When Slack’s IPO window opens, it wants to be able to quickly spring into the public markets. Otherwise it could see sour conditions or botched IPOs by other tech companies shut the window before it rings the opening bell. That’s why Slack CEO Stewart Butterfield says it’s already getting its ducks in a row so it’s poised to IPO when the time comes.
Today, Butterfield told The Australian that “About three to four months ago we started an internal campaign for IPO readiness because we want to have the option in the future and there’s quite a bit of work that goes into it.”
The enterprise chat app’s chief continued, “We’ve done our first external audit and we’ve put in place a lot of controls and security practices. There’s a lot of predictability that needs to be evident in the business, so we’re spending a lot on analysis and data infrastructure.”
Still, Butterfield cautions “the absolute earliest that we could IPO, if everything came together right, would be 18 months from now,” and he notes that “One of the things public investors look for is predictability and when you’re growing as fast as we are it’s impossible to predict where we’re going to be six months from now.”
I asked Butterfield if he had any further comment, and he explained that “We are trying to run the company in such a way that we would be READY to go public whenever we are ready. That doesn’t mean we intend, want or need to go public any time soon. It’s like taking a self-defense course in order to be prepared for any eventuality (but without the general intent of going out and smashing people to the ground).”
Born from the pivoted ashes of Butterfield’s gaming startup Tiny Speck, Slack has become a workplace messaging phenomenon. Now it’s evolving into a platform that’s the social fabric for the enterprise, weaving together an office’s other collaboration tools.
Slack raised $160 million at a $2.8 billion valuation back in April. Bringing it to $340 million in total funding, the cash came from premier VCs including Horizons Ventures, Digital Sky Technologies (DST Global), Index Ventures, Spark Capital, and Institutional Venture Partners (IVP), Accel Partners, Andreessen Horowitz, The Social+Capital Partnership, Google Ventures and Kleiner Perkins Caufield & Byers.

While that’s basically a who’s who of top-tier funds, Slack hasn’t raised from any of the big investment banks that typically back late-stage startups in hopes of underwriting their IPOs. There could be potentially be another funding round before Slack goes public.
However, Butterfield says much of the $340 million is unspent, so it’s not desperate for cash from a fundraise or IPO. “Part of it is a hedge against a change in market conditions. Things won’t always be rosy and if market conditions shift and we have a giant pile of cash we’ll be in a great position because suddenly the competition for engineering talent is less, the lease rate on office space comes down, advertising becomes cheaper and especially companies that we might want to acquire become cheaper.”
That funding will be useful due to a somewhat rough public market for enterprise startups and a chilly fundraising climate in the private markets. Lauded investor Keith Rabois recently said that only startups with extraordinary metrics are currently able to raise money, though Slack might qualify. It’s grown from 750,000 users in April to over 1.7 million daily active users now, and Butterfield tells me Slack plans to release more financial numbers next month.

The closest thing to Slack in the public markets right now might be Jive, which is down 15% this year. But soon, Slack competitor HipChat’s developer Atlassian will IPO, and Butterfield will be watching.
“Atlassian is very similar in terms of the sales and growth model. We have slightly different but heavily overlapping markets and to the extent that they’re successful, and we hope they are — that will be a good omen for us.” The market for enterprise chat is so big that Butterfield believes HipChat and Slack could co-exist.
But there’s a third option for Slack beyond an IPO or fundraise: getting acquired. Butterfield admits to The Australian’s Cliona O’Dowd that Slack has received “friendly overtures to see if (a sale) is something we would be interested in pursuing and so far we have not been interested.” Google and Microsoft would surely be sensible suitors.

It’d be peculiar for anyone but Butterfield to be so forward about their company’s situation and plan. It begs the question of whether he’s trying to drum up interest in a fundraise or acquisition. But in reality, he tells me he’s just a forthcoming guy.
After all, he’s the CEO who retweets jokes about his service going down, and publishes expletive-filled internal memos. Candor can be inspirational when you explain the motivation to build a great company with this level of vigor: “The answer to ‘Why?’ is ‘because why the fuck else would you even want to be alive but to do things as well as you can?’”
