Software-as-a-service pioneer Salesforce announced
in an earnings call yesterday that it will buy workplace management app
Slack for $27.7 billion in cash and stock. So like your friend's new SO
you haven't been able to evaluate in person yet, let's pass judgment on
this pairing from afar.
For Salesforce: Slack will join
analytics company Tableau and cloud provider Vlocity in Salesforce's
growing stable of business services offerings. Salesforce has been
buying up enterprise-oriented companies in a bid to fulfill every
workplace need outside of book club—and Slack is Salesforce's biggest
purchase to date.
- Salesforce bulls say it's bulking up in all the right ways, though some analysts argue it may be straying too far from its core business: software for managing sales.
For Slack: Camping
out under Salesforce's tent means more resources, plus new
relationships with c-suites around the world thanks to the behemoth's
existing customer base.
- With tens of millions
forced to work from home, Slack's first half of 2020 was a financial
party parrot. But in September it missed earnings expectations and
shares tanked 19%.
- The company went public via direct listing in June 2019 and shares haven't budged much since. It also hasn't turned a profit.
No need to
worry about your favorite gossip channel disappearing; the WaPo writes
that Slack's impressive brand loyalty will likely keep Salesforce from
meddling too much in the app you know and love/dread.
Zoom out: Salesforce
and Slack have a common, four-paned enemy: Microsoft. Microsoft's
workplace management play, Teams, is an increasingly painful thorn in
Slack's side, while Salesforce lost an arm-wrestling match for LinkedIn
with Microsoft in 2016.
Bottom line: Software acquisitions have been as few and far between
in 2020 as hugs or concerts. The shift to remote catapulted the
industry, inflating valuations and putting potential buyouts out of
reach. But added competition, from Google and Zoom as well as Microsoft,
brought Slack back down to what Salesforce considered a reasonable
price.
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