Not Buying Slack in 2016 is Bill Gates’ Best Call Ever as Microsoft Tech Advisor

  • Since the June direct listing, Slack has lost nearly half of its market value.
  • Instead of an acquisition, Bill Gates advocated for an in-house Slack killer.
  • Microsoft Teams now boasts of more daily active users relative to Slack.

In 2016 when Slack Technologies (NYSE: WORK) was just a few years old, Microsoft (NASDAQ: MSFT) seriously considered acquiring the workplace collaboration tool at a hefty price of $8 billion. Microsoft’s co-founder Bill Gates, alongside current CEO Satya Nadella, killed the idea. It may have been the most important decision Gates ever took five years after assuming his current role as the software maker’s technology advisor.

A Slack killer is born

At the time of the intended acquisition, Slack Technologies had all the hallmarks of a sure winner with revenues and users growing rapidly. In place of the purchase, Gates instead pushed Microsoft to enhance Skype for Business and turn it into a Slack killer. The bet has now paid off. Teams, the workplace collaboration software that emerged out of the effort to bolster the soon-to-be-discontinued Skype for Business, has almost twice Slack’s users.

Per Microsoft, Teams now boasts over 20 million daily active users. Last month, Slack revealed that its number of daily active users was just over 12 million. Slack’s DAUs were first surpassed by Teams’ in July.

Why Microsoft was right

Granted, Microsoft has a poor history with acquisitions, as evidenced by the Nokia disaster. This would have been a good enough reason for Gates to dissuade the tech giant from pursuing Slack. But there were other reasons, too.

First, it is unlikely that Slack would have been turned into a direct revenue contributor if the strategy Microsoft has adopted with Teams is anything to go by. Currently, Teams is a free product that is bundled with Office 365 commercial subscriptions. There is also a free version offered without the need for a subscription.

Teams contributes to revenue indirectly when the app leads…

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