Salesforce acquires Slack, DeepMind's AlphaFold breakthrough, Trust Fund Socialists & more

The hosts open by going around the horn: one calls in from an undisclosed location, another from what he describes as a nondescript hotel room. The host promises this week's topics: Salesforce buying Slack, Trump and Section 230, the ongoing Coinbase saga, some science from Friedberg that could "save humanity," and what the host calls the trust-fund socialists in the New York Times. The show thanks Slack as its sponsor with a joke about owning Slack shares after an incredible week.

Most of the next stretch is comic banter about one host's layered shirt and undershirt, the "layer rule" about buttons, one host's aversion to buttons after time in Italy, and Brooks Brothers jokes. Another host is teased for turning a picnic tablecloth into a shirt. None of it is analysis; it sets a casual tone.

The host calls the segment an advertisement for nobody, saying he cannot make money from the podcast and mocking Twitter users who ask when the "All-In" syndicate will start. His answer is "never," because he needs to make a living. Another host says a syndicate would be disruptive and cool, and offers to run it for 20% carry, split among the four or five of them at 5% each. It is a running joke, not an announced plan.

The host raises Salesforce's purchase of Slack, which he calls the highest price ever paid for a SaaS company, $27,700,000,000, for a company public only a little over a year. Chamath recalls Social Capital's early investment in Slack, and says he and a partner of about 15 years wrote a memo that deliberately ignored revenue and ARR. The numbers here are the hosts' own.

In Chamath's account, what attracted them was "intercompany edges": back in 2015 or 16 people at different companies were already talking in shared Slack channels, which he saw as replacing email, the only way companies talk to each other. He says Slack now has more daily usage than Facebook, quoting 10,000,000 DAUs against 2,000,000,000 for Facebook, which he presents as a sign of traffic volume. He is not sure what Salesforce bought, says there is a strong case that it is a shame the deal happened, and believes the intercompany effect could be a disruptive force in enterprise software in Salesforce's hands. These are his opinions.

The host turns to Sacks, who built Yammer, sold to Microsoft for $1,000,000,000, and who posted a tweet storm on Slack. The host notes the founder sold his first company, Flickr, for 30,000,000, and Slack for almost 30,000,000,000, and asks for the one thing Slack did wrong. The answer: slowness to embrace enterprise sales. The speaker calls the result a phenomenal 30,000,000,000 exit after seven years of near-flawless execution, notes he was an investor, and says he is only nitpicking.

His argument is that, from Yammer between 2008 and 2012, enterprises do not self-serve: bottom-up SaaS products generate leads, but salespeople must close deals. He says product-driven SaaS founders commonly have a reflexive distaste for sales, and recalls that around 2014 the old Yammer sales team was job-hunting and his former sales chief was interviewing at Slack, which he thinks would have been a perfect fit that Slack was not ready for. He grades the outcome an A-plus regardless. These are his recollections and views.

The host jokes about a limited partner in one of Chamath's funds being involved, then says he reached the same conclusion on his own emergency episode: Slack, unlike Zoom, should have grown faster. By his figure, 87 companies were spending over $1,000,000, and a rabid sales team could have gone after them the way Benioff does. He tells a story of Elon publicly spatting with Salesforce, banning it after the sales team came to him with a bill for bottom-up usage, which is the host's secondhand account and unverified.

The host adds that Slack's founder lacked the DNA to push aggressively for what the product was worth, and sees evidence in Slack billing only for active users. That is a lovely feature and removes fear of using the product, but at enterprise scale he suggests it may have been a non-cutthroat habit that held the company back. He then asks the next speaker for insights or to move on to AlphaFold.

One speaker says it is important to remember the mechanics and game theory around M&A, especially at $30,000,000,000. The larger the deal, the more information asymmetry between buyer and seller, and the question is who it favors. One can say Salesforce was crazy to spend that much, or that Slack was foolish to sell, and he thinks there were asymmetries on both sides.

He guesses, noting he has been off the board for more than a year, that Slack saw the sophistication, scale and cross-sell ability needed for enterprise, which one must beat with precision and speed or by matching a Microsoft-like product portfolio. Salesforce, he suggests, realized it lacked a product useful to every individual inside an enterprise. Both sides felt fear of disruption, so the price could have been $22,000,000,000 or $45,000,000,000 depending on who blinked first and on the bankers. These figures are his hypothetical range.

The host compares the dynamic to two players with top pair on a textured board raising each other, and another speaker says it is about who out-plays whom, like Microsoft's deal for LinkedIn. He recalls that LinkedIn had one bad quarter and fell by 50, 60 or 70 percent, a stock he says he owned in a public fund at the time.

The speaker continues his LinkedIn comparison. He says LinkedIn missed its numbers by a few pennies and the stock fell sharply, which took the wind out of the company internally without changing user momentum, and that Microsoft exploited the resulting fear. Within a year, he says, the company was bought for $25,000,000,000. He sees Slack as similar: it had a hiccup and was re-rated, and the stock bounced back. These are his recollections.

He speculates, as an outsider, that Salesforce framed something like a white-knight bid, offering the enterprise scale and cross-sell and upsell that Slack needed, and that Slack answered that Salesforce needed it to go wall to wall, so the price was what it was.

Friedberg explains how public-company deals normally get done: the board approves the price against other options and often compares it to historical share prices, and a premium of 30 or 40 percent over past highs makes a board comfortable. In this case, he says, the deal was done at only about a 10% premium to where Slack traded in the summer. Others confirm the 10% figure, and one adds that the direct listing opened at 40 or 41 and the deal was at 45.