In a $27.7 billion deal in 2021, Salesforce’s finalized the acquisition of Slack, which was integrated into Salesforce. Today Slack is still a product mostly independently managed by Salesforce, which incorporated some of its features within its platform. Salesforce is primarily owned by entrepreneur Marc Benioff.
| Aspect | Description | Analysis | Examples |
|---|---|---|---|
| Products and Services | Slack Technologies, Inc. offers a messaging and collaboration platform known as Slack. The core offering is the Slack app, available on desktop and mobile devices, which enables teams and organizations to communicate, collaborate, and share information in real-time through channels and direct messages. Slack also provides various integrations and third-party apps through the Slack App Directory to extend functionality. Additionally, the company offers premium plans, including Slack Plus and Slack Enterprise Grid, with advanced features and security options. | Slack’s primary product, the Slack app, serves as a central hub for team communication and collaboration. Integrations and third-party apps enhance functionality and customization. Premium plans cater to organizations with specific needs, offering advanced features and security. | Slack app (desktop and mobile), channels and direct messages, integrations and third-party apps (Slack App Directory), premium plans (Slack Plus, Slack Enterprise Grid), advanced features, security options. |
| Revenue Streams | Slack generates revenue primarily through subscription fees for its premium plans, including Slack Plus and Slack Enterprise Grid. These plans offer advanced features, increased storage, and enhanced security options. Additionally, the company earns income from the Slack App Directory through partnerships and integration fees. | Subscription fees from premium plans provide a significant source of income, especially from businesses and organizations. The Slack App Directory generates revenue through integration fees and partnership arrangements. | Revenue from subscription fees (e.g., Slack Plus, Slack Enterprise Grid), income from the Slack App Directory (e.g., integration fees, partnership arrangements). |
| Customer Segments | Slack serves a diverse customer base, primarily consisting of businesses, organizations, teams, and professionals seeking improved communication and collaboration tools. The platform appeals to a wide range of industries and sectors, from tech companies to healthcare and education. | Slack’s target demographic encompasses businesses, organizations, teams, and professionals seeking efficient communication and collaboration solutions. The platform’s flexibility caters to diverse industries, including tech, healthcare, education, and more. | Businesses, organizations, teams, professionals, users seeking improved communication and collaboration tools, diverse industries and sectors. |
| Distribution Channels | Slack distributes its products and services primarily through its website, where customers can sign up for subscriptions and access resources. The company also utilizes mobile app stores for app distribution. Additionally, Slack may partner with third-party platforms for integrations and cross-promotions. | The website is the central distribution channel, where customers can sign up for subscriptions and access resources. Mobile app stores enable easy access to the Slack app. Partnerships with third-party platforms extend market reach and integration options. | Distribution through the Slack website (slack.com) for subscription sign-ups and resources, app distribution through mobile app stores (e.g., Apple App Store, Google Play Store), partnerships with third-party platforms for integrations and cross-promotions. |
| Key Partnerships | Slack collaborates with various technology companies and software providers to offer integrations through the Slack App Directory. The company may also partner with third-party platforms and developers to create and promote customized solutions. Additionally, Slack forms strategic alliances with businesses and organizations for enterprise-wide adoption. | Collaborations with technology companies enrich the Slack ecosystem with integrations. Partnerships with third-party platforms and developers offer customization options. Strategic alliances with businesses and organizations drive enterprise-wide adoption. | Collaborations with technology companies (e.g., Google, Microsoft) for integrations, partnerships with third-party platforms (e.g., Salesforce, Atlassian), developers for customized solutions, strategic alliances with businesses and organizations for enterprise-wide adoption. |
| Key Resources | Slack’s key resources include its messaging and collaboration platform, the Slack app, a vast user base of businesses and teams, a network of third-party integrations and apps in the Slack App Directory, a global user community, brand recognition, a commitment to user-friendly design, and a focus on security and data privacy. | The messaging and collaboration platform is the core resource, facilitating efficient team communication. The Slack app provides user access and convenience. A vast user base ensures platform activity. Third-party integrations and apps enhance functionality. A global user community fosters engagement. Brand recognition builds trust. User-friendly design promotes usability. A focus on security and data privacy is essential. | Messaging and collaboration platform, Slack app, vast user base of businesses and teams, third-party integrations and apps in the Slack App Directory, global user community, brand recognition, user-friendly design, focus on security and data privacy. |
