In 2009 a software team coordinated through email threads, instant messaging and IRC. Consumer messengers such as Skype were free and widely used by teams, but they came with ads, obscure screen names and failed file transfers, and kept no shared record a new team member could read HC9 HC1. A few hosted business tools existed: 37signals' Campfire offered group chat rooms and Yammer offered company messaging HC4. The buyers were small technical teams paying from their own budgets, and a tool that one small team adopted could spread through its department HC8.
HipChat
HipChat reached software teams four years before Slack, but it charged once a team passed five people until Slack arrived, spent Atlassian's effort on editions behind the firewall and then a rebuild, and never connected companies to each other.
Why HipChat lost to Slack
- 1 · 2009–15Early rooms, built as Atlassian's chat layerLaunched in 2010 before mobile apps were ready; from 2012 integrations and apps came through Atlassian's developer suite and marketplace.Multi-Product
- 2 · 2010–14A free plan capped at five usersFrom March 2013 a sixth user meant paying $2 a person; the cap went in May 2014, three months after Slack launched free for whole teams.Freemium Model
Versus Slack: Slack let whole teams in free, charged for history, and then connected each workspace to its partner companies HC25 SL21. HipChat got there four years earlier, but charged from the sixth user until Slack launched, grew as the chat layer of Atlassian's developer tools, and spent its effort on editions behind the firewall and a rebuild HC8 HC1 HC22.
Arena: Market Conditions Before HipChat
How each step happened
Step 1 of 4 · 2009–15
Early rooms, built as Atlassian's chat layer
Four years early, for software teams
HipChat was first. Pete Curley, Garret Heaton and Chris Rivers, who had sold the calendar startup HipCal to Plaxo, opened a private beta in 2009 of hosted chat rooms with file sharing and a searchable archive HC5 HC4. Nearly 500 companies signed up, and Curley launched in January 2010 without the planned mobile apps and API because uptake came without them HC4. By 2012 each room kept its full history so a newcomer could catch up, which made it more useful the more of a team's work passed through it HC1. Its users were mostly developer teams HC26.
The chat layer of Atlassian's tools
The 2012 sale to Atlassian deepened that one kind of customer. Atlassian bought HipChat after nearly half its own staff came to use it daily, and on the day of the deal released integrations that posted Jira and Confluence notifications into rooms; many of HipChat's 1,200 customer organisations already bought from Atlassian HC1 HC7. The suite was a real route to buyers, and it defined HipChat as the conversation layer of a software team's tools. When Atlassian wanted non-technical teams in 2015, it bought Hall, another chat service, and moved its users over rather than redesigning HipChat for them HC11. The hosts of the Acquired podcast argue that HipChat's reach beyond engineers was more claim than product work HC26. HipChat Connect, its platform for outside developers, arrived in November 2015 and sold apps through the Atlassian Marketplace, built for Jira and Confluence add-ons HC12.
Rivals Slack launched in February 2014 after polishing its onboarding on friends' companies admitted in batches, and put integrations into the free product SL7 HC25. It opened an App Directory with 150 integrations and an $80 million developer fund in December 2015 SL15.
Step 2 of 4 · 2010–14
A free plan capped at five users
Pricing ran alongside the product from launch, which offered a 30-day free trial and then paid plans; under Atlassian the price became $2 per user a month HC4 HC1. Adoption came team by team, with no salespeople: "Everyone starts from some small team as part of some small department and then it spreads like a virus from there," Curley said in 2013 HC8.
The free plan HipChat added in March 2013 put the gate on team size. It had every feature for up to five users; once a sixth joined, the price went back to $2 a person HC8. A department that adopted HipChat met a purchase decision as soon as it grew past a handful of people. Slack launched eleven months later with a free plan for any number of people that limited only searchable history, to the most recent 10,000 messages HC25. The Acquired hosts single out that difference: a newsroom, they argue, would not have tried Slack if it had charged beyond five people HC26.
HipChat moved its gate to history in May 2014, three months after Slack's launch, with search limited to the last 25,000 messages and video calls in the paid Plus plan HC9. From then on the two free plans differed mainly in which paid features they held back, and new teams were already choosing Slack: by November 2015 it reported 1.7 million daily active users, while Atlassian did not disclose HipChat's HC13.
Rivals Slack's free plan admitted whole teams from its first day, and from 2016 a direct sales force widened those team purchases into company contracts HC25 SL2.
Step 3 of 4 · 2015–17
Chat behind each company's firewall
From 2015 HipChat's effort went to buyers Slack did not serve. Atlassian made chat a Collaboration business unit, planned to triple the team, and released HipChat Server, which a company ran on its own network with its own identity management HC10. Its general manager noted that the new chat tools, Slack among them, were cloud services only HC10. Data Center, a clustered edition for up to 20,000 named users, followed in June 2017 HC14 HC15. The editions answered security and IT teams whose rules kept cloud chat out. Atlassian's own retrospective says that while it was busy trying to retrofit HipChat for enterprise customers, Slack took the world by storm HC22.
The editions also kept each customer's chat inside its own walls. HipChat's only route across company lines was the guest link it had added in 2010, a paid feature that let a client or contractor into one room to see the messages sent while invited HC5. It let one outsider into one conversation; it did not connect one company's teams to another's.
Rivals Slack opened shared channels in beta in September 2017, built as one channel whose history both companies hold rather than as guest accounts SL21. By January 2019 more than 15% of its paid customers used them, with an average of more than four each SL2.
