Marc Benioff and Stewart Butterfield are now united, with a mutual Microsoft grudge

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This week: The tech mega-deal that COVID brokered

Marc Benioff standing on a stage: Marc Benioff Reuters/Mike Blake

© Reuters/Mike Blake
Marc Benioff Reuters/Mike Blake

The year of the pandemic is closing with what may be remembered as the era’s signature deal. Salesforce is plunking down $27.7 billion — its largest acquisition ever — to buy Slack, the workplace collaboration platform that’s become as integral to the work-from-home lifestyle as sweatpants.

What a change a few months make: It was only in August that Salesforce CEO Marc Benioff insisted that big-ticket M&A was no longer in the cards. 

  • And Salesforce’s recent pattern of high-priced acquisitions, like Tableau and MuleSoft, are very clearly skewed towards assets involving data analytics and back-end cloud systems
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Salesforce’s Slack Purchase Would Mark An Abrupt About-Face For Benioff

At the end of this year’s second quarter, Marc Benioff was adamant that it is a bad time for Salesforce to buy companies. 

“We’re not in a good M&A environment,” the Salesforce CEO and chairman told investors during an earnings call in August. “This isn’t part of our plan right now. We don’t see that. We really see focusing on our business.”

So it came as a surprise to observers that Salesforce is in advanced talks to buy Slack, the workplace instant messaging startup. Salesforce is reportedly expected to announce the deal after market close Tuesday when it reports third quarter earnings. It is expected to price Slack at a premium above its current $24 billion market cap, in a half cash, half

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Let Salesforce Billionaire Benioff Land His Trendy Tech Whale

Benioff ended up abandoning the approach for Twitter as ongoing discussions dragged the shares even lower. Slack looks like a more natural fit for his company than the social media firm, but the CEO is still, characteristically, asking for a lot of faith from investors. If the latter can swallow a high-looking price, then maybe that faith would be justified over the longer term.

If Salesforce were to pay a premium to Slack’s undisturbed share price of 30% (a fairly typical amount in M&A), it would value the messaging software maker at some $21 billion, including net cash. The snag is that Slack is not expected to generate any meaningful operating profit for years. So judged through the prism of returns on invested capital, payback from a deal would be many years off.

Indeed, Slack’s stock is already trading above the 30% premium level, indicating that the market expects a

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Salesforce chief equality officer no longer reports to CEO Marc Benioff

  • Salesforce hired Tony Prophet as its first chief equality officer in 2016 and made a point of noting that he would report directly to CEO Marc Benioff.
  • It was a major sign of commitment to diversity and inclusion on the part of the enterprise-software giant.  Now, after an organizational shake-up earlier this year, Prophet no longer reports directly to Benioff. But his role has expanded.
  • He now reports to Brent Hyder, Salesforce’s chief people officer, Business Insider has learned. Prophet also took over Salesforce’s recruiting function in May.
  • Read Business Insider’s full story about Salesforce’s efforts to improve diversity and inclusion at the company here.
  • Visit Business Insider’s homepage for more stories.

When Salesforce hired Tony Prophet as its first chief equality officer in 2016, it made a point of noting that the new role would report directly to CEO Marc Benioff — a sign of the $236 billion cloud

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