Slack S-1
sec.gov
sec.gov
Our growth is global with international revenue representing 34%, 34%, and 36% of total revenue in fiscal years 2017, 2018, and 2019, respectively.
We continue to invest in growing our business to capitalize on our market opportunity. As a result, we incurred net losses of $146.9 million, $140.1 million, and $138.9 million in fiscal years 2017, 2018, and 2019, respectively.
Our net losses have been decreasing as a percentage of revenue over time as revenue growth has outpaced the growth in operating expenses."
Nice work!
If slack becomes an email replacement (instead of an ephemeral IM client), and a repository for historical knowledge, then it becomes very difficult to replace. In the workplaces where I have used slack, it definitely starts to take on that role (links to discussions are placed in tickets and documents, for example).
When your entire history of communications, way of tracking tickets, and document repository is stored in a desktop application, replacing Slack may not be as simple as switching to another messaging program.
Could you "replace Outlook" -- it's just an email client after all.
Absolutely. There is always pain in transitions but some are easier than others.
Slack... sure you can just spin up a rocket.chat or matrix instance, but operating those costs money and attention by employees that YOU need to hire and pay. And suddenly the Slack bill you have doesn't seem that high. Quite many companies are in such a situation. There are institutions in different situations, like the French state for example which employs millions (sic) and really wants to keep the data out of foreign hands so they use matrix instead and have staff to maintain the instances. With the costs being irrelevant for most institutions, they select for other criteria instead, which is quality of the product. And Slack for some reason is market leader here. I definitely prefer to use IRC but I'm not delusional, most people aren't like me.
that's a very bad long term strategy :-)
The business model already exists e.g. in the form of American cable companies. They offer crappy services for super expensive prices, but the moment a competitor gets into town and invests heavily, they invest as well and outbid them. This way they ensure that no competitor can make profits and grow beside them in that specific town. So they are safe. Add in government mandated monopolies and "you get counties abc, I get counties def" type deals between cable companies and regulators looking the other way. Same will likely happen for Uber vs Lyft.
And if your answer to that problem is self driving cars, well then I’ll happily point you to the auto-rental market as roughly what kind of a business you’re investing in.
Bingo bango
https://qz.com/1196256/it-took-amazon-amzn-14-years-to-make-...
> Keep in mind that Amazon consistently lost money for its first several years as a public company. It first reported a quarterly profit in the fourth quarter of 2001 [...]
But "net loss" already takes revenue into account! "Loss" is not the same thing as "expenses".
The revenue increased substantially, but so did expenses, resulting in a slight decrease in loss over the past 3 years.
At the current rate, the company would reach break-even profitability around the year 2070.
If you created a business that simply bought $1M worth of Stocks (e.x. ETFs) and bonds, the first quarter when you made the initial investment you'd show a "loss" of $1m. You might sell those 10 years later for $2m (or maybe the value goes to $0). You wouldn't know if it was a good or bad investment until much later. Seeing a $1M quarterly loss from that first quarter of investing wouldn't give you any insight at all.
To make matters worse here, the way that quarterly accounting works generally hides what are investments and what are actual losses. Some pre-profitable companies do better than others here but it's fairly difficult to understand what parts of spending are investments and what parts are just burning money when looking at quarterly accounting statements.
No, that's not how accounting works. If you buy $1M in stocks, then you move the amount from one asset account (cash) to another asset account. You have $1M in assets both before and after, with no losses.
With just modest revenue growth they'll be able to optimize towards profit whenever they choose.
Teams might have parity in a vacuum, but everyone already knows what slack is and how to use it, including people you might hire in the future.
They switched to MS Teams, but at least two years ago, it felt unusable. Or, the team's Slackness couldn't translate. No one used it.
Neither Slack nor MS made money in this exchange.
Maybe Teams has gotten better and more usable, but I wonder if Teams is taking off in business environments, whereas Slack definitely is more common in tech environments?
And I pay for both Office365 and G Suite at my business, and Google just invited me to Currents. I know better than to dump something like Slack for any new (like, first 3 years) Google product, but... Slack's getting some real competition.
Is it markedly worse in any area? Seems like for any business that's already entrenched in slack there isn't much incentive to move off. I'm assuming in your case there must have been some large benefits in order to spend a multi-month effort forcing a migration.
I don't think I follow your logic. Why would this lead to Hipchat being completely shutdown?
Sure for companies already using Slack there's probably not a whole lot of reason to move off. But Slack seems to be relying on continued huge growth numbers to become profitable.
Video chats and screen sharing are better (Screenhero is all that was around on Slack and it stunk). Video recordings save right to OneDrive for important meetings...
Oh and if you use Office 365 it’s a no brainer, everything is integrated!
It is imposed on people whose organizations have Office 365 subscriptions, it is not chosen.
The bugs do need mentioned though. It constantly crashes for me, constantly loses sync, will just straight-up freeze for no discernible reason, will decide it doesn't really feel like actually sending my messages, and so on. It does not at all feel like a mature product.
Our team dropped HipChat and has moved to Teams along with the rest of the org. Our dev team (of 7) had used HipChat as a simple persistent chat app, sandboxed away from the rest of the company. Now we are on Teams with not only Ops guys, but also HR, marketing, and so on. It's fine at being sort of an organizational tool, but we dearly miss having our own private chat-only app that we can make use of as we want/need. Partly this is contextual to our organization, but the way we use Teams now feels far more formalized, and not in a good way.
- an optimization is considered lower priority than feature work and bugs, so never gets staffed
- it's considered risky even when it's not
- it's difficult to quantify the value until the works done
Aside from that, just because it may be more cost effective to use 1000 servers and 1 developer versus 200 servers and 3 developers, doesn't mean it's a sound choice. One invests in people using their brains, the other mostly disappears into raw material supply chains, building servers and infrastructure and burning fuel to run them.
They have a very hard problem on their hands of estimating the revenue growth new features will bring, and compare them to costs savings from better code. I don't think anybody here has enough data to decide on this - it's not impossible that nobody there has enough data either.
Never will be sure of the exact numbers but a great deal of the sales is no doubt driven by startups and cash they are spending (do they still call this runway?). When that stops what happens?
If only. Their COGS may be low, but marketing expenses and R&D are 2/3 of slack's expenses. Also, cloud gets very pricey at scale.
The implication is that they could invest less in growth and get to profitability, but then they’d be leaving addressable market on the table.
Profitability will probably come post-IPO in some form of a hiring freeze (or quotas), and cuts in perks/food per capita.
If 80%ile studio rents in San Francisco were closer to $800/month than $3400/month then maybe salaries could be 70% of what they are, and Slack would be almost break-even.
