Slack and the Land and Expand Model
Slack and the Land and Expand Model
Slack follows the classic Land & Expand handbook. In this article, I explain how and what sets Slack apart from Atlassian.
The last time I wrote about Land and Expand, I mentioned Slack on the sidelines in the context of homogenous vs. heterogenous networks.
In homogeneous networks, users are connected to each other (example: Slack). Heterogeneous networks are marketplaces, in which users are connected with apps (example: Zapier) or another type of user (example: Airbnb, though not B2B).
Since then, a lot happened.
Slack introduced Slack Connected, which allows companies to create channels with other companies.
Slack Connect is enabling businesses to use Slack in new ways that go beyond just traditional human-to-human communications. Nando’s, a restaurant in the UK that specializes in peri-peri style chicken dishes, is using Slack Connect for automated communications with its delivery partner Deliveroo. Other businesses like Fastly are using Slack Connect for customer support, and Zendesk is using it to connect with partners. Slack has even built a Slack Connect instance for doctors to share their experiences with each other in the fight against COVID-19 in recent months.”https://www.theverge.com/2020/6/24/21302050/slack-connect-work-emails-shared-channels-future
Slack has taken the concept to the next level. Instead of expanding within organizations, Slack Connect allows it scale beyond!
A brief explainer of Land and Expand
Land and Expand is a product-led growth loop based on virality.
As I wrote in the original article about Land and Expand:
The traditional way to sales follows a top-down approach: you target the CTO, head of engineering or even CEO. That in itself is its own job, hence why salespeople exist.
The opposite is bottom-up: selling to the engineers. This is “land & expand”: starting with a single user, usually engineers, and expanding from the to the whole team, then department, then company.
Big-name companies follow this model: Atlassian, Miro, Dropbox, Zoom, and many more.
For that to work, a product needs to fulfill a couple of criteria.
First, it has to be inherently collaborative. If the product doesn't revolve around interacting with other users in a meaningful way, there's nothing you can do to add it on top.
The 2nd requirement: low friction. The friction has to be as low as possible, which is why many (all?) companies choose freemium as a monetization model. You also don’t want to force users without an account to create one when they have been invited by someone with an account.
The true stickiness of Land and Expand products and their lock-in effects come from collaboration. Try replacing a tool the whole company uses - or even just a big team - and you know what I mean. It's a long and tedious change-management process; a result of quick expansion due to low friction.
3rd requirement: integrations. Slack has a long list of integrations that make the automation of notifications and control of other apps flawless (think: frictionless). Integrations are another way to increase stickiness and lock-in effects.
4th requirement: a great experience. Collaborative products need to be fast, simple, and quick to product value. Users need to feel that this tool helps them get the job done in a much more efficient way than any other solution that comes to mind. Even spreadsheets.
The idea of Land & Expand is also applied in Sales: going from one account to a bigger account to an enterprise account.
Connecting companies
Slack expands this model with the idea of going cross-company.
The job Slack gets done is realtime communication. As such, it’s less of a competitor to email and more of an evolution of it because email is asynchronous communication.
Slack allows you to handle communication in realtime, instead.
That's the reason why I don’t think Slack’s biggest competitor is Microsoft Teams. I think it’s Zoom. Having a quick Zoom call instead of a Slack chat can be much more efficient because a lot gets lost in translation with text.
Communication with suppliers, service companies, and 3rd parties has been asynchronously so far. Slack Connect wants to stop that.
Microsoft Teams
What makes this interesting is the fact that Microsoft Teams uses the counter-strategy, tops down instead of bottoms up, and is successful with it!
Microsoft reported having 20 million DAU (daily active users) in November 2019 (source). We have to be a bit careful with these numbers because Microsoft bundles Teams with other products.
Microsoft has long-standing relationships with huge enterprise companies that Slack can’t tap into. As such, Microsoft uses its heavy sales arm as driver for growth. Slack is the opposite: product-driven.
Furthermore, Microsoft offers a big bandwidth of applications that all play nicely with each other. Just think of Teams and Office products, for example. This is something Slack was aware of early on, which is why the integrations are so vital to its Land and Expand business model (and SEO strategy).
