The main idea I took away from the group's presentation was that Slack revolves around team communication, and succeeds because of this focus.
Slack's main functionalities include real-time messaging, cross-platform syncing, and integration with other team-related tools. The developers focused on building team-related features on top of these core functions, adding useful features such as a powerful search (that can even search within files), functionality for different channels ("chat groups") within a team, and 90 integrated tools excluding user-made ones.
The success of Slack, as described by the presenting group, is largely attributed to the product targeting a specific need of teams everywhere - a need for good communication. In fact, the group's main message was to tell us to "build a good product, one that serves needs". This was emphasized by the quick growth of Slack's user base, which has hit over 500,000 regular users in 2 years.
As for commercial potential, the presenting group suggested Slack's main commercial potential lies within its freemium model and large user base, with the premium features being targeted at enterprises looking to add value to their organization. It may be worth noting that (from a little research) about 135,000 of the 500,000 users are paying users, adding up to $12 million in annual revenue.
These three factors put together effectively bring across the presenting group's message, that we should build a good product that serves people's needs. The features showed the ways in which Slack is focused, the point on success led in to the group's message, while the commercial potential showed the selling point and target audience of Slack. In other words, Slack's features were built for teams, it became popular because it fulfilled a need of teams, and it earns money by targeting professional teams.
To add on to the points the presenting group has mentioned, here are a few things that crossed my mind when thinking/reading up on Slack:
First, it is not perfect: it is slow (I share that particular pain point about the notifications with Joel) and we need to create new 'accounts' for each team we join - points mentioned by the team. To add my own opinion in, in general it feels like everything has more set-up and is more complicated. For example, compare WhatsApp to Slack - creating a new team chat? In Whatsapp, a tap, a scroll, another few taps and you're done. In Slack, you need to enter emails for a new team (by typing - not tapping!), wait until the people open the email and set up new accounts before you can actually get started. This feeling of complexity, in my opinion, permeates the entire app, making it unlikely for me to use it for prolonged periods. Although it seems useful for teams, going by my current usage I think I can still survive with just WhatsApp. That said, it is interesting and nice to know that an imperfect app like Slack can and is earning significant amounts - I suppose point 1 on this list really applies.
Second, they have some very interesting business philosophies. They boast "fair pricing", where a company purchasing 1000 users' worth of premium will only be charge based on the number of active users. Also, they allow non-profit organizations and educational institutions to enjoy significant discounts. Is it part of their marketing tactic, to make users feel more comfortable in purchasing, or maybe more trusting and loyal?
Lastly, since this is getting lengthy, I thought about the freemium model - does it really make sense for Slack to be freemium? Going by the statistics, about 3/4 of their user base are free users. Doesn't the free user base drain resources? Perhaps they are hoping the free users will eventually convert to paying users. However, the features offered by premium - which include improved security, greater retention of data (e.g. unlimited message history), and more responsive support - do not apply to casual (or less 'professional') people like us. Or maybe they just couldn't charge for the app itself like Things did, because after releasing it the base app for free, the freemium model has become a part of the users' mindsets, and charging for the app now would just create an uproar. I'm no expert, so here's a link on a more expert source for debate.
Well, just some thoughts of mine. Hope they piqued your interest!
TL:DR: Slack is built for teams, filled a need, succeeded with freemium model. Slack may not be perfect but is still succeeding, the company has interesting business philosophies, and perhaps they could earn more without the freemium model.
Nice points. But I feel that not every product needs to be charged. Besides, since it's a very new product, being free to attract users can be their strategy also. Personally I feel it's good to stay with the freemium model.
ReplyDeleteUpon reflection, I suppose growing their user base could have indirect benefits for their overall income.
DeleteBy having more people use their product, they can boast a presence in the market, as well as build up credibility in the eyes of businesses. Also, the free user base could indirectly promote the app through word of mouth and possibly to the workplace, which could lead to more businesses adopting the app. This could ultimately allow for more growth in the long term.
I suppose cashing out quickly doesn't work out.
Hello Justin
ReplyDeleteYou are right to say that Slack is built for teams, but more specifically, for teams in businesses.
I think it's okay for Slack to be under a freemium model because they are primarily targeting at businesses, especially startups and SMEs. So it's mainly B2B, not so much B2C. Businesses will need the premium services and of course they are very willing to pay too. Businesses love the integration that Slack provides, and that's why they are growing so quickly. We might not feel the true usefulness of Slack, probably because we are not working for 8-9 hours in teams who need constant communication and collaboration.
Mei Lan's 2 cents.
I suppose I shouldn't judge it so until we're really in an organisation that uses it. You're right, Slack is still in the growth stage, and the number and proportion of business/paying users could still be increasing. Yet, I just can't help but speculate that at some point it might make more sense to (slowly) phase out the free users in order reduce the burden on resources, or find some way to earn money off them (information or ads, etc.).
DeleteI find the loading times for each of my slack groups really annoying too. Another pain point is I have to set up each of my slack groups individually on the mobile app, perhaps a result of having a different account for each group ><
ReplyDeleteWhat makes me tolerate Slack over google chat when working on a CS project is it's Github/Bitbucket notification. Feels good to be notified when some one pushes something. Somehow I feel happier seeing the notification after I push to my repo too =P
-Naomi
Definitely painful to set up accounts and groups.
DeleteI suppose git notifications is one good use of the integrations...but at the same time you might want to be wary of people like me who may occasionally push things at 4am. :X
I agree with Mei Lan's comment above. Slack focuses on businesses and businesses would definitely pay for the service so at least they have someone to blame when things go wrong.
ReplyDeleteIn my opinion, its free service, on the contrary, is mainly for attracting users. I have never used its premium service but I can imagine that if ever I have such a requirement in business, I would choose it because 1) its service is competitive and 2) I am so familiar with it. I guess this is somehow similar to Dropbox's Space Race. It provides 25 GB of free space to students but the free space is only available for 2 years. A lot of students were attracted and started using it. The moment that 25 GB expires they have to choose either migrate gigabytes of data out, or pay $99 a year for its pro plan. This kind of marketing tries to make users accustomed to the service so they can make profit later. I suppose slack's strategy can also be considered as one of these.
An interesting take that I have to agree with. The fact that I have used it will make me more likely to consider it as a team communication tool in future, and I might suggest it to my colleagues or employer when the time arises. That said, in light of the pain points it currently has, I would still be looking for an alternative, and if a competitor appears that improves on their issues, it is likely that I will never suggest Slack ever again.
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