Stewart Butterfield is the man with the most reason to buy everyone a round for the way the pandemic changed our lives. However many rounds he buys, though, he'll still have plenty left (as long as he isn't buying them in Sunny Beach, the Bulgarian Black Sea resort famous for its eye-watering bar tabs), because his latest project was bought for the sum in the headline, and he walked away with a considerable share of the money.
Never heard of Butterfield? He's well worth knowing: the father of Slack has an instructive story that runs through the different eras of the internet to remind us that even when life is going well… sometimes the stunning success you've spent so long preparing for finally arrives.
And do you know his secret? It lies in the conclusions he drew from the failure of one of his computer games, a full 30 years earlier…
In His Prime
It really is strange that his name isn't better known. For three decades now he has been building applications whose whole idea is to harness modern technology to help people communicate.
He was born in 1973 and fell for the grandfathers of today's computers as a small boy. That generation, swept up in the whirlpool of early internet enthusiasm, seems to have had quite a run of luck—Musk and Sundar Pichai were born just a year earlier.
At 16, Stewart managed to cause a serious crash that crumpled his father's car beyond recognition. His mother's reaction says everything about the liberal upbringing he received: “Well, it's a very good thing this happened to you, because now you've learned an important lesson about road safety.”
The future tycoon was born Dharma Jeremy Butterfield. He decided to rename himself Stewart when he was only 12, and later admitted it wasn't a great idea. “There isn't a single book where the good guy is called that.” Apparently he never came across the adventures of that good little mouse, Stuart Little.
A Site the Size of a Human Palm
Our Stewart, however, is no mouse at heart but an innovative entrepreneur. He was lucky enough to have a computer at home from an early age. He was playing on an Apple II as far back as 1979, teaching himself to program from magazines that happened to come his way.
Then came his first contact with the network. “It was 1992, and I just couldn't believe the technology we already had!” Stewart recalls.
As he tells it, he was one of five people in town who could write HTML. The internet boom was just beginning, and the boy earned a decent income building the primitive websites of the day. To give you a sense of how ancient that era was, Stewart also organized the 5K contest, a competition for websites smaller than 5 kilobytes.
Despite all that, he decided to study… philosophy. He earned a bachelor's degree, then a master's. Learning came easily, the field excited him, until at some point… he simply realized there was nothing he could do with this education. “Have you ever heard of a philosophy firm opening a new position?” Stewart jokes.
Silicon Philosophers
He gave up the idea of a PhD in philosophy because he didn't see much of a future in it. “A lot of my professors told me: academic life is awful, please don't go into it. If you're that interested in these subjects, you can subscribe to some journals and go to conferences.”
It was right around then that the internet, which had started to look a great deal better, pulled him back in. Stewart decided to take on some serious venture that could also become a livelihood.
To raise capital, he spent several years working as a web designer, and in 2002 he founded his first computer game company. He called his pilot venture “Game Neverending.” As Stewart himself would later admit, after a long wait… he had picked the worst possible moment to start a new project. In the software world this period is known as the “dot-com bubble,” the time when suddenly everyone decided to invest in the internet, while it was still neither that popular nor technically ready for serious challenges.
As the name suggests, in this game you didn't lose or win; you just kept on playing and playing. As one commenter put it, “maybe it was too intellectual. Dr. Seuss meets Monty Python, who meets Borges. And all that in an era when games like FarmVille were only just starting to catch on.”
Homo Ludens
One of the fans of the “neverending game,” Cal Henderson, built a fan site for the project and wrote enthusiastic letters to the team. Stewart decided to hire him, and the two have worked together ever since—Cal is also among the shareholders who profited from the sale of Slack.
Stewart's vision was a multimedia project played by many participants online. The game prototype, however, never found the investors it needed, and after a stubborn fight the fledgling entrepreneur had to let go of the people he had hired… Fortunately, that changed thanks to an unexpected brainwave.
The idea arrived in a rather “amusing” way. Stewart and his then wife and business partner, Caterina Fake, had to fly to New York for a big computer game conference. Both of them got food poisoning during the flight, barely made it to the hotel and spent the whole night in real misery… And in the morning, Stewart woke up with the idea for Flickr.
Of course, we don't recommend this method for summoning brilliant ideas, although it clearly worked rather well for our hero.
And he decided to try something unconventional: to use the part of the game's software that dealt with online communication. Stewart invited the game's few loyal users to join a completely different venture. And so Flickr was born, the photo-sharing social network that paved the way for many of the trends in how we communicate online today.
For the first time, people could upload a whoooole 200 photos online for free and easily share them with their friends. Today that may sound like a drop in the ocean, but 20 years ago it was downright incredible.
The Tiny Speck
Flickr's success quickly drew attention, and before long the company was acquired by one of the big online players of the time—Yahoo!—for 20 million dollars. The deal turned quite a few heads, because by the web standards of the day it was a very serious sum.
The time came for our hero to enjoy his success, and he worked for another four years at the company that was no longer his.