| Cost Structure | Slack incurs costs in platform maintenance and development, research and development efforts for new features, marketing and advertising campaigns, employee salaries (including engineers and developers), customer support operations, and investments in security and data privacy measures. | Platform maintenance and development costs ensure functionality and improvements. Research and development expenses drive innovation and feature development. Marketing and advertising campaigns promote user engagement. Employee salaries, especially for engineers and developers, are a significant expense. Customer support operations are essential for user assistance. Investments in security and data privacy measures require resources. | Costs related to platform maintenance and development, research and development of new features, marketing and advertising campaigns (e.g., Slack marketing efforts), employee salaries (e.g., engineers, developers), customer support operations, investments in security and data privacy measures. |
| Competitive Advantage | Slack’s competitive advantage lies in its user-friendly messaging and collaboration platform, a vast network of third-party integrations, customization options, a global user community, a commitment to security and data privacy, and a focus on user experience. The platform’s ease of use and flexibility make it a popular choice for teams and organizations. | A user-friendly platform simplifies communication and collaboration. A vast network of third-party integrations enhances functionality. Customization options cater to unique needs. A global user community fosters engagement. A commitment to security and data privacy builds trust. A focus on user experience promotes usability. | Slack’s user-friendly messaging and collaboration platform, a vast network of third-party integrations, customization options, a global user community, a commitment to security and data privacy, focus on user experience. |
| Value Proposition | Slack offers businesses, organizations, teams, and professionals a streamlined and user-friendly platform for real-time communication and collaboration. The platform provides efficient messaging, channels for team discussions, integration with third-party apps, customization, and a focus on security and data privacy. | Slack’s value proposition centers on simplifying team communication and collaboration. The platform offers efficient messaging, organized channels, extensive integrations, customization options, and a commitment to security. Users benefit from streamlined communication and enhanced productivity. | A streamlined and user-friendly platform for real-time communication and collaboration, efficient messaging, organized channels, integration with third-party apps, customization, a focus on security and data privacy. |
Background
Slack is a popular messaging and collaboration platform that is widely used by organizational teams around the world. The platform was developed by Slack Technologies, a software company that was founded in Vancouver, Canada, in 2009 by Stewart Butterfield.
In this article, we’ll discuss Slack’s history and some of its key moments.
Flickr and Tiny Speck
Many years before Slack existed, in 2002, Butterfield co-founded the Vancouver-based company Ludicorp.
The impetus for the company’s establishment was a massively multiplayer online (MMO) game called Game Neverending, but the venture was later shelved for a more feasible project called Flickr.
When Flickr was acquired by Yahoo in 2005, Butterfield decided to make another attempt at developing a game.
He later founded Tiny Speck in 2009 with Flickr chief software architect Cal Henderson and fellow former Flickr employees Serguei Mourachov and Eric Costello.
No one knew what Tiny Speck did for a while, but after months of speculation, the social MMO game Glitch was launched on September 27, 2011.
By 2012, however, it became apparent that Glitch would join Game Neverending on the scrap heap.
Slack emerges
According to Slack product architect Johnny Rodgers, Butterfield remarked that “If we keep going as we are, we’ll burn through the rest of our money in a few months and be left with nothing to show for it. But if we stop now, we can use that money to build something else.”
That “something else” would be Slack, which was based on an internal communication tool Butterfield had already created for the team at Tiny Speck.
Slack, an acronym for “Searchable Log of All Communication and Knowledge”, underwent beta testing in 2013 and was made available to the public in February 2014.
Early success
Slack was an instant success because of Tiny Speck’s expertise in the gaming industry.
Butterfield and his compatriots already knew how to enhance the gameplay experience and make repetitive tasks more interesting, and this talent easily transferred to workplace communication.
Two factors made Slack irresistible to customers:
- Transparency – to see what others were working on, teams used to have to get up and walk over to a colleague in another department. Slack increased transparency across teams and departments and offered a concrete record of all communication.
- Centralization – Slack managed to centralize communications while also insulating users from distraction. Rather than share a file on Dropbox or send an email in Outlook, for example, users were suddenly able to perform tasks in one interface and avoid switching between apps.
By November 2014, 30,000 teams were using Slack with 73,000 subscriptions to the platform’s premium tier.
This was soon followed by a $120 million Series B funding round which valued the company at $1.2 billion and involved Google Ventures and Kleiner Perkins Caulfield & Byers.
