`
`ROBBINS GELLER RUDMAN
` & DOWD LLP
`JAMES I. JACONETTE (179565)
`BRIAN E. COCHRAN (286202)
`655 West Broadway, Suite 1900
`San Diego, CA 92101-8498
`Telephone: 619/231-1058
`619/231-7423 (fax)
`COTCHETT, PITRE & McCARTHY, LLP
`BRIAN DANITZ (247403)
`TYSON REDENBARGER (294424)
`NOORJAHAN RAHMAN (330572)
`San Francisco Airport Office Center
`840 Malcolm Road, Suite 200
`Burlingame, CA 94010
`Telephone: 650/697-6000
`650/697-0577 (fax)
`POMERANTZ LLP
`JORDAN L. LURIE (130013)
`ARI Y. BASSER (272618)
`1100 Glendon Avenue, Suite 1558
`Los Angeles, CA 90024
`Telephone: 310/432-8492
`
`10/5/2020
`
`SCOTT+SCOTT ATTORNEYS AT LAW LLP
`JOHN T. JASNOCH (281605)
`HAL D. CUNNINGHAM (243048)
`600 W. Broadway, Suite 3300
`San Diego, CA 92101
`Telephone: 619/233-4565
`619/233-0508 (fax)
`
`Co-Lead Counsel for Plaintiffs
`[Additional counsel appear on signature page.]
`
`
`
`This Document Relates To:
`
`SUPERIOR COURT OF THE STATE OF CALIFORNIA
`COUNTY OF SAN MATEO
`In re SLACK TECHNOLOGIES, INC.
`)
`Lead Case No. 19CIV05370
`)
`(Consolidated with Nos. 19CIV05411;
`SHAREHOLDER LITIGATION
`)
`19CIV05674; 19CIV05784, 19CIV05840,
`
`)
`19CIV05681 and 20-CIV-02589)
`)
`CLASS ACTION
`)
`)
`)
`)
`
`ALL ACTIONS.
`
`FIRST AMENDED CONSOLIDATED CLASS
`ACTION COMPLAINT FOR VIOLATIONS
`OF THE SECURITIES ACT OF 1933
`DEMAND FOR JURY TRIAL
`
`
`
`
`
`
`
`
`FIRST AMENDED CONSOLIDATED CLASS ACTION COMPLAINT FOR VIOLATIONS OF THE SECURITIES
`ACT OF 1933
`
`4827-9756-3341.v3
`
`1 2 3 4 5 6 7 8 9
`
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`

`

`
`
`Plaintiffs Nicole Farina, Brian Knapp, Andrew R. Norell, Laurent Chardonnet, Martin Ren,
`Imran Naushahi, Vinodkumar Kazhipurath, and Mason Chu (collectively, “Plaintiffs”), individually
`and on behalf of all others similarly situated, by Plaintiffs’ undersigned attorneys, allege the following
`based upon personal knowledge, as to Plaintiffs and Plaintiffs’ own acts, and upon information and
`belief, as to all other matters, based on the investigation conducted by and through Plaintiffs’
`attorneys, which included, among other things, a review of U.S. Securities and Exchange Commission
`(“SEC”) filings, analyst and media reports, other commentary analysis concerning Slack
`Technologies, Inc. (“Slack” or the “Company”) and consultations with persons knowledgeable about
`Slack’s business. Plaintiffs’ investigation into the matters alleged herein is continuing and many
`relevant facts are known only to, or are exclusively within the custody and control of, the Defendants
`(defined below). Plaintiffs believe that substantial additional evidentiary support will exist for the
`allegations set forth herein after a reasonable opportunity for formal discovery.
`NATURE AND SUMMARY OF THE ACTION
`1.
`This is a securities class action on behalf of all those who purchased or otherwise
`acquired Slack common stock pursuant or traceable to the Company’s Registration Statement and the
`incorporated Prospectus (collectively, the “Offering Documents”) that offered over 283 million shares
`of Class A common stock issued in connection with Slack’s June 2019 direct public offering (the
`“Offering”). Plaintiffs bring this action pursuant to §§11, 12 and 15 of the Securities Act of 1933 (the
`“1933 Act”). The Offering Documents contained untrue statements of material fact and omitted to
`state material facts required to be stated therein or necessary to make statements therein not
`misleading.
`2.
`Slack is a San Francisco-based technology company that offers a cloud-based
`collaboration and productivity platform that brings people, applications, and data together into a
`single, centralized hub where work can be executed — “often . . . replac[ing] the use of email inside
`the organization.” Slack utilizes “team-based” channels to maintain a record of conversations, data,
`documents, and application workflows relevant to a project or a specific topic, while also integrating
`with thousands of third-party applications to ensure critical business information flows, is acted upon
`
`- 2 -
`FIRST AMENDED CONSOLIDATED CLASS ACTION COMPLAINT FOR VIOLATIONS OF THE SECURITIES
`ACT OF 1933
`
`4827-9756-3341.v3
`
`1 2 3 4 5 6 7 8 9
`
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`

