Slack - How A Failed Video Game Made Work Fun
Slack is the world's most popular business-level chat and productivity tool used by more than 12 million people and a whopping 77% of the Fortune 100.
Whether you like your colleagues' cat photos or their funny jokes for the upcoming weekend, Slack has become an essential tool for the offices worldwide - and all that in just a few years!
Although the company's motto was 'be less busy', its founder Stewart Butterfield kept busy trying out a few startup business ideas before he finally struck gold without even knowing it.
This is the story of how a twice-failed video game developer used the ashes of his failures to build the fastest growing SaaS startup in history!
Read more about the story here:
Stewart Butterfield's Beginnings In The Tech World
Stewart Butterfield was born in 1973 in British Columbia, Canada in a house with no running water or electricity. After moving to Victoria, Texas at the age of five, his parents bought him a computer. It was love at first sight - a love that later resulted in him learning to code by the age of 12 - all by himself!
But, he didn't pursue his dream of being a developer - at least not at the beginning. In fact, he went in completely the opposite direction, applying to St. Michaels University School in Victoria to study philosophy in 1992.
A developer turned philosopher - you don't see that everyday!
However, he didn't abandon his goal of coding entirely - during his studies, he designed websites for a living.
That was until 1998, the year he officially finished his formal education and received his Master of Philosophy from Clare College, Cambridge. Still determined to follow his dream of becoming an even better developer, Stewart decided to build his first startup named Gradfinder.com right after finishing college.
Gradfinder was launched in 2000 as a website designed for people to find peers who graduated from the same college or high school. Although the idea was something very similar to Facebook's beginnings, it never really took off, and Butterfield sold it six months later for somewhere between $50k and $100k. Stewart wasn't ready to quit just yet, and he went back to the drawing board, planning his next steps.
'Game Neverending' - The First Failed Video Game
Although Gradfinder wasn't the best deal, the money was enough for Stewart to take some time off and think about his next project. After meeting with a group of friends, they decided to make their own video game company.
First, they wanted to create a non-typical combat game - pretty much like every other game from the '90s and the early '00s. The challenge was making an online game that relied more on creativity instead of combat, and to top it off, Stewart had this idea that players should be able to communicate and cooperate with each other, which was new at the time. So, they got together, made a prototype, and found some of their gamer friends to test the game.
The game received mixed reviews from the beta testers: although some die-hard fans really enjoyed it, most people didn't really like it.
Nevertheless, Stewart chose to believe in his idea, as he stayed focused on the positive reviews and continued with his project. The next step was finding investors for his game, but this was 2002, and trying to raise money for an online game project seemed impossible. Even though he tried his best, the consequences of the dot-com crash were almost unmeasurable and investors simply weren't interested in video game companies.
The only solution was for Stewart and his small team to invest in the company themselves. They managed to raise about $100k from friends and family, but the team's activities burned through them in a few months, and the game wasn't even close to being finished.
Ironically, they had named the game 'Game Neverending' - and they never fully finished it. Stewart could have easily given up on his dream of founding a company at that point, but it just wasn't his style, so again, back to the drawing board!
Flickr - The First Big Success
Stewart desperately needed a new idea, so he sat down with the team and tried to brainstorm a solution. The idea that won out was creating a new site for players where they could upload photos and interact out-of-game.
Something as simple as putting photos on a web server might seem like a child's play nowadays, but in the early 2000, it was harder than it seemed. To help with the entire process, Stewart hired programmer Cal Henderson, a programer who designed a website dedicated to the fans of Game Neverending and who turned out to be a valuable team member.
Cal programmed most of the new website on his train commute to work. He made a deal with Stewart - Stewart would pay him by buying items Cal had put on his Amazon wishlist. By 2004, the team had to decide whether to focus on the video game or the new photo-sharing website, so they voted, and the photo-sharing idea won out.
Making the video game work was every team member's dream, but with the tight budget, it just seemed impossible. However, the team gathered their strength and worked 24/7 to make their idea a reality.
By the end of 2004, they finally launched the Flickr website.
At the time, Flickr was the only company that allowed users to upload and store photos on the Internet for free. It grew so much in popularity, it became the first website that popped out whenever someone Googled 'How to upload photos?'. Early SEO was insane!
While the company saw substantial growth in the first few years, it was still very hard to run such a website at the time. Stewart had to make another big investment - he bought physical servers from Dell and had them delivered once a week. They did this for an entire year, before Yahoo offered to buy Flickr in 2005 for $22 million.
Stewart and his team liked the offer, and they accepted it without much hesitation.
All of a sudden, they were millionaires!
Unemployed, Full Of Cash, And Looking For The Next Venture
Yahoo's deal meant that Stewart, Cal, and a few of the Flickr's original team members had to work for Yahoo for three years.
Three and a half years later, Stewart decided to leave the company and start something new, but this time he had earned a decent amount of cash, which meant things would go more smoothly.
Or would they?
He was determined to succeed in the video game industry, so in 2009, he announced that he'd start building yet another massive online multiplayer game - but this time it was going to be different!
Stewart had already made a name for himself in the tech world and online gaming was much more popular in 2009 than in 2002. As soon as he had the idea, he used his connections and raised $17.5 million for the game he would create.
Not bad for a philosopher-turned-programmer right?
Another Attempt - Another Failure
For this game, Stewart needed the best people he could think of - and who's better than a team with a proven success? In Stewart's case, that was the Flickr team.
He gathered most of his previous team members, including Cal Henderson, and created the video game company 'Tiny Speck'. The game they were working on was named 'Glitch', and they released it as an MMORPG game in 2011.
However, the reception to Glitch was somewhat similar to the reception of Game Neverending: most people didn't really love it, but there was a small group of die-hard fans who spent weeks on it!
Yet again, Stewart was on the same crossroad: continue to improve his failing game for the small fanbase, or use some of that technology he got for the video game to launch a new company.
Like with the last failed video game project, he chose the latter - and this time, it paid off - bigtime!
Slack Becomes The Fastest Growing Startup In History
The team behind Glitch used an inside communication application to talk about projects, deadlines, and anything game-related - the regular working conversation. Stewart chose this to be his next business goal: a communication tool specifically used during working hours! He named the app 'Slack', an acronym that stands for "Searchable Log of All Conversation and Knowledge," but obviously it was a pun too.
To say that things took off from here would be an understatement!
Instead of paying expensive ads and billboards, Stewart chose a different strategy and used more traditional media for the launch. He invited around 8,000 people to try out Slack on the first day, and that number rose to 15,000 in the first two weeks! Stewart used the feedback from the first users to upgrade the app and make it more user friendly.
Two weeks after launching, Slack made their first million, and $120 million followed that one in the first six months. The company was valued at $1.2 billion just six months after launching, and at that time, it was growing about 5 to 10% every week, and hiring a new employee every 4 days!
In 2017, the company was valued at $5.1 billion and became one of the fastest-growing companies ever. Two years later, Slack finally went public on the stock market, initially valued at $19 billion.
Today, Slack is used by thousands of companies around the world, from tech firms, local restaurants, and even NASA's laboratories.
Remember: this all started as a failed video game!
Although two of his projects failed, Stewart never gave up on his dream and kept on trying until he discovered that one great idea that kept him busy - all he needed to do was recognize the idea and execute it!
Just goes to show - persistence really does pay off!