
Why Messaging Startup Slack Keeps Raising Money It Doesn’t Need - petethomas
http://www.bloomberg.com/news/articles/2016-03-15/why-messaging-startup-slack-keeps-raising-money-it-doesn-t-need
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taneq
Because if they keep raising money then their valuation keeps going up, and
people will think they're a good investment and keep giving them money based
on their rising valuation. There's a word for that kind of structure.

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gkoberger
"Venture Capital"?

(I know that's not the P word you're going for, but alas...)

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nickpsecurity
I always thought it was close enough in many times in practice. ;)

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ajmurmann
IRC -> Campfire -> Hipchat and now Slack. I don't understand why large parts
of the industry made these transitions, but it seems like for some reason we
like to collectively abandon one chat solution and move on to the next hip
one. Not sure why that will be different. I am not seeing Warren Buffet's
famous moat and am thus not bullish on Slack.

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ianremsen
I still really do not get why technical people don't just use IRC with a
decent client (Hexchat?)

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jypepin
because businesses don't have only technical people, and you don't want to
have multiple chat systems, which will eventually bring worst communication
between different groups of people. If technical people are on IRC and all the
other people are on hipchat, how do you make the 2 groups communicate?

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twblalock
Plus, the fact that someone is technical does not always mean they want to
fiddle with getting chat systems working. None of the engineers in my
department would be willing to mess with IRC when Hipchat and Slack provide
turnkey solutions that just work, the first time you open them, and require no
configuration or special treatment.

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redwood
This just means that the slowdown that everyone is anticipating this year has
not yet set in across-the-board or across all Institutional Investor segments.
Thesefolks at Slack will probably represent the last major round before
everyone starts thinking "what have I done?".

At this point I think a lot of the larger rounds are not even being publicized
because they'd be so ridiculed.

I understand raising money if you get amazing terms. But the hubris of a chat
company with this kind of overvaluation boggles my mind

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MBlume
...isn't this what an IPO is for?

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pori
In a world that makes sense: probably. Keep in mind, Slack is not only raising
money because it can but also because the public markets would throttle it
like the companies had been in 2015.

That said, Butterfield's move to raise more money simply to be attract more
recruits sounds completely crazy. But hey, it's only crazy if it doesn't work.

He seems to understand the awkward position his company is in. As covered in a
TC article, Butterfield is prepping his company for the public markets even
though there are no real plans to do so. This is evidenced by the near
profitability Slack has now.

Link to relevant article:

[http://techcrunch.com/2015/11/24/ready-to-
pounce/](http://techcrunch.com/2015/11/24/ready-to-pounce/)

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emcq
What I find confusing is that he says compensation is crazy at companies like
Google, where employees can sell their equity on a public market with an
expected value significantly above zero. Does this mean they are fundraising
to pay their staff more in salary, or hoping that repeatedly diluting their
private stock somehow makes Slack preferable?

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mchahn
Continually raising money means the current stockholders, including people
recently hired,are being diluted and are seeing their percentage shrink. This
won't matter in the short term as the valuation soars, but it definitely will
matter when the company matures and the end value is worth less.

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encoderer
Well, the idea is that employees will own a little less of a company that now
has $150MM more on it's balance sheet.

