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Well, these guys do have a good way to make money. Enterprise contracts are worth their weight in gold. As you could see from the quote, their revenue has incre

Well, these guys do have a good way to make money. Enterprise contracts are worth their weight in gold. As you could see from the quote, their revenue has increased more than their losses - which mean that they are on their way to become profitable. Arguably they could be now, if they didn't invest in growth as much.

derwiki 7y ago
> Arguably they could be now, if they didn't invest in growth as much. Bingo bango https://qz.com/1196256/it-took-amazon-amzn-14-years-to-make-as-much-net-profit-as-it-did-in-the-fourth-quarter-of-2017/ 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 [...]
- mises 7y ago
  Amazon massive economies of scale due to operating a highly efficient worldwide supply chain. I don't see Slack's average variable cost per unit going down in that same way. Amazon also made a lot of money on things like AWS by reinvesting, which is why they weren't profitable. They were burning that money by reinvesting it, not for operating expenses.
Radim 7y ago
> their revenue has increased more than their losses 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.
- canes123456 7y ago
  That is not how SAAS economics works. You spend a lot money upfront and revenue is earned over years. They can stop investing in sales/marketing tomorrow and be profitable.
- viscanti 7y ago
  They're investing in growth. It's unclear if that investment is good or bad, but looking at quarterly accounting numbers won't tell us. All we can see here is that they're investing more than they're making. 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.
  - rgbrenner 7y ago
    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. 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.
- dahdum 7y ago
  They quadrupled their revenue while keeping their losses flat in just 3 years, for a sticky high margin enterprise product. With just modest revenue growth they'll be able to optimize towards profit whenever they choose.
  - FPGAhacker 7y ago
    Since we are talking about net losses being flat, it means their expenses are going up as fast as their revenue.
    - kgwgk 7y ago
      Expenses are growing "as fast as revenue" in millions, but "slower than revenue" in growth rate (percentage).
outside1234 7y ago
I guarantee you that Microsoft has not lost money on Teams at the same growth rate. Why does Slack get a pass for that?
- maxxxxx 7y ago
  How about Atlassian? Did they lose money for years?
  - mises 7y ago
    Atlassian actually had decent numbers and was profitable when they went public. Source: https://techcrunch.com/2015/12/10/hipchat-maker-atlassian-begins-trading-at-27-67-valued-at-5-8-billion/ https://techcrunch.com/2015/12/10/hipchat-maker-atlassian-be...
  - AjithAntony 7y ago
    But they are abandoning hipchat
- wuliwong 7y ago
  How are you able to guarantee that?
tw04 7y ago
I'd be curious if it's remotely sustainable. We started on Slack ~3 years ago. We're now moving (albeit slowly) to Teams. 18 months from now Slack will be gone entirely. I can't believe we're the only ones. And unlike Dropbox vs. Ondrive, Slack isn't markedly better in any area than Teams from my testing.
- freewilly1040 7y ago
  The cost of migrating away from something like slack for an enterprise org is enormous compared to what it costs. 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.
  - jvagner 7y ago
    Two years ago a company we were at had Slack and it was used vigorously. They hit a user limit and couldn't get the CEO to pony up whatever it cost to extend Slack. (This company was the kind of company that had unlimited budgets for conferences and sales calls, but could hardly ever get a CC# for a dev team need...) 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?
    - freewilly1040 7y ago
      Your example demonstrates my point. Your CEO made a terrible decision in making you switch. Your co spent much more paying people to migrate to something worse than it would have spent just ponying up for the license.
      - jvagner 7y ago
        Agreed. But if Teams comes with Office365, Slack may have trouble getting CEOs to pay more per-user monthly fees. 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.
anonu 7y ago
That $50mm a year AWS bill seems pretty high - I think some optimizations there could easily cut this big expense...
- ec109685 7y ago
  But why? Their revenue is growing faster and they aren’t running out of money.
  - smolder 7y ago
    At that scale, I suspect there are some ~$10k engineering-time efforts that could save them $1m a year in costs, if they already have the people on staff with the expertise. In my limited experience, a lot of opportunities like that get missed because: - 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.
    - marcosdumay 7y ago
      Head count is not infinite. I don't agree with the GP's claim that they aren't running out of money (if they don't show a profit, they are running out of money, by definition), but developer time is a limited resource that must be carefully allocated. 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.
      - smolder 7y ago
        I just wanted to say I fully agree with what you said; it's a very hard problem.
gist 7y ago
> which mean that they are on their way to become profitable. 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?
ttul 7y ago
I’d love to see - and I didn’t check the S-1 so lazyweb me - their lifetime value estimation. I bet that $400M is worth > $5B billions over the lifetime of all customer cohorts.

