How I Built This with Guy Raz - Live From The HIBT Summit: Stewart Butterfield

Episode Date: January 30, 2020

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.

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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, Stewart launched Slack, an office collaboration tool that now has 12 million daily users. But before Slack, back in 2004, Stewart was struggling to get traction with another video game called Game Neverending. He wound up shedding that one down too, but out of that failure, 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 Stewart on stage, 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, 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? Like, that's what we think we're supposed to do to just carry on and march forward. Yeah, there's a lot of advice that's just persevere, grit, resilient, got to keep going in the face of diversity over and over. But there is definitely a point where 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 work out. But we were just out of money. And it would have been a much more difficult, complex project to complete the game. It would have taken us a minimum of. 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 months. 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. 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? 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 when I got online 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 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.muse.g.g.dead, 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 of my life, that even though we were on the edge of the world, it felt like, and kind of really outside of everything, everything that was really happening, I could connect to anyone. And that kind of the possibilities for computer 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, it allows this instant communication coordination between people. and we're still like 1% of the way into exploring the possibilities. 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... 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... If there's one thing that's an actual, like, practical lesson for entrepreneurs in all of this history, besides the sometimes pivot's work, if it's really, really hard to explain, you're at an enormous disadvantage.

And so the way games are marketed generally is there's kind of a two-by-two matrix. And in one 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. And then there's the mechanics of the game, first-person shooter and real-time strategy and puzzle games and stuff like that. And games are marketed is like their position 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 and maybe I'm not. We tried to sell the world a massively multiplayer game with no combat. It's a cooperative. It was kind of Monty Python meets Dr. Seuss, surreal, absurd. Literally this is that like the game where you would milk butterflies and you like collect milk,

you would squeeze eggs, squeeze chickens to get eggs. Anyway, it was very... How did you raise money around that? 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 did it, and it didn't work. But by the end, I think the kind of technological dead end,

we had to find 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 once I had done that,

it was now impossible. Did, was that, I mean, we hear about, you know, the relentless optimism of entrepreneurs. And, 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?

There was definitely a little bit of this. And I, 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 who 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 happened to be facing where he was sitting and locked eyes with him and I knew that I had just sold him on moving over

and making this massive change in his life and now a couple months later I was telling him he didn't have a job anymore. That was really hard. 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 or spent all their free time. They'd form these really important relationships. And any of you have participated in online communities, especially in the early days, where the online community was the nexus

of all of these friendships and all these relationships. When they disappeared, that's it. People can say, we're going to make a Facebook group and we're going to catch 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 in a very small scale, but like a little civilization

going out of existence. I felt really bad about that. So in some sense, there was, like those were motivations to just keep going, just to pretend like more of these problems and don't have to face up to this. The way that it ended,

I think, was really as positive as it could be. Because we had money left, because we didn't wait until we'd mused up every dollar, we were able to take a little bit of time, and work with everyone who lost their job. So there's 45 people at the company, and eight of them were going to stay on to work on Slack.

So for the other 37 people, we did kind of career coaching, we wrote reference letters, we set up interviews for them, and 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. You know, I think about pivots so often because some of my favorite episodes were about pivots. I mean, Tofurkey.

Seth Tibbitt started out selling Tempe, and he pivoted towards Tofurkeys. Stacey Madison, you know, started out as a PETA cart, but rolled up PETA sandwiches. They sold PETA chips because they had extra PETA 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 PETA 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? 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. It's 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 meet 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 you never really explained what it was or what it was for. With the game, it was very hard to identify.

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 to someone else when I'm not there. That'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...

And Slack is easy to explain. Yeah. Well, hard for us, but... You know, we actually argue by this all the time. If I'm... this happened in real life, it was kind of jammed. 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's this critical moment where I realized I was going to 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 and there's this and this is like restaurant websites on the only hand 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 photo like starts to fade in and that 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 what's the name for this phenomenon

whereby it's definitely not what anyone wants and yet 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, 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 quickly you need to get to the point, it can be like the death of the business. So I'm definitely trying slowly over my career to bias towards things that are a little bit easier to explain. And that people care about.

Yeah. Yes. Stuart Butterfield, the honor of slack. Thank you, Stuart. Thank you. That's Stuart Butterfield, co-founder of Flickr and founder of Slack. Stewart 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 Candice Lim, who produced this episode, and Rumpteen Arablewey, who wrote the music.

I'm Guy Raz, and you're listening to How I Built This. This is NPR.