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Slack S-1

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Re: Slack S-1

#421

Post by freewilly1040 »

jvagner wrote: post #177
freewilly1040 wrote: post #163

Earlier quoted context omitted.

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.

Agreed. But if Teams comes with Office365, Slack may have trouble getting CEOs to pay more per-user monthly fees. And I pay for both Office365 and G Suite at my business, and Google just invited me to Currents. I know better than to dump something like Slack for any new (like, first 3 years) Google product, but... Slack's getting some real competition.

That’s fair and I agree that’s their biggest competitive threat. But investment wise that downside is mitigated by the possibility of being acquired

Re: Slack S-1

#422

Post by it33 »

not_a_moth wrote: post #419
ttul wrote: post #384

Earlier quoted context omitted.

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 wo…

Really? I know an org of > 2,000 people who recently switched away from Slack to the open-sourced Mattermost. I don't think Slack is untouchable. Overall point is considering other companies too with massive losses being pushed on the public feels like a trend, and maybe ominously represents a certain phase in a cycle.

Mattermost CEO here,

Thanks for the mention. Increasingly we see mention of "Slack or Mattermost" as part of DevOps stacks. In my mind, the space is growing quickly and there's room for multiple winners.

I'm excited about having more and more functionality people love available in an open source alternative.

Re: Slack S-1

#423

Post by nine_k »

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 can't help but note how inexpensive is that: less than $3/day.

If your company serves free coffee, operating the coffee machine likely costs more.

There's no financial incentive to leave Slack at this price point.

Re: Slack S-1

#424

Post by markmark »

KeenFox wrote: post #157
zedpm wrote: post #135

Earlier quoted context omitted.

Oh no, turn back while you still can. My team is in full revolt due to a company-wide migration from Slack to Teams. Teams is worse in almost every way. We're seeing lots of missing functionality, bizarre UI bugs, random crashes, extremely slow sync, you name it. Teams is in no way a viable replacement for Slack unless your use case is one or two plaintext messages per day.

It's a gamble: stay with Slack and potentially be forced into an "Our Incredible Journey" migration in the future, or migrate now and shamble along until 40+ year old and profitable enterprise juggernaut Microsoft figures out how to make their product work right. Neither option is great.

Microsoft will never make Teams great, it will be just good enough that corporate bean counters won't let you pay for a competitor when you already get Teams "free".

Re: Slack S-1

#425

Post by gruez »

fragmede wrote: post #346
moreira wrote: post #148

Earlier quoted context omitted.

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 beca…

Small slack teams are easily horizontally scalable; for a small team, the web server, the app server, and the db could probably run on a single EC2 instance, and AWS offers some rather large instance sizes. Lets start there, though. 70k stand-alone (paid!) slack teams means 70k stand-alone systems. How do you operate, well, all of them, simultaneously? With one mammoth central database, there's one database to upgrad…

>so in some sense, Slack is paying AWS a premium to not pay them for unneeded resources at 3:30 AM.

If you're running a server for 1/3 of the day (8 hours), you're probably better off using dedicated instance (60% discount with 3 year reservation) than trying to optimize around on-demand instances (66% discount with perfect allocation, ignoring the engineering cost). The economics are even worse if you consider imperfect allocation, or consider self-hosting (probably cheaper if you're as big as slack).

Re: Slack S-1

#426

Post by rorykoehler »

Spivak wrote: post #305
mbesto wrote: post #290

Earlier quoted context omitted.

Guess what? You can actually see in an S-1 what it costs. S&M = $233,191 for 2019 More than half their revenue is spent acquiring new customers...which, with a high likelihood, will net revenue over a N+1 year timeframe. This is an investors wet dream... I pay $1 now and I only need $.15 to operate that $1 every year for the next 7 years...that's a helluva return. In other words...you can turn off the S&M tap and the…

I think your point still stands but some of that S&M can never be cut because of churn and is highly susceptible to interference from competitors. Slack doesn't have that much lock-in and a lot of people have their sights on that market -- "Cheaper than Slack and bundled with Office365/G Suite" is an extremely tempting offer.

From my experience slack also has negative churn. People get used to it and automatically choose it the next time. You are correct about potential threats though.

Re: Slack S-1

#427

Post by rorykoehler »

dd36 wrote: post #376
mbesto wrote: post #290

Earlier quoted context omitted.

Guess what? You can actually see in an S-1 what it costs. S&M = $233,191 for 2019 More than half their revenue is spent acquiring new customers...which, with a high likelihood, will net revenue over a N+1 year timeframe. This is an investors wet dream... I pay $1 now and I only need $.15 to operate that $1 every year for the next 7 years...that's a helluva return. In other words...you can turn off the S&M tap and the…

What R&D does slack do to the tune of hundreds of millions per year?!? What G&A is over a hundred million a year? Do you use Slack? Yes, they have a boatload of fat to trim. They can pull an Etsy move but is that not already baked into their valuation? I, frankly, don't care enough to look as I won't be investing. I just cannot believe their VC investors let them get that bloated - it's probably why they're pushing f…

The stickiness comes from the switching costs. We have so many integrations and while setting them up again isn't insurmountable it's a great example of unproductive busy work. Why bother?

Re: Slack S-1

#428

Post by rorykoehler »

bryanmgreen wrote: post #415
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…

Two points: 1) I am 100% in alignment that companies should NOT IPO with losses. With no evidence or education to back on this, I'll just say I feel the opportunity for non-professional investors to put money into such unstable companies is an enormous risk - not just for themselves, but the economy as a whole. Maybe there needs to be a separate market for loss-leader investing. 2) With SAAS companies in particular,…

If they did 2)it would muddy their metrics and design feedback loops. The way it is now they can better understand their power users

Re: Slack S-1

#429

Post by scarejunba »

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…

Dude, why don't you just not invest and leave the rest of us to lose our money? If I want to capitalize someone I should be allowed to. The accredited investor thing is already bad enough.

Re: Slack S-1

#430

Post by quicklyfrozen »

moreira wrote: post #158
WestCoastJustin wrote: post #121

Earlier quoted context omitted.

Much of this goes into geo redundancy too. These 10M people are not in one place. So, you need redundant highly availably deployments in many regions. This does add lots of infrastructure duplication but is also super speedy for end users. This adds to the cost big time! For example, I was working with a gaming company and they had 10+ regions around the world, all using this type of setup, just to keep latency to an…

There's a big difference, though; they're not all connected. Each team is its own separate entity. A team with 10 people might pay Slack $100/mo, and all be in the UK. Those people and that Slack team's database doesn't need to interact with anyone else in the system. There should be no big scaling constraints here, unlike your gaming company, where everyone needs to be connected from anywhere in the world, at the lo…

My company is not particularly big but just in my team of a dozen or so we have members in Boston, Australia, Phoenix, and Seattle, and regularly deal with those in London, Tokyo, etc. It's not that unusual; in fact it's part of the reason Slack (and Hangouts) are so important.
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