
Slack Is Raising $250M from SoftBank, Others - Element_
https://www.bloomberg.com//news/articles/2017-07-26/slack-is-raising-250-million-from-softbank-others
======
grandalf
It's amazing to me that Slack has been so successful, considering how so many
other alternatives exist.

I've found several very annoying bugs in the OSX Slack client, and each time I
wait a few months before trying it again, yet more bugs continue to occur.

It's impossible to un-join a team via the OSX app, or to remove a team that
you partially created. Also, updates frequently force a logout and the
password reset procedure is quite clunky.

I finally realized that the web version works pretty well so now I just use
that when I need to use Slack.

I know this makes me sound old, but I really wish popular open source projects
would just stick to IRC as it just works and doesn't require any proprietary
client (and isn't trying to turn into video chat, screen sharing, etc.) Or I
suppose I wish Slack would make its ecosystem available via IRC.

~~~
tabbott
> I really wish popular open source projects would just stick to IRC as it
> just works and doesn't require any proprietary client

IRC isn't a credible alternative for most users in 2017. It stagnated ages
ago, which is obvious from problems like the fact that you can't even write a
multi-line message.

My personal opinion is that Slack has been so successful primarily because
nothing older than it (IRC, Campfire, HipChat) was a decently modern product
by the time Slack launched and Slack was really good at marketing.

Personally, I'm trying to solve the problem of open source projects
increasingly moving to Slack by working on Zulip, the leading open source
alternative to Slack by contributor activity. Here's our story for why one
should prefer Zulip to Slack for fellow open source projects (written a few
days ago; feedback welcome!): [https://zulipchat.com/for/open-
source/](https://zulipchat.com/for/open-source/)

~~~
distances
> My personal opinion is that Slack has been so successful primarily because
> nothing older than it (IRC, Campfire, HipChat) was a decently modern product
> by the time Slack launched and Slack was really good at marketing.

I disagree about the decent competitors -- there is e.g. Flowdock which in
many ways (such as proper threading) is _still_ better than Slack, and was
doubly so back then. I think it's more about access to VC money and network
effects, and indeed the successful marketing you mentioned.

~~~
ThomPete
Flowdock was a more opinionated service and that was IMO to it's detriment.
It's primary usage wasn't internal communication but rather communication
around social media.

Slack took the simplicity of IRC and gave it a modern interface with things
like showing a preview when you link. easily share files etc.

~~~
distances
> It's primary usage wasn't internal communication but rather communication
> around social media.

What makes you think that? I don't see any connection between Flowdock and
social media. As far as I can see, it's purely an internal communication tool
with easy file sharing, hooks for external services as GitHub, and so on.

~~~
ThomPete
As far as I remember it started as that. But maybe that's not accurate. I just
remember them pushing how twitter could be monitored and then important tweets
could be send around the organization to deal with them.

~~~
distances
That feature is a flow (or channel) specific "inbox". You can add different
sources such as e-mail, GitHub pushes, CI results, or the Twitter you
mentioned. Basically looks like an in-channel RSS feed of different sources.
Personally I love the feature.

A neat thing is that you can start a discussion thread from any of these
items, so the context of the discussion is clear.

~~~
ThomPete
Oh I like FlowDock a lot was just trying to explain how I believe Slack won
over it by being less opinionated about how it approaches conversation. It's
IRC core functionality and then apps on top for specific needs.

Flowdock went a little further ahead when it came to how they constructed the
base communication.

------
coleca
We've been paying customers of Slack since the beta. In general the experience
has been great. Although I do worry that with a huge funding round it will
bring more employees and those employees will need stuff to do. There's only
so much you can do with a chat platform, and Slack eeked out a ton of value
out of it early on. What I'm seeing now is features being added or reworked
seemingly just so someone has something to do. I see Apple falling into this
pattern too (mDNSresponder being replaced by DiscoveryD for example).

For example, IMHO one of Slack's best features from the beginning was on the
iOS app when you clicked the button to upload a photo you were presented with
"Last Photo Taken", "Camera Roll", or "Take a photo". That "Last Photo Taken"
button was genius. Simple and I found 90% of the time was what I wanted to do,
and it just worked. In one of the last revisions of the iOS app, they removed
that feature and replaced it with a newer redesigned photo picker. The new
photo picker is riddled with bugs and a good percentage of the time fails to
upload the photo at all for most of our paid team members. Some have resorted
to using the desktop app to send a photo after transferring it over from their
phone. When Slack was a small scrappy startup I'd open tickets and spend the
time w/them to get them the information they needed to debug various issues,
but now that they are at this scale and size I can't be bothered.

