It's very unlikely considering they thought about doing that a few years ago.[0] I don't think they'll rapidly push forward with adding features characteristic for Slack as well. Teams is just yet another corporate tool that is easy to sell to existing customers of Office 365.
It’s basically the definition of enterprise software that the people who buy it aren’t the people who use it. The bean counters don’t care whether the users hate the software.
Teams isn't going to directly take market share from Slack, but it forms a hard barrier limiting Slack's future growth. Large established organizations are switching to Teams, and finding it good enough that they'll never want to pay for Slack.
Never underestimate the power of workplace bureaucracy. At organizational size X, integrating with new Microsoft product Y, single sign on working and easy deploys to all office machines, support from Microsoft and Microsoft lackeys pitching new ideas to IT people, of course they're gonna pick teams.
Teams is absolutely taking share from Slack. As chat permeates organisations, it needs policies, single sign on, oversight and standards that are harder to implement in slack than Teams/Office 365. I know of many organisations who've been forced off slack because 'company policy'.
Work is a non-software company and we asked if we could use Slack and IT responded by saying that we already had Teams installed and included with O365.... therefore we should use that. That's what we've being doing except that no one chats on there....
You might say nobody needs it, but they might benefit from it.
As many times as I’ve hated on Slack on HN, my anger is at their bloat and sluggishness and low density UI to do basic text chat. At least I can do basic text chat in an IRC style channel in it.
Desktop Teams is a nightmare of mystery magic UI, I never have any clue where I am in it, where anything else is, how to get to or from stuff or what the chat is doing, it’s super unpleasant.
It’s basically a web browser to SharePoint but with no browser chrome or address bar or navigation hints or breadcrumbs, then the same into a Skype replacement, then a pile of chat channels which aren’t channels and have rolled up chat threads in a list in them, but all of this in one window so you can only do one thing in the UI at any time (I.e. NOT chat to someone and look up some documentation in another window because it only has one window) and Teams honking at you wherever you are with red blobs of attention grabbers and “people are trying to contact you in Teams” dark pattern Facebook bullshit where the mobile teams and desktop teams notify and then emails you.
It’s both completely overwhelming and underwhelming at the same time.
The divide between customer bases actually resonates throughout the industry. It's Conoco Philips and the Department of Justice vs Gitlab and Sysdig. Old econ vs new roughly. And is sort of playing out across AWS vs Azure, etc. I wonder how Slack addresses this divide. Perhaps in keeping more of a startup ethos and attracting international players such as Grab.
Have you used Teams? I've had to once, to talk to people and Microsoft, and it was _hilariously_ bad. I don't know anyone who uses it in earnest, and I know people who have used Google Chat.
(I do most of the sales calls for Latacora, which feels like a decent representative sample of startups, and I think all but one, maybe two, of the companies we have ever spoken with used Slack. Order of magnitude a percent.)
I agree that Teams is pretty bad but a lot of companies use it because they have office 365. Your view is probably skewed by looking at Silicon Valley it startups. A lot of big companies use Teams.
In my company Teams was actually a big improvement because we had nothing before.
Never used Teams. This is not a comparison just some things in Slack that are weird.
* Formatting is done with Markdown syntax instead of "word processor" style formatting.
In a word processor if you type Hello, Ctrl+b World Ctrl+b!
it would produce Hello, <b>World</b>!
In Slack it produces Hello <b>World </b>!* * .
* /commands are not discoverable or intuitive to anyone who never used IRC or CLI programs. Non-programmers have no idea what arguments are or that [brackets] means optional.
* Bots and their syntax have the same problem except that their DSLs are far more varied and arcane.
* Very few people know or understand the difference between a channel and a group.
* Threads are super weird compared to email. It's like an inbox but not really. Threads interleaved into actual message timelines are not very discoverable and difficult to follow.
* Attachments and files don't really work like most people expect.
* There are at least 5 different settings panels all with different things and scopes.
* Reminders and a bunch of stuff being implemented as a magic "account" in Slack is super confusing to people.
* Very few people really "get" apps as well in this respect. They're in your message timeline, they look like accounts, and are in some ways but aren't in others.
* The difference between a "bot" and "app" isn't super well defined. Some respond to messages in a channel, some need commands.
I thoroughly enjoy going through this thread every time slack updates and breaks my dark theme CSS hack (nowadays I just miserably run it in a tab with darkreader).. 2014! They're making sure that they've "upgraded their infrastructure" before they release it I believe was the last real update with substance.
Been waiting years for official desktop app dark mode support. The lack of it is sheer stupidity, considering they have dark mode in the iOS Slack app.
>> Revenue rose to $145 million from $92 million a year earlier. Slack said it had more than 100,000 paying customers, a 37 percent increase over last year.
They should be fine. $307m of the loss was stock-related compensation.
How could you screw up a business who has a product as popular as Slack?
They got a big pushback after deciding that they (wrongly) thought that they were a content provider platform and not a payment platform and started banning users with political views they didn't like.
They aren't confusing it. It's part of the lie these companies tend to construct--if they say they are something, over time, they hope everyone believes it. "We aren't just a <boring commoditized alread-solved problem> (even though they are), we're a <fancy amalgamation of things you never thought possible>!"
I think this is what you're referring to[0]; it only happened because Visa, MC, and Paypal can dangle their source of revenue over their heads any time they want something changed or a creator removed.
That appears to be about adult content (porn I assume).
I was referring to Carl Benjamin being removed. Jordan Peterson and Sam Harris, who were two of Paterson biggest earners removed themselves as a result and encouraged others to do the same.
Did any of those really have paid tiers that people actually used? People do pay for slack in a way that I don't ever recall them paying for those, partly I think because there are many more online only/remote businesses now than back then.
The Skype of today is crap compared to the first Skype I used and loved. It is completely unclear what it tries to be now and the interface is horrible.
I have an unlimited-Europe plan with it and a phone number attached to it, but I'd rather use something else some day. I haven't found any cheaper alternatives though. Maybe someone here can point one out to me.
I agree that Skype is an awful UI these days, think that Microsoft ruined it, and don’t know a better one to suggest.
But as an aside, “the cheapest one you can find is horrible” is probably appropriate for what “cheapest” usually translates to in products, and expecting to find one cheaper and better when you can’t find one cheaper at all, seems optimistic.
