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Remote work is here to stay, and chances are you or your team has been on Slack.
Now, we’re not saying you’re a slacker.
Rather, we’re talking about the communication software called Slack, which has become one
of the preferred tools for organizations, big and small, to communicate between teams
and individually.
As more people turn to remote work, Slack has seen considerable increase in paid memberships
and simultaneous users connected.
But just as the software is successful, it’s also divisive.
Some love it, others not so much.
With so many productivity tools out there, Slack seems to stand out.
So, is there a secret to their success?
We’ll tell you in this episode of Company Forensics.
Slack’s origins are filled with interesting lessons that predate the software itself.
It starts with Stewart Butterfield; he created Flickr a while back, which he sold to Yahoo
just one year after the launch.
Then he created Glich, in 2011, under the company Tiny Speck.
Glitch was a massively multiplayer online game which, initially, attracted enough interest
to garner $17.2 million in investment.
But, after its launch, it was evident Glitch was going nowhere.
It failed to gain traction and Butterfield ditched the idea before the game sucked all
his funds dry.
In 2012, Glitch was no more.
But, it turns out, investors believed
in him so, at least, he still had plenty of funds.
Then came his eureka moment which, ironically, traced back to his failed game; as part of
Glitch, Tiny Speck had created a versatile chat system with a lot of potential.
The idea centered around user-friendliness.
And the idea had worked because, well, Tiny Speck had used it as part of its internal
communications.
In fact, it became an entirely new project.
Butterfield said.
But, Slack would not only have messaging.
It would include file transfer, daily tasks, and calendars.
The idea gained enough momentum for Butterfield to ask several companies to try it; this paid
off big for Slack’s future.
Through feedback, they found that the more data in Slack, the more users interacted through
it.
Feedback was such that they went back to the drawing board several times, finetuning the
product until it was time for a release.
Slack could replace email as the primary method of communication
because, to him, email restricted communications:
Switching to Slack from email for internal communication gives you a lot more transparency.
No matter who you are in an organization that is entirely email-based, you only get a tiny
slice of all of the communication that's happening.
It doesn't matter if you're the CEO, the VP of engineering, or an intern on their first
day, you only get this narrow little bit.
But Slack’s idea didn’t center around micromanaging everything, which is impossible
in a large organization.
Rather, while keeping a record of all communications, it allowed searching for that one thing you
were interested in.
It included agenda management, file transfer, the ability
to act as a company’s intranet communication and connectivity with external services such
as Dropbox, Twitter, Helpscout and others.
So, after much finetuning, Slack launched as a test platform in August 2013, and companies
loved the idea; just one day after the announcement, 8000 companies had already signed up for it.
This success, Butterfield has stated, is the direct consequence of listening to their customers’
requirements.
When it comes to the launch, there’s a particular detail.
Slack didn’t call this a Beta launch, because it would sound
as though the platform was rigged with flaws.
Instead, the marketing team presented as an invitation for companies to use the new product.
And the market wanted more Slack.
Companies using the platform went from 8000 to 15000 in two weeks.
The company optimized its product for an official
launch in 2014.
Which was, you guessed it, a hit.
By April 2014, the company had raised another $42.6 million, with 60 000 daily users and
15 000 paid members.
Months later, Slack raised $120 million and reached a valuation of $1.2 billion in October
2014, making it one of the fastest ever to reach unicorn status.
And by then, it had 73 000 paid subscriptions.
By October 2015,
the platform had 1 million simultaneously connected users.
And most importantly, of those, 407 000 paid monthly subscriptions.
If you are waiting for a point in this episode in which we talk about the downfall, well,
there isn’t one, at least at the moment.
Those 1 million simultaneously connected users in 2015 have ballooned to upwards of 12 million
as of today.
But, why is it so successful?
We need to talk about Metalab.
You might not have heard of them, but this is the company that made Slack fun.
Andrew Wilkinson, Metalab’s founder, explains that, in order for any software to be great,
users need satisfying interaction.
And Slack didn’t have that.
