
Stewart Butterfield wanted to quit and give the money back to investors - notlukesky
https://www.bloomberg.com/news/articles/2019-06-21/investing-in-slack-work-made-billions-for-vc-firm-accel
======
sagebird
Re: In 2012, when Butterfield was convinced he’d failed, Braccia was
steadfast, said Bradley Horowitz, who put some of his own money in the game
company. That’s probably because Braccia recalled what happened the last time
Butterfield made a bad game. It morphed into a popular photo-sharing site
called Flickr, which Yahoo! bought for around $25 million in 2005. Braccia,
Butterfield and Horowitz all worked together at Yahoo.

So it worked twice for Butterfield and I think it deserves exploring. Maybe
this is the pattern:

1\. Find a smart technical person you trust and fund their dream project with
excess cash.

2\. Don’t freak out if it flops- set up an expectation that if it flops, use
the leftover cash to make a more generally useful tool/service.

Maybe the first dream project is always expected to fail, but it is necessary
for releasing some sort of creative pressure, building trust, and learning how
to communicate honestly between investor and innovator. If it produces
unicorns more often, vcs should be happy to fund the first flop as it somehow
prepares the perfectionist to ditch their grand visions and get back to making
something dirty that works, but doing it of their own volition instead of
feeling trapped.

To clarify: it’s boring to work on a flop— to put in more effort and not get
any positive feedback. I think the natural reaction is to try to take things
you learned, abandon the flop and try to work on something new. And in this
wanting to start something new comes more openness to creating something that
gets positive feedback quickly — not making a perfectionist monument because
you already tried that and felt the pain. I don’t know if there is an
expression for the feeling to be liberated to make something that is not
“important” according to your own aesthetics... getting over yourself?

~~~
heymijo
Can't help but feel like this intellectual exercise is built on a bed of
survivorship bias.

[https://en.m.wikipedia.org/wiki/Survivorship_bias](https://en.m.wikipedia.org/wiki/Survivorship_bias)

~~~
epistasis
Unfortunately, given the low rate of success with startups, you'd probably
need data from a minimum of 40 startups before any analysis can progress
beyond survivorship bias.

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invalidOrTaken
My cousin and I have a joke about Butterfield---a narrative where the poor guy
just wants to make multiplayer games, but keeps accidentally making hugely
successful web companies.

~~~
phaedryx
Hah, I was thinking the same thing. If you have a chance to invest in a
terrible game idea by Butterfield, do you do it?

~~~
malloreon
at this rate, 100% yes.

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brk
I seem to recall PG telling a similar story about flickr at the very first
"Startup School" meeting. The original idea was an online game targeted at
teen girls, and there was some kind of photo sharing element that was part of
the game. The game didn't turn out to be very compelling, but the photo
sharing portion was getting a lot of interest, and the founders pivoted to
developing flickr instead.

~~~
cableshaft
It's the same guy (it's mentioned in the article, even). That's one of the
reasons why the investors stuck with him, because the last time he did the
same thing, work on a failed game then pivot to an app, it became Flickr.

He successfully pulled off the same trick twice.

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tim333
I enjoyed his startup school interview a couple of years back. A relevant bit
on coming up with Slack:

>Stewart B.: I wish that I had better access to the proposals that I had
personally had written, because I had a whole bunch of fucking terrible,
terrible ideas and this was the one that had the broadest consensus among the
team as being something that would be valuable. What's interesting at the
time, though, so we had $5 million left in the bank. None of our investors
wanted their money back. They wanted to just go try something else. Jason
Horowitz is one of our investors so we went down and did the partner meeting
and kind of presented what our big idea was. And at that time, this is before
we actually started development of Slack, but when we had this proto version,
we said that one day this could be like a hundred million dollar a year
revenue business, so it can be valued at billon dollars on that basis...

[https://jotengine.com/transcriptions/Q0I0i33TaqCa9w4In0ZQCg](https://jotengine.com/transcriptions/Q0I0i33TaqCa9w4In0ZQCg)

I think he has a slightly different take on the tech biz being a philosopher
by training.

