
Slack raises $200M at $3.8B valuation for business messaging - jordigg
http://techcrunch.com/2016/04/01/slack-raises-200m-at-3-8b-valuation-for-business-messaging
======
chatmasta
I'm honestly astounded that so many high profile corporations are willing to
use slack without an on-premise version.

Slack is the only SaaS that has access to, and STORES PERMANENTLY, every
important private message, group message, document, commit, internal URLs,
.... of your company.

At some point in the future, slack _will_ get hacked. Every sufficiently
popular product does. It's only a matter of time. And when it does, the data
hosted by slack will be an absolute treasure trove for competitive
intelligence, "insider" trading, hacking, and a variety of other bad, bad
things.

Not to mention, an arbitrary number of employees at slack can read the
internal communications of any company using their product. I'm sure slack has
some "security" measures in place to prevent this, but it would only take one
rogue employee with the keys to the kingdom to snoop on any data imaginable.
This seems incredibly dangerous to me...

~~~
ams6110
I'm sort of astounded at the demand for these products. Instant
messaging/chat/constant interruptions is an antipattern in my book. I don't
use Slack or have any other instant messaging running on my desktop. I used
to, but found it highly annoying. I just use email, and check it a few times a
day. What is the need to suck on this firehose of instant information about
all kinds of mundane events?

~~~
edgyswingset
I think this is highly dependent on culture and the type of work you're doing.
Is the software you're doing organized such that you can effectively lock
yourself away for an entire day and just solve problems? If so, you're
probably not going to see much value from Slack, if any.

But what if you _do_ need to collaborate on pieces constantly? Bouncing emails
back and forth isn't the best. If you don't have an office environment that's
conducive to collaborating like that, slack is also a boon here. Doubly so if
members of the team are distributed. What if you've got issues with your email
where there's a ton of it, and 90% of it is only mildly important? If lots of
the people sending out that email instead just sent chats to a channel that
you turn off notifications for, you won't see notifications for it and your
inbox is cleaner.

Of course it can be disastrous, with channels turning into nothing but a bunch
of GIF sharing and other stupid shit. The onus is on the team to keep work
channels clean and focused, and have appropriate channels for goofy stuff that
people will naturally tend to participate in.

Note that I'm not saying whether or not this ultimately allows work to happen
more efficiently. I honestly can't tell if using Slack makes things easier in
the long run, but I certainly prefer using it over email if I can.

~~~
booop
> Bouncing emails back and forth isn't the best.

Seems to work just fine for the linux kernel.

------
ThomPete
I love Slack but I fell like they are making the same mistake as Dropbox have
done.

They have taken a great business and is pumping it up way beyond it's natural
growth trajectory and is ignoring what I consider the most important advice
for 99% of businesses": Be patient for growth not for profit as Clayton
Christensen is saying.

~~~
rbranson
I guess all the other huge venture-funded tech companies made the same
mistake?

~~~
danharaj
Several of them did? Etsy and twitter come to mind.

------
pavlov
How do people feel about Quip as a competitor to Slack?

[https://quip.com](https://quip.com)

I was sceptical, but Quip's combination of chat and group-editable documents
feels actually much better for dev teams than Slack, which ends up very
unstructured.

(I have no association with Quip at all, but recently had the chance to use it
in a Slack-like context.)

~~~
thepumpkin1979
I've been using Quip for a few months now, it's awesome. Can't really describe
it as a Slack competitor because it really has all the core features of
Dropbox, Dropbox Paper, Google drive-like documents and slack combined. The
text editor is extremately pleasant(even when sometimes gets a little crazy,
hopefully they fix it soob) which is such a huge accomplishment since, at
least on OSX, the app is super smooth, doesn't consume lots of resources and
really feels OSX native.

~~~
rckclmbr
I LOVE the text editor. My only gripe with quip is that the folder layout
changes frequently, is unintuitive, and I can never find documents I wrote.

~~~
thepumpkin1979
Agree, but it's still better than the old navigation.

Quip is the Evernote killer.

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blakesterz
Slack's one of the many things we use and don't pay for because the free
version does exactly everything we need. Asana, NewRelic... a bunch of things
are the same way. I worry some day they'll all dump the free plans and we
won't be able to afford whatever pricing they come up with. It's not like we
can't pay anything, but have so far found no need for the paid plans. I kinda
sorta feel like a free loader. So I guess they have a good number of paying
customers? At least with that valuation, I'd hope so.

~~~
kiloreux
Have you ever considered switching to Hipchat ?

~~~
mastacow
Hipchat's downtime is atrocious.

~~~
mrweasel
People keep saying that, but I can't remember the last time Hipchat was down.

