back to article Loss-making $15bn hipster chat biz Slack suddenly less appetising to investors as it predicts deeper losses

Slack shares got hammered last night in its maiden results after listing on the NYSE in June, despite the collab company beating analyst forecasts for second quarter sales. There were a few bumps on the road, including the $8.2m in credits it dished out to customers for service failures, as revealed in the financials for the …

  1. sabroni Silver badge

    Investor darling Slack .... has never made a profit.

    Ah, the Twitter business model!

    1. David Bird

      Re: Investor darling Slack .... has never made a profit.

      Although, unlike Twitter, people pay them to use the service. So where are all those millions in revenue going?

      1. steviebuk Silver badge

        Re: Investor darling Slack .... has never made a profit.

        Poncy offices. Apple Mac Pros, Starbuck coffee lunches/meetings. Having to travel for "meetings" instead of using a digital solution so they can say they are a "traveller" and "Busy all over for meetings". Hipster clothes and accessories. Endless meetings with fuck all to show for it. Stuck with an issue instead of using current staff that are good if not better, they probably hire overpriced consultants that just ask the engineers "What would you suggest" then they palm that answer off as their own.

        That's what I bet.

        1. Cederic Bronze badge

          Re: Investor darling Slack .... has never made a profit.

          "Having to travel for "meetings" instead of using a digital solution" would be comically ironic, if you weren't making it up for humorous effect.

          What was that? You weren't? Oh...

    2. Blank Reg

      Re: Investor darling Slack .... has never made a profit.

      Investor is the wrong term, Investors look for viable companies that will make money.

      The people that buy slack, uber, snap, etc. are just hoping that some bigger company will buy them out. A more appropriate term might be speculator, or gambler, or maybe idiot.

    3. Gonzo wizard
      Coat

      Re: Investor darling Slack .... has never made a profit.

      One might say they're... slacking.

  2. Dwarf Silver badge
    Joke

    Never made a profit

    Perhaps its because all their employees are Slackers

    1. MachDiamond Silver badge

      Re: Never made a profit

      "Perhaps its because all their employees are Slackers"

      Maybe, but it's more likely that the business model has never been one that makes financial sense in the first place or scales negatively. It's the 80's dot com boom all over again with a new generation of people.

      Lots of ideas that sound great will never be a profitable business. Some good ideas would make a great business if the company hadn't decided to locate to three floors of a high rise building in San Francisco with a view of the Golden Gate bridge at astronomical rates and had to pay the least employee six figures so they can afford to rent a shoe box to live in (and disinfectant for their shoes).

  3. Anonymous Coward
    Anonymous Coward

    Hooray for a glorified Usenet client!

  4. Anonymous Coward
    Anonymous Coward

    Please don't fold now we've migrated to this from SfB, Please don't fold now we've migrated to this from SfB ....

  5. deadlockvictim Silver badge

    Slack

    Whenever I hear Slack mentioned, the commentary is usually not positive:

    • it is a disruption

    • it is addictive

    • it is a time-waster

    • it is intrusive

    and so on.

    That being said, we have Microsoft Teams and it is annoying. I turn it off. If co-workers want me, they can send me an e-mail or walk the 100m to my desk.

    The comments from Ezra Klein about Slack & Vox on his podcast are an example.

    1. The Man Who Fell To Earth
      FAIL

      Re: Slack

      Used both Slack & Teams/Sharepoint. The cloud storage aspects are OK. The rest is complete time waster. When that crap gets introduced to an organization by a pointy-haired-boss, productivity drops.

      1. JDX Gold badge

        Re: Slack

        That's just nonsense. It's very useful just like IRC and such things.

        "Hey Bert, what was that STL trick you mentioned the other day"

        "Jane, can you reboot the server for me"

        etc

        1. Blank Reg

          Re: Slack

          So it's a fancy replacement for the unix talk command I was using as far back as 35 years ago.

