“Slacklassian” vs. Microsoft: A Case Study on Fighting Your Bully
Slack and Atlassian join forces to fend off Microsoft. Here are some thoughts and predictions on the partnership.
Mario vs. Bowser: certainly one of the most iconic rivalries in pop culture! For decades, the two have butted heads as they fought for what they believed to be rightfully theirs. But in 1996’s Super Mario RPG: Legend of the Seven Stars, this was far from the case. The plot begins like many Super Mario games with Mario trying to save a princess from the infamous King Bowser. But as the story unfolds, the kingdom gets terrorized and overrun by a militia of personified weapons known as “The Smithy Gang”. The Gang’s ambitions of ruling the world and destroying all who dare step in their way suddenly make Mario and Bowser’s conflict seem petty. Mario knows The Mushroom Kingdom is in mortal danger. Bowser has lost the throne in his own castle. The two conclude that they must team up and defeat The Smithy Gang.
We see this common trope of rivals teaming up in all our entertainment. We even see it in the real word — especially in business. Two companies that seemingly appear at odds with each will team up, pool their resources together, and compete against a larger force in the market. Today, I will write about the most recent (and perhaps most impactful) example of this in the tech industry: the strategic partnership of Slack and Atlassian and its fight to ward off Microsoft.
A Brief Background
Slack was created by accident by this awesome dude named Stewart Butterfield. Yes, that is his real name, and I love everything about this guy! He was a hardcore programmer that understood when to pivot his video game company into a group messaging service. From there, he built one of the highest-valued Silicon Valley startups with perhaps the most impressive diversity statistics in the industry at that scale. Slack is young, scrappy, and beloved by all. Slack is Mario.
Atlassian’s mission is pretty similar to that of Slack’s. It is a software company that delivers solutions that intend to increase day-to-day operational productivity for enterprise buyers. However, Atlassian’s product offerings are much more diverse. It sells popular, cloud-based project management apps (Jira and Trello) and git development tools (Bitbucket and Sourcetree), to name a few. Atlassian is strong, established, and wants its presence to be known everywhere. Atlassian is Bowser.
The Rivals Team Up
In the second half of 2018, Slack and Atlassian announced a strategic partnership. The deal made waves throughout the entire SaaS industry as competitors, users, and shareholders set out to know what that exactly meant.
In exchange for an equity investment in Slack, Atlassian discontinued Stride and HipChat for the new partnership. In 2017, Atlassian developed Stride, a messaging app that intended to compete with Slack. But as sales lagged expectations, Atlassian needed to fold before the vicious software industry swallowed all its capital. On top of this move, Atlassian pledged to double-down on its integrations between its software suite and Slack as well as build a migration path for all Stride/HipChat customers to seamlessly join Slack.
Who are the Winners of this Partnership?
At first glance, it seems like Slack was the obvious victor. Not only did Slack negotiate the discontinuation of a rival’s products, but it also obtained the IP of Stride and Hipchat! Atlassian, on the other hand, suffered financially, reporting a net loss of 11 cents per share that quarter. Atlassian was also dealt the burden of announcing this partnership to the public while gently explaining to its customers that support for a one year-old service will discontinue.
However, if you take a step back for a moment and examine other variables, you see a different story. Slack is certainly in the S-tier of enterprise-level messaging, but is that enough to position it into a tech behemoth that consistently delivers to shareholders? I say no, and I bet Stewart Butterfield agrees. This is why I believe that Slack is just as dependent on Atlassian as vice-versa, and Atlassian will be long-term winner as well.
Slacklassian: A Match Made in Heaven (Eventually)
Let’s examine both company’s current business offerings. Looking at Atlassian’s Product Line, we can see that the company has an abundance of apps, giving it the data and market research needed to discover new opportunities and grow even more. Slack’s Product Line is… well… just Slack:
If I learned anything from tech, it is that one-trick ponies do not last very long — even if that one trick is very impressive. Slack is so dominant because it created an app ecosystem that allows developers from other companies to effortlessly build integrations on the platform. But this is a double-edged sword, as Slack has to rely on business partners to innovate the platform.
Large companies that have the potential to make integrations, like Atlassian, have a distinct advantage in what they offer to Slack. This is one reason why I believe Butterfield made the decision to partner with Atlassian. This is the first step in Slack’s plan to regain control of the innovation happening on its own platform. According to Atlassian’s press release, it plans to “deepen existing integrations” between Slack and its products. In my mind, this means that Atlassian will be given developer access to Slack that goes beyond the public API.
Rather than simply creating a Bot for every product, Atlassian will have an opportunity to intertwine its tools with the entire Slack environment. For example, what if when I look at a Slack profile, I can also see a little Kanban board of their tasks on Jira? Or when a major IT issue is reported on the Service Desk, the external user can automatically be added into an appropriate Slack channel for real-time chatting/troubleshooting? Maybe I can pin entire Confluence articles on my Channel Sidebar for convenient access. By the end of this year, I predict an Atlassian-driven roll-out on Slack that will make a pairing of these two companies seem as obvious as peanut butter and jelly.
Okay — so, I hope I proved to you how great of a team Mario and Bowser can make! But acknowledging their chemistry is only part of it; it was The Smithy Gang that brought these two together in the first place. Slack and Atlassian made a smart move, but it was spawned by retaliation…
Enter Microsoft
I know I referred to Microsoft as “The Bully” at the beginning of the article. But honestly, I do not have much against Microsoft! In fact, I believe it is one of the few honest tech giants in the industry. Instead of selling our data to third parties and tracking users’ every move, Microsoft makes it money by developing quality products that companies and everyday folks want to buy, like Office, Azure, and Xbox. However, it cannot be ignored that Microsoft has successfully bullied its way into Slack and Atlassian’s business.
