Fog Creek Software Becoming a Betaworks-Style Innovation Lab

Fog Creek Software is a Silicon Alley survivor. Founded in 2000, the company ran smack into the dot-com bust before

Blame Trello for the housing bubble.

Fog Creek Software is a Silicon Alley survivor. Founded in 2000, the company ran smack into the dot-com bust before it had fully hatched. “We were just trying to keep ourselves in business, so we looked at what we had built for ourselves, and we settled on this bug tracker we had made in house,” Fog Creek Software co-founder Joel Spolsky told Betabeat over the phone last night. The resulting software, FogBugz, has gone on to be one of the best selling bug tracking services, giving Fog Creek the freedom to fund a series of interesting projects.

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“We reached a certain point where I realized we had this mature product, kind of running under its own steam, and while we continue to improve and update it, we could take eight people off of FogBugz,” he added. Those eight employees were split into teams of two and given the freedom to spend three months building something that interested them. “I like to think of this place as an idea factory,” said Mr. Spolsky, echoing a sentiment betaworks co-founder John Borthwick has shared with Betabeat. “They have some time to work on something and if its great, we might scale. If not, we pivot, or kill the project and try something totally new,” explained Mr. Spolsky.

The newest idea to come out of this is Trello, a project management tool that Fog Creek has been using internally and decided to release as a free web app. Betabeat has been testing out Trello with our small three person team. Its intuitive to use and seems to offer both a broad and a granular way of dealing with projects coming down the pipe. “It started out as a small project and then it caught on and more people moved to that team to work on it. When we saw the traction it got internally we decided to push it public,” said Mr. Spolsky.

The service, says Mr. Spolsky, is meant to encourage the “agile” development methodology so popular among software engineers these days. “But we were very careful not to position this as a tool for just programmers. Agile works equally well on a sales team or in an editorial setting.”

There are no plans to monetize Trello right now, although its easy to see how it could be turned into a paid tool like Basecamp. Mr. Spolsky says that in the future they may begin releasing interesting projects even when they have no apparent path to profit. “We built this thing internally, WebPutty, and I don’t have a clue how we could get people to pay for that. But we’ve put out a public beta and we’ll see what happens.”

In the meantime, Stack Exchange, which Mr. Spolsky started with Jeff Atwood, has secured a big round of financing, become the official Facebook developer forum and continues to grow at an astronomical rate. “I think Stack Exchange is probably the first company I’m involved with that has a good chance to go public,” said Mr. Spolsky.

Fog Creek Software Becoming a Betaworks-Style Innovation Lab