It's worth noting that profitability isn't the only useful way to run a publicly-traded business. Telecoms are typically swimming in debt, but they're (mostly) fine because they have cash flow (monthly payments; making it impossible to quit).
In general many profitable businesses swim in debt. If you finance each project to 1/3 with your own capital and 2/3 dept you can do three times as many projects, and for established companies with lots of assets (production facilities etc) banks will happily lend that money.
On the other hand there are companies like Nintendo and Apple with huge cash reserves and nowhere to spend them.
I get it their “market share” is increasing every year and the loses are staying the same...and even that is not the full picture of a path to profit.
But if the company could turn a profit, then why not do it privately, show that and then go public? My guess like Uber and Lyft...they can’t turn a profit, and for any hope to turn profit they need this continual growth at a loss, and at some point the investors dump the bag on the public getting a return in a bubble they created and let the public fund the losses.
I think to balance the playing field with VC and private investment, companies shouldn’t be able to IPO with loses.
Obviously not a popular idea here where everyone is trying to get in early and dump the bag on someone else, but that’s kinda the point of protections, some people won’t like them.
Capital is extremely cheap
Markets are at record highs
FOMO in tech right now is extremely strong
In no world is the SEC's role to determine whether or not a company's business strategy qualifies them to go public or not. That would be an absolute disaster.
Profitability is objective...let’s not pretend what I’m suggesting is the SEC subjectively making a decision on a business judgement or business plan. Simply you want to register a security for public offering show a GAAP profit...I understand that’s not “how it works” or I wouldn’t have suggested it “should” be considered, I never said anything about SEC subjectively determining worthiness of an investment.
As an investor, I would not want them to turn a profit at this stage with so much headroom left, especially internationally.
If they choose to go for profitability this early on, then I take it as a negative signal.
Profit is too simple of a number to focus on. It doesn’t tell any kind of story by itself. But it’s a tempting number to latch onto.
Should Tesla be delisted? How about Amazon? They didn’t make a profit for the majority of their existence. GAAP profits as a condition of listing is just ridiculous. Almost all green energy companies lose money, so what you seem to be implying is that the public shouldn’t be allowed to invest in the Teslas of the world because they aren’t profitable?
An IPO is a fundraising event. That’s all. If we are to say that no company should be able to fundraise if they have loses, then very, very few companies would ever have access to capital. An IPO isn’t an endorsement by the SEC, not should it be.
Amazon was "losing" more money in each year leading up to their IPO. By your logic we all should have been protected from investing in this obvious scam of a company, right? If you could go back in time and dump money into Amazon stock, would you?
Of course you would, because profitability is obviously too simplistic a measure to gate companies from going public. Also, the SEC isn't my nanny and I'm capable of reading an S1 to make my own decision. You seem to have an incredibly narrow understanding of the economics behind these companies.
Based on my logic? I never said slack/uber/Lyft are scams, I even admit they may be good investments when they IPO...I even said profitability is not the full picture.
I never said the SEC was your nanny, I never said you couldn’t read an S-1...though based on your assertions I have to question you reading comprehension.
Maybe you could give me a comprehensive breakdown of how the market would be different if amazon did have to post profit before IPO, since you are so sure we would all be worse off...even non investors. Are investors, public markets and private markets really all better off? Is it possible amazon wouldn’t dominate and there be other companies competing in the space? Better jobs even more investment opportunites? I don’t think you could answer any of those questions with certainty.
You think the problem is that investors are leaving too much potential for growth on the table when companies IPO? They should wait even longer and keep more of that growth private?
I also think there are other fundamental benefits to the economy. Yes the public is free not to buy...just as non-accredited investors would be free not to invest in unregistered securities yet regulations are still in place for a reason to protect would be investors.
It doesn’t seem unreasonable that is your company operates at a $500,000,000.00 loss over 3 years you can’t avail yourself to the public market and sell your stock to non accredited investors.
Accreditation is not in place to define who is informed and smart enough to make the investments, it is defining who can afford to take the loss, and who at least has the resources to do it properly.
I can’t think of any reasonable argument why allowing a free-thinking adult to, say, put a bit of savings into a friend or relative’s new startup is so much worse than the rest of these that it needs to be illegal.
Sure, there are probably examples of sophisticated investors who don't meet the criteria. But the numbers are tiny, and probably much smaller than the numbers who think they are, but are in fact not.
Don't forget, you are still allowed to lose your life savings at "regular" investing. And Casinos have different regulations constraining their ability to fool punters...
Accreditation was introduced as risk management, after all. Any time you do something like that you can have a few outliers who are negatively affected. But if the policy is basically sound, overall it is a net win. I think that is the case with accreditation. It's not there to stop you from investing $10k in your friends startup. It's to stop companies from bilking $10k from thousands and thousands of people. Could your friends & family case stand to be eased up a bit? Probably. Does it account for much in the overall scheme. Probably not.
Bear in mind the difference between intent and efficacy. All of the things you mention also have regulation or legislative constraints that in theory are also supposed to make it harder for people to naively get themselves in trouble. Why should investment be different?
For what it's worth, I also think it should be easier to invest small amounts in higher risk ventures - but that counterbalance should be to put limits on the structuring those ventures are allowed to do in order to offer it. Keep everything relatively simple and transparent, keep the terms and structure easy to understand without having to pay a decent lawyer 2k every time to review...
Barring companies from public listings based on some arbitrary numerical threshold is very unreasonable. Even more so when only the losses are emphasized in your previous comments while ignoring the revenue growth. That alone creates a very one-sided and biased view of Slack's financial situation.
But lost you on the second part. It's not for the SEC (in my opinion) to police who can and can't go private in terms of how their busines is doing.
That's for investors to assess when deciding whether, or not, to buy shares.
The SEC's concerns should (again IMO) focus on whether the company seeking to IPO has been truthful in their prospectus. As long as they're not misleading investors, that's fine.
Yes for a public company...but it’s the SECs job to regulate who can have public offerings to begin with.
As I’ve iterated in the thread it’s not legal to publicly offer unregistered private stock to non-accredited investors and let them choose to invest or not. The SEC protects investors and our markets.
A large plurality of it is sales & marketing. The next biggest chunk is R&D.
S&M = $233,191 for 2019
More than half their revenue is spent acquiring new customers...which, with a high likelihood, will net revenue over a N+1 year timeframe. This is an investors wet dream... I pay $1 now and I only need $.15 to operate that $1 every year for the next 7 years...that's a helluva return.
In other words...you can turn off the S&M tap and these companies could be profitable almost overnight.
