Although not widely reported, only a day before Amazon’s epic announcement about the acquisition of Whole Foods Market, it was also suggested that Amazon was to make a bid for Slack for about $9 billion. On that day, Bloomberg assumed that if completed, Slack would be Amazon’s biggest acquisition since the $970 million Twitch Interactive deal three years ago.
However, Jeff Bezos had other plans. After spending almost $14 billion from its cash deposit, Amazon is left with only $8 of cash and equivalents – one billion short from the original Slack offer.
It is quite logical to assume that either Amazon didn’t want to pay $9 billion for Slack, or that some other company, such as Microsoft, Google or IBM, made a better bid.
According to Bloomberg, there is at least one company that is in serious talks with Slack, but these could end abruptly at any time, as Stewart Butterfield, CEO, and Founder of Slack, at this stage, is rumored to be against selling the company.
However one must examine: is Slack really worth $9 billion? Disregarding any acquisition, Slack is already on the verge of raising another $500 million in financing, at a $5 billion valuation, according to Recode.
In order to better value the company and understand its status, we asked Nigel, our new A.I. company analysis bot to help us gather important data and insights on the company, a task Nigel can now perform within seconds and in plain, simple English.
Let’s begin with the web and mobile traffic:
Let’s zoom in into the graph:
According to Nigel, Slack’s web traffic has grown in the last year, passing for the first time 4M daily visitors. Mobile traffic is also generally growing, now at about 620K daily visitors.
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Now let’s compare Slack’s traffic to competitors and let us ask Nigel to map the competition for us:
Now, let’s ask Nigel to compare the traffic of Slack with Atlassian’s HipChat:
Or, compare Slack’s traffic with that of Microsoft’s Yammer:
Let’s ask Nigel to pull out the risk and success points he sees in Slack. They are marked by a rainbow of colors from risky points (red) to the pure success factors (green). On the risky side, Nigels tells us that Slack lacks any patents and trademarks, has very few partnerships, and has few open positions.
The last point can be easily verified: According to LinkedIn, the number of total job opening has dropped in recent year, except for business development roles, suggesting that Slack is looking for new partnerships.
Moreover, when it comes to the competition amongst the corporates, there is some worry there too. Amazon has launched a similar product under the brand Chime, and Facebook already launched Workplace, however, neither has appeared to be seen as a real threat to Slack. However Microsoft, who has better access to Slack’s relevant market, is rumored to be launching a similar product and at present, it is unclear how much of a threat this will be to Slack.
In addition, Slack suffers from mixed reviews. Some companies even went as far to develop a substitute after trying Slack for some time. They claim that Slack is too shallow to allow productive discussions and also encourages employees to constantly be alert, which creates interruptions to the workflow. Other critics claim that Slack creates a constant distraction and in fact, can hamper productivity.
Nigel also flagged in yellow (neutral) the fact that Slack hasn’t raised any funds recently – an unnatural situation for a Silicon Valley unicorn. However, at this point, it is important to note that Slack’s last financial round was only a year ago, in April 2016, in which the unicorn raised $200 million from Thrive Capital, Accel, Comcast, Index, GGV and Social Capital. Back then, Slack was valued at $3.8 billion.
In the opportunity points section, Nigel brought mentioned the growing traffic, a low level of competition and the fact that it has raised more funds than any other startup in the field. Slack has so far raised $540 million, and according to Recode, will end 2017 with an addition of about $500 million more.
Nigel also paid attention to the fact that the company is often mentioned in the news, which we think is a good sign. This stems from Slacks efforts to raise new funds and the bidding process by giants such as Amazon and others.
So, is Slack worth $9 billion in case the company is acquired, or only $5 billion at a later financial round? Let’s ask Nigel, based on Zirra’s proprietary A.I. company analysis technology:
According to Zirra’s valuation technology, Slack’s is currently estimated at about $3.5 billion. This is not the company’s valuation at the books, but an estimated valuation based on 85 public data sources, that according to Nigel, is what the company should have been valued if it was a public company.
However, in case someone would like to buy Slack, we think that it should not be valued at more than $6 billion (Benchmarked Exit Valuation). Therefore, Amazon’s $9 billion offer includes a premium of $3 billion that might have been caused by Stewart Butterfield’s unwillingness to sell.
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