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Messaging startup Slack is building momentum in the crowded team collaboration tools space by announcing it will give $80 million to developers who build "Slack-first" applications and help the software company create its ecosystem.
Slack Technologies Inc., based in San Francisco, makes software that lets teams of workers exchange real-time messages, including images and other files. The announcement caps a year of growing popularity of team collaboration tools among enterprises that want to increase worker productivity.
The $80 million fund, announced this month, is comprised of Slack's money and contributions from six venture capital firms: Accel, Andreessen Horowitz, Index Ventures, KPCB, Spark Growth and Social Capital. While the details of exactly how the money will be divided remain unclear, the Slack fund has already invested in three startups: Howdy, Awesome and Small Wins.
Slack has several competitors in the crowded team collaboration tools space, including the Groups feature within Microsoft Office 365, Google Apps for Work, Jive's Chime, Unify's Circuit and Cisco's Spark. Considering developers have limited time and resources to build applications, the developer fund will provide an added incentive to developers who choose to build on Slack's technology, experts said.
Slack is "really trying to grow much more as a platform, rather than an application," said Irwin Lazar, an analyst with Nemertes Research, based in Mokena, Ill. "The big opportunity here is integrating with other business apps and creating custom workflow applications around it."
Slack's edge in the team collaboration tools space
Since Slack was released in 2013, it has largely been used by individual teams instead of companywide. The company said there are currently 2 million daily active users. An application ecosystem, however, could change that and make Slack a tool deemed necessary by enterprises, according to Alan Lepofsky, an analyst with Constellation Research, based in Silicon Valley.
Irwin Lazaranalyst, Nemertes Research
"To become a real social network inside enterprises, Slack needs to integrate with the business tools that people are using: sales and marketing, engineering and support," Lepofsky said. "The most successful tools are always the ones that have people building add-ons and extensions and filling gaps in what the product doesn't do."
A recent report from research firm IDC examining personal productivity technologies listed Slack's simplicity, availability and robustness of APIs and integrations as its strong points. Its main challenge, the report found, was breaking into enterprise-grade workflow.
By comparison, Cisco and Microsoft already have an advantage when selling their team collaboration tools because most enterprises already have some technology from either vendor, if not both.
A Nemertes survey found that 42% of midsize and large companies want to standardize on one UC platform. About half of that group favored Microsoft and roughly 35% favored Cisco.
"Slack still remains outside of business processes, so bringing in things people already work on, anything that makes it easier to bridge existing business processes will help them," said Vanessa Thompson, an analyst with IDC.
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