Many years ago, long before Teams was a thing, there were rumors and whispers that Microsoft was looking at Slack as a potential target for acquisition. But after doing some soul-searching, the exec team decided it was better to build their own, rather than pick up the hot new startup that was sweeping up the “anti” Microsoft crowd.
And at that time, it was a controversial decision among those who were watching Slack eat Microsoft’s lunch. Microsoft’s Skype tools, for both enterprise and consumers, were not loved, but simply tolerated, while Slack was the best thing to happen to messaging since Away Message in AIM.
About three years ago, when Microsoft announced Teams, Slack famously took out a full-page ad in the New York Times congratulating the Redmond-based company on its new application called Teams. It’s likely fair to say that without Slack, Teams may not exist today.
But as time has passed, both Teams and Slack have found their place in the market with Teams grabbing huge market share in the corporate segment thanks to its inclusion with Office 365 initially (and Microsoft 365 today) and Slack winning big with smaller companies, organizations using G-Suite, and a few other demographics but namely shops that are “non-Microsoft” based.
This brings us up to today, where SalesForce has announced that it will be buying Slack for $27.7 billion – a 28x Net Twelve Months Revenue. To do this, Salesforce will be paying $26.79 in cash + 0.0776 shares of common stock for each share of Slack.
Upon closing, Slack will become an operating unit of Salesforce and will be lead by CEO Stewart Butterfield and the existing Slack leadership team.
While Slack and Microsoft have certainly crossed paths in the messaging world, Microsoft and Salesforce have also fought for acquisitions as well. When Microsoft acquired LinkedIn a few years back, Salesforce was also trying to pick up the business network but lost out to Microsoft.
This acquisition makes sense for Salesforce in the capacity that it gives them additional monetization opportunities of their existing customers and Slack is a powerful name in the business communication space. Further, Salesforce is likely one of the few companies who could a) afford to buy Slack b) would not come under heavy scrutiny from governmental agencies unlike Google, Amazon, or Facebook.
Salesforce has been slowly building up the tools to create a holistic business operating environment with Customer 360. By bringing Slack into the portfolio, it creates another ‘sticky’ app that keeps customers on the Salesforce platform along with their well-respected CRM solution.
But for Salesforce, the premium they are paying for Slack is significant which means that they see a large upside for the messaging application that could be described as IRC in 2020. Only time will tell if this is the right move for both of the companies but for now, Salesforce is making a huge bet on corporate communication.