling: When Slack launched its preview in 2013 and officially in 2014, its growth was explosive, presenting immediate technical and organizational scaling hurdles.

Turning the Corner

Slack's transformation from failed game studio byproduct to tech unicorn was driven by several factors:

• The Successful Pivot: Recognizing the value in their internal tool and having the courage to change direction entirely was the fundamental first step.

• Obsessive Focus on User Experience: Butterfield famously urged the team, "Don't make a crappy product." Slack was designed to be not just functional but pleasant to use, with attention to detail in everything from notifications to emoji reactions.

• Freemium and Product-Led Growth: Offering a robust free tier allowed teams to adopt Slack easily without needing top-down approval. Happy teams naturally spread the word.

• Solving a Real Pain Point: Slack genuinely reduced internal email clutter and made team communication more transparent and efficient for many companies.

• Integrations: Building a rich ecosystem of integrations with other tools (like Google Drive, Trello, GitHub) made Slack the central hub for workplace activity.

Slack's focus on user love and its bottom-up adoption strategy fueled its meteoric rise, proving the value found within the remnants of Glitch.

Advice for New Founders from Slack's Experience

• Solve Your Own Problems First: Often, the most valuable tools are those you build to scratch your own itch. Pay attention to your internal workflows.

• User Experience is Everything: Especially in crowded markets, making your product intuitive, efficient, and even delightful can be a key differentiator.

• Embrace Adaptability: Be willing to pivot if your initial idea isn't working but you've discovered something more promising along the way. Don't cling to a failing vision out of stubbornness.

• Look for Value in Failure: Even failed projects generate assets – code, tools, team expertise, market insights. Audit these before discarding everything.

• Great Internal Communication Matters: It boosts productivity and, as Slack proved, might even become your next product.

Mistake to Avoid: Ignoring the Value Created During a Failed Venture

The story of Slack is the ultimate counter-example to a common startup mistake: treating a failed project as a total loss and discarding everything associated with it. Many founders miss potential opportunities hidden within the work already done.

Why It Happens

• Emotional Toll of Failure: Founders and teams are often burned out and demoralized, wanting a clean break rather than sifting through the wreckage.

• Sunk Cost Fallacy (In Reverse): An urge to distance oneself completely from the failed investment, including any potentially valuable byproducts.

• Lack of Objective Audit: Failure to systematically review internal tools, code snippets, customer feedback, or team skills developed during the project.

• Focus Locked on the Original Goal: Blinders preventing recognition that a secondary element might have more market potential than the primary objective did.

Potential Consequences

• Missed Pivot Opportunities: Overlooking a potentially successful business idea (like Slack) that was developed internally.

• Wasted Resources: Discarding useful code, infrastructure configurations, market research, or process improvements that could be repurposed.

• Loss of Valuable Expertise: Team members who developed unique skills or insights might leave if the value of their related work isn't recognized.

How to Avoid This Mistake

• Conduct Thorough Post-Mortems: Analyze not just why the project failed, but also what was created successfully during the process.

• Audit Internal Assets: Specifically look at tools built for internal use. Ask: "Did we solve a problem for ourselves better than existing external solutions?"

• Review Customer Feedback & Data: Did insights gained point towards a different, unmet need?

• Involve the Whole Team: Engineers, designers, and support staff often have the best visibility into valuable internal tools or processes they developed or used.

• Maintain an Open Mindset: Be receptive to the idea that the most valuable outcome of a project might be something completely unexpected.

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Quick Tips

• Product Development Tip: Treat internal tools as potential future products. Use good coding practices, consider usability, and gather feedback internally.

• Marketing Tip: When pivoting, clearly articulate the new value proposition. Don't assume customers understand the shift; educate them on the problem you now solve.

• Finance Tip: Pivoting requires runway. If failure seems possible, conserve cash to allow flexibility for exploring alternative directions discovered along the way.

Conclusion

Slack's journey from a defunct game studio to a communication giant is a testament to the power of adaptability and recognizing value in unexpected places. It reminds founders that failure doesn't always mean the end; sometimes, it contains the seeds of the next success. By paying attention to the tools you build for yourselves, staying open to change, and focusing relentlessly on user needs, you too can navigate the turbulent waters of startup life and potentially find your own successful pivot.

Until next time, keep building, keep learning, and keep searching for value!