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Proving voicemail doesn’t have to be wack, the Slack-backed startup Yac raises $7.5 million
Yac, the Orlando, Florida-based startup that’s digitizing voice messages for remote offices, has raised $7.5 million in a new round of funding.
The company’s service has garnered enough attention to pick up a pretty sizable new round from investors led by GGV Capital and a return investment from the Slack Fund.
Apparently, reinventing voicemail is a multi-million-dollar endeavor.
“The future of meetings will be asynchronous, in your ears and hands-free,” says Pat Matthews, the chief executive and founder of Active Capital, when the company announced its seed round nearly a year ago.
Co-founded by Justin Mitchell, Hunter McKinley and Jordan Walker, Yac was spun out of the digital agency SoFriendly, and was developed as a pitch for Product Hunt’s Maker Festival. The voice messaging service won that startup competition at the event and attracted the interest of Boost VC and its founder, the third-generation venture capitalist Adam Draper.
About six months after that seed round, Yac received outreach from Slack thanks to a referral from another entrepreneur. Throughout their negotiations last year, the teams used Yac to conduct due diligence, according to Mitchell. At the time of the company’s August announcement that Slack had come on to finance the company, Yac had a bit over 5,000 users on its service; it charges per seat, in the same way Slack does.
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Sneaker enthusiast group SoleSavy raises $2M, setting the stage for a community-driven commerce boom
SoleSavy, a community built around buying hot sneakers and related items that are increasingly hard to acquire at retail, raised $2 million in a round that closed late last year. SoleSavy is a group of communities that is currently mostly hosted on Slack.
SoleSavy’s co-founders Dejan Pralica and Justin Dusanj founded the company in 2018 as a paid community for collectors and enthusiasts seeking pairs that were getting snapped up by bots or resellers. Pralica previously co-founded Kicks Deals, a sneaker shipping site focused on less than retail pricing and Dusanj is the former director of Operations at New Age Sports, a Nike retailer.
SoleSavy’s $2 million party raise includes investment from Panache Ventures, Jason Calacanis’ LAUNCH, Turner Novak, Ben Narasin, Morning Brew’s Alex Lieberman and Austin Rief, Tiny Capital, Wesley Pentz (yes, Diplo), Matthew Hauri aka Yung Gravy, Ryan Holmes, Roham Gharegozlou and Bedrock Capital.
SoleSavy has built an engaged community (several communities, really) around the ebb and flow of the sneakerhead consumer universe (SCU). I just coined that, by the way, please make it a thing. The SCU is an interesting place filled with fascinating characters and behaviors. Every once in a while it pokes its head into the mainstream, whether via a documentary, a hot shoe release or a strong-arm robbery attempt. In 2021, I believe that we will see more of this world breaking out of its box into the larger consumer consciousness.
The trends that are leading us to this place are varied, but some of them have been front and center during the pandemic, as a decade’s worth of consumer behavioral change has occurred in the space of a few months. You only have to look at how hard it was to get a PS5 or Xbox One X or a GPU for the holiday season, and how many services, Twitter accounts and monitor groups rose up to try to help people do that to see what the future of shopping looks like.
I joked about not being able to buy butter without a bot, but it’s not far from the truth — nearly every category of goods has had its own shortages over the last year. But the mother of all limited goods category for decades now has been sneakers.
Every release is hotly anticipated and eagerly purchased by people looking for the latest shoe. The massive increase in interest in the sneaker as the marquee desirable item and the unwillingness of the biggest manufacturers to lose the hype halo has led to each drop being harder to get than the last. Second-market startups like StockX and GOAT have sprung up to facilitate those who don’t mind paying 30%-200% premiums on each release.
The solution for many lies in the countless “cook groups” that help buyers anticipate demand and stock for each drop and plan to purchase them on release date.
SoleSavy’s function is ostensibly to do just that: help regular enthusiasts to strategize and execute the release-day cop. But beyond that, Pralica says that the group has come to be about the community of people around those shoes more than the purchase itself.
