Live From The HIBT Summit: Stewart Butterfield

Our sixth episode from the 2019 How I Built This Summit features Stewart Butterfield, the co-founder of Flickr and Slack. Both companies emerged out of failure. In this live conversation with Guy, Stewart describes how he pivoted from two unsuccessful video games into two multi-million dollar brands. We'll be releasing a few more episodes from the HIBT Summit over the next few weeks, so keep checking your podcast feed. See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:03Guy Raz?

  Hey, everyone. So today, we've got another one of my conversations from the How I Built This summit that happened in San Francisco last October. And you know, in the world of startups, one of the most difficult moves to pull off is a pivot to maneuver out of your first idea into something that might have more potential. And Stuart Butterfield, he pulled this off not once, but twice. About seven years ago, out of the ashes of a failed video game, Stuart launched Slack, an office collaboration tool that now has 12 million daily users. But before Slack, back in 2004, Stuart was struggling to get traction with another video game called Game Never Ending. He wound up shutting that one down too, but out of that failure,

• 0:48Guy Raz?

  he was able to launch a photo-sharing site called Flickr, which he sold just a year later for around $20 million. So when I sat down with Stuart onstage, I asked him about both of those pivots, starting with the first one, from Game Never Ending to Flickr. There was a point, and you talk about this in the podcast, where you had to decide whether to drop all of this work on this computer game, like more than a year, I think two years, of work on this game and pivot to the photo-sharing site. And there was a debate, an internal debate. I wonder, how did you know that that was the right thing to do? Because our instinct would tell us to push forward and to keep going, right?

• 1:32Guy Raz?

  Like, that's what we think we're supposed to do, to just carry on and march forward.

• 1:38Speaker 01

  Yeah, there's a lot of advice that's just persevere, grit, resilience, got to keep going in the face of adversity over and over. But there is definitely a point where you, either you know it can't work or kind of like the reverse manifesting of, I don't believe anymore that this could work, which makes it very unlikely. If the person leading the project doesn't believe it can work, it would be a weird fluke for it to actually, to work out. But we were just out of money, and it would have been a much more difficult compromise. ...project to complete the game would have taken us a minimum of another year, but probably realistic and closer to two more years, and we didn't have that kind of time, whereas Flickr, we figured we can get a version of this out in a couple of months.

• 2:22Speaker 01

  And it actually was, I don't remember the exact dates anymore, but it's sometime in December 2002 that we decided to do it, and early February 2003 it launched.

• 2:32Guy Raz?

  So you guys end up selling Flickr to Yahoo, and you described yourself as briefly internet famous. You actually were like on the cover of Newsweek magazine with some other people at one point, which I'm assuming got you some attention to allow you to kind of think about the next project. You decide to go back and start another company that was going to be a computer game called Glitch. What was driving you then? I mean, did you think, okay, now I've failed, you know, I failed the first time, now I know how to do it right?

• 3:05Speaker 01

  We can talk about the reasons that we used to convince ourselves that it would work this time. There was actually a lot of realistic stuff there. The cost of hardware, so servers in the background, had fallen by at least 90%, and a bunch of things changed by a factor of 10. The number of people online changed by a factor of 10, the availability of great open source software tools. But stepping back one, I got in line in 1992, and I grew up in Victoria, British Columbia, which is a pretty small town. I mean, actually provincial, it's on the edge of the continent, and then it's on an island, so it feels very remote and cut off from the rest of the world, so you're kind of an observer. And when I got to college, I got an account on the school's Unix machine, and that meant

• 3:49Speaker 01

  I had access to the internet. And this is like, maybe six or nine months before the web really started to take off. So the internet at that time was a thing called News Group, which was a hierarchical directory of kind of discussion boards for more or less everything in the world. So hugely popular in the scientific community and academic communities, but also just recreational. In fact, it's kind of mind blowing, but rec.music.gdead, the Grateful Dead News Group, was the most popular thing on the entire internet. It was like... In terms of traffic, it was the Netflix of its day, just like the text postings going back and forth. And I just really remember that as being one of the most revelatory, mind-blowing experiences

• 4:30Speaker 01

  of my life, that even though we were on the edge of the world, it felt like, and kind of really outside of everything that was really happening, I could connect to anyone. And that, um, the kind of the possibilities for computer and technology to facilitate human interaction, to me, are endlessly fascinating. And I think when we look back tens of thousands of years to this time, it will seem as significant as the development of written language, because it just allows this accretive knowledge, allows the accessibility, allows this instant communication and coordination between people, and we're still like 1% of the way into exploring the possibilities.

• 5:09Guy Raz?

