These slides use concepts from my (Jeff Funk) course entitled Biz Models for Hi-Tech Products to analyze the business model for Slack, a supplier of collaborative tools for teams. These tools offer a new form of mail service that is very different from that of traditional e-mail programs such as Microsoft Outlook, G-Mail, and Yahoo-Mail. Slack designed its mail service for the cloud computing environment, as opposed to the traditional in-house computing environment. Accessing documents from the cloud is easier with Slack’s service than with Microsoft Outlook as is enabling apps for Slack’s service and reading messages. Reading messages is easier because they are organized by person (like instant messaging on smart phones) as opposed to time. By measuring usage, Slack can charge by active user thus reducing the risk of trying Slack, particularly for individuals, who are the main market for Slack. These slides describe the value proposition, customers, method of value capture, scope of activities and the method of strategic control for Slack.

1. MT4002: Slack
Lau Lee Hong
Huang Ming Chien
Lim Yu Ke
Xia Yiping
Shi Lei

2. Content
1. Background - Team Collaborative Tools
2. Problems in Corporate Team Collaborations
3. Slack and its Competitive Advantage
4. Value Proposition, Customer Selection, and Methods of Value Capture
5. Business Model - Corporate R&D, Open Innovation and New Business Models

3. ➔ High Valuation at $2.8b
➔ Productivity applications for projects
➔ Examples
◆ Email, Whatsapp & Google Docs
Background - Team Collaborative Tools

4. Problems in Corporate Team Collaborations
➔ Emails were used but poses the following problems:
◆ Disorganised responses
◆ Very few functions for specific collaborative purposes
◆ Unable to selectively choose notifications
◆ Messages are not real-time
◆ Hard to search through contents of the file attachments
➔ Multiple softwares are used concurrently, but not synergized

5. Slack and its
Competitive
Advantage
➔ All-in-one Dashboard
➔ Real-time, on multiple
platforms
➔ Deep capabilities like chat
profiling and seamless
external integrations

6. Live Demo

7. Value Propositions
Slack is an app that assist in internal communication and collaboration. It allows
communication to be more direct and transparent across the workplace.

8. Value Propositions - Collaboration
Ease of working on documents and files like word, photoshop, PDF, JPG, txt,
google docs, etc.
Able to comment directly on the files so that others can see the right comments
on the right files.
Google docs will remain updated to the latest version once shared.

9. Value Propositions - Search
Slack enables easier and faster search as it index the contents of every file people
share.
Instant search is available for contents in a PDF, word document and Google
docs.
All conversations can also be searched as well.

10. Value Propositions - Chat
One to One
Similar to WhatsApp or messenger, people can chat privately with each other.
Private groups
Private group chats are available for communication on specific matters within a department or group in
a company.
All (#channels)
Channels are used to discuss something or share information that concern everyone.
Each person can subscribe to the channels that they want to be in.

11. Value Propositions - Notification
Notification from other services can also be received via Slack.
For example:
A new document in Google Drive
New survey response
New post from RSS feed
Users can assign notification to private groups and channel as well.

12. Value Propositions – Additional functions
Customizable emojis
Reminder when sending messages to people in different timezone so as
not to disturb others in their sleep
Setting reminder messages
Automated reply

13. Competitors
Yammer HipChat

14. Yammer

15. HipChat

16. HipChat vs. Slack
Source: Slack vs HipChat Review

17. Customer Selection

18. Method of Value Capture
● Freemium model allows anyone to download and use but charges for added
functionalities
● Free functions:
○ Search and browse through 10,000 messages, 10 service integration, etc
● Standard functions ($6.67/user/month)
○ Unlimited service integration, allow guest access, able to forward emails to Slack, etc
● Plus functions ($12.50/user/month)
○ Support for external messages and archival solutions, compliance exports for all message
history, 24/7 support with 4 hour response time, etc

19. Method of Value Capture
● Users create value
● Free trials -
○ Slack gives free credits through events (limited period) and friend
recommendations
○ Users may get locked into using the standard or plus plans while integrating
more than 10 services and allowing guest access
○ It may be difficult to remove the integrations after using them

20. Method of Value Capture
● Fair Billing Policy
○ Unlike most companies that charge the full cost despite not utilising the
products, Slack charges users based on how much is the usage.
○ When paid users are not using Slack or users become inactive, Slack adds
pro-rated credit to the company's’ account.

21. Method of Value Capture
● Slack for Non-Profit organisation
○ Gives standard plan free of charge to non-profit organisation
○ Give support to people who are doing good things
● Slack for Education
○ 85% discount for Slack’s annual plans for education institutions or
student groups

22. Interface Standard - Closed source Integration APIs
Classification Web API Real Time Messaging API DIY Integration Tools
Type(s) HTTP/JSON based API WebSocket-based API
Slackbot Remote Control
Incoming & Outgoing
Webhooks
Custom Slash Commands
Who Any members of the community
Function(s)
More flexibility and
customization to build
applications that interact
with Slack.
Build applications to
send messages as a user.
Receive events from
Slack in real time.
Real-time messages to public
channel as Slackbot.
More customization and
formatting.
Define trigger words to
perform actions outside Slack.

23. Network Effects - Intrinsic Value and Utility
Type Direct Effects Indirect Effects
Description
Value of Slack directly increase with
usage
● Public + Private Communication
Channels
● Efficient communication within
organization and teams
Integration usage to Slack increases the value
of its network, which can in turn increase the
switching cost of the entire Slack platform.
● Integration Google drive, Dropbox and
etc.
Critical mass achieved with
organization adoption
Reduce transaction cost
Channels to ensure capacity
To capture new users: Switching cost reduce
due to integration with other softwares.
To sustain user base: Switching cost increase
when more information is stored in Slack.

24. Business Model - (Value capture) SaaS
SaaS - Software as a service
Software licensed on a subscription basis, centrally hosted.
With subscription fee charges, commonly monthly or annual fee.
Vendors able to provide freemium model for limited functionalities.

25. Business Model - Value Proposition
Tackling actual user problems instead of selling its product.
Through a price model of -
Charging company with the actual users of the application, instead of
the regular “per seat” model;
Charging by actual usage time;
Provide freemium service of up to 10,000 messaging histories;
By adapting to evolving customer needs.

26. Business Model - Suggestions
Cloud
Solutions
Crowdsourcing Behavior
Analysis
Customized
Services
Fiverr
Open Innovation Big Data Customization

27. Business Model - Suggestions | Customer Selection
Resource
Pool
Resources &
Information
Pool

28. Business Model - Suggestions | Resources Pool
Open
Innovation
Cloud Solution
Large solution base available
Company experiences/suggestions
Crowdsourcing
Crowdfunding, a general search
for answers & resources etc.
$
Commission

30. Business Model - Suggestions | Information Pool
“BIG” Data
Customer Behavior
Behavioral analysis based on
collected data and preferences
$
Subscription;
(Targeted)
Advertising
Data Pool
Integrated platform of company
profile, job offering & application

34. Business Model - Suggestions | Service
Customization $
Portfolio /
Feature Pricing
Customizable Services
Provide services as desired
(Personalization; Expansions;
Open APIs)
e.g.: Plug-in to company’s website.

37. Slack: Be less busy

38. Questions & Feedbacks