`

`
`
`and transformed, and is then quickly routed to its desired destination. Slack works on a subscription
`freemium basis, providing users a basic, free version of its service (for an unlimited period of time)
`or the option to pay for other plans (e.g., Standard, Plus or Enterprise Grid).
`3.
`On June 20, 2019, the Company completed a direct listing of its Class A stock on the
`New York Stock Exchange (“NYSE”), offering for sale to the public up to 118,429,640 registered
`shares and 164,932,646 unregistered shares purportedly exempt from registration.
`4.
`The public began purchasing Slack stock on the NYSE under the ticker symbol
`“WORK” on June 20, 2019, at an opening price per share of $38.50 (the “Offering Price”).
`5.
`On September 4, 2019, Slack issued a press release announcing its second quarter
`fiscal 2020 (“2Q2020”) results and admitted that “[r]evenue was negatively impacted by $8.2 million
`of credits related to service level disruption in the quarter.”
`6.
`The value of Slack shares dropped precipitously. News outlets such as Forbes reacted
`with headlines such as: “Slack Stock Has Plunged 33%. Here’s What Happened.”1 The Offering
`opening price of $38.50 fell 33% to $26. As of this filing, Slack shares are trading in the range of
`$21 per share.
`7.
`Unbeknownst to shareholders, Slack had omitted in its Offering Documents material
`facts concerning the Company’s excessively punitive contracts with existing customers that were
`forcing the Company to suffer much higher revenue losses than anticipated. The Company had agreed
`to award customers credits in the event of even a de minimis disruption in its service – that is, service
`availability that fell below a 99.99% “uptime” threshold. Slack’s internally-known service
`interruptions as of the Offering were requiring the Company to credit its customers millions of dollars
`as a result of Slacks “up-time” commitments. Indeed, Slack’s infrastructure could not support the
`99.99% service level requirement in light of expanding customer needs (including large enterprise
`customers) in advance of the Offering, and multiple significant outages occurred in the months
`
`
`1 Sergei Kiebnikov, “Slack Stock Has Plunged 33%. Here’s What Happened.,” Forbes, Sept. 11,
`2019, https://www.forbes.com/sites/sergeiklebnikov/2019/09/11/slack-stock-has-plunged-33-heres-
`what-happened/#6b3e0b18550e (last visited Dec. 19, 2019).
`- 3 -
`FIRST AMENDED CONSOLIDATED CLASS ACTION COMPLAINT FOR VIOLATIONS OF THE SECURITIES
`ACT OF 1933
`
`4827-9756-3341.v3
`
`1 2 3 4 5 6 7 8 9
`
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`

