Comment by Naga | Hacker News Reader

Comment by Naga | Hacker News Reader

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I agree with everything you're saying especially from the individual's perspective, but I think its valuable to look at the incentives from Salesforce's perspective.

They paid an incredible amount of money for Slack because of what Slack is. In my opinion, it doesn't really matter that Slack ceased to exist (which I agree de jure it did) because de facto the Slack culture still exists as a minority now. If anything, the incentives at Salesforce should be to preserve Slack, not whittle it down, because they thought Slack was worth billions of dollars. Is Slack's technology really worth that much? Maybe, maybe not. Is Slack's customer base worth that much and do they have a big enough moat that they won't start evaporating? Maybe, maybe not. More likely the value at Slack was created by the sum of its parts together, including culture.

Maybe you can make the argument that Salesforce thinks they bought a company that was worth less than the sum of its parts and that they can unlock value by making changes, but the acquisition and "culture clash" imply to me a big corporation throwing money at something they don't really understand.

The only real way that these acquisitions make sense is "synergy" (eurgh), Slack just as a normal business isn't worth more to Salesforce than market value if it's just going to run Slack as if it's an independent company, but in order to buy it they had to pay 54% premium to the pre-acquisition share price. So why did they pay 54% more than Slack is worth as an independent company? Well, now they can bundle Slack into their other services and grow Slack that way, and vice-versa they can start integrating Slack into their other CRM services and sell more CRM software into Slack's customers. That's why Slack is worth more to them than it is to the open market. It's the same business model as Microsoft getting Cloud customers by leveraging their office suite etc. Especially in these large businesses it's often an enterprise sales game anyway, and all the real winning/losing happens in the Sales/Marketing and C Suite, not the engineering team anyway.

“Synergies” are great but many of the most profitable acquisitions are, at heart, bets that the acquiree was undervalued.

But even those are typically bets about the potential of the acquired company, rather than its current state. In other words, the acquirer typically believes that they possess a set of skills that will enable them to bring the potential of the acquired company to light, demonstrating only post-hoc that the company's original valuation was off.

As an analogy, it's like house-flipping - the acquirer needs to have a very good "eye" for potential, and then needs to put in significant work to realize that potential. As I understand, this is the model that Danaher follows with their acquisitions, but they're only able to do this because of that unique set of skills they possess internally, which sounds to me not that qualitatively different from regular synergy.

It doesn't need to be synergy, here are some other reasons:

* To prevent a competitor buying it

* Because a competitor already bundles something similar and you don't

IE, as a stop loss, rather than better growth prospects.

Many acquisitions work that way.

Yup. A friend of mine worked at a small software compant that sold their product either as a standalone piece of software or as a plugin for the 3 biggest platforms in the field. One of those 3 bought them and promptly stopped developing the stand alone version and the plugins for the other platforms.

The total number of sales of their product plummeted, but the acquiring company didn't care, all they cared about was a that a large enough fraction of the people currently using the standalone version or on of their competitors platforms switched to their platform to get to keep using those features.

I'm in the midst of a similar situation to the Slack team, but on a smaller scale. Our app is a product of the people and the culture. You can't just steamroll the culture and not affect development and the end product.

I've been really surprised at how naive senior people in our parent company are on this front. Many have spent their whole careers at this one company, so they have very limited understanding of anything that doesn't align to what their company does.

Combine this lack of experience with a big dollop of hubris (they work for BigCo!) and it's easy to imagine a well-intentioned executive destroying the value of the acquired team and product.

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