back to indexE14: Salesforce acquires Slack, DeepMind’s AlphaFold breakthrough, Trust Fund Socialists & more
Chapters
0:0 Besties intro, fashion talk & the All-In Syndicate
3:47 Insights on Slack being acquired by Salesforce for $27.7B - why did they sell, are there any nitpicks, was this a home run for Salesforce?
19:14 Sacks on going up against Marc Benioff and Salesforce Chatter while at Yammer, importance of holding onto winners as long as possible
27:26 Why is DeepMind's AlphaFold a major breakthrough? When will it begin impacting drug discovery? Dangers of AI at scale
47:7 Republican party misfires, Georgia runoff implications, can Trump pre-pardon his family, Biden's effective strategy so far
59:21 Trump's Section 230 gambit, will Trumpism fade away?
65:23 Trust Fund socialists
86:14 Coinbase vs. NYT round 2
00:00:00.000 |
Okay, besties are back, besties are back, going around the horn. 00:00:03.740 |
Rain Man David Sachs calling in from an undisclosed location, 00:00:07.460 |
suffering through two Code 13s in one lifetime. 00:00:10.980 |
And David Friedberg is here, the Queen of Quinoa, 00:00:15.200 |
spacking everything in sight, living the life, 00:00:19.720 |
calling in from a nondescript Ritz-Carlton room, it appears to be. 00:00:25.740 |
And, of course, the dictator himself, Chamath Palihapitiya, 00:00:34.600 |
This is what you pay for with your subscription to the All In podcast, 00:00:39.580 |
If you didn't own Slack shares, raise your hand. 00:00:45.500 |
It's been an incredible week on a number of levels. 00:00:51.600 |
We're going to talk this week about Salesforce buying Slack, 00:00:55.200 |
Trump and Section 230, the Coinbase, the ongoing Coinbase saga. 00:01:02.200 |
Friedberg found some interesting science that could save humanity. 00:01:07.200 |
And, of course, the trust fund socialists in The New York Times 00:01:11.200 |
who hate their parents for giving them money. 00:01:16.200 |
Let's start off with the most important thing. 00:01:18.200 |
What is that shirt-under-shirt combo you're wearing? 00:01:30.000 |
If you're going to layer properly, you can have only one layer of buttons. 00:01:43.000 |
And he's like, "I like how that barista dress is, 00:01:50.000 |
I can't have buttons on buttons, but can I have buttons and then a zipper up like with the... 00:01:56.800 |
Chamath has had a weird aversion to buttons ever since he spent the time in Italy. 00:02:04.800 |
I was a little button-shamed, but I'm looking at... 00:02:07.800 |
Sax has buttons on his collars, which just makes no sense. 00:02:10.800 |
Sax is wearing the same Brooks Brothers shirt that he graduated high school in. 00:02:15.800 |
He owns 17% of Brooks Brothers at this point from the number of blazers he's bought there. 00:02:23.800 |
I don't think Freeburg's taken the brunt of anything yet. 00:02:25.800 |
Anybody have any chop busting they want to do with Freeburg, or is that just sort of built in? 00:02:30.800 |
No, Freeburg took the tablecloth that I use for a picnic in the summertime and made it into a shirt. 00:02:38.800 |
You know, you have to be frugal at this time, and also Freeburg cares about the environment. 00:02:43.800 |
He's not going to just let a picnic blanket go to waste. 00:02:47.800 |
It was a hemp-based tablecloth, and so I knew it was going to get taken and stolen. 00:02:52.800 |
That's how I choose to spend my time with you guys. 00:02:58.800 |
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. 00:03:07.800 |
And thanks again for the suggestion that we launch a syndicate with no carry. 00:03:11.800 |
Now a bunch of dipshits on Twitter are like, "Hey, when is the all-in syndicate starting?" 00:03:21.800 |
I'm sorry, but I think an all-in syndicate would be super, super disruptive and cool. 00:03:26.800 |
I'm totally fine with running it as long as we can have the 20% carry, and I'll manage the whole thing. 00:03:34.800 |
We each get 5% carry, but we got to make a living here. 00:03:39.800 |
Not everybody's got SPACs A through Z or had all of their Slack shares bought. 00:03:50.800 |
Salesforce in a record transaction for a SaaS company. 00:03:54.800 |
I think it's the highest ever paid for a SaaS company. 00:03:57.800 |
$27.7 billion for Slack, which has only been public for just over a year, I think. 00:04:04.800 |
