If there’s fear in the market about a tech bubble popping, it seems to be lost on Slack CEO Stewart Butterfield.
The company he leads raised another $200 million in venture capital financing last week, boosting its valuation to $3.8 billion, up from $2.8 billion in less than a year. Since its launch two years ago, it has raised a total of $540 million.
Slack has with one stated goal: to create a messaging app that makes the lives of team members easier and more productive.
Collaboration With a Splash of Whimsy
The mission and the services Slack provides are simple, collaborative and full of bots and emojis that acknowledge your presence and keep you engaged.
Slack reports it added 3.5 times more users last year, a greater growth rate than most other cloud apps including Office 365, Box and Google Apps, according to a [email protected] 2016 study published by identity and mobility management service provider Okta last month.
The company claims 2.7 million daily active users, although only about 800,000 are paid users. The rest use a free version of the software.
The Unanswered Question
Slack is hot and hip and the darling of many workplaces. But is it worth $3.8 billion?
Is it really all that different from the instant messaging services of yesteryear, like AIM (AOL Instant Messenger), MSN Web Messenger or their corporate equivalents that also helped people communicate quickly, directly and efficiently without email?
All of those services were once hot and then fell out of favor when social networks like Facebook and Yammer came into vogue. And Yammer, which was the enterprise sweetheart just four years ago, is now fading (or being blended, if you prefer) into Office 365.
All About Timing?
Slack’s magic may be its timing.
“It’s a product that struck at the right time with the right slant towards simplification,” Constellation Research analyst Alan Lepofsky told CMSWire. He likened it to how Google became popular when there were other search engines already on the market.
“While Slack is essentially 1990’s IRC with a more modern look and feel, perhaps that is what people are looking for,” said Lepofsky, noting that chat applications such as Microsoft Skype/Lync or IBM Sametime, and social networks like Yammer and Socialcast have been available for years.
The problem, he explained, is that people rarely found a real “business fit” for them, and that vendors tried to sell them as company-wide tools. Slack, on the other, he noted, started out very focused on technical teams like developers, and was happy to be used by small groups of people.
Slack’s success, in Lepofsky’s view, is due at least partly to its integrations into systems that developers use like Github, enabling people to have discussions around events like code checkins.
“This ‘business value’ is what makes Slack stick,” he told CMSWire, noting that while collaboration platforms like IBM Connections and Microsoft Office365 have grown complex, “a simple application like Slack can offer a compelling alternative, unless it also becomes too complex.”
Conversation as a Work Product
Digital Clarity Group analyst Alan Pelz-Sharpe looks at Slack a little differently.
“Slack is much more than a chat application — it was one of the first to try to provide a platform for communicative work beyond emails,” he told CMSWire. “Email is still important but in (for example) journalism and media, the discussion is the work and work revolves around discussions. So in my opinion it is already much more than chat — it’s a solid framework for collaborative/communicative work.”
Pelz-Sharpe isn’t alone in this line of thinking.
Though he stopped short of calling content created in Slack a “document,” others, like Google Docs creator Sam Schillace, have done exactly that. The thinking goes something like this: Documents became letters; letters became email; emails (became, will become) digitized conversation — making conversation the new document.
And as Slack continues to add more enterprise-grade features, conversations that occur on the service could very well become systems of record. The thinking is a bit futuristic, but then again, maybe not.
There are also questions around whether Slack might become your new “window” to the world — in other words, the place where workers start and spend their days.
Slack is certainly doing all that it can so that there’s no need to leave. The service already offers a bounty (150 and growing) of apps ranging from GoSquared for taking action on real-time analytics to HelloSign for informing you when your documents have been signed to TalkLife Connect for bringing a therapist into your Slack-driven world for preservation of mental health to Zoho Books for accounting and more.
Last December, Slack, together with some of Silicon Valley’s elite investors like Accel, Andreessen Horowitz, Index Ventures, KPCB, Spark and Social+Capital, launched the “Slack Fund” to encourage developers to make Slack-integration as part of their core products.
While some are calling Slack just another chat app that aims to eliminate email at work, others are predicting that it might actually change the way we work. In other words, be transformative.
If the latter proves to be the case, then we may just be beginning to see Slack’s value … all $3.8 billion of it.