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Battle Royale: Workplace Chat Apps (Slack vs. Microsoft vs. Facebook vs. Google)

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Michael Wenner   June 18, 2019

From a “Tiny Speck” to Workplace Chat Domination 

Before its meteoric rise to unicorn status, Slack humbly began as an internal chat tool for the company's - then called Tiny Speck - main product, a browser-based game called Glitch. In the throes of cracking the MMORPG landscape, the Tiny Speck team created an internal chat tool to facilitate game development. When the founders realized that the underlying game software was on the way out, they re-assessed and found that their internal chat tool was the best path forward, subsequently rebranding to Slack.

Slack by the Numbers

Slack unveiled the numbers behind its platform on April 26, 2019 when it filed its direct listing paperwork. The company boasts over 10 million daily active users in over 150 countries. Additionally over 600,000 companies use Slack, though only 88,000 are paid subscribers. The company reached ~$400M in revenue in FY2019, growing 82% year over year, but has continued to generate ~$140M in yearly losses since 2017.

Slack vaulted to these numbers by billing itself as a collaboration tool, bringing together all the various communication tools under its platform in an aim to increase productivity. Based on a Slack survey from 2015, users reported almost 50% reduction in email usage, 24% reduction in meetings and an increase of productivity around 33%.

Conversely, Slack’s platform has met criticism for an environment where employees are inundated with messages in various groups and chats, which can ultimately reduce productivity. While the jury may be out, there is no questioning that Slack has changed how employees communicate.

Chat App Battle Royale (WORK vs. MSFT vs. FB vs. GOOGL)

Atlassian's HipChat (RIP)

With any hit application come copycats, and tech giants have entered the market to capture a piece of the pie. Slack originally competed against Atlassian - known for its issue tracking application, Jira, and team collaboration product, Confluence. Atlassian offered HipChat, but it failed to gain traction among users, despite Atlassian’s well established name in the software industry.

In 2018, Atlassian decided to sell HipChat’s intellectual property to Slack and collaborate rather than compete. As HipChat sailed into the sunset, other companies joined in the fray. Google, Microsoft and Facebook offer competing products through their enterprise solutions.

Microsoft Teams

Microsoft offers Microsoft Teams as a part of its enterprise Office 365 subscription. Upon launch, Microsoft boasted over 500,000 users. Microsoft has been able to convince enterprise customers to adopt Teams, since it’s a free add-on to premium business subscribers. As a result, Microsoft has reduced a large barrier to adoption.

Facebook Workplace

Slack additionally competes against Facebook after the company released Facebook Workplace in October 2016. Facebook marketed Workplace with eyes on Slack, calling it a “work collaboration tool.” Workplace’s genesis, surprisingly, parallels Slack’s, as it was originally created as an internal collaboration tool to reduce the reliance on emails. Workplace is notably different from Slack as it more closely mirrors Facebook’s layout, using news feeds and user “walls.”

Google G-Suite

Lastly, Slack competes against Google through Hangouts Chat and Meet. Google sells collaboration and workplace tools through Google G-Suite, much like Microsoft’s Office 365 product suite. Google has co-opted Microsoft’s strategy and offers Hangouts Chat and Meet as a free add-on to G-Suite subscribers.

What's Next for Slack?

Slack faces stiff competition as it battles against three tech giants offering substantially similar products. Slack will need to continue to provide integrations and functionalities that make Facebook Workplace, Microsoft Teams, and Google Hangouts Chat and Meet pale in comparison.

Finally, Slack will need to convince enterprise customers that the added functionality warrants a paid subscription outside of their current workflow tools. Through its S-1 filing, Slack has shown that it is focused on acquiring customers, and as the company enters the public markets, investors will focus on Slack’s total user growth and paid subscribers.

Slack IPO Date and Info

Slack IPO Date: Thursday, June 20, 2019.
How to Invest in Slack Stock: Like Spotify, Slack will list directly on the NYSE.
Slack IPO Price: Slack shares have traded as high as $31.50 in the private market.
Slack IPO Center: Visit Our Slack IPO Center for our full Slack S-1 Review.
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