E14: Salesforce acquires Slack, DeepMind’s AlphaFold breakthrough, Trust Fund Socialists & more

Okay, besties are back, besties are back, going around the horn. Rain Man David Sachs calling in from an undisclosed location, suffering through two Code 13s in one lifetime. And David Friedberg is here, the Queen of Quinoa, spacking everything in sight, living the life, calling in from a nondescript Ritz-Carlton room, it appears to be.

And, of course, the dictator himself, Chamath Palihapitiya, cackling like a fool. Welcome back, everybody. This is what you pay for with your subscription to the All In podcast, brought to you by Slack. If you didn't own Slack shares, raise your hand. It's been an incredible week on a number of levels.

We're going to talk this week about Salesforce buying Slack, Trump and Section 230, the Coinbase, the ongoing Coinbase saga. Friedberg found some interesting science that could save humanity. And, of course, the trust fund socialists in The New York Times who hate their parents for giving them money. Let's start off with...

Let's start off with the most important thing. What is that shirt-under-shirt combo you're wearing? I mean, look, you have buttons on buttons. It's just... It's just incredible. Did I break the layering rule? You can't. You can't. If you're going to layer properly, you can have only one layer of buttons.

But to have two layers of buttons... That's not how it works? No, J. Cal went in and got an almond milk. I don't know. Layers are for players, not me. No, he got like an almond milk cappuccino. And he's like, "I like how that barista dress is, and I'm going to wear that from now on." Wait a second.

Can I ask a technical question? Can I have buttons? I can't have buttons on buttons, but can I have buttons and then a zipper up like with the... No, you can't do that either. Listen... Chamath has had a weird aversion to buttons ever since he spent the time in Italy.

Was he button-shamed in Italy? I was a little button-shamed, but I'm looking at... Sax has buttons on his collars, which just makes no sense. Sax is wearing the same Brooks Brothers shirt that he graduated high school in. He owns 17% of Brooks Brothers at this point from the number of blazers he's bought there.

All right, let's get off to it. We've insulted each other. I don't think Freeburg's taken the brunt of anything yet. Anybody have any chop busting they want to do with Freeburg, or is that just sort of built in? No, Freeburg took the tablecloth that I use for a picnic in the summertime and made it into a shirt.

There it is. Absolutely. You know, you have to be frugal at this time, and also Freeburg cares about the environment. He's not going to just let a picnic blanket go to waste. It was a hemp-based tablecloth, and so I knew it was going to get taken and stolen. Absolutely.

That's how I choose to spend my time with you guys. It just pays off. Here we go. All right, can we kick this off? All right, let's kick it off with our advertisement for nobody, because Jamal will not let me make any money off of this podcast. And thanks again for the suggestion that we launch a syndicate with no carry.

Now a bunch of dipshits on Twitter are like, "Hey, when is the all-in syndicate starting?" I'm like, "Never. I need to make a living. I need to get my beak wet." And this week— I'm sorry, but I think an all-in syndicate would be super, super disruptive and cool. I'm totally fine with running it as long as we can have the 20% carry, and I'll manage the whole thing.

We got four people on the call. We each get 5% carry, but we got to make a living here. Not everybody's made it, Chamath. Not everybody's got SPACs A through Z or had all of their Slack shares bought. I think we'll kick it off with that. Chamath, we saw this week.

In fact, just two days ago. Salesforce in a record transaction for a SaaS company. I think it's the highest ever paid for a SaaS company. $27.7 billion for Slack, which has only been public for just over a year, I think. You were, I think, did the Series B in Slack right after they did the pivot at Social Capital.

I don't know if that was in front of one or two, but Phil Hellmuth keeps talking about it. It was the Series B in TinySpec, but it was the Series A in Slack. And there's a really important point. There's a really important story, which is that myself and Ray Coe, who's my partner at Social Capital, we've worked together now for, my gosh, I think it's probably 15 years, wrote a really great memo justifying the investment in Slack.

And it had to do with one thing and one thing only. We ignored the revenue and ARR. I mean, it was fine and nice and good. But the single biggest thing that we were attracted to was Slack. We were attracted to Slack. We were attracted to something that we looked at and which was called intercompany edges.

