Salesforce closes $27.7B deal with Slack

Salesforce COO Bret Taylor tells Yahoo Finance why Salesforce sought out Slack and what the company plans to do with the technology brand.

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SEANA SMITH: Salesforce shares are up just around 1%. The company, big day though, completing it's $27.7 billion acquisition of Slack. Now, we want to get to Julia La Roche who is joined by Salesforce CEO and President Bret Taylor. Julia.

JULIA LA ROCHE: Well, thank you so much, Seana. And Bret Taylor, great to have you on the program again. And I've been wanting to talk to you ever since the third quarter conference call of last year, when Marc Benioff revealed that, when you and Stewart Butterfield of Slack presented this vision for him, you talked about being immediately sold so. I kind of want to go back to the genesis of the deal. What did you and Stewart recognize and then pitch to Benioff at Salesforce to make this record acquisition?

BRET TAYLOR: Well, thank you for having me, Julia. You know, what we saw in Q3, I think, has even been amplified since then, which is, we're in an all-digital, work anywhere world. And we're not going back. You know, salespeople aren't just getting on airplanes to sell in conference rooms anymore. They're selling via Slack and Zoom. Call centers that used to be in buildings are now in the cloud.

And if you're trying to resolve a case, you're doing it over Slack, you know. And if you talk to any retailer in the world, and you're talking about, how do they run cyber week with their agencies and their merchandisers, their command center for cyber week is inside of Slack. And so we have this vision that is every company in the world has a growth agenda right now. As this economy reopens, Slack and Salesforce, our Customer 360 platform, is really the operating system for growth in this all-digital, work anywhere world.

JULIA LA ROCHE: Well, I'm actually using Slack right now, as I have this conversation with my fellow host here. You know, Bret, when we talk, we often talk about products. I know you as someone who's a big name when it comes to building products. Were you using Slack at the time and kind of had this aha moment yourself? Take us inside that conversation, the initial conversation with Stewart.

BRET TAYLOR: Well, first, I've known Stewart for years. While I was working on social networks, he was working on social networks. And I've just been a deep admirer of him as someone who can really see the future and build it. There's few entrepreneurs of his caliber in Silicon Valley. And for me personally, just the opportunity to work with him every day is just a huge benefit of this deal. But as you said, you know, we were users of Slack before.

But we also saw so many our customer base, like IBM, who has 380,000 employees, using Slack every single day to connect to things like Salesforce, to connect over 3,000 workflows across their business. And when you look at it, it's not just a translation of the analog way of work into the digital. It's truly a transformation of the way we work. And I think, as the entire world, because this pandemic is collectively reimagining the future of work. I think Slack really represents a best-in-class way that we can work digitally.

And I think, you know, as companies look forward in this pandemic, and as we recover, and as the economies reopen, every aspect of the customer, employee, and partner experience has to be reimagined. And I think Slack is the tip of that spear for every company with a growth agenda right now.

JULIA LA ROCHE: Well, I also want to bring this up with you as well. When you talk about kind of this future of work and, obviously, no one saw the pandemic coming, but, you know, it kind of was this massive work-from-home digital experiment. Do you think you all would have done the deal at some point? Do you think it would have been inevitable if we didn't go through what we went through in the last year plus?

BRET TAYLOR: It's a wonderful question. My theory is that this pandemic didn't create new digital trends, it accelerated them, sometimes by a decade. You know, I think that with all these new digital tools, aspects of our lives had already been digitized, aspects of commerce had been digitized. Just to give you one example of that, you know, in 2019, around Thanksgiving, we talked about Black Friday. And we talked about Cyber Monday.

Last year we just talked about cyber week. And to me, that just represents the digitization of the economy. And I think that the trends that Slack represented, which is really a digital HQ for your company, you know, our HQ's aren't in San Francisco and New York anymore. They're in the cloud. I think that would have happened. But I think it happened about a decade sooner because of the pandemic. And I think it's really driven home for every single one of our customers that we need to digitize, and we need to digitize quickly.

So I think Slack's relevance certainly was heightened by the pandemic. And as we reopen the economy, and all of our customers deal with this digital imperative, Slack and Salesforce's Customer 360 could not be more relevant at this moment in time.

- I think all of us agree 100% that Slack and digital platforms like this make work, in some ways, more efficient. But how, when you talk about Customer 360, how do you address the issues that many of us get inundated between email, text, and Slack? For instance, today, I had an issue that involved three different people, three different Slacks. And it ended with saying, oh, you know what expletive, let's just get on the phone. How are you going to improve it?

BRET TAYLOR: It's a wonderful question. What I would tell you is, you know, when this pandemic happened, it happened so quickly. And most of us simply translated the way we were working before to the digital world. Maybe you had a meeting that was in a conference room, and you moved it to video conferencing. I really think the new way of working is transforming the way we work, moving to more asynchronous forms of communication, really integrating all of your employees, all of your customers, all of your partners, all of your applications into really a single source of truth for your business.

And, you know, I think right now many of us are sort of in this awkward middle ground, where we have all these digital tools but we haven't actually transformed our company cultures. And I think that's really the opportunity for leaders right now. And you're seeing this all over. CEOs coming out, some are saying, you have to come to the office. Other CEOs saying, there is no office. I think we're in this grand period of experimentation.

But the thing I can tell you is the future of the work has not been written yet. And our cultures are being redefined before our eyes. And I think Slack and Customer 360 are going to play a big part in that. And I think it's an opportunity for leaders to step up right now, too, and really define the culture they want to have on the other side of this digital revolution we've had this past year.

SEANA SMITH: Bret, what are you hoping to see just in terms of growth numbers from Slack? Because I know that there was some concern ahead of this deal that some of those numbers were slowing. And then also just, to that point I guess, how does this better position Salesforce against some of the competitors out there and, specifically, a big name like Microsoft, which has a big presence in this space?

BRET TAYLOR: We're really excited about the prospect for growth in Slack. I think the opportunity that we've seen at Salesforce with our previous acquisitions, like MuleSoft and Tableau, is our ability to take these incredible technologies, package them up as a solution to help our customers with their most strategic digital transformations. I think a great example of this, as I mentioned in our Q1's earnings calls, in Q1, eight of our top 10 deals included Tableau. And five of our top 10 deals included MuleSoft.

We've taken these technologies, really integrated them into our value proposition, and I think that's a real opportunity when we bring Slack into Salesforce, to really accelerate the opportunities for Slack. And as it relates to competition, you know, we really are looking at it differently. We're really driven by our customers. And we think that's the way that we win. We're relentlessly focused on the success of our customers.

And we think that right now, when you look at the digitization of the economy, from the employee experience all the way through the customer experience, by focusing on bringing Slack together with the Customer 360, helping every sales team in the world, every customer service team in the world, every marketing team in the world transform themselves will not only help our business but help our customers accelerate and find success in this new normal.

SEANA SMITH: Bret Taylor, thanks so much for taking the time to join us today, COO and President of Salesforce. And, of course, our thanks to Julia for bringing this interview to us.