It isn't aimed at being a good business communication tool though. It has a strange design that obviously tries to be cool and hip, but lacks proper visual hierarchy and contrast. It is hard to use if you aren't tech-savvy. My mother ends up calling me on Telegram of all things because in her mind Skype isn't something you call with anymore. Even though I then call her on Skype because Telegram doesn't have video. She used to have a Skype-phone (physical unit), but support for that has died out pretty quickly.
The difference between chat and facebook is that with a team in chat, you can move it to anywhere (teams, irc, mattermost, zulip, whatsapp). With facebook, you can't move your friends, so you're stuck.
Why wouldn't stock based compensation count as equivalent to wage expenses? I saw similar comments about Uber/Lyft's loses being primarily made up of stock comp loss, but would all the people getting the stock still work there if they weren't getting paid stock?
Google and Microsoft are both offering equivalent products for free. I don't think Slack has established that they can maintain their pricing and continue to grow.
Stewart Butterfield, Slack’s chief executive, said in an interview that it would take time for the market to understand his company since it had created a new category of software, unlike soda or cars
We've had public business software companies for decades, they all created a new "category" of software, why does he think his is something new?
Fundamentally speaking, how is Slack any different to the first email program? The first operating system? The first chat system?
We've had this sort of software, and companies that sell it, for a very long time now.
Isn't that the majority of modern tech companies? Take something which is marginally profitable, scale it beyond all comprehension and make it unprofitable.
I didn't see the need for a global digitised cab company but it didn't stop two companies burning $30 billion to try and make it happen.
Your view is parochial. A lot of people can't live without Uber and Lyft now. It seems arcane calling a cab company or waiting till one magically appears near you.
Honestly it's sometimes been tempting when you look at things like Uber. How long have they been around now? No signs of investors pulling the plug yet. How long is a long time?
Just goes to show the market can stay irrational longer than your species can continue to exist.
At the end of the day Slack is a SV unicorn that went public without turning any profit. I believe they marketed this in their S-1 as a "loss-making" company...who does the market think it is anyway trying to act rational.
Slack is nothing at all like email. It's proprietary, non-federated and has built-in data discovery/spying mechanisms to record every click/keystroke made by users.
Gmail was not the first email program (which is what the OP asked about). Gmail came several decades after email was invented and already in widespread use. You may or may not realize this fact (depending on your age).
I'm the OP, it doesn't really matter which was the first, my point was that we've had plenty of new "categories" of software. And in reality many that are just like Slack.
In some ways Google Apps for Business is a really good example of a sort of "new category" of communication software. You could plugin apps online, rather than have to host it your self.
A bit of googling shows he's called Slack a "brand new category of software" many times before, but I'm not clear what he thinks it is.
Sorry, I don't mean that as snark. Many people born after 2000 have known nothing but Gmail as email and are surprised to learn that other email systems/providers exist.
That's nothing unique to age. I regularly talk to people born before 1960 (and 1970, and 1980....) who don't know that email is separate from it being on a website (about the only difference is that they know of Yahoo Mail, Hotmail, etc)
Gmail's a bad comparison because it never had to make money directly - it was just there to help Google build and maintain their search monopoly by acting as another data source and shutting out competitors. Slack, on the other hand, needs to make money because chat is their only product.
It is basically a chat program though right? It has some newer features, but they seem just like incremental improvements over proprietary chat applications I've been using for the last 25 years.
Yes. It's basically a chat program with lousy search features. Oh and it has a "native" Electron app, which just means the user experience is better in a browser.
ermogourd kids it's IRC, ferchrissakes. with oh yeah bots and file transfer and groups.
i heard they were throwing money at integrations with everything, had a bumpy ride scaling (mysql master-master ffs) and had vague plans for AI that'd help automate your org, not sure where that went. But the VC wants exponential or bust, so there you go.
This is the ultra-aggressive marketing that Slack has been pushing ever since they got any traction. They seem to pitch that idea to anyone who will listen even though like you say, it makes no sense.
What an arrogant take on the impact of Slack from Butterfield.
Even if he says that Slack is "not about tech but about making work happen", there has been countless of other programs that, while being "tech", made work happen. I just can't see this "category innovation" at all.
Slack is different from those companies of yore. Back then, if you created a chat program and went to an investment bank, they'd laugh you out of the office, or advise that you take whatever acquisition offer you can get, because a chat program with tons of competitors isn't enough to build a profitable business on.
Skype never went public though. Investment from VCs happens well before going to an I-bank with the intention of going public. VCs can invest in anything, investment banks are the ones who create the initial public offering.
Even so, Skype was a household name for video chat for years (despite it's sometime shoddy quality) until FaceTime, Gchat and others implemented video towards 2010.
What's Slack done that's different from other chat platforms available today? Stuff like Jira integration is of interest only to a small portion of its target market, and it's that exact market that will complain about the pricing, that it's non-federated, heavy on resources, intrusive in its tracking, etc.
Then Skype got bought by eBay shortly thereafter for gobs of money, in the somewhat blind hope that synergies would develop between eBay, PayPal, and Skype. Never quite panned out that way.
Btw, although I've seen little difference between HipChat and Slack in my day-to-day, the switch from Skype to HipChat was a profound improvement. Messages sent on Skype could and would frequently vanish into the ether, and/or arrive in the conversation thread way out of order. Imagine troubleshooting production issues under those conditions!...
That sounds like a cop-out answer from the CEO to be honest. Slack isn't a confusing novelty the market has never seen; foundations of Slack have existed for quite some time (eg. using AIM with chatbots 15 years ago as a kid).
It's not the market's fault Slack's revenue/sales expectations don't match their goals. That's entirely on Slack to either do a better job or be more realistic with their 'ceiling'.
Foundations existed for years, not even the same product existed before them: hipchat. It was pretty much equivalent. Slack had a nicer mobile app and some other improvements, but otherwise they're almost the same thing.
We were using HipChat at a previous company (2013, I think), and I never understood the switch to Slack. I was like: Wait, but what's the difference? Everybody knew about Slack, and no one about HipChat.
I also don't think they introduced a new category of software, they just spent an absurd amount of additional money in marketing. That's it.
My company switched from HipChat to Slack around 2015. I won't say hype didn't play into the decision, but IIRC there were two other motivations: 1) more reliable performance, 2) better integrations with Google Docs.
