56 ms·
Slack S-1
- pengstrom 7y agoI've been thinking about venture funding and how companies do not turn a profit while growing. 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?
- kortilla 7y agoNo, being competitive and pushing down prices for consumers is not viewed as being anti-competitive. 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.
- vlovich123 7y agoPredatory pricing is generally considered illegal. The US happens to hold a pretty skeptical view on the matter. The better truth is that startups/new businesses are just too small & by the time they get big their prices typically have adjusted to not be flooding the market (i.e. too late).
- ummonk 7y agoIt is priced sustainably already. They lose money due to sales and marketing, which they could scale back to operate a profitable business (but grow more slowly).
- amrrs 7y agoLyft, Uber, Zoom, Beyond Meat and now, Slack 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?
- bardworx 7y agoSlack is doing a direct listing and aren't raising money via their IPO. This could be good for the average investor as the prices woun't be pumped up but the risk is that there was no price discovery.
- btown 7y agoGive investors liquidity before the inevitable economic downturn, without needing to sell the company.
- CSMastermind 7y agoThe market is going to crash and everyone wants to cash out before it does.
- polote 7y agoBut could also be the thing that will make the market crash nobody knows
- prklmn 7y agoThe S&P 500 by itself is valued at almost $24T (https://ycharts.com/indicators/sandp_500_market_cap https://ycharts.com/indicators/sandp_500_market_cap). 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.
- screye 7y agoI can see that happening. 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.
- megous 7y agoWhy would the market crash, and not just these few bad comapanies? What's systemic about the overhyped IRC clone or just another taxi service getting their fair value judged by public markets, that would cause a market crash?
- vital101 7y agoZero to IPO in five years. Well done team Slack!
- harryh 7y agoSlack was founded in 2009. That was 10 years ago not five.
- omarchowdhury 7y agoSlack the product was launched in 2013. The company, formally known as Tiny Speck, was founded in 2009. Their business and available products before 2013 had nothing with what Slack is today. So not absolutely farfetched to say launch to IPO in 5-6 years, if we're defining it by the relevant incarnation.
- jasongill 7y agoCongratulations to the Slack team; a great product that has generally become better over time. Let's hope that going public doesn't change them too much (although things like the new logo debacle don't inspire confidence at times)
- arkitaip 7y agoI think we're already seeing a backlash against the always multitasking, loss of focus culture that Slack has become the poster child for in the SASS space. Just like Facebook or Twitter, Slack is engineered for constant dopamine-fueled engagement, which quickly turns it into a bad and ultimately unproductive habit for companies that use it. I am already seeing competitors like Level use Slack as a warning example and I think this is just the start of Slack's problems.
- deleted 7y ago[deleted]
- snypox 7y agoWeird opinion. I only know 1 colleague of mine who gets distracted by chat. For me, and for most people an efficient team collaboration tool (Slack) is a game changer though.
- arkitaip 7y agoMaybe you haven't been following the news but this is a real concerns and there have been several tech companies that have even moves away from Slack.
- MrPea 7y agoI've seen it happen. Slack is filled with things one can waste time on. Our company uses Mattermost which is like Slack except stripped down to core chat components.
- xfitm3 7y agoSlack is a junk product.
- bluetidepro 7y agoI don't understand a ton about these documents, but I do always enjoy reading the "RISK FACTORS" that they have to include. Here is the link to them on here: https://www.sec.gov/Archives/edgar/data/1764925/000162828019004786/slacks-1.htm#sB72CD04E04ECEA6B3EA2567D8ACADBFF https://www.sec.gov/Archives/edgar/data/1764925/000162828019...
- cocochanel 7y ago> 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. Well, that doesn't sound too good.
- rwc 7y agoObligatory “this is literally boilerplate language used in every S-1 filing” comment.
- btown 7y agoObligatory “this may be boilerplate nowadays, but there is nothing traditional about unprofitable companies making public offerings” comment. Edit: I stand corrected. https://www.wsj.com/articles/red-ink-floods-ipo-market-1538388000 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.
