Slack Business Model: How A Startup Transformed the Way Teams Work

The Slack business model is based on the innovative team messaging and collaboration platform.

Gary Fox

Slack Business Model Canvas

Slack Business Model: How A Startup Transformed the Way Teams Work

The Slack business model is based on the innovative team collaboration platform. Moving from email overload to simple messaging, Slack transformed the way businesses communicate and work together.

With over 12 million daily active users and more than 156,000 paying customers, Slack has become an essential tool for teams of all sizes across various industries. Let’s explore the world of Slack’s business model and discover how this company has redefined team communication.

The Slack Value Offer

  1. An intuitive, user-friendly interface with customisable features enabling teams to communicate and collaborate efficiently. It reduces the time taken for everyone to stay informed and aligned.
  2. A vast ecosystem of app integrations. Teams can create effective workflows using multiple integrations and add-ons. Slack automates tasks directly within the platform, boosting productivity and streamlining workflows.
  3. An easy-to-use and accessible cloud-based platform that helps teams stay connected and productive from anywhere, on any device. It fosters a flexible and agile work environment that adapts to the needs of teams.

Key Facts About Slack

. Company name:

Slack

Founders:

Stewart Butterfield, Eric Costello, Cal Henderson, and Serguei Mourachov

Launch date:

August 14, 2013

Year founded:

2009

Company CEO:

Stewart Butterfield

Headquarters

San Francisco, California, USA

Number of employees

2,500

Ticker symbol

See Salesforce ticker – CRM

Annual revenue

$5.967 billion (2023)

Profit | Net Income

part of Salesforce

Market Cap

reported as part of Salesforce since acquisition

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A Brief History

Slack was founded in 2009 by Stewart Butterfield, Eric Costello, Cal Henderson, and Serguei Mourachov as a side project while they were working on a game called Glitch. The team realized the potential of the communication tool they had built for internal use and decided to focus on developing it further.

  • August 2013: Slack launches publicly as a platform for team communication
  • February 2014: Slack reaches $1 million in annual recurring revenue (ARR)
  • April 2014: Slack raises $42.75 million in Series C funding
  • February 2015: Slack reaches $12 million in ARR and 500,000 daily active users
  • April 2015: Slack introduces user groups and expands to 750,000 daily active users
  • December 2015: Slack reaches $1 million in paid seats and a $2.8 billion valuation
  • January 2017: Slack raises $200 million in Series F funding at a $3.8 billion valuation
  • September 2017: Slack reaches 6 million daily active users and 50,000 paid teams
  • January 2019: Slack confidentially files for a direct listing on the stock market
  • June 2019: Slack goes public through a direct listing on the New York Stock Exchange
  • December 2020: Salesforce announces its acquisition of Slack for $27.7 billion
  • July 2021: The acquisition of Slack by Salesforce is completed

Who Owns Slack

As of July 2021, Slack is a wholly-owned subsidiary of Salesforce, a leading customer relationship management (CRM) platform. The acquisition, valued at $27.7 billion, was driven by Salesforce’s strategy to expand its offerings and create a more comprehensive platform for businesses. Prior to the acquisition, Slack was a publicly-traded company, with its shares listed on the New York Stock Exchange following its direct listing in June 2019.

Mission Statement

“Make work life simpler, more pleasant, and more productive.”

How Does Slack Makes Money

Slack Business Model - Mau And Dau
Number of daily and monthly active Slack users worldwide from 2019 to 2025

The Slack Revenue Model

The Slack business model generates money through its subscription-based pricing model, offering different plans tailored to the needs and sizes of various teams and organisations.

  • Paid subscriptions: Slack offers paid plans, such as Pro and Business+, which provide additional features, storage, and support for a monthly or annual fee.
  • Add-ons and extras: Customers can purchase additional features, such as extra storage or priority support, to enhance their Slack experience.
  • Slack for Enterprise: Slack offers customized solutions for large organizations, providing advanced security, compliance, and IT administration features for a premium price.

Key Features of Slack’s Business Model

  • Freemium pricing: Slack’s freemium model allows teams to start using the platform for free, driving widespread adoption and encouraging upgrades to paid plans as needs grow.
  • Channel-based communication: Slack organizes conversations into dedicated channels, ensuring focused and easily accessible communication.
  • Extensive app integrations: Slack’s vast app directory enables teams to integrate with essential tools and services, centralizing work and streamlining workflows.
  • Customizable and scalable: Slack offers customizable features and scalable pricing plans, catering to the diverse needs of teams and organizations of all sizes.

