Personal blog of Yzmir Ramirez

Last October as Slack was preparing for its virtual Frontiers conference, the company began thinking about different ways people could communicate on the platform. While it had built its name on being able to integrate a lot of services in a single place to alleviate the dreaded task-switching phenomenon, it has been largely text-based up until now.

More recently, Slack has started developing a few new features that could bring different ways of interacting to the platform. CEO Stewart Butterfield discussed them on Thursday with former TechCrunch reporter Josh Constine, now a SignalFire investor, in a Clubhouse interview.

The talk was about the future of work, and Slack believes these new ways of communicating could help employees better connect online as we shift to a hybrid work world — one which has been hastened by the pandemic over the last year. There is a general consensus that many companies will continue to work in a hybrid fashion, even when the pandemic is over.

For starters, Slack aims to add a way to communicate by video. But instead of trying to compete with Zoom or Microsoft Teams, Slack is envisioning an experience that’s more like Instagram Stories.

Think about the CEO sharing an important announcement with the company, or the kind of information that might have gone out in a company-wide email. Instead, you can skip the inbox and deliver the message directly by video. It’s taking a page from the consumer approach to social and trying to move it into the enterprise.

Writing in a company blog post earlier this week, Slack chief product officer Tamar Yehoshua was clear this was going to be an asynchronous approach, rather than a meeting kind of experience.

“To help with this, we are piloting ways to shift meetings toward an asynchronous video experience that feels native in Slack. It allows us to express nuance and enthusiasm without a meeting,” she wrote.

While it was at it, Slack decided to create a way of just chatting by voice. As Butterfield told Constine in his Clubhouse interview, this is essentially Clubhouse (or Twitter Spaces) being built for Slack.

Yeah, I’ve always believed the ‘good artists copy, great artists steal’ thing, so we’re just building Clubhouse into Slack, essentially. Like that idea that you can drop in, the conversation’s happening whether you’re there or not, you can enter and leave when you want, as opposed to a call that starts and stops, is an amazing model for encouraging that spontaneity and that serendipity and conversations that only need to be three minutes, but the only option for you to schedule them is 30 minutes. So look out for Clubhouse built into Slack.

Again, it’s taking a consumer social idea and applying it to a business setting with the idea of finding other ways to keep you in Slack when you could be using other tools to achieve the same thing, whether it be Zoom meetings, email or your phone.

Butterfield also hinted hinted that another feature — asynchronous audio, allowing you to leave the equivalent of a voicemail — could be coming some time in the future. A Slack spokesperson confirmed that it was in the works, but wasn’t ready to share details yet.

It’s impossible to look at these features without thinking about them in the context of the $27 billion Salesforce acquisition of Slack at the end of last year. When you put them all together, you have this set of tools that let you communicate in whatever way makes the most sense to you.

When you combine that Slack Connect DM, a new feature to communicate outside the organization that was released this week to some controversy, as people wanted assurances that they could control spam and harassment, it takes the concept one step further — outside the organization itself.

As part of a larger entity like Salesforce, these tools could be useful across sales, service and even marketing as a way to communicate in a variety of ways inside and outside the organization. And they greatly expand the value prop of Slack as it becomes part of Salesforce sometime later this year.

While it began talking about the new audio and video features last fall, the company has been piloting them since the beginning of this year. So far Slack is not saying when the new features will be generally available.

When the Salesforce-Slack deal was officially announced on Tuesday afternoon, and the number appeared, it was kind of hard to believe. Salesforce had shelled out more than $27 billion to buy Slack and bring it into the Salesforce family of products. The company sees a key missing piece in Slack, and that could explain why it was willing to spend such an astonishing amount of money to get it.

With Slack, Salesforce now has what CEO Marc Benioff called the interface to everything, something he says that the company has thought about for years. In 2010, they tried building it themselves with Chatter, a social tool that never really caught on in a big way. With Slack they finally have it.

“We’ve always had the vision of the social enterprise at Salesforce for more than a decade. Oh, we’ve had Dreamforces entirely dedicated to the vision of what a collaborative interface, a high production interface with applications and an ecosystem would look like wrapped on top of our Customer 360,” Benioff said.

