Salesforce announced today it is wading deeper into enterprise social by acquiring Slack in a $27.7 billion mega-deal. Rumors of a pending deal surfaced last week, causing Slack’s stock price to spike.
According to today’s announcement, Slack shareholders will receive $26.79 in cash and 0.0776 shares of Salesforce common stock for each Slack share, representing an enterprise value of approximately $27.7 billion based on the closing price of Salesforce’s common stock on November 30, 2020.
Salesforce co-founder and CEO Marc Benioff didn’t mince words on his latest purchase. “This is a match made in heaven. Together, Salesforce and Slack will shape the future of enterprise software and transform the way everyone works in the all-digital, work-from-anywhere world,” Benioff said in a statement.
Slack CEO Stewart Butterfield was no less effusive than his future boss. “As software plays a more and more critical role in the performance of every organization, we share a vision of reduced complexity, increased power and flexibility, and ultimately a greater degree of alignment and organizational agility. Personally, I believe this is the most strategic combination in the history of software, and I can’t wait to get going,” Butterfield said in a statement.
Slack’s Roots In Vancouver
The story of Slack began in Vancouver in 2009 when Butterfield’s Tiny Speck began developing a new game called Glitch. A year later Tiny Speck raised a $5 Million Series A round from Accel Partners and Andreessen Horowitz for what was described merely as a web-based, massively-multiplayer game. It was expected to launch in late 2010 but did not.
Tiny Speck raised another $10.7 million in the spring of 2011 from Andreessen Horowitz and Accel and launched an invite-based beta test of Glitch. Toward the end of the year, Glitch launched but just two months later Butterfield pulled the game, returning it to beta.
Three years into Tiny Speck, it became evident that Glitch was hopeless. “Glitch has not attracted an audience large enough to sustain itself,” an announcement in the fall of 2012 revealed. Butterfield went to Twitter to inform the world that while Glitch was dead, Tiny Speck was not.
An internal communications tool developed to connect Tiny Speck’s Canadian and US offices had proved invaluable, which sparked the birth of Slack. In early 2014, Slack was announced: “Imagine all your team communication in one place, instantly searchable, available wherever you go,” the startup said. “That’s Slack.”
The collaboration platform targeted at enterprises quickly raised more than $42 million from The Social + Capital Partnership, Accel Partners, and Andreessen Horowitz after gaining several thousand new users monthly. By the end of the year, the company had raised a colossal $120 million round, valuing the startup at more than a billion dollars—making it the fastest-growing startup ever, anywhere.
The rest is history.