At the time it was claimed that this was really a whole new way to organize data and work. In practicality, not that much changed from HipChat. Pinned items and the ability to rifle back through conversations saved my bacon a few times, but looking back on it, I don't think they outmatch properly-organized documentation and wikis.
We were kind of heavily invested in Atlassian stack, which means we used Confluence a lot.
We had a good system for creating and looking for documentation in our wiki system, so I hope that was not a selling point for Slack. Unfortunately we (Tech) never really knew why we switched.
EDIT: Also, on the performance side, we were there for the beginning of both systems, and both had their good amount of issues initially. By the time we switched, I don't remember that many HipChat outages. I remember a lot of Slack outages starting up as well, and these days I have issues with Web interface connectivity at least once a week (native works).
I can tell you my experience of having witnessed some companies move to “slack”, “Jira” etc. There were multiple similar cases.
It went something like this:
“We are now ‘agile’
Ok what are all the cool agile dev ops companies using?
Aha Jira&Slack. Ok let’s use that”
From there it gets even more crazy. The tools get included as a standard question for evaluating vendors on RFP’s. Vendors that use a similar toolset are rated more highly.
When you question why. The response is along the lines of:
“Oh if they are using Jira/slack/other tool, it must be an agile/dev ops/chat ops shop”
Put another way sometimes these tools end up being used as a “signal” to others rather than intrinsic value. The value is in the signalling, driven by social proof.
If one can pull this of when marketing your product you have a win. Effectively you have associated a movement (I.e agile) with your product (I.e Jira). So the buy decision is driven by the need to show they are doing {x}.
There must be some basis Of this and reading on how this is done? The broad topic would be marketing but what specifically?
Notes:
* This is merely an observation. I am not judging the accuracy of the statement that using a specific product = demonstrating some property.
These associations may not be applicable in all markets and I have seen them change over time.
At least when I was using hipchat, there was no way to 'tune' down the notifications, so the bloody thing was super annoying. I basically begged my company to make the switch to Slack after a quick trial.
My experience with group messaging was MSN Messenger -> Basecamp -> Campfire -> HipChat -> Slack.
Slack's "good enough" for most communication and has better integration with most products, so it stuck. Others always failed in some way.
It's not that Slack is irreplaceable, if anything it's more vulnerable than ever, but that it has momentum. Other platforms like Campfire or HipChat always fell short of expectations.
you have a different memory to me. I remember switching from hipchat to slack, and it was night and day, obviously better. Slack had more features, a better UX, and wasnt buggy as hell like hipchat
You could argue that we had cellphones for ages, why would someone need an iPhone? You could also argue that an android has the same functionality as an iPhone, again why would someone need an iPhone?
The new "category" of software is about how people relate to software, not the software itself. IKEA created a new category of furniture, or it did not?
I think Uber created a new category of service, but we always had taxis and gps; Slack didn't necessarily create new software, but in my opinion it put chat apps on the general public's mind and it kinda became the go-to name, same as AWS or IBM. That's worth something.
This exactly. You can tell a lot of the above commenters likely havent spent more than a few hours using Slack. Slack has completely changed the way I, and many of my colleagues, communicate with one another at work. (not saying its better or worse, just absolutely different).
Or perhaps they actually haven’t spent enough time not using Slack. I know as someone new to the industry, in all my 4 years I haven’t known a time when I wasn’t able to just ping someone on Slack. It’s natural and obvious to me.
How has Slack completely changed the way you communicate? You can chat, share files and do a lite screen share in a single app? Integrations? I guess, I don't see it and I've used Slack for years, before that HipChat, and I used IRC for a very long time too.
> You could also argue that an android has the same functionality as an iPhone, again why would someone need an iPhone
Having used both I think it is a legitimate question. iPhone vs android is just arbitrary preference at this point.
I think the same thing with Slack. Whether you use Slack, Teams, Hangouts Meet, or something else is becoming entirely a preference. For a company that is losing money this is not a good thing.
Not "was/is", just "was". A customer that decides today doesn't care much about the iPhone legacy, but only if he/she can satisfy all their personal requirements with today's phones and ecosystems. And on that metric there's just as many people preferring iPhones as there are preferring Android devices, because none is clearly superior across the board, but each of them has different strengths and it is a question of personal preference which strengths someone values more.
Well, not exactly. Android has mich higher market share than iOS. There's not just as many preferring iPhones, not even close, though it may feel that way in certain geographies.
Not that many preferring iPhones? People not having iPhones has mostly to do with the 'luxury' aspect of them. Many want an one, but can't/don't want to spend the money on it. The absolute majority of Android devices sold is the sub-€300 market, many subsidised. It's mostly the tech-savvy crowd that on purpose buys an Android from what I see.
Just look at the insane secondhand value of any iPhone. Even my perfectly working old iPhone 6S I use as a backup would still sell for €240 today - which is absolutely nuts...
That's not what prefer means. By your logic just as many people prefer to fly in private jets as fly economy, but that's a meaningless statement - they don't prefer it, they prefer cheaper options and to spend the money on other things. Clearly by any definition the vast majority prefer to buy phones cheaper than Apple sell them, but the high end Android market does great too. Really Android just dominates completely in every market and has done for a very long time, which is why Apple fans like to talk about Apple taking most of the profit (as if this is a good thing!).
The sense I get is that he's trying to differentiate Slack from the general category of enterprise chat and want to communicate it's more than that. I do know small teams that use Slack to automate their business process workflow that require some manual steps. There's a valid argument that it's yet to realize its full potential in that regard.
However, I agree with the general sentiment that Slack must be profitable by now and if their messaging isn't reaching the target audience it's their fault and their fault only. Not to mention the ridiculously high valuation.
Why anyone would willingly plug an opaque, overly complicated, poorly optimized, externally controlled failure point into their tech stack is beyond me.
When I go to work every day, I don’t want to have to worry about whether or not our chat server is up. My job isn’t to manage chat servers, it’s to manage all the servers we actually need to get our shit done. I don’t want to get paged at 2 AM because some XMPP server is down, which will, the next morning, prevent everyone from communicating. Sure, Slack goes down too, but I can make some coffee and let an entire team of dedicated people fix it; it’s their emergency, not mine.