- icebraining 7y agoThey are already profitable. They're just warning it's possible they might become unprofitable. Just like any other company.
- btown 7y agoThey have operated at a net loss for the past 3 years - this is simply untrue.
- neom 7y ago"Our revenue was $105.2 million, $220.5 million, and $400.6 million in fiscal years 2017, 2018, and 2019, respectively, representing annual growth of 110% and 82%, respectively. 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!
- maxxxxx 7y agoIt’s still mind boggling that all these unicorns haven’t found a way to make money even after being in business for years and having a mature product. It’s a strange world.
- paulddraper 7y agoIt's still mind boggling that all these unicorns haven't stopped growing after being in business for years and having a mature product. It's a strange world.
- nicolashahn 7y agoIt's a testament to how much spare money is just floating around in the upper VC class.
- est31 7y agoDon't forget that products like Slack, Uber, Airbnb, etc. all could have basically everyone as their customer. These companies influence the daily lives of millions of people, with comparatively few employees, thanks to the scaling skills of technology. That's why they are valued so high and are still growing. Sure, they might be overvalued and one day the bubble can burst, but neither is it just a ponzi scheme, there is definitely a business behind it.
- douglasfshearer 7y agoSlack has a 5-year, $50M/year minimum commitment with AWS. 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.
- graetzer 7y agothats still only half as much as Lyfts $100M/year: https://news.ycombinator.com/item?id=19282624 https://news.ycombinator.com/item?id=19282624
- airstrike 7y agoLyft is arguably solving a much harder problem than essentially IRC
- dymk 7y agoSlack is way more than IRC. Literally dozens of nontrivial features more.
- gkoberger 7y agoYou could also say "Slack is arguably solving a much harder problem than essentially a taxi company" Both are solving really tough problems involving a lot of users and a lot of data.
- underyx 7y agoSlack to IRC is what a library is to a bulletin board.
- throwaway400 7y agoAnd Snap spends $400mm a year with Google Cloud, not to mention another $50mm on AWS.
- sinatra 7y agoGreat product! Still don’t know why they don’t give the user the option of disabling threaded conversations for self or for entire organization. People have been asking for it for years. Ref: https://twitter.com/slackhq/status/822064778269102080?lang=en https://twitter.com/slackhq/status/822064778269102080?lang=e... 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.
- xfitm3 7y agoSlack is hostile towards users. They aggressively push a narrative that if Slack is annoying - its a management problem.
- noxToken 7y agoHow is Slack any different than any other instant messaging application? Hangouts, Jabber, Discord, Rocket Chat, and even WebEx or GoToMeeting - you can disable notifications, completely ignore, or even sign out of all of these applications. 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.
- drb91 7y agoI can’t speak for the others but Jabber allows you control of the client. The notification settings in chat apps for enterprise are, as a rule, terrible.
- xfitm3 7y agoSlack is not flexible or customizable - when basic features like muting someone are requested you're told that you are using Slack wrong. The notion of a one size fits all solution is flawed.
- deleted 7y ago[deleted]
- jonnycomputer 7y agoCould someone briefly explain the significance of this filing.?
- McDev 7y agohttps://en.wikipedia.org/wiki/Form_S-1 https://en.wikipedia.org/wiki/Form_S-1
- jonnycomputer 7y agoThis comment definitely deserved -1 net votes because it was asking for information that I could have definitely spent a whole bunch of time figuring out for myself instead of asking others for help.
- robinaero 7y agoDoes anyone else find the SEC disclosures format ugly? Might be time for them to adopt markdown
- flazzarino 7y agoTrump is on it, he has them working in shifts
- adamw2k 7y agoSurprised at Sales and Marketing expense given the low number of Enterprise (>$100k) contracts. Wonder what's baked in there beyond AE compensation? I don't see a whole lot of traditional advertising, but maybe it's out there?
- mprev 7y agoThey're doing TV ads on national networks in the UK, which doesn't come cheap.
