Thread by @packyM

Back in 2013, when he was just starting @SlackHQ, WIRED asked @stewart, “What’s your ambition?”

Stewart: (Straight Faced): “Be the next Microsoft.”

Google should acquire Slack to make that ambition come true.

Here’s the 4,300 word case in a 25 tweet thread 👇

3 reasons:

1. $WORK needs distribution & patient capital. Google can help.

2. $GOOG needs growth outside Search & a boost in the Cloud. Slack can help.

3. Slack fills the biggest hole in G Suite’s offering. Google and Slack together would be Office for the next generation.

When Zoom took off during COVID, Google flexed its distribution muscle.

Bigger Meet buttons, free 60 minute calls up to 250 people, no restrictions through September.

It’s working: my Zoom / Meet usage has flipped.

Microsoft is flexing its distribution on Slack, too. Teams auto-installs and opens on Windows computers. It has 75 million DAUs while Slack is somewhere north of 12 million, but those DAUs are BS, and Slack brought an EU antitrust complaint.

Teams is a defensive move. Microsoft isn’t stealing Slack users; it’s trying to keep its users from trying Slack and open ecosystem of productivity & collab tools.

As @benthompson highlighted, $MSFT vertical and $WORK is horizontal, threatening email by working across orgs.

The way we collaborate and communicate at work is changing, becoming more entropic. Office is yesterday, Slack is tomorrow. Slack built for early adopters, tech employees, and young people who will become old, big budget-controlling people one day.

notboring.substack.com/p/entropy-theo…

The Compounding Power of Young Users

If you can acquire the youngest users, retain them as they get older, and continue to attract the new cohorts of young users, you will win over time.

50 year olds weren’t the first to use Excel. MSFT got the analysts, held on, and grew.

Google and Slack (G Sharp) fits perfectly together. Both target younger orgs. If they can win them now, retain, and grow with them, they will be the next Office once the current gen of Office using decision makers ages out and tech continues to grow as a % of the overall economy.

Google would also give Slack its distribution muscle. I mocked up two of the many ways G Sharp could push Slack to its users:

Google is like the UAE. It has an oil-like cash cow - Search - that will run dry one day; it needs to invest that $ to create future cash cows.

Google Search growth slowing (dipped in Q2), but delta btw 2018 & 2019 search ad revenue was still more than Slack’s whole market cap.

.@satyanadella & @sundarpichai are the Indian Matchmakers.

Google and Microsoft are the two most active tech acquirers. Microsoft leads all-time with 242 acquisitions since 1987. Despite starting 14 years later, in 2001, Google is just 6 behind at 236.

Some of Google’s most successful products were acquisitions:

Android (2005) for $50mm, now runs 74% of smartphones

YouTube (2006) for $1.65bn, did $3.8bn in Q2 revenue

DoubleClick (2008) for $3.1bn, built out display ad network

Google Cloud is the fastest-growing segment of Google’s business. Cloud revenue grew 43% YoY, from $2.1 billion to $3 billion in Q2. Slack would add ~$1 billion in annual revenue to Cloud via G Suite.

Plus, Alphabet is turning its $121bn cash pile to the Cloud.

G Suite was built on acquisitions:

- XL2Web (2006) and DocVerse (2010) --> Sheets

- XL2Web, DocVerse, and QuickOffice (2012) --> Docs

- Tonic Systems (2007), DocVerse, and QuickOffice --> Slides

Of Alphabet’s last 13 deals, 6 were for cloud, including Looker at $2.6bn.

Slack should be next. It fills the biggest hole in G Suite’s offering: chat.

With Slack, G Suite can become the Office Killer. Not today, but as Office customers age out, G Sharp will ride younger users into poll position.

Think about everything young cos already do with Google. Domain, email, Docs, Meet - everything to get started. Slack is the first non-G Suite purchase they make.

G Sharp would become what Microsoft Office was in the 80’s - the one-stop productivity and collaboration bundle.

Plus, G Sharp would make workflows simpler and create a better UX.

Google recently added an “Email” option within Google Docs. As email becomes less relevant, esp. for collab docs, would be nice to share directly from Docs --> Slack. Little things like this add up.

Ultimately, Slack is the missing piece in G Suite’s efforts to overthrow Office, and a more complete G Suite + GCP bundle is Google’s best chance to steal cloud services market share from AWS. One acquisition gets Google closer to capturing two of the biggest prizes in tech.

Seems like a no-brainer, huh? There are three reasons it might not happen.

1. $WORK is gonna want a hefty price tag. Recently hit $22bn market cap. Bulls & insiders know its best days are ahead. Slack doesn’t sell for under $30-50bn, 3-4x more than Google has ever paid.

Prize is $MSFT’s $1.5 trillion market cap. Google can get past the sticker shock.

2. Slack and Amazon’s partnership may be prelude to acquisition. Amazon employees use Slack, Slack uses AWS and Chime for audio/video.

Google and Slack are simply a better fit b/c of Google’s distribution into Slack target customers and G Suite.

theverge.com/2020/6/4/21280…

3. @stewart already sold to a search giant once, and quit as soon as he could. Check out this epic resignation letter from Yahoo!

But the @WIRED profile I started this with contains the reason that Butterfield might roll Slack up into Google. The author, @mat, wrote:

.@stewart is a Worldbuilder: notboring.substack.com/p/two-ways-to-…

Everything he’s said in that 2014 profile has come true so far, except for one thing: Slack isn’t yet 80’s-era Microsoft. But it can be, if it teams up with Google to take down today’s Microsoft.

If you liked this thread and want more, check out the full piece here, and subscribe to Not Boring for more Fantasy M&A.

notboring.substack.com/p/acquisition-…

Link to @mat's excellent piece on @stewart here:

wired.com/2014/08/the-mo…