Only host things if you really need to, and only if you have the resources to support them. Unless you want to add “manage chat servers” to your list of core competencies, just buy something and move on. Our business isn’t managing chat servers. All we need is an IM service so we can communicate and get our stuff done. Slack, for all its faults, works for us, and frees up our time to focus on the problems we actually want to solve.
What’s the new category? “Basic applications that somehow consume multiple gigabytes of RAM”? To be fair, I don’t think Slack pioneered that, but they certainly popularized it.
Agree - that’s a total cop out. Whether or not they are a novelty product or creating a category is a separate issue and isn’t as important in this context once it’s clear that they have strong product market fit.
What matters to the market now is that they are a subscription-based software business model not unlike thousands of other SaaS companies. It’s a very well understood space watched by investors who can compare what they are seeing to many other examples.
Slack needs to adjust to life as a public company - how to set expectations, how to manage to those goals. In fairness they also were saddled with hugely inflated expectations before the media and some investors likely realized that they are just like a lot of other SaaS businesses.
Agreed. I'd be happy if they brought their video chat up to the standard Screen Hero set. It was one of the best pieces of software I remember in recent years.
Interesting, so the acquisition agreement did not have a non-compete clause or golden handcuffs to Slack? If you don't mind me asking, how come you left Slack?
(I'm not affiliated with either Slack or ScreenHero. But I loved ScreenHero.)
It would be common for an acquisition agreement to shackle the founders with non-competes. It would also be common for those non-compete clauses to have limited durations. (I have seen 2-3 years in documents.)
Slack bought ScreenHero over 4 years ago. The non-competes have likely expired.
I get that they are the most obvious comparisons for recent IPOs, but it's disappointing to see Slack being conflated with Uber, Lyft, and We, none of which have a remote chance of ever making more than a razor-thin profit in their respective industries. Whereas Slack is a SaaS company, with the real potential (whether it's likely or not) to become highly profitable down the road.
Would you be able to expand on this perspective? Is there an example of a highly profitable SaaS company which offers a super simple subscription solution and doesn't rely on data-collection based advertising?
I'm not a coder but these applications seems vastly more complex than slack - and thus I would be willing to pay more for them.
>DocuSign
This seems closer to being along the same lines as slack, but I feel like docusign doesnt sell it's "software" per say but rather implementations and operational change consultation.
Actually, it does. It means they're focused on revenue growth, not profitability, at this stage. Sales and marketing is very, very expensive. Have you worked at any SaaS companies with tons of inside sales?
A business that’s doing great can have numbers that look like this if they’re investing heavily in growth. In that case, they’re losing money deliberately—if they wanted to, they could optimize for profits and be making money, but at the cost of growing slower and presumably sacrificing greater profits in the future. If you’re a shareholder, you probably don’t want that.
I don’t know whether Slack is in this position, but simply looking at revenue and losses doesn’t give you enough information to judge how well they’re doing on its own. You need to look at things like CAC and growth rate.
Well yeah, businesses that are failing/flailing will obviously want to spin the ‘investing in growth’ narrative rather than tell the truth. My point is just that you need to look deeper than revenue and losses to determine which is which.
If they need to hire aggressively for sells that means their customer acquisition costs are about to increase and there are still doubts about how deeply they can get into large enterprises where the lifetime value of a customer will be worth it.
Also, selling into the enterprise is a long slow process.
They're a cloud-based software company. Where is this "heavy investment in growth" going to? It's not like if they needed huge capex expenditure to grow.
If you can spend 1 million in year 1 to acquire a customer who pays back 3 million over the next five years, that’s a good investment, but you’ll initially book a loss.
Enterprise sales is expensive, but the contracts are very large and long-term.
Sales and marketing are largely one-time expenses, but customers can have very high LTVs. So you can zoom into a particular quarter of a company's results and they can have huge losses. But, in the future they can dial down their sales and marketing expense, and be sitting on an extremely profitable business.
For its second fiscal quarter, Slack posted a loss of $364 million, [...] . That included $307 million in stock-based compensation and taxes related to the company’s direct listing.
It will be an ongoing cost, however the $307m number includes 5+ years of stock grants at much lower valuations which were all realized at once. Future costs will be much lower, more in line with regular payroll spending.
Slack is overrated and over priced. Its not like messenger platforms are difficult. We have had msn messneger, yahoo messenger, whatsapp, rocketchat, facebook messneger, messenger, gchat, skype. Slack doesn't do anything particularly special.
I'd be interested to know the stats on people using the video feature. My experience is that companies on slack primarily trust Hangouts and Zoom more than Slack for video conference.
MSN Messenger with Pidgin as the client is the best IM experience I've ever had, at least for one to one conversations. There's also something to be said for identifying contacts by their email addresses, since even when the IM inevitably dies, you have a way to reach these people.
As someone that uses both slack and webex teams at work, I cannot emphasize enough how much better slack is. Maybe it's because webex teams is beyond awful, but I've used skype and hipchat before as well, so I feel like I can make a somewhat fair assessment.
Genuine question - I use WebEx Teams at work too and it works perfectly fine for the most part. It's also very lightweight compared to Slack. What do you find so terrible about it?
While I think slack is much more useful that any of the ones you mentioned due to 'unique' implementation but it's not hard to replicate. Plenty of communities already use free alternatives like Discord (despite it's focus on 'gaming' communities). I expect open source solutions (Matrix mostly), both self hosted and ran by low cost hosting providers, to start taking Slacks market share once they reach feature parity & a level of polish.
To be honest, compared to all of those with the exception of maybe Rocketchat, it has way more features and integrations. I don't think it's a fair assessment to compare to to WhatsApp, MS Messenger, FB Messenger because those have no place in an enterprise environment.
You’re wrong and the reason why is in your comment.
> platform
Slack isn’t a messenger app. It’s a platform. People like to “work” in slack for some reason. not that slack is so well suited, but because it reduces the number of context switches you need to do. it’s good to have something as a central hub.
If you produce some kind of app, you’ll want to integrate into a messenger platform and your choice (if only one) will be slack. this gives slack gravity and that is what makes it special.
salesforce the core product is nothing special. it’s salesforce the platform which matters.
It'd be really interesting for Slack to go the Atlassian or Microsoft route - acquire companies that solve adjacent problems, and then bundle the products to enterprise customers. The sales get harder to ignore, and it'd make Slack as a company even stickier.
