Teams vs Slack, Stratechery
A popular blog, Stratechery, at the intersection of tech and strategy recently wrote about the Microsoft Teams vs Slack dynamic.
Slack caught me by surprise back in 2015 when I took time off to travel. I came back to SF and everyone was on and talking about Slack. When I couldn’t reciprocate, friends looked at me like I had three eyes. Slack’s growth was stratospheric and in the tech world, they became ubiquitous.
However, the world outside of tech is much larger than inside of it, both in terms of users and the potential opportunity size. When I built partnerships for Parsable (mobile execution of industrial work), I spoke with senior executives across Oil & Gas, Utilities, CPG and Finance.
They also looked at me like I had three eyes, but now because I did mention Slack. It was a Catch22. Future of work is a trend du jour, with significant implications for investors and users alike. Watching this David vs Goliath match is quite the show and Stratechery’s Ben Thompson cuts through the noise to simplify the strategy for each player.
“Facebook created Instagram Stories to remove the impetus for new users to even try Snapchat, Teams is particularly effective as a way to prevent a Microsoft customer from even trying Slack.”
The former worked on me. I don’t have Snapchat, and I only use the Stories feature on Instagram today. If you are Shell, or Proctor & Gamble with $10M in current Microsoft licenses, chances are your users aren’t trying out Slack.
Combining Microsoft’s monopolistic scale and resources with this free-to-bundle Teams play, it seems a daunting head wind for Slack to overcome. But the key to strategy is to play to your strengths. Thus Slack is doing what Slack does best. It’s letting more people both inside and outside of orgs use chat in a ridiculously easy experience. In other words, again from Stratechery:
“Microsoft is busy building an operating system in the cloud, Slack has decided to build the enterprise social network. Or, to put it in visual terms, Microsoft is a vertical company, and Slack has gone fully horizontal“.
If the objective function in play is to grow chat users, Microsoft is doing well. But the second order effects here are quite interesting.
Microsoft is betting that it’s suite of products although not best in class will be stickier than a jumbled collection of awesome tools that don’t play well together.
Slack is currently betting on the market segment that wants a narrower chat product (with data flow and communication history features attached) across many orgs.
I wonder how much of Slack’s growth strategy is tied to Enterprise dollars where they need to win over Microsoft’s existing accounts or opportunities. Conversely, will Microsoft’s gigantic partner ecosystem will dominate down-market even in the face of Slack’s superior chat product.
Given the total serviceable market for Slack and the tailwinds of working during the pandemic, my money in 2020 is on them.