`

`
`
`leading up to the Offering. Moreover, Slack was even awarding credits in significant amounts to
`customers unaffected by service interruptions.
`8.
`Days after the Offering, Slack’s platform had three notable service disruptions,
`resulting in uptime performance of only 99.9%. This triggered the penalties in customers’ contracts
`for falling below the 99.99% service level requirement. The Company was forced to award millions
`of dollars’ worth of credits, which deeply offset revenue for that quarter.
`9.
`Only after the abysmally high losses were revealed on September 4, 2019, did Chief
`Executive Officer (“CEO”) Defendant Stewart Butterfield admit that the contract provisions were
`“outrageously customer-centric.” He also admitted that the 99.99% “uptime” requirement is an
`extraordinary and unusual standard in the industry. He stated that Slack competitors such as
`Salesforce.com, Inc. (“Salesforce”) or Microsoft Corporation (“Microsoft”) would not have had to
`pay credits because they have committed to the lower 99.9% (“three nines”) industry standard. He
`also admitted that the Company’s policy is to proactively award credits to customers, even those
`unaffected by service outages. Thus, many customers who experienced no service outage were still
`awarded credits.
`10.
`Chief Financial Officer (“CFO”) Defendant Allen Shim further admitted that the
`Company had committed to an “exceptionally generous credit payout multiplier” in customer
`contracts, which compounded the financial impact of the service disruptions occurring in June and
`July 2019.
`11.
`These “outrageously consumer-centric” policies and contract provisions resulted in a
`deduction of over $8 million from revenue in one period alone.
`12.
`The Company’s historic inability to maintain the promised 99.99% service-level
`availability demonstrates that a consumer credit payout was inevitable and that the consumer centric
`contracts and policies have a material impact on the Company’s financial success. Slack has
`historically failed to consistently perform at 99.99%. In 2018, the Company performed below the
`99.99% standard in 7 months out of 12.
`
`- 4 -
`FIRST AMENDED CONSOLIDATED CLASS ACTION COMPLAINT FOR VIOLATIONS OF THE SECURITIES
`ACT OF 1933
`
`4827-9756-3341.v3
`
`1 2 3 4 5 6 7 8 9
`
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`

`

`
`
`13.
`Furthermore, the Offering Documents omitted the significant and intensifying
`competition Slack was experiencing from Microsoft Teams (or “Teams”) and the inability of the
`Company to penetrate the lucrative “enterprise” market in light of Slack’s problem scaling its
`platform to serve enterprise clients without service disruptions.
`14.
`Slack has not been able to maintain the 99.99% threshold due to its attempt to reach
`enterprise customers. As discovered in plaintiffs’ extensive investigation, Slack lacked the
`infrastructure to support a 99.99% uptime guarantee and was particularly vulnerable because of
`frequent changes to its codebase, indicating that there could be dozens of new code updates daily. As
`a result, service outages, including outages on a global scale, occurred with far greater frequency than
`the near-perfect (“four nines”) reliability guaranteed by Slack.
`15.
`In sum, the Offering Documents were false and misleading and omitted to state
`material facts both required by governing regulations and necessary to make the statements made
`therein not misleading. More specifically, contrary to the Offering Documents’ hyping of the
`Company’s “go-to-market” enterprise business growth strategy and product scalability:
`(a)
`the Company was experiencing significant and intensifying competition from
`Microsoft Teams due in part to Microsoft’s bundled business productivity suite;
`(b)
`Slack’s attempt to attract and serve enterprise clients was creating
`vulnerabilities in its platform, including service disruptions, and Slack was having significant
`technical difficulties preventing adequate scaling of its platform;
`Slack could not support its non-industry standard uptime guarantee of
`(c)
`99.99% and had failed to satisfy this threshold in 7 months out of 12 in 2018;
`(d)
`Slack’s failure to satisfy its uptime guarantee results in the award of credits to
`
`customers;
`
`(e)
`the credit award is subject to an “‘exceptionally generous credit payout
`multiplier in [its] contracts,’” requiring Slack, in the event of an interruption in service, to compensate
`customers up to 100 times the value of the lost service;
`(f)
`even customers unaffected by service disruptions are granted credits; and
`
`- 5 -
`FIRST AMENDED CONSOLIDATED CLASS ACTION COMPLAINT FOR VIOLATIONS OF THE SECURITIES
`ACT OF 1933
`
`4827-9756-3341.v3
`
`1 2 3 4 5 6 7 8 9
`
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`