A couple things come to mind, like file sharing, calendar & room management, project management (around tasks, mainly), VoIP integration for sales calls, and maybe even gasp email.
I think this is their strategy, and I think what's more they will want to solve these things vertically 'on top of' slack as plugins and apps. They started filling the pipeline for this a while ago by literally funding startups building such things. Acquiring some of the more popular ones is surely one of the goals, should this work out.
I don't know enough about the Slack product or business model to comment authoritatively, but I'm really confused how they're losing money (and so much of it) and I sense a bit of "weirdness" around unit economics/user conversion/pricing.
I've long thought that they've essentially built beautiful native/mobile/web clients for IRC-type chats and provide hosting/IRCOp services. Charging per-seat to enterprise seems like a very, very lucrative proposition for this type of product/service.
4.) They lost $300m Q4 '19 due to 'stock based compensation' (which from my perspective should have been accrued Q4 '15 onwards)
And for all the above... a $5billion unicorn valuation considering chat is a solved problem?
Three major questions:
1. Has any other SaaS or company in human history ever had a 1:130 ratio of paid:free users with a hard cap of $15 on MRR?
2. Does quarterly losses between $30-$300m on $4.5m in revenue make sense considering the unit economics of cloud-based chats?
3. Does 100k paid subscribers seem a bit low for a 6 year old company?
Really weird situation from my "knows enough to be dangerous" perspective and I'm all ears because from my perspective:
1.) There's really not enough innovation or a big enough TAM (considering competitors) to drive a unicorn valuation
2.) Which shouldn't matter because this is still a potentially lucrative market
3.) And yet... they're losing money hand-over fist
Weird, weird weird. Feel free to share your thoughts, I just ask that you consider this message comes from a perspective of "confused guy trying to make sense of these crazy times"
It's over 100000 paid customers, not paid users. E.g., your revenue number is way off... the article says their revenue for the quarter was $145 million. So I guess the average revenue per customer was approaching $1500 (well, unless I dropped a zero or three somewhere, which is possible). For Slack customers are organizations with potentially multiple users. Likewise, I think your 1:130 number is perhaps comparing apples to oranges.
Thanks for the clarification! I was really scratching my head there based on the apples to oranges comparison of 'customers' to 'users' and you were right... my revenue estimate was indeed way off.
Upgrading Slack from 'WTF' to "Let's see how this plays out and if it's priced accurately' because $30m in losses on $145m in revenue for cloud enterprise chat with a long-tail of free-tier users seems pretty promising!
One problem they do have is - compared to discord - a poor strategy for monetizing non-enterprise communities. Discord will allow individuals to upgrade their discord plan (for small benefits everywhere) and then they can give a boost to a server they appreciate. This means discord can monetize any community.
Slack on the other hand has communities with thousands of members in them that have zero monetization. No one is going to shell out 60k for their open source project's slack to be monetized.
Thing is, Slack makes it far too easy for orgs to use it for free.
I work at a megacorp, and we use Slack without paying a single penny.
We have a Slack account setup per project, which typically have 5-50 members. We don't care too much about search or history, we just want a simple chat and audio call solution that isn't horrible to use. Slack fits that bill.
To be clear, this doesn't sit well with me; we should be paying for a service we make good use of - but Slack makes it so damn easy for us to get away with it!
Maybe this is part of some long-term strategy, to basically give it away until it becomes ubiquitous, and then scale back the free tier?
It was GDPR and data privacy that wrangled the megacorp I know to kill all channels and workspaces that seemed affiliated with megacorp with help from Legal... until then everyone was making and using slacks free tier. It's still used to communicate with people outside megacorps SSO environment.
Most users don't know nor care about the paid tier, especially if CHQ isn't footing the bill and the cost for each user license is passed to a business unit or department (which can be how megacorps are setup).
The change over was funded by corporate and it's becoming the standard form of comms in the enterprise.
Unless a deal is done at the corporate level to get access for all users, at large orgs, it's not just the cost - it's the internal purchasing process. In short, if I was to buy software or pay for a SaaS, it's very, very difficult to do so. I have to raise requests in our service desk, and constantly battle with them for months (yes, months) to reopen the tickets they invariably close without comment, and spend time chasing random VPs to approve something they have no idea about. In short, I'd rather chop a leg off than waste so many frustrating hours on it.
> 4.) They lost $300m Q4 '19 due to 'stock based compensation' (which from my perspective should have been accrued Q4 '15 onwards)
I haven't looked at this, but if this is a large part of their loss, then you can possible find the answer to why it was declared in one chunk by looking at the timing of option grants. The schedule should be available. Normally when I see "Our company is losing money" and the money it is losing is a one time loss that would normally be spread out over a long period of time, it's because they timed the announcement to coincide with the granting of options. It causes the price to drop precipitously, they grant the options -- "No funny business here! We scheduled the option grant 6 months ago!". Then the price rebounds. It has happened in every large company I've ever worked for. I always wonder how they get away with it...
Slack's long-term value prop isn't chat, it's the platform. If you've used any of the great bot apps it hosts (PTO Ninja for example), it's easy to imagine a future where these kinds of apps replace whole swaths of bloated Saas-ware. I'm excited to see more of these and a competitive eco-system emerge within Slack the way Apple built the app store. Slack should invest heavily in building a platform for developers if it wants to grow, if it can pull this off it's going to look a lot more like Salesforce.com in 5 years where whole industries are built on its back. This is also the moat they have against MS Teams. Microsoft hasn't been as successful in building wildly productive developer ecosystems since the Windows 9X days.
Slack is sticky and their competitive advantage will be (1) making it stickier and (2) expand the enterprise features (e.g., make it easy to implement a company Data Storage policy, SSO integration, etc).
Slack is back up at or above where it was at end of trading hours yesterday. It plunged after-market, opened at $26, and is back near $31 again now. NYT should just start using AI to write negative articles about tech companies when their stock swings more than 5% and put their journalists to better use.
IRC is great, but I've never thought of it as protecting my privacy. It's definitely public and almost always logged by a myriad of bots if not the server.
