
Slack Raises $160M Series E at $2.8B Valuation - cormacdriver
http://techcrunch.com/2015/04/16/used-daily-by-750k-workers-slack-raises-160m-to-value-collaboration-startup-at-2-8b/
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jayhuang
This is pretty surreal for me. I tried out Slack briefly when they first
allowed the public to request accounts. Made a mental note "cool", and moved
on.

The next year or so I started to see a lot more teams/companies that were
getting on the Slack hype-train, and now this.

Huge props to the team on this valuation but I'm still quite confused.

~~~
ebbv
We're in a serious bubble right now, IMHO. This valuation is based purely on
the fact that all the other hip companies are using it, along with the fact
that it is a good product.

Valuations _should_ be based on actual financials, but when it comes to tech
right now they rarely are. Which is the definition of a bubble, IMHO.

~~~
jayhuang
I feel similarly. Of course there are tons of people saying "no no no, it's
not a bubble", but historically, bubbles were never acknowledged until they
bursted.

~~~
dntrkv
"but historically, bubbles were never acknowledged until they bursted."

What does it mean when there are more people shouting bubble than those who
deny it?

~~~
ebbv
That particular metric means nothing. People like me saying there's a bubble
means basically nothing, because no VC is actually listening to my opinion.
Just like most commenters on here saying there isn't also means nothing.

But, there may (or may not) be a bubble going on despite this.

Ultimately whether it is viewed as a bubble in 10 or 20 years depends entirely
on whether enough investors get burned and burned big enough that they stop
investing, just like what happened in the early 00's.

------
RaphiePS
My favorite thing about Slack is how they've thought of all the little things.
My go-to example is that when they send you a notification email, it includes
links to silence further emails with a single click.

Obviously, this isn't a big "feature." It's not going to show up on their
marketing materials. Nobody will ever say "hey, you should try out Slack
because they let you silence emails." But it's this sort of UX philosophy, of
anticipating and cleverly solving tiny little annoyances, that make it a
really _pleasurable_ product to use.

~~~
nostrademons
Isn't this a legal requirement?

[http://en.wikipedia.org/wiki/CAN-
SPAM_Act_of_2003#Unsubscrib...](http://en.wikipedia.org/wiki/CAN-
SPAM_Act_of_2003#Unsubscribe_compliance)

Technically the law is only that you have to honor them within 10 days, but
I've seen a bunch of sites with one-click unsubscribe nowadays.

~~~
RaphiePS
It's not just unsubscribe. They let you turn off emails for an hour, a day,
etc. Really convenient if you're generally interested in notifications, but
just need a little break.

Another example: when you change your password, Slack will send you a special
link to sign-in on mobile so you don't have to type out your new password on a
tiny keyboard.

~~~
jffry
Sadly (though necessarily) that email-a-link thing doesn't work if you turn on
2-factor auth.

------
dntrkv
How did Slack blow up so quickly? I remember when I first read about it on
TheVerge, that same morning the head of our sales team messages the CTO and
suggests our company try it out. Next thing I know, every other company is
using it.

From my perspective, it went from nothing to huge success overnight.

~~~
petercooper
I'd certainly find some analysis of this interesting to read. Campfire was
popular throughout my more technical social groups up until a couple of years
ago but never came close to the intensity around Slack. I imagine having a
rather powerful free plan helped a lot, although Hipchat might disprove that.

~~~
ch4s3
Yeah, but the consensus seems to be that Atlassian ruined HipChat. I'm not
sure if that's true, but everyone I know that switch lists that as a top
reason.

~~~
optimusclimb
Been using HipChat for almost 3 years (so I believe, pre Atlassian, and post.)

It seems well suited to purpose, and works fine for me. The only gripes I have
are minor (for instance, their iOS offering has this infuriating behavior that
it will notify you for direct messages, and throw up the old red dot on the
app icon, but then provide no ability to see where the message came from when
you open the app.)

In light of how well it works, I am mystified as to how slack has managed to
come in to the exact same space and carve out such a massive valuation. If
there was ever an industry ripe for disruption, the "modern chat client with
goofy icons that allows you to post gifs and search your chats without arcane
IRC syntax" did not seem like one to me.

~~~
ch4s3
The search actually feels really nice. I'm mostly indifferent to them on the
web, but Slack native and on iOS is a bit nicer.

------
mherdeg
A friend shared the thought that Slack is a little bit of a scary company to
invest in because it was very easy to adopt.

"We had no trouble importing our historical message archive and just moving
over to this new chat system very quickly. I worry about the long-term
stability of this company because if something better comes along, it will be
equally fast to switch and never go back," he said.

I wonder about this. Will people move to the new, better thing and ditch their
existing product? Is that an existential threat to Slack?

I do know that the product IS pretty great and "team chat with searchable
archives" has been tough to get right for a long time. (Internal IRC servers,
IRCCloud, Campfire, Hipchat). But being technically excellent and fun to use
is no guarantee of success (soft spot in my heart for Zephyr and platforms
like Zulip).

