Slack Company Report
May 29, 2019

Slack Company Report

Executive Summary

Slack Technologies, formerly Tiny Speck, was founded in March 2010 by Stewart Butterfield as a video game development company. Due to an inability to attract enough attention, the company shut down its flagship game, Glitch. During its time as Tiny Speck, the company created an internal communications module that would later become the foundation for what is now the Slack product. Shortly after Glitch shut down at the end of 2012, the remaining team dedicated their time to building out the communication platform they had, eventually rolling out the beta version of the app in August 2013. In August 2014, the company officially changed its name to Slack Technologies, shortly after the public rollout of Slack, the workplace messaging and collaboration platform. Since then, Slack has experienced tremendous growth, claiming over 600,000 organization-level customers representing over 10 million daily active users as of May 2019. Revenues have also grown rapidly, totaling over $400 million for fiscal year 2019, up from $105 million two years prior.

As a private company, Slack has raised over $1.3 billion in primary funding from investors including SoftBank Group, Accel Partners, Andreessen Horowitz, and Kleiner Perkins. In fact, Slack will be SoftBank’s Vision Fund’s first enterprise software company exit. The company’s growth has been largely attributable to both successful deployment of the “freemium” business model and a first mover advantage, creating a product that focuses on customer experience while solving a number of inefficiencies in traditional business communication mediums. To supplement its organic growth, the company has completed a number of tuck-in acquisitions throughout its operating history. Most recently Slack Technologies acquired Hipchat and Stride, two competing products that was owned and operated by Atlassian.

In its regulatory filings with the SEC, Slack estimates its addressable market at $28 billion. This figure suggests the company has captured slightly above 1 percent of its addressable market. Further, we believe the company’s actual addressable market could be larger due to the the broad number of services embedded in its platform. For example, the platform includes video conferencing, voice communication, and file sharing capabilities, all in addition to the direct chat communication and channel-communication functions. Each of the aforementioned functions have markets with a range of specialized suppliers. Additionally, it is important to consider the potential disruption to e-mail and other traditional business communication markets. As of October 2017, Gartner estimated Slack to have a 70 percent market share of the newly forming WSC market.

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Investing in private company securities is not suitable for all investors. An investment in private company securities is highly speculative, involving a high degree of risk, and investors should be prepared to withstand a total loss of your investment. Private company securities are also highly illiquid and there is no guarantee that a market will develop for such securities. Each investment also carries its own specific risks and investors should conduct their own, independent due diligence regarding the investment, including obtaining additional information about the company, opinions, financial projections and legal or investment advice.

Accordingly, investing in private company securities is appropriate only for those investors who can tolerate a high degree of risk and do not require a liquid investment.

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PLEASE READ THESE IMPORTANT LEGAL NOTICES & DISCLOSURES

This article does not constitute an offer to provide investment advice or service. Registered representatives of SharesPost Financial Corporation do not (1) advise any member on the merits or prudence of a particular investment or transaction, or (2) assist in the determination of fair value of any security or investment, or (3) provide legal, tax, or transactional advisory services.

Securities referenced in this article may be offered by SharesPost Financial Corporation, member FINRA/SIPC. SharesPost Financial Corporation and SP Investments Management are wholly owned subsidiaries of SharesPost, Inc. Certain affiliates of these entities may act as principals in such transactions.

Investing in private company securities is not suitable for all investors. An investment in private company securities is highly speculative, involving a high degree of risk, and investors should be prepared to withstand a total loss of your investment. Private company securities are also highly illiquid and there is no guarantee that a market will develop for such securities. Each investment also carries its own specific risks and investors should conduct their own, independent due diligence regarding the investment, including obtaining additional information about the company, opinions, financial projections and legal or investment advice.

Accordingly, investing in private company securities is appropriate only for those investors who can tolerate a high degree of risk and do not require a liquid investment.

SharesPost, the SharesPost logo, My SharesPost, the SharesPost Index, and SharesPost Investment Management are all registered trademarks of SharesPost, Inc. All other trademarks are the property of their respective owners.

Copyright SharesPost, Inc. 2020. All rights reserved.