With $427m in funding and a $7.1B valuation, Slack sends a message to Microsoft

Slack is poised to challenge big enterprise software players like Microsoft after buying out rival Hipchat and raising $427m in funding at a valuation of $7.1B.


August 22, 2018

Slack, the work-chat platform that transformed conversation at your office into a series of GIFs, raised a $427m Series H at a valuation of $7.1B. Since raising $250m just months ago, Slack’s value increased $2B. 

Offbeat Slack founder Stewart Butterfield built a fan-favorite workplace chat platform by prioritizing fun features — and now he’s using them to crush the competition.

A ‘feature’ presentation that no one expected

Slack — an acronym for “Searchable Log of All Conversation and Knowledge” — began as a feature in Butterfield’s lifelong passion project of building a never-ending video game (he founded Flickr the same way). 

When users gave the game’s new communications feature two emoji-thumbs up, Butterfield dropped his old project to focus on improving Slack with even more new features. 

Butterfield’s focus on features became Slack’s primary strategy, guiding the development of easy-to-use integrations that have made Slack so important that major news outlets now report when their service is down.

If you can’t beat ’em, Slack ’em 

Unlike products designed not to work with other brands (cough *Apple* cough), Slack’s platform features integrations with other software (Google, Microsoft, Salesforce, etc.) to make its product fun and easy to use. 

This strategy paid off last month: Slack bought one of its largest competitors, Hipchat, winning a years-long fight of the features.

Now, Slack has one main competitor: Microsoft. The ’Soft considered buying Slack in 2016, but then built its own collaboration tool, Microsoft Teams, instead.  

The goal? Out-Microsoft Microsoft 

After Microsoft unveiled its Teams product in 2016, Slack took out a full page ad in The Wall Street Journal saying they were “excited to have some competition” (riffing on a 1981 Apple ad that welcomed IBM to the personal computer competition).

But since then, Slack has built up a massive war chest to continue expanding its software offerings to rival Microsoft’s. With $1.2B in the bank and a paying user base of 3m users across 70k teams, now all Slack has to do is keep being the “fun” messaging platform.

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