Well, you tell us what do you think about Bhavin Turakhia’s commentary on Slack’s blockbuster IPO.
Bhavin turakhia is the founder of Flock, a Slack competitor.
Here is his commentary on Slack IPO (the emphasis is totally ours)
“We have observed that people and businesses haven’t yet fully understood the power of workplace communication and collaboration platforms and the tremendous impact they can have on boosting organizational productivity. The publicity around Slack’s direct offering as well as the rest of the companies operating in this industry will hopefully help more people realize that they need not go along with the traditional way organizations functioned for decades. Having said that, to be successful with the direct offering, Slack needs to avoid over-hyping. This is extremely difficult when the people most likely to benefit from initial hype are the people in the best position to cause the over-hyping.
It will be very exciting for the current shareholders at Slack if the initial offering is priced high, but it’s difficult to arrest a decline once one has begun and it makes it almost impossible for the market to reward an ongoing beat-and-raise cadence of consistently good performance. This may make the people able to sell their shares early which may make them extremely rich in the short term but rob them of the opportunity to realize even greater gains in stock value that they could get if they approached it from a steadier, more deliberate perspective. A brand like Hubspot is still trading around six to eight times higher than their IPO price and consistently delivering solid investor returns year over year, giving investors that held onto their stock much bigger gains. A good analogy here is a car. If you keep it floored going as fast as you can, you’ll go really fast and have a lot of fun, but you’ll run out of gas and leave yourself stranded in the desert. Whereas keeping the car at 65 KMPH might mean you make it all the way across the desert to greener pastures than you ever imagined.
Above all, Slack needs to get better at controlling the costs of their revenue. Even conventional metrics of SaaS economics are, again, relatively new to stock market investors. Just as public markets were getting used to the idea of losing money to acquire a customer who is then monetized over a relatively predictable term for a relatively predictable return, companies like Flock have broken those basic models by introducing “infinite” customer lifetime value and customer dollar retention that’s far above the 100% mark that SaaS companies used to struggle to get to.”
What’s your take?
Is this a brave way to hack into ‘Slack’s current hype’ (i.e. keep plugging) or …
Aside, is Slack the next Salesforce (which gets 100X the times of bitching from its competitors?)