251–260 of 469 posts
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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.
Let me let you in on a little secret. Slack makes TONS of money. Take that as a truth and then think about why they're still reporting they're losing money..
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You say "chat app" like that means it's easy. How is running a chat app any easier than, say, running Facebook?
My pet peeve with HN. People here boil everything down to a trivial engineering problem. That Slack is "just a chat app" is grossly underselling all the other parts of the business - sales, marketing, design, product - that makes it tick.
"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…
They see the losses as an acceptable customer acquisition cost for recurring revenue.
Speaking from personal experience, CLV for a Slack customer is 3+ years.
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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?
Generally, cloud is still better for many. Managing datacenters at scale is hard. It also takes time to build up capabilities in house, while cost of delay is usually far greater than cost efficiencies wrung out of infrastructure. Cloud is often a euphemism for “supported hosted software that happens to come with hardware”. Not that different from Dreamhost managing PHP for you , just richer and higher scale. Why bui…
Why build a cheaper internal capability over 6 months when I can have a slightly more expensive service NOW that I don’t have to worry about?
If it really is just slightly more expensive, that seems like it would be a good investment for many businesses. I was just curious because this isn't a field I've been working in directly for a while.
Last time I looked, but that was several years ago, there was a sweet spot for a lot of the cloud infrastructure services but at both the lower and the higher end the pricing didn't seem to make much sense in most cases. On that higher end, you could have bought the equipment outright, hired a substantial team of good people to manage it, and established your own presence in serious data centres with good connectivity, and still been considerably better off.
I wonder what has driven the change in cost/benefit since that time. Maybe it's just that cloud hosting is better understood and has better tooling, and those in turn make the market more competitive now?
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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 comp…
>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. Profitability is objective...let’s not pretend what I’m suggesting is the SEC subjectively making a decision on a business judgement or business plan. Simply you want to register a security for public offering show a GAAP profit...I understand that’s not “how it works” or I wouldn’t have sugges…
As an investor, I would not want them to turn a profit at this stage with so much headroom left, especially internationally.
If they choose to go for profitability this early on, then I take it as a negative signal.
Profit is too simple of a number to focus on. It doesn’t tell any kind of story by itself. But it’s a tempting number to latch onto.
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…
What was your company using before Slack and what did it cost?
"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…
Could you provide some data to show that companies which, at IPO, have any cumulative loss or a very large cumulative loss (as a percentage of valuation or offering size), perform worse as investments or as going concerns?
From your other comments, it seems like the foundation of your proposed change is that going public with significant losses is an attempt to get less-sophisticated investors to compensate more-sophisticated investors.
While there are many arguments against your proposed change, the first step seems to be establishing that the problem you’re trying to solve actually exists. I’m not convinced that it does (but don’t have data either way - that’s just anecdotal), and in fact many - maybe most - institutional investors in private companies continue to hold post-IPO shares long after the lockup (and gradually sell over 1-3 years simply to diversify).
As you investigate this, it might be worth reading about the “CAC payback period” and how it can lead to significant upfront losses: https://baremetrics.com/academy/cac-payback-period, https://kellblog.com/2016/03/17/cac-payback-period-the-most-...
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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?
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Is there any other industry where developing an instant messaging system can result in $500 million in losses despite $700 million in revenue?
My thought as well. What on earth about Slack costs hundreds of millions to operate?
A large plurality of it is sales & marketing. The next biggest chunk is R&D.
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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…
Put another way, you're suggesting that "public investors shouldn't have access to loss making companies, regardless of growth". That would eliminate not just tech IPOs, but a majority of publicly traded companies period . Only 2700 (out of about 7500) currently make the cut: https://finviz.com/screener.ashx?v=111&f=fa_netmargin_pos&ft... Like it or not, tolerating losses (preferably to accomplish growth!) has become…
No that’s not what I’m saying...there is a difference between a company that is registering for an IPO and an existing publicly traded company.
And let’s not pretend Tech companies IPOing at losses is somehow protection to small investors...I don’t see anyone clamoring to allow these small investor be allowed to get in on unicorns pre IPO.