The Big Story
This week, Salesforce bought Slack for $27.7 billion. If you keep up with tech news religiously as I’d imagine many of the readers of this newsletter often do, you’ll realize what a big deal this is.
Certain high-flying tech startups elicit pretty strong reader reactions and enthusiasm, these days the startup that seems to represent that most is Stripe, but a few years ago it was most definitely Slack. Everyone had strong opinions on its trajectory which made it very fun for me to write about when the opportunity arose. Slack ushered in many broader trends to enterprise software that had been bubbling up slowly. It had some consumer startup in its DNA and that was reflected in how they built and shipped their product.
All of this made witnessing the now-public company’s sale to Salesforce this week a bittersweet affair. It’s hard to imagine the consumer-esque design ethos of Slack living on as the company is forced to live more tightly inside the worldview of another company.
Wall Street doesn’t love this deal, while Slack’s stock surged when reports first surfaced about the deal, Salesforce’s share price has cratered around 13% erasing value from the market cap that’s greater than the cost of the very pricey acquisition.
The worry is that the two could be worse together than they would be apart, and while Salesforce has maintained that Slack will be operating independently, true independence is rarely achieved in deals this big and this mission-critical. There’s a good chance that investors are concerned that Salesforce is about to get bogged down in trench warfare with Microsoft, directly confronting its Slack competitor Teams which has taken a good deal of wind out of Slack’s share price sails.
“To get to a market cap of $1 trillion, Salesforce now has to take MSFT head on. Until now, the company has mostly been able to stay in its own swim lane in terms of products,” Battery Ventures general partner Neeraj Agrawal relayed to my colleague Ron in an interview this week.
To get the take from the man himself, check out this interview we published yesterday with Slack CEO Stewart Butterfield on the deal and what it means for the company he built.
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