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Slack S-1

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Re: Slack S-1

#121

Post by WestCoastJustin »

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…

Much of this goes into geo redundancy too. These 10M people are not in one place. So, you need redundant highly availably deployments in many regions. This does add lots of infrastructure duplication but is also super speedy for end users. This adds to the cost big time! For example, I was working with a gaming company and they had 10+ regions around the world, all using this type of setup, just to keep latency to an absolute minimum. I'm sure slack is doing the same.

Re: Slack S-1

#122

Post by vonmoltke »

adamw2k wrote: post #32

Surprised 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?

I know they bought one of the month-long ad campaigns in Penn[1], which could not have been cheap. I also see their ads in some subway stations.

[1] For those who don't frequent Penn Station in New York, the Hilton Corridor that cuts down the center of the station contains a few dozen billboards that represent pretty much the only non-public-service advertising in the station. Amtrak sells the entire lot of billboard space to one advertiser at a time, generally for about a month. Slack was up there a few months ago.

Re: Slack S-1

#123

Post by mises »

maxxxxx wrote: post #105
outside1234 wrote: post #99

Earlier quoted context omitted.

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

How about Atlassian? Did they lose money for years?

Atlassian actually had decent numbers and was profitable when they went public. Source: https://techcrunch.com/2015/12/10/hipchat-maker-atlassian-be...

Re: Slack S-1

#124

Post by [deleted] »

xfitm3 wrote: post #114
noxToken wrote: post #73

Earlier quoted context omitted.

How 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 i…

Slack 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]

Re: Slack S-1

#125

Post by mises »

derwiki wrote: post #67
cupofjoakim wrote: post #41

Earlier quoted context omitted.

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.

> 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-... > 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 [...]

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.

Re: Slack S-1

#126

Post by mbesto »

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…

> I think to balance the playing field with VC and private investment, companies shouldn’t be able to IPO with loses.

If the investing community really thought this was a bad idea then these companies wouldn't IPO. Especially after the lessons learned from 2000.

Look, I get that people want to shit on unprofitable tech businesses, but in case you haven't noticed, investors absolutely love the financials on these companies. Why? Because their cashflows generate insanely strong tailwind effects.

I strongly urge anyone who likes shitting on to read what Bezos says on his earnings calls about earnings vs cash flow, or read Tren Griffin's blog.[0]

Good example...look at FB's FCF - https://www.marketwatch.com/investing/stock/fb/financials/ca...

[0] - https://25iq.com/2014/04/26/a-dozen-things-i-have-learned-fr...

Re: Slack S-1

#127

Post by the_watcher »

will_brown wrote: post #57
wbl wrote: post #45

Earlier quoted context omitted.

The SEC fundamentally believes it's ok to lose money investing. It's up to you to assess the investments and decide where to put your money.

That’s not the point/issue though. The markets are regulated to protect consumers/investors...private companies can’t just have unregistered public offerings to non accredited investors...so it’s not just “up to you to assess the investments” there are rules and nothing is stopping additional rules to not permit registration of a public offering when the company is operating at a $150,000,000.00 annual loss or more t…

The rules are about what information is disclosed. The difference is that with public companies, there are rules about what actually gets disclosed and how often. That's why the general public is allowed to invest. It's about how much information is available, not what that information actually is. Investors need to determine whether or not they invest.

In no world is the SEC's role to determine whether or not a company's business strategy qualifies them to go public or not. That would be an absolute disaster.

Re: Slack S-1

#128

Post by est31 »

maxxxxx wrote: post #89
est31 wrote: post #65

Earlier quoted context omitted.

Don'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, ther…

They also don’t have very high barriers to entry for competitors. Replacing SAP is really hard after it has been established in a company. On the other hand replacing Slack is really easy. Same for Uber. Customers and drivers can jump ship anytime.

Uber has a big competitive moat, which is willingness to burn money. They've got a lot of it, and any competitor which can't raise as much money for that purpose as Uber has will lose out. It's simple, in any area that a small competitor of Uber operates they just artificially lower prices and do it until the competitor runs out of money. The company with more money wins.

Slack... sure you can just spin up a rocket.chat or matrix instance, but operating those costs money and attention by employees that YOU need to hire and pay. And suddenly the Slack bill you have doesn't seem that high. Quite many companies are in such a situation. There are institutions in different situations, like the French state for example which employs millions (sic) and really wants to keep the data out of foreign hands so they use matrix instead and have staff to maintain the instances. With the costs being irrelevant for most institutions, they select for other criteria instead, which is quality of the product. And Slack for some reason is market leader here. I definitely prefer to use IRC but I'm not delusional, most people aren't like me.

Re: Slack S-1

#129

Post by mises »

tonyedgecombe wrote: post #51
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.

I think it's more mind boggling that people will continue to invest in them on the basis of a vague promise of profitability in the distant future. Turning a profit is much harder than buying market share.

The market is hot, and people would stuff money in a hole in the ground right now if you promised a possible 5x return. That will change soon enough. I think these unicorns may know this and may have decided their time to raise money publicly is now, before a market crash. Not saying the market is about to crash, but it's certainly volatile.

Re: Slack S-1

#130

Post by samnwa »

stone-monkey wrote: post #118
tw04 wrote: post #104

Earlier quoted context omitted.

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.

> Slack isn't markedly better in any area than Teams from my testing. Is it markedly worse in any area? Seems like for any business that's already entrenched in slack there isn't much incentive to move off. I'm assuming in your case there must have been some large benefits in order to spend a multi-month effort forcing a migration.

That's what people said when they were on Hipchat. And every other chat before Slack. Chat is commoditized software at this point.
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