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Slack S-1

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Re: Slack S-1

#161

Post by pengstrom »

I've been thinking about venture funding and how companies do not turn a profit while growing.

Wouldn't using funding to sell a service/product under the market value be considered anti-competitive? I mean the businesses without funding would have to price their services high enough to turn a profit, while venture-backed businesses do not.

Are there not chat services that would have thrived if Slack did not offer one for free/relatively cheaply? What happens when Slack wants to increase prices, but the market competitors have diminished in the meantime?

Re: Slack S-1

#162

Post by wuliwong »

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.

>Chat is commoditized software at this point.

I don't think I follow your logic. Why would this lead to Hipchat being completely shutdown?

Re: Slack S-1

#163

Post by freewilly1040 »

jvagner wrote: post #140
freewilly1040 wrote: post #116

Earlier quoted context omitted.

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.

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 cou…

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.

Re: Slack S-1

#164

Post by kortilla »

pengstrom wrote: post #161

I've been thinking about venture funding and how companies do not turn a profit while growing. Wouldn't using funding to sell a service/product under the market value be considered anti-competitive? I mean the businesses without funding would have to price their services high enough to turn a profit, while venture-backed businesses do not. Are there not chat services that would have thrived if Slack did not offer one…

No, being competitive and pushing down prices for consumers is not viewed as being anti-competitive.

Whether a company makes money or not is its own problem. VC vs bank loan vs bootstrap is the same. Build a working product that brings in enough money to profit before you run out of cash. It’s basically how every business started.

Re: Slack S-1

#165

Post by bakenator »

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…

I think this highlights the distinction between book value and market value. GAAP accounting pretty much tries to value the net value of the company based on the holdings/liabilities that it is legally entitled to at that second. Because a Slack customer can stop paying at any time, it would be wrong to say Slack already had that money in the bank.

However the idea you point out is why on the stock market people value companies completely differently than their book value. It would be pretty interesting if there was a standardized balance sheet like document that could be made with projected value.

Re: Slack S-1

#166

Post by hendzen »

the most interesting thing in this S1 is that Slack has a dual-class supervoting share structure but has a sunset provision after which the class B shares convert to class A and all have the same voting power.

Re: Slack S-1

#167

Post by freewilly1040 »

maxxxxx wrote: post #119
pmohun wrote: post #108

Earlier quoted context omitted.

I'm not sure replacing Slack is as easy as you may think. If you have used their product, then you understand the amount of integrations and dependencies that become built into a team's workflow. When your entire history of communications, way of tracking tickets, and document repository is stored in a desktop application, replacing Slack may not be as simple as switching to another messaging program. Could you "repl…

“Could you "replace Outlook" -- it's just an email client after all.” Absolutely. There is always pain in transitions but some are easier than others.

But why would you? “Hey boss I’m going to take up a bunch of everyone’s time getting everyone on boarded and retrained, as well as doing a nontrivial data migration, because some hot new email client is marginally better”

Re: Slack S-1

#168

Post by throwaway400 »

graetzer wrote: post #23
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…

thats still only half as much as Lyfts $100M/year: https://news.ycombinator.com/item?id=19282624

And Snap spends $400mm a year with Google Cloud, not to mention another $50mm on AWS.

Re: Slack S-1

#169

Post by robhunter »

bakenator wrote: post #165
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…

I think this highlights the distinction between book value and market value. GAAP accounting pretty much tries to value the net value of the company based on the holdings/liabilities that it is legally entitled to at that second. Because a Slack customer can stop paying at any time, it would be wrong to say Slack already had that money in the bank. However the idea you point out is why on the stock market people valu…

I think a lot of it is historically tied to taxation.

By not depreciating sales and marketing, Slack can claim all of that expense upfront, and delay tax payments since they show a greater loss.

Re: Slack S-1

#170

Post by freewilly1040 »

will_brown wrote: post #62
dcosson wrote: post #49

Earlier quoted context omitted.

Don’t understand this take at all. The public is free to just not buy the stock if they don’t want. You think the problem is that investors are leaving too much potential for growth on the table when companies IPO? They should wait even longer and keep more of that growth private?

I think a company going public should not operating at $150M losses using VC money...letting them cash out and profit by selling to the public. I also think there are other fundamental benefits to the economy. Yes the public is free not to buy...just as non-accredited investors would be free not to invest in unregistered securities yet regulations are still in place for a reason to protect would be investors. It does…

Well there people who disagree and would like to invest in them. Why should your opinion be forced on them?
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