Bold Business Logo

Slack Technologies Is Taking Its Unicorn Status to the Next Level

Slack Technologies Inc. recently decided to go public. The startup workplace communications messaging company has thrived since it was founded in 2009. With over $400 million in annual revenue, Slack Technologies has done rather well. Thus, banks and investors might be quite excited with the company’s mention of going public. But there’s one major caveat. Slack Technologies has opted not to pursue a traditional IPO route. Instead, their public debut will be based on a Slack direct listing on stock exchanges.

The Slack direct listing is highly unusual, as few companies choose this approach to its public offering. Spotify recently made the decision to pursue a direct listing, but its stock performance has been mediocre at best. Some have suggested that Airbnb may also take this approach in the future given its cash reserves. Understanding all this, one might question whether the Slack direct listing is part of some new trend among unicorn startups. Are direct listings soon to be the norm for tech startups moving forward?

A Look at Slack’s Offerings

Slack Technologies was founded in 2009, and the company is essentially a workplace messaging platform. It provides a collaborative workplace that allows interpersonal chats, file sharing and group conversations in a highly flexible manner. These provisions have made Slack Technologies highly attractive, especially for large companies that have thousands of employees. In fact, while the company has over 95,000 paying customers, 645 account for 40 percent of Slack Technologies’ revenues. Its popularity among these big clients has awarded the company notable financial reserves.

In essence, Slack Technologies generates revenues by charging clients based on user volumes. But at the same time, more than 500,000 users enjoy the services for free. As part of its organic marketing approach, Slack Technologies attracts new clients through word-of-mouth. This strategy appears to have worked well with the company—now valuated above $16 billion. Being in such a stable position, CEO and Co-founder Stewart Butterfield has opted against the traditional IPO filing. Instead, the Slack direct filing will allow existing shareholders to publicly trade their shares without the hassles that IPOs impose.

a photo quote of April Rinne about Slack Technologies
April Rinne shares her thoughts on Slack.

Why the Slack Direct Listing Makes Sense

As noted, the Slack direct listing provides an opportunity for existing shareholders to trade their stock publicly. But what are the benefits of pursuing such a strategy? After all, if no new stocks are being offered, then the opportunity to generate capital funding doesn’t exist. For companies like Slack Technologies, this case is not as important. In addition to having continued growth at 82 percent over the last year, the company also has declining operating expenses. This fact, in addition to adequate cash reserves, means the need for additional funding is not crucial.

Several other advantages exist with the Slack direct listing decision. For one, the existing shares will not be diluted with the additional shares normally created during a traditional IPO. The Slack direct listing also avoids expensive underwriting fees by banks that are used to allowing initial share prices to start lower than actual values. And direct listings do not have required lockup restrictions typical of IPOs. Given these additional benefits, it is understandable why the decision for the Slack direct listing took place.

a photo quote of Stewart Butterfield about Slack Technologies
Slack Technologies CEO and Co-founder Stewart Butterfield talks about what they’re doing.

What’s the Potential Downside for the Slack Direct Listing?

Obviously, the choice involving the Slack direct listing eliminates the opportunity to generate new cash for the company. Still, beyond this concern, some additional downsides may also exist. One potential negative outcome can be stock volatility. The lack of investor education that usually occurs with an IPO offering is not as extensive. This situation can result in varying opinions regarding share values resulting in ups and downs after the company goes public. Such is a concern for Slack Technologies also because of its large “free” customer base and potential competitors.

Other possible downsides of the Slack direct listing involve the volume of shares being sold. If existing shareholders sell an excessive amount of stock, then the company’s share value—and valuation—can tumble. Likewise, if too few shares are sold, ongoing valuations can be challenging, thus creating delays in accurate assessments. Due to many employees’ shares attaining fully vested status at the time of public offerings, the latter is not expected. And Slack Technologies hopes the former does not occur simply due to its prior valuations.

a photo of a laptop (with its screen showing a number graph) beside a man's hand holding a phone with the screen showing the logo of Slack Technologies
With over $400 million in annual revenues, Slack Technologies has done rather well.

