Decrypting Slack: With tens of millions of users around the world, how did Slack transform from a gaming company to be acquired by Salesforce for $20 billion?

The most important thing in starting a business is timing. I have heard this concept rottenly!
However, Slack’s transformation once again proves that current events can indeed create heroes.

Over the past decade, the proportion of people working remotely at least one day a week has continued to rise.
Of course, Slack was not originally designed specifically for remote work, but its emergence has indeed contributed to the global trend of remote work.

Another trend is the rise of Saas.
Slack adopted a subscription business model at a time when the number of VCs specializing in software as a service (SaaS) was surging.
In 2010, US SaaS startups received a total of US$5.7 billion in investment, and by 2014, this number tripled to approximately US$20 billion.
According to PitchBook statistics, U.S. SaaS companies received a total of US$26.4 billion in VC investment in 2018.
The rise of Slack coincided with the VC trend, which meant that there was more capital to support a period of rapid growth. The founding team finally saw the light of day after the previous failure.

As of today, Slack has more than 10 million daily active users, covering more than 600,000 businesses—88,000 of which are paying users!

"Since its launch in 2014, businesses around the world have identified similar needs and are now finding solutions in Slack,"

"It is called the operating system of the team, the hub of collaboration, and the connection within the organization."

Slack’s Competitive Advantage

What Slack’s team has done right is not just a beautiful transformation, which can gain tens of millions of users around the world, they have also done more for the product. Here are a few features that maintain Slack’s market coverage and competitive advantage:

1. Understand users’ pain points

Slack released their MVP (minimum viable product) 9 years ago
After they gained a critical mass of user sign-ups, they began closely asking for user feedback to understand pain points, and this learning continued even after the product was publicly released.
Here they prove that if you can understand the market closely, you can ensure that you stay on track and achieve success.

2. Focus on product development

Because Slack pays close attention to user needs, the internal team has a stable and clear product development roadmap.
They develop features based on the feedback they receive, and their user-centered approach to decision-making reduces their investment in additional features or decisions.

Features such as topic discussions, sharing of files, pictures or other media, team workspaces, private groups, etc. are all added through user feedback!

3. Third-party integration

In addition to product development, Slack has also begun to integrate with various third-party applications, trying to integrate applications that are encountered every day within the enterprise.
It has integrated more than 200 applications such as Google Drive, Dropbox, Trello, GitHub, Zendesk, Zapier, etc., allowing companies of all sizes and industries to integrate the tasks and discussions at hand without interrupting their workflow.

4. Business model

Slack is a free/premium success story.
If you're a new user, all you need is an email address to sign up and start using Slack.
Free users can search and view the latest 10,000 messages, which is a very friendly design for small businesses with limited budgets and limited internal communication. Of course there are upgrade options for large organizations too!

5. Reasonable pricing and charges

Pricing is one of the important determinants of purchasing decisions. Especially when faced with a market with limited capital and limited access and acceptance.

In addition to its freemium model, Slack has also won the pricing war in a competitive market by maintaining reasonable prices for users of different sizes and types of use of the service, while taking into account how and how often different types of users use it.
For example, when Slack detects that an account is inactive, they will stop charging the account (this is such a wonderful feature. There are too many automatic debit and automatic renewal apps that can automatically detect usage. Save a lot of unnecessary expenses!)
This mechanism makes their charges more reasonable and has become a trump card for them to expand their user base.

Slack Current Challenges

Slack's product positioning is very clear. In terms of market share, its current competitors are only technology giants Microsoft and Slack itself.

why?

Slack's revenue could actually be higher than it is now, but the company is more focused on improving the value it gets to its clients.Slack keeps subscription fees relatively low, offers free credits, and more, ensuring customers are "compensated" if service is disrupted.

However, these points eat into profits, which is a small price to pay for Slack in exchange for the consistent quality of their service.

Slack status

In December 2020, Slack was eventually acquired by CRM platform giant Salesforce for $27.7 billion.

In just 7 years, the Slack team transformed a gaming company into a company worth as much as the GDP of a small country like Estonia, leading all daily operations of corporate productivity.
Customers range from small personal stores to multinational listed companies such as IBM. In addition, remote work has become the norm now. As operations gradually shift online, the future of Slack is definitely worth looking forward to.

Conclusion

The story of Slack can be regarded as a very talked about "transformation pivot" story in the entrepreneurial world. The founding process of Slack reminds us that if this road does not work, you can always pivot and try another way.

At the same time, we are dedicated to customers and accept feedback without any hesitation.Slack doesn't need to add too many bells and whistles or purely marketing gimmicks, because Slack's core philosophy is clear, which is to ensure that it excels in its core capabilities while ensuring that pricing is as fair as possible to users.

It is precisely this kind of "craftsman spirit", persistence in small details, and persistence in pursuing quality that it is really not surprising to become a leader in the industry!

 3 Takeaways

1. Slack’s Wonderful Pivot: From Gaming Company to Enterprise Software
   Slack's founding team originally focused on developing the multiplayer online game Glitch. However, due to poor market response, founder Butterfield and others decisively separated Glitch's internal communication tools and transformed them into an enterprise communication platform. This flexible transformation not only saved the team at that time, but also brought them unexpected and fruitful results.
2. Product advantages: solving pain points and strong integration capabilities
   Slack’s success stems from its user-friendly product design, which targets the pain points of enterprise communication. It provides integration with multiple applications, such as Google Docs, Dropbox, etc., which greatly improves work efficiency. Slack also attaches great importance to user feedback and continuously optimizes functions to ensure that the product always meets market demand.
3. Market opportunities and strategies: freemium model and reasonable pricing
   Slack's rapid rise coincided with the SaaS (Software as a Service) trend, adopting a free/plus-value model and attracting a large number of users. Reasonable pricing strategies and a mechanism to stop charging for inactive accounts increase user stickiness and ensure market coverage and competitive advantage.