Comment by coleca | Hacker News Reader

Comment by coleca | Hacker News Reader

Parent Full thread

We've been paying customers of Slack since the beta. In general the experience has been great. Although I do worry that with a huge funding round it will bring more employees and those employees will need stuff to do. There's only so much you can do with a chat platform, and Slack eeked out a ton of value out of it early on. What I'm seeing now is features being added or reworked seemingly just so someone has something to do. I see Apple falling into this pattern too (mDNSresponder being replaced by DiscoveryD for example).

For example, IMHO one of Slack's best features from the beginning was on the iOS app when you clicked the button to upload a photo you were presented with "Last Photo Taken", "Camera Roll", or "Take a photo". That "Last Photo Taken" button was genius. Simple and I found 90% of the time was what I wanted to do, and it just worked. In one of the last revisions of the iOS app, they removed that feature and replaced it with a newer redesigned photo picker. The new photo picker is riddled with bugs and a good percentage of the time fails to upload the photo at all for most of our paid team members. Some have resorted to using the desktop app to send a photo after transferring it over from their phone. When Slack was a small scrappy startup I'd open tickets and spend the time w/them to get them the information they needed to debug various issues, but now that they are at this scale and size I can't be bothered.

When a company like Slack gets all this money, can they decide to not spend the money? Like you said, what else could you really add? Why do companies find the need to expand?

>When a company like Slack gets all this money, can they decide to not spend the money?

Not really.

E.g. The firms investing $250 million basically would like to see ~3x return or more on their money. The want their $250 million to turn into ~$750 million. That's the whole point of investing.

If Slack simply parked $250 million in the bank for 1% interest rates, that's something Softbank could simply do themselves. If Softbank can buy $250 million treasury bills for 1% return, there's no need to give Slack $250 million to do it for them. Besides, VCs like Softbank can't survive on 1% returns; they're hoping for ~20%+ returns.

Instead, Slack is supposed to put that $250m to productive use and make the company more valuable. This makes more money for everyone including investors. (This doesn't mean Slack spends the $250m all at once though. Softbank and CEO Stewart Butterfield probably had long discussions on the strategic uses of the potential capital. Presumably, Softbank agreed with Butterfield's vision which is why they invested.)

> E.g. The firms investing $250 million basically would like to see ~3x return or more on their money.

That sounds more like a loan with very high interest then.

Well, a loan would have set terms and schedules of repayment and default.

For investors, the 3x & 20% figures I gave are not formalized terms of payback. Instead, they are desirable financial targets for the investor so they can be considered a prestigious firm that attracts capital from more limited partners. Slack won't be in "default" if they provide 0% return to Softbank. However, future limited partners like university endowments or police/firemen pensions will avoid underperforming VCs that deliver low or negative returns. (If VCs don't perform to expecations, the market will punish them and they will shut down.[1])

To trace the causal chain, VCs want 20%+ because your grandmother and her pension plan investing in the VCs want 20%.

[1] http://www.businessinsider.com/death-of-venture-capital-2011...

Basically, except there's more risk involved and a shorter horizon

It is probably about commercial side of it. Selling slack to the enterprise probably is something missing.

> Selling slack to the enterprise probably is something missing.

You know that there are enterprises with 5000+ members on a paid slack, right?

It's less about whether they can technically handle the scale (they clearly can), but more about enterprises that are going to have typical enterprise demands - security policies, encryption at rest, whitelabeling, maybe even on-premise installs. On top of that, enterprises typically aren't self service, you need to have a pretty large sales team to effectively sell to the enterprise.

Yes, yes. But I'm saying that there are already enterprises that use Slack. So perhaps it has at least some of that already solved.

obviously, but part of that investment is increasing sales velocity to enterprises. It would behoove slack to grow and get more bigCos entrenched onto the platform - switching costs and employee preference can help them get a foothold on the market to beat back competition.

I agree with what you're saying about features, however, you're assuming that taking the $250m will muddy the product.

I expect Slack has a plan for these funds, which was probably pitched to the investors. The plan was good enough to get the investment.

Until I see otherwise, I'm going to give Slack the benefit of the doubt and assume these funds will go to expand their business in a positive way which may have little to do with existing features.

> I expect Slack has a plan for these funds,

Even at its previous level of funding, Slack had so much extra money they were giving it away as a private VC fund. I'm baffled as to why they need to raise more instead of just reining that one.

They could spend the money on marketing and not R&D. I agree, adding features for the sake of adding features can be a bad idea.

I think there are still interesting things Slack can do. With all that chat data, leveraging NLP and other AI to try and improve productivity and communication seems like a wonderful goal to me, but not sure if that's something on their road map.

Reply on news.ycombinator.com