How Slack and Flickr Founder Stewart Butterfield (Twice) Mastered the Art of the Pivot

In the past decade, the term “pivot” has become an integral part of the Silicon Valley lexicon. Perhaps it isn't surprising that the place that gave birth to FailCon — a conference to learn about failure — would embrace the concept of “if at first you don't succeed....” Yet most entrepreneurs think of pivoting too simplistically, buying into the popular press narrative of a single, bold decision.

Stewart Butterfield understands just how wrong that narrative can be. Stewart is quite possibly the “grandmaster” of the pivot, having turned two different failed video game companies into, respectively, Flickr (the first image-based social network, which presaged the success of Facebook, Instagram, and Snap) and Slack, the incredibly successful workplace messaging and collaboration service. These canonical pivots involved not only bold decisions, but also repeated failures, tearful goodbyes, and literal nausea. Fortunately, you don't have to go through Stewart's experience to benefit from the lessons he learned.

In this week's Masters of Scale podcast, Stewart tells the untold, messy story behind the pivots that created both Flickr and Slack. You'll learn how the idea of Flickr came to him while crouched over a hotel room toilet in New York, desperately chugging ginger ale to fortify himself to speak at a gaming convention in hopes of avoiding bankruptcy. You'll also hear how the pivot to Slack was even more traumatic — involving 15 consecutive failed pivots over the course of 18 money-losing months, leading to a tearful meeting where he laid off nearly his entire team.

Yet from these painful ashes arose Flickr, one of the first Web 2.0 success stories, and Slack, one of the today's enterprise unicorns. The key lesson that Stewart shares? Not only do you need to pivot towards your new business, you also need to pivot away from your old business. Unless you find a way to provide clear decisions and graceful closure for your team and customers, you'll be torn between old and new. In the case of Flickr, Stewart had to do some old-school political horse-trading to get the votes to switch to a new business model, while in the case of Slack, he took the time to throw a final party for departing staff and the hard-core fans of its videogame, then find new jobs for all the laid-off team members. Pivoting away may not seem as sexy as pivoting towards a shiny new business, but it is a key foundation for later success.

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As always, I'd like to hear your thoughts and reactions to this episode. Have you ever pivoted your business? Did you find a way to find closure and pivot away from old business model? Or did you find yourself torn between old and new?

Please write a short post on your LinkedIn newsfeed to share your answers with the wider community. Tag your post #mastersofscale so I can find it. And if you’d like, Tweet it at me (@ReidHoffman) and @MastersOfScale.