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Slack and Microsoft are in a head to head competition in the collaboration space when it comes to the Teams product. But Slack, as it turns out might upend a different business line which Microsoft is actively trying to grow in; CRM solutions. Slack though is not aggressively focused towards it; but it may become a natural fit at some point. Both LinkedIn and Rimeto provide a benefit to both the companies; but it’s Slack who might be able to better leverage the latter.

Get answers to typical IP address issues that can cause trouble connecting to the VPN. IntroductionThis will be the first in a series of articles showing you how to model a public company. We’re going to build a standalone model for Slack Technologies, Inc. A standalone mo.

Rimeto & LinkedIn - Two sides of the same coin

LinkedIn has become the de facto way for people to organize their professional bio over the internet and to connect with their colleagues or professional acquaintances over the web. These two basic elements have resulted in tremendous value for LinkedIn, making it possible to have features like premium subscription, job listings, B2B marketing solutions, talent solutions and of course paid ads. Rimeto on the other hand is relatively new compared to LinkedIn (LinkedIn was launch in 2002 and Rimeto in 2016) and pales in comparison with LinkedIn on almost every financial metric you can think of. But, Rimeto aims to become the enterprise directory for the workplace. From this TechCrunch article -

Rimeto has developed a richer directory by sitting between various corporate systems like HR, CRM and other tools that contain additional details about the employee. It of course includes a name, title, email and phone like the basic corporate system, but it goes beyond that to find areas of expertise, projects the person is working on and other details that can help you find the right person when you’re searching the directory.

On one hand, LinkedIn is where people are voluntarily keeping the information about their company, experience, roles etc, while on the other hand, Rimeto is being adopted by companies to maintain the information of their employees. This leads to some important differences between the two. In Rimeto’s case; the data would be much richer than LinkedIn both in terms of quality (up to date) and exhaustive coverage (projects, teams, time spent etc). For LinkedIn, the quantity of data is enormous but the quality is not always that great. Not everyone is keeping their LinkedIn profile up to date. Nonetheless, both provide employee data which can provide synergies for both Microsoft and Slack.

LinkedIn & Microsoft

Microsoft bought LinkedIn for $26.2 billion dollar in 2016. Microsoft in 2015 had also tried to acquire Salesforce; the market leader in CRM space which is a $50 billion dollar market and highly competitive. The main motivation behind it was to give a significant boost to Microsoft’s own solution MS Dynamics in the CRM space. But when that acquisition failed twice; Microsoft instead tried to double down on growing Dynamics and that’s when they latched onto LinkedIn. With LinkedIn, although Microsoft’t original goal was to improve it’s CRM business, they might have realized it could help them in more than one way (probably that’s why $26 billion dollar price tag). As part of the original pitch for buying LinkedIn; Microsoft laid down six key points; one of which was connection between LinkedIn’s Sales Navigator and Microsoft Dynamics sales software. As explained by one of the Microsoft Dynamics customer:

Slack Rimeto Acquisition

Park Place began using LinkedIn aggressively a few years ago, and Adams said the company quickly realized that as LinkedIn helped drive more business, Park Place's outdated salesforce-automation and financial systems simply couldn't keep up.

'Our salespeople are what I call the LinkedIn generation—and some are even the InstaGram generation,' said Adams. 'This is their natural environment.'

But of all of those enterprise apps we looked at, Microsoft was the only one that had the built-in and optimized LinkedIn capability,' he added. 'All of those other apps are good—but Microsoft's ability to automatically include all of this relevant data for our salespeople directly in line with how they already work was the big differentiator for us.'

The advantage quoted above, hasn’t materialized in a significant change in marketshare for Microsoft . One reason could be because of the inherent data quality issues or the privacy issues in using LinkedIn’s public data as part of a CRM solution. The inherent nature of LinkedIn as a professional network might take a beating if people see it being used for CRM or other enterprise solutions. Quoting this statement by LinkedIn CEO -

“We have a members-first approach,” he said. “So it’s all about making sure we’re maintaining the trust of our membership. Microsoft has a very similar ethos with regard to how they secure the data of their customers, and just being very thoughtful in terms of the right way to roll this out and make sure that we create the right experience. So there’s just been a lot of testing happening.” (Source)

Also, because of the nature of Microsoft products which are essentially enterprise based, focused towards improving the internal work process of a company; it may be a big challenge for them to use it to it’s fullest potential. That however is where Slack can be different and may find it more easier to do so with Rimeto.

