If you woke up to rumours of a 9-billion dollar bid for Slack last month and wondered what the heck was going on – then you weren’t the only one. It’s hard to deny that Slack has made a huge impact on the team collaboration space – but it’s also difficult to determine whether such a huge price for purchase is really necessary.
Let’s start by outlining what Slack has accomplished so far. After all, I’m not arguing against the fact that this teamwork app has a lot of value. Slack managed to make enterprise software into a commonplace solution for work. The paid seat count and daily user count has risen by 3.5 times in a single year.
The more Slack grows, the more that platform evolves. In other words, when you sign up with Slack, you also make the overall product stronger for everyone else on the platform. Everyone who uses Slack to organise their workforce becomes more likely to infuse their entire company with Slack, and while the competitors continue to emerge on the market, they simply can’t seem to access the community that Slack has going for it.
By the 1st of April 2016, there were 2.7 million daily active users on the app, and 800,000 paid seats. What’s more, these people aren’t just casual visitors. The average user is spending ten hours every weekday plugged into their Slack solution.
More than Just a Community
As impressive as the Slack community is by itself, that’s not all the application has to offer. Recently, it announced another $200 million in funding, at a valuation of $3.8 billion, to bring it to a level of $540 million in funding. That means that Slack has plenty of cash to design and implement new products, fund acquisitions and more.
While Slack might have to adjust the usage patterns of its teamwork product to ensure minimised distractions and an increased efficiency in the workplace, it offers enterprises a great deal of opportunity. By moving into ubiquity, Slack has unlocked a significant opportunity, emerging as the identity layer for the enterprise.
Since everyone in a business communicates, Slack is showing enterprises why the need it, rather than one of the many other collaboration solutions on the market. Slack can double as both a login for other apps and an identity provider. As the hub for an enterprise’s software needs, Slack will be difficult to displace.
So, why do Amazon Want it – and Are They Going to pay “That” Much?
As cloud infrastructure goes, Amazon Web Services (AWS) is a pretty significant force for other businesses to contend with. When it comes to accessing the everyday part of your cloud infrastructure, Amazon doesn’t have much of an offering for anyone beyond the programmer in need of extra computing power. With an app for collaboration and messaging – all of that could quickly change.
However, it’s worth asking how badly Amazon actually needs a collaboration studio – in my opinion, though it could be a good development for the company to keep up with today’s competitive market, it’s also not necessarily worth a monster price of $9 billion.
Teamwork apps are definitely valuable. Look at Facebook Workplace for instance. Although it was a relatively late entrant into the collaboration market, it’s still achieved some pretty significant clients, such as the Royal Bank of Scotland. However, while Slack has a pretty impressive clientele, they might not have the same deep connections with all companies. While many big companies might use Slack, the chances are they’re using it without realising it, as small groups in their business find their own solutions for collaboration.
A lot of today’s businesses – including Slack – run on the AWS system. That means that Amazon already has an important level of access to almost all the people with significance on the current market. Even if Amazon wanted a solution for communication that allowed them to avoid all the complexity of getting something up and running, there are a lot of competing systems out there that can offer the same level of features Slack has – for a much lower price than $9 billion.
Honestly, as wonderful as Slack is – and let’s face it, it’s a pretty good app – I simply don’t see the value in Amazon purchasing slack for such a huge price. While a teamwork application certainly has something to offer Amazon, a $9 billion purchase seems over-the-top when you consider the fact that most of that price is set for the community Slack offers. Since Amazon probably already has access to that community through its services – it’s hard to see the appeal.
Amazon Has Made Big Purchases Before
It’s fair to say that Amazon has made some significant business purchases in the past. For instance, the purchase on the table currently is for “Whole Foods”. The difference between this acquisition, and the potential purchase of Slack, is that acquiring an offline chain of retail outlet makes sense in accordance with Amazon’s plan.
Right now, Amazon is trying to automate the grocery shopping experience for its clients. Purchasing Whole Foods will give Amazon the chance to tap into an offline network that it hasn’t connected with before. It makes a lot of sense for Amazon to avoid the hassle by purchasing a brand that’s already done all the hard work for them.
Slack doesn’t have the same advantages to offer Amazon. Instead, it simply allows them to skip over the development cycle. If that’s the aim, then there are far cheaper services out there that Amazon can access.
The real questions right now, are first off – is there any real truth to the rumours surrounding the Amazon purchase, and does the benefit/cost matrix look healthy enough for Amazon to really consider a price tag that high. Secondly, is there a chance that Slack has issued the rumour in an attempt to drive purchasing competition up for the company.
Let’s face it, it wouldn’t be the first time that Slack tried to trick investors into paying more.
In my opinion, a $9 billion price tag – if authentic – wouldn’t be worth Amazon’s consideration. However, maybe the company knows something that I don’t. Who knows?
Rob is Founder & Publisher of UC Today, a leading news publication specialising in Unified Communications & Collaboration technologies.