Image Credits: SoleSavy
SoleSavy is at its heart a Slack group (a series of groups actually that act as cohorts, leading people through the tiers of community that the team has built) with rooms that help people to understand what’s happening in sneakers, get the releases and commiserate around the culture. Pralica says that they’ve built that community out slowly (the waitlist for the group grows by 400 people per day) in order to maintain a positive atmosphere and to properly onboard new people to the group. They also have an app that drives push notifications and a podcast.
That positive community vibe is what Pralica says is SoleSavy’s long-term focus and differentiating factor that keeps the 4,000 members across the U.S. and Canada interacting with the group on a nearly daily basis.
I’ve been in a dozen or so different groups focused on buying large quantities of each release to re-sell over the years and many of them are, at best, rowdy and at worst toxic. That’s an environment that SoleSavy wanted to stay away from, says Pralica. Instead, SoleSavy tries to court those who want to buy and wear the shoes, trade them and yes, maybe even resell personal pairs eventually to obtain and wear another grail.
Though cook groups have been the “core” of the Discord and Slack-based communities in the sneaker world, other iterations have been booming too. Entrepreneurial communities based in the same hustle principles like Tyler Blake’s In This Economy and fanbase-focused groups around popular streamers top the Disboard. And bets on social token outfits like Zora are also focused on community as the glue that holds together a user base.
Community is the future of all commerce, whether you’re looking for a specific product (see the huge PS5 monitors) or want to steep yourself in a particular universe of product interest (the SCU). The trends that I’ve been seeing all point to 2021 being the year that community-driven purchasing breaks out of the underbelly of fandom and becomes officially “a thing.”
Image Credits: SoleSavy
SoleSavy has been experimenting with a variety of ways to keep the community knit going, including live chats, get-togethers and even a handsome custom community-designed Jordan 1. These efforts have driven the previously bootstrapped company to some impressive early numbers. Pralica says that SoleSavy is currently profitable, with $1.5 million ARR on $33 monthly subscriptions plus affiliate revenue and that their DAUs are at 90% — an engagement number that would make any retailer salivate.
Though the funding closed (very) late last year I thought that this would be a great kick-off story for the year ahead. Though SoleSavy seems to have a really compelling story and a great growth curve, I think they’re at the tip of a very large trend, one that we will see continue to build throughout the year.
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It’s not just you, Slack is struggling this morning
Slack did its best to ease the working world back into their jobs this morning by breaking, ensuring that everyone’s return to the grind would be as chaotic and unproductive as possible.
Precisely when the downtime began is not clear, though problems amongst the TechCrunch staff began a little after 10 o’clock in the morning. Slack itself posted at 10:14 a.m. Eastern Time that there was a problem:
Downtime issues are not new for the workplace chat application that went public in mid-2019, before announcing a deal to sell itself to Salesforce toward the end of 2020. TechCrunch covered the service’s uptime issues in 2020, 2019, 2018, 2017 and so forth.
The downtime is embarrassing, as Slack is in the midst of selling itself for a hefty check. For a service designed to help folks work, falling apart precisely when the users — customers! — you serve are trying to gear back up for a working year is simply awful.
I suppose we can call one another until Slack is back up.
To close, here’s the view from Redmond, with its competing Teams product:
Update: Slack sent TechCrunch a statement, saying the following:
Our teams are aware and are investigating the issue. We know how important it is for people to stay connected and we are working hard to get everyone running as normal. For the latest updates please keep an eye on @slackstatus and status.slack.com.
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Daily Crunch: Slack and Salesforce execs explain their big acquisition
We learn more about Slack’s future, Revolut adds new payment features and DoorDash pushes its IPO range upward. This is your Daily Crunch for December 4, 2020.
The big story: Slack and Salesforce execs explain their big acquisition
After Salesforce announced this week that it’s acquiring Slack for $27.7 billion, Ron Miller spoke to Slack CEO Stewart Butterfield and Salesforce President and COO Bret Taylor to learn more about the deal.
Butterfield claimed that Slack will remain relatively independent within Salesforce, allowing the team to “do more of what we were already doing.” He also insisted that all the talk about competing with Microsoft Teams is “overblown.”
“The challenge for us was the narrative,” Butterfield said. “They’re just good [at] PR or something that I couldn’t figure out.”
