While Zoom Zooms, Slack Digs Moats

Slack made the opposite trade. They gave up some speed, but they’ve built in network effects and switching costs.

Zoom traded moats for speed. That trade works while they have the better product, but “superior product” is not one of the seven powers. Over time, product can be copied.

Slack, on the other hand, has Personal Utility (Direct) network effects inside of a company. People use PU(D) networks for essential communication with their personal or professional circles using their real identities.

Arguably, Zoom’s virality has caused negative network effects, at least for me. The more people who join Zoom, the more Zoom happy hour invites I get, the worse my life becomes.

“Network effects” is an overused concept. The basic concept is that network effects occur when an experience gets better with each person who joins.

12.5M isn’t as impressive as 300M. But the beauty of Slack is that those 12.5M+ daily active users (DAUs) and 9,000+ new paid accounts are locked. They will keep paying for years.

You can join a Zoom with a link, but a company basically needs to onboard all of its employees if it wants to use Slack to communicate. Plus, Slack is mainly a B2B product, while Zoom serves (and counts in its 300 million figure) both B2B and B2C. As a result, Slack’s growth has been excellent but not as eye-popping as Zoom’s.

Slack, on the other hand, doesn’t look quite as good on paper. It is not quite doubling year-over-year, it’s not profitable yet, and it’s growing more slowly than Zoom is.

In a matter of weeks, Zoom zoomed from 10 million users to 300 million users participants.