Even with 49% up sales and a 46% drop in expenses Slack still cant turn a profit
theregister.com
theregister.com
Pinterest looks to have earned about $1.1 billion in revenue during the same time with roughly the same number of employees. Fastly is at $250MM in revenue with just 630 employees.
So it looks like Slack is at least twice as large as it should be for its given revenue. But why? Are they supporting too many platforms/devices? Or are chat applications just not that valuable to companies?
What do they do? I am curious on the breakdown of engineering versus everybody else. I am always reminded of Craigslist, which operates with a skeleton crew. In 2017, it was reported they had 50 people on revenue of almost $700 million.
So long as retention is good, and your unit economics are profitable, it is like running those dollars into a money-printing press by buying an annuity that will pay out for years.
Instead, the rule is more like: is CaC sufficiently lower than Customer Lifetime Value so that each customer is profitable. This ratio tells you if your money-printing machine is working. As the low-hanging leads dry up, CaC gets higher.
Your argument might be rephrased as "their customer lifetime may be shorter than they think." Possible. There's some amount of switching cost (lost history, webhooks and integrations) there, though.
In terms of competition, we've seen plenty of alternative pop up recently such as Mattermost and MS Teams, both of which have gained popularity.
In terms of consumption, it is only feasible to really have a single chat application at a time, maybe two if one is being tested. Having more than 1 defeats the purpose of having an org wide chat. Maybe individual teams will choose their own in large companies, but the general assumption is you try and sell your chat solution to the company, not to the individuals. And so we have a situation where the presence of strong competition directly effects the consumption of the product (Slack's offering).
My opinion is that Slack was previously somewhat synonymous with company chat, but that is no longer the case. They peaked, and now that Discord, MS Teams, Mattermost, etc. are viable alternatives, their market saturation is on the decline. They let their grasp slip away, and they will pay for it.
Slack has still had a net gain in users in the time that those competitors have gained users as well though, right? If everyone is gaining users, that seems like a reasonable argument against the market being saturated.
I know you're talking about within an organization, but this made me realize how long it's been since I've used a client like Pidgin/Adium/bitlbee that could handle multiple chat protocols all from one client.
I'm pretty sure the majority of the protocols I used to use in these apps aren't even around anymore (other than irc and xmpp).
Before that, they spent a significant amount of time and resources on the new WYSIWYG editor that was extremely unpopular and caused them to do a public 180 after saying they wouldn't go back.
In short, it's being wasted on sour grapes and untested ideas.
You start a chat and you can't add someone to the chat once it's started. So you create a new chat and add a member to it. Now you decide to hop on a call and you need to invite someone else, and that wasn't an option. But today, you can add another team member to the call. You figure out it's a vendor issue but you can't get your vendor on the call because they don't have a Slack account, and there isn't a link to share for just that one screenshare/conference.
So you are left with inviting your vendor into your Slack space which you don't want to do or move to another solution.
Yup. Those deficiencies are unforgivable.
I wonder what chat program the employees of Slack use.
If you’re ok with the apps, then it provides a ton of value for a fraction of the price others do.
I mean, Slack itself is almost as expensive as O365 which offers Office (online and offline) and a ton of other apps and features in addition to Teams.
Everything else comes along for the ride.
We spend probably 20 hours every month on the phone with them managing various issues. My CEO has asked if we could run our own email server and I have refused every single time for the simple reason that we would now spend 40 hours per month on the same email issues since both source and destination of the complaint would be company internal.
AND we would be fighting getting our email delivered because Google and Microsoft basically dump your email in the trash for not coming from Microsoft or Google.
No thanks. Pay Microsoft. They're the least bad in the space.
If it doesn't work as expected, I will try the next. There is literally 0 loyalty involved in my company.
As an example, when switching to Teams to reply to a message why does it focus the search bar instead of the chat window? How often do users search (as their first focussed action) in comparison to using the chat window?
Teams seems to be full of these minor UX annoyances that all add up to make Teams a chore to use. Slack has done a much better job on UX (in my opinion).
Teams works for us. Chat works, charming or not. And say suddenly you need to share your desktop while chatting to show some issue, well no problem. Need to invite a couple of folks from support to get some of their input? No problem, just invite them. Poof you got an ad-hoc meeting going and you get an issue solved in 5-10 minutes and customer is happy.
It's not like I want to marry it, but for the most part it works quite well and doesn't get in my way. And so it's a decent enough tool.
We have 2 cloud communication companies with radically different stock results (Slack vs Twilio).
Slack, who has ~50% revenue growth and haven't turned a profit and their stock is ~0% flat YTD [1].
Then you have Twilio, they too are having 50%+ growth and have never turned a profit, yet their stock is up ~130% YTD. [2]
The stock market is a funny beast.
[1] https://finance.yahoo.com/quote/WORK?.tsrc=applewf [2] https://finance.yahoo.com/quote/TWLO?p=TWLO&.tsrc=fin-srch
It's a better app than Google Whatever (Hangouts? Meet? Duo???) and Cisco WebEx, though Zoom is much easier to use for larger meetings.
My org uses Teams and I’m now a member of probably 30 teams with lots of channels each. I ignore them all as there’s too many.
Slack is different because I just join specific communities.
Also text search is bad right now in Teams, but is handy in Slack.
School districts will almost certainly hate everything they were forced to start using over the last few months because their entire workflow has changed dramatically. From top to bottom and they’re having to invent new things on the fly. They will almost certainly get stuff wrong.
Normally, such a radical change would have involved months if not years of planning, followed by months of trials, before even being deployed in 1 class for 1 subject.
But that does not mean Teams itself is not excellent software. It just means Slack is slightly more excellent.
And once you throw in how rapidly Teams has been improving, I think it’s a matter of months before Teams surpasses slack in almost every way.
> CFO Shim said Slack expects "to be free cash flow breakeven for the year" and raised revenue guidance to a range of $870m to $876m, a jump of 38 per cent at the midpoint. The next quarter is expected to grow 32 per cent at the midpoint of a range of $222m to $225m.
It's true, they can't turn a profit, but this still sounds like a development in that direction. I'd say check back next year and see.