An Aberrancy or a New Trend Among Startup Unicorns?

Without a hefty underwriting fee, banks may be the ones that lose the most through the Slack direct listing. Yet at the same time, Slack Technologies is taking some risks as well. Ultimately, the choice between an IPO versus a direct listing involves several factors. These include tolerance of share dilution, a need for capital, and the strength of the existing shares that already exist.

Markedly, for companies like Slack Technologies, it is understandable why a direct listing might be considered. And if they do well, it may certainly provide a roadmap for other startups in similar positions in the future.

12th Annual Diversity MBA Elite Business Conference Highlights

Diversity and Inclusion Champions Took Center Stage for the 2018 Diversity MBA Awards

The 12th Annual National Elite Business Leaders Conference & Awards Gala presented by Diversity MBA concluded on September 28-29, 2018 at the Marriott Marquis in Chicago. This two-day event was the culmination of Diversity MBA’s efforts to recognize leaders, acknowledge the achievements of businesses around diversity and inclusion, and, ultimately, inspire change for the society as a whole. The past year’s theme—”Together, Towards Tomorrow”—succinctly captured the call to work together for a more diverse and inclusive workforce. As the event’s media partner, Bold Business had the opportunity to speak with leaders and participants of this conference.

What Diversity MBA stands for

Diversity MBA has been instrumental in inspiring conversations around inclusive diversity. Their focus is to inform and equip leaders on what it takes for them to succeed. They lead the discussions on business trends and help organizations get the most from their workforce. Diversity MBA helps connect leaders through their publication and social media reach. They also help organizations through research, multiplatform training programs and conferences. Lastly, Diversity MBA has been influential in advancing the cause for creating a more diverse and inclusive workforce by recognizing companies and leaders exhibiting solid diversity and inclusion strategies.

Sharing Best Practices for Inclusive Diversity

The year’s roster of awards included two annual award categories—50 Out Front (Best Companies for Women & Diverse Managers To Work) and Top 100 Under 50 (2018 Elite TOP 100 Executive & Emerging Leaders)—plus three leadership citations—Impact Award, Diversity Champion Award, and Hall of Fame award. These recognitions were handed out to leaders whose notable contributions helped advance the cause for diversity and inclusion.

The winners of 50 Out Front winners were a good mix of companies from across all industries. Pam McElvane, CEO of Diversity MBA, says, “We continue to be excited with the cross industries and disciplines participating in our survey. It represents that the business case for diversity and inclusion is relevant no matter where you sit.”

The conference topics for the year focused on the challenges leaders and managers encounter in creating a work environment that is truly diverse and inclusive. Some of the hot topics that were included are workplace biases, wealth and talent gap, the impact of e-commerce, managing conflicts, and supporting courageous conversations. Additionally, the organizers modified the format of the talks to allow a more collaborative discussion and sharing of best practices.

The keynote speakers were Vivica A. Fox—actress, producer, television host and, now, book author; and Nielsen’s Chief Diversity Officer Angela Talton. Vivica A. Fox offers inspirational and start-today tips for living through her inspirational memoir, “Every Day I’m Hustling.”

On the other hand, Angela Talton is one of the few seated diversity executives who report to the CEO. This case affords Nielsen’s diversity officer the ability to introduce innovative, inclusive diversity to the workplace. It is no surprise that Nielsen was awarded as that year’s No. 1 in the rankings of 50 Out Front’s “Best Places for Women & Diverse Managers to Work.”

A photo quote from PAM MCELVANE about the Diversity MBA conference that features diversity and inclusion
On the importance of diversity and inclusion in the businesses of today

Segregation and Division vs. Diversity and Inclusion

Segregation and division can take many forms—gender, age, race, social status and physical challenges. It can happen anywhere, and the workplace is no exception. However, businesses have the power to take down these divisions through overall strategies that encourage openness and inclusive diversity.

