The Science of Quitting & How Slack became a Unicorn thanks to quitting...

Read time: 5 minutes

Last week: I wrote all about How To Quit based on my personal experience quitting my last company even when things were going well. You can read that (and all past issues, here).

It went down pretty well - so many of you messaged to thank me for sharing my experience, and inspiring them to think deeper about their current situation.

I had a LOT of requests to share more about quitting generally, so I delved into the research and pulled out a few gems for you this week. I also finished reading "Quit" by Annie Duke which has really helped shape it all - so before I waffle on too long, and you quit this episode - let's dive in.

QUIT

In "Quit," Annie Duke, a former professional poker player turned decision strategist, dives deep into the art and science of knowing when to walk away. Quitting isn't just about giving up; it's a strategic decision that can lead to better outcomes in work, life, and beyond.

If you've ever played poker, you'll realise the secret art is that the only way to win is to know when to quit.

Oh, the irony.
​

The Sunk Cost Fallacy.

Persistence isn't always a virtue.

Sometimes, it's costly and counterproductive.

The cost of sticking it out can often do more harm than good. With the Sunk Cost Fallacy, people often continue investing time, money, or effort into something because they've already invested heavily, not because it's the best decision.

Recognize when sticking it out is driven by past investments rather than future benefits. Anyone who's invested in markets, crypto (dare I even admit, NFTs) has learned this lesson the hard way. Losing any money feels so painful that you are willing to ride the painful journey all the way to the bottom - this is a psychological trap that social economic geniuses have studied to death. Don't get caught in this trap!

How to avoid it: Regularly reassess your goals and the progress toward them. Are you continuing because it's the best course of action, or because you feel too invested to quit?
​

Knowing When to Quit

Successful quitting involves recognising the signs that it’s time to move on. What you need for this is a set of 'Kill Criteria'.

Establish clear criteria, for when you will quit a project or endeavour. This involves setting benchmarks that, if not met, indicate it’s time to pivot or abandon the effort.

A great framing for this is to define the path for success for each milestone, and indeed your kill criteria with the word "UNLESS". Unless provides you the secret exit or re-entry back to your plan if something happens.

I actually used this once (this is an embarrassingly true story). One of my first businesses was, essentially like Groupon for students. It went viral, we made a lot of money totally bootstrapped very quickly, but then it started to go downhill and frankly in the cold light of day - I wasn't exactly proud of this business.

So over Christmas I said to myself - I'm going to shut this company down by the New Year and take all the profit from it - UNLESS - when I send an email to the 70,000 person email list, I get a bunch of complaints because people show us they really love us.

I sent that email and I got not a single person say 'oh no', 'but we love you', 'don't do it'. Just crickets. My intuition that I was building something meaningless on vapour doomed for eventual failure was bang on. I listened to my gut, I closed the company, took the money, put a downpayment on my first ever apartment (in Camden Town where I lived for the next 10 years) & never looked back.

An incredible decision (one of my finest, on reflection, I've made many awful ones too), and all thanks to figuring out when it was time to quit....unless....

The lesson here? Before starting any new project, define your "kill criteria." This might include specific timelines, financial targets, or personal satisfaction levels.

​
The Power of Opportunity Cost

Quitting frees up resources to pursue more promising opportunities. Understand that by sticking with one path, you might be missing out on better alternatives. Evaluate what you could achieve if you redirected your time and energy elsewhere.

Opportunity cost also comes with different baggage in different decades. In your 20s - your opportunity is your flexibility, ability to grow, but also your freedom. I spent the first half of my 20s employed, travelling the world, fucking about, going to festivals, loving and living life to the max. I only started in entrepreneurship at 26 - and that is one of my best decisions - the opportunity cost of starting on my own too young - was giving up my utter freedom to see the world and get real life experience outside my bubble.

In my 30s - I'm married, have a home, a daughter, a few businesses - the opportunity cost of making seriously risky decisions is huge because they impact other people now. It makes me less selfish, more thoughtful, but has plenty of downsides too - and quitting too comes with more risk.

