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Salesforce to Acquire Slack in Biggest Benioff Acquisition to Date

By Erik Linask December 01, 2020

Just a few months ago, Salesforce CEO Marc Benioff said, “We're not in a good M&A environment. I just don't see it.” 

He did acknowledge that things could change – and apparently they have.  In a move that defies his comments from Salesforce’s Q2 2021 earnings call, the company just announced it is acquiring collaboration giant Slack in a $27.7 billion deal.

Launched in 2013, Slack has been widely credited with kickstarting the enterprise collaboration market, which now boasts a wide range of players and has become a key part of business communications strategies.  Started as primarily an alternative to email to drive better project- and team-based collaboration, Slack has since grown to become the largest competitor to Microsoft in the collaboration space.

Still, despite its growth, the company has struggled during the 18 months since going public and hasn’t been profitable for three quarters.  Even the massive growth in remote working during the pandemic hasn’t given it the same boost other companies have seen and, with the significant increase in Teams users, the pressure to perform only increased.  Given that, it’s not at all surprising to see it as the latest tech company to be acquired, and the 39% revenue growth in the past quarter certainly provided some additional bargaining power.

But, why Salesforce?

Salesforce, which went cloud before cloud was a thing and has become the 800-pound gorilla in the CRM space.  But, it clearly has had its eyes set on a bigger market and, with Slack, it can connect employees, customers, and partners on a single, unified platform, further extending its Customer 360 vision.

“This is a match made in heaven,” said 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.  I’m thrilled to welcome Slack to the Salesforce Ohana once the transaction closes.”

One of the benefits of Slack is its ability to integrate with other enterprise software, which will play well into Salesforce’s strategy of creating a unified platform for internal and customer collaboration.  Slack already integrates with more than 2,400 enterprise applications, and Salesforce already boasts a massive application ecosystem.  Together, the two can redefine how businesses connect with their customers and enable new workflow opportunities leveraging the Salesforce ecosystem.

Salesforce says it will integrate Slack into every Salesforce Cloud as the new interface for Salesforce Customer 360, enabling a new level of communication and collaboration between teammates and customers.  The integrated solution will enable level of productivity and ability to act quickly on customer information leveraging the entire ecosystem of Salesforce applications to create tighter and more connected customer experiences.

“Salesforce started the cloud revolution, and two decades later, we are still tapping into all the possibilities it offers to transform the way we work,” said Slack CEO and co-founder Stewart Butterfield.  “The opportunity we see together is massive as software plays a more and more critical role in the performance of every organization.  Personally, I believe this is the most strategic combination in the history of software, and I can’t wait to get going.”

Naturally, the acquisition also positions Salesforce better against Microsoft, especially with the clear message from businesses that remote work is here to stay.  With that in mind, it wouldn’t be at all surprising to see more acquisitions from Salesforce to further position the company in the communications and collaboration space.  What if Benioff were to go after a cloud storage business or one of the many independent cloud communications companies and integrate those services to create a full-blown enterprise communications and collaboration and CRM solution?  That would really give MSFT a major competitor – one that effectively built the SaaS market.




Edited by Erik Linask

Group Editorial Director

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