My question is where the hell is that money going?
That money is all the cash flow in some entire minor industries. It’s the GDP of some minor lower/mid-economy nations’ cities. Their losses are equal to half the entire GDP of Palau.
Maybe I’m detached. But I don’t understand the cash flow in chat apps today. It’s absolutely bizarre amounts of money for something that can and will easily be replaced in a few years, as always happens.
Overpaid executives. I worked for a darling in the security space that has not posted a profit ever in it's 7 years post-IPO (they could at this point, but choose not to). Yet the company paid the CEO, multiple years I was there, over $300M annually. The current CEO makes a "base" $128M and has incentives of over $400M dangling in front of him. Yet any time the company misses guidance do you know what they blame? Paying the "field" (sales and field engineering) too much in commission and stock grants. Yet if you roll up all executive and board grants on an annual basis you're north of a Billion (with a B) in pay. Yet... No analyst has the nerve to ask that question point blank on the earnings call.
Beyond executives and the board? Marketing. I'm now at a much smaller F round startup that blew $350k+ on the RSA conference and another $150k+ on expenses for said show. The return on that is miniscule.
Where does the money go? I feel like most startups I've been in have been very good at funneling the funds exactly where they want it. Profitable doesn't seem to be the goal anymore, but more of to sink as much cash into executive pockets as quickly as possible.
Their CEO is paid ~$10M (total comp) [0]. The other listed executives are paid much less. Even if they cut executive compensation to 0, they would still have massive losses.
>No analyst has the nerve to ask that question point blank on the earnings call.
Ooooh, I need to Google to see if this has happened. Obviously investors and analysts would prefer to have those talks privately to avoid alienating anyone important, but it has to have happened sometime.
Slack targets the same market that made Microsoft big: the corporate sector. For big companies, even recurring licensing costs for Slack are trivial, and it gives the managers of the bigger companies a feeling of importance to be able to negotiate big bulk discounts. In this corporate sector market, all you need to do to get rich is to be the established player, which Slack very much seems to become.
As for the easily being replaced part, Slack will just buy up any competitor while its small. Just like how Facebook did it with Instagram and Whatsapp. Facebook is deemed uncool by the younger generation but not Instagram and Whatsapp.
Why is it so bizzare? Do you think that Palau has enough people engaged in producing goods or services that deserve more than their current GDP?
I think comparing the valuations of a US company HQ'd in one of the most expensive cities in the world, that has created a tool that is used by nearly all organizations around the world for communication is well worth the crazy valuation.
I’m not talking about their supposed $16b value. I’m wondering where the money they’re actually spending is going.
They’ve lost nearly $150 million in a year. How? What does that money even go to? Even paying their devs incredibly generous wages and benefits, server costs, advertising, deals with businesses, etc, I can’t imagine the losses being that big. It’s insane amounts of money to burn through.
That doesn’t seem like that big of a number for a large corporation that Slack is now. Tesla had a net loss of 700mm[1] last quarter. Their business is more capital intensive for sure but still. Just looking at a 150mm net loss and saying it’s a big number doesn’t tell you much.
Since when has a company making poor over-priced decisions ever justified a better valuation? It's the complete opposite.
If Airbus decided to pay twice as much for planes would you say they should be valued higher?
While there is intangible benefits that come from deciding to setup shop in one of the most expensive cities on Earth I'm far from convinced a messenger app company couldn't thrive elsewhere.
What they offer is not unique nor difficult to create. Doubt they'll ever manage to pull in $1B a year to justify that price, the required business model for it would have their customers looking elsewhere overnight.
> Not a fan of Slack but they do have more than chat: voice and video, screen share, drawing on screen, shared control
Most of the features are a no-go in large enterprises and from what I've seen, enterprises will also choose better tools for some of that functionality (like zoom over slack video).
That money is all the cash flow in some entire minor industries. It’s the GDP of some minor lower/mid-economy nations’ cities. Their losses are equal to half the entire GDP of Palau.
Maybe I’m detached. But I don’t understand the cash flow in chat apps today. It’s absolutely bizarre amounts of money for something that can and will easily be replaced in a few years, as always happens.