`

`
`
`(g)
`as a result of Slack’s “‘exceptionally generous’” contractual provisions, even
`a de minimis service interruption materially impacts Slack’s financial performance.
`16.
`Based on the Offering Documents’ material misrepresentations and omissions, the
`Offering was a stunning success for Defendants. Since going public, however, the price of Slack’s
`common stock has largely been on a one-way trip down. By the time this action was first filed,
`Slack’s stock had fallen below $26.00 and has continued to decline – a far cry from its $38.50 opening
`Offering Price.
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`17.
`As a result of Defendants’ wrongful acts and omissions, and the significant share price
`decline in Slack’s common stock, Plaintiffs and other Class (defined below) members have suffered
`and continue to suffer significant losses and damages. The claims asserted herein are purely strict
`liability and negligence claims. Plaintiffs expressly eschew any allegation sounding in fraud.
`
`- 6 -
`FIRST AMENDED CONSOLIDATED CLASS ACTION COMPLAINT FOR VIOLATIONS OF THE SECURITIES
`ACT OF 1933
`
`4827-9756-3341.v3
`
`1 2 3 4 5 6 7 8 9
`
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`

`

`
`
`JURISDICTION AND VENUE
`18.
`This Court has subject-matter jurisdiction over this action pursuant to the California
`Constitution, Article VI, §10 and §22 of the 1933 Act, 15 U.S.C. §77v. This action is not removable.
`See 15 U.S.C. §77v; Cyan, Inc. v. Beaver Cty. Emps. Ret. Fund, ___ U.S. ___, 138 S. Ct. 1061, 1078
`(2018).
`19.
`This Court has personal jurisdiction over each Defendant named herein because each
`conducted business in, resided in, and/or was a citizen of California at the time of the Offering.
`Additionally, three of the Individual Defendants (defined below), Andrew Braccia, John O’Farrell,
`and Chamath Palihapitiya, are residents of this County and the statements complained of herein were
`disseminated into this State.
`20.
`Venue is proper in this Court because Defendants’ wrongful acts arose in and
`emanated from, in part, this County. The violations of law complained of herein occurred in this
`County, including the dissemination of materially misleading statements into this County and
`acquisition of the Company’s common stock by members of the Class who reside in this County. In
`addition, certain of the Defendants reside in this County.
`PARTIES
`
`A.
`
`Plaintiffs
`21.
`Plaintiff Nicole Farina purchased shares of the Company’s common stock that were
`issued in the Offering and pursuant and traceable to the Offering Documents and was damaged
`thereby.
`22.
`Plaintiff Brian Knapp purchased shares of the Company’s common stock in the
`Offering and pursuant and traceable to the Offering Documents and was damaged thereby.
`23.
`Plaintiff Andrew R. Norell purchased shares of the Company’s common stock that
`were issued in the Offering and pursuant and traceable to the Offering Documents and was damaged
`thereby.
`24.
`Plaintiff Laurent Chardonnet purchased shares of the Company’s common stock in the
`Offering and pursuant and traceable to the Offering Documents and was damaged thereby.
`
`- 7 -
`FIRST AMENDED CONSOLIDATED CLASS ACTION COMPLAINT FOR VIOLATIONS OF THE SECURITIES
`ACT OF 1933
`
`4827-9756-3341.v3
`
`1 2 3 4 5 6 7 8 9
`
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`