Slack doesn't have that much lock-in and a lot of people have their sights on that market -- "Cheaper than Slack and bundled with Office365/G Suite" is an extremely tempting offer.
Their API is also quite good IMO, which provides a sort of lock-in, though not a huge one.
While not quite as fully-featured as Slack, Keybase offers this. I'm a member of multiple orgs and seamlessly change between conversations (both group and 1-on-1).
Yes, they have a boatload of fat to trim. They can pull an Etsy move but is that not already baked into their valuation? I, frankly, don't care enough to look as I won't be investing. I just cannot believe their VC investors let them get that bloated - it's probably why they're pushing for an exit so fast. I also am not convinced Slack is very sticky. We switched to Mattermost last week and miss nothing about Slack.
Moreover, as I said in another comment: If there is all this money left to be made, why are their investors pushing them to go public? They should be riding that gravy train privately and cashing out a few years from now for 10x more...
This isn't a consumer product. They're not doing magazine and television ads. Why is S&M so expensive?
What the interviews invariably show is that a chat client is not simple. It's extremely complicated, especially when you want it to work at scale. If you think it's a "simple" app, go ahead, try to make one - even on a whiteboard.
I can completely understand why instant messaging can get you $700 million in revenue. As for the losses -- they are invested in the future of the company and I think are justified.
"How hard can it be?" is something we ask about "simple" stuff everyday, and the answer if you dig deeper is almost always "Much harder than you think."
They could have been profitable in most years just by not increasing spending - which is entirely possible in their industry. Their expenses aren't really a function of the amount of customers they have.
So they consciously chose to not be profitable to grow their business instead (as they stated).
It's not like they couldn't be profitable if they wanted to.
Their business actually looks to be in an amazing shape.
If the investing community really thought this was a bad idea then these companies wouldn't IPO. Especially after the lessons learned from 2000.
Look, I get that people want to shit on unprofitable tech businesses, but in case you haven't noticed, investors absolutely love the financials on these companies. Why? Because their cashflows generate insanely strong tailwind effects.
I strongly urge anyone who likes shitting on to read what Bezos says on his earnings calls about earnings vs cash flow, or read Tren Griffin's blog.[0]
Good example...look at FB's FCF - https://www.marketwatch.com/investing/stock/fb/financials/ca...
[0] - https://25iq.com/2014/04/26/a-dozen-things-i-have-learned-fr...
Just because a business doesn't turn a GAAP profit doesn't mean it is not a worthwhile investment opportunity, nor that investors shouldn't have access to it so they can decide for themselves. There are many reasons why investors might want to back an unprofitable company - I won't go into them all here, as it differs dramatically by industry.
Keep in mind that a large part of the public market capital is from institutional investors who have just as much experience, if not more, as private investors.
No one has to buy shares in these companies. It is all a choice. "The public" is not some block of sorry schmucks who keep getting stuck with toxic investments pawned off by VC funds, and I'm not exactly sure why you seem to think "the public" is getting a bag dumped on them...
[1] Endocyte acquisition by Novartis for $2B, December 2018. Endocyte had ~$300m of accumulated losses and zero revenue prior to acquisition [1] Ablynx acquisition by Sanofi for $4.8B, May 2018. Ablynx had ~€370m of accumulated losses prior to acquisition
Working for a biotech startup instead of a big company, you accept this risk for the chance of a payoff in an acquisition.
Now, if your startup isn’t making payroll, GTFO.
https://www.cnbc.com/2019/03/19/passive-investing-now-contro...
Because their investors and employees want liquidity, and public investors want in on the pie. There isn't some rule that says companies can only public once they've stopped growing rapidly.
Like it or not, tolerating losses (preferably to accomplish growth!) has become a critical part of the capital landscape across industries. At least the tech sector is developing better metrics for comparing healthy and unhealthy growth, and generates enough growth (and later margins) to justify the risk in the first place. You'd be really disadvantaging small investors to not let them make the choice to participate at this stage.
No that’s not what I’m saying...there is a difference between a company that is registering for an IPO and an existing publicly traded company.
And let’s not pretend Tech companies IPOing at losses is somehow protection to small investors...I don’t see anyone clamoring to allow these small investor be allowed to get in on unicorns pre IPO.
Really? This sentiment is blanketed all over HN and other investment forums. One of the major macro changes to the investment landscape is rapidly growing companies staying private longer such that the gains benefit a much smaller pool of investors.
WE know the truth. The ipo buyers don't.
And as others have pointed out you are exactly wrong about efforts to make public investment available earlier. Besides founders who would love to have more fundraising options, there is plenty of evidence and outcry that small investors are not getting access to economic growth: https://www.theatlantic.com/magazine/archive/2018/11/private...
One has demonstrated the ability to turn a profit and the other has not. This seems a bit like asking "Why is radiation considered a valid cancer treatment and rhino horn isn't when both have failed to help people before?"
There are exceptions and sleight of hand (like when Uber doesn't reveal costs to get drivers, but this is 100% true for formerly-profitable companies too. You could make a much better argument for skipping on those, or by forcing more disclosure in S-1s. But painting broadly based on total profitability is just too simplistic.
and luckily for investors there is nothing else to invest in
I think that your main concern is the public market funding VC capital returns. If so, then a more reasonable approach to prevent public market exploitation may be to require a lock up period for investors for a certain amount of time (not sure how you would determine this...) similar to how employees are often beholden to lock up periods post IPO.
They see the losses as an acceptable customer acquisition cost for recurring revenue.
Speaking from personal experience, CLV for a Slack customer is 3+ years.
Could you provide some data to show that companies which, at IPO, have any cumulative loss or a very large cumulative loss (as a percentage of valuation or offering size), perform worse as investments or as going concerns?
From your other comments, it seems like the foundation of your proposed change is that going public with significant losses is an attempt to get less-sophisticated investors to compensate more-sophisticated investors.
While there are many arguments against your proposed change, the first step seems to be establishing that the problem you’re trying to solve actually exists. I’m not convinced that it does (but don’t have data either way - that’s just anecdotal), and in fact many - maybe most - institutional investors in private companies continue to hold post-IPO shares long after the lockup (and gradually sell over 1-3 years simply to diversify).
As you investigate this, it might be worth reading about the “CAC payback period” and how it can lead to significant upfront losses: https://baremetrics.com/academy/cac-payback-period, https://kellblog.com/2016/03/17/cac-payback-period-the-most-...
It’s clear not many here care to understand the problem, tech generally loves a good pump and dump...look at all the recent tech IPOs... how many of those were boot strapped vs VC backed? And VC backed tech IPOs were in the black?
