Slack Technologies Inc. built up a $3.8 billion valuation and
buzz as one of Silicon Valley's hottest startups by getting
millions of office workers to use its group messaging app. Now some
of the tech industry's biggest players want to be part of the
conversation.
Microsoft Corp.'s this month unveiled its Teams workplace
collaboration service, which came on the heels of Facebook Inc.'s
launch last month of Workplace by Facebook. The tech giants' moves
put pressure on the San Francisco startup, whose user base is tiny
by comparison.
"I've been paranoid about this for a long time," Slack Chief
Executive Stewart Butterfield said in an interview after the
Microsoft Teams announcement.
Slack has been bracing for the assault. It signed a partnership
last month with International Business Machines Corp., to use its
Watson artificial-intelligence services.
The escalating battle reflects more than excitement over the
prospect of a more efficient alternative email. Tech companies
envision messaging as a gateway to other business software from
other vendors. For instance, a worker could type in the chat box to
book vacation days in a human resources program or enter a
transaction in an expense reporting program. The company that
provides that interface could wield extraordinary power in the
enterprise software market.
Slack already lets users beef up messages with information from
partners—tweets from Twitter Inc. or customer information from
Salesforce.com Inc.—and add comments to files and share them.
The messaging service offers a free version but its two paid
tiers, at $6.67 and $12.50 per user per month, are considered
costly by some standards. It doesn't disclose revenue or other
financial data.
Slack already has battled other competitors large and small,
including Atlassian Corp.'s HipChat, Alphabet Inc.'s Google Spaces
and Symphony Communication Services LLC, a startup backed by Wall
Street. (Dow Jones Newswires, a wire service owned by Wall Street
Journal publisher News Corp, is a provider of news on the Symphony
platform.)
Revenue from what International Data Corp. analysts call
workplace-application messaging, which also includes collaborative
apps such as Google Docs and Skype videoconferencing, hit $4.4
billion last year, and IDC expects it to reach $6.7 billion by
2020.
Microsoft, the long-reigning king of office software, and
Facebook, with 1.79 billion monthly users for its social network,
bring new heft to the fight. Microsoft Teams, due to become
generally available in early 2017, also lets workers chat with
far-flung teammates and search through conversations. It is
designed to work with Microsoft productivity apps so, for instance,
users can embed Skype video conversations in the message queue.
Microsoft said it would include Teams free with the commercial
version of the online Office 365 productivity suite, which claims
85 million users.
Facebook's Workplace service adapts the company's messenger,
newsfeed, events and other features for use within companies.
Mr. Butterfield said the market is large enough for more than
one provider, and that there are plenty of companies that don't use
Office 365.
Microsoft agreed. "The goal is not to take away any success
others have had," a Microsoft spokeswoman said.
Some analysts say the market is Slack's to lose. "Microsoft
Teams put out a road map and they're going to build out a lot of
business partnerships, but right now this doesn't take anything
away from Slack," said Mike Gotta, research vice president of
Gartner Inc.
Slack grew out of a videogame company called Tiny Speck
co-founded by Mr. Butterfield in 2009. The game wasn't a hit, but
software the company built to help employees in the U.S.
communicate with colleagues in Canada proved useful and Mr.
Butterfield and his partners launched Slack in 2014. The company
has raised $539.95 million from prominent venture capitalists
including Andreessen Horowitz and Kleiner Perkins Caulfield &
Byers.
Slack's user base has been growing at a clip, reaching four
million daily users in October, up from three million tallied in
May. Its customers include Samsung Electronics and Urban
Outfitters, but it caught on especially among software development
teams.
Sapho Inc., a 53-person software startup based in San Bruno,
Calif., uses Slack to communicate with the majority of its
employees, who are based in Prague.
Sapho also illustrates Slack's vulnerability. Sapho CEO Fouad
ElNaggar said important information sprinkled in Slack messages can
be difficult to retrieve, and Sapho employees sometimes have
trouble finding files shared through the system.
"We've banned people putting files in Slack because we have lost
things in there," said Mr. ElNaggar. His company continues to use
Slack for conversations, but he requires employees to share files
in email messages because it's easier to find them later.
Mr. ElNaggar said Slack is expensive, especially if similar
functions are available free of charge with Microsoft Office
365.
Mr. Butterfield acknowledged that it can be difficult for
employees to keep up with the volume of information delivered by
Slack. But access to conversations among teammates is a critical
need, he said, and the company is working on ways to combat
information overload. For instance, the company is working on
artificially intelligent chatbots that can, say, highlight
information relevant to a specific user.
In July, Slack invested $1.97 million in 14 makers of bots,
including Abacus, an expense reporting program.
(END) Dow Jones Newswires
November 13, 2016 21:35 ET (02:35 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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