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Is Slack Following in Spotify's Footsteps?

Written by Monica Savaglia
Posted January 22, 2019

Nowadays, it’s nearly impossible to disconnect. We’re always plugged into a device and constantly checking our notifications, whether it’s for personal reasons or work-related. We’re connected at all times.

As someone who works in an office, I know this is very true. Work doesn’t just stay at work; now work comes with me everywhere. I have my work email available on my phone, and I also have our messenger platform’s app launched on my phone at all times.

My personality forces me to always attempt to stay prepared, informed, and organized, which is why I take work with me everywhere. If someone needs to contact me for any reason about a work-related question, I am able to answer them quickly.

And I’m not the only one. According to the most recent data from the Bureau of Labor Statistics, 33% of Americans who are wage or salary employed work an average of 5.53 hours on a weekend day. Even when we’re not at work, we’re still working in some way.

Slack Technologies Connects You to What’s Important

Thanks to companies like Slack Technologies, that is made possible in a less-annoying way. The San Francisco-based company’s messenger platform took off in a short period of time, and it took off quickly.

In my office, we use Slack. Easily communicating with your coworkers is very important, especially when you work closely with other departments to get your job done. Having a clear and direct way of talking to your coworkers is the backbone of any successful company.

Slack allows you to collaborate with other people on one platform. Founder Stewart Butterfield needed an internal tool in his company, Tiny Speck, to help with the development of an online game called Glitch, so he developed the messaging tool Slack. Slack is an acronym for “Searchable Log of All Conversations and Knowledge.”

Slack officially launched in August 2013. When I started working with Wealth Daily, we had just begun using Slack and integrating it as our official messaging platform. Before that, people were using up to four different platforms to communicate with each other. You can see how this would cause problems with getting things done in a timely fashion. It was hard to know what platform someone was using and to keep track of who used what. Slack has helped everyone at my job work and communicate more efficiently. It has connected us in a way that has made us a stronger company.

Right now, Slack is a private company, but the time for it to grow stronger has arrived, which means it’s getting serious about becoming a publicly traded company.

At the end of last year, there were a lot of rumors about an initial public offering (IPO) from Slack. It was one of the most highly anticipated IPOs. The company was valued at $7.1 billion in a $427 million funding round back in August. Its valuation is high, and that’s what makes it an attractive opportunity for investors.

Slack Could Be Considering a Direct Listing

Slack is considering a different approach to going public. It’s foregoing the traditional IPO and instead going the direct listing route.

A direct public offering (DPO), also known as a direct listing, lets a company go public without having a bank-backed IPO. In the beginning of last year, music-streaming company Spotify went the route of direct listing. A direct listing gives current investors the opportunity to offer their stakes directly to new shareholders, and the shares would be priced solely on demand.

Valeska Pederson Hintz, a partner at Lowenstein Sandler, a law firm that works with tech companies and both public and private investors, had this to say about Slack’s direct listing plans:

To the extent that it’s become a trend, it’s in part due to how large the unicorns have gotten. You have these huge companies that are well capitalized, and they don’t need the marketing and exposure to bankers that other companies really rely on.

Highly valued and well-known companies like Spotify and Slack are able to go this route because they have the money and don’t really need to market themselves to investors. The general public already has an idea of what the company is about and what it has to offer.

Slack hasn’t filed with U.S. regulators for the listing yet, and with the government shutdown still chugging along, it’s hard to tell when we can expect this direct listing from Slack, since this approach requires more interaction with regulators from the Securities and Exchange Commission (SEC). Initially, the goal was to have the direct listing take place near the middle of 2019.

Until we get more of an end in sight for the government shutdown, we won’t know for sure if Slack will take the direct listing route. It would make sense for a company like Slack to take that path, and I'll be covering any news about Slack's plans to go public.

Until next time,

Monica Savaglia Signature Park Avenue Digest

Monica Savaglia

Monica Savaglia is Wealth Daily’s IPO specialist. With passion and knowledge, she wants to open up the world of IPOs and their long-term potential to everyday investors. She does this through her newsletter IPO Authority, a one-stop resource for everything IPO. She also contributes regularly to the Wealth Daily e-letter. To learn more about Monica, click here.

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