~~~
dberg
Its literally been down 3 times in the last week

[https://status.hipchat.com/](https://status.hipchat.com/)

~~~
mrweasel
Weird, maybe their infrastructure doesn't scale well and only goes down when
the US is at work? Sadly there's no time stamps on their status page, so I
can't tell.

It could be similar to people complaining that Reddit or Imgur is down or
unstable, but that mostly happens to Americans. So Europeans get the benefit
of an overbuilt infrastructure, because the companies try to scale to the load
generated by Americans.

------
ChiCommTroll
For the "irc is just as good as Slack, you should just use irc" crowd, Slack's
mobile clients are pretty good. Ever tried to get a non techie person to use
irc on a mobile device? Ever used _irc_ on a mobile device? The experience is
terrible.

Slack's clients also have persistence, as in shows the most recent history of
communication.

Not everyone uses screen/tmux with irc (though they should).

~~~
nunez
I hate this argument. Yeah, IRC is open and there are tons of clients for it,
but Slack is the only one that I've used that a) retains history without you
having to think about it, and b) is actually really really REALLY nice to use.

That said, if all you need is simple team communication, IRC works great

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DonnyV
Wow this is a disaster waiting to happen. They will never generate enough
profits to support this type of funding.

~~~
harryh
You don't think they can be as successful as Atlassian?

~~~
ethanbond
Can a $10m/year chat app be as successful as a $320m/year enterprise software
company when they have to justify a nearly identical valuation?

No.

~~~
harryh
My point was that I think Slack stands a pretty good chance of growing into a
company that makes about as much money as Atlassian.

~~~
ethanbond
So by the time they do that they'll only have, what, a two trillion dollar
valuation?

~~~
harryh
I'm not sure what point you're trying to make here.

Is investing at Slack today at a 3.8B valuation a good investment? Maybe,
maybe not. But it doesn't seem _crazy_ to me. That's all I'm saying. They
already make a lot of money, they're growing fast, and they're in a
potentially very large market.

Only time will tell how far they get.

~~~
orthecreedence
> they're in a potentially very large market.

They're in a shrinking market. It's not like they "discovered" chat. They
slapped a good interface over IRC and centralized everything on _their_
servers. Everyone and their dog is now writing chat apps, including _existing_
big enterprise companies. So while slack got a large initial boost from
developer-driven teams, other companies with existing large userbases are now
catching up (and _fast_ ).

Slack is one part decent app five parts hype. It's not worth anywhere near
3.8B, and it now has _immense_ shoes to fill because it apparently thinks it's
worth that much.

~~~
djloche
Assuming the latest numbers from TC are correct, they're at annual reoccurring
revenues of somewhere between from 70M-140M (depending on average per seat
revenue). In the past 12 months they've gone from 100,000+ paid seats to over
800,000+ paid seats. The investors are valuing (and expecting) future growth.

For comparison: Atlassian is estimating $440+ revenue for their fiscal year,
and has a market cap of $5.5B.

------
slapshot
Any word on if they had any employee liquidity in the round?

------
loingo
If you are in ASEAN, let use other solution by
[https://antbuddy.com](https://antbuddy.com) or a solution for FREE slack at
[https://slack.antbuddy.com](https://slack.antbuddy.com)

------
ravenkat
I'm a great fan of Slack. Large portion of revenue for an b2b app like Slack
will come from big corporations and businesses with more than 200 employees.

Microsoft/Google are heavily invested on large enterprises. These big giants
can pull off a product like Slack and sell to all the big clients. Microsoft
already sells communicator to large corps. They can switch that to Microsoft-
Slack version and bundle it with their office products taking the large (90%
revenue) out of Slack pocket.

Slack has to go really big to hit enterprises hard or they will be just
serving small medium businesses which will have churn burn and less LTV.

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SEJeff
One area they could improve (besides the obvious one being video chat) is
integration with other bug trackers. The Jira plugin is quite pathetic.
Granted, Atlassian owns hipchat AND jira, but hipchat's jira integration is
excellent. The slack plugin for jira is pretty terrible and is why $employer
went with hipchat sadly.

~~~
moosey
Yup. I've been doing custom integrations because of this. We have several
alerting systems, and catching items getting added to (and leaving) a queue is
an important one that I've added, along with other integrations with internal
systems that exist where I work.

One nice thing about slack is that writing these integrations are very, very
simple.

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zaidf
I was a big Slack skeptic when my employer decided to roll it out. But just a
few weeks in, it has cut my skype usage by 90% and has resulted in a lot more
communication with colleagues than skype.

I think Slack is on its way to really challenging apps like skype and
gotomeeting for the enterprise use-cases.

------
gchorba
I am still looking for more security enabled in it. We can't go over to it yet
as a company.

~~~
educar
What security features are you looking for? It's like any other SaaS, isn't
it?

~~~
gchorba
One of the issues is that it is a SaaS, currently per certain regs, we can
only use skype as our cloud chat, and even then only when it is one on one.

~~~
grinich
Which regulations?

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minimaxir
Note: not an April Fools joke.