- cosmie 7y agoThey're doing quite a bit of TV advertising[1]. Production and flighting costs on commercials, at a global scale, isn't going to come cheaply. [1] https://www.ispot.tv/brands/Zyh/slack/ https://www.ispot.tv/brands/Zyh/slack/
- GordonS 7y agoI wonder how effective TV advertising would really be for something relevant to such a small proportion of the population.
- cosmie 7y agoBased on the commercial contents, they're targeting pretty much any white-collar employees. So the target population isn't as small as it appears at first glance. 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.
- cozzyd 7y agoMemory usage seems to mirror their revenue as well! 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...
- your-nanny 7y agoyou might consider Mattermost instead, if in research setting. It has better support, imo, for researcher use cases, and you can host yourself.
- shereadsthenews 7y agoAll that R&D but it’s still unreachable over IPv6.
- LandR 7y agoI'm staggered that there are 575 companies paying slack $100k / year. I don't even have anything against slack but what is possibly worth $100k a year from a comms software?
- ralala 7y agoAvailability
- derwiki 7y agoSlack does a lot of things very well, but I've seen a surprising amount of downtime. YMMV of course.
- theevilsharpie 7y agoIt's been pretty reliable for me, particularly compared to the previous messaging service my company used (HipChat).
- jsty 7y agoAnything that saves a single engineer-year of effort, or less than half an engineer-year in a high COL area. Which for quite a lot of large companies, would cover their internal comms stack. It probably vanishes in comparison to, say, what they pay Cisco for their phones.
- sidcool 7y agoBig companies with thousands of employees license Slack with advanced features, mostly per user basis. So the payment is in direct proportion to number of people using it. $100k/year is nothing for any big organization.
- LeonM 7y agoIf you run a company with 1000 employees, that just $100 per seat, that's not that bad. Telephony is usually quite a lot more expensive than that.
- jscheel 7y ago• We have a limited operating history, which makes it difficult to forecast our revenue and evaluate our business and future prospects. • 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.
- chimeracoder 7y ago> Feel like this is essentially copypasta for tech IPOs now. 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).
- ameliozanchi 7y agoGuys, you shouldn't be all disappointed like this. In specific words and knowledge only 10% of proper fiscal payment is received, This is practical knowledge, There are objectives to achieve, in every autarchy. Not surprised at all. At Least the house of the richest person is more beautiful than the government buildings in most countries. And the funny thing is that we find the opposite on communist countries, im not defending then, it still exists a bad organization for fiscal revenue, but there is more on autarchy's world than media shows up, they have to pay procedures, it is not just the house you know, there is a yard, a pool and the neighborhood
- YjSe2GMQ 7y agoCan't tell if this is was written by a Markov chain or by a human.
- techsin101 7y agoI have no idea what he is saying
- robhunter 7y agoI think historical accounting practices and standards are not great at evaluating SaaS businesses. 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?
- bakenator 7y agoI think this highlights the distinction between book value and market value. GAAP accounting pretty much tries to value the net value of the company based on the holdings/liabilities that it is legally entitled to at that second. Because a Slack customer can stop paying at any time, it would be wrong to say Slack already had that money in the bank. 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.
- robhunter 7y agoI think a lot of it is historically tied to taxation. By not depreciating sales and marketing, Slack can claim all of that expense upfront, and delay tax payments since they show a greater loss.
- Naga 7y agoI don't think that Slack's business model is that different from other companies, from a marketing perspective. Sure, they acquired you as a customer in 2014 and don't need to spend anymore on marketing, but other companies spend huge amounts for marketing in the first few years and then spend less over time (think: you picked a detergent brand and keep using it without further marketing, for example). I actually think it is appropriate to recognize the expense now (or in whatever year it occurred), as there is no way to measure what benefit they are getting now from it. Isn't Slack burning now so it won't have to later? If that is true, does that sound like an unprofitable business? 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.
- hendzen 7y agothe most interesting thing in this S1 is that Slack has a dual-class supervoting share structure but has a sunset provision after which the class B shares convert to class A and all have the same voting power.
