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Comment by theturtletalks | Hacker News Reader

Their valuation stems from MAUs and majority are on the generous free tier. Do investors really think they can monetize the free users?

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I've said this elsewhere in the thread, but Slack could already be making money off me if they offered an attractively priced plan for open source and hobbyist communities and gave workspace owners an easy way to forward that monthly subscription fee onto the users. But at the moment I use Slack a lot and pay them nothing.

2018 revenue was $400 million, ~doubled the previous year - Slack isn't a company with just a ton of free users and no monetization

40x still seems like an insane multiple.

Assuming they have a margin of 50%, their EBITDA multiple is 80. For comparison, Facebook had an EBITDA multiple of ~50 at IPO time.

Slack isn't a consumer company, they are an SaaS enterprise company. Most SaaS enterprise companies trade at far lower multiples. A decent comp for Slack would be Dropbox, which has $1.4B and rough valuation of ~$10B

It is overvalued, but then so are a lot of tech companies. I think Slack is a good app, one of the tech startups of true value from this boom cycle, but it’s overvalued. When the likely market adjustment happens, it’ll get a haircut, but it will deservedly survive and prosper.

It's a great time to IPO

Even if we ignore the time value of money, Slack needs to quadruple its revenue and turn it all into profit to justify a 16B valuation. I can see it happening since so much is being integrated into it from 3rd parties, but it's a very tall order.

Solid revenue and solid growth. I was not saying Slack has no monetization, but getting from 400M to 16B is 40X growth. To expand that quickly would require monetizing your existing users most of whom use the free tier. How does Slack really plan to do that?

why do they need to reach 16B in annual revenue? I dont think you will find any tech stock with a market cap of 1x revenue.

Fair enough, but 40X multiplier is on the tail end for tech companies that don’t sell ads (not to say they won’t in the future).

And how many of the free users are the same people? I am active on 7 or 8 slacks (all free) with at least 5 or 6 different emails. Sure they can easily link my from my device, but do they when they can inflate numbers?

The thing that drives me nuts is the pricing model. Why don't they just let users pay for themselves? Then I could be paid on all of the slacks that I use for $10/mo or whatever they charge.

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