Startups, funding and venture capital
Revolut lets businesses accept online payments — With this move, the company is competing directly with Stripe, Adyen, Braintree and Checkout.com.
Health tech venture firm OTV closes new $170M fund and expands into Asia — This year, the firm led rounds in telehealth platforms TytoCare and Lemonaid Health.
Zephr raises $8M to help news publishers grow subscription revenue — The startup’s customers already include publishers like McClatchy, News Corp Australia, Dennis Publishing and PEI Media.
Advice and analysis from Extra Crunch
DoorDash amps its IPO range ahead of blockbuster IPO — The food delivery unicorn now expects to debut at $90 to $95 per share, up from a previous range of $75 to $85.
Enter new markets and embrace a distributed workforce to grow during a pandemic — Is this the right time to expand overseas?
Three ways the pandemic is transforming tech spending — All companies are digital product companies now.
(Extra Crunch is our membership program, which aims to democratize information about startups. You can sign up here.)
Everything else
WH’s AI EO is BS — Devin Coldewey is not impressed by the White House’s new executive order on artificial intelligence.
China’s internet regulator takes aim at forced data collection — China is a step closer to cracking down on unscrupulous data collection by app developers.
Gift Guide: Games on every platform to get you through the long, COVID winter — It’s a great time to be a gamer.
The Daily Crunch is TechCrunch’s roundup of our biggest and most important stories. If you’d like to get this delivered to your inbox every day at around 3pm Pacific, you can subscribe here.
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Why Slack and Salesforce execs think they’re better together
When Salesforce bought Slack earlier this week for $27.7 billion, it was in some ways the end of a startup fairytale. Slack was the living embodiment of the Silicon Valley startup success fantasy. It started as a pivot from a game company, of all things. It raised $1.4 billion, went from zero to a $7 billion valuation to IPO, checking off every box on the startup founder’s wish list.
Then quite suddenly this week, Slack was part of Salesforce, plucked off the market for an enormous sum of money.
While we might not ever know the back (Slack) room maneuvering that went on to make the deal a reality, it is interesting to note that Slack CEO Stewart Butterfield told me in an interview this week that he was not actually trying to sell the company when he approached Salesforce president and COO Bret Taylor earlier this year. Instead, he wanted to buy something from them.
“I actually talked to Bret in the early days of the pandemic to see if they wanted to sell us Quip because I thought it would be good for us, and I didn’t really know what their plans were [for it]. He said he’d get back to me, and then got back to me six months later or so,” Butterfield said.
At that point, the conversation flipped and the companies began a series of discussions that eventually led to Salesforce acquiring Slack.
Big money, big expectations
From the Salesforce perspective, Taylor says that the Slack deal was worth the money because it really allows his company to bring together all the pieces of their platform, one that has expanded over the years from pure CRM to include marketing, customer service, data visualization, workflow and more. Taylor also said that having Slack gives Salesforce a missing communication layer on top of its other products, something especially important when interactions with customers, partners or fellow employees have become mostly digital.
“When we say we really want Slack to be this next generation interface for Customer 360, what we mean is we’re pulling together all these systems. How do you rally your teams around these systems in this digital work-anywhere world that we’re in right now where these teams are distributed and collaboration is more important than ever,” Taylor said.
Butterfield sees a natural connection between what people do in the course of their work, what machines do behind the scenes in these systems of record and engagement and how Slack can help bridge the gap between humans and machines.
He says that by putting Slack in the middle of business processes, you can begin to eliminate friction that occurs in complex enterprise software like Salesforce. Instead of moving stuff through email, clicking a link, opening a browser, signing in and then finally accessing the tool you want, the approval could be built into a single Slack message.
“If you have hundreds of those kinds of actions a day, there’s a real opportunity to increase the velocity, and that has an impact, and not just in the minutes saved by the person doing the approval, but the speed of how the whole business operates,” Butterfield said.
Competing with Microsoft
While neither executive said the deal was about competing with Microsoft, it was likely an underlying reason that the companies decided to join forces. They may prove better together than they are separately, and both have complicated histories with Microsoft.
