Image Credits: Thomas Trutschel / Getty ImagesSalesforce, the
CRM powerhouse that recently surpassed $20 billion in annual
revenue, announced today it is wading deeper into enterprise social
by acquiring Slack in a $27.7 billion megadeal. Rumors of a pending
deal surfaced last week, causing Slack’s stock price to spike.
Salesforce co-founder and CEO Marc Benioff didn’t mince words on
his latest purchase. “This is a match made in heaven. Together,
Salesforce and Slack will shape the future of enterprise software
and transform the way everyone works in the all-digital,
work-from-anywhere world,” Benioff said in a statement.
Slack CEO Stewart Butterfield was no less effusive than his
future boss. “As software plays a more and more critical role in
the performance of every organization, we share a vision of reduced
complexity, increased power and flexibility, and ultimately a
greater degree of alignment and organizational agility. Personally,
I believe this is the most strategic combination in the history of
software, and I can’t wait to get going,” Butterfield said in a
statement.
Every worker at every company needs to communicate, something
that Slack can ably empower. What’s more, it also facilitates
external communication with customers and partners, something that
should be quite useful for a company like Salesforce and its family
of offerings.
Ultimately, Slack was ripe for the taking. Entering 2020 it had
lost around 40% of its value since it went public. Consider that
after its most recent earnings report, the company lost 16% of its
value, and before the Salesforce deal leaked, the company was worth
only a few dollars per share more than its direct listing reference
price. Toss in net losses of $147.6 million during the two quarters
ending July 31, 2020, Slack’s uninspiring public valuation and its
winding path to profitability and it was a sitting target for a
takeover like this one. The only surprise here is the price.
Slack’s current valuation, according to both Yahoo and Google
Finance, is just over $25 billion, which, given its very modest
price change after-hours means that the market priced the company
somewhat effectively. Slack is up around 48% from its valuation
that preceded the deal becoming known.
The new deal also puts Salesforce more on par — and in
competition — with its arch rival and sometime friend Microsoft,
whose Teams product has been directly challenging Slack in the
market. Microsoft, which passed on buying Slack in the past for a
fraction of what Salesforce is paying today, has made Teams a key
priority in recent quarters, loathe to cede any portion of the
enterprise software market to another company.
(adsbygoogle = window.adsbygoogle || []).push({});
What really has set Slack apart from the pack, at least
initially, was its ability to integrate with other enterprise
software. When you combined that with bots, those intelligent
digital helpers, the company could potentially provide Salesforce
customers with a central place to work without changing focus
because everything they need to do can be done in Slack.
Today’s deal comes after Salesforce’s purchase of Quip in 2016
for $750 million. Quip brought to the SaaS giant a way of socially
sharing documents, and when paired with the Slack acquisition gives
Salesforce a much more robust social story to tell than its
internal option Chatter, an early attempt at enterprise social that
never really caught on.
It’s worth noting that Salesforce was interested in Twitter in
2016, the same year that Microsoft was reportedly interested in
Slack, but eventually walked away from that deal when shareholders
objected, not wanting to deal with the controversial side of the
social platform.
Slack was founded in 2013, but its origins go back to an online multiplayer game
company called Glitch that was founded in 2009. While the game was
ultimately a failure, the startup developed an internal messaging
system in the process of building that company that later evolved
into Slack.
The company’s historic growth helped Slack raise more than $1
billion while private, earning an impressive $7 billion valuation
before going public last year. But while the Glitch-to-unicorn
story appears simple, Slack has always faced entrenched competition
from the likes of not only Microsoft, but also Cisco, Facebook,
Google and even Asana and Monday.com.
For Slack, the path to the public markets was fraught with hype
and outsized expectation. The company was famous, or as famous as
an enterprise software company can be. At the time it felt like its
debut was the start of a long tenure as an indie company. Instead,
that public life has been cut short by a huge check. Such is the
dog-eat-dog world of tech.
Read more https://swordpress.com.ng/2020/12/13/salesforce-buys-slack-in-a-27-7b-megadeal-dotifi-com/