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Slack S-1

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Re: Slack S-1

#381

Post by yeahitslikethat »

nugget wrote: post #288
will_brown wrote: post #260

Earlier quoted context omitted.

>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…

>I don’t see anyone clamoring to allow these small investor be allowed to get in on unicorns pre IPO Really? This sentiment is blanketed all over HN and other investment forums. One of the major macro changes to the investment landscape is rapidly growing companies staying private longer such that the gains benefit a much smaller pool of investors.

Doesn't everyone want the option to get in on these deals before they've been pumped and dumped?

WE know the truth. The ipo buyers don't.

Re: Slack S-1

#382

Post by ttul »

IanCal wrote: post #226
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…

I either wildly underestimate the cost or the scale of building slack, am I reading that right that they've spent well in excess of a billion dollars in the last few years?

You aren’t wrong. But keep in mind that these are all recurring revenue deals. The $400M is highly likely to recur next year or even increase - even if they don’t close a single additional customer.

SaaS companies talk about “lifetime value” which is a fancy name for the net present value of future cash flow from each customer. What if today’s $400M will recur for ten years? That warrants a value of $4B just on today’s customers. But if the growth can be sustained for a few more years, maybe by 2022 they’ll hit $1.5B/yr... that’s the gamble investors seem ready to take.

Re: Slack S-1

#383

Post by dd36 »

dmoy wrote: post #259
dd36 wrote: post #235

Earlier quoted context omitted.

My thought as well. What on earth about Slack costs hundreds of millions to operate?

This is literally described in the S-1. A large plurality of it is sales & marketing. The next biggest chunk is R&D.

Right. What R&D is slack doing that requires hundreds of millions of dollars? Or G&A? No wonder their investors are cashing out. They see that there are limits else they'd keep riding this as a private company.

Re: Slack S-1

#384

Post by ttul »

not_a_moth wrote: post #301
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…

I see the counterargument, but we are still pushing companies onto the public that are losing copious amounts of money. Part of me wonders if we aren't witnessing the irrational exuberance before the (cyclical) fall.

This is not irrational exuberance. Slack makes a very sticky enterprise product with tremendous network effects. It’s hard to get rid of because it integrates with all sorts of other things within the enterprise. The value of chat is unlikely to diminish anytime soon. Losing money today to acquire customers who will stick around for years is a great idea. In fact, to move for profits today at the expense of growth would be foolish.

Re: Slack S-1

#385

Post by kgwgk »

pbreit wrote: post #338
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…

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.

Note that Slack's "IPO" is not a fundraising event and Uber and Lyft have marginal costs which are far from zero. (I'm not sure Slack is a "software" company, but Uber and Lyft definitely are not.)

Re: Slack S-1

#386

Post by jonnycomputer »

jonnycomputer wrote: post #18

Could someone briefly explain the significance of this filing.?

This comment definitely deserved -1 net votes because it was asking for information that I could have definitely spent a whole bunch of time figuring out for myself instead of asking others for help.

Re: Slack S-1

#387

Post by scarface74 »

thegranderson wrote: post #137
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…

There are many industries where this happens. Biotech and drug development is particularly prolific in this regard. Often drug development companies spend tens to hundreds of millions creating a drug, only to have the whole company bought out by a large pharma company once it passes a certain testing/approval milestone. No profits for the company at all. [1] Just because a business doesn't turn a GAAP profit doesn't…

I would say a “large part of the market is made up of institutional investors”. 45% and growing of the market is made up of passive index funds.

https://www.cnbc.com/2019/03/19/passive-investing-now-contro...

Re: Slack S-1

#388

Post by kgwgk »

FPGAhacker wrote: post #370
dahdum wrote: post #314

Earlier quoted context omitted.

They quadrupled their revenue while keeping their losses flat in just 3 years, for a sticky high margin enterprise product. With just modest revenue growth they'll be able to optimize towards profit whenever they choose.

Since we are talking about net losses being flat, it means their expenses are going up as fast as their revenue.

Expenses are growing "as fast as revenue" in millions, but "slower than revenue" in growth rate (percentage).

Re: Slack S-1

#389

Post by [deleted] »

raldi wrote: post #229
fratlas wrote: post #13

Earlier quoted context omitted.

I've been seeing a lot of calls about this incoming downturn (especially HN), does anyone have any articles/analysis they can point me to? Would love to read up on the state of it.

Sure, here's a 2009 HN thread all about the impending market crash: https://news.ycombinator.com/item?id=712198 And one from 2011: https://news.ycombinator.com/item?id=2868728 And here's one from 2012: https://news.ycombinator.com/item?id=3947923 Here's one from 2014: https://news.ycombinator.com/item?id=8338411 And here's one from 2016: https://news.ycombinator.com/item?id=12218583

[deleted]

Re: Slack S-1

#390

Post by scarface74 »

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 a huge opportunity in front of them (become the messaging platform for every business that exists).

Isn’t that pitch what every startup tells investors?

“We only need to get a small share of this very large market”

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