> 40% of their revenue is concentrated in <1% of their paid customers. Is this normal in the corporate SaaS market ?

Speaking from my experience of 6 months at a SaaS company this is about the norm.

Besides the usual 80/20 rule it gets more skewed at the top. And so even the product development was optimised to keep the top 1% happy. A ton of custom built features with hundreds of feature flags..

The 80/20 rule is basically the power law which is one of my favorite laws. https://en.wikipedia.org/wiki/Power_law

It is also one of the most abused rules, often used to justify extremely sloppy "big picture thinking".

Yeah, but 80% of the time, the sloppy thinking is right.

I would say this is only normal/healthy if you have a freemium business model--otherwise the revenues to me seem way to skewed (i.e. very/very far away from 80/20).

Most of the places I worked had 2 or 3 whales. 55 whales is actually pretty good.

Interesting... I guess you could see a lot of SaaS companies as outsourced software development teams for the whales.

yep, if you owe someone a little money they have control. If you owe someone a lot of money, you have control. The whales use SaaS companies to develop things they dont want in house and demand features because they know they're one of the biggest customers.

That is exactly how my current employer feels half the time.

I've noticed this too. I worked for companies that had one big customer; possibly branching out with two or three others. But if that one big customer ever went away, the company would probably collapse. They really should have just been bought and made a subsidiarity:

https://penguindreams.org/blog/tech-culture-shock-from-ameri...

Sometimes that is the strategy: create something cool and hope to get purchased. Having worked at a company that was likely one of Slack’s “whales”, it is a bonus to have feature requests weighted more heavily, but if a tool doesn’t keep everyone else using it happy - you run the risk of some other tool becoming the shiny new thing.

I've worked for a company with a whale client like that (maybe not total shutdown bad but pretty close). The argument for why they never bothered to just acquire the startup was their fear of ruining the agility of the startup. That seemed like a reasonable concern as they were a massive, heavily regulated company.

Well, it might still be the case.

> Again, I can only see this as a risk, basically because no underwriter will push the stock to investors.

They don't need the cash but want to make it easier for stockholders to sell. Now also seems to be the time for tech IPO.

Think about thousands very small customers you simply take the money from and have no effort but they are not the target of your sales team. The numbers sound good to me.

Regarding the direct listing, I wouldn't view that as a negative - sounds like they had no need to raise additional capital, but wanted to provide liquidity to their investors and employees.

They've raised a _lot_ privately, and some of those rounds IIRC were described as just "opportunistic" by the founder - i.e., raise money while it's cheap. Also given that they have a VC arm it sounds like they have more capital than they can actually deploy in their core business.

> I also saw that this is a direct listing and not an IPO.

A direct listing is an IPO. Underwriter's are not a requirement, as Spotify profitably demonstrated.

Thanks for clarifying. My understanding was that an IPO creates new shares, while a direct listing just sells the existing ones. In the same sense, I thought that underwriters were responsible for pushing the stock through the distributions channels (funds, investors, etc) so that they make sure that an IPO is successful in its opening.

After some more searching on "direct listing vs. IPO", there definitely seems to be a lot of "DPO is not an IPO" so I'm going to enjoy having my foot in my mouth.

Can someone please explain how a valuation of $16B is arrived at? I mean, from the math above, they have approximately 250K ARR?

They have 575 companies paying them more than 100k each

Thanks! That makes a lot more sense.

I predict that, one year from now, few people will be talking about Slack and, two years from now, Slack will be teetering on insolvency.

Those 50 largest customers are unlikely to move away within the next two years, and neither are most businesses. I can see someone worry about growth, but they're not going away in 2 years.

Two years ago, those 50 customers weren't using Slack at all. It will be just as easy for them to leave.

Especially when Microsoft just tosses Teams in for free in their next Office 365 renewal.

My company just switched to Teams (from Sametime). We had evaluated Slack, Teams, and Cisco/Webex Teams. To me Teams is a pretty crap chat tool, but it's integration with WIndows (and the macOS client isn't shabby either) is what made it a clear winner. We can chat, do voice, share files, collaboratively edit files, share desktops, all in one app. My only complaint is that the emoticons are typical Microsoft style and should be updated to something better. But this might be due to most Windows desktops not using a high DPI. On a Retina screen they look amateurish.

In large enterprises, it's hard to break into the enterprise but once your application is used you are in there for the long run until unless you have an outage while they have a major incident.

With Slack, if you have a few integrations setup or a bot or 2 configured, it's hard to move. Also the alternatives are terrible.

Why would they?

A free alternative?

You guys really think that enterprise-tier Fortune 500's are going to switch from Slack to a free alternative? Why would they? The money they spend on Slack isn't even a rounding error in their budgets, there's no way that they would want to cut that out and instead have their internal staff try to support some free service instead

Discord has essentially the same app but better voice/call support and other various features. But they seem focused on the gamer market.

When they realize they are tired of the distraction and didn't really need it in the first place.

Your sentiment is valid, but you need to quadruple the timescale.