This week Slack’s co-founder, Stewart Butterfield announced leaving Salesforce (SFDC). Slack is now folded into SFDC #platform, its fastest-growing category.
⚡️ Let's glimpse back at Slack platform journey and the role #networkeffects played in Slack becoming the largest Salesforce acquisition.
At the time of 2020 acquisition SFDC vs Slack ratio was
22 : 1 in revenue and headcount
Rev: $21B vs $0.9B; Employees: 54K vs 2.5K
but only
🏆 2 : 1 in apps, #ecosystem and developer #community
Apps: 5K vs 2.4K (App Exchange vs Slack Directory)
Devs active: 2.6M vs 0.9M
An incredible achievement by Slack, compared with the high bar of SFDC, the first B2B platform and inventor of the App Store concept.
Slack also had 700K+ custom apps (built for internal workflows using its API), but more importantly it showed signs of genuine network effect.
🛠️ Slack Platform
In contrast to many SaaS businesses, Slack had a vision to become a platform from the outset (after pivoting from Tiny Speck).
Less than 2yrs in, they launched the Slack App Directory with 150 apps, in addition to a collection of dev tools and APIs.
At that time Slack dedicated 20% of Eng resources to building the platform while their user base 2X to 2m in a year.
They build first integrations themselves, later handing them over to partners to maintain. They also didn’t charge commission on partner integrations.
Fast forward to 2020 acquisition, Slack had 10m active users. Of its 130K paid customers, 90% used a 3rd party application or custom integration.
🤝 Slack Connect - path to cross-company network effect
#1 acquisition reason?
In June ‘20, Slack officially released a new paid feature - shared channels for up to 20 orgs. Idea to invite several 3rd parties in a shared channel was a brilliant move, especially in combination with a 90-day trial offer to convert free users with this feature.
If you’re a paying Slack customer, you can invite partners in a shared channel, but your partners need to be paid users too. Instead of a high-friction “pay now” CTA, Slack offers them 90D free trial. They love the convenience and will convert in 3 months.
This quickly became a #growth driver of new paid customer acquisition for Slack and “a key product differentiator” that increased retention.
🚀 Slack started reporting not only on paid users, but also on Connected Endpoints (each workspace is 1 endpoint), measuring “network adoption”.
While its user base was growing only 30% YoY
📍 Connected Endpoint grew 240% YoY
At the time of SFDC acquisition, 64K paid customers used Slack Connect creating 520K + endpoints.
I.e. ~ 50% of paid users connected with 8 third parties - partners, suppliers, etc. Amazing achievement in B2B #saas.
👋 This is an excerpt from the Slack platform and #partnerships playbook - TBC.
Sources: IR, S1, keynotes.