Slack, the enterprise messaging tool that lets business colleagues trade words, work on projects together, share links and other things in real time, has come a very long way since launching in August 2013.
After selling photo-sharing app Flickr to Yahoo in 2005, Canadian entrepreneur Stewart Butterfield started a new company with the intention of building a game. Years later Butterfield and his team realized that a chat app they had been building on the side showed great potential as an alternative to email and decided to focus on that instead.
Their choice paid off. At the end of January 2019, parent company Slack Technologies said the office messaging service had more than 10 million daily active users and over 88,000 organizations paying for it, a figure that rose to over 95,000 by the end of April.
On February 4, the company filed to go public with a direct listing. It will begin trading on the NYSE under the symbol "WORK" on June 20 and its reference price was set at $26 per share, which would give it a valuation of $15.7 billion.
Here is a breakdown of some important steps that helped Slack get where it is today.
On the day that Slack was released, 8,000 companies signed up to use it. Brand Minds credited the app’s immediate popularity to word-of-mouth marketing strategies.
Before launching, Butterfield and his team got their friends and acquaintances working at other companies to test the app and give feedback on it. That approach gave them a perfect medium to spread the word, while ensuring that their product catered to customer needs.
Later on, Slack began using other methods to grow its brand name. A blog, SlackHQ.com, was published on Medium.com, giving it 125,000 followers. Butterfield and his team also used Twitter as a promotional tool.
“We bet heavily on Twitter,” Butterfield told Fast Company in 2015. “Even if someone is incredibly enthusiastic about a product, literal word-of-mouth will only get to a handful of people – but if someone tweets about us, it can be seen by hundreds, even thousands.”
Twitter also proved useful in other ways, helping Slack to communicate with its customers 24/7.
In its early days, Butterfield reportedly obsessed over how to bill users. WalmartLabs, Slack’s biggest single customer at the time, was used as an important case study.
The Slack team discovered flaws in WalmartLabs billing system, noticing that half of its users were inactive, yet still getting charged. From here, the “fair billing policy” was born. Butterfield pledged to scan every account each night and make pro-rated refunds every ten days to inactive account users. This approach went down a storm with customers.
"That, obviously, didn't get us the sale in the first place, but it gets us a, 'Wow, that's amazing,'” Butterfield said, according to Business Insider. “They'll tweet about it, tell their friends about it. They'll be very happy with us. They'll be much more likely to renew. They have a positive impression. That positive impression, obviously, makes a huge difference.”
Deep Integration With Third-Party Apps
Slack also won plaudits for its deep integration with other relevant work-related apps. Users are given access to hundreds of different services from other providers, giving them plenty of tools to do whatever they need in one location.
For example, customers can use Workbot to streamline work with custom integrations, access Google Drive and Calendar, create to-do lists with Workast, fill job vacancies with Lever and keep track of projects through Trello. In total, there are more than 1,500 apps in the Slack App Directory.
Fighting Off Giants
Slack’s shrewd business decisions have enabled it to successfully see off numerous competitors over the years. Potential investors will be waiting to see if it can continue to prosper now that some of the world’s biggest software giants have moved into the market.
Alphabet Inc.’s (GOOGL) Google Hangouts and Facebook Inc.’s (FB) Workplace are currently not viewed as a massive threat. Google’s offering is popular, but serves a different purpose as a more lightweight offering than enterprise-grade solutions. Facebook’s Workplace, meanwhile, has grown slowly, amid data privacy scandals. Amazon.com Inc. (AMZN), whose cloud unit runs a paid-for online video conferencing application called Chimes, was said to be interested in buying Slack in 2017, according to Bloomberg. It was speculated that Slack could help Amazon dominate the cloud marketplace and an offer would spark a bidding war with Google.
Microsoft Corp. (MSFT) poses a much bigger obstacle. In the winter of 2016, Microsoft’s founder and CEO, Bill Gates and Satya Nadella, decided not to purchase Snap for $8 billion and launched their own competing product named Teams instead.
Since then, the Redmond, Washington-based tech giant has made huge strides. According to a survey of 900 businesses in Europe and the US by Spiceworks, adoption of Microsoft Teams is skyrocketing and could soon overtake Slack as the world’s most popular business messaging app.
Key to this success was Microsoft’s decision to bundle Teams with Office 365 subscriptions at no extra fee. Many businesses use Office 365, making the app a default choice for many.
Microsoft doesn’t break out monthly user figures. However, it was confirmed that 329,000 organizations were using Teams as of Sep. 2018, up from 200,000 just six months earlier.
The world’s fourth-biggest company certainly has the expertise and capital to take down its biggest rival in the space. Yet Slack continues to be a popular choice for start-ups and small businesses, owing to its adaptable interfaces, freemium version and access to some of the best third-party apps.
For now, it appears there is enough room for two apps to prosper in this mushrooming sector.