As one of Salesforces most visible products, Slack will be front and center at this years Dreamforce. The biggest Slack-related announcement at Dreamforce will be a feature called Slack canvas, built from Salesforces shareable document software Quip. Its another step toward incorporating Slack into the wider Salesforce family of products, which is critical in a highly competitive communication software space.
Slack has stopped publicly releasing its user numbers, but even with its most recent daily active user total in 2020, 12 million, Microsoft Teams was eating its lunch at 75 million. Teams reported 145 million users in 2021. Then there are challenges from Google, which has its own established workplace suite, and Zoom, which has recently placed a larger emphasis on its chat function.
Im pretty scared if Im [Salesforce co-CEO Marc] Benioff with Slack, going into a recession, said Wing Venture Capital partner Zach DeWitt. I think Microsoft is going to be very aggressive on distribution and pricing over the next few years here.
With Slack, Salesforce made a huge bet on the collaboration space. But with steep competition from Microsoft and others, is an underutilized tool that brought Salesforce co-CEO Bret Taylor into the company the missing link that could help the $27 billion bet pay off?
Nate Botwick, formerly VP of product with Quip, oversaw the process of building Quips software into Slack. The fruition of that project is Slack canvas. Canvases will be collaborative documents within channels that compile files, checklists and other important information that could previously just be pinned as messages by users. Theyll link to workflows like requesting a work phone, and pull data from Salesforce Sales Cloud.
It is a more persistent space to organize around this preexisting organization of channels, said Slack senior vice president of product Ali Rayl. This is a powerful thing we get with channels, which is that the right people are already there.
Quip-turned-canvas has its roots in the Salesforce-Slack acquisition. Taylor co-founded Quip in 2012, and Salesforce acquired the product in 2016. Fast forward a few years and, according to Botwick, Slack CEO Stewart Butterfield approached Salesforce with interest in acquiring Quip.
Incorporating collaborative documents within Slack had been a part of Slacks original pitch deck when it was first getting up and running, Botwick said. But as we all know, those talks ended with Salesforce acquiring Slack instead of Slack acquiring Quip.
Both products independently had this vision of teams being able to work with both a canvas-like product and a messaging product together, but each product independently focused in different areas, Botwick said. Between Stewart and Brett, it was one of the things that they were both most excited about in this acquisition.
Quip moved into Slacks domain after the deal closed. The rest of Salesforces products, such as Sales Cloud and Service Cloud, are still external to Slack but integrated through thin work, as Rayl called it. For example, you can file a quick Salesforce expense report without leaving Slack. You're not provisioning people to a bunch of different systems just so they can access one chart or one ticket, Rayl said.
The connection to the broader Salesforce suite is a benefit for Slack, as its where employees are already working. But it's a play Microsoft also has, to an even greater degree.
Ross Rubin, principal analyst at Reticle Research, said companies are absolutely using both Salesforce and Microsoft products. The question is which ones theyre paying for, as Slack and Teams offer some features for free.
There are many companies that are Microsoft shops, Rubin said. Do they need both? Teams can be a more general platform, whereas Salesforce might build functionality into Slack thats heavily integrated into CRMs, for example.
Futurum Researchs Kramer put it more bluntly: Microsoft has pretty much won the collaboration wars, she said.
Salesforce knows it has a long road ahead if it wants to prove Kramer wrong in the collaboration space. Although co-CEOs Taylor and Benioff have called the companys integration of Slack a key priority, it hasnt all been smooth sailing. During earnings calls Benioff has alluded to integration challenges and realignments within the Slack organization.
Although there were a number of standard internal operational changes that come along with any big merger, such as moving from Slack Workday to Salesforce Workday, Rayl was quick to point out that nothing has changed about the way Slack thinks about its product.
We still have the same goals for Slack. We still build the product in the same way, said Rayl. Now the focus is, How do we just expose all of Salesforces products in the best possible way inside of the Slack that we're already planning to build?
The true measure of Salesforces strategy, however, will depend on Slacks ability to add new users and also convert free users to paid ones. But Slack is cagey about disclosing the number of users it has. The company declined to share that information with Protocol ahead of Dreamforce, although it's a data point the company has shared in the past.
Since Slack doesnt disclose its user numbers, it's not clear how many Salesforce customers are actually using Slack as opposed to, say Microsoft Teams. Slack leaders are confident the company is differentiated, but it's still expanding into the same areas as its competitors.
I see Slack in the same boat as Zoom, Kramer said. Both companies are in an uphill battle to build true collaboration hubs that you live in all day, rather than a place you pop into for a meeting or a message.
Regardless, Salesforce executives seem pretty happy about Slacks performance so far.
This is the fourth consecutive quarter weve seen more than 40% growth, said Taylor during Salesforces first-quarter earnings call. And moving forward, Slack is expected to contribute about $1.5 billion towards Salesforces full year revenue guidance.
But if Salesforce customers arent actually using Slack for their work, the vision of becoming a digital headquarters that can compete with the likes of Teams and others begins to break down. Without data on the number of users, it's impossible to tell how close to that shaky reality Slack is.
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