`

`
`
`25.
`Plaintiff Martin Ren purchased shares of the Company’s common stock that were
`issued in the Offering and pursuant and traceable to the Offering Documents and was damaged
`thereby.
`26.
`Plaintiff Imran Naushahi purchased shares of the Company’s common stock in the
`Offering and pursuant and traceable to the Offering Documents and was damaged thereby.
`27.
`Vinodkumar Kazhipurath purchased shares of the Company’s common stock in the
`Offering and pursuant and traceable to the Offering Documents and was damaged thereby.
`28.
`Plaintiff Mason Chu purchased shares of the Company’s common stock in the Offering
`and pursuant and traceable to the Offering Documents and was damaged thereby.
`29.
`Plaintiff Mohammed Kassem purchased shares of the Company’s common stock in
`the Offering and pursuant and traceable to the Offering Documents and was damaged thereby.
`B.
`Defendants
`30.
`Defendant Slack is a workplace collaboration software company based in San
`Francisco, California. Slack’s shares are listed and traded on the NYSE under the ticker “WORK.”
`Slack is subject to liability as an issuer, solicitor, and control person, and all the statements and
`solicitation herein made by Slack’s officers was on behalf, and at the behest, of the Company. Slack
`organized and invited investors to meet with its top executives at “early investor” education meetings.
`In so doing, Slack directly targeted over 50 institutional investors including “Hedge Funds” and
`“Long Only” investors, a portion of whom were already investors in Slack. It sent Defendant CEO
`Stewart Butterfield to meet virtually and in person with key contacts of these investors in San
`Francisco and other locations on the West Coast and internationally, as well as in New York and
`Boston, where, at Slack’s direction, Defendant Butterfield and other Slack top executives pitched the
`investors on Slack’s anticipated Offering with an electronic presentation that Slack prepared.
`31.
`Slack designated numerous personnel in a working group for the Offering, including
`its CEO and CFO, each of whom not only reviewed and approved the Offering Documents, but also
`pitched investors at Slack’s behest in Slack’s “investor day” in New York City on May 13, 2019, and
`“investor education meetings,” according to a PowerPoint and talking points/script that was reviewed
`
`- 8 -
`FIRST AMENDED CONSOLIDATED CLASS ACTION COMPLAINT FOR VIOLATIONS OF THE SECURITIES
`ACT OF 1933
`
`4827-9756-3341.v3
`
`1 2 3 4 5 6 7 8 9
`
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`

`

`
`
`and approved by Slack, in particular Slack’s CEO and CFO and other Slack personnel. At substantial
`expense, Slack also arranged and prepared “investor day” and the “investor education meetings.”
`Slack not only specifically targeted potential and existing investors for “investor day” and “investor
`education meetings,” it also conducted corporate outreach for “investor day” by employing financial
`news outlets to announce the date of Slack’s “investor day,” inviting investors. And Slack solicited
`and participated in originating customer testimonials to promote the Offering. The investor day
`presentation and PowerPoint slides were recorded and broadcast on Slack’s website through a web-
`link promoted to investors by Slack that was available starting in May 2019. Through that link and
`information on Slack’s website, investors were provided information to facilitate investing in Slack’s
`shares.
`32.
`In fact, Slack designated a significant group of executives in addition to Defendants
`CEO Butterfield and CFO Shim, to assist in pitching investors at “investor day” and in the “investor
`education meetings,” including Chief Product Officer Tamar Yehoshua, General Manager Bryan
`Elliott, Vice President of Investor Relations Jesse Hulsing, Senior Vice President of Sales and
`Customer Success Robert Frati, Director of Product, Lifecycle Fareed Mosavat, and Vice President
`and Global Head of Customer Success and Services Christina Kosmowski. Each of these persons,
`including Defendants Butterfield and Shim, were incentivized by the Company to execute Slack’s
`Offering with compensation and/or bonuses that were triggered upon the closing of Slack’s Offering
`as a performance-based condition. A portion of those incentives Slack granted to CEO Butterfield,
`CFO Shim, Tamar Yehoshua and Robert Frati, included Restricted Stock Units (“RSUs”) for over
`1.7 million, 1.1 million, 1 million and 720,000 shares of Class B common stock, respectively.
`33.
`Slack invited investors to “investor day” and “investor education meetings” and
`pitched investors through its top officers because it was motivated by its financial interests and the
`financial interests of others served by the Offering. The Offering was in fact necessary to provide
`Slack and early investors in Slack’s capital structure with liquidity and the ability to exit investments
`in Slack’s securities that were made by those investors, which included private equity/venture capital
`funds holding nearly half of Slack’s Class B supervoting stock (ten votes to every one vote of Class
`
`- 9 -
`FIRST AMENDED CONSOLIDATED CLASS ACTION COMPLAINT FOR VIOLATIONS OF THE SECURITIES
`ACT OF 1933
`
`4827-9756-3341.v3
`
`1 2 3 4 5 6 7 8 9
`
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`

