Why what you do when shutting down a business matters more than the failure itself

Ali Rayl, director of customer experience at Slack. Photo: supplied.

Ali Rayl, head of customer experience at Slack, is visiting Australia this week as the company opened its new Asia Pacific HQ in Melbourne yesterday.

Rayl is a founding employee, and interestingly, was the last employee hired to work on the video game “Glitch” before its collapse. Slack was born out of the game’s failure.

It was a case of déjà vu for Slack co-founder and CEO Stewart Butterfield, who was responsible for Flickr, which also emerged from a failed video game, and was later sold to Yahoo in 2005. “Glitch”, a nonviolent online game with an emphasis on teamwork, was his next big idea, launched in 2010, but it lasted just two years.

His latest venture, which was recently valued at $US2.8 million, was built on the communication tool the “Glitch” team used to talk to each other while building the game.

In its dying days , Butterfield and his management team ignored the general rule when it comes to culling employees in hard times: last in, first out, and kept Rayl on.

“I still feel some survival guilt over that to be honest,” she admits. “It was a pretty intense time.”

Before joining Slack, Rayl pledged to steer clear of enterprise software companies.

“I had done a lot of startups which a focus on enterprise in the past, and I had gotten tired of it because usually when you’re making software for businesses you have two different audiences: you have the customer, who is the person buying your software, and then there are the people using the software. So you’re making something for people that you’re not really focused on… and it’s deflating.

“So I was done, and I move on and I did a music software startup. Then I’m like ‘I want to do a video game.’”

So she signed up at Glitch.

Soon after, Butterfield pulled the pin because it wasn’t going to deliver the returns needed from the $US17.5 million investment that had been sunk into the idea. Despite closing “Glitch”, the business behind it, Tiny Speck, lived on, considering its next steps.

“It was ‘Oh man, this video game I really like it, this is super sad’,” recalls Rayl.

“I was like ‘What are we doing next?’ and Cal [‘Glitch’ and Slack co-founder Cal Henderson] said a workplace communications tool, and I’m like ..’OK’,” she said, remembering a slight hesitation because of the career backflip.

“Personally, I just felt awful. There were all these people that were working for this company for two or three years, they had a family, they were really tight-knit and then they didn’t have a job.”

But it was what happened next that was special.

“We spent the first month or two after shutting down the game setting up online profiles for them, helping get them jobs,” Rayl said. “Stewart spent a week writing heartfelt LinkedIn recommendations for everybody. We shut it down as well as we could.”

That attitude inspired Rayl to care so strongly about the Slack team and what they do.

“There was a time very early on, where we were like ‘Well, maybe we’ll be able to make a tool that enough people will use that the eight of us will be able to keep working together’,” she recounts.

“Ultimately we just wanted to make a good business that we were proud of and one that treats customers and employees really well.

“I really love the team. I’ve never seen a team of people that can execute so well, so quickly and get it right so often.

“I was like ‘I want to work with the team. I don’t care what we’re doing, this is where I want to be.’”

Now the team has grown from 125 employees this time last year to over 365 now, with 16 recently hired in Melbourne.

And it’s the way Butterfield acted when Glitch closed four years ago that helped make Slack the huge success it is now.

* The writer traveled to Melbourne as a guest of Slack.

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