Notion gets thrown for a Loop

Today let’s talk about one of my favorite productivity companies and the challenge it now faces from a tech giant. It’s a story that speaks to the challenges of competing with software bundles in a world with only minimal antitrust enforcement — even when the challenger’s product is significantly better. 

Seven years ago this month, Slack was riding high. One of the fastest-growing enterprise software companies of all time, it hit a $100 million run rate and was valued at $3.8 billion. The company arrived in an era when newly smartphone-savvy workers were choosing their own tools to bring to work, and for a moment it looked as if it might be a generation-defining company.

Then Microsoft entered the picture. Teams, a straightforward clone of Slack’s workplace communication app, didn’t arrive with a bold new design or fresh set of features. But while it looked to fans of Slack like a pale imitation, Teams boasted two crucial advantages. One, it’s part of the Microsoft 365 bundle. That meant any workplace that already paid for Word, Excel, and PowerPoint could now get Slack for no extra charge. And two, Teams is backed by Microsoft’s formidable sales force, which helps the company sell into the large enterprises that are traditionally most profitable for software services.

In a move that the company came to regret more or less instantly, Slack “welcomed” Teams to the world with a smarmy full-page newspaper ad. In retrospect, it was the moment that the company peaked. Over the next four years, its user base would triple to about 12 million people. Over that same time period, Microsoft took Teams from zero to 115 million users. Slack went public in 2019, but did not turn a profit this year, and after its stock floundered the company sold to Salesforce for the (admittedly incredible) price of $27.7 billion.

Since then, despite a recent redesign, Slack has more or less been treading water. The division just named its third CEO in a year. A fun party game you can play in San Francisco is to try to find a Salesforce employee who thinks that buying Slack was a good strategic move for their company. (I’ve never succeeded.)

Slack made more than its share of mistakes along the way, including on the product side. Even if it had executed perfectly, though, there’s a good chance the outcome here would have ...