In the past, Facebook didn't hesitate to make multi-billion dollar bets when it saw opportunities to secure new market share. With the enterprise in its crosshairs and the pending the release of Facebook at Work, experts suggest Slack, the popular messaging and collaboration app, might be a premium acquisition that the social media giant simply can't afford to pass up.
Slack has many attributes that make it a viable target for Facebook, including an active user base that grows every day; a simple and modern user experience; and a sky-high valuation that few other companies could possibly absorb. Slack's daily active user (DAU) base doubled to two million during the second half of 2015, and many users stay connected to the service for an average of 10 hours per day, according to the company.
Of course, an attempt to acquire the two-year-old company would require serious cash. Slack was valued at $2.8 billion when it raised VC funding last April, but that was two months before it hit the million-DAU mark. It reached two million DAU last month.
Slack a surprise hit in enterprise
Slack's meteoric rise in the enterprise appears to be an anomaly. With no official marketing team or strategy, the app gained a tremendous level of credibility among IT professionals on word of mouth alone. Workplace productivity apps rarely gain such levels of interest among employees, but Slack changed many workers' perceptions of enterprise software, according to David Johnson, principal analyst at Forrester Research.
"Slack's enterprise credibility is growing because IT decision makers see it as an example of an enterprise technology with a consumer-oriented design ethos," Johnson says. "That's important right now because they know employees' work and home lives are continuing to blend, and they know that for employees to willingly use any tools IT provides they need to be consumer-like and feel familiar."
If Facebook did acquire Slack, it would gain quick access to features and technology that would likely take the company a long time to build, he says. Such a deal wouldn't significantly improve Facebook's credibility in enterprise in the short term, according to Johnson, but it would give Facebook access to decision makers with purchasing authority who are already Slack customers or users. That could help Facebook create a service that businesses are willing to pay for, thereby elevating its position in the market over time, he says.
Brian Blau, research director at Gartner, says Facebook needs more compelling resources, products and technologies if it hopes to have an impact in the enterprise market. "I don't think any single acquisition will get them to their ultimate goal, but certainly a strategy that has them offering a wide variety of solutions, or even a communications platform, would be the most credible way that Facebook could attract enterprise business."
Slack would boost Facebook business cred
Facebook is first and foremost a consumer technology company, and it should aim to develop or acquire enterprise apps or features that utilize its expertise in social communications, according to Blau. "Facebook also needs to have businesses trust them with sensitive corporate data and … convince enterprises that their solutions are better than other social communications products that traditionally haven't done well."
If Facebook determines that buying Slack is the best way to achieve those objectives, the app could become the equivalent of its consumer Messenger app for Facebook at Work, the company's workplace collaboration tool that's been in development and testing for more than a year. Facebook plans to publicly release the tool in the "coming months."
"Slack is at the intersection of messaging and team collaboration," says Vanessa Thompson, research vice president at IDC. (IDC is a CIO.com sister company.) "With their focus on building an ecosystem and basic automation with bots, this would be a good complement to Facebook at Work, especially for those organizations who take on Facebook at Work in order to use the Messenger capability."
Today many small teams on Slack use the service for free, or pay up to $15 per month per user depending on their specific needs, but the company plans to release enterprise-specific pricing at some point this year. Facebook at Work will similarly be free at launch, but Facebook is expected to eventually charge for additional support, analytics and integration with other enterprise collaboration tools, such as Microsoft Azure, Office 365, Google Apps, Box and Dropbox.
Slack isn't beholden to legacy interests or technologies
Slack appeals to many users because it wasn't developed by one of the "big dinosaurs" of enterprise or consumer technology, according to Josh Keller, president and founder of digital advertising agency Union Square Media. Keller and his team started using Slack about six months ago, and about 50 employees now utilize the tool for all of their internal communications, he says.
Slack is the cool, new kid on the block that can move more swiftly than legacy providers, and it more tightly integrates with today's business needs, according to Keller, who also says Slack is one of the best workplace productivity products he's used in years.
Facebook certainly has the resources and funds to acquire businesses with valuations in the billions, but it must also weigh the impact of potential differences in company culture, according to Johnson.
A decision by Facebook to acquire Slack will ultimately come down to synergy, technology, talent and price, according to Gartner's Blau. "If Facebook does have ambitions in enterprise communications, then buying or building technology such as you find with Slack will be in their future," he says.
Assuming Slack's growth trajectory continues to increase, and its leaders raise more VC funding or pursue an IPO, Facebook may well make another blockbuster deal before the close of 2016.