Salesforce Buys Slack for $27.7 Billion
Over the past few years, we’ve become fond of Slack, which we use for internal TidBITS staff discussions, the public SlackBITS group where we gather to watch live Apple events, and (for some of us) family Slack groups that allow us to avoid Facebook (see “Fed Up with Facebook? Move Your Family to Slack,” 12 February 2019). The massive (over 35,000 users) MacAdmins Slack group is also valuable for anyone supporting Macs.
The cloud-based business services company Salesforce must also find Slack valuable because it’s paying $27.7 billion to buy Slack. Although Slack went public in 2019, it has struggled since, despite the massive increase in remote work during the pandemic, all while competitors like Microsoft Teams have grown rapidly.
The deal won’t clear until next year at the earliest, but we don’t see why it wouldn’t pass scrutiny. It’s a natural move for both companies. While Slack is dearly beloved by techies, it has a hard time monetizing its service. Salesforce will likely be able to improve sales, especially with the integration of Slack chat into its other business services.
Although it’s too early to speculate about how Slack might change, we and many other tiny businesses, non-profits, and workgroups hope that the post-acquisition Slack continues to offer its limited free tier of service.
This is nitpicking, but how truly beloved can something be if people are not willing to pay even a little for it? I think this has much to do with focus on raw adoption numbers. If all that counts if how many millions of people use a tool then it’s a race to the bottom as everybody has to go free and try to sell something beyond or sell out users’ privacy (eg. Facebook). By contrast, if you focus on selling a solid product at a reasonable price, you likely won’t have the same high adoption rates, but you’ll probably gain a bunch of happy loyal customers (eg. Apple). IMHO the latter is more desirable model for both customers and businesses. I really wish we’d give up on this 90s obsession with trying to have the entire developed world use the one same tool for a certain task.
Well, a lot of people do pay a lot for it. Very small businesses and organizations aren’t usually in that group because the premium features are priced for larger firms. For instance, in the internal TidBITS Slack, we have 30 users right now (all the Take Control discussions continue to happen there as well even though that’s Joe’s baby now). We like Slack, but not enough to pay $200 per month.
I doubt that this deal is about one app, it’s about Salesforce going after Microsoft Dynamics, including its Teams and Microsoft Cloud Services and Office 365. There is no Mac version of MS Dynamics; it can only run in Parallels, and according to people I used to work with, it does not run well on it at all. Salesforce runs just fine on Macs. So I suspect Tim Cook is smiling about this. And Salesforce initially got off the ground by focusing on small to mid sized businesses and charging reasonable prices. They been focusing equally on businesses of all size businesses for years:
Slack has never been profitable:
Slack reported a loss of $74.4 million, or 13 cents a share, on revenue of $201.7 million, up 50% from $134.8 million a year ago. After adjusting for stock-based compensation and other factors, Slack reported a loss of 2 cents a share, compared with a loss of 23 cents a share a year ago. Analysts surveyed by FactSet had expected adjusted losses of 6 cents a share on sales of $186.2 million.
What I am concerned about is the possibility Salesforce might kill the free version.