`

`
`
`A common stock) as of the Offering and that employed directors serving on Slack’s Board of
`Directors. See infra, ¶¶37, 40-41 (identifying defendants Braccia, O’Farrell, and Palihapitiya as board
`designates for venture capital firms Accel, Andreessen Horowitz and Social Capital, respectively, and
`alleging voting control percentages). Slack needed the liquidity of the public market (here the NYSE)
`for its own future securities issuances and to compensate its employees. It also needed to provide
`Slack’s early investors liquidity not only as a result of obligations under certain shareholder
`agreements, but also to demonstrate success to help it garner future financings. Those early investors
`included entities affiliated with Accel, Andreessen Horowitz, Social Capital, and SoftBank Group
`Corp. (“Softbank”), for which Slack registered for sale over 29.9 million, 16.6 million, 12.7 million,
`and 2.2 million shares, respectively, of Slack’s Class A common stock. Slack was also financially
`motivated to serve the interests of its executive officers and directors whose compensation was in part
`tied to Slack securities that required a liquid market to cash out, and Slack registered a total of over
`18 million shares of Slack’s Class A common stock that included shares held by those persons,
`including Defendants, as alleged below at ¶¶34-35, 38-39. These stakeholders, including the venture
`capital/private equity funds and Slack’s officers and directors, also held unregistered shares that
`benefited from the liquidity of the public markets created by the Offering, and Slack was financially
`motivated to execute the Offering to provide liquidity for those purported unregistered shares as well.
`Indeed, immediately before the Offering, Accel, Andreessen Horowitz, Social Capital, and Defendant
`Butterfield, each, beneficially owned four times as many “unregistered” shares as shares registered
`in the Offering, and SoftBank held nearly 20 times as many “unregistered” shares as it did registered
`shares. Defendants Shim, Braccia, Friar, Palihapitiya and Smith, collectively beneficially owned over
`190 million unregistered shares. As Slack recognized in inviting “partners” such as these to Slack’s
`private “NYSE CELEBRATION” that Slack hosted at the NYSE in advance of and during the ringing
`of the bell on the day Slack listed its shares: “We literally wouldn’t be here without you – your
`partnership with Slack has made all of this possible.”
`34.
`At the time of the Offering, Defendant Stewart Butterfield (“Butterfield”), who co-
`founded the Company, was serving as CEO and Chairman of the Board of Directors (the “Board”).
`
`- 10 -
`FIRST AMENDED CONSOLIDATED CLASS ACTION COMPLAINT FOR VIOLATIONS OF THE SECURITIES
`ACT OF 1933
`
`4827-9756-3341.v3
`
`1 2 3 4 5 6 7 8 9
`
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`