It’s not about investor risk...its About leveling the playing field.
Again everyone here is screaming investor risk/their choice/don’t have to buy...I don’t see anyone advocating allowing small investors to get in on unicorn tech cos pre IPO. I’m not sure why everyone is pretending it’s about giving opportunity to the little guy...it’s about the need for VC to liquidate.
What future growth would there be for buyers if the company went public already at its peak?
I never said anything about peak. I said profit. Certainly a company making profit may want to go public to finance growth to make more profit (ie peak).
IPOs/stock companies were not created for companies that were unprofitable.
What makes you say that? Proof? It was historically used to raise more funding to fuel growth, a function VCs can now fill (ie, then it would be likely to have a VC provide the larger sums required). Though VCs can fill such a gap, IPOs give insiders an exit.
It’s your assertion show me proof IPOs are for “unprofitable companies”.
New growth would have to be sustainable "indefinitely" or they'd have to worry about replacing it. In addition, even more revenue growth is then required to maintain the higher market cap.
And, specifically re: Slack. Unlike, say, Uber or Lyft, Slack has customers who have demonstrated that they are willing to pay what the service actually costs. The ride-sharing companies have not. The entire investment thesis for them is that they will somehow be able to increase prices at some point in the future, but they don’t actually have any indication that this is true. And I agree that they are most likely a bad investment. Slack, on the other hand, has a huge and rapidly growing book of extremely sticky business. To turn on profitability, they turn off their expenditure on sales people. They’re very different models.
How about: being bought by Microsoft.
Disclosure: Work at MSFT, not on Teams.
They bought Github even though they already had VSTS aka Azure Devops that offered free git hosting and they just abandoned their own browser engine for Chromium. Also they bought Xamarin.
Microsoft would buy to prevent someone else from doing so.
Though its hold has weakened greatly, the Outlook, Exchange, and AD behemoth still own enterprise communications.
Isn’t that pitch what every startup tells investors?
“We only need to get a small share of this very large market”
Think of companies more like hydrofoils on lava than like barges.
However, in biotech these days, an IPO is a funding event, not just an exit. On average biotech companies that IPO do so ~3 years after Series A. Average post-money of recent biotech IPOs is $754M, and 20% see their share price double in the year after IPO. Many of these companies raise additional cash in the public markets before they are acquired. So in biotech, public offerings are analogous to late stage VC / growth rounds in tech, and IPOs in tech are more akin to M&A exits in biotech (although big M&A exits in biotech are actually happening faster than big IPO exits in tech)
Source is analysis I did of SEC filings: https://www.baybridgebio.com/blog/ipo_2018_q12019.html
https://saasholic.com/the-rule-of-40-for-saas-and-subscripti...
For Slack, if they grew 84% and their profit was -35% they are well above a net of 40 with 49. It is pretty easy to see that if Slack stopped spending on sales & marketing and stopped growing engineering they would be massively profitable. Instead, they should get as big as they can as fast as they can as most markets are becoming winner take all.
No investor worth their salt simply looks at past profits and decides right then and there whether a company is a good investment, because past performance alone does not predict future performance.
You have to look at the business and economic landscape, think about the business model and make a calculation about how compatible they are. This is especially important for companies recently founded.
Slack, Uber and Lyft can ==EASILY== turn a profit by slowing growth.
"USE OF PROCEEDS
Registered Stockholders may, or may not, elect to sell shares of our Class A common stock covered by this prospectus. To the extent any Registered Stockholder chooses to sell shares of our Class A common stock covered by this prospectus, we will not receive any proceeds from any such sales of our Class A common stock."
From Uber's S1:
"Cost of revenue, exclusive of depreciation and amortization, consists primarily of Core Platform insurance expenses, credit card processing fees, hosting and co-located data center expenses, mobile device and service expenses, amounts related to fare chargebacks and other credit card losses, excess Driver incentives, and costs incurred with carriers for Uber Freight transportation. Core Platform insurance expenses include coverage for auto liability, general liability, uninsured and underinsured motorist liability, and auto physical damage related to our Ridesharing products and Uber Eats offering. Excess Driver incentives are primarily related to our Ridesharing products in emerging markets and our Uber Eats offering. [...] As trips increase, we expect related increases for insurance costs, credit card processing fees, hosting and co-located data center expenses, and other cost of revenue, exclusive of depreciation and amortization, categories."
Cost of revenue was in 2018 $5.6bn (out of $11.3bn of revenue). The also provide "adjusted net revenue" excluding among other things excess Driver incentives and Driver referrals: in that case the cost of revenue is $4.3bn out of $10bn.
Uber's gross margin is below 60%.
To figure out the long-term sustainability of a business, you therefore have to compare spending, revenue, revenue growth, and churn rate (or a more complicated measure which Slack is using in this filing, Net Dollar Retention Rate) in complicated formulas that I don't know off the top of my head.
(Net Dollar Retention Rate over time is one of their three "Key Business Metrics", reflecting its importance in determining steady-state viability.)
Tech companies with actual revenue have a step up in that regard.
1) I am 100% in alignment that companies should NOT IPO with losses. With no evidence or education to back on this, I'll just say I feel the opportunity for non-professional investors to put money into such unstable companies is an enormous risk - not just for themselves, but the economy as a whole. Maybe there needs to be a separate market for loss-leader investing.
2) With SAAS companies in particular, adjusting for profit can be easy and it boggles my mind they don't know this or are too egotistical to believe they should.
Slack's pricing model is way too expensive and their 1:6 Paid-to-Unpaid user ratio is evidence of that. They could easily merge their two paid tiers so paid accounts have a fuller product offering than the free version AND drop the price. If they convert half of their non-paid users through pricing adjustments they could be making a PROFIT without adding any additional expense.
SaaS companies talk about “lifetime value” which is a fancy name for the net present value of future cash flow from each customer. What if today’s $400M will recur for ten years? That warrants a value of $4B just on today’s customers. But if the growth can be sustained for a few more years, maybe by 2022 they’ll hit $1.5B/yr... that’s the gamble investors seem ready to take.
I try to assume that if I think something is odd but it's not my field, I'm wrong and don't understand it properly. It's just at a scale I find hard to understand. A billion dollars is a lot.
I'd love to know what it is they're pumping the money into that they make per user, because I can't see what massive upcoming things there are to build. What are they ploughing hundreds of millions into?
Again, with all of this, I assume it's me that doesn't understand.
Thanks for the mention. Increasingly we see mention of "Slack or Mattermost" as part of DevOps stacks. In my mind, the space is growing quickly and there's room for multiple winners.
I'm excited about having more and more functionality people love available in an open source alternative.