derwiki 7y ago

> Arguably they could be now, if they didn't invest in growth as much. Bingo bango https://qz.com/1196256/it-took-amazon-amzn-14-years-to-make-as-much-net-profit-as-it-did-in-the-fourth-quarter-of-2017/ 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 [...]

mises 7y ago
Amazon massive economies of scale due to operating a highly efficient worldwide supply chain. I don't see Slack's average variable cost per unit going down in that same way. Amazon also made a lot of money on things like AWS by reinvesting, which is why they weren't profitable. They were burning that money by reinvesting it, not for operating expenses.

Radim 7y ago

> their revenue has increased more than their losses 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.

canes123456 7y ago
That is not how SAAS economics works. You spend a lot money upfront and revenue is earned over years. They can stop investing in sales/marketing tomorrow and be profitable.
viscanti 7y ago
They're investing in growth. It's unclear if that investment is good or bad, but looking at quarterly accounting numbers won't tell us. All we can see here is that they're investing more than they're making. 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.
- rgbrenner 7y ago
  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. 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.
dahdum 7y ago
They quadrupled their revenue while keeping their losses flat in just 3 years, for a sticky high margin enterprise product. With just modest revenue growth they'll be able to optimize towards profit whenever they choose.
- FPGAhacker 7y ago
  Since we are talking about net losses being flat, it means their expenses are going up as fast as their revenue.
  - kgwgk 7y ago
    Expenses are growing "as fast as revenue" in millions, but "slower than revenue" in growth rate (percentage).

outside1234 7y ago

I guarantee you that Microsoft has not lost money on Teams at the same growth rate. Why does Slack get a pass for that?

maxxxxx 7y ago
How about Atlassian? Did they lose money for years?
- mises 7y ago
  Atlassian actually had decent numbers and was profitable when they went public. Source: https://techcrunch.com/2015/12/10/hipchat-maker-atlassian-begins-trading-at-27-67-valued-at-5-8-billion/ https://techcrunch.com/2015/12/10/hipchat-maker-atlassian-be...
- AjithAntony 7y ago
  But they are abandoning hipchat
wuliwong 7y ago
How are you able to guarantee that?

tw04 7y ago

I'd be curious if it's remotely sustainable. We started on Slack ~3 years ago. We're now moving (albeit slowly) to Teams. 18 months from now Slack will be gone entirely. I can't believe we're the only ones. And unlike Dropbox vs. Ondrive, Slack isn't markedly better in any area than Teams from my testing.

freewilly1040 7y ago
The cost of migrating away from something like slack for an enterprise org is enormous compared to what it costs. 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.
- jvagner 7y ago
  Two years ago a company we were at had Slack and it was used vigorously. They hit a user limit and couldn't get the CEO to pony up whatever it cost to extend Slack. (This company was the kind of company that had unlimited budgets for conferences and sales calls, but could hardly ever get a CC# for a dev team need...) 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?
  - freewilly1040 7y ago
    Your example demonstrates my point. Your CEO made a terrible decision in making you switch. Your co spent much more paying people to migrate to something worse than it would have spent just ponying up for the license.
    - jvagner 7y ago
      Agreed. But if Teams comes with Office365, Slack may have trouble getting CEOs to pay more per-user monthly fees. 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.

anonu 7y ago

That $50mm a year AWS bill seems pretty high - I think some optimizations there could easily cut this big expense...

ec109685 7y ago
But why? Their revenue is growing faster and they aren’t running out of money.
- smolder 7y ago
  At that scale, I suspect there are some ~$10k engineering-time efforts that could save them $1m a year in costs, if they already have the people on staff with the expertise. In my limited experience, a lot of opportunities like that get missed because: - 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.
  - marcosdumay 7y ago
    Head count is not infinite. I don't agree with the GP's claim that they aren't running out of money (if they don't show a profit, they are running out of money, by definition), but developer time is a limited resource that must be carefully allocated. 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.
    - smolder 7y ago
      I just wanted to say I fully agree with what you said; it's a very hard problem.

gist 7y ago

> which mean that they are on their way to become profitable. 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?

ttul 7y ago

I’d love to see - and I didn’t check the S-1 so lazyweb me - their lifetime value estimation. I bet that $400M is worth > $5B billions over the lifetime of all customer cohorts.