~~~
moretai
When a company like Slack gets all this money, can they decide to not spend
the money? Like you said, what else could you really add? Why do companies
find the need to expand?

~~~
jasode
_> When a company like Slack gets all this money, can they decide to not spend
the money?_

Not really.

E.g. The firms investing $250 million basically would like to see ~3x return
or more on their money. The want their $250 million to turn into ~$750
million. That's the whole point of _investing_.

If Slack simply parked $250 million in the bank for 1% interest rates, that's
something Softbank could simply do themselves. If Softbank can buy $250
million treasury bills for 1% return, there's no need to give Slack $250
million to do it for them. Besides, VCs like Softbank can't survive on 1%
returns; they're hoping for ~20%+ returns.

Instead, Slack is supposed to put that $250m to productive use and make the
company more valuable. This makes more money for everyone including investors.
(This doesn't mean Slack spends the $250m all at once though. Softbank and CEO
Stewart Butterfield probably had long discussions on the strategic uses of the
potential capital. Presumably, Softbank agreed with Butterfield's vision which
is why they invested.)

~~~
amelius
> E.g. The firms investing $250 million basically would like to see ~3x return
> or more on their money.

That sounds more like a loan with very high interest then.

~~~
jasode
Well, a loan would have set terms and schedules of repayment and default.

For investors, the 3x & 20% figures I gave are not formalized terms of
payback. Instead, they are _desirable financial targets_ for the investor so
they can be considered a prestigious firm that attracts capital from more
limited partners. Slack won't be in "default" if they provide 0% return to
Softbank. However, future limited partners like university endowments or
police/firemen pensions will avoid underperforming VCs that deliver low or
negative returns. (If VCs don't perform to expecations, the market will punish
them and they will shut down.[1])

To trace the causal chain, VCs want 20%+ because your grandmother and her
pension plan investing in the VCs want 20%.

[1] [http://www.businessinsider.com/death-of-venture-
capital-2011...](http://www.businessinsider.com/death-of-venture-
capital-2011-2)

------
thinbeige
OT: I am the only one who thinks Slack is overrated?

There are use cases where a group chat is important and crucial but almost
every chat product out there has a proper group chat. Even with weaker APIs
than Slack they are still ok to use. Moreover:

\- Slack is the huge distraction and greatly improves ADD

\- The admin UI is like a forest full of trees, slow, crowded, littered with
settings and options, has more pages than Wikipedia, finding the right setting
is a ten minutes task if you are not used to Slack; this is my major gripe
with Slack which drives me nuts every time

\- Why do I have to create new accounts with email verification with every new
Slack channel?

\- While people post a lot of crap on Slack (memes, gifs, jokes) important
stuff is still handled over email or respective ticketing systems; so now I
have many topics in Slack, email and Trello

\- Slack is def. good for socializing but again--every other group chat is
good enough for socializing

\- Ok there is second use case: echo chambers for token ICOs and obviously
there are many at the moment

\- As a side note: 95% of startups and SMBs use G Suite/G Mail as their mail
server which includes Google Chat which has group chat and all the features
95% of us need, which is integrated in everything (such as the address book or
search works seamlessly with chat and email messages); why aren't folks just
using this? Why the hassle of setting up another tool, setting up roles, team
members in the horrible admin pages of Slack? Just to have an ADD powerhouse
called Slack in the company? I really don't get it and if I miss something
please enlighten me, I want to understand why I need Slack

With their market share and their API they have reached a nice network effect
without a doubt. But the question is, is it a winner-takes-it-all market and
will they ever find somebody who will buy them at that valuation.

~~~
IceDane
No, I also think it's massively overrated. I hate the interface, how I have to
login and create accounts for each channel and so on. I'd rather just use
discord tbh, but IRC is simplest.

