By now you have heard that CRM acquired Slack (WORK) for $26.79 and 0.0776 shares of CRM stock per share of WORK stock. For a total purchase price of $27.7B. Making it SalesForce’s largest acquisition to date.
A lot of analysts have analyzed this transaction from the financially does it make sense angle. Especially, as Slack is not growing as fast as MicroSoft Teams.
I am going to take a different approach. I am going to think through what it would take for me as an office worker, to abandon MicroSoft and fully embrace SalesForce and MicroSoft alternative office tools.
Because many are asking the question of what is next for SalesForce. Is SalesForce ready to take on Microsoft in the enterprise software solutions provider space? And I think that is exactly what they are planning on doing and this acquisition is their attack on the first leg of support holding up MicroSoft’s dominance.
MicroSoft is the current behemoth in the space
Having worked in the corporate world I’ve observed the ubiquity of Microsoft. They are everywhere. Day one starting pretty much any new job you get your laptop all set with Windows, Outlook, Word, Excel, Powerpoint and more.
To me, the stronghold that MicroSoft has that SalesForce will need to attack is how embedded their tools are in the everyday life of office workers. Office workers who for their entire lives have used nothing but Outlook, Excel, Word, and PowerPoint.
Of these tools two are the lynchpins that have kept MicroSoft as the leader for the last three decades plus.
Outlook and Excel.
If SalesForce could somehow win users over with an e-mail alternative tool and a spreadsheet alternative tool the rest will follow. I believe that this acquisition is clearly Mr. Benioff’s attack on the e-mail lynchpin.
What does SalesForce do exactly?
SalesForce actually does not sell an application that is ubiquitous to all office workers. They specifically sell an application used by salespeople.
This was a brilliant move when they were starting out over two decades ago. For two simple reasons 1) there was nothing comparable at the time and 2) if you make a tool that will make a salesperson’s life easier you can sell it for pretty much any price.
The inherent way the salesperson thinks is top-line focused, not bottom line focused. So, instead of thinking should I be paying this much for a tool. The salesperson thinks if this frees up an hour a day of admin work for me, that’s one more sales meeting I can take. The extra sales I win from that will more than cover the cost of the SalesForce application so sign me up!
And now you can see why SalesForce has become such a behemoth. They attacked a massive opportunity in the most lucrative part of the enterprise application space and made massive amounts of money of it.
Now it seems they are ready to branch out and take on the rest of the office that has traditionally been MicroSoft’s game.
There are obviously many other player’s in this space. Google wants you on their G-Suite, Slack wanted you using their messaging service, Box wants you to use their storage services, DocuSign wants you to use them for every document you need to sign, Asana and Jira want you to manage your workflows with them and so on.
But the applications used most frequently and were most integral to the day to day lives were always MicroSoft.
Except for certain counter cultures. Used to be Apple back in the day that was an alternative operating system and office tools.
Today it’s Google that is the alternative system. They have an alternative to each of the primary MicroSoft Tools with G-Suite, Google Docs, Sheets and Slides.
A lot of startups will only use G-Suite and then take a plug and play approach with all the other software applications out there. Of which SalesForce is one of the first they will typically pick up once they move into the sales phase of the startup life cycle.
The third player in the game
This is why I think this is a game between three players. MicroSoft, Google and the late comer to the party SalesForce.
The first step of the game is for SalesForce together with Google to pry MicroSoft out of their embedded leadership position in the space. That requires attacking the two lynchpins of e-mail and excel.
A combination of the leading Sales Software and a rapidly improving G-Suite is a start. But if you could also, replace Outlook with Slack then you have made a massive leap forward.
Most every employee in the traditional corporate world comes into work, sits down, turns on their computer and the first application they open is Outlook to check their e-mails. If the first application that they open is Slack to check their messages. That would be a game changer.
Their will be no winner
If SalesForce together with Google could succeed in making the MicroSoft Office license less of an ubiquitous item in corporate offices around the world then that would open up space for all of the other players. With them sitting currently in 2nd and 3rd place ready to jump in to fill the void.
It may be possible that one day soon that Slack overtakes e-mail. I have used it and do love the tool and can see why it could succeed.
What is less obvious is if anyone would ever be able to replace Excel. This is why SalesForce would have to be working in tandem with Google, because the nearest potential competitor here is Google Sheets. And having used both excel and sheets. There is no comparison. Excel is not going anywhere anytime soon.
So, SalesForce might be able to take on one lynchpin of MicroSoft but the other. Well, we will have to see what Benioff comes up with for that one. Because I am not seeing it.