Jul 23, 2025
TLDR (2-min read)
When Stewart Butterfield shut down his gaming company Glitch in 2012, he did something unusual: he treated the 40 laid-off employees with extraordinary care. He extended their healthcare, personally helped them find new jobs, and wrote individual thank-you notes. Eight months later, when he started Slack, those same people came rushing back. The result? A $27.7 billion exit to Salesforce. The lesson: how you treat people during difficult transitions shapes whether they become allies or ghosts. Smart companies are now systematizing this empathy to turn every ending into a future opportunity.
December 2012. Stewart Butterfield stared at his computer screen, dreading what came next. In thirty minutes, he'd have to tell 40 talented people that their quirky game company was dead, their jobs were gone, and Christmas was officially ruined.
Most CEOs would hide behind legal teams and corporate speak. Butterfield did something that seemed crazy at the time. Something that would create the foundation for one of history's fastest-growing companies and a $27.7 billion exit.
His secret wasn't brilliant strategy or perfect timing. It was treating people like humans during their worst day at work.
Here's how one compassionate layoff became the blueprint for building unshakeable business loyalty, and why the smartest companies today are copying this exact playbook.
When Dreams Die Before Christmas
Stewart Butterfield knew he had lightning in a bottle with Glitch. After selling Flickr to Yahoo, he'd raised $17 million to build something magical: a whimsical online game where players explored the minds of 11 cosmic giants, collaborating instead of competing in a world without violence.
The game had everything. Stunning psychedelic art, passionate fans who understood the vision, and a team that genuinely believed they were creating the future of gaming. The problem? Not enough people wanted to play it.
Despite pouring everything into user acquisition and feature development, Glitch never found its market. By December 2012, the numbers were brutal. The dream that was supposed to change everything was about to become another Silicon Valley cautionary tale.
Butterfield had a choice. He could follow the standard Silicon Valley playbook: quick layoffs, standard severance, minimal contact. Or he could do something different.
The Layoff That Rewrote the Rules
What happened next violated every piece of advice from lawyers and HR consultants.
Instead of a sterile email and security escorts, Butterfield gathered his entire team for radical transparency. No corporate euphemisms about "restructuring" or "market conditions." Just the unvarnished truth about why Glitch was closing and exactly where things went wrong.
But honesty was just the beginning. While his advisors probably cringed, Butterfield went further:
He extended healthcare benefits for months. When people are worried about feeding their families, removing healthcare anxiety isn't just kind. It's transformative.
He became everyone's personal recruiter. Butterfield didn't just offer references; he actively worked his network, personally introducing team members to hiring managers and spending hours polishing résumés.
He wrote individual thank-you notes. Not LinkedIn posts or company emails, but personal, handwritten notes acknowledging each person's specific contributions.
The result? Zero burned bridges. Zero Glassdoor revenge reviews. Just 40 talented people who felt genuinely valued, even in disappointment.
At the time, it looked like expensive sentimentality. Eight months later, it looked like genius.
The Psychology of Last Impressions and Customer Loyalty
Butterfield wasn't just being nice. He was using one of psychology's most powerful principles without even knowing it.
Nobel laureate Daniel Kahneman's research shows that people judge entire experiences primarily on two moments: the most intense point (the peak) and how it ends. A layoff is inherently a peak negative moment, but how you handle the ending shapes how people remember the entire relationship.
When Butterfield extended benefits, provided ongoing support, and wrote personal notes, he transformed the final chapter. Instead of "I got fired," the lasting impression became "I was valued, even when they couldn't keep me."
This isn't just feel-good psychology. It's business strategy. The companies that understand this don't just manage transactions; they create experiences that people remember positively, even when things go wrong.
The Return That Built an Empire
Eight months after those tearful layoffs, Butterfield sent out an email: "We're pivoting to something new. It's called Slack."
The response was immediate. The same people he'd laid off didn't just reply. They replied within minutes. Engineers who'd cleaned out their desks were suddenly asking how quickly they could start cleaning out new desks at their current companies.
