1The Twice-Pivot Pattern
Stewart Butterfield has pulled off something almost no other founder has done: twice, he started a company to build a video game. Twice, the game failed. And twice, a tool his team built for internal communication became worth billions.
First, there was Game Neverending—a multiplayer online game that never launched. From its ruins came Flickr, the photo-sharing pioneer that Yahoo bought for an estimated $22-25 million in 2005.
Then there was Glitch—a bizarre, fantastical game where players could milk butterflies and grow eggs on trees. It shut down in 2012. From its ashes came Slack, which Salesforce acquired for $27.7 billion in 2021.
"The thing that killed Glitch was just leaky bucket. You can put it into Excel in five minutes and see that this is not going to work. 97% who signed up would be out of there within five minutes."
— Stewart Butterfield, Masters of Scale
2The Painful Death of Glitch
In 2009, Butterfield had left Yahoo (where he'd landed after the Flickr acquisition) and started Tiny Speck with $17 million in funding. The vision was Glitch—a massively multiplayer game unlike anything before.
The game was beautiful and weird—"kind of Dr. Seuss meets Monty Python meets modern-day graphic novels." Players loved it obsessively, spending 20+ hours per week. But there was a problem: most people didn't get it at all.
The 3% Who Loved It:
20+ hours/week, deeply committed, vocal advocates
The 97% Who Didn't:
Gone within 5 minutes, never returned
Shutting down Glitch was one of the hardest decisions Butterfield ever made. Investors wanted him to keep going. Co-founders wanted to keep going. But the math was unforgiving.
3Finding Gold in the Wreckage
While building Glitch, the team had created an internal chat tool for coordination. It was nothing fancy at first—just a way to keep everyone on the same page while working remotely across the US and Canada.
As Butterfield started shutting down Glitch, he looked at this chat tool and had a realization: "Wait. This thing we built—this is actually really good."
Butterfield had spent 3.5 years building Glitch. In that time, he'd learned exactly what remote teams needed to communicate. He'd lived it. That experience gave him something no competitor had: deep understanding of the problem.
Before writing a single line of Slack code, Butterfield put together a pitch deck. Remarkably, the deck had the exact pricing they'd launch with, the exact product vision, and the exact marketing approach. Nothing changed because they'd already learned everything they needed through failure.
4The Art of the Pivot
Butterfield's approach to pivoting offers a masterclass for founders facing the same crossroads:
Bring Your Team Along
"As CEO, you always have to bring the core team along during a pivot. You have to make them feel like it was a joint decision." Butterfield didn't dictate—he built consensus.
Handle Endings with Grace
When shutting down Glitch, Butterfield treated users, employees, and investors with respect. Many of those people came back for Slack. Endings done right create beginnings.
Know When to Quit
The hardest part wasn't starting Slack—it was admitting Glitch was dead. "Shutting down was a tough conversation with our board... they actually wanted us to keep going."
5Slack's Rocket Ship
Just two years after shutting down Glitch, Slack raised $120 million at a $1.2 billion valuation. They were growing 5-10% per week—not per month, per week.
What made Slack different wasn't just the product—it was the philosophy. Butterfield applied everything he'd learned from building consumer products at Flickr to business software. The result was enterprise software that people actually enjoyed using.
6Key Lessons for Founders
1. Your failure might contain your success
The internal tool, the process, the insight—something you built for the "wrong" thing might be the right thing for something else.
2. Consumer thinking transforms enterprise
Slack succeeded because it felt like a consumer app. The enterprise software bar is low—exceeding it creates massive opportunity.
3. Relationships survive pivots
How you end things determines what comes next. Investors, employees, and users remember how you treat them.
4. Time spent learning isn't wasted
The 3.5 years on Glitch weren't lost—they were R&D for Slack. Every failure is tuition if you're paying attention.
5. Face the math
When the numbers don't work, they don't work. Butterfield didn't rationalize Glitch's problems—he faced them and moved on.