Glitch in the plan

It’s unlikely that anyone outside of the gamer community would have ever heard of the browser-based, multi-player video game Glitch. A non-combat game that focused on collaboration and collective activities, its business model was a classic freemium offering: free to play, with customisation available for a fee. Launched in September 2011, it failed to catch on, and was ditched by its founder, Stewart Butterfield (who had previously founded photo-sharing platform Flickr), just over a year later. That wasn’t the end of the company behind it, Tiny Speck, however. The firm, which was split between offices in San Francisco and Vancouver, had long communicated using a bespoke tool it had created, the not-so-catchily-named Searchable Log of All Conversation and Knowledge, built with the collaboration that had driven Glitch very much to the forefront. Convinced that the tool had legs, Butterfield renamed it with an acronym and made it available to other firms, which quickly saw its value. As the user base grew, in 2013 Tiny Speck raised 17 million US dollars in investment for further development. In 2014, a further 162 million US dollars was raised, and Tiny Speck, by now a unicorn, became Slack. In 2021, Slack was acquired by Salesforce for more than 27.7 billion US dollars. Its pivot from a game without value to a messaging platform used by nearly 80 per cent of the Fortune 100 was one of the most valuable pivots in history, with lessons for all potential firms looking at reinvention.

The first is that there is already likely to be value within a company, and it’s not always hidden, just simply not thought of as a product that the wider world might be ready to spend any money on. Tiny Speck spent over a year trying to monetise a game while overlooking something that its own staff used every day, and clearly valued. The internal tool that eventually became Slack earnt nothing, simply allowing two offices, in San Francisco and Vancouver, to stay in touch with each other. It’s arguably much the same trick that Amazon pulled off when it realised that the infrastructure it had built to run its own online retail operation might be of value to outsiders, giving birth, in 2006, to Amazon Web Services (AWS). By 2024, AWS, which now supports much of the internet, was generating revenue close to 40 billion US dollars, roughly 57 per cent of the group's total on under a fifth of its sales. AWS is another example of an asset a company should be selling can often be something it built for itself and (initially) never intended to make available to the wider world.

By-products outliving products is a pattern far more common than generally perceived

The second lesson is that reinvention requires bravery. It takes a great deal of nerve to drop an original idea completely, especially when it’s an idea that a firm might be overly attached to. Butterfield managed to overcome this, closing Glitch and letting most of the team go, and even offering to hand back money to his investors rather than pursue a product that he had come to realise would not be a success. One of those investors, Andrew Braccia of Accel, told Butterfield he would back whatever he did next. A less stout approach might have kept Glitch going for as long as possible, with what became Slack neglected and undeveloped.

A third lesson is that by-products outliving products is a pattern far more common than generally perceived, at least for firms and founders who know where to look. Butterfield had form here, given that his first firm, Ludicorp, set out to build a game called Game Neverending, failed, and created off the back of it a photo-sharing feature that became Flickr, sold to Yahoo in 2005 for around 25 million US dollars. When Glitch was closed, Butterfield already knew that there might be value in combing through the debris in search for hidden treasure. It’s a lesson founders should take on board, but many struggle with given that to concede that the product they set out to build is not the one worth keeping is one of the hardest things to do in business. The most successful founders however have the ability to detach themselves from sentiment and let go. And it makes the Searchable Log of All Conversation and Knowledge just that, a one-stop-shop for any founder wanting to learn about where value might truly lie.