What in earth is some glorified chat room software going to do with enough
money to have an impact on a small country's economy? It's insane.

Someone argued elsewhere in the comments that IRC and such is inaccessible for
normal users. Sure, but who are the people that are using slack? Definitely
not normal users. I don't think slack will last only catering to developers
and such, because for example discord has a massive user base of average janes
and joes and I honestly can't see what slack offers that's better.

~~~
epicide
> I have to login and create accounts for each channel

No you don't. It's per "team". Assuming that's what you meant: how many teams
do you honestly use? Sure, it's not ideal for a bunch of little communities.
As you said, Discord is good for that.

For a business, I haven't seen anything that even compares with Slack. I'm not
sure what you consider a "normal user" (I'd argue that there is no such
thing). If you mean non-technical users, then there are plenty of non-
technical users in a business that need to communicate. For most businesses,
they outnumber the technical people and rely on good communication tools more.

For work, Discord would be terrible for me since I can't have more than one
username (to my knowledge). I want to keep my personal chats/username/status
separate from my work ones.

Different people need different solutions.

BTW I'm focusing in on the business use case as that seems to be who Slack
targets. They are trying to sell to people that have used Skype and Lync (or
whatever they are calling it this week) and hated it.

EDIT: also, building a decent chat app is a very difficult problem. I imagine
they will use that money to maintain the various clients they have and try to
keep adding communication features (as they have been doing).

~~~
geostyx
You can set a separate nickname for each server.
[https://support.discordapp.com/hc/en-
us/articles/219070107-S...](https://support.discordapp.com/hc/en-
us/articles/219070107-Server-Nicknames)

------
logogoto1
So much hate for an app that has tried to replace (and done a damn good job)
for really bad chat clients FOR BUSINESSES.

At least for Silicon valley, really we want to go back to AIM, Yahoo
Messenger, Lynx, IRC (the latter is possible I guess).

For engineering sure we can do IRC...but really sales/marketing/HR? No.

Slack is not perfect...but they have done a pretty damn good job hitting 90%
of most tech company needs.

(Omg there is even an API)...c'mon give em some "slack"

------
djhworld
I like Slack as a product.

I don't like how some open source and general interest communities use it for
communication, as you have to go through this awkward sign up process that
describes language like "welcome to the team!" and you have to set individual
passwords for each team you join.

Slack seems to me like it's designed for businesses and teams to communicate,
not as a public forum.

~~~
Kiro
Yeah, Discord is much better in that sense.

~~~
lewisl9029
Interestingly enough, Discord errs on the other side of the spectrum by not
providing a good story for segregating personal/work identities:

[https://feedback.discordapp.com/forums/326712-discord-
dream-...](https://feedback.discordapp.com/forums/326712-discord-dream-
land/suggestions/10492779-support-multiple-accounts?page=1&per_page=20)

~~~
geostyx
Though you can have a different nickname for each server:
[https://support.discordapp.com/hc/en-
us/articles/219070107-S...](https://support.discordapp.com/hc/en-
us/articles/219070107-Server-Nicknames)

------
neya
I was recently pissed off at seeing how many open source projects use Slack
despite so many issues with it.[1]

Like others have mentioned, I tried several chat clients (open source and non-
open source) and realized none of them fit the bill/don't have the
customizability that I wanted.

So, as stupid/crazy as this sounds, I sat down over a weekend, wrote a simple
chat app on Phoenix/Elixir, hosted it on Google Cloud AppEngine, and Bingo! We
were done. I know many people will advise against this, but:

1) I'm not into devops, so this setup works really well for me since AppEngine
is precisely meant for this.

2) AppEngine allows you to setup firewall rules within their interface, so I
restricted access to the outside world and whitelisted only my company's IP.
So, I don't really need to worry about security much.

3) Because, this is a custom solution, I was able to integrate stuff such as
time tracking, verifying that confidential docs aren't shared between teams,
etc. Also, our own custom branding, client support integration within the chat
(you can answer to support tickets right from within the interface).

4) I enjoyed the experience thoroughly and it integrates with my entire Saas
I've developed[2] very, very nicely.

Ironically the Phoenix open source project (and similar others) themselves use
Slack (why god, why?) and it's really terrible because Slack doesn't allow you
to search for more than 10,000 messages. That's the last thing you want in an
open source project - the inability to search for solutions / snippets of
code.

Hope they move it else where or did what I did.

[1][http://sircmpwn.github.io/2015/11/01/Please-stop-using-
slack...](http://sircmpwn.github.io/2015/11/01/Please-stop-using-slack.html)

[2][https://news.ycombinator.com/item?id=14785209](https://news.ycombinator.com/item?id=14785209)

