Nivas Ravichandran

@nivasravichandran

Dear Slack, Get over Microsoft. You have a bigger problem.

July 20th 2017

On November 2, 2016, Microsoft officially launched Microsoft Teams (a chat-based workspace Software as a Service) that ties into its existing Office 365 subscriptions. During the launch, Satya Nadella (CEO, Microsoft) explained — “Microsoft teams will bring together chat, meeting, notes, Office, Planner, PowerBI, and a host of extensions and applications to help teams get work done.”

Minutes before the launch of Microsoft Teams, Slack published an open letter to Microsoft as a full back page ad in the New York Times with the title “Dear Microsoft”. This is based on the 1981 event when Apple ran a full-page ad in the Wall Street Journal, welcoming its new competitor (IBM) to the personal computer market.

The Open Letter Advertisement by Slack in the New York Times

Though Slack’s open letter to Microsoft received a lot of attention on Social Media and PR, several top technology media networks wrote about why this was a bad move by Slack. The Verge even published an article —Why Slack may live to regret its smarmy letter to Microsoft, breaking down each point mentioned in Slack’s letter and how Microsoft could beat them. But the problem for Slack is not Microsoft.

Slack has definitely had a phenomenal growth from 16,000 daily active users in February 2014 to a whopping 4 Million DAU in October 2016. But between the first half and the second half of 2016, it’s DAU growth fell from 50% to 33% and paid seat growth fell from 63% to 33%.

Image Source: Techcrunch

There have been questions about Slack’s ability to scale from a workplace chat app for small companies to a platform that large enterprises could use. In April 2016, Uber dropped Slack because the service was not able to handle 12,000 employees of Uber trying to communicate simultaneously. Slack needs to identify a way to scale as a collaboration application for large enterprises and identify ways to retain or increase growth. But Slack has a bigger problem on its path.

In October 2016, after two years of private beta testing, Facebook unveiled its Workplace Software to the world. A platform that works like regular Facebook but for a network of co-workers. Instead of a monetisation strategy through advertisements, it charges its enterprise customers a per-user subscription fee each month. The enterprise social networking and communications software is being reported to have been used by 14,000 organisations in just 6 months since its launch.

One of the biggest challenges for Slack is exactly the biggest advantage for Workplace — Learning Curve. The learning curve for Slack is big for new users, especially non-techies/busy people. With more than 1.94 Billion MAU on Facebook (March 2017) and the Workplace app not differing much from Facebook (News Feed, Groups, Events and Messenger), Workplace is able to acquire users at a near-zero learning curve. No on-boarding process means more people will be willing to adopt to it.

Workplace released a customer story about how Starbucks has over 80% of their store managers using the platform on a weekly basis. That is more than 20,000 of Starbuck’s store managers on Workplace. A great example of faster adoption and the ability to handle communication at scale.

Though both the platforms have a free version, Workplace has an advantage in the pricing of the premium version. Slack costs about $6.67 per user for the Standard paid version, and $12.50 for the Plus version. Workplace costs $3 per month per user, and down to $1 a month per user for groups over 10,000.

Comparison of pricing of Slack vs Workplace by Facebook

The newsfeed feature in Workplace comes in handy for cross-team communication, company announcements, and shoutouts. Anyone who has used Slack will tell you that this becomes disruptive with several messages storming on the public channels. Similar to Facebook Live, Workplace also has a live video feature which is useful for announcements or events in remote or large companies. The best part is that your personal Facebook Account is not connected to your Workplace Account.

Workplace Free Edition

At Freshworks (previously Freshdesk), we moved from Google+ (Yes, Google+) to Workplace in October 2016 and the organisation has been using it ever since. Being a 1000+ employee company with teams sitting across 5 different countries, lack of visibility and communication across different teams was a challenge before Workplace. Due to the poor adoption of Google+, email was the best form of communication for anything from announcements to hunting misplaced items. Now with Workplace, different teams have groups to discuss product updates, ideas and customer feedback. We are able to opt-in to groups to obtain updates and the leaders are able to have an improved visibility into updates and provide help when necessary.

Two challenges lie ahead for Workplace, though. They will have to build integrations with all business applications used at work. Integrations are key for collaboration platforms to ensure it is the place where work happens. This really should not be a difficult nut to crack. The harder challenge is to convince the world of the opinion that Workplace will not be a distraction(like Facebook) but will actually help in boosting communication and visibility. In spite of the challenges, Workplace has a significant advantage and chance of significantly hindering the growth for Slack.

So, Slack really cannot be slacking.

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