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Slack S-1

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Re: Slack S-1

#201

Post by smolder »

ec109685 wrote: post #144
anonu wrote: post #139

Earlier quoted context omitted.

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

But why? Their revenue is growing faster and they aren’t running out of money.

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.

Re: Slack S-1

#202

Post by wongarsu »

cbhl wrote: post #194
maxxxxx wrote: post #33

Earlier quoted context omitted.

It’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.

Their operating expenses are likely dominated by the three types of people: software engineers (listed as R&D), sales/marketing, and administrators. Profitability will probably come post-IPO in some form of a hiring freeze (or quotas), and cuts in perks/food per capita. If 80%ile studio rents in San Francisco were closer to $800/month than $3400/month then maybe salaries could be 70% of what they are, and Slack would…

> Telecoms are typically swimming in debt

In general many profitable businesses swim in debt. If you finance each project to 1/3 with your own capital and 2/3 dept you can do three times as many projects, and for established companies with lots of assets (production facilities etc) banks will happily lend that money.

On the other hand there are companies like Nintendo and Apple with huge cash reserves and nowhere to spend them.

Re: Slack S-1

#203

Post by Silhouette »

scrollaway wrote: post #69
moreira wrote: post #37

Earlier quoted context omitted.

Perhaps I'm just not aware how things work in companies of Slack's size, but... what do you think $4M/mo is spent on, for what essentially amounts to a chat app? I realise there a lot of extras in Slack (attachments cost S3 storage, video calls take bandwidth, webhooks take some processing), but as of January 2019, they had 10M daily active users. $50M/365 gives us $137K per day. $137K per day just to serve 10M activ…

4.2M / month on AWS is a hefty bill but it's not unheard of. Slack is, I suspect, paying for all the marked up extras such as various expensive regulation compliance addons, at-rest encryption, multi-AZ+multi-region backups and mirrors and what not. There's also probably a huge amount of stuff they use on their side to run their own tooling and analytics on their clients; costs that won't necessarily rise per user. T…

The thing I find curious is that businesses of this scale are still using cloud hosting. Is it cost-effective or otherwise better in some way to outsource your infrastructure instead of hiring an in-house IT team to manage your own hardware and connectivity at this level?

Re: Slack S-1

#204

Post by robszumski »

moreira wrote: post #37
douglasfshearer wrote: post #12

Slack 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…

Perhaps I'm just not aware how things work in companies of Slack's size, but... what do you think $4M/mo is spent on, for what essentially amounts to a chat app? I realise there a lot of extras in Slack (attachments cost S3 storage, video calls take bandwidth, webhooks take some processing), but as of January 2019, they had 10M daily active users. $50M/365 gives us $137K per day. $137K per day just to serve 10M activ…

Every team needs a dev/test environment. You know how you've always wanted slick metrics collection to make your job easier? They have that, at scale. Fraud detection and bot throttling? Running at scale with machine learning. It all adds up fast.

Re: Slack S-1

#205

Post by ummonk »

robhunter wrote: post #150

I 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 spen…

Not sure what you mean. LTV/CAC is a common metric in SaaS for sales efficiency.

Re: Slack S-1

#206

Post by cknoxrun »

thegranderson wrote: post #137
will_brown wrote: post #35

Earlier quoted context omitted.

Is there any other industry where a company can go public having lost $500,000,000 over the last 3 years? I get it their “market share” is increasing every year and the loses are staying the same...and even that is not the full picture of a path to profit. But if the company could turn a profit, then why not do it privately, show that and then go public? My guess like Uber and Lyft...they can’t turn a profit, and for…

There are many industries where this happens. Biotech and drug development is particularly prolific in this regard. Often drug development companies spend tens to hundreds of millions creating a drug, only to have the whole company bought out by a large pharma company once it passes a certain testing/approval milestone. No profits for the company at all. [1] Just because a business doesn't turn a GAAP profit doesn't…

Indeed, I was at a biotech drug conference in Berlin last year and was astonished at how little direct research large pharma are engaged in. They've completely offloaded primary research to drug development companies. Maybe it has always been like that, but for me it was an eye-opener.

Re: Slack S-1

#207

Post by raldi »

drb91 wrote: post #134
raldi wrote: post #131

Earlier quoted context omitted.

I can be away for a few days, catch up quickly, and add a comment to a conversation that ended long ago and know that the participants will actually see it. All thanks to threads.

Catching up quickly is not something I associate with slack—mostly missing things, actually. This is obviously a hard problem to solve without just making it back into email. Muting apps that spam notifications for someone else’s benefit would be a great start. Not allowing bots to spam new threads at you and cleaning up old threads automatically would also be great—having a ton of old threads brings the client to it…

How thready is your slack's culture?

Re: Slack S-1

#208

Post by zimpenfish »

linuxftw wrote: post #197
scrollaway wrote: post #82

Earlier quoted context omitted.

Cool, 10000 more of those boxes and you can rebuild slack "in a weekend for $35k/month". Don't mind the lawsuits when you lose your customer data and forgot to pay for backups for "cost optimization" reasons. Don't mind the complaints when your uptime is barely one-nine. Don't mind the customer cancellations when your 1000-user VPS doesn't actually scale to 20k concurrents. And don't mind the HN snark when you releas…

I think you're being overly negative. I think you can do a lot with a little. Does a chat app need to be fully searchable? I don't think so. Does it need backups? I don't think so. These are features users could opt-in for if it was that important to them. Could be something simple as sending encrypted nightly diffs to an email address. The whole world doesn't need to be over engineered to have a useful product.

> Does a chat app need to be fully searchable? I don't think so.

Having had a meeting this afternoon where the critical information required for me to pick up a project was only available in Slack messages, yeah, I think it does.

(Personally I would be roasting the two people involved for not doing that discussion over email or at least not writing the damn things down afterwards but hey ho, I'm not in charge.)

Re: Slack S-1

#209

Post by ummonk »

will_brown wrote: post #35
neom wrote: post #11

"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 re…

Is there any other industry where a company can go public having lost $500,000,000 over the last 3 years? I get it their “market share” is increasing every year and the loses are staying the same...and even that is not the full picture of a path to profit. But if the company could turn a profit, then why not do it privately, show that and then go public? My guess like Uber and Lyft...they can’t turn a profit, and for…

>But if the company could turn a profit, then why not do it privately, show that and then go public?

Because their investors and employees want liquidity, and public investors want in on the pie. There isn't some rule that says companies can only public once they've stopped growing rapidly.

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