We came up with the concept of depreciation/amortization as a way to better match up expenses with revenues in a given time frame.
I think we need a similar mechanism for allocating sales & marketing costs.
My company spends about $1,000/year on Slack. We likely will in perpetuity, as long as we/Slack exists.
Slack spent marketing/CAC dollars on us all the way back in 2014 to acquire our LTV stream of cash flows.
If you "depreciated" Slack's sales and marketing costs ($104M, $140M, $223M) over the LTV of the average customer, they would show massive profitability already, and even greater profitability in the future.
We do this already with depreciation - why not with sales and marketing for recurring revenue software companies?
However the idea you point out is why on the stock market people value companies completely differently than their book value. It would be pretty interesting if there was a standardized balance sheet like document that could be made with projected value.
By not depreciating sales and marketing, Slack can claim all of that expense upfront, and delay tax payments since they show a greater loss.
That being said, specific marketing costs already are amortized over the life of contracts - if you pay commissions to sales staff, those are allocated over the life of the contracts that are signed. If you pay inducements (such as free months of service, or whatever), those are amortized over the life of the contract. However, general marketing expenses like ads are recognized in the period that they occur. There are a number of reasons for this: maybe adtech can decide who saw what ad and made a purchase because of it, but that is generally hard to tell. The other is that how do you know what the life of the contract will be. Your company pays $1000/year for Slack, and you likely will, but what if something changes? Slack can't know what you're planning to do. They'd have to make an estimate, and estimates are open to manipulation by management.
Management's incentive is to decrease expenses in the current year to make themselves look better to investors, so they're going to say that their expenses will be good for 20 years. How can they be certain? There's also the other way they can manipulate it by saying that "oh, this was a bad year already, we might as well recognize marketing expenses now to make a bad year worse, so next year looks better". Since there's no actual measurement basis, there's no corroborating evidence either way.
Source: am an auditor, albeit not familiar with US GAAP.
You can't export your data from Slack?
You can. Nicely it can be had as json. But it's really only half useful since there are links and attachments that point within Slack itself and that content is not captured in the export without additional processing.
Email is non-sticky (just take your emails/save them on client and leave) Files storage is non-sticky (just move your files from OneDrive to GDrive) Chat/Collaboration is sticky as mud.
Maybe you should think about a formal method of documenting important decisions for your company instead of relying on a chat log.
"Hey, I just purchased 20k of widgets"
"What? Why?! We can't afford that! We decided to discontinue those widgets month ago! Didn't you scroll through the chat logs before making that purchase order??!"
Good luck.
What was your company using before Slack and what did it cost?
This is starting to sound very similar to mark-to-market accounting, and the one word associated with "mark-to-market" is "Enron".
From http://www.creditpulse.com/accountingfinance/lessons-enron/e...
> Basically, mark-to-market is a type of accounting that enables a company to book the value of an asset or a liability, not based on the cost of that asset, but based on current market valuations or perceived changes in market valuations.
What got Enron started down the path to ruin is the SEC granted them a waiver where they could start pricing their projects by their perceived value. Problem was, the perceived value was anything that Enron said it was. So that let Enron inflate their holdings, which gave them access to more capital, which let them keep on inflating their holdings until the whole thing came crashing down.
Of course, the asset values weren't just what Enron said they were. They had auditors backing up their claims. One of the Big 5 financial auditors. And as a result, Arthur Anderson also went down in flames along with Enron.
So, in your case, who decides what the LTV of customer cash flows is? The Enron lesson is let speculators use their hunches to guess the future, but keep that speculation out of the official accounting documents.
From Wikipedia:
Mark-to-market (MTM or M2M) or fair value accounting refers to accounting for the "fair value" of an asset or liability based on the current market price, or the price for similar assets and liabilities, or based on another objectively assessed "fair" value.[1] Fair value accounting has been a part of Generally Accepted Accounting Principles (GAAP) in the United States since the early 1990s, and is now regarded as the "gold standard" in some circles.
If your company serves free coffee, operating the coffee machine likely costs more.
There's no financial incentive to leave Slack at this price point.
From the document:
> In April 2018, the Company executed an amendment to its existing agreement with Amazon Web Services (“AWS”). The amended agreement was effective as of May 1, 2018 and continues through July 31, 2023. The Company has minimum annual commitments of $50.0 million each year of the agreement term for a total minimum commitment of $250.0 million. As of January 31, 2019, the Company had a remaining minimum payment obligation of $212.5 million to AWS through July 31, 2023.
Both are solving really tough problems involving a lot of users and a lot of data.
I realise there a lot of extras in Slack (attachments cost S3 storage, video calls take bandwidth, webhooks take some processing), but as of January 2019, they had 10M daily active users. $50M/365 gives us $137K per day. $137K per day just to serve 10M active users? That's nearly $14 per day (over $400 per month!), for just 1000 users using a simple chat app.
This is not including any staff, development, nothing. Literally just hosting costs, which should already be deeply discounted given the amounts and agreements involved. That seems... excessive?
Edit: It's worth noting that $50M is the -minimum- commitment they have to AWS. One can assume the actual bill is higher.
I serve more than 1000 users on a $3.50/mo VPS with a not-particularly-efficient runtime just fine.
Don't mind the lawsuits when you lose your customer data and forgot to pay for backups for "cost optimization" reasons.
Don't mind the complaints when your uptime is barely one-nine.
Don't mind the customer cancellations when your 1000-user VPS doesn't actually scale to 20k concurrents.
And don't mind the HN snark when you release your slack competitor without voice/video chat support, webhooks, apps, zero debugging capabilities when things go wrong, etc, etc.
I don't even like Slack and I think their bill is too high but please don't be delusional, it's a tired HN trope.
Does a chat app need to be fully searchable? I don't think so. Does it need backups? I don't think so. These are features users could opt-in for if it was that important to them. Could be something simple as sending encrypted nightly diffs to an email address.
The whole world doesn't need to be over engineered to have a useful product.
Having had a meeting this afternoon where the critical information required for me to pick up a project was only available in Slack messages, yeah, I think it does.
(Personally I would be roasting the two people involved for not doing that discussion over email or at least not writing the damn things down afterwards but hey ho, I'm not in charge.)
They do, that's why people pay for it.
Absolutely, yes. There is a ton of tribal knowledge contained in chat history.
Unfortunately, "sending encrypted nightly diffs to an email address" comes off very much the same way as the infamous dropbox comment: https://news.ycombinator.com/item?id=9224
Having a search feature, and doing useful backups isn't over engineering, they're features that users are opt-ing in to paying for, to the tune of $400 million/yr.
