Slack, a relatively new messaging and communications application, specifically aimed at increasing business efficiency, has announced that it recently raised $160 million in new funding at a valuation of $2.8 billion. Its investors include big VC names like Accel Partners, Andreessen Horowitz, Kleiner Perkins, and Google Ventures. To date, Slack has raised $340 million of working capital to fund expansionary business strategies. Even crazier, Slack came into existence not but one year ago, in 2014, and has since grown at an exponential rate. In other words, Slack has generated a $2.8 billion valuation in just over a year.

Slack is a B2B (business-to-business) service aimed at increasing employee productivity. Some of its betters known customers include Buzzfeed, Live Nation, Adobe (ADBE), and PayPal (EBAY). Slack oversees more than 750,000 daily users, of which 200,000 are paying customers. Since the beginning of 2015, Slack has doubled its membership, signifying a growth rate that outpaces both Twitter (TWTR) and Facebook (FB). Slack charges a monthly service fee of $6.67, which is quite low for enterprise software applications. That said, why is Slack’s valuation so high?

One main reason for Slack’s incredibly high valuation pertains to its ability to seamlessly add new product features to its platform. Slack’s senior management has also acted quickly and competently in dealing with internal problems. For example, after a security breach in early February, Slack introduced a new feature to enhance user authentication measures and better ensure client safety.

In addition to its customer-centric focus, Slack retains immense growth potential. After just one year of availability, Slack has experienced an endless increase in user acquisitions and subscriptions. A rise in membership is an integral part of Slack’s valuation; if Slack can engage 10 million paying users, just 6% of the American workforce, at a cost of $10 per month, its revenues would skyrocket. Being that Slack’s platform is also an online service, the company’s profit margins would be extremely high. Furthermore, if Slack maintained a P/E of about 15 (which is less than the S&P 500 average of 18), it would be considered undervalued at its current landmark $2.8 billion valuation. Unfortunately, these scenarios are purely hypothetical; like all other mobile applications of this era, Slack remains tethered to  user statistics to signify its importance.