          1. Cederic Bronze badge

            Re: Slack

            Pretty much. Although not necessarily as fully featured as ytalk, so things haven't progressed as much as you'd hope in that period.

        2. The Man Who Fell To Earth
          FAIL

          Re: Slack

          "That's just nonsense. It's very useful just like IRC and such things."

          So your "big productivity gain" is what the unlimited text messaging on every employees cell provides already provides without costing the company squat.

      2. cbars

        Re: Slack

        You must have annoying colleagues and should train people to talk to you properly. Hint: "Hey" is not a message I need to respond to, if you have a question then ask it. Otherwise I will ignore you.

        1. sabroni Silver badge

          Re: "Hey" is not a message I need to respond to

          "Hey! Get out of the way of that speeding car!"

          "No, that's not a message I need to resp......."

      3. steviebuk Silver badge

        Re: Slack

        A pointy-haired-boss introduced it to our old company. It didn't last long. It was shit, a time waste, nothing but poncy shit was done on it and then when it turned out he had to pay for the old archive messages it was scrapped for some other digital, hipster bollocks.

        Having said that, I can't lie that I'd like to create something that is classed as "Hipster bollocks" just because I'd like to retire. I love IT but can't stand this push to "the cloud". And can't stand lying fucking consultants.

      4. Anonymous Coward
        Anonymous Coward

        Re: Slack

        When that crap gets introduced to an organization by a pointy-haired-boss, productivity drops

        You nailed it.

        We had since forever a local Jabber server for intra-communication. No voices, no pictures, no distractions.

        Then we hired an outsider to "revitalize" our flagship product. Oh Lord. First thing he did was to tear down Jabber and slap us Slack on our faces, just because "notifications from successful builds and new commits". Which we already had in e-mail.

        And then many other things went downhill. The ship he was supposed to save is sinking faster, but in an angle where captain's quarters will be the last to get under the ocean.

        AC for obvious reasons, as I haven't (yet) left the ship

    2. GruntyMcPugh Silver badge

      Re: Slack

      We have Teams,.... it's just Yet Another Place to Lose Stuff. Another feed to check,.... and I don't really like the interface. I'd far rather there was more Skype integration into Outlook, so everything was driven by the same client, but Skype is a dead duck and apparently telephony is moving into Teams,..... so again we have two clients,...

    3. Gonzo wizard
      FAIL

      Re: Slack

      I'm tempted to say they're using it wrong.

      But seriously, I've been a slack user for about three years and my approach to solve all these issues is to mute all but the most important channels I'm subscribed to. It kills the endless distracting notifications and I get notified if I'm mentioned by name anyway. I will go through all the muted channels first thing, around lunchtime and at the end of the day, never more frequently and often less than that.

      I'm in 30 channels across two organisations. All are muted except for one team channel and the channels dedicated to receiving alerts about production issues. Works like a charm.

      1. The Man Who Fell To Earth

        Re: Slack

        "...my approach to solve all these issues is to mute all..."

        I love the irony that the "right way" to use something is to put it on mute.

    4. TechnicalBen Silver badge
      Joke

      Re: Slack

      "100m to my desk", wow, that's a long reach from keyboard to mouse. Is the display equally wide?

    5. JohnFen Silver badge

      Re: Slack

      If I had a choice, I'd use neither as well. But if I had to choose between the two, I'd take Slack over Teams in a heartbeat. Sadly, my employer is making us use Teams.

      1. stiine Silver badge
        Unhappy

        Re: Slack

        You're lucky, I have to use both...

  6. DavCrav Silver badge

    My new business venture

    Selling £10 notes for £9. My plan is to chase incredibly fast revenue growth. Initially there will be some losses, sure, but once I have achieved scale I'll be able to charge £11 for my £10 notes and really rake in the pounds.

    1. steviebuk Silver badge

      Re: My new business venture

      Can I invest?

