The team collaboration market may be dominated by Slack, Microsoft and other large cloud vendors, but some believe that open-source messaging tools will also find a place among large organizations.
Mattermost is one of a handful of vendors — along with Zulip, Rocket.Chat and others — taking an open-source approach to team chat. The company has been attracting attention from investors following deployments at organizations as diverse as Uber, Airbus and the Department of Defense. “People want an open-source alternative because they need the trust, the flexibility and the innovation that only open source is able to deliver,” said Ian Tien, co-founder and CEO of Mattermost, an open-source team messaging tool that launched in 2015.
One of the key advantages Mattermost has over cloud-based competitors like Slack and Microsoft Teams is that it can be downloaded and installed on private servers, said Raúl Castañón-Martínez, a senior analyst at 451 Research. A significant number of organizations will prefer open-source collaboration and productivity tools that run on internal infrastructure over cloud-based apps, he predicted. “These might not be as numerous as those that choose cloud-based products like Dropbox and Slack, but this is still a substantial opportunity that should keep vendors like Mattermost busy.”
Investors appear to agree. In the first half of this year the company closed two funding rounds, including a $50 million Series B led by Y Combinator that brought the total to $70 million to date. “We think that messaging and collaboration is going to be as big as email and web conferencing,” said Tien, pointing to Slack’s forecast of a total market value in the region of $28 billion in its recent S1 filing.
Synergy Research Group predicted in January that spending on team collaboration apps would reach $500 million this year, a 60% jump over 2018, although the analyst firm attributed most of that projected growth to cloud-based services. According to IDC, total spending on collaboration software this year is set to reach $3.5 billion, with self-hosted software accounting for $920 million.
Mattermost was created by Tien and colleagues at game engine developer SpinPunch, where it was initially intended as a communication tool within its gaming portal. At the same time the company was building the messaging software, there was growing frustration with the messaging app used internally by SpinPunch’s staff. Problems arose after the unnamed messaging app was acquired by a larger vendor.
“The quality started to fail; it would lose data, it would crash, it was very buggy, and when we tried to leave, they wouldn't let us export our data,” said Tien. “We had 26 gigs of information in this platform, and they wouldn't give us our data back. We were super unhappy.”
Instead, the team decided to repurpose the code used for its game portal messaging app and create a business-focused team chat app that would free the company from lock-in to a vendor. “We ended up open-sourcing it, and it just took off. The result, Tien said, is a messaging platform with functionality that will be familiar to Slack users. “People loved an open-source alternative to Slack, which is what we kind of became,” he said.
The Mattermost server codebase is available to download for free under the MIT license, while the company sells a managed Enterprise Edition, starting at $3.25 per user per month, with added enterprise-friendly features such as corporate directory integration, desktop and mobile apps, and commercial support. There are also options to host the app on public cloud platforms. The application is now downloaded 10,000 times a month, Tien said.
There are a variety of reasons that organizations deploy Mattermost, according to Tien. Ownership and management of employee message data can be a major factor. The ability to install Mattermost’s software on private servers means that customers can retain full control over their data, which can aid in compliance with certain regulations. Organizations operating in highly regulated industries, such as banks, or within countries subject to strict privacy rules may prefer to run messaging apps on their own infrastructure, said Tien.
“Enterprises really want the choice. They say, ‘I have got a data center in the U.S. for federal government; maybe I want a data center here in Germany for these privacy laws.’ They just want that control and flexibility, and there is nothing in the market that is as flexible and trusted as open source.”
Offering more control over user data could serve Mattermost well, said 451 Research’s Castañón-Martínez, and help the company overcome one of its major challenges, namely visibility in a market dominated by some of the biggest software companies around. In addition to Slack and Microsoft, Cisco, Google and Facebook are among those selling cloud-based team chat apps. “Self-hosted products are a compelling alternative for security- and privacy-minded organizations, but cloud-based offerings tend to have a dominant mindshare,” he said.
“Recent incidents such as Slack's service outages and privacy travails are putting the spotlight on the benefits of open-source, self-hosted team collaboration offerings like Mattermost,” said Castañón-Martínez. “This could give them an added boost in terms of gaining market traction in the near term.”
Another advantage inherent to open-source software is the ability to modify the code and customize the platform. More than 1,000 developers have contributed to the project, translating the app into 16 languages and creating more than 600 integrations with third-party applications, with an emphasis on devops and development tools.
As Tien points out, many startups tend to be keen adopters of open-source software, and the mindset is extending to larger organizations. “We think that enterprises that have software innovation as critical to their strategy, they are going to move to more and more open source,” Tien said.
Mattermost is aimed predominantly at the large Global 2000 companies. While the focus is mostly on tech operations and software development teams — Mattermost integrates with various devops tools — the aim is to appeal to a wider user base too. “It will start with developers, and then it will grow out to the people that surround, that are closest to that need for innovation and trust,” Tien said.
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