In fact, initially, Wilkinson dreaded the idea of working with yet another productivity
tool, and the product they saw…well, here’s what Wilkinson has to say.
IRC, by the way, is Internet Relay Chat, a protocol that communicates via text.
Then, there was time: Wilkinson had just six weeks to improve it.
But here’s another factor to Slack’s rise to the top.
Through feedback, Butterfield knew his product wasn’t up to par, and he relied on others
to get it into shape.
Both teams took the challenged head-on and, in retrospect, Wilkinson summarizes the revamped
platform as successful because it was visually attractive, interactive, and playful.
So, it’s pretty much a videogame, right?
But, Slack isn’t the only productivity tool out there.
Yet it manages to stand out while others have failed.
Critics say that its success isn’t due to the design, or marketing, or feedback, or
even luck.
It's a combination of all of them.
Feedback: let’s do something with it.
Design: let’s improve it.
Launch: let’s make it interesting.
Luck, well, let’s take it.
Critics have taken their time to dissect Slack and many
have found that its user experience is key.
Slack invites non-techies to use it, but also, it’s easy for administrators and I.T. departments.
It's all online.
Slack is based on the idea that you are not online all the time, so you might need to
go back and check on what’s been happening.
But it’s not limitless, of course.
Through that research, Slack set the limit at 10 000 messages, in which you can visualize,
search, etc., for free.
If you go over, you have to pay not to lose your info.
Now, 10 000 messages might seem like a lot, but take a team of 50 people, sending 50 messages
per day.
You go through them fast.
And Slack charges per user, per month.
It’s genius!
Companies didn’t mind paying for this because of how good the software is.
So has investment; In 2017, tech giant Softbank, and others, invested $250 million, which valuated
the company at $5.1 billion.
Then in 2019, private investment had valuated the company at over $7 billion.
Not bad at all!
But it hasn’t been a perfect ride.
The hacking in 2015, which caused
a dent in the software’s reputation as its security was deemed as not up to par.
Not only that, but user’s data was compromised, such as emails, passwords, Skype IDs, etc.
In response, Slack developed the 2-factor authentication and tools for administrators,
which did improve security.
But reputation, that’s hard to recover.
Another criticism: productivity.
Many believe that Slack is ruining the way we work, because of its ease of use.
People turn to Slack for everything, even for things that don’t require it, and if
used incorrectly, the software can create communication overflow.
Messages—a key element in Slack—can become untraceable
and users focus more on following the conversation rather than the objective of the conversation
itself.
So, yes, Slack lowered the dependence on email, but people now spent countless hours on Slack.
But, the platform is so easy to use, that even with these flaws, it’s addicting!
This leads to another key aspect: the quality of communication dilutes into a pointless
back-and-forth over urgent matters, making it easy to prioritize incorrectly.
Even updates have befallen to criticism: One update allowed the administrator to export
all data, including private messages, without notifying users.
Which isn’t cool, but it did follow the new General Data Protection Regulation or
GDPR.
Slack stores all data exclusively on cloud servers that are, logically, under Slack’s
control.
So, users have their hands tied, and in response, many open software developers have sought
to create better versions.
Regardless of the highs and lows, Slack is booming right now.
Like Zoom (check out our video on it), Slack’s use has increased dramatically in these isolated
times.
Remember how we said that simultaneous users went from 1 million in October 2015 to 10
million in March 2020.
But it jumped from 10 to 12.5 in less than a month!
Revenue has accompanied growth, and as more people rush to digital platforms, Slack doesn’t
seem to slow down anytime soon.
But, let it be known, that the competition out there is rough.
So, Slack might not be home safe.
In fact, in the past months, the company has released newer versions in all operating systems.
But the main thing Slack has proved is that you can create new things from something as
old as instant messaging.
And yes, productivity tools are abundant, but if done right, you can still stand out.
Just make sure that, if you are going to badmouth your boss in private, don’t do it through Slack.
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Hope you enjoyed that.
Check out all of the success stories and failure stories that we've created in Company Forensics.
Stay tuned, don't forget to subscribe and we'll see you next week.