When assessing your own opportunity cost - people tend to think with rose-tinted goggles that anything will be better, forgetting the old saying "the grass is always greener where you water it". Basically - you'll still need to put in the work - there are no magic free passes in life.

To get this right for you - periodically review your commitments and assess whether there are better opportunities you could be pursuing instead. Don't jump ship until you've really spent time evaluating the pros and cons, and talk to others about it too.

​
Cognitive biases

These often cloud our judgment about when to quit. One well studied one to watch out for is called the "Endowment Effect".

We overvalue what we own or are invested in, which can prevent us from quitting. Recognise this bias and objectively assess the value of continuing versus quitting.

Seek external perspectives. Consulting with mentors, colleagues, or advisors can provide a more objective view and help counteract personal biases.

​
Frameworks for Effective Quitting

It's good to have some structured approaches to make quitting decisions more straightforward, otherwise our emotions flare up and get in the way - here's some quick starting points:

Expected Value: Evaluate the expected value of continuing versus quitting. This involves assessing the potential outcomes and their probabilities.

Create a decision matrix that compares the benefits and drawbacks of continuing with those of quitting. Use this matrix to guide your decisions logically rather than emotionally.
​

Grinding vs. Quitting

Finally - the trickiest part to manage, knowing whether it's time for persistence or time for quitting. The trick is knowing the difference.

Grit vs. Quit: Grit is valuable, but it's crucial to recognise when perseverance is no longer productive. Balancing grit with the wisdom to quit can lead to better long-term success.

The only real way I've found to measure this sadly is reflecting on past decisions and giving myself some space and time to really think about what was the right call and what wasn't using some objective data or information that went beyond just my silly feelings.

Reflect on whether your current efforts are yielding progress or simply consuming resources. Use feedback and results to inform whether to keep grinding or to quit.
​

Takeaways for Success

1. Set Clear Kill Criteria: Define what success looks like and when it’s time to quit before you start any project.
2. Consider Opportunity Costs: Regularly assess if your current path is the best use of your resources.
3. Recognize Cognitive Biases: Be aware of biases like the sunk cost fallacy and endowment effect that might cloud your judgment.
4. Use Decision Frameworks: Apply structured approaches like expected value and decision matrices to make quitting decisions.
5. Balance Grit and Quit: Understand when persistence is valuable and when quitting is the smarter move.

Gritty Quitty Questions:

1. What are your current commitments, and do they align with your long-term goals?
2. Have you established clear criteria for when you will quit a project or endeavour?
3. Are there better opportunities you could pursue if you freed up resources by quitting something else?

Mastering the science of quitting is about making strategic decisions that enhance your long-term success.

Don't get it twisted, the most successful people on earth are the most successful quitters on earth. Quitting is for winners.

LinkedIn of the week: Before you quit your job...do this​

Podcast of the week: How to Quit as CEO - transitioning out your business with Evgeny Schadchnev​

My Tweet of the week The Neuroscience of Success​

​

The Art of Knowing When To Quit: The Slack Story

When I was quitting my last company and thinking about what next - one story kept getting sent to me. Stewart Butterfield's story of building Slack, the workplace communication behemoth, which underscores the importance of recognising when to pivot and embrace new opportunities, even at the cost of abandoning significant investments and ambitions.

The Birth of Slack from the Ashes of Glitch

In 2009, Butterfield co-founded Tiny Speck, a company aimed at creating an ambitious online game called Glitch. Despite assembling a talented team and investing substantial time and resources, Glitch struggled to gain traction. After two years of development and a series of beta tests, it became clear that the game's market potential was limited. In November 2012, Butterfield made the tough decision to shut down Glitch.

Recognizing the Pivot Point

Shutting down Glitch wasn't just a matter of abandoning a project; it meant walking away from millions of dollars in investment and countless hours of work. However, Butterfield's insight into the potential of a tool developed for internal communication during Glitch's development sparked a new vision. This tool, designed to streamline team collaboration, showed immense promise beyond the gaming industry.

