Introduction

Fair competition is the driving force behind a fast-growing economy. Technology and SaaS companies were able to come up with new innovative products thanks to fair competition principles maintained by the FTC and other regulatory bodies. An example of a company that upholds fair competition was Salesforce. The company has maintained fair competition in the SaaS industry by making strategic acquisitions, exemplified by their acquisition of Tableau in August 2019 and Slack in July 2021.

Acquisition moves

The table below provides a comparison of the number of employees and annual revenue for Zendesk, Slack, and Tableau at the respective points in time of their acquisitions

Company Time Period Employees (as of specified date) Annual Revenue (as of specified date)
Zendesk End of 2020 2,730 $1,029,564
Slack End of 2020 (6 months prior to acquisition by Salesforce) 2,545 $902,610
Tableau August 2019 (at the time of acquisition by Salesforce) 4,135 $1,155,352

From a financial and operational perspective, Salesforce had the option of approaching Zendesk with an acquisition deal, in addition to or instead of Tableau and Slack, given that Zendesk’s size and revenue were comparable to the other two at the time of acquisition. This would have reduced competition for Salesforce and allowed for potential improvements to their existing CRM products. A Zendesk acquisition would have also created a mutually beneficial partnership since the products of both companies could complement each other and integrate across many cloud platforms. Despite this, Salesforce chose to acquire Tableau and Slack, which specialize in analytics data visualization and collaboration platforms, respectively.

It should be noted that in 2018 Zendesk acquired Base as part of its acquisition of FutureSimple Inc., a company that creates sales automation tools that directly compete with Salesforce (Zendesk Press Release, 2018). As a result of this acquisition in 2018, Zendesk introduced Zendesk Sell, its first CRM product powered by Base’s automation tools, directly competing with Salesforce’s CRM software products. This move solidified Zendesk’s position as a direct competitor of Salesforce. With this perceived competitive threat, Salesforce could have started negotiations with Zendesk for an acquisition deal.

Conclusion

Salesforce’s decision not to acquire Zendesk was a strategic move that allowed them to maintain fair competition in the CRM market. By acquiring Tableau and Slack, Salesforce improved their corporate image and reputation, showcasing how acquisitions can be done strategically. These were value-added acquisitions that equipped Salesforce’s core CRM products with data visualization and collaboration technologies, respectively. An acquisition of Zendesk back then could have been perceived as killing off early competition in the CRM market.

References (in order of appearance)

Zendesk Inc. form: 10-K for year-ended 2020 Retrieved April 8, 2022 from https://d18rn0p25nwr6d.cloudfront.net/CIK-0001463172/995a9058-9903-4bf8-baca-fcb62e2de1cb.pdf

Slack Technologies, Inc. (form: 10-K, received: 03/19/2021 … (n.d.). Retrieved April 3, 2022, from https://d18rn0p25nwr6d.cloudfront.net/CIK-0001764925/b1ab8d05-51af-46aa-af7a-6264306163de.html

Tableau Software Inc. - form 10K for year end 2018. Document. (n.d.). Retrieved April 8, 2022, from https://www.sec.gov/Archives/edgar/data/1303652/000130365219000007/a10k2018.htm#sBF595A1EA76E9535B4CA19D40DAA594A

Zendesk’s Press release. (2018, November 13). Zendesk introduces Sales Force Automation Tool Zendesk Sell. Zendesk. Retrieved April 8, 2022, from https://www.zendesk.com/company/press/zendesk-introduces-sales-force-automation-tool-zendesk-sell/

Salesforce + Tableau. Tableau. (n.d.). Retrieved April 8, 2022, from https://www.tableau.com/solutions/salesforce#video-reveal-sfconnector

Slack team. (n.d.). Slack Plus Sales Cloud: Your Sales Team’s New Digital HQ. Slack. Retrieved April 8, 2022, from https://slack.com/blog/collaboration/salesforce-and-slack-for-sales-and-service