In an interview with Cheddar TV, IPO Edge Editor-in-Chief John Jannarone argues that workplace messenger service Slack should find support in coming days thanks to a limited number of likely sellers and a business model with a sticky customer base, strong growth, and a large addressable market. While it may not command a multiple as high as Beyond Meat or Zoom, there’s an argument for it to hold current levels.
IPO Edge also interviewed Intercom’s Co-Founder and Chief Strategy Officer, Des Traynor, who explained why Slack has become such a hit with businesses and can continue to expand and pick up more paying customers.
IPO Edge: How can Slack can keep up revenue growth? (It appears to be decelerating)
Mr. Traynor: “Slack is extremely popular with mid-size businesses that are experiencing massive growth. As these businesses grow, they will increasingly spend more with the company so Slack’s already large revenue will expand with its existing customer base over time. In this way, the company can experience massive revenue growth without even acquiring new customers.
Additionally, Slack is leading a megatrend – messaging – and we’re just scratching the surface when it comes to widespread business adoption of that technology. We tend to see these types of megatrends first become established with consumers and then move into business, and messaging is following that wave. The bottom line is messengers have become the dominant form of communication between people and businesses, because communication is faster, more personal and more engaging. Slack has nailed down replicating messaging among friends and family to the business world and this form of communication has proven its staying power.
In building out its platform of apps, Slack has positioned itself as much more than a chat or messaging tool — it’s the place where work happens. Their platform of apps has allowed Slack to move beyond chat. The strength of its platform will prove to be key. At Intercom, we think about our messaging platform in the same way, it is through our platform and partner app ecosystem that our Messenger powers much more than chat and becomes the place where customer actions or tasks, not just communication, take place.”
IPO Edge: Is it turning more existing users to paying users? More new customers?
Mr. Traynor: “I’m not certain how successful Slack has been in doing that as of today – I just don’t have that information – but I’m confident it will be able to turn an increasing amount of its users into paying customers over time. They’ve built a good product that solves a real problem for its customers and those ingredients tend to result in paying customers. If they focus on building a place where people communicate and collaborate in an increasingly deeper way, that will help both new and existing customers. We’ve seen many tech giants in the last ten plus years successfully monetize a massive user base and I expect Slack will be able to do the same.”
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