He added that ironically in a building right next door to Salesforce Park you’ll find Slack headquarters. They won’t have to go far to collaborate (or you know, they can just use Slack).

From Chatter to Slack

Neeraj Agrawal, general partner at Battery Ventures, says that Benioff has had an interest in enterprise social going back years, and this is his way of finally delivering. “Remember Chatter? Benioff was dead on with this trend. He lost Yammer to Microsoft (when Microsoft acquired it for $1.2 billion) about 7-8 years ago, and then launched Chatter. It was a huge bet, but didn’t work. Slack is really Chatter 2.0,” he said.

Chuck Ganapathi, CEO and co-founder at Tact.ai, was product lead on the Chatter product at Salesforce in the 2009 time frame. He wrote in a soon-to-be-published blog post he shared with TechCrunch that it failed for a lot of reasons, but mostly because at its core, Salesforce was still a bunch of database guys and enterprise social was a very different animal.

“Some of the issues were technical — Salesforce is a database-centric company, founded by Oracle alums on a relational DB foundation. DB applications and unstructured communication applications like Chatter or Slack represent completely different branches of computer science with little overlap,” he wrote. Because of that, he felt that they lacked the expertise to build the application correctly, and it never really caught on, with so many similar products in the market at the time.

But Benioff never lost interest in the concept of incorporating social into the Salesforce platform. It just took another 10 years or so and a bushel of money to make it happen.

A good match or not?

Leyla Seka, a partner at Operator Capital, who formerly ran the AppExchange at Salesforce, sees good things ahead with a combined Slack and Salesforce. “Salesforce and Slack together will offer a powerful duo of applications that will help companies work more effectively together. I think that COVID-19 has shown us how critical it is to get employees the data they need to do their job, but also the community they need to thrive at their job. The marriage of Salesforce and Slack promises to do just that,” Seka told me.

Brent Leary, principal analyst at CRM Essentials, was knocked out by the price tag, but says it shows that Salesforce is not afraid to go after what it wants, even if it has to pay a hefty price to get it. “This goes to show Salesforce has absolutely no fear in them when it comes to this deal. They are willing to throw down the big bucks on this acquisition because they see a huge payoff by adding this piece into their platform,” he said.

As for Slack, he sees it as a way for them to take the fast track to the enterprise big leagues. “And for Slack they go from competing with AMOSS (Adobe, Microsoft, Oracle, SAP, Salesforce) to joining one of them, and the company that really made the most sense for them to team up with,” he said.

Laurie McCabe, an analyst and founder at SMB Group, agrees with Leary’s take, saying Salesforce doesn’t hesitate when it thinks the value is there. “In this case, Slack gives them a strong collaboration offering that will help them compete more effectively against Microsoft’s growing cloud portfolio, which of course includes CRM and Teams,” she said.

Show me the money

Battery’s Agrawal believes this deal is all about generating revenue, and it was willing to pay a premium to move the needle in billion-dollar chunks. The end game he believes is about catching Microsoft, or at the very least getting to $1 trillion (with a T, folks) in market cap.

It’s worth noting that investors are not showing signs, initially at least, of liking this deal, with the stock down over 8% today and 16.5% since the rumor of Salesforce’s interest in Slack surfaced last week before the Thanksgiving holiday. That translates into more than $18 billion in lost market cap — probably not the reaction they were hoping for. But Salesforce is big enough that it can afford to play a long game, and reach its financial goals with the help of Slack.

“To get to a market cap of $1 trillion, Salesforce now has to take MSFT head on. Until now, the company has mostly been able to stay in its own swim lane in terms of products. […] To get to a trillion dollars in market cap, Salesforce needs to try to grow in two massive markets,” Agrawal said. Those would be either knowledge worker/desktop (see the 2016 Quip acquisition) or cloud (see the Hyperforce announcement). Agrawal says chances are the company’s best bet is the former, and it was willing to pay top dollar to get it.

“The deal will help Salesforce maintain a 20%+ growth rate over the next few years,” he said. Ultimately, he sees it moving the revenue needle, which should eventually drive market cap higher and help achieve those goals.