~~~
temuze
I agree.

Slack needs to hustle right now and increase the barrier to entry. Not sure
how - integrations help. Maybe asynchronous communication as well?

~~~
31reasons
Some kind of machine learning based answering system that look like Stack
Overflow but answers come from analyzing chats!

------
jewel
Can someone with more experience comment on the terms of the investment
itself? Why would people invest in this company if they haven't even begun to
spend the $120M of their series D money yet?

For those of us outside of Silicon Valley who don't have the same funding
climate, what's it like?

~~~
bsbechtel
There's fear of missing out for the investors...every investor in Silicon
Valley wants to get in on the next Facebook or Google, and the investing
environment there is intensely competitive. For the entrepreneurs though, I am
left scratching my head as to why they would accept this money, given the
massive amount of risk and responsibility you take on when you accept this
money. If you don't need the money, why would you accept it when it has such a
high price?

~~~
ghshephard
Why do you think there is any more risk/responsibility in raising money in an
E-Round versus an IPO?

~~~
bsbechtel
Well, first it depends on the valuation, but that goes for any equity
financing round. But also, it depends on the type of investor you are taking
on, and their expectations for returns to fit in their profile.

Private investors tend to invest in higher risk/reward equities, meaning you
need to achieve higher growth rates to satisfy them. I am guessing many of the
companies raising massive private rounds now need to still grow significantly
before a liquidity event could justify the investor's investment (once you go
public, the pressure isn't as high to achieve 2-3x growth year over year).
Publicly traded technology stocks are expected to grow at most 20-30%/year,
without further diluting the equity pool. Every new private financing round
makes the pool a little smaller, meaning you still need to grow even faster to
achieve the returns required by your investors.

In addition, once you IPO, you have access to many other forms of financing
that are significantly cheaper than selling equity.

------
feverishaaron
For those that are confused about the value of Slack – It's not just about
text chat. It's about comprehensive search and combatting organizational
forgetfulness and knowledge drain. If we put it on Slack, it's archived
"forever" and a team member a few years from now can start with a Slack search
before re-inventing the wheel.

This is especially evident with the integrations. If just the relevant slice
of data is fed into Slack, it's easier to digest than running a full report in
another tool. And it's now part of the corporate history. So finding patterns
of endemic problems becomes much easier.

~~~
napoleond
_> It's about comprehensive search and combatting organizational forgetfulness
and knowledge drain._

They are far from achieving that vision. I agree that company-searchable chat
(and email) is valuable, but I doubt it will ever replace proper internal
documentation--any other approach is far too noisy, and without a lot of
context it's impossible to know if correspondence about an issue from two
years ago is still relevant today.

~~~
feverishaaron
Ah, but it searches inside files and any connected system as well. So If I
search for "Arc Code:500" it will show me any chats, any github pull requests
and any Google docs that mention that phrase.

------
SandB0x
Do platforms like Slack really offer a great benefit to a business? Maybe I'm
being cynical, but it seems that if you had a dysfunctional organisation then
this is not a silver bullet, and if you had a well functioning organisation
you would manage just fine with old fashioned tools like email and Dropbox.

> Support for private groups and 1:1 direct messaging gives you complete
> flexibility. Private things stay private, so just the right people see them.

If you haven't managed to work out how to implement this kind of communication
with email then aren't there bigger problems at your workplace?

There are other things that bother me, such as

> The “ambient awareness” that comes from increased transparency cuts down on
> the need for meetings.

> “We no longer wonder what’s happening on the front line, we know. It makes
> our relationships deeper because we discover things about each other and
> we're in touch with exactly what’s happening.”

So I now need to scroll through screens of idle chatter to try and figure out
what some other team is doing? Is this constantly pinging me while I'm trying
to work? Will every conversation descend into bikeshedding as every man and
his dog wants to offer his opinion on the new logo or product feature?

I've just never come across Slack in London yet, so maybe I'm yet to
understand what it's like in practice.

~~~
manigandham
It's just chat. We've had chat services for a long time, although the options
for biz/corporate/enterprise have traditionally sucked.

There is a lot of efficiency gained since emails can often be heavy and
include lots of extra wording, signatures, greetings, etc. There are plenty of
conversations that just move faster through a lightweight chat system.

Lots of companies were using MSN, Skype, Lync, Gmail, IRC, etc to do chat
before and now there's finally a better crop of tools like HipChat, FlowDock,
Slack and others. They all offer various abilities above just chat messaging
like APIs and integrations to get notified about various other things all in
the same place.

Is Slack a nice tool? Yes, it's finally a chat system that works for actual
business needs.

Is Slack worth this much and better than everyone else? Not sure, the other
ones mentioned are pretty good too and there are still lots of missing
features with all of them. $2.8B seems very inflated, but then again this is
Silicon Valley at work.

~~~
enraged_camel
>>It's just chat.

