How One VC Firm Amassed a 24% Stake in Slack Worth $4.6 Billion

An anonymous reader shares a report: Stewart Butterfield loved the game, but not enough people agreed with him. He spent two years and raised roughly $11 million to build an online adventure game called Glitch that featured garrulous, blue-headed creatures and milk-drunk butterflies. Once people had a chance to play it and Butterfield could track the numbers, the verdict was clear: Glitch was a flop. "There was this night where I just lost faith," Butterfield said in a podcast interview. He decided in 2012 that it was game over. Butterfield made plans to shut down the company and give the remaining money back to his investors.

Andrew Braccia, a partner at venture capital firm Accel, wouldn't accept the refund. He and other investors urged Butterfield to keep the remaining $5 million and try something else. That turned into Slack Technologies, the maker of corporate chat software that went public Thursday. At the close of trading, Slack's market value was $19 billion. Accel invested about $200 million in Slack over seven years, largely driven by Braccia's unwavering faith in Butterfield. As of the stock debut, Accel held 24% of the company, the biggest VC stake in a newly public unicorn in recent history. Those shares are worth $4.6 billion today.

Might not be anything left for a short

[fortythirteen]

Slack's value is already down ~11.5% from its IPO. And there's nothing showing that it'll be recovering by the time you can short it.

Re:

[SunTzuWarmaster]

Well, shit. Looks like only a $4,071,000,000 return on a $200,000,000 investment. May as well pack up and go home, we only realized a 20x return. Why even bother anymore?

Re:

[fortythirteen]

Looks like only a $4,071,000,000 return on a $200,000,000 investment

Not for anyone investing in them through the stock market. The only people that got a payout were early investors and the backers of the initial offering based solely on BS "unicorn" hype that won't pay off when the rubber meets the road. Everyone else has lost money since last Monday.

SELL SELL SELL!

[stealth_finger]

Sell now before that value drops like a rock to about tree fiddy!

What will the articles look like when Slack falls?

[Anonymous Coward]

So what happens when people realize that Slack is just a simple chat application, with virtually no lock in, and there's already free OSS competitors that have replicated their feature set, as well as other closed source competitors? Furthermore, they have ONE APPLICATION.

There's nothing particularly complicated about chat, and there's nothing particularly innovative about it that hasn't been replicated elsewhere. Chat also has a low learning curve, so replacing it with something else is "no big deal".

I'm sure Slack will make money. But 20 billion market cap? GM is only 52 billion. You're telling me that a company that makes a chat app is worth 40% of a company that makes cars?

So lets fast forward about a year or two... that should be enough time for the hype to have all died down, and people might start realizing that they aren't worth 20 billion dollars. They likely won't go under, since AFAIK they have real customers... but I don't see how they can possibly maintain dominance.

All wrong

[SuperKendall]

So what happens when people realize that Slack is just a simple chat application, with virtually no lock in

Even if you ignore the value of being able to search past discussions and stored documents, there is still lock in.

One company I was with switched away from Slack, and years later people are still griping out it. They hated moving away from Slack because other things just aren't as good at what Slack does - allow others to communicate as clearly as possible over a text based interface.

Yes it's "just chat" but there is a lot of nuance to a good chat application and Slack has a lot of that down.

There's nothing particularly complicated about chat

After having use a lot of chat clients, and having even developed some, I can say with authority you are so, so very wrong.

But 20 billion market cap?

That is the only part where I agree. Although I think Slack is absolutely at the top of the chat companies I find that valuation too high myself... although I also think it is true that the top companies helping manage chat also have a very bright future as more and more companies support remote work.

So lets fast forward about a year or two... that should be enough time for the hype to have all died down

Indeed, I would love to see another article revisiting this a year from now and see what has happened in the interim.

Re:

[SuperKendall]

I find it laughable that anymore would realistically think hosting a Slack-like system themselves would mean LESS downtime.

It will for sure mean more downtime, just that you are in better control of it.

Why would I want to use a pale shadow of the real thing? I've seen too many times where the siren call of saving money actually was worse in the long run with time lost to managing a platform that was not part of the core business.

If Rocket works for you more power to you, but I am dubious that it's a full c

Re:

[Kjella]

There's nothing particularly complicated about chat, and there's nothing particularly innovative about it that hasn't been replicated elsewhere. Chat also has a low learning curve, so replacing it with something else is "no big deal".

But the flip side is that there's also no big gain, people hate change and it's <$100/year to make people you pay tens of thousands of dollars if not six figures work more efficiently, which is one of those metrics you can't really measure. It's a bit like trying to save money on whether you give your employees pencils or pens, if they have a preference screw the cost difference. It's different than when you're Discord and most your audience is measuring the price in Fortnite skins. And it's not like the

Slack AKA

[Rosco P. Coltrane]

IRC with a GUI and emojis.

It goes to show, you can turn a pretty buck recyclingold ideas...

And...

[virtig01]

And voice calling calling.

And channel history search.

And group video chat.

Re:

[Namarrgon]

And persistent messages, pinned files, code snippets, rich text, service integrations, etc etc.

I'm an IRC user from way back, both personal and business contexts, but the net splits alone were enough to drive me away. Modern chat clients are far, far beyond "IRC with a GUI".

Does make me wonder what Wave could've become by now, if Google or even Apache had persisted with it. Flawed as it was, it was way ahead of the curve.

Slack Is as Slack Does

[AlanObject]

I am currently on a contracting gig where the client company uses Slack for internal communication in the team. As far as I can tell e-mail is almost totally abandoned. They use zoom for all their external stuff like with customers.

As chat applications go Slack is good. My biggest beef with it is that if you are signed into more than one workspace you get "message pending" status but you have no idea what workspace it is coming from. You have to step through them all. As an overall productivity tool

Not worth crap

[p51d007]

Until you SELL the stock. Slack is an "ok" tool, but it's like every other get rich quick scheme....it won't last once the new wears off. Perhaps Fakebook, MS or some other will buy it, but that's about it.

NOBODY FUCKING CARES

[nagora]

Stop posting Slack press releases here, you fucking fuck fuck.