And even back in 2015 or 16, when we did this original investment, there was this dynamic where people across companies were communicating via Slack channels. And I was completely stunned by this idea because that was effectively a substitution for email. Because the only way you communicate across companies today is by email.

And I think that's what we're trying to do. And I think that's what we're trying to do. And I think that's what we're trying to do. And I think that's what we're trying to do. And I think that's what we're trying to do. And I think that's what we're trying to do.

And I think that the Slack product team's ability to innovate around that was not as fast as it could have been, but it was still very unique. And I think it was a true moat. And the tragedy is we won't see what the terminal value is if they were left alone to execute.

And in this weird way, I've always struggled with why Microsoft was so overly obsessed with Slack because if you looked at the team's product, it was much more directly competitive with Zoom. And to this day, it still remains much more directly competitive with Zoom than Slack. But, you know, there we have it.

And if you look at the revenue, Slack was doing 800 million run rates. I know we rounded up to a billion. And yet Salesforce had 20 billion. So 5% revenue to revenue. And then they got 10% of the company. So in that way, if you look at it on a percentage basis, which is, you know, you might look at the Facebook, Instagram, and WhatsApp, is what percentage of the existing entity did they get?

Slack's growing about 60% a year and Salesforce is growing about 22%, something like that. The other thing is the president of Salesforce is Brett Taylor, who was our CTO at Facebook, who I worked with. And so I think Brett also understands network effects really well. And, you know, by the way, in this interesting twist of fate, Benioff was the underbidder, I think, for LinkedIn.

Yes. You know, we've seen Mark around the hoop on these, you know, social network, network effect, business tool acquisitions before and finally he got us. Also Twitter. He was running, he was hanging around the basket with Twitter. And then they also brought his name up for TikTok, which made no sense.

So I think Benioff is just looking at this like if Google and Microsoft and Apple are too scared to buy things because of antitrust, well, I'm under the radar of the antitrust trillion dollar. So I'm the only. He's under the radar because he doesn't have a play in this sort of communication or collaboration space.

And so therefore there are no antitrust issues. If Microsoft were to do it, it would definitely be scrutinized because you could argue that they're adding to their existing dominant market share and collaboration. But Benioff's dream has always been, at least since he launched Chatter to compete with us when we were doing Yammer, this is back in 2010, 2011, is his dream has always been to have a product that could get him onto every seat in the enterprise.

You know, his current product set is departmental. I mean, you've got kind of the CRM product for sales and they've got the support cloud for customer support and they've got the marketing cloud for marketing. And so he's gone department by department, but he's never really had a sort of pan, like cross company.

Yeah, something that the entire company would use. Like a central login system, right? And Slack is that central login system. But when he came up against you, it was very, you know, Benioff, you're friendly with Benioff. Benioff came at you so hard. He threw three or four hundred engineers at Chatter.

He took out full page Wall Street Journal ads. He tried to poach your people. He tried to make the product free. He made it personal against you after you would not sell to him. True or false, David Sachs. I don't think he made it personal. But it was definitely a big deal.

Did he feel personal? Did he hear your voice? No, no, no, no. He did. I understand what he was trying to do. That's your way of saying. No, I mean, if we had sold to Salesforce, like we ended up. So what I would say is, yeah, we got in like a very it was a very competitive situation.

He didn't beat us. He failed. What's that? He failed. Does that product even exist? Yeah. It's sort of like a feed inside of the CRM product. It didn't really succeed as a standalone collaboration product. And so we won that battle. But it definitely I would say it scared us enough to sell to Microsoft because, you know, the.

What did you do? We were about to enter a new stage of competition. So here's what happened is he launched his product to kind of be a clone of Yammer inside of Salesforce. But he was initially charging $15 per seat. We were charging like five. And so they massively overpriced it.

And they. And then they were on this. Like slippery slope where they kept lowering the price to compete better with us. And then finally, they realized that they should just give the thing away for free as a strategic move. And that was when we decided to sell to Microsoft is we didn't know.

We knew we had a better product than chatter, but we didn't know how it would go if we were up against a free chat. Tell us honestly, how much did he offer? What was the meeting like? Where you made you the offer? We. Yeah. So take us to the.

