Slack Technologies, formerly Tiny Speck, was founded in March 2010 by Stewart Butterfield as a video game development company. Due to an inability to attract enough attention, the company shut down its flagship game, Glitch. During its time as Tiny Speck, the company created an internal communications module that would later become the foundation for what is now the Slack product. Shortly after Glitch shut down at the end of 2012, the remaining team dedicated their time to building out the communication platform they had, eventually rolling out the beta version of the app in August 2013. In August 2014, the company officially changed its name to Slack Technologies, shortly after the public rollout of Slack, the workplace messaging and collaboration platform. Since then, Slack has experienced tremendous growth, claiming over 600,000 organization-level customers representing over 10 million daily active users as of May 2019. Revenues have also grown rapidly, totaling over $400 million for fiscal year 2019, up from $105 million two years prior.
As a private company, Slack has raised over $1.3 billion in primary funding from investors including SoftBank Group, Accel Partners, Andreessen Horowitz, and Kleiner Perkins. In fact, Slack will be SoftBank’s Vision Fund’s first enterprise software company exit. The company’s growth has been largely attributable to both successful deployment of the “freemium” business model and a first mover advantage, creating a product that focuses on customer experience while solving a number of inefficiencies in traditional business communication mediums. To supplement its organic growth, the company has completed a number of tuck-in acquisitions throughout its operating history. Most recently Slack Technologies acquired Hipchat and Stride, two competing products that was owned and operated by Atlassian.
In its regulatory filings with the SEC, Slack estimates its addressable market at $28 billion. This figure suggests the company has captured slightly above 1 percent of its addressable market. Further, we believe the company’s actual addressable market could be larger due to the the broad number of services embedded in its platform. For example, the platform includes video conferencing, voice communication, and file sharing capabilities, all in addition to the direct chat communication and channel-communication functions. Each of the aforementioned functions have markets with a range of specialized suppliers. Additionally, it is important to consider the potential disruption to e-mail and other traditional business communication markets. As of October 2017, Gartner estimated Slack to have a 70 percent market share of the newly forming WSC market.
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