When Slack launched in 2013, it wasn’t supposed to be a startup — it was a tool built for a video game company. Stewart Butterfield, co-founder of Flickr, had developed it to help his team communicate during the failed development of an online game called Glitch. The game died — the messaging system didn’t.
Slack (an acronym for “Searchable Log of All Conversation and Knowledge”) entered a world where email ruled work, and enterprise communication was clunky, siloed, and unloved. With its real-time channels, seamless integrations, and fun user experience (remember the Slackbot and loading jokes?), Slack felt like a breath of fresh air.
Within 18 months of launch:
- Slack had over 500,000 daily active users (DAUs)
- Raised $42.75 million in Series C funding
- Grew 20% week-over-week at times
- Was valued at $1.1 billion by 2015
Slack positioned itself as the anti-enterprise tool for enterprises — a lovable, consumer-grade app that “just worked.” It boasted fast onboarding, emoji reactions, bot integrations, and a playful tone. Engineers loved it. Startups adopted it instantly. Then larger companies followed.
By 2019:
- Slack had over 12 million DAUs
- Served over 600,000 organizations
- Generated $630 million in annual revenue
- Was worth $23 billion post-IPO
Butterfield’s team had done the impossible: created a workplace app people actually liked.
Enter Microsoft
Slack’s rise didn’t go unnoticed. Microsoft, already a giant in enterprise software, saw the threat clearly. Outlook and Office 365 were dominant — but email and Skype for Business were outdated.
In 2016, Microsoft prepared to acquire Slack. But CEO Satya Nadella and co-founder Bill Gates vetoed the deal. Their reason? “We can build this ourselves.”
In 2017, Microsoft launched Teams — a direct Slack competitor bundled inside Office 365 at no extra cost. It wasn’t better. It wasn’t cooler. But it came pre-installed for over 270 million users.
The war had begun.
The Turning Point
Slack knew it was outgunned. In 2016, it made a bold move: it published a full-page “Dear Microsoft” letter in the New York Times, welcoming Teams to the market — and warning that Slack’s product focus would win.
But while Slack was building integrations and refining UX, Microsoft was playing the platform game.
- Teams was free with Office
- It integrated deeply with Word, Excel, Outlook, SharePoint, and OneDrive
- It rode Microsoft’s corporate relationships and procurement pathways
- Microsoft could force deployment at scale overnight
By 2019, Teams had overtaken Slack in DAUs:
- Teams: 20 million DAUs
- Slack: 12 million DAUs
By 2020, COVID-19 hit — and remote work exploded. Collaboration tools became essential overnight. Slack usage surged — but so did Teams.
- Microsoft Teams grew from 20M to 115M users in 12 months
- Slack added users too, but far slower — and couldn’t match Microsoft’s IT-driven deployment
By the end of 2020, Slack realized it couldn’t win alone.
The Salesforce Acquisition
In December 2020, Salesforce announced it would acquire Slack for $27.7 billion — a 55% premium over Slack’s then-market value.
The rationale: combine Salesforce’s CRM dominance with Slack’s communication layer. It was a defensive play — a way to offer a “digital HQ” for companies outside of Microsoft’s ecosystem.
But many analysts saw the move as a white flag. Slack had lost the war of scale — and needed a bigger protector to survive.
Strategic Contrast: Product vs Platform
✅ Slack’s Strategy
- Delight users with experience and flexibility
- Win bottom-up via teams, then expand across organizations
- Be open, extensible, and lightweight
🧱 Microsoft’s Strategy
- Embed Teams into Office 365 by default
- Sell top-down to CIOs and IT departments
- Build tight vertical integration across Microsoft apps
- Outlast competitors through ecosystem lock-in
Slack focused on being better. Microsoft focused on being everywhere.
Key Strategic Decisions
1️⃣ Slack’s Platform Independence
Slack refused to bundle or partner with large suites. It wanted to be the “Switzerland” of collaboration — but that limited its protection from Microsoft’s bundling advantage.
2️⃣ Microsoft’s Bundle Play
By including Teams in Office 365 — at no extra charge — Microsoft gave it instant reach into enterprises. Even if Teams wasn’t as beloved, it became ubiquitous.
3️⃣ Slack’s IPO vs Teams’ Free Growth
Slack went public via direct listing in 2019, needing to justify valuations through user growth and ARPU. Teams didn’t — it was subsidized by Microsoft’s empire.
4️⃣ Salesforce Buyout
Slack gave up independence in exchange for access to Salesforce’s massive sales force and client base. It hoped to be part of a broader B2B cloud platform — but faced cultural challenges.
The Numbers
| Year | Slack DAUs | Teams DAUs | Notes |
|---|---|---|---|
| 2016 | 1.5M | — | Slack dominates early market |
| 2017 | 5M | 2M | Teams launches |
| 2019 | 12M | 20M | Teams overtakes Slack |
| 2020 | 16M | 115M | Remote work surge |
| 2021 | — | 145M+ | Teams keeps growing |
The Lessons Learned
- Better UX doesn’t always beat better distribution. Slack was beloved, but Microsoft owned the pipes.
- Bundling is a weapon. Teams was never free — it was hidden inside something already paid for.
- Product-led growth must adapt at scale. Slack thrived with small teams. Enterprise lock-in required bigger plays.
- Platform power wins over point solutions. Microsoft didn’t win because it was loved — it won because it was everywhere.
Today, Slack still exists — integrated into Salesforce’s vision of an all-in-one work platform. But in terms of user scale, it remains overshadowed.
Microsoft didn’t out-innovate Slack.
It out-positioned it.
