In early December 2020, Salesforce announced it had agreed to acquire Slack for approximately $27.7 billion. The deal was the largest acquisition in Salesforce history and one of the largest software deals to that point. The reaction in the industry was a mix of analysis about the strategic logic and a quieter set of observations about what the deal said about where the SaaS market was heading.
Slack had grown rapidly through the second half of the previous decade by selling team messaging primarily on the strength of how much better it was than email for many internal communications. By 2020, Slack had a strong product, a loyal user base, and a public market presence. What it did not have was a clear path to growing into the much larger market dominated by Microsoft, whose Teams product had been pushed aggressively to existing Microsoft 365 customers and had grown faster than Slack since launch.
Microsoft's bundling of Teams with the broader productivity suite was the existential issue. Slack was a stronger product than Teams in most direct comparisons, but stronger product does not always win when the weaker product is included for free with software the customer is already paying for. The competitive pressure had been visible in Slack's growth numbers and stock performance through 2020.
For Salesforce, the strategic logic was about wrapping a communication and collaboration layer around its existing customer relationship management platform. The vision was that Slack would become the interface through which people interacted with Salesforce, and that the combination would create a unified workplace platform that could compete with Microsoft on the overall workplace experience.
The deal also said something about consolidation in SaaS more broadly. The era when category-leading SaaS companies could grow indefinitely on their own was visibly ending. The successful ones either reached the kind of scale where they could become platforms in their own right, like Salesforce had, or they got acquired by the platforms.
The integration would take years to play out. The early integration work was promising. The deeper question of whether Slack would maintain its product identity and culture under Salesforce ownership, or whether it would slowly become a feature of the larger Salesforce platform, would take longer to resolve.