Taking the Leap to Build Slack

Butterfield's decision to pivot from a failing game to a promising communication tool was not without risk. He gambled the future of his team and company on a product that, while internally successful, had yet to prove its value in the broader market. This strategic quit led to the development of Slack, launched in August 2013. The product addressed a universal pain point: the inefficiency of workplace communication.

The Opportunity Cost and the Scale of Success

By quitting Glitch, Butterfield forfeited the substantial investments already made. The opportunity cost was high, yet the potential rewards of pursuing Slack were higher. His bet paid off spectacularly. Slack quickly gained popularity for its intuitive interface and effective communication solutions, eventually becoming a cornerstone of modern workplace collaboration. By 2019, Slack had over 10 million daily active users and was valued at over $20 billion following its direct listing on the New York Stock Exchange.

Lessons on Quitting for Greater Success

Butterfield's journey with Slack offers crucial insights into the strategic art of quitting:

1. Evaluate Market Potential: Recognise when a product, despite considerable investment, does not meet market needs.
2. Leverage Existing Assets: Identify and repurpose valuable components from failing projects.
3. Take Calculated Risks: Understand that pivoting requires confidence in new opportunities and a willingness to embrace uncertainty.

By knowing when to quit, Butterfield transformed a failing venture into a transformative tool for global businesses, demonstrating that strategic quitting can lead to greater success.

Your Question, Answered

Every week, I pick a question to answer. Following the quitting theme last week, there were a lot about what to do next. I got this one from Brian:

Hey Dan, my startup is nearing the end of the road. We have 2 months runway & I need to decide whether to call it a day or take a similar path to you - restructure the 'cap table', (this is known as a 'recap' but basically means reorganise the ownership percentages btw). If you could do it all again - what would you do (and what should I do?)

Hey Brian, thanks for the honesty - this shit is tough. So - liquidating a company can be expensive - the common mistake most founders make is running out of money and not having enough to go through a formal liquidation process - if you are at 2 months runway, this is indeed the right time to be asking yourself these questions.

It's a tough place to be - I've been in that spot many times and got myself out of it - & in that spot and followed through with liquidating - the major difference was how much I wanted to keep that startup alive!

Personally, I'd avoid the recap if I could do it all again. It was a nightmare, cost a fortune on lawyers, has created a billion of problems later down the line, never goes away as a problem and in reality - never really makes investors happy anyway. If I was to do it all again, I would have shut down the company, and started again from scratch, for sure - based on the little info you've given me - I'd suggest the same to you. Make peace with the failure, quite honourably, dust yourself off and go again free from the shackles of the last trauma/startup!

Good luck mate.

1-1 Coaching with Dan

In my goal to help more entrepreneurs/ people who are looking to level up their careers, I've just started taking 1-1 consulting calls (only 1 a week)

Why book a call? Some of my expertise/success:

I've built 5 startups. 1 win, 1 fail, and 3 still going.

E Commerce: Heights - with revenue over $10M a year.

Community: Foundrs, one of the UK's top founder communities

Podcasting: Kindling Media - bootstrapped media company that makes the UK's top business podcasts, like Making Money and Secret Leaders with over 50M downloads.

Health/Mental Health: Managed to overcome burnout, insomnia, depression & anxiety in pursuit of success as I talk about in my interview with Steven Bartlett on Diary of a CEO​

Angel Investing: I've invested in over 85 startups

Coached & Mentored: Certified coach & done lots of mentoring

Personal Brand: Have grown to 100k on LinkedIn and X (Twitter) in the last 12 months

So if you're interested in booking a session with me to talk all things business or building a personal brand, book for 30-minutes or 45-minutes. (limited spots).

Science of Success Vault

I'm building a vault of valuable tools, resources and one sheets that I hope help you succeed.

These will be stored in the ever growing 'Science of Success' vault - you can always access that here

Want to take your success (even more) seriously? 👇​
🧠 Fuel your brain and feed your gut, try Heights here (use code 'SOSDMS' for 15% off your first month of any subscription

🎧 Check out my podcast Secret Leaders here​

​​​