Slack is the first major IPO of 2019 to be announced

Slack has confidentially filed for an IPO.

US trader lookng at Slack IPO Source: Bloomberg

Slack is starting off a busy year for initial public offerings(IPO’s). It’s reported that the office messaging site has confidentially filed for an IPO with the US Securities and Exchange Commission(SEC),becoming the first major filing of 2019.

Why did Slack file for an IPO?

Slack is one of many tech companies expected to go public this year, like Uber and Lyft. Slack has been a successful workplace messaging system since it launched in 2013 by, Stewart Butterfield. The company has grown to have 10 million users and is valued at approximately $10 billion. The ‘unicorn’ company that’s worth over $1 billion has opted to file for a direct listing, in which the company would sell directly to shareholders. In addition to the direct listing, Slack is reported to be working with banks like Goldman Sachs on the shares sales to bidders.

Can Slack’s IPO compete with Microsoft?

Slack’s main competition would be Microsoft Teams, another workplace messaging app. Collaboration software experts like, Alan Lepofsky, knew that the company’s success would lead to similar office messaging software from big tech companies like Microsoft. Lepofsky also noted that Slack’s popularity gives companies like Microsoft a small amount of time to challenge Slack’s dominance.

‘They’ve had a meteoric rise. But any of these tools[from other companies] that fill in a gap only have a short window to do it,’ said Lepofsky.

While Slack came first and is more popular, the cost of Slack may make it less desirable to some businesses who want the free Teams app.

Brian Gillespie, a technology executive at Cerner, a healthcare information technology company, chose Teams instead of Slack because of cost.

‘We didn’t see Slack replacing anything. There was no takeaway cost, it was all additive,’ said Gillespie.

When Slack goes public, it will have to address more competition from big tech companies like Microsoft and pressure to validate its high valuation. Investors will be waiting to see how Slack launches into the public later this year.

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