Workplace-messaging firm Slack is about to go public in a red-hot IPO market, but it’s approach to going public — using a “direct listing” — is slightly different than an IPO.

The “direct listing” method revives some of the same issues and anxieties that came up when Spotify went public using the same method.

But the world is a lot different than when Spotify went public on April 3, 2018.

Direct listings allow a company to go public without involving underwriters — those intermediaries who buy shares from the company or insiders and then sell them to the public. Instead, the shares simply begin trading on an exchange, in this case the NYSE.

Spotify was the first large company to use a direct listing. The worry at that time was simple: direct listings were an untested way to go public. There were two concerns: 1) because direct listings do not have an initial price that is sold to investors, it was not clear where the stock would open, and 2) In a direct listing, most of the shares are immediately available for trading (in Spotify’s case, about 96%).

There was effectively no lockup period. The fear was that insiders would dump the stock en masse on the first day, leading to chaos.

Reference price

Neither concern proved to be a major issue. Instead of an initial price that underwriters set to sell stock, Spotify and its advisors set a “reference price” of $132 that was roughly based on recent private trades. Spotify opened at $165.90 and closed at $149 on its first day of trading, up about 12%.

Fast forward to Slack, and those anxieties are much less evident. The NYSE has set a “reference price” of $26, based roughly on the price of private trades over the last few months (it has traded privately in a range of $25.75-$31.50).

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