“You know, I think the genius of Stewart Butterfield is that he’s created an
environment that lets anybody work on a phone or computer anywhere,” Benioff says of Slack’s founder and CEO, when our conversation finally does turn to the topic at hand. “And he’s done it in a much easier way. He’s a
pioneer in this idea that this collaborative interface is what the future of computing is going to be.”
When Salesforce announced on
Dec. 1 it had entered into an agreement to acquire Slack, many investors weren’t thrilled, says Mark Murphy, a research analyst with J.P. Morgan. “It’s a high multiple and high valuation for Slack. So it had better work
because of that, or it’s going to be a big mistake.” By that day’s market close, Salesforce’s stock had tumbled more than 8%.
Benioff has acquired many companies over the years—more than 30 over just the past five years—a pattern that some have criticized as
an effort to grow revenue at the expense of profit margins. But he says buying Slack offers a wholly different opportunity than previous purchases: to completely rethink how customers access and interact with Salesforce tools.
More than a decade ago, Benioff tried to create his own collaborative interface, called Chatter. But the glorified group chat feature never
really took off. “We kind of stopped innovating [on it], mostly because it wasn’t really a revenue item for us; it was more of an internal feed inside Salesforce,” says Benioff.
Chatter may have been ahead of its time, or it may have been a subpar product because it wasn’t in Salesforce’s wheelhouse. Where
the company does shine is in developing software that is designed for customer-facing corporate teams—think sales, marketing, and customer service. Salesforce’s first offering was targeted to salespeople: customer relationship management
software, which sales teams use for tracking customer interactions, sending personalized messages, and all sorts of other things. (“CRM,” which is Salesforce’s stock ticker, represents about a quarter of the company’s revenue
today, though it’s now the slowest-growing category.)
But Murphy, the J.P. Morgan analyst, still says that Benioff has an
uncanny ability to know where the puck is heading. “Salesforce is a company that understands the future of business,” he says. “It just stays ahead of the market at all times.”
Slack’s growth hasn’t been meteoric; nor has the company experienced the huge pandemic bump that some of its peers, like
videoconferencing phenom Zoom, have seen. But the company’s product is sticky, especially for corporate customers with younger workforces. And in this case, the combination may well be worth more than the sum of its parts. “Salesforce
is investing a lot in Slack,” Butterfield tells me in a recent interview. “I don’t mean money, I mean people. I mean like in the kind of platform integrations we’ve been trying to sell the world for a long time.”
While Benioff has a flair for bombast, Butterfield has a reputation for nuance—and when we talk about the sale to Salesforce, he
acknowledges that the gamble remains a big one: “Most M&A doesn’t work, so you kind of have to go into this believing that this is exceptional,” he says. Butterfield is quick to add that he believes this arrangement is
exceptional. One of the reasons he’s optimistic, despite the odds being against the long-term success of the deal, is that he knows Benioff is throwing his full weight behind the plans for a deep integration of the two companies’ products.
And if Benioff is on board, well, then it just might come to fruition. “He has demonstrated over and over again that when he really wants something to happen, it happens,” says Butterfield.
There’s something else that unites the two founders, different as they are: a common enemy, Microsoft. Its Teams product, which it calls
a “solution for work communications,” is bundled with its broader offerings of online enterprise tools, which helps give it a major boost when it comes to customer uptake. But the pandemic helped too: Microsoft says it now has
145 million daily users of Teams, up from 32 million at the onset of COVID.
In the summer of 2020, Slack filed a complaint
against Microsoft with the European Commission, alleging that the larger company was unfairly bundling its rival tool with its larger suite of widely used products. (Microsoft vigorously denies the claim.) Salesforce has had its own beef with
Microsoft too. Back in 2015, Microsoft tried to buy Salesforce, but talks reportedly fell apart. And the two companies have sold competing products for years, though Salesforce is well ahead when it comes to its signature product, CRM, which has
more than four times the market share of Microsoft.
Butterfield himself presents another potential asset to Salesforce and its ability to
compete in the future. Like Benioff, he’s a visionary, though he represents a different generation: one that’s more proficient with emoji.
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