- olivermarks 7y agoThe cynical perspective is that direct listing rather than an IPO lets large holders get out faster after the stock begins trading, which suggests a lyft style pop and deflation
- idlewords 7y agoI understand why "VC subsidized taxi rides" runs at a loss, but how on earth does Slack lose money?
- rockostrich 7y agoTrying to grow as fast as possible. As others have pointed out, they could stop spending as much as they do right now to grow the company (employees as well as customers) and probably be profitable. That's not to say that this IPO isn't a cash grab by investors though.
- wsdfsayy 7y agoI remember at Uber we had tried Slack for a few months and it could not scale to that number of employees (at the time around 5000 worldwide)...
- kemenaran 7y agoDoesn’t Uber use Mattermost these days? https://mattermost.com/blog/how-uber-uses-mattermost-to-enhance-enterprise-wide-communications/ https://mattermost.com/blog/how-uber-uses-mattermost-to-enha...
- wsdfsayy 7y agoyes they have their own internal chat app now this was a few years ago
- thrav 7y agoSame thing happened with freeCodeCamp
- paxys 7y agoWhen was this? Given the number of enterprise customers they claim to have, it is unlikely that Slack can't scale to 5000 users at a company.
- pcprincipal 7y ago> In September 2018, the Company completed its acquisition of all issued and outstanding shares of Astro Technology Inc. (“Astro”), a pre-revenue start-up company that provides artificial-intelligence (AI) enhanced communications solutions, for a total purchase price of $43.3 million in cash. 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.
- mrnobody_67 7y agoChamath personally owns more of Slack than the founder/CEO....
- omarchowdhury 7y agoNot personally. According to the attached footnote (15): consists of shares held by the entities affiliated with Social Capital, it seems the principal's name is identified in lieu of the firm as they are the custodian in charge.
- fxfan 7y agoDo traders track RAM firms using electron-primary-app-firms? Or use one to hedge against the other ;). Perhaps add Intel too in the mix somewhere!
- bparsons 7y agoThe wave of IPOs this month is incredible. 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.
- codedokode 7y agoTheir app has compicated and clumsy UI that looks like it was made by programmers rather than by a designer and very high memory usage. Here is an example of memory usage from a small team with little volume of messages, reported by smem on Linux: - 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.
- erdaniels 7y agoThat’s not surprising at all. Sure it would be great if it had a light footprint but it’s usability far outweighs that.
- Kovah 7y agoProbably because those people who use the app most do not care about memory usage. Everytime somebody complains about how resource-hungry Slack is, it usually comes from a developer. I rarely see project managers or designers or even clients complain. And, looking at the company I work for, the developers channel is the one with the lowest usage. This is why Slack became successful: it works for the people who need it most, not because it is very resource-efficient or well coded.
- snazzycalynx 7y agoThat is really impressive, good job
- Halluxfboy009 7y agotoo much to read, really
- yalogin 7y agoSlack is a much better investment than Uber, lyft and Pinterest. Not sure why google is not compettwith them yet. It’s proven that google cannot do consumer very well but services they do very well. May be the corporation focused service like slack is what they will excel at. Couple that with their other offerings it could work very well for them. Then again point being slack doesn’t have the kind of red flags the other recent IPOs
- paxys 7y agoGoogle is competing (or at least trying to) - https://gsuite.google.com/products/chat/ https://gsuite.google.com/products/chat/
- econner 7y ago> None of our stockholders are party to any contractual lock-up agreement or other contractual restrictions on transfer. Following our listing, sales of substantial amounts of our Class A common stock in the public markets or the perception that sales might occur, could cause the market price of our Class A common stock to decline. Direct listing!
- dzonga 7y agoWhat I don't understand is how, a messaging service losses 100mil. Their competitor's like DHH's Basecamp are printing money, so how would they lose money. Cutthroat competition overall with offering like MS Teams, FB Workplace n Whatever Google has or will kill.
- arnklint 7y agoAre they even true to their mission statement?
- us0r 7y agoAnother whale for Amazon: >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.