Amazon looking at $9B deal with Slack: reports

15 Jun

Amazon is reportedly interested in acquiring Slack Technologies, which makes collaboration and chat tools for businesses. Here’s why a deal could be construed as savvy or totally wacky with little in between.

According to Bloomberg, Amazon and other technology companies are sniffing around Slack, which would carry a value of about $9 billion in a takeover.

Slack has become an enterprise player as it has landed corporations who are using its chat software to manage teams. Slack is often used in a broader mix of tools from the likes of Atlassian, Microsoft, Google and others.

The emergence of Slack is fascinating. On one level, Slack and the open floor plan are the two largest productivity myths of recent times. Both approaches increase the noise of getting work done and minimize the signal. Slack can be useful for real-time collaboration and its bots are handy at times. At other times, Slack is a glorified AOL chat room from back in the day.

However, the funny part about Slack is that no one wants to say out loud that there’s too much noise in fear of looking like a tech Luddite. Yet, it’s not hard to find folks to rant about Slack’s downside.

So why would Amazon blow $9 billion on Slack? Here are a few reasons why it makes sense–and doesn’t.

It makes sense

It’s nutty

  • Paying $9 billion for Slack would be out of character. Amazon bought Zappos for $1.2 billion and Kiva for $775 million in 2012. Kiva, which makes the robots that are in Amazon’s distribution centers, may ultimately become one of the most forward-looking purchases. Amazon’s acquisitions are typically in the tuck-in category and fill a need (Audible, Twitch). Slack has a big valuation that may fill a need for Amazon, but it doesn’t fill a huge void.
  • Collaboration is a tough market. Today’s Slack can quickly become tomorrow’s Yammer, Jive or some other tool. The enterprise is littered with collaboration tools that started out well, but lost momentum. Slack could dominate or become an also-ran. The odds are 50-50 at best. Will Amazon pay $9 billion for a coin flip?
  • If Slack is truly the future of enterprise software then why sell now? Enterprise technology companies–Twilio, Okta come to mind–do well over time on the public markets. Slack is an enterprise company and could do as well, too. Sure, Slack is going to listen to offers, but perhaps it’s just seeing what its value could be. The Bloomberg story may just be a trial balloon that could seal more enterprise deals and partnerships by generating buzz.

This article originally appeared on the technology business website ZDNet.

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