You were, I think, did the Series B in Slack right after they did the pivot at Social Capital. 00:04:09.800 |
I don't know if that was in front of one or two, but Phil Hellmuth keeps talking about it. 00:04:13.800 |
It was the Series B in TinySpec, but it was the Series A in Slack. 00:04:19.800 |
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. 00:04:38.800 |
And it had to do with one thing and one thing only. 00:04:45.800 |
But the single biggest thing that we were attracted to was Slack. 00:04:48.800 |
We were attracted to something that we looked at and which was called intercompany edges. 00:04:55.800 |
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. 00:05:06.800 |
And I was completely stunned by this idea because that was effectively a substitution for email. 00:05:13.800 |
Because the only way you communicate across companies today is by email. 00:16:14.800 |
And I think that the Slack product team's ability to innovate around that was not as fast as it could have been, 00:16:30.800 |
And the tragedy is we won't see what the terminal value is if they were left alone to execute. 00:16:39.800 |
And in this weird way, I've always struggled with why Microsoft was so overly obsessed 00:16:44.800 |
with Slack because if you looked at the team's product, 00:16:46.800 |
it was much more directly competitive with Zoom. 00:16:48.800 |
And to this day, it still remains much more directly competitive with Zoom than Slack. 00:16:54.800 |
And if you look at the revenue, Slack was doing 800 million run rates. 00:17:10.800 |
So in that way, if you look at it on a percentage basis, which is, you know, 00:17:14.800 |
you might look at the Facebook, Instagram, and WhatsApp, 00:17:17.800 |
is what percentage of the existing entity did they get? 00:17:20.800 |
Slack's growing about 60% a year and Salesforce is growing about 22%, something like that. 00:17:27.800 |
The other thing is the president of Salesforce is Brett Taylor, who was our CTO at Facebook, 00:17:33.800 |
And so I think Brett also understands network effects really well. 00:17:37.800 |
And, you know, by the way, in this interesting twist of fate, 00:17:40.800 |
Benioff was the underbidder, I think, for LinkedIn. 00:17:44.800 |
You know, we've seen Mark around the hoop on these, you know, social network, 00:17:49.800 |
network effect, business tool acquisitions before and finally he got us. 00:17:55.800 |
He was running, he was hanging around the basket with Twitter. 00:17:57.800 |
And then they also brought his name up for TikTok, which made no sense. 00:18:00.800 |
So I think Benioff is just looking at this like if Google and Microsoft and Apple 00:18:06.800 |
are too scared to buy things because of antitrust, 00:18:09.800 |
well, I'm under the radar of the antitrust trillion dollar. 00:18:14.800 |
He's under the radar because he doesn't have a play in this sort of communication or collaboration space. 00:18:21.800 |
And so therefore there are no antitrust issues. 00:18:24.800 |
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. 00:18:33.800 |
But Benioff's dream has always been, at least since he launched Chatter to compete with us when we were doing Yammer, 00:18:43.800 |
is his dream has always been to have a product that could get him onto every seat in the enterprise. 00:18:49.800 |
You know, his current product set is departmental. 00:18:53.800 |
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. 00:19:00.800 |
And so he's gone department by department, but he's never really had a sort of pan, like cross company. 00:19:06.800 |
Yeah, something that the entire company would use. 00:19:13.800 |
But when he came up against you, it was very, you know, Benioff, you're friendly with Benioff. 00:19:23.800 |
He threw three or four hundred engineers at Chatter. 00:19:27.800 |
He took out full page Wall Street Journal ads. 00:19:34.800 |
He made it personal against you after you would not sell to him. 00:19:52.800 |
No, I mean, if we had sold to Salesforce, like we ended up. 00:19:55.800 |
So what I would say is, yeah, we got in like a very it was a very competitive situation. 00:20:08.800 |
It's sort of like a feed inside of the CRM product. 00:20:11.800 |
It didn't really succeed as a standalone collaboration product. 00:20:16.800 |
But it definitely I would say it scared us enough to sell to Microsoft because, you know, the. 00:20:24.800 |