The Slack Attack!
At the beginning of 2017, Microsoft unveiled Teams — a communication tool that appeared to be a carbon copy of Slack. From my experience, the reception of Teams was filled with laughs and dismay. During my summer 2017 internship, my company was just getting on Teams, and everybody hated it. Negative reviews about a poor mobile experience, limited integrations, and unreliability flooded our all-hands meetings. It got so bad that our office created a free Slack org without leadership’s approval.
That experience made me think Microsoft Teams was over before it started. Boy, was I wrong. Since its release, Teams has not only caught up to Slack, but it surpassed Slack in Daily Active Users:
If you are at all surprised by this, it is probably because you are a young, hip kid that reads Medium. You were never Microsoft’s target demographic. Instead of Microsoft marketing to your 30-student college club that will only use the free version, the company has been aggressively selling to large enterprises that already have Microsoft software in every laptop. This explains why Microsoft has more users but with less customers (i.e. a company or group that purchases an instance of the app) than Slack.
Microsoft’s major success in Teams is in no small part to its classic use of subscription bundling. All Office 365 Business customers get premium access to Microsoft Teams at no additional cost. Now, I finally understand why my internship company would not budge on moving to Slack; why purchase something when you already have a near-identical product that comes with Word, PowerPoint, and Excel for free? It took five years, but Slack’s one-trick pony business model is finally catching up to it.
Octocat Puts on a Suit
In June of 2018, Microsoft announced plans to acquire Github, the world’s largest code hosting application. It comes as no surprise that Microsoft would purchase the overvalued Github because of its massive user base of a niche market that aligns with Microsoft’s ambitions. At face value, the Github product has no foreseeable profit model that could make it explode in wealth. Rather, Microsoft sees the millions of Github users as an opportunity to introduce them to more profitable developer tools, such as Azure and, of course, Microsoft Teams.
Within eight months of Microsoft receiving clearance to acquire Github, Teams released a heavy Github feature that came pre-installed. With a few minutes of configuration, you can add the Github Tab to any org that addresses of myriad of use cases for development teams. You can perform CRUD actions on any pull request or issue in your repository without leaving Microsoft Teams. Teams takes it one step further and allows you to search for PR/issues with keywords. This functionality goes well beyond what is offered by the Github Bot in Slack.
Now, let’s set the scene. If I were Stewart Butterfield on June 4th, 2018, and I see that Slack’s top competitor just purchased Github, I would be tapping my fingers on the table. I would be thinking about all the possibilities that Github and Microsoft Teams could do together and how the two could become the new status quo for dev team collaboration.
What would I do?
I would call up the first two people on the list that would also be nervous by this move: Scott Farquhar and Mike Cannon-Brookes, the CEOs of Atlassian. Remember, Atlassian is behind Bitbucket, the second largest code hosting site behind the dominant Github. Atlassian’s only advantage over an independent Github was how well Bitbucket integrated with its other business tools. But when Github entered in cahoots with the largest enterprise software company in history, that edge was erased. Atlassian had a major incentive to do something radical and swift to respond to Microsoft, and Butterfield knew it. So, my guess is that Butterfield called up Atlassian in June, and a deal was made official in a matter of two months.
Mario had to call on Bowser for help, and Bowser was more than willing to form the syndicate.
My Idea For a Better Slacklassian
As far as predictions go, I believe that a more extensive Atlassian integration will happen in Slack’s next major update — similar to what I described above. However, this is not enough to satisfy the pockets of the newly-public Slack; the company still needs more product diversification to boost long-term gains. This is why I believe Slack will unveil a new product outside of its messaging platform within the next year. Knowing Stewart Butterfield, this new product will not be a copycat of someone else’s. They will try to disrupt the market again. With that in mind, it is hard for me to predict what that may look like, but I have a recommendation:
I think it is time for work teams to have a “homepage” that is unique to their work, visually pleasing, and requires no code. How cool would it be if I can turn on my computer every morning and see the following on one page:
- The latest updates of my Git repositories
- My team’s collaborative Google Calendar
- Real-time Reports/Dashboards from Salesforce, Tableau, Atlassian, and Google
- A Kanban Board from my Jira or Monday.com account
- Literally any information that you can programmatically obtain from a cloud application
There is only one company that is positioned to do something as amazing as “the homepage of your work team”, and that is Slack. The company has successfully given an innovative playground to 3rd-party developers, resulting in 1,800+ available integrations on the platform (Microsoft Teams has a mere 220). Imagine how receptive that community will be when you tell them they can bring their brand to life with beautiful visualizations on this homepage. Plus, Atlassian is right there to help Slack sell Version 1.0 to thousands of existing customers. Hey Stewart Butterfield, I gave you the idea, now please hire me so we can make this happen! 😄
Conclusion
Today, the battle between Slacklassian and Microsoft appears to have reached a stalemate. Atlassian has an important say in what the duo should do next, but because everything is happening on Slack’s platform, no moves will be made until Butterfield gives the greenlight. But with Slack’s IPO off to an underwhelming start, I do not see it making any immediate announcements about a major move. Nevertheless, this is tech, so expect a game of bullet chess real soon.
At the end of Super Mario RPG: Legend of the Seven Stars, Mario and Bowser are able to put an end to The Smithy Gang’s tyranny and restore the kingdom. However, it was not just the two of them alone. They received help from Mallow, Geno, Princess Toadstool, and all of Toad Kingdom. Slack and Atlassian make a solid team, but they cannot defeat the beast of Microsoft unless they leverage their army of strong, 3rd-party integration developers and create the next great thing.
Wow, Clayton Marshall, the Super Mario thing really was the perfect metaphor.
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