⚙️ Case Study: Slack

Happy Sunday Operators ⚙️

Emails aren’t dead, but they certainly have fierce competitors—real-time messaging. 

And guess who’s leading the charge? 

That’s right, Slack is absolutely crushing it.

Slack now commands a whopping 34% market share in enterprise communication, with a cool 77% of Fortune 100 companies hopping on the Slack Connect bandwagon. 

But let’s not pretend it was all smooth sailing. 

Nope, Slack’s journey started with a good old-fashioned flop.

^{Together With… Me!}
Refer a friend… Get a Report

Our team spends 20+ hours a week bringing you the best content on how to scale your business operations. But there’s more we can offer.

We interviewed more than 200 tech operation leaders about their plans for the upcoming quarter. We then compiled their responses into one report for you to review.

To access the report, you only need to refer 1 friend!

^{Setting the Stage}
Slack Connect

Before Slack, there was Glitch—an online multiplayer fantasy game. 

Stewart Butterfield, the brain behind Flickr, launched Glitch in 2011 with a $15 million budget and loads of hype. But despite the fanfare, Glitch landed with all the grace of a lead balloon. 

By 2012, it was game over. But you know how in movies, the sidekick sometimes steals the show? That’s exactly what happened here. 

During the development of Glitch, Stewart’s team needed a better way to communicate. You know it. Email chains were like tangled Christmas lights—frustrating and inefficient. So, they whipped up an internal messaging tool to keep everyone in sync.

They realized this tool was too good to let go when Glitch crashed and burned. In 2013, they made a massive pivot, and voilà, Slack was born. The name stands for “Searchable Log of All Conversation and Knowledge.” 

Quite a mouthful, right? 

But it perfectly sums up Slack’s magic—organizing all your workplace chatter in one neat space. Instead of chaotic email threads, you got tidy, organized spaces for every project and team. Imagine a filing cabinet that doesn’t make you want to pull your hair out and scream in frustration.

By 2014, Slack had over 120,000 daily users. It quickly became the go-to tool for companies craving better communication. 

Then 2020 hit, and the world turned upside down. As remote work became the norm, Slack wasn’t just helpful; it was a lifeline for many companies. 

Its user base skyrocketed, proving that real-time messaging was no longer a luxury—it was essential.

But here’s where the uphill battle was…Slack was facing formidable giants like Microsoft Teams and Google Chat. Slack would have risked being seen as a commodity if it had remained just another messaging service. 

The problem is that commoditized products often compete primarily on price, leading to lower profit margins. Slack had to provide more value to differentiate itself and stop being just another face in the crowded market.

Enter Slack Connect, the feature that would cement Slack’s market dominance. 

Now you could pull outside organizations like clients, vendors, and other stakeholders into your Slack channels. On the surface, Slack Connect seems like a nice add-on feature. 

But dig deeper and you'll see the genius…

Each new organization or business joining made Slack exponentially more useful and valuable for every other user.

It created a powerful reinforcing loop:

• More companies or people join

• Increasing usefulness and value for existing users

• Attracting even more people to join

Slack tapped into the powerful business theory called the network effect, which accelerated growth and adoption. So, the next time you’re zipping through your Slack channels, remember this…

You’re part of a story that turned a gaming dud into a communication powerhouse, reshaping how we work and connect. 

Not too shabby for a sidekick, huh?

Ops Tactic:  To grow your business, leverage the power of network effects to create a reinforcing loop of users where each new addition makes the platform more valuable, attracting even more users and accelerating growth.

^{Why this Matters}
How Network Effects Boost Your Service’s or Product’s Value

Imagine you're throwing a party. At first, only a few friends show up. It's fun, but as more people arrive, the party gets better—more energy, more conversations, more fun. 

That's a direct network effect. 

Each new guest (user) makes the party (product) more enjoyable.

Now, think about your smartphone. It's useful on its own, but it becomes even more valuable when you start adding apps—games, social media, productivity tools. 

This is an indirect network effect. 

The more complementary products (apps) there are, the better the primary service (smartphone) gets.