      1. RegW

        Re: My new business venture

        I'll take all you've got for £8.75

      2. Korev Silver badge
        Childcatcher

        Re: My new business venture

        My mum once taught a pupil who was so thick that he sold a fiver that he'd found for £1.75...

        It turns out that was actually a smart move as the original "owner" of the fiver complain and the teachers made the "purchaser" return it!

        1. Anonymous Coward
          Anonymous Coward

          Re: My new business venture

          Would have been smarter if in an arcade which only accepted coins.

          All the water in the world, not a drop to drink and all that.

  7. JDX Gold badge

    I just don't get these massive losses

    Slack is a genuinely useful product, which unlike Twitter et al has directly paying customers. The central software really can't be that complicated so:

    For the third quarter, Slack said it expects revenues of between $154m and $156m – 46 to 48 per cent year-on-year growth and a loss of between $47m and $49m, both slightly higher than expected.

    How are they even spending $47m on anything, let alone spending more like $200m? I wouldn't know HOW to spend $200m.

    It seems all these companies are started in someone's garage for about £50 and then suddenly cost hundreds of millions once they get well known. Are losses actually losses, or do they just borrowing and borrowing?

    1. c1ue

      Re: I just don't get these massive losses

      One obvious guess is cloud costs.

      I don't know if Slack operates its own data centers, but very possibly not. In which case, it can get hammered by cloud costs both due to freemium model and due to even paying customers loading ever more non-chat stuff (pics and what not) into their Slack channels.

      Security is also probably a serious issue because Slack is basically an overgrown web app.

      1. Bronek Kozicki Silver badge

        Re: I just don't get these massive losses

        I think you might have a point there. Many "cloudy" companies use woefully inefficient languages like Python, Node.js, Java or Ruby which require lots of memory and/or CPU cores to run with sufficient performance, and the only scalability they do is just adding more machines. Which come at a cost.

        I am so glad that Golang is gaining popularity, even though it is not my favourite language it is simple (and opinionated) enough for Python coders to pick up and write decent code.

        1. MachDiamond Silver badge

          Re: I just don't get these massive losses

          "and the only scalability they do is just adding more machines. Which come at a cost."

          Ahhh, you see, the reason they use inefficient code that forces the investors to pay for more hardware is because the IT department is coin mining whenever there is any excess capacity, like in the middle of the night and on weekends. During peak business hours the app is using all of the hardware capability so they can show that the racks are needed.

      2. Anonymous Coward
        Anonymous Coward

        Re: I just don't get these massive losses

        I believe Slack hosts on AWS.

      3. Gonzo wizard

        Re: I just don't get these massive losses

        That's just bad practice. If they're paying over the top for hosting they should use a hybrid approach and Kubernetes. Core load hosted in the cheapest possible way which is probably going to be your own hardware.

        1. JDX Gold badge

          Re: I just don't get these massive losses

          But even in Ruby, just figure out how many users you can service on a single server. I'd bet tens of thousands, maybe an order of magnitude more (or even 2) given a single machine can run that many for real-time gaming.

    2. Anonymous Coward
      Anonymous Coward

      Re: I just don't get these massive losses

      >How are they even spending $47m on anything, let alone spending more like $200m? I wouldn't know HOW to spend $200m.

      Sunglasses and holidays on Neckar Island I suspect.

      1. Geoff May (no relation)

        Re: I just don't get these massive losses

        Those letters that spell "Go Stick Your Head in a Pig" don't come cheap.

        1. JDX Gold badge

          Re: I just don't get these massive losses

          Very good.

    3. steviebuk Silver badge

      Re: I just don't get these massive losses

      Lego is quite expensive. I could spend £200m

      1. Bongwater

        Re: I just don't get these massive losses

        Warhammer 40k, get that disposable income ready! $200 million would get you a nice Bio-Titan, 3 squads of Death Company Marines, and maybe if you're lucky, Celestine and Magnus :)

    4. diodesign (Written by Reg staff) Silver badge

      Re: I just don't get these massive losses

      For one thing, Slack said earlier this year it will spend $250m on AWS cloud hosting between 2018 and 2023....