It’s worth noting that Salesforce president and CEO Bret Taylor said while they intend to integrate Slack deeply into the Salesforce product family, they recognize the power and utility of Slack as a standalone product and they don’t intend to do anything that would mess with that.

“Fundamentally, we want to make sure that Slack remains as a kind of technology-agnostic platform. We know that Slack is used by millions and millions of people every day to connect every tool under the sun. The most remarkable thing is just how many customers have also just integrated their own custom internal tools as well into this is really kind of the central nervous system for the teams that use it, and we would never want to change that,” he said.

It’s hard to judge a deal this large until we have some hindsight and see how well the two companies have meshed, how well they can incorporate Slack into the Salesforce ecosystem, while allowing that independence Taylor alluded to. If they can find a way to walk that line and Slack becomes that wrapper, that operating system, that glue that holds the Salesforce ecosystem together, it will be a good deal, but if Slack stops innovating and withers under the weight of its corporate overlords, then it might not be money well spent.

Time will tell which is the case.

In a wide ranging interview with The Wall Street Journal’s global technology editor Jason Dean yesterday, Slack CEO and co-founder Stewart Butterfield had some strong words regarding Microsoft, saying the software giant saw his company as an existential threat.

The interview took place at the WSJ Tech Live event. When Butterfield was asked about a chart Microsoft released in July during the Slack quiet period, which showed Microsoft Teams had 13 million daily active users compared to 12 million for Slack, Butterfield appeared taken aback by the chart.

“The bigger point is that’s kind of crazy for Microsoft to do, especially during the quiet period. I had someone say it was unprecedented since the [Steve] Ballmer era. I think it’s more like unprecedented since the Gates’ 98-99 era. I think they feel like we’re an existential threat,” he told Dean.

It’s worth noting, that as Dean pointed out, you could flip that existential threat statement. Microsoft is a much bigger business with a trillion-dollar market cap versus Slack’s $400 million. It also has the benefit of linking Microsoft Teams to Office 365 subscriptions, but Butterfield says the smaller company with the better idea has often won in the past.

For starters, Butterfield noted that of his biggest customers, more than two-thirds are actually using Slack and Office 365 in combination. “When we look at our top 50 biggest customers, 70% of them are not only Office 365 users, but they’re Office 365 users who use the integrations with Slack,” he said.

He went on to say that smaller companies have taken on giants before and won. As examples, he held up Microsoft itself, which in the 1980s was a young upstart taking on established players like IBM. In the late 1990s, Google prevailed as the primary search engine in spite of the fact that Microsoft controlled most of the operating system and browser market at the time. Google then tried to go after Facebook with its social tools, all of which have failed over the years. “And so the lesson we take from that is, often the small startup with real traction with customers has an advantage versus the large incumbent with multiple lines of business,” he said.

When asked by Dean if Microsoft, which ran afoul with the Justice Department in the late 1990s, should be the subject of more regulatory scrutiny for its bundling practices, Butterfield admitted he wasn’t a legal expert, but joked that it was “surprisingly unsportsmanlike conduct.” He added more seriously, “We see things like offering to pay companies to use Teams and that definitely leans on a lot of existing market power. Having said that, we have been asked many times, and maybe it’s something we should have looked at, but we haven’t taken any action.”

As Slack has grown in popularity, one of the company’s key differentiators has been the ability to integrate with other enterprise tools. But as customers use Slack as a central work hub, it has created its own set of problems. In particular, users have trouble understanding which apps they have access to and how to make best use of them. Slack announced several ways to ease those issues at its Spec developer conference today.

Andy Pflaum, director of Slack platform, points out there are 1,800 app integrations available out of the box in Slack, and developers have created 500,000 additional custom apps. That’s obviously far too many for any user to keep track of, so Slack has created a home page for apps. Called App Launcher, it acts a bit like the Mac Launchpad — a centralized place where you can see your installed apps.

You access App Launcher from the Slack sidebar by clicking Apps. It opens App Launcher with the apps that make sense for you. When you select an app, Pflaum says it takes you to that app’s home screen where it will be ready to enter or display relevant information.

