This video was brought to you by Pipedrive. Try Pipedrive free for 30 days by signing
up with the link in the description. Remote work is here to stay, and chances are
you or your team has been on Slack. Now, we’re not saying you’re a slacker. Rather, we’re talking about the communication
software called Slack, which has become one of the preferred tools for organizations,
big and small, to communicate between teams and individually. As more people turn to remote work, Slack
has seen considerable increase in paid memberships and simultaneous users connected. But just as the software is successful, it’s
also divisive. Some love it, others not so much. With so many productivity tools out there,
Slack seems to stand out. So, is there a secret to their success? We’ll tell you in this episode of Company Forensics. Slack’s origins are filled with interesting
lessons that predate the software itself. It starts with Stewart Butterfield; he created
Flickr a while back, which he sold to Yahoo just one year after the launch. Then he created Glich, in 2011, under the
company Tiny Speck. Glitch was a massively multiplayer online
game which, initially, attracted enough interest to garner $17.2 million in investment. But, after its launch, it was evident Glitch
was going nowhere. It failed to gain traction and Butterfield
ditched the idea before the game sucked all his funds dry. In 2012, Glitch was no more. But, it turns out, investors believed in him so, at least, he still had plenty of
funds. Then came his eureka moment which, ironically,
traced back to his failed game; as part of Glitch, Tiny Speck had created a versatile
chat system with a lot of potential. The idea centered around user-friendliness. And the idea had worked because, well, Tiny
Speck had used it as part of its internal communications. In fact, it became an entirely new project. Butterfield said. But, Slack would not only have messaging. It would include file transfer, daily tasks,
and calendars. The idea gained enough momentum for Butterfield
to ask several companies to try it; this paid off big for Slack’s future. Through feedback, they found that the more
data in Slack, the more users interacted through it. Feedback was such that they went back to the
drawing board several times, finetuning the product until it was time for a release. Slack could replace
email as the primary method of communication because, to him, email restricted communications: Switching to Slack from email for internal
communication gives you a lot more transparency. No matter who you are in an organization that
is entirely email-based, you only get a tiny slice of all of the communication that's happening. It doesn't matter if you're the CEO, the VP
of engineering, or an intern on their first day, you only get this narrow little bit. But Slack’s idea didn’t center around
micromanaging everything, which is impossible in a large organization. Rather, while keeping a record of all communications,
it allowed searching for that one thing you were interested in. It included
agenda management, file transfer, the ability to act as a company’s intranet communication
and connectivity with external services such as Dropbox, Twitter, Helpscout and others. So, after much finetuning, Slack launched
as a test platform in August 2013, and companies loved the idea; just one day after the announcement,
8000 companies had already signed up for it. This success, Butterfield has stated, is the
direct consequence of listening to their customers’ requirements. When it comes to the launch, there’s a particular
detail. Slack didn’t call this a Beta launch, because it would sound as though the platform was rigged with flaws. Instead, the marketing team presented as an
invitation for companies to use the new product. And the market wanted more Slack. Companies using the platform went from 8000
to 15000 in two weeks. The company optimized its product for an official launch in 2014. Which was, you guessed it, a hit. By April 2014, the company had raised another
$42.6 million, with 60 000 daily users and 15 000 paid members. Months later, Slack raised $120 million and
reached a valuation of $1.2 billion in October 2014, making it one of the fastest ever to
reach unicorn status. And by then, it had 73 000 paid subscriptions. By October 2015, the platform had 1 million simultaneously
connected users. And most importantly, of those, 407 000 paid
monthly subscriptions. If you are waiting for a point in this episode
in which we talk about the downfall, well, there isn’t one, at least at the moment. Those 1 million simultaneously connected users
in 2015 have ballooned to upwards of 12 million as of today. But, why is it so successful? We need to talk about Metalab. You might not have heard of them, but this
is the company that made Slack fun. Andrew Wilkinson, Metalab’s founder, explains
that, in order for any software to be great, users need satisfying interaction. And Slack didn’t have that. In fact, initially, Wilkinson dreaded the
idea of working with yet another productivity tool, and the product they saw…well, here’s
what Wilkinson has to say. IRC, by the way, is Internet Relay Chat, a
protocol that communicates via text. Then, there was time: Wilkinson had just six
weeks to improve it. But here’s another factor to Slack’s rise
to the top. Through feedback, Butterfield knew his product
wasn’t up to par, and he relied on others to get it into shape. Both teams took the challenged head-on and,
in retrospect, Wilkinson summarizes the revamped platform as successful because it was visually
attractive, interactive, and playful. So, it’s pretty much a videogame, right? But, Slack isn’t the only productivity tool
