Many of you will have already seen articles by publishers such as Forbes, Venturebeat, Techcrunch and the Financial Times that indicate that Salesforce is in talks to acquire the popular collaboration tool, Slack. For those of you who aren’t up to speed yet, here’s the lowdown:

• A few days ago, rumours began circulating that Salesforce was in talks to buy Slack, leading to a fall in Salesforce’s stock price and huge jump in Slack’s stock price.
• Both companies have been tight-lipped, with neither responding to requests for comment.
• There are some hints that the two companies might have explored an acquisition previously, such as Slack changing its ticker to WORK, Salesfoce being the owner of the Work.com domain. However, nothing concrete was ever announced.
• Salesforce’s stocks have climbed 57% since Slack went public last year and the company has reported strong earnings throughout 2020. The company is set to announce their Q3 earnings on December 1st.

Why might Slack be an interesting acquisition for Salesforce?

At Candybox, we already see on a day to day basis how closely our clients want to knit Salesforce and Slack together. Tools like Troops have become very popular since they facilitate seamless two-way communications between the platforms, something that is hard to achieve out of the box.

Salesforce, for all of its many positives, can be unwieldy. As many sales managers will opine, it’s a struggle to get reps to log information in Salesforce. This leads to poor data, reporting gaps and difficulty closing deals or managing customers when reps leave the company. Salesforce’s main native collaboration tool, Chatter, is rarely widely adopted and often ends up competing with other communication platforms that the company employs.

Slack, on the other hand, is beloved. It’s the rare kind of product that your team will clamour to use. Fundamentally, it’s a fun platform to work within. It’s quick and seamless to spin up a deal channel for everyone who’s working to close a new client to communicate quickly with one another. Shared channels are another great and easy-to-configure feature, allowing you and your customers to join a Slack channel together and chat back and forth (note: this is a favourite of ours at Candybox).

As Kalpak Shah argued all the way back in 2016, Slack has been very successful at making its a “‘interface / ‘gateway’ into various enterprise applications”. Thus, an acquisition would cement Salesforce’s position as system or record and establish Slack as the system of engagement. It’s also possible that Slack would provide an additional avenue for Salesforce into SMB or Growth segments of the market, as this is one area that Slack has great market penetration.

Finally, a tool like Slack would fill a gap in Salesforce’s arsenal against its rival, Microsoft, whose collaboration product, Teams, has been surging in 2020.

Why might an acquisition make sense for Slack?

Slack has had difficulty gaining ground against competitors in the second half of 2020. In particular, Slack has faced stiff competition from Microsoft Teams, since the product is being sold as a bundle with other Office products.

Teams was launched back in 2017, at which point Slack had around 4 million users. However, by early 2017, Teams had far surpassed Slack and currently has some 115 million users currently compared to Slack’s approximately 12 million. There has long been widespread sentiment that in order to continue to grow, Slack would need to team up with a larger company. If Salesforce were to acquire Slack, Slack would immediately be catapulted into C-level discussions with new and existing Salesforce clients across a variety of industries.

Aside from this, Salesforce and Slack already have a lot of crossover in terms of both existing and target customers. And on top of that, the two companies have been partners since 2016 and announced an extension to their partnership in 2019, with new integrations being announced to foster greater collaboration between the two tools.

Final Thoughts

Although initially surprised by the news, we think Salesforce acquiring Slack would make a lot of sense and open up many compelling possibilities in both applications.

Many publications are stating that we will know before each company announces their Q3 earnings, so we may not have long to wait to hear whether the deal will go ahead.

Stay tuned!