Growth and Salesforce acquisition
Salesforce experienced tremendous growth over the next few years.
The platform surpassed 500,000 daily active users in January 2015 before reaching 5 million daily active users in November of the following year.
The number of daily active users reached 12 million at the start of the pandemic before the company was acquired by Salesforce on December 1, 2020, for $27.7 billion.
Salesforce CEO Marc Benioff was unequivocal in his support of the deal:
“This is a match made in heaven. Together, Salesforce and Slack will shape the future of enterprise software and transform the way everyone works in the all-digital, work-from-anywhere world.”
Slack’s story up to these days
Stewart Butterfield is a serial entrepreneur and co-founder of the photo-sharing website Flickr.
He went through the founding of several companies, in particular, when he founded Glitch (an online game).
When he was running Tiny Spek, which comprised a set of companies, Butterfield and his team needed a communication system to handle the teams within his organizations.
That tool was developed in-house, and it eventually became Slack.
When Slack launched back in 2013, more and more companies signed up until its growth kept compounding. Where did this opportunity come from?
The timing was right!
Butterfield said in an interview for CNET:
“In the last 15 years, the Microsoft hegemony and Office and Windows worship has broken down, and as a result, we’ve gotten a lot of new and, in most cases, better tools…But that means information is scattered across a bunch of different tools and there’s no one search tool that you can go through to search across all of this.”
From that stage, Slack kept inviting larger and larger groups of companies.
By 2021, it was harder and harder for Slack to compete against Microsoft’s aggressive strategy of bundling Teams into its suite of productivity tools.
That prompted Slack to write a whole advert to prompt Microsoft about it.
Yet, by 2021, it became clear to Slack that to be able to compete with Microsoft’s aggressive bundling strategy, it needed to become part of a larger group.
From there, the acquisition from Salesforce for over $27 billion.
Thus, Slack is now part of Salesforce’s software empire.
While Slack had been managed primarily as an independent brand within Salesforce.
By the end of 2022, as Benioff went back to lead Salesforce and push more integrations of independent products, like Slack, within the company’s strategy, former Slack’s CEO and founder left the company!
In the meantime, Slack generated $1.5 billion in revenue by early 2023, signaling the incredible potential of the company.
And yet, the need for Salesforce to integrate more and more Slack into the company’s strategy.
Key takeaways:
- Slack is a popular messaging and collaboration platform that is widely used by organizational teams around the world. The platform was developed by Slack Technologies, a software company that was founded in 2009 by Stewart Butterfield.
- Slack was a success because of Tiny Speck’s expertise in the gaming industry. Butterfield and his compatriots already knew how to enhance the gameplay experience and make repetitive tasks more interesting. Later, the platform came to be loved by customers for its transparency and centralization.
- Salesforce experienced tremendous growth between 2015 and 2016 in particular. The number of daily active users reached 12 million at the start of the pandemic before the company was acquired by Salesforce on December 1, 2020.
Key Highlights
- Background and Early Ventures:
- Stewart Butterfield’s involvement with Ludicorp and the creation of Flickr.
- Transition to Tiny Speck and development of Glitch, a social MMO game.
- Emergence of Slack:
- Butterfield’s development of an internal communication tool within Tiny Speck.
- Launch of Slack, an acronym for “Searchable Log of All Communication and Knowledge,” in February 2014.
- Early Success and Features:
- Success of Slack due to gaming industry expertise, enhancing communication features.
- Transparency and centralization as key factors driving adoption.
- Rapid Growth and Funding:
- Rapid adoption with 30,000 teams and 73,000 premium subscriptions by November 2014.
- $120 million Series B funding round valuing the company at $1.2 billion.
- Salesforce Acquisition:
- Salesforce’s acquisition of Slack for $27.7 billion on December 1, 2020.
- Aim to reshape enterprise software and adapt to changing work trends.
- Integration and Ongoing Strategy:
- Slack operated mostly independently within Salesforce’s ecosystem.
- Founder’s departure and focus on integrating Slack into Salesforce’s strategy.
- Revenue Generation and Potential:
- Slack generated $1.5 billion in revenue by early 2023.
- Acknowledgment of Slack’s substantial revenue potential.
- Significance and Integration:
- Integration of Slack into Salesforce’s ecosystem to enhance collaboration and productivity.
- Strategic move to adapt to remote and digital work environments.
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