Slack Acquires Rimeto

Slack & Rimeto

Slack bought Rimeto on Jul 8 for an undisclosed amount but the more important announcement was made by Slack two weeks before that. It was the launch of Slack Connect which allowed organizations to work with different partners and vendors in Slack itself. From the announcement page

Slack Connect is a secure communications environment that lets you move all the conversations with your external partners, clients, vendors and others into Slack, replacing email and taking business collaboration to the next level…

The key part here is business collaboration between different companies. Slack has made it easier and smooth for people to collaborate with the feature of shared channels and ability to connect existing tools through plugins. With the ability to share channels across different organizations; it becomes all the more easy for a sales team for example to reach their leads and at the same collaborate with internal shared channels for any tribal knowledge or issues. As highlighted in Stratechery, the importance of Slack Connect

This doubles down on all of the advantages of shared channels. The user experience of chat specifically is what matters; the only reason this is even possible is because Slack is focused on one specific part of the stack, and the more companies that take advantage of Slack Connect the more of a moat Slack has. That’s the thing about social networks: their best feature is whether or not your friends are on it, or, in this case, whether or not the companies you are working with are using Slack

As more companies take advantage of Slack the more efficient it becomes. On top of that, when you add the Rimeto advantage it provides significant advantage in two ways. First, internal collaboration improves. With Rimeto, employee can more easily find people with specific skills, or know about a colleague in terms of their profile/roles/projects. Second, cross company collaboration improves. People using Slack could benefit tremendously if they are able to know more about their partners/vendors and their needs. For instance; If I am a developer working with a company’s IT admin to setup our system; it would help to know the skills and experience of the other person and provide customized help. When you look at types of collaborations happening between companies; sales, recruitment, IT support, vendor support, marketing etc, the value add could be enormous. As mentioned by Slack CEO, in this interview -

Once you bridge that across organizational structures or across organizational lines, it’s even more powerful. There are these ongoing conversations and there are these like ongoing topics for those people that you work with most closely outside your organization. So you might be a lawyer and it’s your outside counsel. You might be a marketer, it’s your creative agency. You might be an accountant and it’s your auditor. It’s not for sending unsolicited messages to someone in the process of trying to sell them, it’s for companies that actually work closely together.

Stewart never mentioned the Rimeto advantage but it’s not hard to imagine the tremendous value add of adding an extra layer of context with all these collaborations. This may also give Slack a natural advantage when it comes to people looking for CRM solutions.

CRM - Microsoft vs Slack

Slack Rimeto

The CRM market is currently highly competitive and is currently dominated by Salesforce with close to 20% of the market. One way to achieve differentiation in the space is through data which Microsoft now has through LinkedIn and Slack through Rimeto. But, who will be able to better use the data ? Slack here definitely has quite a few advantages. As stated before, to grow it’s CRM marketshare, Microsoft is essentially focused towards using LinkedIn as part of its current Dynamics CRM solution which is a big challenge as described above. On top of it, Dynamics occupies only 3% of the market share which means they are facing sort of a chicken and egg problem. Integrating within Teams might be a better way to leverage LinkedIn but Teams does not have the same focus as Slack in terms of cross company collaboration and connecting different tools people use. Slack though, already has lot of users on it’s Slack platform, but the bigger advantage is Slack’s focus on being as horizontal as possible. As noted by Stewart Butterfield in this full page ad in NY times teasing Microsoft.

The modern knowledge worker relies on dozens of different products for their daily work, and that number is constantly expanding. These critical business processes and workflows demand the best tools, regardless of vendor. That’s why we work so hard to find elegant and creative ways to weave third-party software workflows right into Slack. And that’s why there are 750 apps in the Slack App Directory for everything from marketing automation, customer support, and analytics, to project management, CRM, and developer tools.

Third party apps are an important part of Slack; it’s what enables an organization to use Slack irrespective of the app that they have been already using. Although Microsoft has an edge when it comes to having a feature rich Dynamics CRM solution as opposed to companies just using Slack; but there are many businesses which use only the basic capabilities of a CRM and for them, Slack is already turning out to be a great advantage. As noted by Gene Marks here.

Many of our clients implement CRM systems and only use twenty percent of the capabilities. They focus on the contact management which generally means creating contacts with notes, scheduling follow-ups and appointments and sending emails. Granted, those clients are missing out on important CRM functionality like automated workflows, marketing campaigns, service ticket generation, forecasting and opportunity management. This isn't a fault, it's just a fact. They realize the importance of these CRM things but they never rise to them. Some companies just don't have the culture or the need to expand their usage of CRM to that level.

With time of course, as more and more apps get added to to Slack, we may see a shift towards more complex CRM processes happening in Slack. Either through completely new kind of apps which handle data from Rimeto plus provide CRM capabilities or integrations with existing CRMs. But it’s a huge market and what works with Slack is a new way of doing things and the open ecosystem which allows developers to take advantage of the latest suite of apps and combine collaboration, existing tools and at some point in future, employee data. This gives users a much better holistic experience. There are real challenges to solve though; how do you make sure different companies adopt Rimeto to maintain their enterprise directory; even if they do adopt it, would they be willing enough to share outside their company ? But as Slack continues to grow in the space of collaboration between companies; the benefits might outweigh the concerns.

Overall, Slack’s focus on being more open, on collaboration and on enterprise directory could give users a strong reason to switch. This in turn will help Slack to gain momentum and achieve cross company network effects as more companies adopt it. Naturally this will open up Slack to other opportunities which it might be not actively pursuing right now. For Microsoft, even though LinkedIn provides wealth of data; the size of LinkedIn and it’s social brand may work against Microsoft and prove to be too difficult or too slow in terms of integration and leverage in the best possible way. The same thing is a plus for Slack when it comes to Rimeto; it’s relatively small which makes it easy to be molded in any way Slack wants it to be.

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