It's official: Investors love Slack. The workplace chat company went public Thursday through an unusually direct listing, where it only made its shares available on the New York Stock Exchange, with no bankers. Slack shares closed at $ 38.62, nearly 50 percent above the "benchmark" one day earlier, valuing the company at $ 19.47 billion.
Of course, investors, always a winding bunch, can easily fall out of love with Slack. Slack has yet to win, and it faces competition from Microsoft's chat service, Teams, that comes with Office 365, Microsoft's flagship workplace productivity offering, as well as smaller competitors such as Flock and Mattermost.
But Slack's public listing followed two less hyped, but also successful, business IPOs: video conferencing company Zoom in April and the network and security company Fast in May. Together, these IPOs suggest that while the consumer technology market is dominated by Apple, Amazon, Facebook and Google, companies selling to businesses can still find ways to compete with the big guys.
When Slack launched its chat app in 201[ads1]3, the most direct competitor was HipChat, created by Atlassian, which had its own successful IPO in 2015. The snail's use grew rapidly past HipChat usage, and Atlassian shuttered HipChat last year to focus on other products. But it also competed with many other workplace communication tools, from email to corporate social networks to old-fashioned intranets. Zoom goes from top to top with Cisco's well-developed WebEx. Quickly found a market despite competition from Akamai. It is difficult to find similar examples among consumer technology, where new competitors tend to either sell to the big four or remain perpetual.
For example, Facebook bought Instagram and WhatsApp before either the app could pose some real challenge for Mark Zuckerberg's empire. In 2010, Facebook rolled into Check-In, which looked like up-and-comer Foursquare. The service didn't work, but Foursquare didn't end up being a real Facebook rival either. More recently, Facebook has added the Snapchat-like Stories feature to Instagram and similar lenses to the traditional Facebook service. As online dating sites like Tinder or Bumble become a common way for people to connect, Facebook has rolled out dating features in some countries.
There is enough merger and acquisition activity in the business-to-business market, some of which are driven by cloud units of google and amazon. But the apparent success of Slack, Zoom, and Fast shows that sales are not the only option for business technology companies.
One feature the three have in common is their business model. No one requires potential customers to undergo a complex sales process to begin using their products, or a large sales team to sell those products. Slack and Zoom offer free versions that everyone can start using immediately. You only have to pay when you begin to need large numbers of users or advanced features. You can sign up for Fast with a credit card, without talking to a sales representative. This made it easier to build buzz, especially at startup. Perhaps more importantly, the low access barrier allowed some employees or team of employees to start using the services, often instead of a product that someone else in their company purchased.
Beyond the IPO set, other companies use open source software to take on business-tech giants. For example, Docker offers its alternative to traditional "virtual machine" software offered by VMware and Citrix for free, so developers and other techies can experiment and build products with it before pony-raising money for services, support or proprietary software. Similarly, cloud management software companies such as Chef, Marionette and HashiCorp take on companies like BMC with open source software.
Of course, the products and services these companies offer must be appealing enough that employees ultimately tie together to convince their bosses to pay. Slack did so by making a workplace chat app people actually enjoyed using, even though it was cheaper or no doubt better options on the market. HashiCorp and similar companies beat the big guys to the market. But they got the chance by going straight to those who use their technology, rather than buying managers.