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Slack S-1

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Re: Slack S-1

#441

Post by Danieru »

floatrock wrote: post #318
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…

> 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…

What you are describing is Mark to Model not Mark to Market. Mark to Market is what banks use and has little room for cheating. Mark to Model was banned after Enron.

Re: Slack S-1

#442

Post by shostack »

BurningFrog wrote: post #154
CSMastermind wrote: post #8

Earlier quoted context omitted.

The market is going to crash and everyone wants to cash out before it does.

What specifically will make the market crash?

The GOP's tax heist that has led to dumping rocket fuel on an already insanely hot market, leading to stock buybacks that give the illusion of growth and mask warning signs, coupled with removing the safety net of having the ability to reduce taxes when things do start declining.

We're in for a rough one, and it is VERY intentional this time.

Re: Slack S-1

#443

Post by yeahitslikethat »

tomc1985 wrote: post #439
yeahitslikethat wrote: post #381

Earlier quoted context omitted.

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.

Not sure why you're being downvoted. Most of the major IPOs of the last few years seem to follow that hump-into-oblivion pattern after public markets get in on it

I get down voted a lot. It's fine. People here don't like what I have to say. Little debate. Just down votes. I speak the true tho.

Re: Slack S-1

#444

Post by shostack »

cosmie wrote: post #84
adamw2k wrote: post #32

Surprised at Sales and Marketing expense given the low number of Enterprise (>$100k) contracts. Wonder what's baked in there beyond AE compensation? I don't see a whole lot of traditional advertising, but maybe it's out there?

They're doing quite a bit of TV advertising[1]. Production and flighting costs on commercials, at a global scale, isn't going to come cheaply. [1] https://www.ispot.tv/brands/Zyh/slack/

Wish there were some data available on the efficacy of it for them. As a marketer, broadcast is always an interesting one to watch as budgets shift to digital.

Re: Slack S-1

#445

Post by pbreit »

kgwgk wrote: post #385
pbreit wrote: post #338

Earlier quoted context omitted.

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.)

While Slack's IPO is very unique, it is indeed raising money. Uber & Lyft book driver incentives as marginal costs but that's about it. Of course they are all software companies.

Re: Slack S-1

#446

Post by kgwgk »

pbreit wrote: post #445
kgwgk wrote: post #385

Earlier quoted context omitted.

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.)

While Slack's IPO is very unique, it is indeed raising money. Uber & Lyft book driver incentives as marginal costs but that's about it. Of course they are all software companies.

From the S-1:

"USE OF PROCEEDS

Registered Stockholders may, or may not, elect to sell shares of our Class A common stock covered by this prospectus. To the extent any Registered Stockholder chooses to sell shares of our Class A common stock covered by this prospectus, we will not receive any proceeds from any such sales of our Class A common stock."

From Uber's S1:

"Cost of revenue, exclusive of depreciation and amortization, consists primarily of Core Platform insurance expenses, credit card processing fees, hosting and co-located data center expenses, mobile device and service expenses, amounts related to fare chargebacks and other credit card losses, excess Driver incentives, and costs incurred with carriers for Uber Freight transportation. Core Platform insurance expenses include coverage for auto liability, general liability, uninsured and underinsured motorist liability, and auto physical damage related to our Ridesharing products and Uber Eats offering. Excess Driver incentives are primarily related to our Ridesharing products in emerging markets and our Uber Eats offering. [...] As trips increase, we expect related increases for insurance costs, credit card processing fees, hosting and co-located data center expenses, and other cost of revenue, exclusive of depreciation and amortization, categories."

Cost of revenue was in 2018 $5.6bn (out of $11.3bn of revenue). The also provide "adjusted net revenue" excluding among other things excess Driver incentives and Driver referrals: in that case the cost of revenue is $4.3bn out of $10bn.

Uber's gross margin is below 60%.

Re: Slack S-1

#447

Post by sjy »

TheGRS wrote: post #315
Spivak wrote: post #305

Earlier quoted context omitted.

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.

Maybe, so far I've been in a few situations where we didn't go with Slack...only to go back to Slack. Part of the lock-in is their brilliant multi-org client. I can easily go back-and-forth between my company, a contract's IM, an alumni group of people in my last job and a group of local artists that like to talk to each other. Hell I've thought about luring most of my close friends from Facebook onto Slack. Their AP…

Do all your contacts work in the tech industry? I'm wondering if we're really backwards here in Australia, or if I've just had bad experiences. Slack-style messaging seems really uncommon outside tech, even though traditional AIM-style IM is used everywhere. I think a lot of enterprises could benefit from capturing corporate knowledge in searchable Slack channels, but the only teams I see using them are doing IT and software.

Re: Slack S-1

#448

Post by plankers »

icedchai wrote: post #146
blantonl wrote: post #66

Earlier quoted context omitted.

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?

People said bitcoin was a bubble. Can't wait to see the excuses and rationalizations when this one pops.

Re: Slack S-1

#449

Post by skinnymuch »

ummonk wrote: post #213
screye wrote: post #54

Earlier quoted context omitted.

I can see that happening. Loss making unicorns go public -> investor pressure builds to reach profitability -> none of them can deliver on promises in the short term -> public does not want to own these stocks anymore -> causes a frantic selling spree -> market crashes.

Well, Zoom is already profitable and Slack could easily go profitable. But yes, the tale is different for AirBnB, Lyft, and Uber.

Airbnb is profitable. It has been since second half of 2016. Or at least close enough to profitable depending on the metrics you want to account for.

https://www.marketwatch.com/story/airbnb-made-its-first-prof...

https://www.bloomberg.com/news/articles/2019-01-15/airbnb-sa...

Re: Slack S-1

#450

Post by johncolanduoni »

linuxftw wrote: post #197
scrollaway wrote: post #82

Earlier quoted context omitted.

Cool, 10000 more of those boxes and you can rebuild slack "in a weekend for $35k/month". Don't mind the lawsuits when you lose your customer data and forgot to pay for backups for "cost optimization" reasons. Don't mind the complaints when your uptime is barely one-nine. Don't mind the customer cancellations when your 1000-user VPS doesn't actually scale to 20k concurrents. And don't mind the HN snark when you releas…

I think you're being overly negative. I think you can do a lot with a little. Does a chat app need to be fully searchable? I don't think so. Does it need backups? I don't think so. These are features users could opt-in for if it was that important to them. Could be something simple as sending encrypted nightly diffs to an email address. The whole world doesn't need to be over engineered to have a useful product.

> Does it need backups? I don't think so.

When all the communications of you and your coworkers suddenly aren't there the next morning, you might think so.

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