Luminous Venture’s General Partner and Co-Founder, Lomax Ward was invited to discuss Slack IPO on BBC One’s Business Briefing programme.
Max told news presenter, Sally Bundock:
Slack really has been a game-changing platform for business, introducing a WhatsApp-style messaging to internal teams and really improving communications.
While it may not be making a profit now, we can see where it’s going. Revenue grew 70 per last year and the number of users, paying over $100k a year, also grew 90 per cent.
This company has a 90 per cent gross margin and so, actually, with that sort of margin, you can see it trading to profitability quite quickly.
Explaining Slack’s untraditional route to market, Max said:
There are still some banks involved, but they are doing a direct listing rather than an IPO where you’re actually issuing new shares to raise capital.
Slack is already well capitalised. They have $800 million on the balance sheet already, so they don’t have to raise money. This is a case of just listing your shares. It’s a much cheaper process. There will still be roughly $20 million of fees – but that’s a lot less compared to the $100-$150 million that Uber would have paid earlier this year.
Max shrugged off concerns about another dotcom bubble emerging. He said:
Uber and Lyft have both had well-publicised problems since coming to market. But, actually, looking at the tech companies that have IPO-ed this year, they have performed very well – and the ETF (exchange-traded fund) that tracks these is up 40 per cent this year compared to the NASDAQ Composite at 10 per cent.
Companies like Slack which, as I said, has this 90 per cent gross margin and CrowdStrike, which IPO-ed last week – these are high-margin, fast-growing software businesses which should be sustainable in the long term.
The BBC One interview was broadcast simultaneously on the BBC News channel and BBC World, which has a global audience of 99 million.
You can view Max’s full interview on the BBC iPlayer.