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Slack's London office. Photo: Slack.

It may not have the traditional moat to fend off competition, but Slack has nonetheless managed to build quite the castle by out-executing its rivals.

Why it matters: Everyone in business software looks at Slack and says "I can do that." Yet most have flopped spectacularly, while Slack continues to power ahead even as Microsoft, Google and others remain in the hunt.

Between the lines:

  • Tech-industry business wisdom says successful companies need a moat — a way to keep competitors from easily seizing their markets and customers. Slack was often criticized as a castle without a moat, and thus ripe for plundering.
  • Yet rivals big and small have failed to conquer Slack. The latest evidence came in a deal Thursday, in which Atlassian announced it is shutting down rival business chat services Hipchat and Stride, selling the intellectual property to Slack, and investing in the company.

The Atlassian deal should help Slack on several levels, Constellation Research principal analyst Alan Lepofsky tells Axios. He says:

"Slack is making some smart moves. Since they don’t have native business functionality of their own (ex: Sales, Marketing, Finance, ERP, etc.) they are focused on being a hub where business applications can be integrated. One of their original, and still core markets is technical teams (developers, engineers, etc.) so partnering with Atlassian (BitBucket, Jira, Confluence) makes a lot of sense. Many of the customers of those applications would not be interested in Microsoft Teams, so without Stride in the picture, Slack becomes the de facto choice for them."

The big picture: Slack started out without a big differentiator, but now it has two. First, its wide adoption has helped build a vast web of partnerships and integrations from other companies. Second, within organizations that use it, Slack has become the place where business gets done, supplanting email.

The other side: Rivals keep on coming. Facebook, which continues to harbor ambitions of being a larger presence inside businesses with a product known as Workplace, is buying Redkix, which combines email, calendar functions and messaging in a single app. The move is designed to improve Workplace's messaging capabilities, according to Recode, which had the scoop on the deal.

Market reaction: Slack is still private, but shares of Atlassian rose more than 18% following the news.

What they're saying:

  • Protocol Labs' Mikael Rogers: "Imagine winning a market so dramatically that your competitor shuts down their competing services, hands you their IP, and gives you money for the trouble."
  • Box CEO Aaron Levie: "The future of IT will be driven by best-of-breed products built by insanely focused companies. This move by Slack and Atlassian is super smart and lets them double down on their strengths."

Go deeper

Updated 4 mins ago - Politics & Policy

Inauguration Day dashboard

U.S. Capitol and stage are lit at sunrise ahead of the inauguration of Joe Biden. Photo: Patrick Semansky - Pool/Getty Images

President Biden is delivering his inaugural address at the Capitol. Watch a livestream here.

What's next: Biden and Vice President Harris review readiness of military troops, a long-standing tradition to signify the peaceful transfer of power.

Updated 12 mins ago - Politics & Policy

In photos: The Biden and Harris inauguration

Joe Biden is sworn in as the 46th president of the United States. Photo: Alex Wong/Getty Images

Joe Biden and Kamala Harris were inaugurated as president and vice president respectively in a ceremony at the U.S. Capitol on Wednesday morning.

Why it matters: Top Democrats and Republicans gathered for the peaceful transfer of power only two weeks after an unprecedented siege on the building by Trump supporters to disrupt certification of Biden's victory. Trump did not attend Wednesday's ceremony.

Joe Biden sworn in as 46th president of the United States

Joe Biden was sworn in just before noon on Wednesday as the 46th president of the United States, in an inauguration ceremony unlike any other.

Why it matters: The 78-year-old Democrat assumes the presidency at a fraught moment for the country, which remains polarized and in the grips of a coronavirus crisis that has killed more than 400,000 Americans.

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