I'm sorry but comparing it to Uber is highly misrepresentative. Uber has serious Cost structure that can not be removed: the cost of the driver is essential to the operation of it's busienss. Slack on the other hand is just a SaaS. Why are their costs so high? They said stock based compensation, but that doesn't begin to tell what it's for. Their user acquisition costs don't need to be really high, as far I know they started off with a great deal of virality and without too much paid acquisition. Between then and now, what happened? Naive question: Couldn't they simply cut most of their engineering/marketing and be wildly profitable?
If I were to take a wild guess, I'd say it was they tried to grow too quickly and overspent on marketing, getting a barely decent ROI on ad spend.
One of the most useless product of our generation. The fact that they believe themselves that they make "work happen" is a level of self-koolaid-drinking that I rarely saw even in Silicon Valley. I'm happy that the stock is plummeting.
Slack is essentially an IRC. IRC is pretty much dead nowadays, Slack is just the same concept but with a cloud integration and a modern client. It is neither new nor a particularly good implementation, discord is faster and better as a communication tool and possibly more clones are coming. The only lucky thing for Slack is that it was in the right time in the right place and introduced 30 year old concept to the corporate folks - but this advantage can go away anytime.
New category of software? Such a statement shows how disconnected leaders can be from reality.
Collaboration and communication software has existed basically since computer networks exist. More specifically icq, MSN, even Skype falls into the same category of software...
They created a succesful startup - a lot of kudos for that. The company, as so many others this year, fails to proof itself in the public market.
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[ 2.8 ms ] story [ 242 ms ] threadMaybe it's not a huge deal because the overlap of Slack customers and Office 365 customers isn't that big?
[0] https://www.businessinsider.com/microsoft-canceled-8-billion...
Those sound more like great features than "workplace bureaucracy".
To everybody who isn't a software developer and will likely never need Jira integrations and Slackbots, Slack is just another chat app.
For a paid software, Slack needs to win those people over too.
...Which serves as a demonstration that nobody needs chat.
Isn't it great how that works?
As many times as I’ve hated on Slack on HN, my anger is at their bloat and sluggishness and low density UI to do basic text chat. At least I can do basic text chat in an IRC style channel in it.
Desktop Teams is a nightmare of mystery magic UI, I never have any clue where I am in it, where anything else is, how to get to or from stuff or what the chat is doing, it’s super unpleasant.
It’s basically a web browser to SharePoint but with no browser chrome or address bar or navigation hints or breadcrumbs, then the same into a Skype replacement, then a pile of chat channels which aren’t channels and have rolled up chat threads in a list in them, but all of this in one window so you can only do one thing in the UI at any time (I.e. NOT chat to someone and look up some documentation in another window because it only has one window) and Teams honking at you wherever you are with red blobs of attention grabbers and “people are trying to contact you in Teams” dark pattern Facebook bullshit where the mobile teams and desktop teams notify and then emails you.
It’s both completely overwhelming and underwhelming at the same time.
I have seen first-hand how much of the business can run on Slack. Yet, if it's gone one day, companies would survive.
(I do most of the sales calls for Latacora, which feels like a decent representative sample of startups, and I think all but one, maybe two, of the companies we have ever spoken with used Slack. Order of magnitude a percent.)
In my company Teams was actually a big improvement because we had nothing before.
* Formatting is done with Markdown syntax instead of "word processor" style formatting.
In a word processor if you type Hello, Ctrl+b World Ctrl+b!
it would produce Hello, <b>World</b>!
In Slack it produces Hello <b>World </b>!* * .
* /commands are not discoverable or intuitive to anyone who never used IRC or CLI programs. Non-programmers have no idea what arguments are or that [brackets] means optional.
* Bots and their syntax have the same problem except that their DSLs are far more varied and arcane.
* Very few people know or understand the difference between a channel and a group.
* Threads are super weird compared to email. It's like an inbox but not really. Threads interleaved into actual message timelines are not very discoverable and difficult to follow.
* Attachments and files don't really work like most people expect.
* There are at least 5 different settings panels all with different things and scopes.
* Reminders and a bunch of stuff being implemented as a magic "account" in Slack is super confusing to people.
* Very few people really "get" apps as well in this respect. They're in your message timeline, they look like accounts, and are in some ways but aren't in others.
* The difference between a "bot" and "app" isn't super well defined. Some respond to messages in a channel, some need commands.
It's one of the few products that's forced Google to create a desktop app (even if it still is CEF based).
The explanation is here
For Slack has no moat
https://twitter.com/slackhq/status/531941157283315712?lang=e...
They should be fine. $307m of the loss was stock-related compensation.
How could you screw up a business who has a product as popular as Slack?
edit: Just look at what's happening to Patreon
https://news.ycombinator.com/item?id=17432801
I was referring to Carl Benjamin being removed. Jordan Peterson and Sam Harris, who were two of Paterson biggest earners removed themselves as a result and encouraged others to do the same.
https://dailycaller.com/2018/12/17/jordan-peterson-sam-harri...
All communications platforms so far have come and gone in vogue.
I remember in 2005 when everyone in our office communicated over MS Messenger.
Maybe Slack is to instant messaging as Facebook was to social networking and will get some longevity. But it's too early to tell yet.
- no message history past a few months
- the redesign made it look like a phone messaging app
- poor group chat functionality that didn't have anything beyond basic permissions
- calls were peer-to-peer for the longest time, making it mostly trivial to get someone's residential IP and DDOS their network.
It might have improved since then (I know calls are no longer P2P) but that's why a large portion of the gamers moved to Discord.
I have an unlimited-Europe plan with it and a phone number attached to it, but I'd rather use something else some day. I haven't found any cheaper alternatives though. Maybe someone here can point one out to me.
But as an aside, “the cheapest one you can find is horrible” is probably appropriate for what “cheapest” usually translates to in products, and expecting to find one cheaper and better when you can’t find one cheaper at all, seems optimistic.
Instant messenger, internet phone and video/presentation conferencing.
Am i missing something here because its literally my primary business communication tool.
IMO the bigger issue here is there expectations to lose 9c / share next quarter, which isn't explained by that $307 M last quarter.
Just because a product is popular doesn’t mean it’s a good business.
It also amazes me that people hand wave compensation as a “real” expense....
We've had public business software companies for decades, they all created a new "category" of software, why does he think his is something new?
Fundamentally speaking, how is Slack any different to the first email program? The first operating system? The first chat system?