out there. Yet it manages to stand out while others have
failed. Critics say that its success isn’t due to
the design, or marketing, or feedback, or even luck. It's a combination of all of them. Feedback: let’s do something with it. Design: let’s improve it. Launch: let’s make it interesting. Luck, well, let’s take it. Critics have
taken their time to dissect Slack and many have found that its user experience is key. Slack invites non-techies to use it, but also,
it’s easy for administrators and I.T. departments. It's all online. Slack is based on the idea that you are not
online all the time, so you might need to go back and check on what’s been happening. But it’s not limitless, of course. Through that research, Slack set the limit
at 10 000 messages, in which you can visualize, search, etc., for free. If you go over, you have to pay not to lose
your info. Now, 10 000 messages might seem like a lot,
but take a team of 50 people, sending 50 messages per day. You go through them fast. And Slack charges per user, per month. It’s genius! Companies didn’t mind paying for this because
of how good the software is. So has investment; In 2017, tech giant Softbank,
and others, invested $250 million, which valuated the company at $5.1 billion. Then in 2019, private investment had valuated
the company at over $7 billion. Not bad at all! But it hasn’t been a perfect ride. The hacking in 2015, which caused a dent in the software’s reputation as its
security was deemed as not up to par. Not only that, but user’s data was compromised,
such as emails, passwords, Skype IDs, etc. In response, Slack developed the 2-factor
authentication and tools for administrators, which did improve security. But reputation, that’s hard to recover. Another criticism: productivity. Many believe that Slack is ruining the way
we work, because of its ease of use. People turn to Slack for everything, even
for things that don’t require it, and if used incorrectly, the software can create
communication overflow. Messages—a
key element in Slack—can become untraceable and users focus more on following the conversation
rather than the objective of the conversation itself. So, yes, Slack lowered the dependence on email,
but people now spent countless hours on Slack. But, the platform is so easy to use, that
even with these flaws, it’s addicting! This leads to another key aspect: the quality
of communication dilutes into a pointless back-and-forth over urgent matters, making
it easy to prioritize incorrectly. Even updates have befallen to criticism: One
update allowed the administrator to export all data, including private messages, without
notifying users. Which isn’t cool, but it did follow the
new General Data Protection Regulation or GDPR. Slack stores all data exclusively on cloud
servers that are, logically, under Slack’s control. So, users have their hands tied, and in response,
many open software developers have sought to create better versions. Regardless of the highs and lows, Slack is
booming right now. Like Zoom (check out our video on it), Slack’s
use has increased dramatically in these isolated times. Remember how we said that simultaneous users
went from 1 million in October 2015 to 10 million in March 2020. But it jumped from 10 to 12.5 in less than
a month! Revenue has accompanied growth, and as more
people rush to digital platforms, Slack doesn’t seem to slow down anytime soon. But, let it be known, that the competition
out there is rough. So, Slack might not be home safe. In fact, in the past months, the company has
released newer versions in all operating systems. But the main thing Slack has proved is that
you can create new things from something as old as instant messaging. And yes, productivity tools are abundant,
but if done right, you can still stand out. Just make sure that, if you are going to badmouth
your boss in private, don’t do it through Slack. So, I want to do a special shoutout to Pipedrive
for the sponsor for today's video. It's an easy-to-use sales tool where you don't
need an IT degree to make it work. It lets you visually track your leads, pipelines,
and communications in one neat place and never forget when to follow up. It automates your dates so that you can spend
time on customers, not on legwork. There's really no lengthy setup or training
needed, which means that you can jump in with both feet from day one. It lets you break free from endless cycles
of typing and retyping data in multiple places, saves you from spending hours searching for
that last conversation, or forgetting any important details. Pipedrive has helped 90,000 companies worldwide
and closed over $24BN in deals. And it's free for 30 days and then 25% off
for the first 3 months if you sign up with the link in the description. Hope you enjoyed that. Check out all of the success stories and failure
stories that we've created in Company Forensics. Stay tuned, don't forget to subscribe and
we'll see you next week.
I still dont know the difference between slack and discord
I never understood how slack was more than just irc with some fancy plugins and a lick of paint.
90% of startups are overvalued as fuck on the hope they become big in the future. Sometimes you get the next wework and lose billions.
No but it sure is worth $30
Is any huge VC funded tech company valued in a reasonable way? No.
Dunno but their customer support is awesome. Fast responses that aren’t canned - what a treat.
It’s not worth that much until they can handle more than 15 users per channel, and maybe video on the mobile app. And how about screen sharing without a voice call.