Sunk cost fallacy avoided: A real-world example
Startups are notorious for bleeding money into a failing product -- which is why the success story behind Slack, the messaging app built for businesses, is so unusual.
As former poker player and author Annie Duke writes in her 2023 book, "Quit: The Power of Knowing When to Walk Away," Slack's roots began with Glitch, an online game developed by founder Stewart Butterfield that quickly built a die-hard following after it launched in 2011. But within a year, Butterfield realized just how difficult and expensive it would be to convert new users into paying customers.
So he quit, telling investors in an email that he'd woken up "with the dead certainty that Glitch was over." By avoiding the sunk cost fallacy, Butterfield freed up the time and money to transform the internal messaging system his team had developed into an external product. The name was Slack -- an acronym for "Searchable Log of All Conversation and Knowledge."
Slack launched to the public in 2013, then went public in June 2019. A year and a half later, Salesforce (CRM +0.06%) bought Slack in a $27.7 billion deal.