Step 4 of 4 · 2017–19
Rebuilt as Stride, then sold to Slack
In 2017 Atlassian chose to start over rather than update HipChat. Stride, launched in September, joined chat with voice and video meetings; Mike Cannon-Brookes called it "a very big investment" built "from scratch" HC16 HC17. Its free plan allowed unlimited users with the last 25,000 messages, the kind of gate Slack had launched with three and a half years earlier HC16 HC25. Stride restarted adoption in a market Slack already led, and HipChat Cloud's teams were to be moved onto it, so the room history they had built since 2010 had to move either way HC24.
In July 2018 Atlassian left real-time communications: Slack bought the intellectual property of Stride and HipChat Cloud, Atlassian made an equity investment in Slack, and all four chat products would close HC2 HC18. Stewart Butterfield described the payment as nominal, spread over three years, and the cloud services closed in February 2019 HC19 HC21. Atlassian, with $874 million of fiscal 2018 revenue from its other products, called the step difficult but pragmatic, and drew the lesson to make big bets early or not at all HC18 HC23 HC22. The four-year lead from step 1 was spent on the five-user gate and the enterprise editions before Slack's teams grew into company-wide contracts.
Rivals Slack held its customers with history, partner channels and more than 450,000 integrations in use in a typical week by January 2019 SL2. After HipChat closed, Slack named Microsoft, whose Teams came with Office 365, its primary competitor SL18 SL6.
Key dates
- 2009Private beta of hosted team rooms
- 2010-01Public launch with a 30-day trial, before mobile apps
- 2010-09Paid guest links and video
- 2012-03Atlassian buys HipChat
- 2012-03140 million messages Sent since launch; more than 1,200 customer organisations HC9 HC1
- 2013-023,500 paying customers Before the free plan HC8
- 2013-03Free for up to five users
- 2013-091 billion messages Sent since launch HC9
- 2014-02Slack launches free for whole teams, limited by history HC25
- 2014-05Free for any number of users
- 2014-052 billion messages Sent since launch; team almost doubled under Atlassian HC9
- 2015-01HipChat Server and a Collaboration unit
- 2015-05Atlassian buys Hall for non-technical teams
- 2015-11HipChat Connect for outside developers
- 2015-118 billion messages Doubled in 2015; Slack reports 1.7 million daily active users HC12 HC13
- 2017-06Data Center for 20,000 users
- 2017-09Stride replaces HipChat Cloud
- 2018-07IP sold to Slack; Atlassian leaves chat
- 2019-02Cloud services close
Sources
Oldest first.
- HC4 HipChat Takes On Campfire And Yammer As It Launches To The Public. Contemporaneous report quoting a founder
- HC6 HipChat is consumer-meets-enterprise done right, check it out!. Contemporaneous account by a former colleague
- HC5 HipChat's Enterprise Communication Platform Adds Video Chat And Guest Access. Contemporaneous report
- HC1 Meet Hipchat, the newest member of the Atlassian family. Acquisition announcement
- HC7 Collaboration Start-Up Atlassian Acquires HipChat. Contemporaneous report quoting an acquirer executive
- HC8 HipChat Introduces New Free Tier For Teams Of Five Or Fewer To Capitalize On Bottom-Up Growth. Contemporaneous report quoting a founder
- HC25 Slack, Flickr Co-Founder Butterfield's Business Collaboration App, Exits Beta. Contemporaneous report (paired winner source)
- HC9 Atlassian's HipChat Removes User Limits On Free Plans. Contemporaneous report quoting a founder
- SL7 From 0 to $1B: Slack's Founder Shares Their Epic Launch Strategy. Founder interview; VC publisher
- HC10 Atlassian Launches HipChat Server, Doubles Down On Team Collaboration. Contemporaneous report quoting an executive
- HC11 Atlassian Acquires Team Chat Service Hall To Bring More Non-Technical Users To HipChat. Contemporaneous report
- HC12 Atlassian Opens Its HipChat Messaging Platform To Developers. Contemporaneous report quoting an executive
- HC13 Atlassian launches HipChat Connect API to let developers build deeper integrations. Contemporaneous report quoting an executive
- SL15 Slack Launches App Directory And Joins Top VCs For $80M Fund Backing Developers. News report and analysis
- HC14 Atlassian expands enterprise offering with HipChat Data Center. Contemporaneous report quoting an executive
- SL18 Slack launches 'Enterprise Grid' for larger businesses as Microsoft touts Teams traction. News report
- HC15 The Evolution of HipChat Server: Introducing HipChat Data Center. Company announcement
- HC16 Atlassian launches Stride, its Slack competitor. Contemporaneous report
- HC17 Atlassian Launches Messaging Platform Called Stride In Latest Bid To Slow Down Slack. Contemporaneous report quoting the co-CEO
- HC24 Six months in Stride. Company announcement
- HC18 Atlassian Announces Fourth Quarter and Fiscal Year 2018 Results (exhibit 99.1). Filed press release
- HC19 Atlassian exits business communications space, surrenders to Slack. Contemporaneous report quoting both chief executives
- HC2 Announcing our new partnership with Slack. Exit announcement
- HC21 Atlassian's Hipchat and Stride to be discontinued, with Slack buying up the IP. Contemporaneous report
- HC20 Atlassian exec apologizes to HipChat and Stride users for Slack decision. Contemporaneous report quoting both co-founders
- SL2 Slack 2019 direct-listing prospectus. Listing prospectus
- HC26 Acquired: The Slack DPO (transcript). Podcast transcript (analysts; paired winner source)
- HC23 Atlassian Q4 fiscal 2019 shareholder letter. Shareholder letter
- SL6 Slack FY2020 Form 10-K. Annual filing
- HC22 20 years of Atlassian, 20 lessons learned. Company retrospective
- SL21 Turning Slack into a Network. Early-employee history