Yeah. So here's a. I'll tell you the back story. I mean, this hasn't been publicly publicly revealed, but here we go. And in service of the in service of the all in podcast. Go ahead. Go ahead. David. Yeah. To try and in service is trying to get us from number three to number one on the charts.

No. You know, it's funny. We launched Yammer at the TechCrunch 40 conference that Jason, as you know, you are the co-founder of. And Benioff was like a judge. He was a panelist and he was raving about it. And you could just, you know, from from the moment we launched, he was raving about it.

You could see the light bulb go off with him. And he realized that, like, social was going to be it was, you know, at the time, obviously, social is big with consumer social networks. But he saw the potential of social or collaboration inside the enterprise. And so, yeah, I mean, like, I think a year later or something, they were interested in buying the company for around $250 million.

And so, yeah, I mean, like, I think a year later or something, they were interested in buying the company for around $250 million. The big issue for them, though, was that Benioff had a bunch of like engineers who wanted to build it in house. And so they they actually I don't know what would have happened if if they, you know, didn't want to build it themselves.

But but basically they vetoed doing a deal. And so they ended up building Chatter and they threw the 300 engineers at it and they basically spun their wheels for a few years. And. And anyway, it turned out to be much better for us because we ended up selling the company for five times as much to Microsoft.

You know, if we had sold to Salesforce in like 2010, it would have been a much smaller deal. But yeah, I mean, he was very interested in it from the from the get go. All right, folks, you have a breaking news in the background on what actually happened. Congratulations to Stuart and the team.

I want to I want to ask a question to Martin Sachs. Did you guys keep all of the shares you you originally had? You you originally invested in to the exit here just to set the context for folks. You know, you invest in a company. It's a small startup.

It's actually for 30 billion. Yeah. For you, oldest. All for every share that I owned. Half of it were half. No. Yeah. For of of of of a hundred shares that I owned per every hundred that I owned. Ten of them. I sold at thirty eight right at the direct listing.

I want to say forty of them I sold in the mid twenties and the rest of it just got taken out at this price. So your dollar cost average to the, you know, whatever high thirties, maybe forty or something. Yeah. I don't know my exact. I mean, I sold some and I still own some.

So, you know, I definitely got my my beak wet from this acquisition. But. But no, but look, I think I probably sold, you know, more than half of them, you know, and that was a mistake. And, you know, one of my biggest learnings as an investor has been to let your winners ride.

You know, my biggest mistake as an investor has not been the losers. It's all it's been selling the winners prematurely. Yeah. My Uber as well, David. And I sold some Uber before, but I kept a lot of my Uber, maybe most of it or half of it. I think.

Anyway. I mean, Facebook, you know, when they IPO it was worth 50 billion. We all thought that was like unbelievable. I mean, because it was over a 50 X return. But what's the last of those acts? Just never sell anything if you can help it. I sold my Facebook in 2014 and bought Amazon and Tesla.

I think that you have to be able to sell for two reasons, liquidity and moral obligation. Yeah. I mean, that's an exaggeration. I mean, you can never. It's it's. People need to be able to sell, but to the extent you can hold on, just don't sell everything. You know, always keep.

Yeah. Keep. Keep. I mean, think about the people who were at Apple in the 80s or Microsoft in the 80s or Amazon in the 90s. A lot of those people got frustrated holding the shares for so long. And I think keeping at least 20% of your shares forever, you know, could be amazing.

There was somebody told me had never sold a single share of. I don't know if that's a true story or not. I told you that. I told you that you can't be. Okay. Okay. Anyway, I didn't know that was a leak. More breaking news. Let's move to Alphafold. Let's move to Alphafold.

Must credit all in podcast. Oh, my God. The same. We could edit it out. The same may or may not be true without and his shares. You know what we should do is we should do a we should put beeps in there. Nick, I was told. Hadn't I been told that I was going to be a.

I was told that I was going to be a. I was told that I was going to be a. I was told that I was going to be a. I was told that I was going to be a. I was told that I was going to be a. I was told that I was going to be a.

E14: Salesforce acquires Slack, DeepMind’s AlphaFold breakthrough, Trust Fund Socialists & more

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