~~~
logicallee
I think that's a matter of perspective isn't it? :-)

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snug
Now if only they had an on-premies solution.

~~~
disgruntledphd2
This is something that they _must_ be working on, as they are leaving a lot of
money on the table from big companies.

Presumably this was part of the pitch (build on-premise version, hire the good
salespeople from MS and Oracle, profit).

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wyck
Why does anyone thinks that a centralized chat service is a good idea? I
especially don't get why open source projects move to a platform they cannot
even control or commit to.

It makes no sense.

~~~
st3v3r
Because it's easy for everyone to use, even non-technical people. And it
requires no maintenance, so the people running the project aren't spending
time doing things that are not running the project.

~~~
wyck
I agree, it's just sad to see several areas of the market move towards
centralized closed source solutions. It's as though a new generation of
developers don't even know what open source is, including the dangers these
"easier" solutions bring to the table and how they shape the future.

~~~
st3v3r
So why isn't the open source community moving towards an open source, all in
one solution like this? To just ignore the popularity of Slack, and insist
that everyone just use IRC and handle the other stuff themselves is just
foolish.

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ampvchen
I loved quora response about the valuation [https://www.quora.com/How-is-
Slacks-rumored-2-76-billion-val...](https://www.quora.com/How-is-Slacks-
rumored-2-76-billion-valuation-calculated/answer/Patrick-
Mathieson?srid=3PV&share=39dba0a2#)

~~~
eleusive
It's particularly interesting that Slack's CEO upvoted that answer - I wonder
if that's because the answer was accurate or he was just amused.

------
nikolay
This proves that people are not sane these days! $3.8B for a fancy version of
Yahoo! Messenger, wow!

------
hatred
Wondering if any of the current/ex-employees were allowed to liquidate their
holding?

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tim333
>insane 3.5X user growth.

Is that that insane for a successful startup? I think that comes out at
2.4%/week which is a bit lower than YC tends to aim for.

~~~
nickpinkston
Depends on stage and market penetration. It's usually an S-curve.

It says they're at 2.7M active users, which they frame as a lot for an
enterprise app, so that probably means 10-100K companies - that seems huge for
a company growing 3.5X user growth.

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traviswingo
Can anybody explain this valuation?

~~~
wj
Without seeing their financials I'm not sure if I am qualified to explain
their valuation.

That said, if I had the money and was invited to participate in this round I
would have. More so than any other software I have seen, Slack has organic
buy-in from everybody outside I.T. Once introduced is spreads like wildfire
throughout any company I have heard about. Unlike much (most) software
introduced to them Slack has an easy to see value for them, has almost no
setup barriers, and is usable with little to no training.

All of the objections in this discussion are from an I.T. perspective ("you
can just use self-hosted IRC for free") or a compliance perspective (having
worked many years in the financial services industry I understand that there
are compliance requirements but those are always written by lawyers and often
their understanding of the security tradeoffs between self-hosted, with
company employed security professionals, and the cloud, with vendor employed
security professionals, are dubious at best).

I sometimes feel that programmers would write Excel from scratch in order to
add two plus two.

~~~
YZF
But where is their moat? It seems like these sort of apps come and go with
fashion. In my company some people use Slack but there's also a mix of various
other solutions from Jabber to HipChat to IRC. Can't say that Slack is
spreading like wildfire in our fairly large company... It is getting some use,
people say it's ok, and that's about that...

~~~
weisser
Their moat is the developer ecosystem and apps on the Slack platform.

But it's also the fact that while it's easy to get started, the value and
dependence on Slack increases rapidly by your team's investment in using it.

Slack takes no time at all to do an initial team setup so you can just get
started and as mentioned nothing needs to be learned to dive right in. Users
are rewarded for discovering new things and further rewarded by cool points
for sharing the tricks and secrets they uncover with others.

The ability to search and find a file or a key part of a conversation that
happened a year ago faster than you could an email. This feature only gets
better the more your conversations happen in Slack — you'll never lose
anything again.

In terms of features, many of the best customizations involve apps working
with Slackbot and Zapier. Setting up these custom features takes time and
tweaking to get them exactly perfect — switching costs you won't want to deal
with a year from now once they've become part of your routine.

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paulpauper
Just more evidence the media, that for months has been sounding the alarm that
Web 2.0 had burst, is almost always useless and wrong. Tech media no
exception. I guess it's not burst. The Nasdaq stock index is up 15% from the
lows in Fed. We're seeing a flight to quality, not a bubble burst, which is a
subtly that is lost on most journalists.

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medlazik
My guess (wishful thinking): They need money to make and maintain an on-
premise version.

~~~
pbarnes_1
Considering they're (supposedly) profitable, have hundreds of employees, and
it doesn't cost $200m to do this -- doubtful.

It's highly unlikely we'll ever see an on-prem Slack.

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paulpauper
This is a ubiquitous business model that will succeed where evernote failed.