~~~
brogrammernot
That's an interesting use-case. I'm curious if Slack would find open-source
work compelling enough to grant a free license for searching messages. I do
know for non-profits they offer free standard plan for up to 250 people and
85% off their pricing for those above the 250 person limit.

Any chance you mind sharing that code on GitHub? I've been curious about
Elixir/Phoenix lately :)

~~~
neya
Sure! I plan to Open Source it soon :)

------
nuggien
$250m for about 5% of the company, reminds me of when microsoft got 5% of
facebook in an investment. Somehow I don't think this will end as well for
softbank as it did for microsoft.

------
inthewoods
I think what Slack got right was the on-boarding/time to wow. In a sea of
vanilla, sterile enterprise products was this tool that just seemed to be
having fun with it. For small companies, particularly in the SF area, it felt
like it understood their vibe. For larger companies, it felt like they were
joining the cool kids. My team uses Slack now and honestly, it's nothing
_that_ special. It's a chat room. It's done well and has nice integrations
(that's their product moat), but adoption is so key and they nailed that.

~~~
jernejzen
I think Slack is that kind of product that would never happen outside of the
SF. A well know founder with an access to the capital, marketing machinery
machinery and critical mass of early adopters. I like Slack and I use it but
it's just because others also do. Otherwise I don't find it as amazing shift
for the quality of my life or work.

------
te_chris
Just let me block people and bots. Absurd that you can't. I emailed their
support and got the most weak, SV response possible: 'If you need to block
people then that shows you have a communication problem'. F-the-F-off. If we
want to block people or bots who are annoying or irrelevant to us, let us!

~~~
Cthulhu_
Slack channels are hard to get into; if you've made it open via e.g. one of
those auto inviter bots, you've done it to yourself. Slack is not built for
big / open communities.

~~~
te_chris
Who said I was talking about open communities? I don't care if someone moves a
Trello ticket, e.g. on some projects, but I do want to still be able to talk
about the project in the channel.

~~~
mateuszf
Then you can use the "mute" feature

~~~
te_chris
Mute the whole channel because slack won't just let me mute a user? That's
ridiculous UX.

~~~
epicide
"Bad UX" gets thrown around like "bad customer service" in retail: usually, it
really means "fix my problem before I've even tried to solve it myself" and
then throwing a tantrum when that doesn't happen.

------
phantom_oracle
Why does Slack need the money?

~~~
portman
>> _Slack will also let employees and other shareholders sell equity to
investors as part of the deal_

Translation: partial liquidity for founders and early employees.

~~~
Kiro
So that means not all of the $250M is going into the company? How common is
that?

~~~
marcins
Common enough, Atlassian did the same thing a few years before it's IPO - in
this case all the money went to employees:

[https://www.atlassian.com/blog/archives/atlassian_closes_60_...](https://www.atlassian.com/blog/archives/atlassian_closes_60_million_investment_from_accel_partners)

------
120bits
When I first heard of slack, I signed up right away and pitched the idea to my
supervisor to move to slack. It has all we need. The idea was turned down. But
I still wanted to try it out. So, I setup a slack for my family. It has been a
great experience. I have multiple channels, trips, events and all. My parents
enjoy it. I get asked why not use "Whatsapp Groups". I did tried it, but I
felt Slack was a better and I really dont like to get added to random groups
without having my consent. So, I stopped using whatsapp.

I integrated Dropbox and kayak and ton of others app. My parents are not tech
savvy and they can still use it.

