FOCUS
0
100
200
300
400
500
$600 MILLION
2017 2018 2019 2020 2017 2018 2019
2017 2018 2019 2020
–$200 MILLION
–150
–100
–50
0
0
20,000
40,000
60,000
80,000
PAID CUSTOMERS
(AS OF JAN. 31 OF EACH YEAR)
ANNUAL LOSSES
(FISCAL YEARS)
REVENUES
(FISCAL YEARS)
PR
OJ
EC
TE
D
Q^1
PR
OJ
EC
TE
D
Q^1
SOURCES: BLOOMBERG; FINANCIAL FILINGS
34
FORTUNE.COM // SEPTEMBER 2019
its rival workplace chat service, Microsoft
Teams, now has 13 million daily active users,
compared with Slack’s 10 million. The news
sent Slack’s shares tumbling almost 4% in
one day.
Butterfield’s response to the competition
is that a smaller, more focused company can
have an advantage over a larger incumbent
that has dozens of products. The bigger you
get, says Butterfield, the harder it is to empha-
size quality and user experience.
Comparing Microsoft’s numbers with
Slack’s is difficult for several reasons. For
starters, Slack contends that its service isn’t
just another chat tool for businesses. Rather,
it’s in a category by itself, the company says,
because it shifts communication from one-to-
one, like email, which creates silos of informa-
tion, to group “channels” that make sharing
information and working together easy. The
average user, according to Slack, keeps the
app open for nine hours daily on her com-
puter or mobile phone, and engages with it for
about 90 minutes.
There is another reason that makes
apples-to-apples comparisons tricky. Teams
TECH
is bundled with Office 365, a subscription-
based version of Microsoft’s key workplace
applications. An employer can have Teams,
in other words, without even knowing it,
much less using it. Slack, on the other hand,
is sold as a stand-alone service and is not
folded in with other products. Critics say
that Microsoft’s user numbers for Teams are
therefore inflated.
But Jared Spataro, corporate vice presi-
dent of Microsoft’s 365 division, says these
questions about bundling are exactly why the
company decided to publish its number of
daily active users—not just overall customers.
“The 13 million people who are using Teams—
from our perspective, it doesn’t matter if they
got it bundled or free,” says Spataro. “They’re
using the product.”
The number of hours that Microsoft’s
customers spend on Teams daily is unclear,
however. Unlike Slack, Microsoft wouldn’t say.
In any case, analysts agree that Teams is the
greatest threat to Slack. William Blair analyst
Bhavan Suri states the obvious in a recent
report: “Microsoft is well-capitalized and has a
significant presence in many large enterprises.”
SL ACK: FROM ADOLESCENCE TO ADULTHOOD
The workplace chat app is quickly adding customers and revenue. But it’s still losing huge amounts of money as it
ramps up its business.
GRAPHICS BY NICOLAS RAPP
