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Salesforce to acquire work-chat service app Slack for $27.7 billion

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On Tuesday both Salesforce and Slack confirmed the acquisition of the latter for $27.7 billion by the software company Salesforce. This acquisition will mark one of the biggest business deals in the software industry and also the biggest in the history of Salesforce to date. Salesforce is a cloud computing giant which after owning the new work-chat app will amplify the working connectivity globally. The company will have a better shot at giving tough competition to the tech giant Microsoft.

Salesforce was one of the earlier companies in the IT industry to sell software in the form of subscription service. This saved many small companies and individual workers the time to install the programs on PCs. But, the concept of the software subscription is not a unique idea anymore. Many companies especially the big tech giants are making such online services with lucrative packages to offer, for example, IBM and Microsoft. So, what’s Salesforce’s plan in the long run?

Slack Competing with Microsoft

Slack is an application used for messaging on a professional level. It is mostly used to enable communication among a group of people (especially workplace teams) which offers more than just one-to-one chatting service. Unfortunately with Microsoft Teams into Office 365, the demand for Slack was pulled down. In July, Slack launched a complaint against Microsoft in the European Union for illegally offering Teams in Office 365 subscription. And, customers will rather prefer a subscription where they are offered more than one service and everything is connected to ease the workflow. On top of this, some of the main products of Salesforce are in tough competition with Microsoft’s to stay afloat in the market. So, what is better than making a deal to make the company bigger and better?

Slack
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The experts can see clearly that for Salesforce the main target is to outrun Microsoft as the latter is moving far ahead of Salesforce in terms of cloud computing. Marc Benioff, CEO and founder of Salesforce said that “Slack is a central nervous system for so many companies” and that “it’s a match made in heaven”. But, if it is only about outrunning Microsoft not every decision of the company might be fruitful.

The Salesforce – Slack deal

Salesforce is paying Slack $27.7 billion to close the deal. Under the agreements for this acquisition, the Slack shareholders will get $26.79 in cash and 0.0776 shares of Salesforce common stock for each share of Slack. And, this calculation gives an entire value of $27.7 billion according to the November 2020 closing price of Salesforce’s common stock. March believes that this acquisition and what it will lead to will become the future of enterprise software. And, as the entire world is now getting accustomed to the work-from-home habit, the two companies might have hit the jackpot after all.

Stewart Butterfield, CEO of Slack, believes that with every passing day enterprise software is becoming the core of any organization. So, to build products and services with less complexity, more flexibility, proper alignment, and organizational agility is the main goal. He also said that he believes this is the most strategic decision in the history of software.

The current reputation of Salesforce 

It has been over two decades that Salesforce is providing computing solutions to customers around the globe. The company has achieved massive success and recently it is also expanding its business by several acquisitions. The company bought a data analytics specialist for $15.7 last year. The current market value of Salesforce is approximately $220 billion which is around seven-folds greater than it was almost a decade ago. Kate Leggett, an analyst predicts Salesforce made a very positive acquisition as Slack will be added to its software suite giving people a similar experience like Office 365. If there are no hiccups in the way, Salesforce will take full control of Slack by mid-2021.

An arsenal of perks

Though Slack is a very handy alternative for email and other online communication, it is not as popular as it was expected to be. It is used by many companies and government agencies but not a hot deal for the investors. So, by selling it to one of the leading software companies in the world, Slack just made a perfect exit embarking on a new journey. With Slack being acquired now it will have a broad customer base of the Salesforce and attract new customers as well for the company.

Marc Benioff, Founder and CEO of Salesforce

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Talented people have the urge to make a difference in this world and create a name for themselves from quite an early age. One such genius who jumped into the entrepreneurship race from the age when he was just in high school is Marc Benioff. Influenced by his father, a Hindu guru, and a former secretary of state Marc Benioff is best known as  founder of Salesforce – a cloud computing company.

Marc Benioff, son of Joelle and Russell Benioff, was born on September 25th 1964 in San Francisco and was raised in the Bay Area. Marc got his first exposure into the business world through his father’s local departmental store in San Francisco. In one of the interviews he went on to credit his father and said, “I learned my work ethic from him”. He studied high school from the Burlingame High School and during his time there he developed and sold his first software called “How To Juggle” for the TRS-80 Model 1 Computer. This trade gained him $75 from the buyer computer magazine.Marc BenioffThe next major successful turn came into Marc’s life when he was 15. This was the year when he founded his single-man company named Liberty Software dedicated to develop games for the Atari 800 computer. Under this company’s banner Benioff developed games such as “King Arthur’s Heir”, “The Nightmare”, “Crypt of the Undead”, and “Escape from the Vulcan’s Isle”. His venture of developing games became his primary source of income and by the next year Benioff was making $1500 per month which he would later use to pay for his higher studies. He graduated from High School in the year 1982 and enrolled himself into University of Southern California to pursue Bachelor of Science in Business Administration degree.

The USC days were of great opportunities for Benioff. He landed an internship as a programmer with the tech-genius and the greatest visionary ever lived Steve Jobs at Apple’s Macintosh division. It was here when he learned that revolutionary ideas were not just a dream but they can be pursued and achieved too. Benioff had made his mind to make his career in programming but one of his professor at USC had something else in mind. He suggested Benioff to take business. And, thus, was born an entrepreneur who would revolutionize the online world.

Marc started his career immediately after graduating from USC and joined the database giant Oracle as a customer support. Benioff had an exceptional oratory skills and this helped him to gain the “Rookie of the Year” title at the age of 23. Three years later he climbed up his career ladder so fast that he reached the Vice President position and became the youngest person to be on that post. This also gained him a fat salary of $300,000.

Benioff’s success caught an eye of the top-line people and the founder of Oracle, Larry Ellison, himself called him in. Benioff and Ellison quickly became close friends and spent a good amount of time together attending parties, going on vacations, etc. After 13 years of job at Oracle, Benioff decided to work on something of his own project. And he started working on the idea of cloud computing and gave the company a name which today is known as “Salesforce”. Ellison supported Benioff’s idea by funding the project with $2 million and took a seat on board of directors.

As the time passed by, Benioff found out a potential competitor to Salesforce and it was none other than Oracle itself. This led to the start of downfall between Ellison and Benioff’s relations. While the business war’s continued Salesforce managed to survive the huge dot-com bust blow-off in early 2000s. The survival made the company even stronger and brought it in the list of biggest companies in modern cloud computing market. The company went public in 2004 and raised $110 million. Today, the company is valued at $40 billion and has also been awarded multiple awards including the “Best Place to Work at” for 8 consecutive years.

Starting from selling a software for $75 to making a billion dollars company Marc Benioff stands at number 16 in the Forbes 500 most influential CEOs list. Besides his business work, Benioff has also written a business book “Behind the Cloud”, a memoir on Salesforce in 2009. He is actively involved in philanthropical works and donates a huge sum to charitable trusts and organizations. Benioff currently lives in San Francisco, California with his wife Lynnie Benioff and two children.