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Microsoft now more focused on ‘killing Zoom’ than Slack, says Stewart Butterfield

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photo illustration of salesforce tower with white clouds and slack logo pattern
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At TechCrunch Disrupt 2021, Slack founder and CEO Stewart Butterfield and Salesforce COO Bret Taylor discussed their $28 billion merger, announced last December, a deal the Department of Justice signed off on this summer but that shareholders still seem to be second-guessing. At least, they aren’t convinced of the value that Slack brings to Salesforce if one uses as a barometer the performance of Salesforce’s shares — they’re valued roughly where they were a year ago.

Taylor, perhaps naturally, sounded unconcerned, suggesting that major acquisitions can take time to digest. “When we do acquisitions, just by the way we finance them, it often takes us a handful of quarters for our shareholders to really understand the strategic rationale [and] see that we can execute on the integration.”

To Taylor’s point, Salesforce has only in the last month begun to weave Salesforce features into Slack, whose newest feature, Clips, allows users to record themselves or their screens to send as videos to their colleagues. Users can also “do speech-to-text and create a transcript of these videos that are indexed for search so they’re findable later,” said Butterfield, explaining, as did Taylor, that Slack remains very much focused on asynchronous communications.

Still, one lingering question for some shareholders may be whether Butterfield intends to stay at Salesforce. He’s already a billionaire. There was no earn-out component of the deal, he confirmed.

Further, Butterfield hasn’t had great experience with parent companies. After selling photo-sharing company Flickr to Yahoo, he peeled off as soon as he could, but not before penning a resignation letter that noted he’d come to feel “sidelined” and “adrift.” He told Wired years later that “innovation at Flickr turned blue and choked out” under the control of Yahoo, which, it should be noted, is TechCrunch’s parent company.

But Butterfield insisted that he’s not going anywhere.

“Slack went public in 2019, so about two years before the acquisition closed, and even before that, [Slack] was a big success for our investors and for me, and our other shareholders and employees. So [money was] not really a consideration in the deal-making around the deal. There’s just a lot that we can do, and I think this is a platform to achieve more.”

That leaves another oft-aired concern about Slack — the ongoing competition it faces from Microsoft Teams, which has grown faster than Slack, and which Butterfield once said was “unhealthily obsessed with killing Slack.”

https://www.youtube.com/watch?v=VCFzWH-pcmU

Butterfield downplayed the threat during the conversation. Asked about a complaint that Slack filed with the European Commission last year, accusing Microsoft of using its market power to try to crush it, Butterfield said he’s lost track of it. “I actually don’t know all of the details of how that works. We make our case, and it’s their investigation. It’s not like we’re litigating.”

He said, “Over the last year, maybe even 18 months, I think Microsoft’s preoccupation with Slack has shifted somewhat to a preoccupation with killing Zoom, because Teams turns out to not really [be] so much of a direct competitor.

“Obviously,” he continued, “there’s a huge amount of overlap in the functionality. But we have 1,000-plus customers who spend $100,000 with us, or more, each year [ … ] There’s not that many customers or companies in the world that spend $100,000 with a single software vendor, so they’re obviously very large companies. Almost all are Microsoft customers, and of those, almost all of them are Office 365 customers. Probably the majority are using Teams in some respect. But they’re using it for video calling.”

Butterfield joked, “I’m friends with [Zoom founder] Eric Yuan, and while I don’t want to wish them too much unhealthy competition, I do feel like that preoccupation has shifted. I think Microsoft believes that in order to kill Slack, they’re going to have to kill Zoom first.”

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