Monday, December 7, 2020

Salesforce Buys Slack and I’m Disappointed

Last week, Salesforce announced its intent to purchase Slack for $27.7B and the Internet is all excited.  The excitement comes mostly from the high price tag that represents about a 50% premium over what Slack was trading at two weeks ago. But I am disappointed that Slack is getting acquired by Salesforce. 

Sure, the Slack investors are happy. They are making a nice profit on the deal, especially given that Slack has been trading below their IPO level since going public in June 2019. Slack as a company might be happy too. They face heavy competition from Microsoft Teams and Google Apps, and Salesforce might be a good home base to compete from. 

I also understand the Salesforce rationale. Salesforce needs to expand its enterprise footprint beyond the Sales organization. Sure, they have made some inroads into Marketing and Services, but those are still the go-to-market side of the house. Engineering doesn’t use Salesforce. Neither does IT. Nor Finance.  

Slack is a popular solution that is being used by teams across the enterprise. Salesforce needs that really bad. Salesforce tried to enter the collaboration space with Chatter some 10 years ago, but Chatter never managed to break out of the Sales confines. Even though Salesforce offered Chatter for free to any employee, people who are not in Sales just don’t hang out in Salesforce. More recently, Salesforce tried to break out with Quip but that failed as well. Finally, Salesforce realized that it needed something that has already been established across the enterprise and Slack fits that bill. 

Salesforce also needs to keep growing. At their size ($17B in revenue), organic growth becomes increasingly difficult and acquisitions help to “feed the beast”. That’s why we see Salesforce making bigger and bigger acquisitions: $2.8B for Demandware in 2016, $6.5B for MuleSoft in 2018, $15.7B for Tableau in 2019, and now $27.7B for Slack. Bam! That helps to keep the overall growth above 20%! 

Yet, as a Slack user, I am disappointed. Slack is at the heart of a workplace revolution. Their application finally began to improve enterprise collaboration. But it wasn’t alone and companies such as Zoom, and Box are also addressing a [different] part of the collaboration puzzle. These products have been frequently adopted as “rogue software” - software simply loved enough by users that they went around the formal IT and started using it behind their backs.  

My hope always was that one day, Slack, Zoom, and Box would come together and create a complete, well-integrated collaborative solution – one that spans chat/messaging, video conferencing, and content management. Slack alone, without video conferencing and screen sharing from Zoom is incomplete. Both solutions need a persistent repository to manage the content artifacts – something that Box does very well. I need a solution that combines them together. 

Sure, Microsoft and Google already offer such complete solutions. But the market clearly has an appetite for a best-of-breed approach, combining the best messaging, best conferencing, and best content management you can get. This is where the stack vendors tend to come up short, even if they check off all the boxes. The products from Microsoft and Google are good, but not the best. Zoom, Slack, and Box have been defining that “best-of-breed”. 

The magic of the success of Slack, Zoom, and Box has been their ability to take on an old problem with existing solutions that never quite made it. Zoom is the most notorious example right now. Doing what Cisco Webex, Microsoft Skype, LogMeIn GoToMeeting, and many others tried before, Zoom just succeeded with simplicity, dependability, and – we learned this year – amazing scalability. Similarly, Slack excels where Jive, Yammer, Skype for Business, Chatter, and many others came in short. Just like Zoom, Slack isn’t a brilliant new idea. It just works well

Now, Slack will become part of the Salesforce universe. Sure, they will leave them alone for a while, let everyone settle in as part of a giant software company, and drink the Ohana Kool-Aid. Salesforce loves to market grand visions and they might actually make Slack the interface for the Salesforce apps. That could be great for Salesforce customers. But as a user of Slack, Zoom, and Box, I am disappointed because I know that the best-of-breed collaboration tools will never come together the way they could have. 

As a Slack user, I never thought that Slack needed better integration with Salesforce. Never. But I thought many times that it should have been more integrated with Zoom and Box. 





1 comment:

  1. Unfortunately good enough is often just that...good enough for the masses and Microsoft mastered that game a long time ago. Companies aren't willing to pay the premium for a best of breed, best in class solution.