The Top 5 Side Projects That Became Billion Dollar Tech Companies and What You Can Learn From Them

Burbn was not, however, terribly successful. The app was too complicated, Sawyer points out, and had “a jumble of features that made it confusing.” Systrom, however, kept tweaking the app. He paid attention to how people were using it. He brought on another programmer, Mike Krieger; the pair used analytics to determine how, exactly, their customers were using Burbn. Their finding? People weren’t using Burbn’s check-in features at all. What they were using, though, were the app’s photo-sharing features. “They were posting and sharing photos like crazy,” Sawyer notes.

At that point, Systrom and Krieger decided to double down on their data: They focused on their photo-sharing infrastructure and scrapped almost everything else. Burbn would become a simple-photo-sharing app.

Slack daily active users

The team spent months — then years — painstakingly designing critically lauded artwork and solving tough engineering challenges. But at some point, it became clear that Glitch did not appeal to the masses. “It was so weird and unfamiliar to people,” Butterfield says. “They’d be half an hour into this and they’d still be like, ‘What is this game?’”

The Glitch team experimented with different ways to onboard people: Explainer videos, different customer acquisition strategies. Nothing worked. Only five percent of people who tried the game stuck with it.

Then came that fateful day in November 2012, when Butterfield told the team he’d made the tough decision to shut down the company, tears rolling down his face.

Before the holidays struck, they had decided to do a complete 180. They’d go from an imaginative and beautiful game to an enterprise communication application. Two ideas that could not be more drastically different.

Why enterprise communication? Well, it was the only product they had up their sleeve that made sense.

The Glitch team had built an internal chat system while they developed the game. Every employee would work on it in their spare time. Although it was clunky, its features were robust.

When it came time for the pivot, Butterfield and his remaining team decided they’d spin out that feature and try to turn it into a company.

In January 2007, with Lefkofsky’s backing, Mason started working on a company — a do-gooder enterprise called The Point. The Point was a social media platform designed to get groups of people together to solve problems.

The Point was not intended to be a big money-making enterprise, and by one early employee’s account, that was fine with most of the staff.The Point launched in June. It gained modest traction in Chicago, but basically went nowhere.

Every Monday, Lefkofsky, Mason, and a handful of early employees would meet to talk about the Point’s progress. One Monday, in the middle of 2008, Lefkofsky raised an idea he thought could revitalize the struggling start-up, based on a campaign he’d seen launched on The Point.

Ordinarily, people used The Point to organize around some sort of cause that might make the world a better place.

But in this case, a group of users decided their cause should be saving money. Their plan was to round up 20 or so people who all wanted to buy the same product and see if they could get a group discount.

Through the rest of the summer and early fall of 2008, Lefkofsky would not let that idea go. He’d bring up all the expensive purses his wife and all her friends were buying, and say, “It’s crazy! Couldn’t they buy 20 of them and get a discount?”

Around this time, the global economy entered free-fall as the sub-prime mortgage crisis exploded and credit markets ground to a halt. Then in September 2008, Lehman Brothers filed for bankruptcy and famous Silicon Valley venture capital firm Sequoia sent out a presentation called “R.I.P. Good Times.” Mason and Lefkofsky decided to lay some people off.

“There was this pressure from the market crash [and] looking at our burn rate and revenue — it was time for us to try something to scratch that itch,” says a source close to early employees.

Groupon — a side project launched out of desperation by a team of do-gooders who professed no real desire to make big bags of money — was born.

Next, Odeo moved into an office and started hiring more employees — including a quiet, on-again, off-again Web designer named Jack Dorsey and an engineer named Blaine Cook. Evan Williams became Odeo’s CEO.

By July 2005, Odeo had a product: a platform for podcasting.

But then, in the fall of 2005, “the shit hit the fan,” says George Zachary, the Charles River Ventures partner who led the firm’s investment in Odeo.

That was when Apple first announcediTunes would include a podcasting platform built into every one of the 200 million iPods Apple would eventually sell. Around the same time, Odeo employees, from Glass and Williams on down, began to realize that they weren’t listening to podcasts as much as they thought they would be.

Says Cook: “We built [Odeo], we tested it a lot, but we never used it.”

Odeo co-founder Noah Glass gravitated toward Jack Dorsey, whom Glass says was “one of the stars of the company.” Jack had an idea for a completely different product that revolved around “status” — what people were doing at a given time.

One day in February 2006, Glass, Dorsey, and a German contract developer Florian Weber, presented Jack’s idea to the rest of the company. It was a system where you could send a text to one number and it would be broadcasted out to all of your friends: Twttr.

Before Pinterest became social media’s fastest growing website, andlanded on the cover of Fast Company, CEO Ben Silbermann set out to transform every cell phone into a clothing retail outlet with an app called Tote.

He didn’t succeed.

Designed to change shopping on your phone from being a “pain” to “easy and fun,” according to its Facebook site, Tote connected consumers with dozens of retailers, including Banana Republic, Anthropologie, and American Apparel.

While the app was a suitable replacement for bulky catalogs, what Tote didn’t do was make mobile payments easy. At the time, the payment technology just wasn’t advanced enough to allow for simple, on-the-go transactions, said Cohen in a telephone interview. “There wasn’t the level of sophistication that there is today.” (Cohen, chairman of New York Angels, made clear he was not speaking on behalf of the company, only giving his perspective as an investor — and he declined to disclose how much he’s invested.) The lack of a workable transaction system was more than a little inconvenient for an app that marketed itself as making shopping more convenient. It threatened its very existence.

Cohen claims he wasn’t concerned that Tote was a dud and Silbermann decided to move in another direction. He was backing Silbermann, not any particular business model. And besides, Cohen said, he viewed the Tote-to-Pinterest transformation as an “iterative” one, a “direct outgrowth of what he learned from the first business.” Silbermann, Cohen said, saw “an unmet need, and obviously a huge opportunity.”



"Everything you touch you change. Everything you change, changes you" - Octavia Butler, Parable of the Sower

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