  So, I mean, with Glitch, right? This is a beautiful game, you raised money around it, you had great developers, you convinced people to move across the country to work on this. What happened? It just didn't-

• 5:19Speaker 01

  So, in this case, we had the money. In fact, we had money left over when we decided to shut it down. But it was apparent that it wouldn't work. And I think this is, um, if there's one thing that's an actual, like, practical lesson for entrepreneurs in all of this history, besides the sometimes pivots work, it's, um, it's hard, if it's really, really hard to explain, you're at an enormous disadvantage. And so what this, the way games are marketed generally is there's kind of a two-by-two matrix, and in one, um, axis, it's the kind of veneer on it, it looks like World War II or post-apocalyptic sci-fi, or it looks like Dungeons and Dragons, or it looks like Pikachu or something like that, like Cutesy cartoon, there's that, the flavor of it.

• 6:01Speaker 01

  And then there's the, the mechanics of the game, first-person shooter, real-time strategy, and puzzle games, and stuff like that. And games are marketed, it's like they're positioned on this grid. So it's a World War II first-person shooter game. And instantly, people can see, like, at least, I understand what that is, and maybe I'm interested in it, maybe I'm not. We tried to sell the world a massively multiplayer game with no combat, it was cooperative, it was kind of Monty Python meets Dr. Seuss, surreal, absurd. Um, literally, this is, like, the game where you would milk butterflies, um, and you, like, collect milk, um, you would squeeze eggs, squeeze chickens to get eggs, um, anyway,

• 6:46Speaker 01

  it was, it was very, uh-

• 6:48Guy Raz?

  How did you raise money around that?

• 6:52Speaker 01

  It was, I think the fact that we had been successful before, it was a compelling plan. But it was also right at this interesting juncture where it was around the year that Android came out, it was around the year that iPhones actually started to take off, and suddenly there was this massive shift in people's discretionary internet time from desktop and laptop computers to mobiles. And we had made a bet on Flash as a technology for delivering the game, which wasn't going to work on mobiles, and I think in the end that really was the nail in the coffin. If it hadn't been for that, I think it would have been worth trying a little bit more. But I was committed, and every day I came in with optimism, and I was sure that this next thing that we were going to try was going to work. And then we

• 7:35Speaker 01

  did it, and it didn't work. But by the end, I think the kind of technological dead end we had found ourselves going down, the fact that it was desktop only in a world that was going increasingly mobile, the fact that it was already so hard to explain, you know, made it really tough, despite the fact that there was a super committed, very enthusiastic audience. I just lost faith. And I realized that, like, once I had done that, it was now impossible.

• 8:01Guy Raz?

  Was that, I mean, we hear about, you know, the relentless optimism of entrepreneurs, and it sounds like you, inside you were actually, you had a lot of self doubt. And that voice got louder and louder until it got to a point where you were basically saying, "I need to level with you, Stuart, this is not working." When you told your closest colleagues that, were they shocked? Were they like, "But yesterday you were so optimistic, what's going on?"

• 8:25Speaker 01

  There was definitely a little bit of this. And so I told the board and the co-founders, and there was some argument back and forth about, and there's definitely a belief that we should persist. But I think once I was out, everyone realized that it wasn't going to work. And the next day, or probably two days later, we told the whole company. And so we called an all-hands meeting. We were based in Vancouver and here in San Francisco. And there was one employee who had moved from my hometown, Victoria, British Columbia, to Vancouver. He just had a new baby, he was, I think, two years old. He left his in-laws who were helping take care of the baby and bought a new house and moved to this new city. And when I started telling everyone that we were going to shut it down, I just like

• 9:08Speaker 01

  happened to be facing where he was sitting and locked eyes with him. And I knew that I had just like sold him on moving over and making this massive change in his life. And now a couple of months later, I was telling him he didn't have a job anymore. And that was really hard. Like, that was really hard. I mean, I think that the feeling of having let down all of these people, to a lesser extent, having let down the investors, but that wasn't as much of a concern. Having let down all these people, because there was thousands and thousands of people who loved this game, were spending all of their free time, they'd formed these really important relationships. And any of you who have participated in online communities, especially in the early days, where like the online community was the nexus of all of these friendships and all these relationships, when they disappeared, that's it. Like, people can say, "We're going to make a Facebook group, and we're going to catch

• 9:52Speaker 01

  up this way, or we're going to do this thing or that thing." But it's gone, and it's almost like a little, obviously on a very small scale, but like a little civilization going out of existence. And I felt really bad about that.

• 10:03Guy Raz?

  Yeah.

• 10:04Speaker 01

  So, in some sense, there was, like, those were motivations to just keep going, just to pretend like there weren't these problems and don't have to face up to this. The way that it ended, I think, was really, I mean, as positive as it could be. Because we had money left, because we didn't wait till we'd used up every dollar, we were able to take a little bit of time and work with everyone who lost their jobs. So there's forty-five people at the company, and eight of them were going to stay on to work on Slack. So for the other thirty-seven people, we did kind of career coaching, we wrote reference letters, we set up interviews for them. We ended up getting everyone a job, and in most cases, a better job than what they had. And I think that goodwill got us a long way.