We've had this sort of software, and companies that sell it, for a very long time now.
I didn't see the need for a global digitised cab company but it didn't stop two companies burning $30 billion to try and make it happen.
Let's check that timeline of team chat apps...
2006 - Campfire launches (now part of Basecamp)
2010 - Hipchat launches
2013 - Slack launches
At the end of the day Slack is a SV unicorn that went public without turning any profit. I believe they marketed this in their S-1 as a "loss-making" company...who does the market think it is anyway trying to act rational.
In some ways Google Apps for Business is a really good example of a sort of "new category" of communication software. You could plugin apps online, rather than have to host it your self.
A bit of googling shows he's called Slack a "brand new category of software" many times before, but I'm not clear what he thinks it is.
How many corporations use G suite for their email? How many roll their own email systems and use thunderbird?
To the average user, email is a proprietary non-federated system filled with tracking.
i heard they were throwing money at integrations with everything, had a bumpy ride scaling (mysql master-master ffs) and had vague plans for AI that'd help automate your org, not sure where that went. But the VC wants exponential or bust, so there you go.
Even if he says that Slack is "not about tech but about making work happen", there has been countless of other programs that, while being "tech", made work happen. I just can't see this "category innovation" at all.
Perhaps, and also perhaps when they do, it won't be so valuable anymore...
https://www.vcgate.com/Bessemer_Venture_Partners.asp
Skype was a P2P phone calling program over TCP/IP.
I.e., a neat trick that might have killed traditional telecoms.
Then Microsoft bought Skype and killed it instead.
Even so, Skype was a household name for video chat for years (despite it's sometime shoddy quality) until FaceTime, Gchat and others implemented video towards 2010.
What's Slack done that's different from other chat platforms available today? Stuff like Jira integration is of interest only to a small portion of its target market, and it's that exact market that will complain about the pricing, that it's non-federated, heavy on resources, intrusive in its tracking, etc.
Btw, although I've seen little difference between HipChat and Slack in my day-to-day, the switch from Skype to HipChat was a profound improvement. Messages sent on Skype could and would frequently vanish into the ether, and/or arrive in the conversation thread way out of order. Imagine troubleshooting production issues under those conditions!...
It's not the market's fault Slack's revenue/sales expectations don't match their goals. That's entirely on Slack to either do a better job or be more realistic with their 'ceiling'.
https://slackhq.com/atlassian-and-slack-partnership
Everyone shrugged and said "Yeah I need that" and it looked/felt better than Hipchat.
Definitely not a new category, I very near share a date of birth with IRC. Even before that you had BBSs
We were using HipChat at a previous company (2013, I think), and I never understood the switch to Slack. I was like: Wait, but what's the difference? Everybody knew about Slack, and no one about HipChat.
I also don't think they introduced a new category of software, they just spent an absurd amount of additional money in marketing. That's it.
At the time it was claimed that this was really a whole new way to organize data and work. In practicality, not that much changed from HipChat. Pinned items and the ability to rifle back through conversations saved my bacon a few times, but looking back on it, I don't think they outmatch properly-organized documentation and wikis.
We had a good system for creating and looking for documentation in our wiki system, so I hope that was not a selling point for Slack. Unfortunately we (Tech) never really knew why we switched.
EDIT: Also, on the performance side, we were there for the beginning of both systems, and both had their good amount of issues initially. By the time we switched, I don't remember that many HipChat outages. I remember a lot of Slack outages starting up as well, and these days I have issues with Web interface connectivity at least once a week (native works).
It went something like this:
“We are now ‘agile’
Ok what are all the cool agile dev ops companies using?
Aha Jira&Slack. Ok let’s use that”
From there it gets even more crazy. The tools get included as a standard question for evaluating vendors on RFP’s. Vendors that use a similar toolset are rated more highly.
When you question why. The response is along the lines of:
“Oh if they are using Jira/slack/other tool, it must be an agile/dev ops/chat ops shop”
Put another way sometimes these tools end up being used as a “signal” to others rather than intrinsic value. The value is in the signalling, driven by social proof.
If one can pull this of when marketing your product you have a win. Effectively you have associated a movement (I.e agile) with your product (I.e Jira). So the buy decision is driven by the need to show they are doing {x}.
There must be some basis Of this and reading on how this is done? The broad topic would be marketing but what specifically?
Notes:
* This is merely an observation. I am not judging the accuracy of the statement that using a specific product = demonstrating some property.
These associations may not be applicable in all markets and I have seen them change over time.
cargo cult driven marketing
Slack's "good enough" for most communication and has better integration with most products, so it stuck. Others always failed in some way.
It's not that Slack is irreplaceable, if anything it's more vulnerable than ever, but that it has momentum. Other platforms like Campfire or HipChat always fell short of expectations.
You could argue that we had cellphones for ages, why would someone need an iPhone? You could also argue that an android has the same functionality as an iPhone, again why would someone need an iPhone?
The new "category" of software is about how people relate to software, not the software itself. IKEA created a new category of furniture, or it did not?
I think Uber created a new category of service, but we always had taxis and gps; Slack didn't necessarily create new software, but in my opinion it put chat apps on the general public's mind and it kinda became the go-to name, same as AWS or IBM. That's worth something.
his argument is that it’s so new that people don’t grok it yet. (which of course is wrong)
Having used both I think it is a legitimate question. iPhone vs android is just arbitrary preference at this point.
I think the same thing with Slack. Whether you use Slack, Teams, Hangouts Meet, or something else is becoming entirely a preference. For a company that is losing money this is not a good thing.
Just look at the insane secondhand value of any iPhone. Even my perfectly working old iPhone 6S I use as a backup would still sell for €240 today - which is absolutely nuts...
However, I agree with the general sentiment that Slack must be profitable by now and if their messaging isn't reaching the target audience it's their fault and their fault only. Not to mention the ridiculously high valuation.
Only host things if you really need to, and only if you have the resources to support them. Unless you want to add “manage chat servers” to your list of core competencies, just buy something and move on. Our business isn’t managing chat servers. All we need is an IM service so we can communicate and get our stuff done. Slack, for all its faults, works for us, and frees up our time to focus on the problems we actually want to solve.
https://mastersofscale.com/ev-williams-never-underestimate-y...