Business leaders taking deliberate steps for diversity and inclusion are helping create an environment that allows people to be their authentic self. This intentional approach enables employees to contribute better to the growth of the company.

Merck’s Vice President of Human Resources & Global Diversity and Inclusion Center of Excellence, Celeste Warren, shares, “Diversity is making sure that the population is diverse, that the employee base mirrors our patient base, our customer base. We want to make sure that we are getting them into the organization, retaining them and helping them to be as productive as they can be in the service of our mission. The inclusion piece is making sure that we are creating an environment where everyone can be successful, productive and engaged and empowered to do the best that they can. You want to create an environment that allows people to bring their authentic selves to work. It allows them to not worry about having to have to cover or be someone else or hide some aspect of themselves or downplay it, but just being able to come in and be productive and be able to service our patients and our customers and driving strong health outcomes.”

Advocating for Diversity and Inclusion—The Benefits

When businesses take diversity and inclusion seriously, the benefits are profound and revolutionary:

  • Variety and diversity inspire innovation. Each person carries with him a unique voice and view of the world. When leaders blend various ideas and put them out in the open, it gives one an opportunity to think of numerous ways on how to solve issues. Angela Talton, chief diversity officer of Nielsen, says, “When you think about that innovation, you have to think about diversity and inclusion. I like to say diversity plus inclusion equals innovation and growth because that’s exactly what has happened. Listening to those new voices, those diverse voices, and those new ideas around how to innovate and change the business. That’s how we’ve been able to grow and change it.”
  • A diverse workforce can better understand and serve a diverse customer base. This end can be achieved by having demographics that match the customer base. Currently, the United States’ workforce demographics include 12 percent Black, 18 percent Hispanic and 6 percent Asian. If the aim is to meet this goal internally, a company’s workforce should fall around this ratio.
  • A robust diversity and inclusion strategy increases revenue. Research shows that companies with a more diverse workforce are more likely to perform better financially. In a research conducted by Mckinsey and Company in 2015, companies with high gender and racial diversity scores reap 15 percent and 35 percent better financial results. Why is this so? Increased diversity is correlated with factors such as talent attraction, employee satisfaction, customer satisfaction and company image. These factors are known to have financial implications.
  • Businesses that support diversity and inclusion efforts are helping society to be more inclusive and open. An individual is both a citizen and an employee. Hence, whatever is happening in the business sector will spill over to society at large. Conversely, the business sector is not immune to the challenges the society. There is no way that you can segregate these parts.

    James Taylor, chief diversity officer of University of Pittsburgh Medical Center, concurs, “It’s my belief that that organizations that are most progressive and that understand the sense of inclusion and diversity and what it means to meet folks where they arecreate space and provide them with skills that will not just help [one] be a better employee while…at UPFC—but it will help [one] be a better community member, …be a better parent,  …be more engaged and more versed in all aspects of not just [one’s] career but my life.”

  • A diverse and inclusive workforce future-proofs the business. By 2045, America is projected to be a minority-majority country. Moreover, with technology and the movement of people, borders will be blurred, and cultures will inevitably mix. Companies operating on a global scale should create strategies on how to prepare their employees and leaders to be culturally competent. Thus, creating a diverse and inclusive workplace now will pave the way for a more culturally-open workforce.
A photo quote from DA Abrams during the Diversity MBA conference that features diversity and inclusion
DA Abrams weighs in on the uniqueness of Diversity MBA

Diversity and Inclusion—On the Right Track

The discussion about diversity and inclusion is just beginning. Currently, there are only three black CEOs in the Fortune 500 companies and only 24 female CEOs. Clearly, more work needs to be done. Nevertheless, with the success of this Annual National Elite Business Leaders Conference & Awards Gala, the organizers are confident that things are on the right track.

Perhaps, as we move forward in taking bold steps towards a brighter future of diversity and inclusion, it’s time to re-think Aristotle’s words, “Of mankind in general, the parts are greater than the whole.”