`

`
`
`As one of Slack’s executives in the Offering working group and at the behest of Slack, Butterfield
`reviewed and approved, and participated in making, the statements in the Offering Documents, which
`he signed. At the behest of Slack, he also reviewed, edited and approved the Offering’s investor day
`and investor education meetings presentation, talking points and script, in addition to participating in
`making false and misleading statements at the investor day presentation as Slack’s CEO. Butterfield
`was motivated by the financial implications of the Offering given his financial stake in the Company,
`which included multiple forms of securities that could be sold (or converted and sold) to investors in
`or after the Offering. Immediately prior to the Offering, Defendant Butterfield beneficially owned
`41.6 million Class B supervoting shares and held voting control over an additional 46.9 million shares,
`and he registered over 11 million Class A common shares for sale. In the Offering, Defendant
`Butterfield immediately sold 1.36 million shares and has continued to sell shares daily since.
`Butterfield was also motivated by the financial implications of the Offering for Slack and Slack’s
`selling investors, which included a number of venture capital firms and individuals.
`35.
`At the time of the Offering, Defendant Allen Shim (“Shim”) was serving as CFO.
`Defendant Shim first joined Slack in March 2014 and served as Senior Vice President of Finance and
`Operations. As one of Slack’s executives in the Offering working group and at the behest of Slack,
`Shim reviewed and approved, and participated in making, the statements in the Offering Documents,
`which he signed. At the behest of Slack, he also reviewed, edited and approved the Offering’s
`investor day and investor education meetings presentation, talking points and script, in addition to
`participating in making false and misleading statements at the investor day presentation as Slack’s
`CFO. Shim was motivated by the financial implications of the Offering given his financial stake in
`the Company, which included multiple forms of securities that could be sold (or converted and sold)
`to investors in or after the Offering. Immediately prior to the Offering, Defendant Shim beneficially
`owned over 1.9 million Class B supervoting shares, and he registered over 1.3 million Class A
`common shares for sale. In the Offering, Defendant Shim immediately sold over 502,000 shares for
`proceeds of $19.4 million, and has continued to sell tens of thousands of shares between June and
`
`- 11 -
`FIRST AMENDED CONSOLIDATED CLASS ACTION COMPLAINT FOR VIOLATIONS OF THE SECURITIES
`ACT OF 1933
`
`4827-9756-3341.v3
`
`1 2 3 4 5 6 7 8 9
`
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`

`

`
`
`December 2019. Shim was also motivated by the financial implications of the Offering for Slack and
`Slack’s selling investors, which included a number of venture capital firms and individuals.
`36.
`At the time of the Offering, Defendant Brandon Zell (“Zell”) was serving as Chief
`Accounting Officer. Defendant Zell participated in the preparation of and signed the Offering
`Documents.
`37.
`At the time of the Offering, Defendant Andrew Braccia (“Braccia”) was serving as a
`director on the Slack Board. As a director and board designate of Slack’s largest shareholders, the
`Accel venture capital firm, Braccia participated in the preparation of, and reviewed and approved, the
`statements in the Offering Documents, which he signed. He also reviewed and approved the
`Offering’s investor day and investor education meetings presentation. Braccia was motivated by the
`financial implications of the Offering given his financial stake in the Company and the financial stake
`of the Accel venture capital firm that designated him to Slack’s board and at which he was a partner.
`That financial stake included multiple forms of securities that could be sold (or converted and sold)
`to investors in or after the Offering. Braccia beneficially owned over 119 million shares of Slack
`Class B supervoting common stock, providing him and the Venture Capital Defendants (defined
`below in ¶45) with approximately 24% voting control as of the Offering. Braccia, a primary violator
`as alleged herein, was controlled by the Venture Capital Defendants, and in fact the Venture Capital
`Defendants did have the ability to influence or control him. Braccia is a managing member of
`Defendants Accel Growth Fund III Associates L.L.C., Accel X Associates L.L.C., and Accel XI
`Associates L.L.C., the Limited Liability Companies possessing sole voting and dispositive power
`over the Accel funds holding a combined total of approximately 24% voting control as of the Offering.
`He was also compensated and evaluated at Accel in part based on his ability to execute the Offering.
`38.
`At the time of the Offering, Defendant Edith Cooper (“Cooper”) was serving as a
`director on the Slack Board. Defendant Cooper participated in the preparation of and signed the
`Offering Documents. Cooper was motivated by the financial implications of the Offering given her
`financial stake in the Company, which included multiple forms of securities that could be sold (or
`converted and sold) to investors in or after the Offering. Immediately prior to the Offering, Defendant
`
`- 12 -
`FIRST AMENDED CONSOLIDATED CLASS ACTION COMPLAINT FOR VIOLATIONS OF THE SECURITIES
`ACT OF 1933
`
`4827-9756-3341.v3
`
`1 2 3 4 5 6 7 8 9
`
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`

