Holding ESTC & Will Likely Add to WORK Tomorrow

Allen Shim

Yeah. Richard, it's Allen. I'll just add that, overall our open-platform strategy continues to be a real strategic advantage for us. And you're seeing the ecosystem more broadly benefiting. We've got over 2,000 apps on in the app directory, over 700,000 developers and over 550,000 custom applications. So, just really building on the investments and strategy of having this open-platform strategy, including the kind of go-to-market element.

Stewart Butterfield

So great questions. I would say that the general availability of share channels probably had some really minor impact on the enterprise, because enterprise customers were added to the beta late, and we definitely saw people resistant upgrades to grid, because share channels usage was so important to them. But I don't think that's going to be a major driver by any measure now.

And I think just more broadly, while we're very excited about share channels and we see some really promising early results. Obviously, when we see someone upgrading and immediately create share channel. We think that's a driver of the usage. There's some interesting stories. We'll be sharing about service providers actually paying for their customers' Slack usage because they feel like can deliver a better service that way. But this is like a driver for the business at scale three to five years out as opposed to something that's going to make a doing next week.

By Q1 results, we should be able to give a better idea of the dynamics there. But we're not even modeling the impact of share channels ourselves at this point, because it's just too early to say.

Allen Shim

The last time we looked at this, when we said, what is the, particularly, the TAM within our existing large customer's, it was in the low double-digit percentage. So it's 3, 4, 5x higher in terms of expansion opportunity just within that existing base to kind of give you another angle at it.

Allen Shim

Well, I think it's a reflection of – this is a software SaaS model. I mean, we have very strong fundamentals, high gross margins and strong retention dynamics. So I think we've always said as part of the growth phase, the first priority is to invest in growth, and you're seeing that. We're going to continue to invest in growth, continuing to invest in innovation, and we're leading in those areas. But you're also going to see more leverage. And I think this is really a part of our deliberate effort to continue to drive more efficiency in the business as we invest in growth. So I think both have always been kind of a dual-track goal for us, and we're really just executing against that.

Raimo Lenschow

Sorry, sorry. Sorry I was on mute. If you look at the competition without naming is like, so the main marketing message around the active users. But that's kind of also almost like a false number because it doesn't really tell you anything about engagement levels and how do you – is there a way – or what are you thinking about reacting to that in terms of like, if you look at the Slack usage that you see out in the field there, it looks – the engagement level seems a lot higher. But I'm just wondering how – what's the way for you to kind of communicate that? Thank you.

Stewart Butterfield

If you have ideas for how to communicate, I would love to hear it, because we're trying a lot of stuff. I think it's going to take some time, and it's going to take a couple of more quarters for people to really appreciate it. But I mean, the confusion is deliberately created. I mean, you can't make any mistake about that. And it's not just -- I think we undercount the difference a little bit. If you talk about just like, there's more engagement here and a little bit less here because that makes it just purely quantitative where, I think, it's a quality difference.

There is a lot of people who have desktop VoIP phones that work Skype for Business and are now achieved. So they pick up the phone and make a call and they are -- a team user has nothing to do with what people do. You Slack for why people are switching to Slack, the strength of the platform or any of that.

So I mean I want to just be candid and say, we haven't carry out the right way to message that. I think trying to get ahead of it and get people to understand that you were going to hear 30 million day active user announcement and the 50 million daily active user announcement and 100 million daily active user announce, because the 100 million people using link.

So, of course, they're going to get there. I think our priority is really serving the customers, continuing to not getting too drawn into that distraction. But we do have to head on when we go to talk to customers, because there's going to be a population of 1,000 people who have built all these incredible integrations inside this customer and people are fanatical, and they say it's transformed where they were, and you reach a population outside that, where people don't -- aren't familiar with it and they kind of shrug their shoulder and think that we already get teams to free. Getting past that can take us a couple of months or it can take a couple of years. People have done multiyear valuation of teams that have ultimately failed and they’ve gone back and expanded their Slack usage. And if we can figure out a way to get that happening in a month or a week or a day, we would love to roll that out very broadly.

Allen Shim

I mean, when we see 70% of our top 50 customers, our office -- also Office 365 customers. It's clear to us that the comers appreciate the difference and what the transformation that we can provide versus the more communication, legacy tools that they already have.

So we want to continue to invest in that, continue to invest in customer success, continue to invest in how people want to change their organization's culture and may become more agile. And we think that that's something that will take time as stores. So it's a new category. We're spending a lot of time in education, and we know we still have a long way to go.