How Slack Would Complete Amazon’s Empire

General Tech


Hundreds of millions of people use Amazon. It’s the largest online retailer by far. It offers a collection of increasingly popular streaming movies and television. Millions of people have Amazon’s voice-controlled personal assistant Echo in their homes. If you’re a gamer, you probably know Amazon’s live streaming service Twitch, while countless programmers and IT workers rely on the company’s cloud services.

But one category of people still doesn’t use Amazon for much: office workers. Amazon might be looking to change that.

This week Bloomberg reported that Amazon is considering buying the workplace chat app Slack at a valuation of $9 billion. That’s an enormous sum to pay for a startup, but it would give Amazon a foothold in the lucrative business software market—a market that up until now it has largely ignored. Perhaps more importantly, the buy would give Amazon control over a platform that many people believe could be the next big thing in computing.

Over the years, Amazon’s cloud business, Amazon Web Services, has grown to power everything from consumer services like Netflix to corporate and governmental applications for the likes of General Electric and The CIA. The rise of smartphones has only driven more adoption of Amazon’s “on-demand” infrastructure.

The next big thing in computing, however, may well not be web or smartphone apps. Instead, “conversational interfaces” may dominate, powered by voice-controlled systems like the Echo or chat programs like Facebook Messenger and Slack. Instead of tapping apps, you’ll chat with bots.

For consumers, such interfaces mean that you won’t download Spotify—you’ll just tell your Echo what songs to play. Instead of going to your neighborhood pizzeria’s website to place an order, you’ll send them a text through Facebook Messenger. Business software makers think office work will eventually be botified as well, and they’re betting that Slack is the platform where it will happen.

“Slack is the fastest growing enterprise company in history by any measure, whether it be users, active users, or revenue,” says Ross Mayfield, the founder of Pingpad, a startup building a collaboration tool for Slack users.

In buying Slack, Amazon could control not just the backend platform that developers use to create new business applications, but the platform where those apps will eventually be used. Developers could host and manage apps on the Amazon cloud and then use the Slack to store to distribute them. Mayfield says handling all that through a single company is appealing to third-party software companies like his own.

Besides extending Amazon’s control over the future of cloud computing, Slack would also be valuable to Amazon in and of itself. Raul Castañon-Martinez and , point out that the acquisition would give Amazon a presence in the business communications market, something it’s been trying to do through its online meeting app Chime and its customer service system Connect, both of which launched earlier this year, and with older offerings like WorkMail and WorkDocs. “Amazon has indicated an interest in the workforce productivity space,” Melissa Incera, an analyst with 451 Research. “But they’ve been a little big slow in attracting the user numbers that the industry expects in terms of growth for these types of business platforms.”

The question is whether the acquisition makes as much sense for Slack as it does for Amazon. Slack’s founders have long been reluctant to sell the company, saying they want to build it into the next Microsoft. “I think the problem will be on the Slack side in terms of receptiveness to this type of acquisition,” says Incera. “They are obviously experiencing explosive growth, investing pretty heavily in a solid management team, I think they will see remaining independent in their best interest.”

But there are benefits for Slack. As the company tries to attract larger corporate customers, having the institutional force of Amazon behind it could help it win and support big enterprises. Perhaps more importantly in the long term, Amazon could give Slack access to its artificial intelligence research and development. While Slack’s founders might aspire to more than just money, $9 billion is a lot to walk away from.



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