Artifice. Just like WeWork trademarking the word We and coming up with a bunch of frothy "created with the power of We" bullshit
What matters to the market now is that they are a subscription-based software business model not unlike thousands of other SaaS companies. It’s a very well understood space watched by investors who can compare what they are seeing to many other examples.
Slack needs to adjust to life as a public company - how to set expectations, how to manage to those goals. In fairness they also were saddled with hugely inflated expectations before the media and some investors likely realized that they are just like a lot of other SaaS businesses.
It would be common for an acquisition agreement to shackle the founders with non-competes. It would also be common for those non-compete clauses to have limited durations. (I have seen 2-3 years in documents.)
Slack bought ScreenHero over 4 years ago. The non-competes have likely expired.
Really hope the answer isn't ads!
A number of free users upgrade over time by upgrading their free account or by highly recommending Slack at their workplace.
I feel like I've definitely heard that said a few times before.
>Office 365, Salesforce, Adobe Creative Suite, ADP
I'm not a coder but these applications seems vastly more complex than slack - and thus I would be willing to pay more for them.
>DocuSign
This seems closer to being along the same lines as slack, but I feel like docusign doesnt sell it's "software" per say but rather implementations and operational change consultation.
>Shopify, HubSpot, Zoom. Not sure what these are
Sorry for the late response
Considering that they are a pure software company this is quite shocking and, to me, a sign not to touch them with a barge pole.
If they were just putting it all back in sales and marketing they wouldn't have losses this high.
I don’t know whether Slack is in this position, but simply looking at revenue and losses doesn’t give you enough information to judge how well they’re doing on its own. You need to look at things like CAC and growth rate.
Also, selling into the enterprise is a long slow process.
Enterprise sales is expensive, but the contracts are very large and long-term.
For its second fiscal quarter, Slack posted a loss of $364 million
364-307=57
Open channels meant - more transparency and anyone can join and contribute. All those hella bots are extremely handy.
Overall, i would say we became more transparent, focussed and it made communication across a single company SIMPLE.
I'd be interested to know the stats on people using the video feature. My experience is that companies on slack primarily trust Hangouts and Zoom more than Slack for video conference.
> platform
Slack isn’t a messenger app. It’s a platform. People like to “work” in slack for some reason. not that slack is so well suited, but because it reduces the number of context switches you need to do. it’s good to have something as a central hub.
If you produce some kind of app, you’ll want to integrate into a messenger platform and your choice (if only one) will be slack. this gives slack gravity and that is what makes it special.
salesforce the core product is nothing special. it’s salesforce the platform which matters.
A couple things come to mind, like file sharing, calendar & room management, project management (around tasks, mainly), VoIP integration for sales calls, and maybe even gasp email.
I've long thought that they've essentially built beautiful native/mobile/web clients for IRC-type chats and provide hosting/IRCOp services. Charging per-seat to enterprise seems like a very, very lucrative proposition for this type of product/service.
There are a couple of eyebrow-raising financials:
1.) 100,000 paid users @ $6.67-$15/mo = $667k-1.5m MRR = $2m-$4.5m QRR
2.) 13m DAUs @ $0/mo (free tier)
3.) They lost $30m Q3 '18
4.) They lost $300m Q4 '19 due to 'stock based compensation' (which from my perspective should have been accrued Q4 '15 onwards)
And for all the above... a $5billion unicorn valuation considering chat is a solved problem?
Three major questions:
1. Has any other SaaS or company in human history ever had a 1:130 ratio of paid:free users with a hard cap of $15 on MRR?
2. Does quarterly losses between $30-$300m on $4.5m in revenue make sense considering the unit economics of cloud-based chats?
3. Does 100k paid subscribers seem a bit low for a 6 year old company?
Really weird situation from my "knows enough to be dangerous" perspective and I'm all ears because from my perspective:
1.) There's really not enough innovation or a big enough TAM (considering competitors) to drive a unicorn valuation
2.) Which shouldn't matter because this is still a potentially lucrative market
3.) And yet... they're losing money hand-over fist
Weird, weird weird. Feel free to share your thoughts, I just ask that you consider this message comes from a perspective of "confused guy trying to make sense of these crazy times"
Upgrading Slack from 'WTF' to "Let's see how this plays out and if it's priced accurately' because $30m in losses on $145m in revenue for cloud enterprise chat with a long-tail of free-tier users seems pretty promising!
Thanks again!
Slack on the other hand has communities with thousands of members in them that have zero monetization. No one is going to shell out 60k for their open source project's slack to be monetized.
I would bet that the free plan for slack is basically free advertising for them to on board people to their paid plans
TAM includes competitors.
It can't possibly be just 100,000 paid users. That's clearly nonsense. Oracle uses it and they have 80,000 employees alone!
I work at a megacorp, and we use Slack without paying a single penny.
We have a Slack account setup per project, which typically have 5-50 members. We don't care too much about search or history, we just want a simple chat and audio call solution that isn't horrible to use. Slack fits that bill.
To be clear, this doesn't sit well with me; we should be paying for a service we make good use of - but Slack makes it so damn easy for us to get away with it!
Maybe this is part of some long-term strategy, to basically give it away until it becomes ubiquitous, and then scale back the free tier?
Most users don't know nor care about the paid tier, especially if CHQ isn't footing the bill and the cost for each user license is passed to a business unit or department (which can be how megacorps are setup).
The change over was funded by corporate and it's becoming the standard form of comms in the enterprise.
I haven't looked at this, but if this is a large part of their loss, then you can possible find the answer to why it was declared in one chunk by looking at the timing of option grants. The schedule should be available. Normally when I see "Our company is losing money" and the money it is losing is a one time loss that would normally be spread out over a long period of time, it's because they timed the announcement to coincide with the granting of options. It causes the price to drop precipitously, they grant the options -- "No funny business here! We scheduled the option grant 6 months ago!". Then the price rebounds. It has happened in every large company I've ever worked for. I always wonder how they get away with it...
If I were to take a wild guess, I'd say it was they tried to grow too quickly and overspent on marketing, getting a barely decent ROI on ad spend.
Collaboration and communication software has existed basically since computer networks exist. More specifically icq, MSN, even Skype falls into the same category of software...
They created a succesful startup - a lot of kudos for that. The company, as so many others this year, fails to proof itself in the public market.