This is the main reason people pay for Slack instead of sticking with the free tier, so I'm guessing that for a lot of people, it does.
When all the communications of you and your coworkers suddenly aren't there the next morning, you might think so.
The part that "essentially amounts to a chat app" is probably one of the least expensive portions.
It's still high don't get me wrong, but not shockingly high considering how slack is used and trusted by so many companies.
Netflix still uses cloud hosting for most things. Some like Dropbox have found a way to DIY. On the other hand, Gitlab tried to move to in house kubernetes on bare metal, and reversed that position
Why build a cheaper internal capability over 6 months when I can have a slightly more expensive service NOW that I don’t have to worry about?
If it really is just slightly more expensive, that seems like it would be a good investment for many businesses. I was just curious because this isn't a field I've been working in directly for a while.
Last time I looked, but that was several years ago, there was a sweet spot for a lot of the cloud infrastructure services but at both the lower and the higher end the pricing didn't seem to make much sense in most cases. On that higher end, you could have bought the equipment outright, hired a substantial team of good people to manage it, and established your own presence in serious data centres with good connectivity, and still been considerably better off.
I wonder what has driven the change in cost/benefit since that time. Maybe it's just that cloud hosting is better understood and has better tooling, and those in turn make the market more competitive now?
These rates compare favourably to rolling your own DC (rack or more).
It’s the bandwidth costs that are inflated by 500-1000%, which is where all the margins come from and it creates a lock in effect as getting your data out is expensive.
Procuring gear, hiring a team, contracting connectivity, testing, integrating, scaling, etc, takes months. It also presumes you’ll attract, hire and be able to fund management that understands modern processes and can get things done in a timely, quality fashion. Even the best in the business are 50/50 at getting this right, so there will be growing pains. Whereas a top 5 cloud provider almost always has world class practices and processes behind their services and are a credit card transaction away. Much less capital commitment, much less time commitment.
Put another way, why prematurely optimize when you don’t necessarily know what you need long term ? Startups or even new products at large companies need to focus on product/market fit and responsiveness. Their processes and structures should be more like a tent city with gradually paved cowpaths than a planned city.
In the case of a venture funded startup, time is more valuable than capital. In the case of a large enterprise, it depends - sometimes time is more valuable, sometimes operating cost needs to be squeezed. Cloud of all forms (private, public) has become very lucrative in enterprise because of the slow pace and intransigence of IT teams that were assembled in an era where technical and software services could suck and take years to solidify. These days software needs to suck a lot less, and quickly - customers are demanding it. Cloud is not mainly about where you do your computing, it’s about how you do it: on demand, fungible resources, granular billing, API-driven access. I’m sure I can get the costs down if I own all the gear and have a flexibly contracted network, but I still need to ensure I have the automation, processes, and practices that meet the business need for velocity. I can’t risk hiring a team that might put up a ticketing system and manage every request by Excel spreadsheet if they don’t know better.
Building good software means providing developers with infrastructure and tools they need to act quickly with safety, and most importantly, giving them the ability to change their minds without a major cost/capital hit. Cloud (or, as I say above, on demand, fungible infrastructure and rented software) is a major path (but not the only) to get there.
The 10M daily active users are spread across every continent, in different time zones. All with the expectation of near real time delivery of messages, push notifications/emails and file uploads. The expectation that everything is immediately searchable and that you can search across messages and files thought the entire history of your slack usage. The expectation that there is an audit log of every message, whether it's been deleted or not and that data is never lost (due to HR/legal needs). And the expectation that everything is secure.
Lyft's AWS bill (from their S-1) is much higher, but their application has very different scaling constraints to something like Slack, it's not as easily horizontally scalable. Even though their bill is high, I suppose it can be hand-waved away as "oh scaling's expensive".
And a lot of the redundancy/security comes built into AWS services. S3 has redundancy built in, there are Multi-AZ RDS instances with easy support for at-rest encryption, and there's container orchestration these days for easily handling app server redundancy and worker servers. So a company starting out, like Slack, just a few years ago, would have access to all of that without much additional overhead.
I'm seriously fascinated by what it is that makes it so expensive. I suppose the real explanation might just be that there's no incentive to optimise for costs. It's like Slack's own app: A native app -could- be built that is super efficient and light, but there's no incentive to optimise for that.
Lets start there, though. 70k stand-alone (paid!) slack teams means 70k stand-alone systems. How do you operate, well, all of them, simultaneously? With one mammoth central database, there's one database to upgrade; if it goes down, there's one database to fix. With 70k small databases there's 70,000 problems! With 70,000 systems, how do your engineers deploy code, and how many times per day can they do it (it had better be well into the double digits)? How do you roll them back? What do you do if an upgrade goes wrong? With 70k different apps, one small problem quickly becomes 70k small problems, which is harder to manage than 1. Some things can (and I'm sure are) scaled horizontally but the isolation that grants you does not come for free.
And then, what about past that? Looking at the customers listed on Slack.com, they serve some larger enterprises, who are going to need the "expensive" level of scaling. No database is going to be able to scale to that level without team to manage it (no matter the technology), so then you need a queue as well as a db, plus a team to manage each of those, and then how do you do searching/indexing. You also can't ever take a single database node offline, so then it's a database cluster, with hot spares, and also large enterprises operate globally so then their slack team system needs to run multi-region hot as well, and then and then and then? I've got Slack open all the time on both my (work) phone and my (work) laptop as do the majority of my coworkers, which means their webservers have heavier requirements compared to Lyft, which I use for a few minutes whenever I take a ride.
Slack usage will hit a lull outside of business hours, so you'd want it to scale resources that serve that - I'll bet a non-insignificant portion of the $4M/month probably goes to resources that are only used during the business day - so in some sense, Slack is paying AWS a premium to not pay them for unneeded resources at 3:30 AM.
Slack's optimized their app for development cost (much to my laptop's sadness), it doesn't seem that far fetched that slack has also done some optimization of server side costs. future money isn't worth as much as money today is, and this fact is reflected in AWS RI offerings.
If you're running a server for 1/3 of the day (8 hours), you're probably better off using dedicated instance (60% discount with 3 year reservation) than trying to optimize around on-demand instances (66% discount with perfect allocation, ignoring the engineering cost). The economics are even worse if you consider imperfect allocation, or consider self-hosting (probably cheaper if you're as big as slack).
I also don’t understand how duplicated infrastructure makes it super speedy for end users when they are from around the world. Yes, they could connect to regional instances, but then the regional instances must synchronize with the other regional instances on the other side of the planet, which gains nothing.
