In the middle of last year, when Slack and Wall Street were unveiled, the cloud software company Salesforce imposed a one-slide rule on the company to see if it should try to acquire it.
His idea at the time, according to a person familiar with his thinking: Slack, a new form of workplace communications and collaboration software, was facing business challenges that made its shares look overvalued. If the salesforce had patience, there was likely to be a better moment to buy.
At last that time must have come. Salesforce is now talking about buying Slack, setting up a show down with Micro .ft that could shape the way software is used by many of the world’s fee employees.
For Mark Benioff, chief executive of Salesforce, the wait seems to be over. Shares of his company have soared 57 percent in the 17 months since Slack was revealed, even approving a 5 percent drop on Wednesday on news of the negotiations. This has given it a stronger currency for deals that are likely to be paid in large quantities in stock.
In contrast, Slake’s stock fell nearly a quarter over the same period, popping up after news of a potential deal.
While Slack’s fortunes have skyrocketed in a year while other cloud software software stocks have been hot on Cloud Street, its potential strategic value to Salesforce seems uncanny.
Created as a new form of channel-based chat service, Slack has evolved into a comprehensive workplace tool. As more and more of the company’s activities are powered by software, Slack has become a starting point for a growing range of service activities, making it a window to tap into other applications to do things like launch video programs or track invoices.
As a sign of central status it now interrupts the lives of many workers, Slack says its users spend an average of more than 10 hours a day connected to the service and actively use it for more than 100 minutes.
However, Slack has lost ground this year for a similar service to the so-called Timos, Microsoft. The coronavirus epidemic is forcing workers to adopt new forms of software to communicate, with the number of people using teams every day recently reaching 115 meters, up from just 20 mm a year ago.
Slck is a more complex piece of software that has less immediate value as a pure communication tool for workers to keep in touch with, which has evolved more slowly. It does not disclose user numbers, but says 130,000 organizations now pay for its service, an increase of 30 percent over the previous year.
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Slack has also lost customers this year, especially as smaller companies have struggled. Its chief executive Stuart Butterfield has argued that deals with new customers in recent months have put the company in a better position in the long run, but the delay in recognizing revenue on cloud deals means it will see a significant slowdown in revenue before then. Then.
For Mr. Benioff, meanwhile, an acquisition would cut deals designed to further extend his company’s daily working life, bringing him into further conflict with the micro .ft.
Salesforce paid .5 6.5bn in 2018 to Mullesoft, a tool for integrating cloud applications and data, and the following year, the data visualization service, more for tables. 15.7bn. But he lost the bidding battle for the microfinance link to LinkedIn, and Mr Benifo later extended Wall Street’s patience by trying to buy Twitter. Three months ago, he stepped out to reassure investors that the valuation of software companies had reached such a high level that Salesforce was unlikely to acquire it.
That may be the exception to Slack’s stock price underperformance, but Wall Street is still concerned. Concerns are that a deal will clear Salesforce’s earnings per share on Wednesday of 12bn from its market value. According to Coven’s analyst Derrick Wood, what Salesforce paid for its last two major acquisitions would also be a premium of about 400 percent.
The success of the teams has increased Mr Benif’s urgency to act. The Microsoft .ft service has become an effective tool for users to channel into other of the company’s applications – including its customer relationship management software, which directly competes with Salesforce’s core business.
Microsoft has succeeded in tightly integrating teams with its vast cloud computing platform, tying workers more closely to its other software software. This was one of the reasons given by Slack to file an antitrust complaint in the EU earlier this year, claiming that Microsoft had unfairly accepted it.
In contrast, Salesforce Cloud can use Slack as a “front end” for a more open set of software software tools, according to someone familiar with its thinking. It will integrate with Salesforce’s own CRM-like services, while also avoiding other companies’ widely used applications.
Mr. Benef, along with the entrepreneurs behind him, has had little success in folding companies like this in the software’s expanded salesforce portfolio. Brett Taylor, one of the founders of Google Maps, joined Salesforce after acquiring Quip, his own cloud collaboration company, and became its chief product officer. Former CEOs of Techlo and Mulsoft are also still in the company.
Now an important question is whether Mr Butterfield is willing to give up his dream of making MicroSF an independent competitor and throw a lot of his own with Mr Benif.
Thanks to a special class of voting stock, Mr. Butterfield’s personal stake in Slack, currently valued at 1. 6 1.6bn, gives him about 22 percent of the vote, and he controls 20 percent of the vote through a series of agreements with other shareholders. . A further 26 per cent of the vote is held by Assel, the initial venture capital investor, which increases the concentration of ownership.
Mr Butterfield’s last experience of selling to the company he co-founded did not go well. Flickr, a photo-sharing site bought by Yahoo in 2005, has become a watchword for why entrepreneurs in Silicon Valley should resist selling. Yahoo failed to earn a groundbreaking service, and Mr. Butterfield described his subsequent tenure on the Internet portal as a low point in his working life.
Although the microsoft .ft is running rampant and its new company has lost momentum, joining the salesforce has become the best option for ensuring that slack can become an instability of working life.
