Slack Preps For IPO, Even If It Doesn’t Need Or Want One Quickly
When Slack’s IPO window opens, it needs to have the ability to shortly spring into the general public markets. In any other case it might see bitter circumstances or botched IPOs by different tech corporations shut the window earlier than it rings the opening bell. That’s why Slack CEO Stewart Butterfield says its already getting its geese in a row so its poised to IPO when the time comes.
In the present day, Butterfield The Australian that “About three to 4 months in the past we began an inner marketing campaign for IPO readiness as a result of we need to have the choice sooner or later and there’s fairly a bit of labor that goes into it.”
A portrait of Slack CEO Stewart Butterfield
The enterprise chat app’s chief continued, “We’ve completed our first exterior audit and we’ve put in place loads of controls and safety practices. There’s a whole lot of predictability that must be evident within the enterprise, so we’re spending rather a lot on evaluation and knowledge infrastructure.”
Nonetheless, Butterfield cautions “absolutely the earliest that we might IPO, if all the things got here collectively proper, can be 18 months from now” and he notes that “One of many issues public buyers search for is predictability and whenever you’re rising as quick as we’re it’s unimaginable to foretell the place we’re going to be six months from now.”
I requested Butterfield if he had any additional remark, and he defined that “We try to run the corporate in such a approach that we might be READY to go public every time we’re prepared. That doesn’t imply we intend, need or have to go public any time quickly. It’s like taking a self-protection course with a view to be ready for any eventuality (however with out the overall intent of going out and smashing individuals to the bottom).”
Born from the pivoted ashes of Butterfield’s gaming startup Tiny Speck, Slack has develop into a office messaging phenomenon. Now it’s evolving right into a platform that’s the social material for the enterprise, weaving collectively an workplace’s different collaboration instruments.
Slack raised $one hundred sixty million at a $2.four billion again in April. Bringing it to $340 million in complete funding, the money got here from premier VCs together with Horizons Ventures, Digital Sky Applied sciences (DST International), Index Ventures, Spark Capital, and Institutional Enterprise Companions (IVP), Accel Companions, Andreessen Horowitz, The Social+Capital Partnership, Google Ventures, and Kleiner Perkins Caufield & Byers.
Whereas that’s principally a who’s who of prime-tier funds, Slack hasn’t raised from any of the large funding banks that sometimes again late-stage startups in hopes of underwriting their IPOs. There could possibly be probably be one other funding spherical earlier than Slack goes public.
Nevertheless, Butterfield says a lot of the $340 million is unspent, so it’s not determined for money from a fundraise or IPO. “A part of it’s a hedge towards a change in market circumstances. Issues gained’t all the time be rosy and if market circumstances shift and we’ve an enormous pile of money we’ll be in an excellent place as a result of out of the blue the competitors for engineering expertise is much less, the lease price on workplace area comes down, promoting turns into cheaper and particularly corporations that we’d need to purchase grow to be cheaper.”
That funding might be helpful on account of a considerably tough public markets for enterprise startups and a cold fundraising local weather within the personal markets. Lauded investor Keith Rabois just lately stated that solely startups with extraordinary metrics are at present capable of increase cash, although Slack may qualify. It’s grown from 750,000 customers in April to over 1.7 million every day lively customers now, and Butterfield tells me Slack plans to launch extra monetary numbers subsequent month.
The closest factor to Slack within the public markets proper now is perhaps Jive, which is down 15% this yr. However quickly, Slack competitor HipChat’s developer Atlassian will IPO, and Butterfield might be watching. “Atlassian could be very comparable when it comes to the gross sales and progress mannequin. We’ve got barely totally different however closely overlapping markets and to the extent that they’re profitable, and we hope they’re — that might be a superb omen for us.” The marketplace for enterprise chat is so huge that Butterfield believes HipChat and Slack might co-exist.
However there’s a 3rd choice for Slack past an IPO or fundraise: getting acquired. Butterfield admits to The Australian’s Cliona O’Dowd that Slack has acquired “pleasant overtures to see if (a sale) is one thing we might be curious about pursuing and to date we now have not been ”. Google and Microsoft would certainly be smart suitors.
It’d be peculiar for anybody however Butterfield to be so ahead about their firm’s state of affairs and plan. It begs the query of whether or not he’s making an attempt to drum up curiosity in a fundraise or acquisition. However in actuality, he tells me he’s only a forthcoming man.
In any case, he’s the CEO who retweets jokes about his service taking place, and publishes expletive-crammed inner memos. Candor might be inspirational once you clarify the motivation to construct a terrific firm with this degree of vigor: “The reply to ‘Why?’ is ‘as a result of why the fuck else would you even need to be alive however to do issues in addition to you possibly can?’”