------
davidgf
Slack! That productivity killer... at least from the point of view of a
software developer

~~~
darkstar999
Well at least they put it in the name.

------
biztos
It seems to me the only justification for them taking half a billion dollars
in VC money[0] -- besides of course "because we can" \-- is that Slack must
have plans to grow into much, much more than the "enterprise group-chat app."

As annoying as Slack's UI can be, it's not as annoying as Jira's, and
Atlassian has a market cap over $8B. Salesforce has a market cap over $64B and
also has a lot to do with people in big businesses communicating about stuff.

My hunch has long been that Butterfield, having sold Flickr too early back in
the day, badly wants to join the Three Comma Club. That annoying knock-knock-
knock sound is just the beginning.

[0]:
[https://www.crunchbase.com/organization/slack#/entity](https://www.crunchbase.com/organization/slack#/entity)

~~~
me551ah
If you don't like their UI , you can also try out
[https://flock.com](https://flock.com).

------
johnm1019
The Slack client is a mind boggling exercise in excess. It often requires
500MB+ RAM when I am connected to two different Slack "networks" and it's an
IRC client!? Honestly with so much money and theoretical engineering talent
what went wrong here?

~~~
loader
My current slack app session is using 27MB of ram.

~~~
geostyx
I'm curious what makes use 500+ sometimes.

------
jacquesm
$5B valuation for a chat app. Not bad.

------
keithwhor
This is fantastic news. Congrats to Slack and the team.

Slack recently ran a Slack Developer Workshop (conference with 100+ attendees)
to a small group of developers in SF. I was lucky enough to be a part of it.
They made it abundantly clear that Slack has a strong interest in being an
application distribution platform and they are focused on creating a superior
developer experience for their ecosystem. It was amazing to hear.

As somebody who grew up on IRC, the power, to me, was in how robust and easy
IRC was to build for and around. Bots and commands were very easy to script
and get the hang of. In my mind, Slack has actually built something more
valuable than IRC. They have built a new model and ecosystem for application
distribution, and they've added the right product features to do the job. The
next step is to make it insanely easy to develop for and truly surpass the
"ease" of the IRC experience for devs. It's inspiring to hear stories about
how companies are building entire workflows with Slack being the center of
their business; Mike Brevoort of Missions for Slack [1] spoke of a use case
they're dealing with where Slack is powering the entire operations of a
Canadian craft brewery using Slack + Google Sheets.

What Slack really has the potential to do here, in my mind, is be _the_
application layer for business. Think about companies like Envoy (check-in,
etc.) with Slack integration; somebody shows up at your office, you get pinged
on Slack. You open Slack on your phone to check the notification, there's
Slack Actions available for you to unlock the door (or what-have-you). The
time-to-delivery on similar applications without Slack... well, it oftentimes
just straight up wouldn't happen. We'll see more of these.

This is what Slack is getting insanely right. They didn't stop at massive
growth + having a "good chat app." They're innovating and enabling new and
veteran businesses to grow in novel ways.

Disclosure: Slack is an investor of ours [2] and we're also pretty passionate
about developer experience. Through that, I've had a chance to interface with
a number of their team members and I truly believe it's a fantastic
organization. I can't help but root for good people.

[1] [https://missions.ai/](https://missions.ai/)

[2] [https://stdlib.com/](https://stdlib.com/)

~~~
robtaylor
"I've had a chance to _interface_ with a number of their team members"

TIL people actually say stuff like that.

~~~
keithwhor
They don't: I used a simple markov chain text generator that I fed a bunch of
software developer and founder HN comments into.

... this post, too.

~~~
hinkley
You even got "craft brewery" in there. Is anything on the internet still real?

------
josephscott
Crunchbase[0] lists the previous funding total at $539.95M over 9 rounds. This
would bring the total to $789.95M.

[https://www.crunchbase.com/organization/slack#/entity](https://www.crunchbase.com/organization/slack#/entity)

------
j_s
Slack's bottom-up approach to getting their foot in the door worked well for
them.

Providing a fremium service allowing the first email from a domain to be the
admin encouraged adoption without official blessing.

------
EGreg
How does one start to raise money from SoftBank??

------
artur_makly
and they want me to pay for screensharing !!! Take my $please.

------
sitkack
Wasted money.