Slack Business Model Patterns

Slack Business Model Canvas

Slack Business Model Canvas

The Slack Business Model

Customer Segments Of The Business Model Canvas

Customer Segments

The Slack business model caters to cost-conscious shoppers and other segments including:

  • Teams: Small to large teams within organizations of all sizes
  • Enterprises: Large corporations with complex communication needs
  • Startups: Fast-paced, agile teams requiring efficient collaboration tools
  • Education: Academic institutions, including universities and schools
  • Non-profits: Organizations with limited budgets seeking affordable communication solutions
Value Proposition Of The Business Model Canvas

Value Propositions

The Slack business model focuses on the following value propositions.

  • Seamless communication: Centralized platform for efficient team interaction
  • Customizable workspace: Tailor Slack to fit unique team requirements
  • Integrations: Connect with a vast ecosystem of third-party apps and services
  • Productivity enhancement: Streamline workflows and reduce communication clutter
  • Accessibility: Available across multiple devices and platforms
Channels

Channels

The Slack business model leverages the following channels to reach and engage with its customers:

  • Website: Primary platform for accessing Slack and its features
  • Mobile apps: iOS and Android apps for on-the-go communication
  • Desktop apps: Native apps for Windows, macOS, and Linux
  • Partnerships: Collaborations with other companies to expand Slack’s reach
  • Events: Conferences, webinars, and workshops to showcase Slack’s capabilities
Key Relationships Of The Business Model Canvas

Customer Relationships

The Slack business model uses methods to minimize costs associated with customer relationships:

  • Customer support: Dedicated support team to assist users
  • Community building: Encouraging users to share ideas and best practices
  • User feedback: Actively seeking and incorporating user input for improvements
  • Onboarding: Guided setup and training to ensure smooth adoption
  • Education: Resources and tutorials to help users maximize Slack’s potential
Key Activities Of The Business Model Canvas

Key Activities

The Slack business model includes the following key activities:

  • Product development: Continuously improving and expanding the Slack platform
  • Customer acquisition: Attracting new users through marketing and partnerships
  • User engagement: Fostering a loyal and active user community
  • Integration ecosystem: Building and maintaining a robust app integration marketplace
  • Customer support: Providing timely and effective assistance to users
Key Resources Of The Business Model Canvas

Key Resources

The Slack business model relies on several key resources to operate effectively and maintain its competitive position:

  • Talent: Skilled workforce, including developers, designers, and support staff
  • Technology: Proprietary software and infrastructure powering the Slack platform
  • Brand: Strong brand recognition and reputation in the team collaboration market
  • Data: Valuable user data and insights for product improvement and innovation
  • Partnerships: Strategic alliances with other companies to expand Slack’s capabilities
Key Partners Of The Business Model Canvas

Key Partners

The Slack business model relies on a diverse network of key partners that play a crucial role in supporting the company’s operations, growth, and success. These partnerships include:

  • App developers: Third-party developers creating integrations for the Slack platform
  • Technology providers: Companies supplying infrastructure, security, and other essential services
  • Strategic alliances: Partnerships with complementary companies to expand Slack’s capabilities
  • Resellers: Partners offering Slack as part of their product or service portfolio
  • Investors: Venture capital firms and other investors supporting Slack’s growth
Revenue Streams Of The Business Model Canvas

Revenue Streams

The Slack business model generates the following revenue streams:

Cost Structure Of The Business Model Canvas

Cost Structure

The main costs associated with the Slack business model include:

  • Research and development: Investing in continuous product improvement and innovation
  • Talent acquisition: Attracting and retaining top talent across various functions
  • Infrastructure: Maintaining and scaling Slack’s technology infrastructure
  • Sales and marketing: Promoting Slack and acquiring new customers
  • Customer support: Providing high-quality assistance to Slack’s user base

The Future of the Slack Business Model

The Slack business model has shown remarkable resilience and adaptability, positioning it strategically within the highly competitive communication software market. As of 2023, Slack’s valuation stood impressively at $26.51 billion, underlining its substantial growth trajectory and market acceptance since its acquisition by Salesforce for approximately $27.7 billion in 2021​. This acquisition has expanded Slack’s capabilities, integrating it into a broader suite of enterprise solutions which has likely enhanced its market position.

Financially, Slack has demonstrated robust performance with a reported revenue of over $273.4 million in Q1 of 2022, marking a 36% year-over-year increase​​. This growth is supported by a significant user base, with Slack expecting to expand to 47.2 million daily active users by 2025. This projection is anchored on Slack’s high penetration in the United States market, where it remains the tool of choice for many businesses due to its integration capabilities and user-friendly interface​.

However, challenges remain as Slack continues to face fierce competition from major players like Microsoft SharePoint, which holds a larger market share. The dynamic market of collaborative software, projected to grow to $16.2 billion by 2028, requires continuous innovation and adaptation. Slack’s strategy involves expanding its integration ecosystem and enhancing user experience to maintain its competitive edge​

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