Steward Butterfield sat in the boardroom contemplating his odds against a juggernaut that’s rediscovered its groove again. This is every founder’s worst nightmare, the awakening of the sleeping giant. Microsoft, under the leadership of Satya and the product head of Microsoft Teams, Brian MacDonald, has become a tech company again. It is moving with speed on product development, agility on product strategy and curiosity on market-penetration strategies.
Simply, “Stellar has her groove back!”
For Stewart, the CEO & founder of Slack, this rejuvenation of energies presents perhaps the most pronounced threat to his business.
Over the past decade, we have seen the age of UI and UX, companies whose products had the most intuitive UX and the user-friendly UI, which have attracted droves of new users and lured consumers away from their competitors.
Drew Austin & Arash Ferdowsi pipped G-drive at the proverbial post of the more intuitive UX and easier to navigate UI of Dropbox. However, as the product-market fit of Dropbox matured, tinkering at the seams of UX hasn’t delivered user-growth that justifies the share price premium of the IPO list price.
The current trading price of a single rod of Dropbox is below the IPO price.
Stewart sits in his pause area thinking through his various options. Although Slack is profitable & revenues are growing, its inability to tap into the Microsoft ecosystem of platform technologies for Office365 (arguably the most ubiquitous office/enterprise operating system) makes growth trajectories limited and cost of customer acquisition prohibitively high (for a tech company).
By contrast, Fidelity National Information Services, (disclaimer: a client of my firm & I hold some stock) has more than doubled its share price over the past five years on the same Nasdaq.
My expectation is that a technology play that is tied to the enterprise should have a share price that mirrors the trend of FIS.
Admittedly, Slack and FIS are worlds apart on business models and market strategies.
The point of this piece is simple:
The age of UX and UI as competitive advantages against which you can affix a share price premium on, is over. We are now in the era of “ecosystem hyperconnectedness” or what the sector enthusiasts call the “network effect”.
If your tech is competing with the native platform of an operating system player or market-dominant competitor, you are in trouble.
Now then, back to your regular scheduled program.
Speaker | Investor | Dragon Slayer