Emmet, Analyze Slack for Me

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 Emmet, our new A.I. company analysis bot to help us gather important data and insights on the company, a task Emmet 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 Emmet, 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.

Analyze any startup with Emmet: 

Now let’s compare Slack’s traffic to competitors and let us ask Emmet to map the competition for us:

Now, let’s ask Emmet to compare the traffic of Slack with Atlassian’s HipChat:

Or, compare Slack’s traffic with that of Microsoft’s Yammer:

Let’s ask Emmet 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, Emmet 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.

Emmet 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, Emmet 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.

Emmet 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 Emmet, 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 Emmet, 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.

Analyze any startup with Emmet: 

Analyzing Crunchies Award Winners

By Assaf Gilad, Leah Meirovich and Grady Berk

Slack is the best startup of the year, according to a TechCrunch board of tech editors, entrepreneurs, investors, and other notables. The work messaging app won the TechCrunch Crunchies award last Monday, beating out other popular services such as Giphy, SpaceX, Didi, and Stripe. TechCrunch explained that Slack won the prize after launching its NYC R&D center that tackles search, AI and bots, and after launching the company new threaded messages product. Was this choice justified? Using Google Trends, it’s easy to see how much worldwide attention each of the services attracts. And most of the time, Slack draws the most attention.

Zirra, a startup that has developed AI and machine learning technology to analyze private tech companies, has analyzed Slack to check how justified was the TechCrunch’s choice. [Read here the full  Zirra spotlight report on Slack]

Slack, a communication application for business teams, provides a unified, responsive and neat experience on web and mobile alike. Also, Slack has an excellent integration with some third-party service providers, including the likes of Google Docs, Dropbox, Github, Zendesk, and even Giphy, which makes the work environment a little more fun. Recently, Slack added a handful of new features, including chatbots and a customized profile for team members. Slack already has plans to start testing voice and video chat shortly.

Slack reported on 5 million daily active users, with 1.5 million paying for the service. To this date, Slack gains about 10,000 new daily active users that sign up each week, based on almost completely organic viral growth. According to a blog post published at the end of 2016, Slack stated that they had 4 million active daily users, one million of which are paying customers.

Those 1.5 million paying customers pay an average of between $80 and $150 per user per year. Also, if customers add a Google Apps subscription, through Slack’s partnership with Google, Slack makes an additional $60-$120 per year per user. Slack’s CEO, Stuart Butterfield, recently told the press he anticipates Slack will more than double its revenue to about $200 million this year, thanks to the secured product launched to large organizations. The new product allows creating unlimited interconnected workspaces, along with the fact that employees can find information in other working groups.

Slack has raised more than $540 million in VC money and even created an $80 million fund to invest in startups building tools for their application as a way to outsource the building of customization and unique new features.

Slack operates in the enterprise collaboration market that grows rapidly (about to reach $70.6 billion in revenue by 2019), it enjoys high ratings in both application stores (4.5/5 stars), and it experiences a robust and healthy growth in employees count:

But despite the successful product, brilliant strategy, the strong growth in popularity, Slack does have a few risk points worth mentioning:

1.Slack’s business model is subscription-based. However, their biggest draw is their freemium plan, which, according to the company, offers their product free of charge for an unlimited number of users. However, it was since reported that the there is an actual limit of 8,462 users per channel.

2. There are many existing companies already in the market space and collaboration market is already crowded with giants such as Microsoft, Facebook (Workplace and Instagram), Line, and Atlassian (Trello). Slack Technologies must display a strong differentiating factor in order to surpass the clutter. Slack hasn’t deciphered full integration with email services, and Microsoft or Google’s superiority in having a popular enterprise mail systems can be considered as a disadvantage to Slack. The company had already partnered with Google, having full integration with Drive.

3. In 2015, Slack was hacked over the course of four days, and some user data was compromised. Slack has since added two-factor authentication, but it is not yet perceived as secure as bigger corporations such as Microsoft or even Telegram, despite its new secured version for enterprises.

Last year, a few media outlets valued Slack at about $4B. After analyzing the company, extracting data from 85 different data sources, Zirra estimates Slack’s valuation at $4.6B-$4.7B. In case the company decides to go public or to seek a buyer, It can ask for as much as $9.6B. [Read here the full  Zirra spotlight report on Slack]

 

Niantic Labs

Niantic Labs, The gaming company behind last summer’s hit game Pokemon GO took home the Crunchies best app award this Monday.  Pokemon GO was the #1 overall app on Google Play since the release and until this day is considered as the fastest-growing mobile game in history. But as of February 6th, 2017, the game is now ranked 66th in the Games category and 166th overall on iTunes. [Read here for the spotlight report on Niantic Labs]

At present, Niantic Labs has three apps, Pokemon GO, Ingress, and Fieldtrip available for download on the iTunes store and on Google Play. The games have differentiated themselves in the app gaming market by incorporating augmented reality (AR) into the app to create a whole new experience for mobile gaming.

Pokemon GO downloads graph – Apple Store, by Apptopia

Since the release in July 2016, Niantic reached $1 billion in revenue, says a report from Android Authority. At the height of the app’s popularity, Pokemon GO was generating an average of $18M per day, but now the app is only making roughly $1.5M to $2.5M per day. A part of the magic of a successful AR game as Pokemon GO is that it can make use of fact it leads hoards of users from one place to another. In that way, Niantic has struck deals with Starbucks and McDonalds to make thousands of stores appear as PokeStops and Gyms.

We can see that early reviews of the app were glowing, and as the craze died down, reviews became mixed, especially after the Plus was released. Also, the ranking of the app is diving down as seen in the downloads graph below. However, Pokemon GO is still a successful app and is still generating millions of dollars in revenue every day. Also, since Pokemon GO is an outdoor game, it suffers from seasonality. This summer, you’ll probably see your streets packed with kids following their smartphones, although new games from new publishers will join the trend. As a result, Zirra values Niantic Labs at about $900 million, not yet a unicorn. For more details read here for the spotlight report on Niantic Labs.

Success and risk factors – Niantic Labs, by Zirra

Niantic Labs’ rating, by Zirra