Until, in 2009, he decided it was time to try something even bolder. For the second time he turned to computer games… and for the second time he failed. And once again he found a spectacular way out of the dead end, this time creating a company worth not millions but tens of billions of dollars.
It all began with Tiny Speck, a company working on a computer game called Glitch. By now Stewart had experience and assembled a solid team. As he puts it, if the team on his first game had been a two out of ten, here he was working with top professionals who were a 10/10.
There was even serious funding. The startup raised a full 17.5 million dollars from investors and began building an ever better product… but once again the users simply weren't there. Everything looked promising, and the game's reviews were good. But to succeed online, you also need that particle of magic which shows that the venture has arrived at the right time and caught the attention of the right people.
The battle went on for three and a half years, until at some point it became clear that the venture was doomed. There was $5.5 million of investment left, and the game's users were desperately few. By then the company had 45 full-time employees. Among them were animators, musicians, writers and illustrators, many of whom would have struggled to find their next job if they were thrown out on the street. “I felt that if I gave up, it would be running away from responsibility,” Stewart recalls. “I just had to come up with something else.”
He hit on yet another crazy idea and, luckily for him, the investors agreed to it; they didn't have much left to lose anyway. And how that decision would pay them back!
Slack, With or Without the Polish
His first task was to take care of the people who had no place in the next venture. Stewart spent a large part of the remaining money on building good portfolios and presentations for them and did everything he could to help them find even better-paid jobs.
Only then did he turn, together with the eight remaining members of the team, to the idea that had come to him. Far fewer in number than Leonidas's Spartans, they proved good enough to build one of the fastest-growing startups in history.
Having once already “packaged” and sold a side project after his main one failed, he decided to try again. The programmer was very pleased with the team's internal communication system and decided to focus on developing it.
Today many of us use that very same communication system every day. We know it as Slack.
Slack the Octopus
Back then, every online communication tool relied on principles dating back to the dawn of the internet. If you're one of the “online dinosaurs,” you surely remember mIRC, the grandfather of chat. Well, chat apps kept being built on that same IRC (Internet Relay Chat) principle for a long time afterward. And it was Stewart who established what came next.
The main problem was that when the user on the other end wasn't online, there was no way to send them a message that would be stored and would reach them once they showed up on the network. That was exactly what our hero's programmers had managed to achieve “without meaning to” with their internal communication system.
And that, together with solidly guaranteed message security, gradually turned Slack into the ideal platform for workplace communication. Then, for the first time, came the ability to search through messages, which made users' lives even easier. Today we can safely say that this app has become the standard in its field.
You're Loaded
Slack turned out to be perhaps the biggest winner of all at the epicenter of the pandemic. Countless companies suddenly found themselves in the brand-new situation of having to switch to remote work overnight. It must have been a huge challenge for Slack's servers, but they held up impressively. Communication over the professional network remained unbreakable, despite the “heavy” video calls that only a few years earlier would have been unthinkable online.
“At first we had countless dumb ideas. After three weeks of pondering, we decided that the internal communication system we'd built while working on the game might be the product worth building,” Stewart recalls.
“Slowly, almost without noticing, we managed to create a system that covered all the ways communication happens in companies. It turned out to be really useful; at some point we were sure we had something we never wanted to work without again.”
The launch of Slack was announced in August 2013. By December 2015 the project had already attracted $340 million in investment and was used every day by at least 2 million people, about 570,000 of them paying subscribers.
This time Stewart found himself at the center of events at exactly the right moment. The deal in which the giant Salesforce acquired our hero's venture for $27.7 billion became the business event of 2021. At the time, our hero held 8 percent of the shares, which brought him a “modest” 1.3 billion dollars.
Outplaying the Game
As we've heard firsthand here on Digital Stories, the startup ecosystem very often turns into a roller coaster of horrors. It's fascinating to hear the conclusions of a man who has seen so much of both directions—failure and dizzying success.
“For me, the most wonderful methodology for building software goes like this: don't overthink what you're doing, forget about your ego, and forget about any expectations, too,” is Stewart Butterfield's advice in a nutshell.
And so, on both rides on the roller coaster, for Stewart everything began with a game and ended with a communication tool.
“The whole idea came from my father, who loved bridge. It was hard for him to find good partners, and playing against the computer bored him. So my idea was to bring people together so they could play but also talk to one another. It's a useful exercise to get your brain moving with a game. But there also has to be the element of friendship, of small talk around the table, of some competition,” says the creator of Slack.
“It's not games that have always interested me, but rather playing as an excuse for social interaction with others,” Stewart adds.
And here we are, back at communication and its online dimensions. What does the future have in store for us there? For now, at least, Stewart hasn't let on that he's working on his next game project to point us the way. We'll wait for him to spend some of his fortune and come back, and until then all we can do is guess what's coming in the hyperdynamic world of online communication…
In the meantime, if the world of entrepreneurship interests you, on Friday a new themed read awaits you—a meeting with a Bulgarian woman who travels the world gathering the essentials from the stories of successful entrepreneurs.
