Slack plans a mass-media advertising push to boost growth

DUBLIN (By Eric Auchard, Reuters) – Slack, the group messaging platform valued at nearly $3 billion, plans to accelerate its growth by spending some of its $250 million cash pile on mass-market advertising, founder and CEO Stewart Butterfield said.

“We are switching from trying to keep up with growth to trying to generate growth,” Butterfield said in an interview at Web Summit, Europe’s biggest conference for start-ups.

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“Slack can afford to pay a pretty high price to acquire paid users. If we are able to grow this company through advertising, that is my preference,” he said.

The move comes even though Slack is already growing at more than 10 percent per month and has acquired 480,000 users since it was introduced 21 months ago, Butterfield said.

Slack’s team messaging software has gone viral over the past year among business users while often flying under the radar of information technology departments.

Now though, the company is targeting paid corporate users and positioning itself as a “platform” that can support office functions ranging from expense reporting to travel bookings and project management.

Butterfield pointed to Chinese consumer messaging app WeChat, a unit of Tencent, as a model. WeChat includes features that allows people to search for jobs, buy clothing and perform other tasks.

“WeChat is very similar to what we are doing for business users,” Butterfield said.

Slack shot to prominence this year after joining the ranks of so-called “unicorns” – companies valued at more than $1 billion. It has raised $340 million to date and was recently valued at $2.8 billion.

Butterfield, who previously co-founded the photo service Flickr, said Slack has about $250 million in the bank and plans to use some of it on in print advertising, sponsorships and online marketing.

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Slack’s concept of helping teams of co-workers share quick, conversational updates on what they are doing or thinking or reading is displacing many of the functions for which email has long served, while challenging basic business software precepts.

But the company is resisting the conventional way business software is sold by putting off hiring a corporate sales force. The basic software is free, and Slack only charges for additional features once businesses opt to incorporate it more broadly into their operations.

Butterfield says Slack will rely on a growing network of hundreds of software partners to create features that run on top of Slack. The company recently hired April Underwood, the former head of platform development at Twitter to run Slack’s platform expansion.

(The story corrects name to April in 13th paragraph.)

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(Editing by Jonathan Weber and David Evans)