No, it is not "just chat." Chat is just one function. Slack basically brings
ALL of the information that is relevant to your team in one place. It has out-
of-the-box integrations with a TON of services, and all the data they are
sending to your team's Slack feed can then be search on, which provides
massive productivity advantages.

~~~
manigandham
So... it's just chat. With some integrations. I already stated this:

> They all offer various abilities above just chat messaging like APIs and
> integrations to get notified about various other things all in the same
> place.

Thanks for the confirmation.

~~~
enraged_camel
Just because the integrations present the data to the user in a chat interface
does not make it "just chat."

It's OK though. I know you're just being obtuse.

~~~
manigandham
How is that not chat? You didn't have this ability before (although more
manual)? What is so utterly amazing about this?

And no it doesn't bring "all the information" together, there's still plenty
happening outside of it.

Enjoy using it but we don't need all the abstract hyperbole.

------
chatmasta
Ignoring the question of "why are they valued so much," I have a more
immediate question... what do they need all this money for????

Capital costs are low and slack is probably cash flow positive. Why are they
raising a Series E for this much money? That's enough to pay for thousands of
employees.

They must have something up their sleeve beyond just chat. My theory is
investment is flowing into slack because enterprise was so quick to adopt
them, and slack now has its foot in the door at many of the largest companies.
This puts them in a position to compete with Dropbox, Box, and other
enterprise-focused companies.

Slack is playing in a field much bigger than corporate chat. They are a new
entrant into the enterprise platform wars and seemingly more agile than
Dropbox et al. I imagine investors are putting money into this advantage
position more than the slack product itself.

------
karangoeluw
For those wondering how/why Slack took off so fast, read this:
[https://qz.com/335321/slack-is-everywhere-growing-fast-
and-s...](https://qz.com/335321/slack-is-everywhere-growing-fast-and-still-
works-great-heres-how-they-did-it/)

------
bhc3
I've not used Slack. How does it differ from Yammer and Jive? I ask, because
those two work collaboration platforms have their own valuations. Yammer was
bought for $1 billion by Microsoft. Jive Software's current market cap is $404
million.

I'm curious what the key differences are that drive a $2.8 billion valuation
relative to the lower valuations of those two companies.

------
jalonso510
This is a case where I see the outrageously high valuation and really do think
it's reasonable. They're allegedly adding $1m in annually recurring revenue
every 11 days, which is just phenomenal for this young a product. They'll be
in range for an IPO in less than 2 years if they want. Slack has just really
nailed it and is moving really quickly.

------
czbond
A series E seems fairly late stage of a round for how young the company is...

~~~
richardlblair
As it says in the article, this was about taking money while the VC market is
hot. It's easy to get massive amounts of cash at crazy valuations right now,
so companies are raising what they can and putting it in the bank for a rainy
day.... or when bubbles burst.

------
nnoitra
How are companies like this valued so much, it's just a fancy chat computer
program. I don't understand the economics behind this.

~~~
espitia
Like this: [https://signalvnoise.com/posts/1941-press-
release-37signals-...](https://signalvnoise.com/posts/1941-press-
release-37signals-valuation-tops-100-billion-after-bold-vc-investment)

On a serious note: Remember it is a private financing round. VCs and parties
involved calculate based on current metrics future value of company. So,
although it may or may not be accurate, it is literally putting a value based
on other metrics. For all we know, it could all collapse in a year from now or
a lion's share of businesses around the world will be using Slack as their
main comms. platform in 10 and thus $2.6B wouldn't sound so bad.

------
asumanth
Huge props to the Team at Slack. They've made a great product. My personal
opinion is, tools like slack and others can get quite distracting with the
constant notifications. I foresee in the future where startups are doing
products that reduce/manage the "noise".

------
fra
I don't understand why so many businesses use a product with such a weak SLA
as their main mode of communication. Both Hipchat and Slack have terrible
uptime guarantees, and you should stay away from them.

~~~
tim333
Slack's uptime's been better than 99.995%. Communication failures due to some
guy not reading your email are probably much higher. I don't think the SLAs
are a big issue.

[https://status.slack.com/calendar](https://status.slack.com/calendar)

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mberning
It's a great product. Really enjoy using it. But with this much attention and
hype it makes me worried about who is going to come in and buy them and ruin
it.

------
sparaker
A pretty impressive product, good going!

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foobarqux
Did previous investors participate in this round? I can't tell from the
wording in the article.

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joelrunyon
What are they planning to do with the 160M? Didn't they just raise 120M in
October?

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georgespencer
Good for them. I don't use the product but they seem like great folks.

------
foolfoolz
who would have thought you could make a chat room in 2013 and become a
billionaire

~~~
zeeshanm
IMO, the cool thing about slack is integration with other services for "real-
time" notifications. At my previous job, we had this tool built internally in
irc chat room to notify whenever client connected/disconnected a session,
breached some risk limit, etc. It was super helpful to be on top of stuff in
real-time. And once you have something like this it's hard to let go of it.

