The archive · Developer & Business Tools · Financial decision · 2014–2019
Slack's direct listing closes day one near $20B after betting chat replaces email
Slack lists directly on 2019-06-20 and closes near $38.62 (~$20B), five years after betting workplace chat replaces email.
Slack Technologies
What the business is
Workplace chat software built around channels and a searchable record of every conversation — Slack grew from a tool made for a failed video game into a verb for messaging colleagues.
Starting capital：Per CNBC: more than $800M in cash before listing; its last private round raised $427M in 2018 at a $7.1B valuation.
How it started
Slack was publicly released in 2014, but it came from an internal chat platform Stewart Butterfield's team built while making a video game that failed — the second failed game venture for Butterfield, who had co-founded Flickr after an earlier game attempt and sold it to Yahoo for around $25 million in 2005. The name stands for 'Searchable Log of All Conversation and Knowledge,' a record meant to spare teams spread across North America the confusion of email.
What happened
In five years Slack grew to more than 10 million users and became a verb — 'I'll Slack you.' In the fiscal year that ended on 2019-01-31, revenue nearly doubled to about $400 million on a net loss of nearly $139 million. Butterfield kept the company independent despite acquisition interest from Amazon, Google and Microsoft in 2017. Instead of a conventional IPO, Slack chose a direct listing — only the second large tech firm to do so after Spotify — with the NYSE setting a $26 reference price and no underwriters issuing new shares.
How it ended up
Slack's stock opened at $38.50 on 2019-06-20, 48% above the $26 reference price, rose as high as $42 and closed at $38.62, putting the company's value at about $20 billion against a $7.1B valuation from its 2018 private round. Analysts quoted by NPR still saw a hurdle: proving to non-tech companies that Slack is more than chat while Microsoft Teams competes for the same users.
Background
Slack is workplace chat software whose bet, from its 2014 public launch, was that chat would replace email as the place where work happens. The product grew out of an internal messaging tool built during a failed video game by Stewart Butterfield — who had earlier sold Flickr to Yahoo for about $25 million — and its name stands for 'Searchable Log of All Conversation and Knowledge.'
In five years Slack passed 10 million users and became a verb: 'I'll Slack you' was shorthand for messaging a colleague. In the fiscal year ending 2019-01-31, revenue nearly doubled to about $400 million on a net loss of nearly $139 million, and Butterfield held the company independent despite reported acquisition interest from Amazon, Google and Microsoft in 2017.
Rather than run a conventional IPO, Slack listed directly on the New York Stock Exchange on 2019-06-20 — only the second large tech company to do so after Spotify. A direct listing issues no new shares and raises no capital; it let existing shareholders sell while bypassing underwriters, and the exchange set a $26 reference price the night before.
The stock opened at $38.50, 48% above the reference price, rose as high as $42 and closed at $38.62, valuing Slack at about $20 billion — roughly triple its $7.1B private valuation from 2018. The debate NPR captured that day was whether Slack was 'more than a chat application': Forrester's analyst argued Microsoft Teams matched it outside the developer-heavy core, a preview of the competition to come.
What has to be true
- The direct listing itself was the bet made visible: no new shares, no underwriters and no fresh capital, with insiders selling into the market at whatever price it set.
- The financials were the justification: revenue nearly doubled to about $400 million in fiscal 2019 with a net loss near $139 million, and CNBC reported $800M+ cash on hand.
- The product evidence was concrete: more than 10 million users in five years, verb status, and Butterfield declining acquisition interest from Amazon, Google and Microsoft in 2017.
- The risk was visible on day one: Forrester's analyst framed Microsoft Teams as an equal for non-technical companies, making Slack's central challenge proving it was more than chat.
What can be applied
A direct listing fits only companies that do not need IPO capital: about $400M revenue and $800M+ cash made Slack's no-new-shares debut credible, shifting pricing risk to the market.
Aftermath
As of 2019-06-20 Slack was a newly public company: its shares closed near $38.62 for about a $20 billion valuation after opening 48% above the reference price, with about $400M of trailing revenue and more than 10 million users. This material records nothing after that date, so Slack's later quarters, its eventual acquisition and its current trajectory are outside the scope of this case.
Sources
- Putting A Price On Chat: Slack Stock Jumps On 1st Day Of Trading
- Slack Is Going Public at a $16B Valuation
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