Slack S-1 • Hacker News Board

Re: Slack S-1

#331

Post by caprese » Fri, Apr 26, 2019, 7:05 PM UTC

will_brown wrote: post #260

evrydayhustling wrote: post #215

Earlier quoted context omitted.

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…

>you're suggesting that "public investors shouldn't have access to loss making companies, regardless of growth". 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 allo…

The answer is “yes, all industries where investors dont care about that”

and luckily for investors there is nothing else to invest in

Re: Slack S-1

#332

Post by zymhan » Fri, Apr 26, 2019, 7:06 PM UTC

xenospn wrote: post #263

cknoxrun wrote: post #206

Earlier quoted context omitted.

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.

I would assume the smaller companies are much more efficient when it comes to R&D.

And if they don't have a breakthrough drug, they go bust and investors lose their money and employees lose their jobs.

Re: Slack S-1

#333

Post by inkaudio » Fri, Apr 26, 2019, 7:09 PM UTC

toasterlovin wrote: post #286

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…

Slack has a huge opportunity in front of them (become the messaging platform for every business that exists). They’re investing a lot of money to acquire all of that business (salespeople, travel, etc.). That is literally one of the main purposes of capital and access to capital is why you would take a company public. And, specifically re: Slack. Unlike, say, Uber or Lyft, Slack has customers who have demonstrated th…

Slack has some customers that are willing to pay, there are millions of people who use Slack for free, Slack needs to find a cost effective way to cover those expenses. Slack service is not remotely unique, their competitors both large and small are profitable ie Basecamp/Microsoft/Google

Re: Slack S-1

#334

Post by TheSoftwareGuy » Fri, Apr 26, 2019, 7:14 PM UTC

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…

It's well known that you have to spend money to make money, as they say.

No investor worth their salt simply looks at past profits and decides right then and there whether a company is a good investment, because past performance alone does not predict future performance.

You have to look at the business and economic landscape, think about the business model and make a calculation about how compatible they are. This is especially important for companies recently founded.

Re: Slack S-1

#335

Post by fjp » Fri, Apr 26, 2019, 7:21 PM UTC

robhunter wrote: post #321

floatrock wrote: post #318

Earlier quoted context omitted.

> If you "depreciated" Slack's sales and marketing costs over the LTV of the average customer... This is starting to sound very similar to mark-to-market accounting, and the one word associated with "mark-to-market" is "Enron". From http://www.creditpulse.com/accountingfinance/lessons-enron/e... > Basically, mark-to-market is a type of accounting that enables a company to book the value of an asset or a liability, no…

Well, just like there are objective levels of depreciation for certain classes of assets (property vs. equipment), perhaps there could be similar levels of depreciation allowable for sales & marketing costs based on historic customer churn?

The property and equipment depreciation rates are codified in US tax law.

Re: Slack S-1

#336

Post by briandear » Fri, Apr 26, 2019, 7:23 PM UTC

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…

Public or private ownership has no relevance to profitability. If a VC can invest in a “losing” company, how is that any different than allowing public markets to do the same? The loss is priced into the stock and with a “losing” stock there is opportunity for upside just as much as a “winning” stock — the public ought to be allowed to be allowed to have a piece of that opportunity just as readily as private markets.

Re: Slack S-1

#337

Post by yalogin » Fri, Apr 26, 2019, 7:25 PM UTC

Slack is a much better investment than Uber, lyft and Pinterest. Not sure why google is not compettwith them yet. It’s proven that google cannot do consumer very well but services they do very well. May be the corporation focused service like slack is what they will excel at. Couple that with their other offerings it could work very well for them. Then again point being slack doesn’t have the kind of red flags the other recent IPOs

Re: Slack S-1

#338

Post by pbreit » Fri, Apr 26, 2019, 7:25 PM UTC

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…

Your question exhibits a lack of understanding of 1) IPOs (they are fundraising events) and 2) software (zero marginal costs = massive leverage).

Slack, Uber and Lyft can ==EASILY== turn a profit by slowing growth.

Re: Slack S-1

#339

Post by m0zg » Fri, Apr 26, 2019, 7:25 PM UTC

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…

How the heck does one spend $539.5M per year running something like Slack, that's what I'd like to know. It just doesn't seem that complicated of a service.

Re: Slack S-1

#340

Post by azernik » Fri, Apr 26, 2019, 7:25 PM UTC

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…

Fast growth skews all of those numbers, because there's a lag between marketing/sales spending and the ensuing revenue - especially for SaaS businesses where revenue is subscription-based, and typically trickles in over a period of years.

To figure out the long-term sustainability of a business, you therefore have to compare spending, revenue, revenue growth, and churn rate (or a more complicated measure which Slack is using in this filing, Net Dollar Retention Rate) in complicated formulas that I don't know off the top of my head.

(Net Dollar Retention Rate over time is one of their three "Key Business Metrics", reflecting its importance in determining steady-state viability.)