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For me the fascinating headline here is the 86% gross margins. FY2020 gross revenue at Slack was $630.4m, GAAP gross profit $533.2m [1]. SaaS apps are comicall
by abalashov 6y ago
For me the fascinating headline here is the 86% gross margins. FY2020 gross revenue at Slack was $630.4m, GAAP gross profit $533.2m [1].
SaaS apps are comically, stupidly profitable at scale. That's educational.
[1] https://slack.com/blog/news/slack-announces-fourth-quarter-and-fiscal-year-2020-results https://slack.com/blog/news/slack-announces-fourth-quarter-a...
- ebg13 6y agoExcept they had net income of -$570M (that's a minus sign in front) because their operational losses are staggeringly high.
- abalashov 6y agoYes, but that's the aspect of the cost structure that the acquirer is most equipped to tweak.
- ebg13 6y agoIndeed. I expect mass layoffs basically immediately.
- nemo44x 6y agoYes the redundant orgs will probably be mainly laid off eventually. You don’t need 2 HR’s, G/A, etc. Sales will probably be reduced quite a bit and the engineering team will stick around.
- Axsuul 6y agoSlack's culture is very different from Salesforce's so I think they will at least keep around HR.
- kyawzazaw 6y agoWhat did Salesforce do with Tableau, MuleSoft and Quip?
- Miraste 6y agoThat's a big indication Salesforce will get rid of Slack HR.
- Axsuul 6y agoSlack will continue to be Slack[1] according to the CEO which doesn't signal a culture change. 1. https://twitter.com/stewart/status/1333901111254675456 https://twitter.com/stewart/status/1333901111254675456
- Miraste 6y agoEvery acquired company always says that, practically verbatim. It's meaningless, the CEO doesn't have a say anymore. Salesforce's designs are the relevant direction now, and they're not telling. Facebook (Telegram, Oculus, Instagram) and IBM (dozens of companies) come to mind as specific examples of acquisitions in which the former CEO insisted that business would continue as usual, only for the management teams to be gutted and the company culture eradicated.
- siliconmountain 6y agoWhat's the difference here? How can GAAP profit and net income be nearly a billion dollars in difference? I thought GAAP was standard accounting? What kind of operational losses are not included in GAAP
- ebg13 6y agoYou left out the word "gross" but that word is important here. GAAP gross profit doesn't include operational cost, only product production cost. That's why it's gross and not net.
- baobabKoodaa 6y agoThe distinguishing term here is not GAAP, it's gross vs. net profit. Both of which can be calculated under GAAP.
- baby 6y agoThe subscription model is a true modernized return to the good old ways of creating a product that sells because it’s good quality. How? If a user is not satisfied, they will stop paying. Slack has all the incentives to improve their product, especially in the face of competition.
- intricatedetail 6y agoIs it true though? People could use Slack because other people use it and it is hard to coordinate the switch. Also better the devil you know...
- kumarvvr 6y agoPerhaps true for a standalone app, but very different for a social one like Slack. You have to use what others are using.
- pimterry 6y agoIs that true? For a social app where every user pays, sure, but Slack is generally paid for by a central business/group/organization. If the users in the organization are sufficiently unhappy with Slack, a functional organization should be unhappy with Slack, and if the organization is unhappy it can migrate everybody elsewhere overnight, with minimal social impact.
- goatinaboat 6y agoIf the users in the organization are sufficiently unhappy with Slack, a functional organization should be unhappy with Slack Nice theory but overwhelmingly disproved by the existence of SAP.
- NateEag 6y agoIt's also possible that almost all organizations using SAP are dysfunctional.
- amelius 6y ago