Slack has had an ongoing battle with Microsoft and its Teams product for years. It filed suit against the company last summer in the EU over what it called unfairly bundling of Teams for free with Office 365. In an interview last year with The Wall Street Journal, Butterfield said that he believes Microsoft sees his company as an existential threat. Hyperbole aside, there is tension and competition between the two enterprise software companies.
Salesforce and Microsoft also have a long history, from lawsuits in the early days to making friends and working together when it makes sense after Satya Nadella took over in 2014, while still competing hard in the market. It’s hard not to see the deal in that context.
In a recent interview with TechCrunch, Battery Ventures general partner Neeraj Agrawal said the deal was at least partially about catching Microsoft.
“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,” Agrawal told TechCrunch.
As for Butterfield, while he saw the obvious competition, he denied the deal was about putting his company in a better position to compete with his rival.
“I don’t think that was really an important part of the rationale, at least for me,” he said, adding “the competition with Microsoft is overblown. The challenge for us was the narrative. They’re just good PR or something that I couldn’t figure out,” he said.
While Butterfield cited a list of large clients in enterprise tech, insurance and banking, the narrative has always been that Slack was favored by developer teams, which is where it initially gained traction. Whatever the reality, with Salesforce, Slack is definitely in a better position to compete with any and all comers in the enterprise communications space, and while it will be part of Salesforce, the two companies also have to figure out how to maintain some separation.
Keeping Slack independent
Taylor certainly recognizes that Slack’s current customers are watching closely to see how they handle the acquisition, and his company will have to walk a fine line between respecting the brand and product independence on one hand, while finding ways to create and build upon existing hooks into Salesforce to allow the CRM giant to take full advantage of its substantial investment.
It won’t be easy to do, but you can see a similar level of independence in some of Salesforce’s recent big-money purchases like MuleSoft, the company it bought in 2018 for $6.5 billion, and Tableau, the company it bought last year for more than $15 billion. As Butterfield points out, those two companies have clearly maintained their brand identity and independence, and he sees them as role models for Slack.
“So there’s a layer of independence that’s like that [for Mulesoft and Tableau] because it’s not going to help anyone call us Chat Cloud or something like that. They paid a lot of money for us, so they want us to do more of what we were already doing,” he said.
Taylor, whose opinion matters greatly here, certainly sees it in similar terms.
“We want to make sure we have a real integrated value proposition, a real integrated platform for developers, but also maintain Slack’s technology independence, technology agnostic platform and its brand,” he said.
Better together
As for the companies coming together, both men see a lot of potential here to merge Slack communications with Salesforce’s enterprise software prowess to make something better, and Taylor sees Slack helping link the two with workflows and automations.
“When you think about automation, it’s event driven, these long-running processes, automations. If you look at what people are doing with the Slack platform, it’s essentially incorporating workflows and bots and all these things. The combination of the Salesforce platform where I think we have the best automation intelligence capabilities with the Slack platform is incredible,” Taylor said.
The challenge these two men now face as they move forward with this acquisition, and all of the expectations inherent in a deal this large, is making it work. Salesforce has a lot of experience with large acquisitions, and they have handled some well, and some not so well. It’s going to be imperative for both companies that they get this right. It’s now up to Taylor and Butterfield to make sure that happens.
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Everyone has an opinion on the $27.7B Slack acquisition
When the Salesforce-Slack deal was officially announced on Tuesday afternoon, and the number appeared, it was kind of hard to believe. Salesforce had shelled out more than $27 billion to buy Slack and bring it into the Salesforce family of products. The company sees a key missing piece in Slack, and that could explain why it was willing to spend such an astonishing amount of money to get it.
With Slack, Salesforce now has what CEO Marc Benioff called the interface to everything, something he says that the company has thought about for years. In 2010, they tried building it themselves with Chatter, a social tool that never really caught on in a big way. With Slack they finally have it.
“We’ve always had the vision of the social enterprise at Salesforce for more than a decade. Oh, we’ve had Dreamforces entirely dedicated to the vision of what a collaborative interface, a high production interface with applications and an ecosystem would look like wrapped on top of our Customer 360,” Benioff said.
He added that ironically in a building right next door to Salesforce Park you’ll find Slack headquarters. They won’t have to go far to collaborate (or you know, they can just use Slack).
