Salesforce to acquire Slack for a whopping $17 billion. Here’s what this will
unravel.
Before we directly jump into the specifics, let’s look at a couple of numbers.
Slack
Launch year:- 2009
DAU (As of Oct 2019)- 12 million
Web Traffic (March 2020) - 134 million monthly visits
App Downloads:- 1 million
Microsoft Teams
Launch year:- 2017
DAU (As of April)- 75 million
Web Traffic (March 2020)- 187 million monthly visits
App Downloads:- 2 million
I am personally a Slack lover myself the UI/UX and the third-party app ecosystem
is seamless and helps to explore workflows beyond the native capabilities of the
tool.
So how on earth did Teams win over Slack?
1. Attractive offerings at competitive pricing-
The Office 365 bundle provides much more value to the users for a cheaper price.
Slack as standalone pricing is capped at $6.7/month whereas the bundle including
teams, PowerPoint, Word, Excel is at $5 on the cheapest tier.
2. Pandemic coming into play-
One interesting thing to notice is that Slack has repeatedly said Teams is not a
highly converting product like itself. This is true because a reason for such
high numbers was people buying 365 bundles might have not activated Teams as a
freebie but because of Covid that changed and is a great factor in Team’s growth
in 2020.
3. More funds at disposal-
Slack has been struggling to get profitable for years whereas Microsoft’s pocket
is, not to mention, super-deep so the bundling approach worked for them. In 2018
Teams also announced a free tier to compete with Slack’s 30% freemium to paid
conversion rate.
4. Better interface for calls-
Slack’s video as well as voice calling experience isn't as smooth when compared
with Teams'. Teams have far better UX as compared to Slack when it comes to
features like video and voice calling, screen share on calls, etc
Now that we know Teams have an upper hand over slack, let's see how this
acquisition can be a great symbiotic relationship for both parties.
1.Enemy's enemy makes a friend- Slack and Salesforce mutually share Microsoft as
their most significant competition. Microsoft through its ecosystem of SaaS
companies changed the landscape of the corporate messaging market within a
couple of years as each of these vendors pushed their customers to Teams.
2. Joint forces-
With the acquisition, Salesforce and Slack’s GTM efforts will be combined which
will make a very strong market shift in Slack’s favor.
3.Better offerings for large enterprise customers-
Salesforce + Slack integration would be a game-changer in the SaaS landscape as
we will be seeing some dynamic workflows, especially for larger enterprises.
A. The freebie technique which worked well for Teams and was a major reason for
their successful GTM will now enable Salesforce to do the same. And with
salesforce's deep reach in the enterprise ecosystem, it’s not going to be a
tough nut to crack for the duo.
B. Remember the 800+ ecosystem of apps built on top of Slack which enables
seamless workflows. This is the strongest value proposition of Slack. Now
imagine this being integrated with the entirety of the Salesforce ecosystem. It
can be revolutionary as Sales, Marketing, and Finance data being enabled by
Salesforce data and Slack being the central nervous system of workflow and
delivery.
4.Benefitting from continuous user engagement-
This makes sense for Salesforce too because today salesforce is used a couple of
times maybe by AEs or other teams whereas slack is a continuous background
process that will enable user engagement for Salesforce. Read about the Chatter
acquisition of Salesforce that helped them similarly.
5.Integrating other acquisitions to cater to better industry experience-
Last but not least is the engineering. Microsoft has been using its PaaS
Dataflex for a seamless experience for the instant messaging, video which was a
drawback of Slack. Salesforce owns Heroku which will help the engineers to
seamlessly develop and integrate those workflows and features on the backbone of
a seamless and developer-friendly experience.
Hope this roller coaster ride was fun.
Do you see the merger happening? Is the valuation less or more? Will the duo of
Salesforce and Slack overthrow the dominance of Microsoft? Leave your thoughts
in the comment section.
Also, for a similar business analysis like this, read my previous breakdown of
possible revenue options for Cred (link in the first comment).
.
.
.
.
.
Posted by Rahul Rajvanshi
on facebook
link: https://www.facebook.com/profile.php
unravel.