Why? Because those layoffs hadn't felt like exile. They'd felt like a temporary setback handled with extraordinary care. The team trusted Butterfield with their next career bet because he'd proven he'd have their backs when everything went sideways.
That trust became rocket fuel. Slack shipped its beta in August 2013 and exploded from zero to 8,000 users in 24 hours. Word-of-mouth accelerated as early adopters evangelized the tool that made work feel more human. By 2021, when Salesforce wrote that $27.7 billion check, many of those original Glitch refugees were ringing the bell on one of SaaS history's biggest exits.
Building Employee Loyalty Through Systematic Care
The challenge isn't understanding why empathy works. It's scaling it without losing authenticity.
Butterfield could personally manage 40 relationships, but what happens when you're nurturing hundreds of connections across customers, partners, and team members? The companies mastering this don't just care more. They create systems that deliver personal experiences at scale.
Instead of hoping you remember important moments, they create systems that automatically recognize transition points. When contracts end, when valued employees leave, when customers churn. And they trigger meaningful responses.
Instead of generic corporate communications, they send personalized acknowledgments that reference specific contributions and shared experiences.
Instead of letting relationships fade, they maintain warm connections that create natural opportunities for future collaboration.
The math is compelling: replacing a skilled employee costs 1-2x their annual salary. Reacquiring a lost customer costs 5x more than retention. A thoughtful gesture today, whether it's a handwritten note, a carefully chosen gift, or simply genuine follow-up, can save five figures tomorrow.
Smart companies are building this kind of systematic care into their operations. When someone's contract ends, when a valued customer relationship changes, when any significant transition happens, these become opportunities to plant seeds for future relationships instead of just closing chapters.
The 5-Minute Action Plan
Ready to start building your own pipeline of loyal alumni? Here's where to begin:
Audit your relationship exits. Look at everyone who's left your company or stopped being a customer in the past year. These aren't closed books. They're dormant relationships.
Identify your highest-value alumni. Choose 5-10 people you'd genuinely want to work with again. Former employees who were rock stars, customers who were great fits but timing wasn't right, contractors who delivered exceptional work.
Send a no-agenda check-in. Reach out with genuine curiosity about their current projects, zero sales pitch. Something like: "I was thinking about the great work you did on [specific project], and I'm curious how things are going at [new company]."
Add a thoughtful touch. Consider sending something personal. Their favorite coffee, a book that made you think of them, or even just a handwritten note. The goal isn't to impress with expense but to show you remember them as a person.
Build the follow-up into your system. Don't rely on memory. Set reminders to check in again in 3-6 months. Relationships compound with consistency, but only if you actually maintain the consistency.
You'll be surprised how many people respond positively to authentic outreach. And you'll be even more surprised how often those conversations lead to referrals, new opportunities, or full comeback stories.
Three Principles That Scale
Endings shape memories more than beginnings. In a world of automated everything, how you handle difficult moments becomes what sets you apart. Layoffs, contract endings, service cancellations. Most companies optimize for efficiency; the smartest ones optimize for lasting impressions.
Consistent care beats sporadic kindness. Butterfield's personal touch worked for 40 people, but the companies winning long-term build systems that deliver personal experiences at scale. Technology should amplify human thoughtfulness, not replace it.
Trust converts faster than marketing. The team that returned to build Slack didn't need to be convinced or sold. They already trusted Butterfield's leadership. When people have positive emotional associations with your brand, they become your most effective advocates.
Building Business Relationships That Last
The best time to plant the seeds of future loyalty is during today's transitions, especially the ones that feel final. Whether you're managing customer churn, contractor relationships, or team changes, you're either building bridges or burning them with every interaction.
The companies that master this aren't just managing exits. They're creating networks of advocates that become their biggest advantages. Every thoughtful goodbye becomes a potential future hello.
Ready to turn your relationship transitions into your biggest source of growth? Checkout the RevSend Platform to get started