We were about to enter a new stage of competition. 00:20:26.800 |
So here's what happened is he launched his product to kind of be a clone of Yammer inside of Salesforce. 00:20:40.800 |
Like slippery slope where they kept lowering the price to compete better with us. 00:20:44.800 |
And then finally, they realized that they should just give the thing away for free as a strategic move. 00:20:49.800 |
And that was when we decided to sell to Microsoft is we didn't know. 00:20:53.800 |
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. 00:21:10.800 |
I mean, this hasn't been publicly publicly revealed, but here we go. 00:21:18.800 |
And in service of the in service of the all in podcast. 00:21:26.800 |
To try and in service is trying to get us from number three to number one on the charts. 00:21:33.800 |
We launched Yammer at the TechCrunch 40 conference that Jason, as you know, you are the co-founder of. 00:21:40.800 |
He was a panelist and he was raving about it. 00:21:42.800 |
And you could just, you know, from from the moment we launched, he was raving about it. 00:21:46.800 |
You could see the light bulb go off with him. 00:21:48.800 |
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. 00:21:53.800 |
But he saw the potential of social or collaboration inside the enterprise. 00:21:56.800 |
And so, yeah, I mean, like, I think a year later or something, they were interested in buying the company for around $250 million. 00:22:02.800 |
And so, yeah, I mean, like, I think a year later or something, they were interested in buying the company for around $250 million. 00:22:06.800 |
The big issue for them, though, was that Benioff had a bunch of like engineers who wanted to build it in house. 00:22:14.800 |
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. 00:22:27.800 |
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. 00:22:35.800 |
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. 00:22:42.800 |
You know, if we had sold to Salesforce in like 2010, it would have been a much smaller deal. 00:22:47.800 |
But yeah, I mean, he was very interested in it from the from the get go. 00:22:52.800 |
All right, folks, you have a breaking news in the background on what actually happened. 00:22:58.800 |
I want to I want to ask a question to Martin Sachs. 00:23:01.800 |
Did you guys keep all of the shares you you originally had? 00:23:04.800 |
You you originally invested in to the exit here just to set the context for folks. 00:23:24.800 |
For of of of of a hundred shares that I owned per every hundred that I owned. 00:23:33.800 |
I sold at thirty eight right at the direct listing. 00:23:38.800 |
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. 00:23:46.800 |
So your dollar cost average to the, you know, whatever high thirties, maybe forty or something. 00:23:56.800 |
So, you know, I definitely got my my beak wet from this acquisition. 00:24:02.800 |
But no, but look, I think I probably sold, you know, more than half of them, you know, and that was a mistake. 00:24:10.800 |
And, you know, one of my biggest learnings as an investor has been to let your winners ride. 00:24:15.800 |
You know, my biggest mistake as an investor has not been the losers. 00:24:18.800 |
It's all it's been selling the winners prematurely. 00:24:23.800 |
And I sold some Uber before, but I kept a lot of my Uber, maybe most of it or half of it. 00:24:31.800 |
I mean, Facebook, you know, when they IPO it was worth 50 billion. 00:24:44.800 |
I sold my Facebook in 2014 and bought Amazon and Tesla. 00:24:49.800 |
I think that you have to be able to sell for two reasons, liquidity and moral obligation. 00:25:00.800 |
People need to be able to sell, but to the extent you can hold on, just don't sell everything. 00:25:11.800 |
I mean, think about the people who were at Apple in the 80s or Microsoft in the 80s or 00:25:15.800 |
A lot of those people got frustrated holding the shares for so long. 00:25:18.800 |
And I think keeping at least 20% of your shares forever, you know, could be amazing. 00:25:23.800 |
There was somebody told me had never sold a single share of. 00:25:40.800 |
The same may or may not be true without and his shares. 00:25:41.800 |
You know what we should do is we should do a we should put beeps in there.