Morning Markets: A twist in our continuing coverage of Slack vs. Microsoft in the domestic market.
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Slack, a popular workplace communication tool and company, is competing with Microsoft to bring intra-office chat services to the American business landscape. The company’s meteoric rise, enormous war chest, powerful backers, and slightly-quirky brand have catapulted the company to a valuation of more than $7 billion.
The company is so well-known that it may pursue a direct-listing instead of a traditional IPO when it goes public this year. Behind Uber, Slack could be the most-anticipated public offering of the year.
We’ve covered Microsoft’s efforts to supplant Slack over the past few years, as the struggle is a good encapsulation of the Unicorn versus Incumbent battle that you can find across the world of enterprise software and tooling.
But even though Slack subsumed one set of competition, it may actually pick up a new challenger. According to The Information, ByteDance, another richly-valued, private technology company, may launch a Slack competitor in the United States:
Despite the heavy loss, ByteDance is planning an even more ambitious expansion. It is quietly laying the groundwork to launch a work collaboration and productivity app in the U.S. and other overseas markets, people familiar with the matter said. The move poses a potential challenge to the likes of Slack, Microsoft and Google.
There’s so much capital in the market today that the most famous companies can do a lot. Perhaps too much, at times.
Examples abound of this capital-fueled ebullience. My favorite from today is news that Bird, a scooter unicorn with unproven unit economics, is launching a program to allow smaller entrepreneurs to build mini-Birds themselves, using its tech.
Sticking to the theme, ByteDance is best known for social networking service TikTok and a news app. A move into exporting corporate social networking (of sorts) would be an interesting path. But the company is dealing with slowing revenue growth, perhaps making the possible expansion of its Slack-similar tool to the United States more understandable.
“Bytedance Ltd., the world’s most valuable startup, barely met its 2018 revenue target after a sharper-than-projected slowdown in Chinese advertising growth, people familiar with the matter said. The company told investors to expect revenue of 50 billion ($7.4 billion) to 55 billion yuan during its most recent fundraising[.]”
If you have the capital, and have to juice growth, and your home market’s market is slowing, moving orthogonally abroad into a different business category could make some sense?
More so if Microsoft and Slack weren’t battling it out already for a somewhat nascent market. The Information has one more tidbit that we should consider, namely that in 2018 “the company lost $1.2 billion.” Bringing its Slack equivalent to the United States likely wouldn’t turn a profit for some time. If ByteDance can afford to lose more than what it did in 2018 and defend its famous $75 billion valuation isn’t clear.
But when you promise growth, you had best deliver. Even if it means challenging Stewart and Satya on their home turf.
iStock Photo / Pobytov