For example, if you selected Google Calendar, you would see your daily schedule along with meeting requests, which you can accept or reject. You also can launch meeting software directly from this page. All of this happens within Slack, without having to change focus. App Home will be available in beta in the next few months, according to Pflaum.

Another way Slack is helping ease the app burden is with a new concept called Actions from Anywhere. The company actually launched Actions last year, enabling users to take an action from a message like attaching a Slack message to a pull request in Jira, as an example. Pflaum said that people liked these actions so much they were requesting the ability to take actions from anywhere in Slack.

“At Spec, we are previewing this new kind of action — Actions from Anywhere — which gives users the ability to take an action from anywhere they are in Slack,” Pflaum said. To really take advantage of this capability, the company is adding a feature to select the five most recent actions from a quick-access menu. These actions fill in automatically based on your most recent activities, and could be a real time-saver for people working inside Slack all day.

Finally, the company is enabling developers to open an external window inside Slack, what they call Modal windows, which open when users have to fill out a form, take a survey, enter expenses or provide additional information outside the flow of Slack itself.

All of these and other announcements at Spec are part of the maturation process of Slack as it moves to solve some of the pain points of growing so quickly. When you grow past the point of understanding what a complex piece of software can do, it’s up to the vendor to provide ways to surface all of the benefits and features, and that’s what Slack is attempting to do with these new tools.

Slack’s goal of integrating enterprise tools in the chat interface has been a major differentiator from the giant companies it’s competing with like Microsoft and Facebook. Last year, it bought Astro, specifically with the goal of integrating enterprise productivity tools inside Slack, and today it announced new integrations with Microsoft OneDrive and Outlook.

Specifically, Slack is integrating calendar, files and calls and bringing in integrations with other services, including Box, Dropbox and Zoom.

Andy Pflaum, director of project management at Slack, came over in the Astro deal, and he says one of the primary goals of the acquisition was to help build connections like this to Microsoft and Google productivity tools.

“When we joined Slack, it was to build out the interoperability between Slack and Microsoft’s products, particularly Office and Office 365 products, and the comparable products from Google, G Suite. We focused on deep integration with mail and calendar in Slack, as well as bringing in files and calls in from Microsoft, Google and other leading providers like Zoom, Box and Dropbox,” Pflaum, who was co-founder and CEO at Astro, told TechCrunch.

For starters, the company is announcing deep integration with Outlook that enables users to get and respond to invitations in Slack. You can also join a meeting with a click directly from Slack, whether that’s Zoom, WebEx or Skype for Business. What’s more, when you’re in a meeting, your status will update automatically in Slack, saving users from manually doing this (or more likely forgetting and getting a flurry of Slack questions in the middle of a meeting).

Another integration lets you share emails directly into Slack. Instead of copying and pasting or forwarding the email to a large group, you can click a Slack button in the Outlook interface and share it as a direct message with a group or to your personal Slack channel.

File sharing is not being left behind here either, whether from Microsoft, Box or Dropbox; users will be able to share files inside of Slack easily. Finally, users will be able to view full Office document previews inside of Slack, another step in avoiding tasking switching to get work done.

Mike Gotta, an analyst at Gartner who has been following the collaboration space for many years, says the integration has done a good job of preserving the user experience, while allowing for a seamless connection between email, calendar and files. He says that this could give them an edge in the highly competitive collaboration market, and more importantly allow users to maintain context.

“The collaboration market is highly fragmented with many vendors adding ‘just a little’ collaboration to products designed for specific purposes. Buyers can find that this type of collaboration in context to the flow of work is more impactful than switching to a generalized tool that lacks situational awareness of the task at hand. Knowledge-based work often involves process and project-related applications, so the more we can handle transitions across tools, the more productive the user experience becomes. More importantly there’s less context fragmentation for the individual and team,” Gotta told TechCrunch.

These updates are about staying one step ahead of the competition, and being able to run Microsoft tools inside of Slack gives customers another reason to stick with (or to buy) Slack instead of Microsoft’s competing product, Teams.

All of this new functionality is designed to work in both mobile and desktop versions of the product and is available today.

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