The Rocket Ship Growth of Slack: How an Internal Tool Became Every Company‘s Favorite App

Slack is one of the fastest growing business applications of all time. It went from launch to a $1 billion valuation in just 1.25 years and now has over 12 million daily active users. This is the story of how Slack captured the hearts and minds of workers around the world to become an essential tool powering the modern workplace.

Humble Beginnings as an Internal Side Project

Slack had an unusual start. It began as an internal communication tool for a small game development company called Tiny Speck. Founder Stewart Butterfield and his team were building a quirky online game called Glitch. They needed a way to easily message each other in real-time, share files, and integrate with other tools like GitHub and Google Docs. So they built their own system and named it Slack, which stands for "Searchable Log of All Communication and Knowledge."

When Glitch ultimately failed to gain traction and was shut down, the team realized their homegrown messaging tool had more potential. In August 2013, they launched a preview release of Slack as a standalone product. It quickly spread via word-of-mouth as one of the most promising enterprise software startups in Silicon Valley.

Explosive Growth and Eager Adopters

It didn‘t take long for Slack to catch on with early adopters. By February 2014, it already had 16,000 daily users. That jumped to 140,000 active daily users just 6 months later. Tech darlings like Airbnb, BuzzFeed, Dropbox, and Stripe were among the first well-known companies to adopt it company-wide.

The passionate Slack user base was key to fueling growth. It spread from team to team and department to department within organizations. In many companies, it was adopted in a grassroots, bottom-up way by rank-and-file workers rather than being mandated from the top down by executives. Slack‘s viral growth is even more impressive considering they spent very little on traditional marketing in the early days.

Making Work Simpler, More Pleasant, and More Productive

So what made Slack so sticky and loved by users? The core features were simple but powerful:

• Organize conversations into open or private channels
• Make voice or video calls with coworkers
• Share and comment on files, images, and documents
• Use search to find and resurface any past message or file
• Connect to hundreds of third-party tools like Google Drive, Trello, GitHub, Salesforce
• Customize profiles with photos, job titles, and status messages
• React to posts with a full range of emoji

Compared to alternatives at the time like email, Skype, and IRC chat, Slack provided a more user-friendly, visually appealing interface. Fun features like emoji, animated GIFs, and customizable themes/colors made it an app people actually enjoyed using for work. Powerful integrations made it a one-stop-shop and central nervous system that could tie together a company‘s other software tools.

Scaling Up and Achieving Unicorn Status

As Slack‘s user base exploded, the company attracted significant venture capital to help it scale. It raised a $42.75M Series C round in April 2014 valuing the company at $250M. By October 2014, daily active users had reached 268,000 and the company was valued at $1.12B after a $120M Series D round.

This rocket ship growth continued in 2015, reaching 500,000 daily active users in just 2 years post-launch. 2016 saw international expansion, with 5 global offices to serve users in over 150 countries. The company was valued at nearly $4 billion at this point.

Continued Product Evolution

Slack didn‘t rest on its laurels after early success. It continued to ship major new product features at a regular cadence:

• 2015: Introduced user groups, 2FA security, Slack apps/integrations directory
• 2016: Launched voice/video calling and Slack enterprise product grid
• 2017: Added interactive screen sharing, threads to organize conversations, and channel details pane
• 2018: Launched actions and ways for external apps to add UI inside Slack
• 2019: Introduced workflow builder to automate tasks and processes

This continual addition of new capabilities, while maintaining ease of use, helped Slack keep engagement high and fend off competitors like Microsoft Teams and Facebook Workplace. It also allowed the company to expand upmarket and win huge enterprise-wide deals like the 350,000 user deployment at IBM in 2019.

Unconventional Marketing Strategy

From the start, Slack took an unorthodox approach to marketing and growth. Rather than paying for pricey ad campaigns or hiring a large sales team, they relied on creating an incredible product experience that would spread organically.

Their main marketing investments were in:

• Building a distinct, friendly, quirky brand voice that stood out from stodgy enterprise software
• Doubling down on customer support to create raving fans
• Launching the Slack App Directory to encourage an ecosystem of high-quality integrations
• Holding HQ office hours and Slack developer hangouts to directly engage customers and partners
• Developing great content and resources to educate people on best practices for using Slack

This emphasis on customer experience paid dividends. Slack boasted best-in-class net promoter scores and net negative churn, with people who used the product becoming vocal advocates. Over 70% of Fortune 100 companies now use Slack.

Transitioning to a Public Company

All of this momentum culminated in Slack‘s highly anticipated direct listing on the New York Stock Exchange in June 2019. The stock had a reference price of $26 but jumped 50% on the first day of trading, giving Slack a market cap of $19.5 billion.

As a public company, Slack continues to post impressive growth numbers. 2020 Q1 revenue was $201.7 million, up 50% year-over-year. It now has over 122,000 paying customers and 963 customers spending over $100,000 annually with Slack.

Eyes on the Future

What‘s next for Slack? The company sees opportunity to become the central hub for all work, expanding beyond just messaging into a full collaboration suite. This means tighter partnerships and integrations with enterprise tech giants like Salesforce, Oracle, and SAP. It‘s also investing in areas like AI and machine learning to make the product experience even more intuitive and intelligent.

As Slack enters its next chapter as a maturing public company, it aims to achieve profitability while maintaining strong growth. With over 12 million active users today, there are still hundreds of millions more knowledge workers globally that are potential Slack users. Slack‘s ultimate mission is to make work life simpler, more pleasant and more productive for everyone. If the past 7 years are any indication, expect Slack to continue pushing the boundaries of modern workplace communication and collaboration in the years to come.