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Slack – email’s worst nightmare


Slack’s CEO believes his company’s products will lead to the demise of almost all corporate email within the next 5-7 years. This bold assertion is not as wild as it seems – at first glance.

Slack’s office tool benefits from the growing trend amongst employees to work remotely. This workplace chat application now has a $20bn valuation based on its IPO last week.

In 2018 approximately four million US employees worked from home (Global Workplace Analytics – source). Slack allows teammates to easily work together online. It follows hot on the heels of Zoom’s IPO listing – the video conferencing company which also facilitates such remote working.

Slack copied Spotify in seeking a direct listing – meaning it avoided the traditional expensive listing route of diluting its shareholders by 10%-15%. Interesting, since Slack only recently raised money in 2018 – at 22% below its IPO listing price. So it did not require new capital. Consequently, no new shares were issued. This method of going public is anathema to Wall Street investment banks who typically charge up to 5% when underwriting an IPO. Slack therefore saved its exiting shareholders a small bundle by using such market makers as Citadel.

Slack offers various channels for workers to access within their companies – from project groups to larger divisions they may be part of. It is far more efficient than email and is increasingly displacing the use of emails within companies. Workers can easily leave and reenter different Slack channels – all hosted by the company. Depending upon a worker’s priorities that day they can even mute certain channels. Unlike email – workers don’t need to be copied on tons of communications.

Essentially it helps to declutter an employee’s communication inbox. The filters offered by Slack help remove communication bureaucracy – particularly in the form of huge numbers of workers being unnecessarily interrupted by irrelevant emails. Workers can easily opt in or out, mute their Slack channel or easily organize a video conference call to chat with their colleagues.

Slack is closer to Twitter than email. Importantly, the platform lends itself to short sentences back-and-forth within a group. These more closely resemble a phone group chat than an email list. Such communication helps speed up questions being answered, and the decisions taken. It avoids pages of emails with large numbers of people copied in.

Some of the key advantages when using Slack include:

  • Leave channels: Once a worker’s input on a project is finished, you can leave a channel. Limiting a worker’s channels regularly avoids distraction and unnecessary messages. Workers can always join again if they wish.
  • Voice and video calls: For those times when employees need to talk face to face, using Slack’s integrated voice and video calls function is easy. Premium users can even set up conference calls with multiple users.
  • Easily connect to other apps: Slack can integrate with popular tools, including Google Drive, GitHub, Zendesk and many others.
  • Mute and Do not disturb channels: Allows workers to stay in a channel, but without the distraction of regular alerts. If the request is urgent, workers can still be notified.

Financial outlook of Slack

Slack has narrowed its losses and expects 50% revenue gains for the 2020 fiscal year. This will push its revenue above $600 million next year – from the current $400 million in fiscal 2019. Slack’s first quarter 2019 revenues already represent a 67% increase from the same period last year – when the company lost $24.8 million on $80.9 million in revenue.

The company is aggressively growing its daily user base – with over 88,000 paid customers. This is up almost 50% up on fiscal 2018 figures. Its total daily active user number is now just over 10 million. Interestingly its number of large paying customers – those paying over $100,000 in annual recurring revenue (ARR) – is now at 575. This is up 93% year over year – compared with fiscal 2018.

As Slack scales up further, securing more large-scale paying customers globally (companies) – we expect it to reach profitability within the next few years.

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This article does not constitute investment advice. Do your own research or consult a professional advisor.

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