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Lovable underdog Slack fights off fierce messaging rivals like Microsoft

Messaging software firm Slack has become big enough to draw a competitive response from giants like Microsoft, but not big enough to have the roster of large corporate clients that it needs to compete with the giants.

SAN FRANCISCO — Slack is the classic Silicon Valley accidental success. Born three years ago, with roots in a failed video game, the messaging software is now used by 5 million people.

The company behind it, Slack Technologies, found success by combining something that Silicon Valley fetishizes — rich data on how people use a product — with something it often overlooks: How do people actually feel while using it?

This combination produced an unlikely hit that, when it became available in 2014, grew mostly by word-of-mouth, which is unusual for corporate software. Last year, the privately held company was valued at nearly $4 billion.

Slack facts

Headquarters: San Francisco

CEO: Stewart Butterfield

Employees: 800

Users: 5 million daily

The New York Times

Now Slack faces a significant new challenge. It has become big enough to draw a competitive response from giants like Microsoft, but not big enough to have the roster of large corporate clients that it needs to compete with the giants.

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Last fall, Microsoft announced a direct Slack rival called Teams, to be given free to all 85 million users of its Office 365. At the same time, Facebook made its work collaboration tool, Workplace, widely available free. Atlassian, a smaller company, has signed big customers, too.

As a result, Slack, which built up momentum as a lovable underdog, must fend off some of technology’s largest and fiercest competitors if it wants to be more than a niche tool for small businesses and teams.

Microsoft already offers ways for employees to collaborate. And while its offerings have not been viral hits, they have offered boring but important features that big companies demand, like strong data security and regulatory compliance controls.

There is no illusion within Slack that success is certain. But Stewart Butterfield, the chief executive, said small tech companies with new ideas had long defeated larger rivals that tried to copy them. Think of Apple beating IBM in personal computing, Google beating Microsoft in search and Facebook crushing Google in social networks.

One advantage Slack has is focus, Butterfield maintains. Microsoft, for example, has Slack-like products including Yammer, SharePoint, Skype for Business and now Teams. The executives who run those businesses within Microsoft must “compete for budget and mind share and attention,” he said, providing an opening for Slack to gain users while Microsoft managers wage internal wars.

Microsoft said users would embrace Teams because it had strong encryption and global support and worked seamlessly with software they already used, like Excel. “We think customers value coherence,” said…

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