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Comment by muglug | Hacker News Reader

The obvious counter-example to this is Slack, a "pure-tech" company whose value has halved since IPO, and there's a similar story with Snapchat (though its value has recovered somewhat in the past year).

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Well, nobody said that being a "pure" tech company automatically guarantees sky-high valuations, a hockeystick growth curve and the successful capture of a winner-takes-all market. Of course there must still be failures in that space, some which fail early and some which fail late.

It's just that the described path to success is close to impossible in any other space except for pure tech companies, preferably with a software-only product, which means that any company not fitting that description, but boasting absurd high valuations justified by assuming the company will go the path described above does most likely mislead investors.

I don’t think there’s fundamentally anything wrong with slack though. Investors just don’t understand it, I don’t think. I’ve read so many articles about how Microsoft is going to crush it with teams and it’s so obvious to anyone who has had to work with both of them that they simply are not competitors — really the only thing close to it is Discord and it’s not going after the enterprise market.

The barrier to entry to compete with slack is fairly low. And Discord can just decide to start focusing on enterprises. Microsoft is just one company with the leading office suite that happens to be really kludgy. Slack has its pluses and minuses. So just because slack works great and is fun to use, and has lots of companies giving them money, doesn't mean they are worth their huge valuation. They aren't getting enough money, and another hipchat like competitor can come along and do even better. The best thing slack has is they are the default safe choice.

I say this as a slack stock holder who lost money, so I clearly know what I'm talking about ;-)

The only way slack's valuation makes sense to me is that it could be used as a covert business-intelligence tool. I tend to think of github the same way.

Microsoft Teams is definitely a direct competitor, and while it may not be nearly as good as slack, there are few companies out there with as many tentacles in Enterprise as Microsoft.

It would not be uncommon for an inferior product to win a significant market share. Especially when it comes to Enterprise software.

I don't think Slack counts, Slack's IPO was just a cash out because they saw the writing on the wall.

Slack's stock price chart has a "down and to the right" appearance.

It was valued at $7 billion or so early last year. so at today’s price, it still went up over 50% since then. so one could argue it is still overvalued.

just because some greater fool declared it was worth $40 at some point doesn’t mean it’s now a bargain if it goes down to $20.

Indeed, I wasn't suggesting it was a good investment, just that the appearance of the chart is fairly consistent in moving toward a value of zero.

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