      C.

    5. MachDiamond Silver badge

      Re: I just don't get these massive losses

      "How are they even spending $47m on anything, let alone spending more like $200m?"

      The business will never go anywhere if you don't have a full suite of C-level executives. You also need branding specialists, social media coordinators, a department to sponsor influencers, telephone sanitizers, etc. The whole lot that "everybody knows" is required to be taken seriously in the business world.

      We need an icon for a "B-Ark"

  8. Mr.Nobody

    It runs on AWS

    so clearly much of their revenue goes to Mr. Bezos.

  9. woppo

    Would you trust them? https://www.theregister.co.uk/2018/12/21/slack_iran_ban/

  10. Tikimon Silver badge
    Facepalm

    So THAT'S why the aggressive Teams invasion...

    Installs per-user, reinstalls if deleted, pops up a BIG window on login begging you to log in. Now it makes sense, they're trying to beat Slack.

    Software as a service BLOWS. It's merely a way to assure eternal rental, and to keep the user away from pesky competitors.

    1. Calum Morrison

      Re: So THAT'S why the aggressive Teams invasion...

      You've noticed that too then! It's just been in the last few months Teams has really started ramping up to be the app you can not kill. It's like the browser wars all over again...

  11. karlkarl Bronze badge

    Good, I hope this slow, amateur shite disappears.

    In future I recommend turning down any contract as soon as you find out that the team uses kiddie web crap like slack.

  12. Anonymous Coward
    Anonymous Coward

    Email is a necessity.

    Slack is, and always will be, a poor substitute for email.

    It may be the current trendy proprietary messaging app, like ICQ and AOL instant messenger and so many others before it.

    But it will eventually die like all the previous ones when a newer and therefore trendier one comes along.

    Meanwhile people will use email to get work done.

  13. Gordon 10 Silver badge
    Mushroom

    Fixing security holes

    Maybe they are going to fix the one where *any user* can remove an app or addin for the *whole* workspace (company-wide!)

    I removed the Webex addin 3 times in one day for everyone before I found that out... fortunately it wasn't something useful! (badum tish)

  14. carnage3604

    Hangouts was fine

    What's equally crazy is how Google killed / butchered / neglected / abused Hangouts (which most of the early Slack adopters had via G Suite) and those same companies are now paying to use something that does 99% of the same thing. Slack is a glorified .gif sharing network and I seriously doubt it contributes in anyway to effective and productive working.

    Just like open plan offices - it's noisey, a distraction and should be eliminated immediately.

  15. Anonymous Coward
    Anonymous Coward

    I fail to see how a chat program can cost over $600m a year to develop and run the infrastructure for. What the hell are they spending the money on?

    1. Cederic Bronze badge

      Well, let's see. In the last three months they've spent $218m on R&D, $136m on sales and marketing, $123m on basically running the company (probably includes admin/finance/HR/etc staff, fixed overheads, facilities, etc), $31m delivering their products and services and another $3m on other stuff.

      I'm not sure where your $600m/year comes from, they've spent more than that in the last six months. Unless you just mean the costs of delivering the product and the R&D costs, in which case they've spent $318m in the last six months, but most of that is on R&D which will primarily be focussed on creating new products/revenue streams rather than the cost of delivering their existing ones, so I'm not sure that answers your question either.

      More relevantly they were cash flow positive in the last six months. You can make a loss almost indefinitely if you remain cash flow positive.

    2. silent_count

      Hookers and blow. The other $50 probably just gets wasted.

  16. Anonymous Coward
    Anonymous Coward

    So it's like irc but centralised and with all your data and chats and stuff under someone elses control? Sounds perfect. Can't understand why they're not making lots of money from this.

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