`

`
`
`Cooper beneficially owned over 273 thousand Class B supervoting shares, and she registered over
`102 thousand Class A common shares for sale. Cooper was also motivated by the financial
`implications of the Offering for Slack and Slack’s selling investors, which included a number of
`venture capital firms and individuals.
`39.
`At the time of the Offering, Defendant Sarah Friar (“Friar”) was serving as a director
`on the Slack Board. Defendant Friar participated in the preparation of and signed the Offering
`Documents. Friar was motivated by the financial implications of the Offering given her financial
`stake in the Company, which included multiple forms of securities that could be sold (or converted
`and sold) to investors in or after the Offering. Immediately prior to the Offering, Defendant Friar
`beneficially owned over 406 thousand Class B supervoting shares, and she registered over 50
`thousand Class A common shares for sale. Friar was also motivated by the financial implications of
`the Offering for Slack and Slack’s selling investors, which included a number of venture capital firms
`and individuals.
`40.
`At the time of the Offering, Defendant John O’Farrell (“O’Farrell”) was serving as a
`director on the Slack Board. As a director and board designate of Slack’s second largest shareholders,
`venture capital firm Andreessen Horowitz, O’Farrell participated in the preparation of, and reviewed
`and approved, the statements in the Offering Documents, which he signed. He also reviewed and
`approved the Offering’s investor day and investor education meetings presentation. O’Farrell was
`motivated by the financial implications of the Offering given his financial stake in the Company and
`the financial stake of the Andreessen Horowitz venture capital firm that designated him to Slack’s
`board and at which he was a general partner. That financial stake included multiple forms of securities
`that could be sold (or converted and sold) to investors in or after the Offering. O’Farrell beneficially
`owned over 66 million shares of Slack Class B supervoting common stock, providing him and the
`Andreessen Horowitz venture capital firm with approximately 13.2% voting control as of the
`Offering, and Andreessen Horowitz registered over 16.6 million shares of Class A common stock for
`sale. In the Offering, O’Farrell’s venture capital firm immediately sold 3 million shares for proceeds
`
`- 13 -
`FIRST AMENDED CONSOLIDATED CLASS ACTION COMPLAINT FOR VIOLATIONS OF THE SECURITIES
`ACT OF 1933
`
`4827-9756-3341.v3
`
`1 2 3 4 5 6 7 8 9
`
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`

`

`
`
`of $116 million. He was also compensated and evaluated at Andreessen Horowitz in part based on
`his ability to execute the Offering.
`41.
`At the time of the Offering, Defendant Chamath Palihapitiya (“Palihapitiya”) was
`serving as a director on the Slack Board. As a director and board designate of Slack’s third largest
`shareholders, venture capital firm Social Capital, Palihapitiya participated in the preparation of, and
`reviewed and approved, the statements in the Offering Documents, which he signed. He also
`reviewed and approved the Offering’s investor day and investor education meetings presentation.
`Palihapitiya was motivated by the financial implications of the Offering given his financial stake in
`the Company and the financial stake of the Social Capital venture capital firm that designated him to
`Slack’s board, which financial stake included multiple forms of securities that could be sold (or
`converted and sold) to investors in or after the Offering. Palihapitiya beneficially owned over 50
`million shares of Slack Class B supervoting common stock, providing him and the Social Capital
`venture