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Slack S-1

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Re: Slack S-1

#141

Post by opencl »

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.

An Office 365 subscription includes Teams, email hosting, the Office suite, and 1TB storage per user for less than the price of Slack alone. So I would call that markedly worse pricing.

Sure for companies already using Slack there's probably not a whole lot of reason to move off. But Slack seems to be relying on continued huge growth numbers to become profitable.

Re: Slack S-1

#142

Post by est31 »

megous wrote: post #100
screye wrote: post #54

Earlier quoted context omitted.

I 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.

Why 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?

I doubt there will be a global stock market crash but a there can definitely be a burst of the second dot com bubble. It would be enough for one of the overvalued companies to go bankrupt to take them all down, e.g. Tesla (they certainly have liquidity problems).

Re: Slack S-1

#143

Post by nik736 »

tw04 wrote: post #104
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.

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.

Teams is super buggy and I hated using it. We are now back at Slack (and actually happy paying customers).

Re: Slack S-1

#144

Post by ec109685 »

anonu wrote: post #139
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.

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.

Re: Slack S-1

#145

Post by ec109685 »

samnwa wrote: post #130
stone-monkey wrote: post #118

Earlier quoted context omitted.

> 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.

HipChat was utter crap. At some point things are good enough.

Re: Slack S-1

#146

Post by icedchai »

blantonl wrote: post #66
will_brown wrote: post #57

Earlier quoted context omitted.

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…

It's not a popular idea here because: Capital is extremely cheap Markets are at record highs FOMO in tech right now is extremely strong I can't wait to see the sentiment in two years.

The question is... right now, is it more like 1995 or 2001?

Re: Slack S-1

#147

Post by [deleted] »

anonu wrote: post #139
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.

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

[deleted]

Re: Slack S-1

#148

Post by moreira »

rgallagher27 wrote: post #109
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…

Scale, redundancy/backups and security. The 10M daily active users are spread across every continent, in different time zones. All with the expectation of near real time delivery of messages, push notifications/emails and file uploads. The expectation that everything is immediately searchable and that you can search across messages and files thought the entire history of your slack usage. The expectation that there i…

A Slack team is a self-contained unit, however, if I understand correctly. It -should- be easily horizontally scalable (please correct me if I'm wrong). Each team could have its own database, its own app servers running on whatever region(s) was/were needed. So it's not like they would have some mammoth central database that requires strong scale engineering. Furthermore, you know in advance how big each team is because they all pay you for X users, so you can allocate resources to them appropriately.

Lyft's AWS bill (from their S-1) is much higher, but their application has very different scaling constraints to something like Slack, it's not as easily horizontally scalable. Even though their bill is high, I suppose it can be hand-waved away as "oh scaling's expensive".

And a lot of the redundancy/security comes built into AWS services. S3 has redundancy built in, there are Multi-AZ RDS instances with easy support for at-rest encryption, and there's container orchestration these days for easily handling app server redundancy and worker servers. So a company starting out, like Slack, just a few years ago, would have access to all of that without much additional overhead.

I'm seriously fascinated by what it is that makes it so expensive. I suppose the real explanation might just be that there's no incentive to optimise for costs. It's like Slack's own app: A native app -could- be built that is super efficient and light, but there's no incentive to optimise for that.

Re: Slack S-1

#150

Post by robhunter »

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 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?

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