This post was originally published on this site
Stewart Butterfield remembers the magic moment when everything he had tried to accomplish over the past five years crystallized.
“A surge of brand-new people started the week of March 9… by the week of March 16, growth was a steep vertical,” Slack’s chief executive told MarketWatch in a 45-minute video chat Monday, recalling the impact the coronavirus pandemic has had on the worldwide workforce. “Everything I was trying to accomplish as CEO in a cultural work sense, the efficacy of communication, was happening.”
The forced migration of millions of employees to work from home accelerated what was already a fledgling business. Consider: It took Slack Technologies Inc. WORK, +1.05% more than four years to climb from 1 million simultaneously connected users on its collaborative-communications platform to 10 million on March 10; on March 25, it was 12.5 million. “The week of March 9 was the most productive in our company’s history,” he said.
Growth was “across the board,” both geographically (the U.S., Western Europe, and Southeast Asia) and in the rate of new team-account creation for current customers.
The San Francisco-based company added 9,000 new paid customers from Feb. 1 to March 25, an 80% increase over the full quarterly total the preceding two quarters. During weekdays, the cumulative number of minutes of active use of Slack by all users globally now exceeds 1 billion. Meanwhile, paid subscribers — including the U.S. Department of Veterans Affairs, KPMG and TD Ameritrade AMTD, -4.99% — have climbed to 110,000, according to Butterfield, who like most tech CEOs these days is jumping from one Zoom videoconference call to the next for meetings. [Slack is both a partner and customer of Zoom Video Communications Inc. ZN, +0.83% .] He was joined on the call Monday by Lenny, his new Cockapoo.
Shares of Slack are up 10% this year, and last month it reported its fiscal fourth-quarter revenue surged 49% to $181.9 million, from $122 million a year ago, powered in large part by an increase in customers who spent more than $1 million annually on its product. There are 70 now, compared with 39 in the year-ago quarter.
See also: Slack earnings: Shares plunge 22% on widening loss
The success of Slack extends to the burgeoning business of what used to be called telecommuting. Nearly three out of four organizations will move at least 5% of their previously on-site workforce to permanently remote positions post-COVID-19, according to a Gartner survey of 317 chief financial officers and finance leaders on March 30.
“This may have jump-started the market by seven years,” said Wayne Kurtzman, an analyst at market research firm IDC. Forcing millions of people to change their everyday work practices “is a perfect opportunity for companies to become the digital businesses they have wanted to be.”
Besides Slack, Microsoft Corp.’s MSFT, +0.22% collaborative-communications platform, Teams, continues to post huge gains in the wake of the coronavirus pandemic.
Microsoft last week said a record 2.7 billion meeting minutes were logged on March 31, an increase of 200% from 900 million in mid-March. Total video calls grew 1,000% in March. And the Pentagon recently launched a Microsoft-based teleworking service for 4 million employees. Microsoft last month said Teams reached 44 million people on a daily basis, compared with 32 million on March 11 and 20 million in November.
See also: Microsoft Teams is making Slack investors nervous with its growth
The inevitable comparisons between Teams and Slack befuddles and annoys Butterfield. “You probably sense the frustration in my voice,” he says. “Microsoft has made a huge push the past three years with a free service, but can you find a single Slack enterprise customer who has switched to Teams?”
“If Microsoft is such a competitive threat to Slack as it says, we would not have grown in sales and $1 million customers,” Butterfield said, picking up steam. “I mean, 44 million is an impressive number, but that is out of 200 million Office 365 customers. That’s about a 20% adoption rate.”
The wide breadth of Slack, with up to 25,000 channels, and security features give it a competitive advantage, added Butterfield, who before Slack co-founded photo-sharing website Flickr. (It was sold to Yahoo Inc. in 2005, and has subsequently ended up the property of SmugHug.)
“The smaller startup has an advantage against the large, established company because its focus is narrowed on doing one thing better,” Butterfield said.
