Salesforce acquires Slack for almost $28Billion ! Why?

Salesforce acquires Slack for almost $28Billion !

That is a whopping amount of money for a company who was making just $450 million in revenue. Compare this with another mega deal that we saw last year where IBM paid $34Billion to acquire Red Hat. But the difference is Red Hat was making $3.5Billion in revenue. Slack is nowhere near it but getting valuation close to Red Hat. Yes, I know this is a very simplistic way of comparing two acquisitions and financial wizards would apply lot many parameters for a comparison.

While Slack was not exactly a hot technology nor was it growing at breakneck speed, why would have Salesforce found it compelling to pay such an enormous money? Well, the answer is not in ‘what revenue it has today’ but ‘what it can do’.

Collaboration tool, developer tool and building platform for application developers is a deadly combination. Salesforce, through its CRM (SFDC) has a big presence in enterprises. But it needed to go beyond that as the game is shifting to ‘collaboration’. On the other hand Slack was not able to compete effectively against Microsoft Team and Zoom. It needed a big push. Also there is big synergy in the approach of both the companies – both want to be seen as a platform for application developers.

I would not be surprised to see an offering from Salesforce that would embed collaboration tool in SFDC (and all its offerings), that would offer ‘zoom’ like functionality and Slack’s strong communication channels functionality that developers loved. This would help Salesforce expand its appeal to developer community and would bring more application developer to its fold. And don’t forget about power of API management through its last year’s acquisition of Mulesoft.

This is my quick analysis as the story broke out today! Would update it further as more details come out.

https://www.businessinsider.com/salesforces-277b-slack-buy-will-likely-pay-off-analysts-say-2020-12