~~~
tedmiston
Video version -
[https://www.youtube.com/watch?v=zsBjAuexPq4](https://www.youtube.com/watch?v=zsBjAuexPq4)

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tptacek
Can I ask maybe a dumb question: was it actually _good_ for Butterfield that
Accel kept their money in for the pivot? Would it have been that hard for him
to start over with Slack, rather than using Accel’s remaining 5MM? One
imagines a decent chunk of dilutive investment went into his failed game; is
there a reason those costs had to be factored into Slack’s cap table?

~~~
lquist
Bingo! Stewart knows how to play the (VC) game and doesn't want to dilute a
new idea more than he has to. As for Accel, they don't want to have to write
down an investment until the last possible minute. Doing so would depress
their mark to market for the fund.

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olivermarks
Slack was built on the foundations of Web 2.0 tools like Socialtext, Jive,
Atlassian and others. It's a classic case of profiting from the furrow others
have ploughed, right place at right time etc. This is a big lesson for
startups...like surfing timing is everything - which set, which wave,
circumstances...

~~~
sagebird
The timing thing is always at play, I agree but I’m not buying the narrative
that Slack had less work to do because of work done by Socialtext, Jive,
Atlassian and others. Whatever desktop technology they use to bundle chrome
(eg Electron), yes, they are benefiting from that work a bit and modern
browsers in general. But overall I think Slack could have existed in a similar
form as a desktop work/chat application in the late 90s or early 2000s using
Winforms and Carbon or whatever native desktop kits. It could have been a user
friendly irc client with file sharing tailored to teams and workplaces, and it
would have done wonderfully, no “standing on shoulders” of Web 2.0 stuff
required. In fact I think it would have been an easier path to success if they
started in 1999.

~~~
olivermarks
I mentioned the funded tip of the iceberg - there were hundreds of vendors in
this space eight years ago, many of whom died or were acquired by larger
entities keen to have a collaboration offering. It evolved over time and Slack
were the winners, mainly I'd say due to great timing around mobile first
maturity

------
malloreon
Some day Stewart is going to make the game he's been trying to make for over a
decade, and it'll be awesome.

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andygcook
a16z tweeted this email from Marc Andreesen in 2012 the other day in response
to Stewart throwing in the towel on Glitch:
[https://twitter.com/a16z/status/1142126195439308802](https://twitter.com/a16z/status/1142126195439308802)

"It is what it is...

If history repeats and they come up with the next Flickr, all will still end
well..."

Obviously lots of survivorship bias here, but interestingly enough, that's
exactly what happened at an even larger scale.

~~~
zild3d
Yep, wound up being about 720 Flickr's which is crazy, and puts things into
perspective. (Flickr sold for $25M, Slack now has a market cap of $18B)

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H8crilA
He did fail and quit on the first idea, and then tried a second idea that was
pretty much completely unrelated to the previous idea. Using the same contacts
network.

This only makes sense given how much luck is involved in building startups. As
long as the bull run continues (money is cheap) and your idea is somewhat
reasonable - someone will fund you.

~~~
wp381640
Is it really luck if he's done it twice?

~~~
H8crilA
If I read the article correctly the first idea was some game, and as probably
>95% of indie games it failed. Then a successful chat app (Slack).

Who has done what twice?

~~~
pwinnski
He has tried twice to create GNE: Game Never-Ending. The first time he gave
up, he turned the image-sharing part of the game into Flickr. The second time
he gave up, he turned the chat part of the game into Slack.

Maybe he should try making GNE again.

~~~
DonHopkins
Glitch was his attempt at making GNE again.

Game Neverending is to Flickr as Glitch is to Slack.

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Axsuul
Humble video of Stewart Butterfield demonstrating Glitch (2010):
[https://www.youtube.com/watch?v=UuSxwPwSyEQ](https://www.youtube.com/watch?v=UuSxwPwSyEQ)

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ksajadi
Interesting side observation: a16z is not in any of the top IPO holdings. This
might be due to the series they participate in but their fund size suggest
they also follow through. Somehow they didn't in any of those companies?