From Chatter to Slack
Neeraj Agrawal, general partner at Battery Ventures, says that Benioff has had an interest in enterprise social going back years, and this is his way of finally delivering. “Remember Chatter? Benioff was dead on with this trend. He lost Yammer to Microsoft (when Microsoft acquired it for $1.2 billion) about 7-8 years ago, and then launched Chatter. It was a huge bet, but didn’t work. Slack is really Chatter 2.0,” he said.
Chuck Ganapathi, CEO and co-founder at Tact.ai, was product lead on the Chatter product at Salesforce in the 2009 time frame. He wrote in a soon-to-be-published blog post he shared with TechCrunch that it failed for a lot of reasons, but mostly because at its core, Salesforce was still a bunch of database guys and enterprise social was a very different animal.
“Some of the issues were technical — Salesforce is a database-centric company, founded by Oracle alums on a relational DB foundation. DB applications and unstructured communication applications like Chatter or Slack represent completely different branches of computer science with little overlap,” he wrote. Because of that, he felt that they lacked the expertise to build the application correctly, and it never really caught on, with so many similar products in the market at the time.
But Benioff never lost interest in the concept of incorporating social into the Salesforce platform. It just took another 10 years or so and a bushel of money to make it happen.
A good match or not?
Leyla Seka, a partner at Operator Capital, who formerly ran the AppExchange at Salesforce, sees good things ahead with a combined Slack and Salesforce. “Salesforce and Slack together will offer a powerful duo of applications that will help companies work more effectively together. I think that COVID-19 has shown us how critical it is to get employees the data they need to do their job, but also the community they need to thrive at their job. The marriage of Salesforce and Slack promises to do just that,” Seka told me.
Brent Leary, principal analyst at CRM Essentials, was knocked out by the price tag, but says it shows that Salesforce is not afraid to go after what it wants, even if it has to pay a hefty price to get it. “This goes to show Salesforce has absolutely no fear in them when it comes to this deal. They are willing to throw down the big bucks on this acquisition because they see a huge payoff by adding this piece into their platform,” he said.
As for Slack, he sees it as a way for them to take the fast track to the enterprise big leagues. “And for Slack they go from competing with AMOSS (Adobe, Microsoft, Oracle, SAP, Salesforce) to joining one of them, and the company that really made the most sense for them to team up with,” he said.
Laurie McCabe, an analyst and founder at SMB Group, agrees with Leary’s take, saying Salesforce doesn’t hesitate when it thinks the value is there. “In this case, Slack gives them a strong collaboration offering that will help them compete more effectively against Microsoft’s growing cloud portfolio, which of course includes CRM and Teams,” she said.
Show me the money
Battery’s Agrawal believes this deal is all about generating revenue, and it was willing to pay a premium to move the needle in billion-dollar chunks. The end game he believes is about catching Microsoft, or at the very least getting to $1 trillion (with a T, folks) in market cap.
It’s worth noting that investors are not showing signs, initially at least, of liking this deal, with the stock down over 8% today and 16.5% since the rumor of Salesforce’s interest in Slack surfaced last week before the Thanksgiving holiday. That translates into more than $18 billion in lost market cap — probably not the reaction they were hoping for. But Salesforce is big enough that it can afford to play a long game, and reach its financial goals with the help of Slack.
“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. […] To get to a trillion dollars in market cap, Salesforce needs to try to grow in two massive markets,” Agrawal said. Those would be either knowledge worker/desktop (see the 2016 Quip acquisition) or cloud (see the Hyperforce announcement). Agrawal says chances are the company’s best bet is the former, and it was willing to pay top dollar to get it.
“The deal will help Salesforce maintain a 20%+ growth rate over the next few years,” he said. Ultimately, he sees it moving the revenue needle, which should eventually drive market cap higher and help achieve those goals.
It’s worth noting that Salesforce president and CEO Bret Taylor said while they intend to integrate Slack deeply into the Salesforce product family, they recognize the power and utility of Slack as a standalone product and they don’t intend to do anything that would mess with that.
