Raised in a log cabin, Slack chairman would be worth US$1.3B with workplace communication firm’s listing
Canadian entrepreneur Stewart Butterfield helped found Slack Technologies Inc. after selling his earlier startup, Flickr, to Yahoo for more than US$20 million.
The latest venture is bringing a bigger windfall.
His eight-per-cent stake in the workplace communication company would be worth US$1.3 billion if Slack goes public this week at US$16 billion, the low end of Wall Street’s expected range.
Slack co-founder Cal Henderson, 38, owns three per cent worth about US$533 million.
Butterfield, the 46-year-old chairman and chief executive, has come a long way from the log cabin where he lived without electricity and running water for the first few years of his life. He was introduced to computers in the second grade but lost interest in the technology as he got older and went on to study philosophy in college.
After brief stints in the startup world at Communicate.com and Gradfinder.com, Butterfield came up with the idea for Flickr, a photo and video hosting service that he sold to Yahoo in 2005. He worked at Yahoo until 2008 and later founded Glitch, which became the multibillion-dollar firm now called Slack.
Slack, an acronym for “Searchable Log of All Conversation and Knowledge,” will begin trading Thursday on the New York Stock Exchange under the ticker symbol WORK. It is scheduled to go public via a direct listing on Thursday, instead of the more popular initial public offering route.
Here are some facts about Slack:
EMAIL KILLER?
Slack is an internet-based platform that allows teams and businesses to communicate with each other.
It organizes discussions by topic and group, is similar to instant messaging chat rooms, and allows cooperation on documents and files. Launched in 2013, Slack has replaced email discussions at many companies, although email is still the dominant medium of communication in workplaces.
DIVERSE CLIENTS
The San Francisco-based company, whose customers include Electronic Arts Inc, Nordstrom Inc and Ford Motor Co, said it ended the first quarter with 95,000 paid customers.
Slack had more than 500,000 organizations on its free subscription plan, as of Jan. 31.
As of April 30, Slack had 645 paid customers with more than US$100,000 in annual recurring revenue, an 84-per-cent increase from a year earlier.
These large customers accounted for 43 per cent of its total revenue.
Slack also said it had more than 10 million daily active users.
RISING COMPETITION
Its closest competitor is Microsoft Teams, a free chat add-on for Microsoft Corp’s Office365 users.
Other similar platforms include Google Hangouts, Workplace by Facebook and Cisco Systems Inc’s Webex Teams.
The global market for workplace collaboration is expected to hit US$3.2 billion by 2021, according to research firm IDC.
LOSS MAKING
Slack reported an adjusted operating loss of US$33.8 million for the quarter, compared with a US$20.2-million loss a year earlier.
Slack’s total revenue grew 67 per cent to US$134.8 million in the first quarter. It expects second-quarter revenue to grow 51 per cent to 53 per cent to a range of US$139 million to US$141 million, with an adjusted loss of between US$77 million and US$75 million.
VALUATION
The company was hoping for a valuation of more than US$10 billion in the listing, Reuters has reported.
Private trading suggests the company could list at a price range of US$26-US$32, which would imply a market cap of US$14 billion-US$17 billion, according to funding database PitchBook.