Before we directly jump into the specifics, let’s look at a couple of numbers.
Slack
Launch year:- 2009
DAU (As of Oct 2019)- 12 million
Web Traffic (March 2020) - 134 million monthly visits
App Downloads:- 1 million
Microsoft Teams
Launch year:- 2017
DAU (As of April)- 75 million
Web Traffic (March 2020)- 187 million monthly visits
App Downloads:- 2 million
I am personally a Slack lover myself the UI/UX and the third-party app ecosystem
is seamless and helps to explore workflows beyond the native capabilities of the
tool.
So how on earth did Teams win over Slack?
1. Attractive offerings at competitive pricing-
The Office 365 bundle provides much more value to the users for a cheaper price.
Slack as standalone pricing is capped at $6.7/month whereas the bundle including
teams, PowerPoint, Word, Excel is at $5 on the cheapest tier.
2. Pandemic coming into play-
One interesting thing to notice is that Slack has repeatedly said Teams is not a
highly converting product like itself. This is true because a reason for such
high numbers was people buying 365 bundles might have not activated Teams as a
freebie but because of Covid that changed and is a great factor in Team’s growth
in 2020.
3. More funds at disposal-
Slack has been struggling to get profitable for years whereas Microsoft’s pocket
is, not to mention, super-deep so the bundling approach worked for them. In 2018
Teams also announced a free tier to compete with Slack’s 30% freemium to paid
conversion rate.
4. Better interface for calls-
Slack’s video as well as voice calling experience isn't as smooth when compared
with Teams'. Teams have far better UX as compared to Slack when it comes to
features like video and voice calling, screen share on calls, etc
Now that we know Teams have an upper hand over slack, let's see how this
acquisition can be a great symbiotic relationship for both parties.
1.Enemy's enemy makes a friend- Slack and Salesforce mutually share Microsoft as
their most significant competition. Microsoft through its ecosystem of SaaS
companies changed the landscape of the corporate messaging market within a
couple of years as each of these vendors pushed their customers to Teams.
2. Joint forces-
With the acquisition, Salesforce and Slack’s GTM efforts will be combined which
will make a very strong market shift in Slack’s favor.
3.Better offerings for large enterprise customers-
Salesforce + Slack integration would be a game-changer in the SaaS landscape as
we will be seeing some dynamic workflows, especially for larger enterprises.
A. The freebie technique which worked well for Teams and was a major reason for
their successful GTM will now enable Salesforce to do the same. And with
salesforce's deep reach in the enterprise ecosystem, it’s not going to be a
tough nut to crack for the duo.
B. Remember the 800+ ecosystem of apps built on top of Slack which enables
seamless workflows. This is the strongest value proposition of Slack. Now
imagine this being integrated with the entirety of the Salesforce ecosystem. It
can be revolutionary as Sales, Marketing, and Finance data being enabled by
Salesforce data and Slack being the central nervous system of workflow and
delivery.
4.Benefitting from continuous user engagement-
This makes sense for Salesforce too because today salesforce is used a couple of
times maybe by AEs or other teams whereas slack is a continuous background
process that will enable user engagement for Salesforce. Read about the Chatter
acquisition of Salesforce that helped them similarly.
5.Integrating other acquisitions to cater to better industry experience-
Last but not least is the engineering. Microsoft has been using its PaaS
Dataflex for a seamless experience for the instant messaging, video which was a
drawback of Slack. Salesforce owns Heroku which will help the engineers to
seamlessly develop and integrate those workflows and features on the backbone of
a seamless and developer-friendly experience.
Hope this roller coaster ride was fun.
Do you see the merger happening? Is the valuation less or more? Will the duo of
Salesforce and Slack overthrow the dominance of Microsoft? Leave your thoughts
in the comment section.
Also, for a similar business analysis like this, read my previous breakdown of
possible revenue options for Cred (link in the first comment).
.
.
.
.
.
Posted by Rahul Rajvanshi
on facebook
link: https://www.facebook.com/profile.php