“Fundamentally, we want to make sure that Slack remains as a kind of technology-agnostic platform. We know that Slack is used by millions and millions of people every day to connect every tool under the sun. The most remarkable thing is just how many customers have also just integrated their own custom internal tools as well into this is really kind of the central nervous system for the teams that use it, and we would never want to change that,” he said.
It’s hard to judge a deal this large until we have some hindsight and see how well the two companies have meshed, how well they can incorporate Slack into the Salesforce ecosystem, while allowing that independence Taylor alluded to. If they can find a way to walk that line and Slack becomes that wrapper, that operating system, that glue that holds the Salesforce ecosystem together, it will be a good deal, but if Slack stops innovating and withers under the weight of its corporate overlords, then it might not be money well spent.
Time will tell which is the case.
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Daily Crunch: Salesforce buys Slack for $27.7B
Salesforce announces its acquisition of Slack, Amazon brings the Mac mini to the cloud and Google Maps gets a newsfeed. This is your Daily Crunch for December 1, 2020.
The big story: Salesforce buys Slack for $27.7B
The acquisition, which was first reported last month, is now official.
“This is a match made in heaven,” said Salesforce co-founder and CEO Marc Benioff. “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.”
This cash-and-stock deal should make Salesforce a more serious competitor in the enterprise communication market. It also seems that Slack (which went public last year) was an obvious target for a takeover, due to an underwhelming stock price and a net loss of $147.6 million during the two quarters ending on July 31 of this year.
The tech giants
AWS brings the Mac mini to its cloud — This was just one of the announcements that Amazon Web Services made today at its re:Invent conference.
Google Maps takes on Facebook with launch of its own news feed — The feed is designed to make it easier to find the most recent news and recommendations from trusted local sources.
Facebook’s self-styled ‘oversight’ board selects first cases, most dealing with hate speech — The Facebook-funded body that the tech giant set up to distance itself from tricky content moderation decisions has announced the first set of cases it will consider.
Startups, funding and venture capital
SoftBank takes a $690M stake in cloud-based Swedish customer engagement company Sinch — Sinch provides cloud-based “omnichannel” voice, video and messaging services to help enterprises communicate with customers.
Voi, the European ‘micromobility’ rental company, raises $160M additional equity and debt funding — Voi says the new funding will be used to invest in technology development, fuel growth in current Voi markets and bring its latest e-scooter model to more cities.
Floww raises $6.7M for its data-driven marketplace matching founders with investors, based on merit — Having made more than 160 investments himself, founder Martijn De Wever says he recognized the need for a platform connecting investors and startups.
Advice and analysis from Extra Crunch
Bottom-up SaaS: A framework for mapping pricing to customer value — For the first time, individual employees are influencing the tooling decisions of their companies.
Who’s building the grocery store of the future? — Startups offering cashierless checkout, software analytics and robotics will clean up on aisle five.
(Extra Crunch is our membership program, which aims to democratize information about startups. You can sign up here.)
Everything else
China’s Chang’e-5 lunar lander successfully lands on the moon — China’s Chang’e-5 mission will be the third ever to bring back soil or rock samples from the moon.
US shopping app downloads on Black Friday reached a record 2.8M installs — Many U.S. consumers spent this year’s Black Friday sales event shopping from home on mobile devices.
The Daily Crunch is TechCrunch’s roundup of our biggest and most important stories. If you’d like to get this delivered to your inbox every day at around 3pm Pacific, you can subscribe here.
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Salesforce beats growth expectations as investors digest the Slack acquisition
Today after the bell, Salesforce reported its third-quarter earnings for its fiscal 2021, a period that ended October 31, 2020. The CRM giant reported top-line revenue of $5.42 billion, up 20% from the year-ago period. Salesforce also had net income of $1.08 billion and earnings per share of $1.15.
Analysts had expected the company to earn $0.75 per share off revenues of $5.25 billion, according to Yahoo Finance.
Shares of Salesforce were off after-hours, falling around 3.6% at the time of writing. It was not clear if the company’s share price performance was due to its Q3 results, or its raised Q4 guidance, or its new fiscal 2022 expectations, or the newly announced Slack deal.