• 10:49Guy Raz?

  You know, I think about pivots so often because some of my favorite episodes were about pivots. I mean, Tofurkey. Seth Tivitt started out selling tempeh, and he pivoted towards Tofurkeys. I'm Stacy Madison. You know, it started out as a pita cart, but rolled up pita sandwiches. They sold pita chips because they had extra pita at the end of the day, and they cut them up and handed them out to people. And eventually, people were coming to the cart, not for the rolled up sandwiches, but for the pita chips. Is there a way, I mean, is there ever a way to know when it's time to abandon this thing that you love and... Totally shift direction?

• 11:27Speaker 01

  Yeah, so, I mean, that's probably more survivorship bias, rather than I have some special talent or ability to identify those situations. I just happened to do it twice. Kind of like someone who won the lottery advising you on which numbers to pick. But because this game was so weird and so hard to explain, it was much harder to get into people's heads. And you really need to be able to get, like, purchase in someone's mind, which is why you hear things like, it's Jaws meets Star Wars, or it's Uber for whatever, because people already have those concepts in their head and they can kind of put it together to figure out what this thing is. With Flickr, I think we had a real disadvantage, because we never really explained what it was or what it was for. With the game, it was very hard to identify.

• 12:09Speaker 01

  I think we still face that as a major challenge for Slack, because it's like a brand-new category of software that doesn't really replace anything specific that you were using before. So, part of it is, is this an idea that I can make clear enough for someone else such that that person can go on and explain it to someone else when I'm not there? And it's a little bit complicated grammatically, but what I mean is, like, can other people be advocates for you? Can other people explain it? And the ideas where that's possible, I think, have a lot more possibility than the ones where it's not.

• 12:44Guy Raz?

  And Slack is easy to explain.

• 12:45Speaker 01

  Yeah, well, hard for us, but...

• 12:46Guy Raz?

  But you can...

• 12:47Speaker 01

  You know, we actually argue about this all the time. If I'm... This happened in real life. I was kind of jammed up on the plane, and it was taking everyone a long time to sit down, and so I was chatting with the flight attendant, and she said, "What do you do?" "I work in software." "Oh, what company?" "Slack." "What's that?" And there was this critical moment where I realized, I was gonna say, "It's a messaging app used by businesses, but if you go to our website, until two months ago, it said, 'Imagine what your team can do.'" And then now it says, like, "Whatever work you can do, you can do it better with Slack," or something like that. And I realized, like... We really should probably tell people what it is. Because people are taking time out of their day to come to the website and they want to understand it.

• 13:30Speaker 01

  And there's this, and this is like, restaurant websites. On the only time I've ever gone to a restaurant website, I want the hours that they're open, their address, the phone number, or the menu. There's really no other reason to go. You go to a restaurant website and this like, this photo like starts to fade in and it kind of Ken Burns effects. And there's a meal and the music starts auto playing and you're not allowed to use the menu, like the thing to navigate the website until all this crap is finished. And the people who make restaurant websites and the owners of the restaurants who commission them must have gone to other restaurant websites before and be frustrated. So I tweeted this years ago, it's like, what's the name for this phenomenon whereby like,

• 14:15Speaker 01

  it's definitely not what anyone wants and yet you people persist in providing it? And someone came up with the owner's delusion. Like, your thing, because it's so important to you, seems like something that everyone else will really be interested in. Like, you're so into the style of food you've created and this photograph you took of the dish was so, like, it came out so perfectly that you really, it's like people who tell you about their kids' activities for a little bit too long. That's a real tough one. Like, it can be really tough to be out there hustling and if you're just completely incorrect about the degree to which someone else cares and like, how, how quickly you need to get

• 14:58Speaker 01

  to the point, it's, it can be like the, the death of, of the business. So I'm definitely trying slowly over my career to bias towards things that are a little bit easier to explain.

• 15:07Guy Raz?

  And that people care about.

• 15:08Speaker 01

  Yeah.

• 15:09Guy Raz?

  Yes. Stuart Butterfield, founder of Slack. Thank you, Stuart.

• 15:12Speaker 01

  Thank you.

• 15:13Guy Raz?

  That's Stuart Butterfield, co-founder of Flickr and founder of Slack. Stuart joined me live on stage at the How I Built This Summit, which happened in October at Yerba Buena Center for the Arts in San Francisco. We'll have a few more of my conversations from the summit over the next month or so, so keep an eye out for them. And thanks to Candace Lim, who produced this episode, and Rameen Arabloue, who wrote the music. I'm Guy Raz and you're listening to How I Built This.

• 15:50Guy Raz?

  This is NPR.