The value keeps climbing as more people join the smartphone. 

This creates a snowball effect: more users attract even more users, making the product increasingly valuable.

As a product becomes more valuable and ingrained into daily user habits, switching costs for individuals become extremely high. 

Why would you leave the party once everyone's already there?

Essentially, tapping into network effects gives a product defensibility, pricing power, and the ability to expand its territory quite literally. It's the ultimate scalable growth engine on steroids.

Let’s crunch some Slack numbers to see the network effects’ power:

• Exponential User Growth: Slack’s network effects have been a major driver of its growth. Slack reported having over 32.3 million daily active users and 54.1 million monthly active users in 2023. The number of daily active users is expected to reach 47.2 million by 2025​.

• Increased Productivity and Efficiency: Slack usage reduces emails by 32% and meetings by 27%, further enhancing workplace efficiency​.  

• Revenue Growth: Slack's revenue grew significantly, from $221 million in 2017 to nearly $6 billion in 2023. 

The Blueprint

Let's jump into the playbook:

I. Partner Up with Complementary Services 

Want to give your product's value a massive boost? Team up with complementary services and watch how everything snowballs! It's like finding the perfect sidekick for your superhero product. 

Joining forces with tools and platforms that your users can't live without will benefit you big time. You will expand your product's superpowers reach new audiences and create an ecosystem that benefits everyone involved.

Now, the question is… how do you find the perfect partner? 

Easy! 

Look for products or services that complement yours like peanut butter and jelly. 

Or…

Seek out offerings that add value to your users' experience and make their lives easier. 

Once you've found a match made in heaven, reach out with a value proposition that's impossible to resist. Show them how this partnership will be a game-changer for both of your user bases. 

And when you've sealed the deal, work hand-in-hand to create integrations so seamless, your users won't even notice they're using two different products. 

It'll be like having a secret weapon that makes your product indispensable! 

II.  Fuel Growth Through Referrals

Here’s the ultimate growth hack — referral programs. 

It's like turning your users into a squad of hype machines, spreading the word about your product like wildfire. 

When your users are head over heels for what you've built, they'll be itching to share it with their friends, family, and even that random guy they met at the coffee shop. 

And by making it easy and rewarding for them to do just that, you'll be tapping into the most powerful marketing force on the planet…

Word of mouth!

But how do you create a referral program that gets results? 

It's all about incentives! 

Dream up a rewards structure that's so irresistible that your users won't be able to keep their mouths shut. We're talking exclusive discounts, VIP features, or perks that make them feel like royalty. 

Make sharing a breeze by hooking them up with personalized referral links and integrating with their favorite social media haunts. And watch as your user base explodes with every new referral. 

It's the ultimate win-win. You get cost-effective growth, a bigger slice of the market, and a brand reputation that's the envy of the town. 

III. Make Data-Driven Decisions 

Data is boring for some people, but it is crucial in the quest to maximize the impact of network effects. 

It's the roadmap that shows you exactly how your users tick, where your growth opportunities lie, and what decisions will take your product to the next level. 

To become a data-driven ninja, you'll need to set up a top-notch tracking and analytics system that captures all the juicy details

But don't just let that data collect dust. Dive into it regularly and put your detective hat on. 

Look for trends, patterns, and areas that need some extra TLC. 

Then, use those insights to fine-tune your product, tweak your marketing strategies, and double down on the initiatives that pack the biggest punch. 

When you let data lead the way, you'll always be one step ahead of the competition. You’ll be in the prime position to seize every opportunity that comes your way! 

When you create a powerful network effect, your business becomes the center of a constantly growing universe of value. It's like having a massive magnet that pulls in more and more users, partners, data, and capabilities.

This is the ultimate competitive edge—owning an entire interconnected ecosystem around YOU.

So, no matter what you're selling, always look for ways to tap into network effects. 

Because once you get that flywheel spinning, your growth will be unstoppable. Network effects are the secret ingredient to achieving incredible scale in today's hyper-connected world. 

The companies that master this will be the industry leaders with incomparable competitive edge.