Posted on Wednesday, Jan 3rd 2018
According to a MarketsandMarkets report, the enterprise collaboration market is expected to grow from $26.68 billion in 2016 to $49.51 billion by 2021 at a CAGR of 13.2% driven by widespread usage of social media and mobile devices. Billion Dollar Unicorn Slack is a leading player in the market that has recently raised funding from the Softbank Vision Fund.
San Francisco-based Slack was founded in 2009 by Flickr founder Stewart Butterfield and other Flickr executives including Serguei Mourachov, Eric Costello, and Cal Henderson. The company was born as Tiny Speck and was part of a Flash-based multi-player game called Glitch. It soon pivoted to becoming a real-time messaging, archiving, and search tool to strengthen communications within teams. It renamed itself as Slack in 2013.
Today, Slack offers professional group messaging apps that are targeted to improve productivity in the workplace by reducing email volume. Its platform aims to simplify work life by building apps and integrations to streamline work, automate routine tasks, and make conversations in Slack contextual. It has over 9 million weekly active users and over 50,000 companies pay to use Slack.
Slack recently launched a feature called Shared Channels that explores the external communications market. It allows companies to interact with external parties like ad agencies, building operators or law firms.
Slack operates on a freemium model with the basic version available for free and higher-end products available in prices ranging from $6.67 per active user per month to $12.50 per active user per month.
Since Slack is privately held, it does not disclose its detailed financials. Slack was estimated to be operating at annual revenue of $30 million in 2015. Recent reports suggest that the company hit the $100 million revenue milestone in 2016 and is growing more than 100% annually with $200 million in annual recurring revenue in 2017.
Slack is venture funded and has raised $789.95 million from investors including Softbank, Global Founders Capital, Thrive Capital, Social Capital, GV, Kleiner Perkins Caufield & Byers, Accel, SV Angel, Andreessen Horowitz, DST Global, Horizon Ventures, Index Ventures, IVP, Jeff Weiner, and Slow Ventures. In September 2017, Slack raised $250 million in a round led by Softbank at a valuation of $5.1 billion. An earlier round of funding in April 2016 was for $200 million at a valuation of $3.8 billion. In 2015, it had raised $160 million at a valuation of $2.8 billion, and back in October 2014 it was valued at $1.12 billion.
Slack was rumored to be an acquisition target for Microsoft and Amazon. But the latest funding round puts those rumors to rest. The market looks extremely competitive right now. Microsoft has launched a new chat app called Teams that will eventually replace Skype for Business. Teams is bundled with Office 365 for free and Microsoft claims 125,000 organizations use it. Facebook’s business tool Workplace is used by over 14,000 organizations and it has recently added video to it. Additionally, there are other Slack-like players that include Atlassian and BroadSoft. 2018 will be a year of intensifying competition for Slack. Let us see how it fares in the altered market environment.
More investigation and analysis of Unicorn companies can be found in my latest Entrepreneur Journeys book, Billion Dollar Unicorns.
This segment is a part in the series : Billion Dollar Unicorns
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