The Success of Slack & Network Effects
Slack, a real-time collaboration app and platform, has seen significant growth over the past year, primarily due to the inescapable shift to remote work; for reference, this past February, it was reported that IBM would deploy Slack to all of its 350,000 employees. A platform that I have never utilized or found useful before COVID-19, Slack has become one of my most used applications. Currently implemented in my classes, student organizations, and even social groups, it is an indispensable tool for remote collaboration and communication.
However, despite a relative cooling of the WFH craze, Slack has continued to experience considerable increases in paid customers. This is primarily due to the benefits of network effects on its recent introduction of shared channels, called Slack Connect. Connect provides Slack with a unique, differentiated feature and allows for collaboration between different companies and customers, providing a new means for expansion and maintaining a competitive advantage. Customers involved in the shared channels in Slack Connect are now unlikely to transition to other products, and more significantly, it might cause existing customers to push their friends and family also to become a part of their shared channel. The number of customers using shared channels keeps increasing rapidly, approaching half of the paid customer base. Consequentially, the network, measured in the number of endpoints within it, is growing exponentially and has accelerated in the last few quarters.
Even though the initial WFH surge has begun to cool, Slack is still seeing a record growth of paid customers, credited to these network effects. Network effects are when increased numbers of people improve a service’s value; as more of one’s colleagues join Slack, it becomes more valuable to them. I personally serve as a prime example for this phenomenon — not just on the individual relationship level, but on levels of larger organizations. Before COVID-19, only one of the student organizations I was involved in used Slack, and thus it did not seem worth it to me to adopt. However, once more of my clubs started using it, and even some of my classes, I was heavily influenced to adopt Slack as a primary communication channel for my daily life.
Source: https://seekingalpha.com/article/4387112-slack-ignore-sell-off-growth-actually-accelerating