It gains tens or hundreds of milliseconds, especially for channels/chats between people in the same region. You may not feel a "chat app" requires this level of performance, but the improvements there.
You can't just say "I could serve 1000 users on a $240/year VPS, they should be able to serve their 10M users on around $2M/year!" Things don't scale like that. The complex dynamics of the world can't be represented by linear extrapolation. Moreover, there's a balance that needs to be struck between the complex process of "spending less on cloud" and the complex process of "developing the product". Everything costs money.
How is running a chat app any easier than, say, running Facebook?
You're right, it takes a mind-boggling amount of wasted effort and negligence to turn a simple thing like corporate chat into something as bloated and broken as Slack.
Making something simple and easy is harder than just letting entropy destroy your product.
Slack is indeed just a chat app. There are many like it. Most of which look and feel very similar at this point. I administer a slack setup for our company and it's fine but it's nothing special. However, for what it does and what it cost, I'm not in a mood to replace it with something else. The hassle would cost us more and we'd not save a lot of money or gain any functionality that we need or indeed solve a problem we have.
We switched to Slack a few years ago from hipchat which at the time was very similar in scope, feature set, and cost. The reason we switched was that we wanted to get rid of bitbucket and some other Atlassian stuff (in favor of Gitlab, and later Github). I've also used stuff like IRC and even NNTP in the past, neither of which is appropriate for non techie teams. Lately, I've been considering switching to keybase which has a nice and easy to set up team component (I've actually set this up already). I'd probably go with that for new teams though it is still a bit rough in some respects.
Slack has awesome brand recognition but ultimately it doesn't have that many unique selling points beyond that. They've clearly grown by converting investor cash into customer acquisition. It's a common pattern with VC funded SAAS companies: compensate for a lack of unique selling points or technical edge with stupendous amounts of marketing and sales. If you think their hosting is expensive, their marketing and sales are likely way more expensive. It never was a proper tech company where things like algorithms, their awesome infrastructure, or patented stuff are the key things. It always was just another chat app done well.
Their hosting cost is quite high and suggests that they tend to throw money at problems instead of engineering talent. That's both fine and common for VC funded startups but it also suggests they will go through some lengthy rounds to re-architect internally and optimize their cost structure in the next few years after they IPO when shareholders are going to be obsessing about shareholder value.
From a technology point of view, they should indeed be able to run at a fraction of the cost but right now that's not a priority for them as they are very well funded and have a need to grow as fast as they can. Cutting cost through lengthy and complicated re-engineering projects is probably very low on their todo list and would be likely to just slow them down.
They are actually surprisingly middle of the road in terms of what they do. They do it well but when you look at their feature set there's nothing really that remarkable or unique. Their UI is alright but generic electron/react (?) which is notoriously not that fast but gets the job done. There are a lot of electron based chat apps out there and whatever your point of view on those is, slack is nothing special in that sense. Sure their UX is awesome and they clearly have some design hipsters running the show and obsessing over things like color schemes, logos, smileys, etc. But in the end it's just a generic chat app. E.g. Telegram, Signal, Facebook, Skype, Whatsapp, FB Messenger, (and Google's many attempts to compete with the Cartesian product of those) etc. each have very similar client side architectures and feature sets as well.
Sever-side they probably use Elasticsearch (which I'm well familiar with) and they seem to have a lot of centralized infrastructure and plumbing. From having used it, their search engine isn't actually that sophisticated or impressive. Clearly search ranking is not a huge attention area for them. Obviously a complicating factor is that they are running their stuff in multiple data centers across the globe. Adding to their complexity is enterprise needs for backups, auditing, security, compliance, etc.
Given their age and hipness, they probably bought into micro-services in a big way. That just means they run a lot of stuff that they scale by throwing more hardware at it. Over-provisioning is a great way to hide any performance issues. If you have dozens of micro services running in multiple data centers, things add up quickly. Add hosted data bases, search engines, queues, analytics, monitoring, devops, etc. to the mix and you are looking at some hefty hosting bills at the scale they are running it. Also many of their bigger customers probably insist on dedicated setups for them. When you grow rapidly, a lot of that stuff is just a side effect of Conway's law where you end up with a lot of moving parts because you have a lot of different teams.
At such scale it should be easier to have its own infrastructure rather than pay Amazon's overpriced bills.
I doubt Jeff Bezos is running some slush fund laundering scheme.
• We have a history of net losses, we anticipate increasing operating expenses in the future, and we may not be able to achieve and, if achieved, maintain profitability.
• We have experienced rapid growth in recent periods and our recent growth rates may not be indicative of our future growth.
---
Feel like this is essentially copypasta for tech IPOs now. Still, congrats to them, their revenue growth is pretty dang impressive.
It literally is; the SEC requires companies to state that unless they have an established track record of profitability (which most tech IPOs do not).
Is there any benefit of Public at this point of time? or Just a trend to grab as much as Wallet share from the average investor?
A couple large companies going public and raising several billion dollars will not make the market crash. All of them listing at once is a symptom of where we are in the economic cycle, and where these companies are in their individual growth curves.
Loss making unicorns go public -> investor pressure builds to reach profitability -> none of them can deliver on promises in the short term -> public does not want to own these stocks anymore -> causes a frantic selling spree -> market crashes.
Well hold on, I was just idly speculating, but I don't like this kind of thinking. There's a hundred and one reasons people can't leave a city, or the obstacle to leaving is too great.
Off the top of my head, not wanting to uproot kids into a new school system, partner's job, disability that makes it extraordinarily difficult to move (away from whatever ADA stuff you've got set up at your apartment and commute flow you've got set up), need to stay near sick family, need to stay regional to a very specific doctor or healthcare facility, and that's just needs. A strong desire to stay in a local area due to history or just preference should be valid as well.
I see this reasoning used to attack non-tech workers all the time and it bothers me.
A lot of funds pile into the techs. They lose money. Their customers pull their money. They have to sell not just the techs, but the rest of their portfolios too.
But yes, the tale is different for AirBnB, Lyft, and Uber.
https://www.marketwatch.com/story/airbnb-made-its-first-prof...
https://www.bloomberg.com/news/articles/2019-01-15/airbnb-sa...
We're in for a rough one, and it is VERY intentional this time.
As they should be, unless they plan to retire in the near future. Attempting to time the market is generally folly.
HN comments can be excellent on certain topics, finance is certainly not one of them.