As TechCrunch reported moments ago, Salesforce will buy Slack for $27.7 billion in a cash and stock deal that was fully priced into shares of the smaller company, which dropped a little over a point on the news, having risen by nearly 50% since the deal’s existence first leaked.
Holders of Slack will be rewarded for their patience. Now it’s up to Salesforce leadership to prove that the huge buy will help boost the company’s growth.
Salesforce told investors today that it anticipates Q4 fiscal 2021 revenues of $5.665 billion to $5.675 billion, which works out to growth of around 17% from the year-ago period. The company also anticipates that it will grow around 17% in Q1 of its fiscal 2022.
But Salesforce expects to grow 21% in all of its fiscal 2022. How does it intend to accelerate? Its projections include Slack:
Full Year FY22 revenue guidance includes contributions from Slack Technologies, Inc. of approximately $600 million, net of purchase accounting, and assumes a closing date in late Q2 and Acumen Solutions, Inc. of approximately $150 million, net of purchase accounting, and assumes a closing date within Q2.
So, Salesforce investors, after two anticipated quarters of 17% growth coming up, your company will accelerate up to 21% growth for the next fiscal year. Is that worth $27.7 billion?
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Salesforce buys Slack in a $27.7B megadeal
Salesforce, 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.
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.
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As Slack acquisition rumors swirl, a look at Salesforce’s six biggest deals
The rumors ignited last Thursday that Salesforce had interest in Slack. This morning, CNBC is reporting the deal is all but done and will be announced tomorrow. Chances are this is going to a big number, but this won’t be Salesforce’s first big acquisition. We thought it would be useful in light of these rumors to look back at the company’s biggest deals.
Salesforce has already surpassed $20 billion in annual revenue, and the company has a history of making a lot of deals to fill in the road map and give it more market lift as it searches for ever more revenue.
The biggest deal so far was the $15.7 billion Tableau acquisition last year. The deal gave Salesforce a missing data visualization component and a company with a huge existing market to feed the revenue beast. In an interview in August with TechCrunch, Salesforce president and chief operating officer Bret Taylor (who came to the company in the $750 million Quip deal in 2016), sees Tableau as a key part of the company’s growing success:
“Tableau is so strategic, both from a revenue and also from a technology strategy perspective,” he said. That’s because as companies make the shift to digital, it becomes more important than ever to help them visualize and understand that data in order to understand their customers’ requirements better.
Next on the Salesforce acquisition hit parade was the $6.5 billion MuleSoft acquisition in 2018. MuleSoft gave Salesforce access to something it didn’t have as an enterprise SaaS company — data locked in silos across the company, even in on-prem applications. The CRM giant could leverage MuleSoft to access data wherever it lived, and when you put the two mega deals together, you could see how you could visualize that data and also give more fuel to its Einstein intelligence layer.
In 2016, the company spent $2.8 billion on Demandware to make a big splash in e-commerce, a component of the platform that has grown in importance during the pandemic when companies large and small have been forced to move their businesses online. The company was incorporated into the Salesforce behemoth and became known as Commerce Cloud.
In 2013, the company made its first billion-dollar acquisition when it bought ExactTarget for $2.5 billion. This represented the first foray into what would become the Marketing Cloud. The purchase gave the company entrée into the targeted email marketing business, which again would grow increasingly in importance in 2020 when communicating with customers became crucial during the pandemic.
Last year, just days after closing the MuleSoft acquisition, Salesforce opened its wallet one more time and paid $1.35 billion for ClickSoftware. This one was a nod to the company’s Service cloud, which encompasses both customer service and field service. This acquisition was about the latter, and giving the company access to a bigger body of field service customers.
The final billion-dollar deal (until we hear about Slack perhaps) is the $1.33 billion Vlocity acquisition earlier this year. This one was a gift for the core CRM product. Vlocity gave Salesforce several vertical businesses built on the Salesforce platform and was a natural fit for the company. Using Vlocity’s platform, Salesforce could (and did) continue to build on these vertical markets giving it more ammo to sell into specialized markets.
While we can’t know for sure if the Slack deal will happen, it sure feels like it will, and chances are this deal will be even larger than Tableau as the Salesforce acquisition machine keeps chugging along.
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