Another kind of interesting thing is the amount of money going into index funds. These index funds buy stocks based on their position in the market. The influx of capital allows companies to stay in the S&P 500 that before may have been removed. This optimizes for whether or not you're in the S&P 500 and not actually company performance. Decoupling your survival from reality is not a healthy ecosystem.
https://www.thestreet.com/story/10115781/1/investors-holding...
https://news.ycombinator.com/item?id=712198
And one from 2011:
https://news.ycombinator.com/item?id=2868728
And here's one from 2012:
https://news.ycombinator.com/item?id=3947923
Here's one from 2014:
https://news.ycombinator.com/item?id=8338411
And here's one from 2016:
The truth is that no one really knows when the crash will come. But it will come eventually.
And here's the live (well, lagging a few months, but this is a very slow signal anyhow) version: https://news.ycombinator.com/item?id=14950203
As you said, it's a very slow signal. The model predicts what will happen over 10 years. It doesn't say whether there will be steady X% YOY growth, or a massive plunge and then a compensating rebound.
I like slack, we use it on all the experiments I work on, but I'm seriously considering upgrading my workstation for the privilege of not restarting my slack tabs every day or so...
I get that HN likes to think "it's just chat", but a decent chat application (having used gChat, Slack, IRC, AIM, …) is way more nuanced than that.
I don't even have anything against slack but what is possibly worth $100k a year from a comms software?
Basically you can write SQL and if there are results, we'll send a message to Slack. Same works for Python, including plots / images.
1. Supermetrics pulls data into a google sheet once an hour
2. Alert logic in the spreadsheet
3. Some slack integration (zapier maybe) sends slack alerts based on cell values
Currently looking at eletype to replace a lot of our custom stuff
At least allow me as an individual user to see all messages sequentially without any threads. I am willing to do mental context switches. I prefer doing that to losing messages in old threads.
I'm not saying that Slack are the good guys, but if your managers are forcing you to have all notifications on at all times and using @channel for every message, then it really is your management.
The notification settings in chat apps for enterprise are, as a rule, terrible.
If someone is sending you messages that are so useless you need to mute them, either your organization is seriously disfunctional or you shouldn’t be in Slack.
They probably want to prevent organisations from disabling a feature that may assist with their scaling on slack.
I'm a thread fan from the start, and I've observed many who were initially skeptical start using them heavily
I'm on a couple slacks, some where local culture is firmly built on threading, and some where it's not, and the former is at least 10x more productive and enjoyable. If other members of the community had the option to view things threadlessly, they would start replying to threads in the main channel, and ruin the experience for everyone else.
You might say this wouldn't happen much, but think about how hard it is just to get your coworkers to stop using @here frivolously.
However, if so many of your users are complaining about something, and if the complaint is about something as important as “losing messages,” then something should be done about it. It’s no longer enough to say that “but it works for some people” or to say that “options add complexity.”
Our entire core team has discussed this. Nobody wants threads. They all lose messages due to this. But sometimes we accidentally respond to messages that start a thread. So, we want this option to be removed for the entire organization. But we can’t.
It’s an option that’ll have cost, yes. But, it’ll be much simpler than many other complicated (and low value) things Slack has worked on in past two years. Those other things are also adding complexity, slowing down dev, increasing things to test, etc. And, again, this option solves a serious and fundamental problem of losing messages. So, it’s worth the cost for many of their users.
Are you familiar with the way you can cc: the channel on a thread comment when you’re concerned people might miss it?
Vocal minorities shouldn't drive product decisions.
This is obviously a hard problem to solve without just making it back into email. Muting apps that spam notifications for someone else’s benefit would be a great start. Not allowing bots to spam new threads at you and cleaning up old threads automatically would also be great—having a ton of old threads brings the client to its knees on my dual core laptop.
Slack just sucks for anything you need to find again, IMHO, it should be treated like it's ephemeral. The logs are worth keeping as leverage against employees of course.
Wouldn't using funding to sell a service/product under the market value be considered anti-competitive? I mean the businesses without funding would have to price their services high enough to turn a profit, while venture-backed businesses do not.
Are there not chat services that would have thrived if Slack did not offer one for free/relatively cheaply? What happens when Slack wants to increase prices, but the market competitors have diminished in the meantime?
Whether a company makes money or not is its own problem. VC vs bank loan vs bootstrap is the same. Build a working product that brings in enough money to profit before you run out of cash. It’s basically how every business started.
Well, that doesn't sound too good.
Edit: I stand corrected. https://www.wsj.com/articles/red-ink-floods-ipo-market-15383... provides historical context that this is not a new phenomenon, though it is more common than ever.
"...we incurred net losses of $146.9 million, $140.1 million, and $138.9 million in fiscal years 2017, 2018, and 2019, respectively."
It could either drive the bull market for another 18 months, or create the appearance of a panic by private investors looking to finally pull the chute before they hit the ground.
>In April 2018, the Company executed an amendment to its existing agreement with Amazon Web Services (“AWS”). The amended agreement was effective as of May 1, 2018 and continues through July 31, 2023. The Company has minimum annual commitments of $50.0 million each year of the agreement term for a total minimum commitment of $250.0 million. As of January 31, 2019, the Company had a remaining minimum payment obligation of $212.5 million to AWS through July 31, 2023.
Anyone care to explain how a pre-revenue company can be valued at $43mm? I know the argument can be made Google paid much more for Deepmind, but Google's market cap is 51x more than Slack's on the secondary market right now.
Direct listing!
Their operating model also leads to a pretty unique way of internal adoption. At my last company (a smaller one), we had a paid Slack account and it was our official means of internal communication.
At my current company, a large Fortune 100 company, email is still the predominant form of internal communications. With Skype and Teams available, but with a frustrating enough user experience that everyone falls back to email. But there are a lot of pockets that unofficially use Slack, with some using the paid form (and expensing it under their budget) and others using free ones. Our central IT is finally giving in looking at getting an official subscription to centralize usage under a single Slack account (for auditability, information security, employee attrition concerns, and ease of user support).
By targeting end users directly in those commercials and enabling internal adoption without interfacing with IT (i.e. free accounts, web app for those that can't install desktop apps, etc), they're able to gain adoption and momentum in a guerrilla fashion that snowballs into eventual enterprise contracts.
[1] For those who don't frequent Penn Station in New York, the Hilton Corridor that cuts down the center of the station contains a few dozen billboards that represent pretty much the only non-public-service advertising in the station. Amtrak sells the entire lot of billboard space to one advertiser at a time, generally for about a month. Slack was up there a few months ago.
- 5 processes
- over 850M in swap
- over 310M PSS (Proportional set size which is the only indicator showing true memory usage)
This is over 1 Gb total. Despite high memory usage, they don't provide 32-bit version for Linux. It is surprising how such product can become profitable.
https://mattermost.com/blog/how-uber-uses-mattermost-to-enha...