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Slack Starts 2021 With a Global Outage

Written by Monica Savaglia
Posted January 5, 2021

Slack Technologies (NYSE: WORK) started the new year with a global outage and shares down.

It was the first full workday of 2021 for most, and one of the most commonly used work messaging and work collaboration platforms went down. People who were returning to work after having the last week or two off for the holidays saw this outage as a sign to make a slow transition back to the workday. Perhaps it convinced some to take the day off and go back to bed.

Believe me, I know how hard it is getting back into the swing of things when coming back from winter break — that's of course if you had the luxury of taking a break. A lot of companies are approaching almost a year of working remotely because of the COVID pandemic, having their employees constantly adjusting how they work. Without a doubt, returning to work after the winter break hit differently for people who are continuing their work-at-home routines and trying not to let the fatigue set in too deeply. 

The popular messaging and work collaboration platform unfortunately was feeling that fatigue when it had a global outage early Monday morning. This was most likely not the way the company wanted to start the new year. It was just a little after 10 a.m. EST when Slack released this statement:

Customers may have trouble loading channels or connecting to Slack at this time. Our team is investigating and we’ll follow up with the more information as soon as we have it. We apologize for any disruption caused.

Slack sent out another update around 11:20 a.m. EST that acknowledged the outage was more significant than it originally stated. Not only were connections and messages impacted; search, link previews, apps/integrations/APIs, posts/files, workspace/org administration, login/SSO, notifications, and calls were all being affected:

We’re continuing to investigate connection issues for customers, and have upgraded the incident on our side to reflect ana outage in service. All hands are on deck on our end to further investigate.

This outage came at a time when most people on the East Coast were logging on and ready to get back to work. You never realize how much you rely on one tool to communicate with your company and co-workers until it’s gone. Slack has more than 10 million users and over 750,000 companies use Slack as a service. It’s been a tool that has become particularly useful and important during the COVID pandemic. This wasn’t exactly the high note on which Slack wanted to start 2021, especially after the announcement on December 1, 2020, that the cloud-based software company Salesforce (NYSE: CRM) would be buying Slack for over $27 billion. 

Salesforce (NYSE: CRM) Sets Deal to Acquire Slack

Early in December, Salesforce surpassed $20 billion in annual revenue, and it was rumored that there was a pending deal between the companies, which at the time, sent Slack’s shares soaring. In a statement, Salesforce co-founder and CEO Marc Benioff said: 

This is a match made in heaven. Together, Salesforce and Slack will shape the future of enterprise software and transform the way everyone works in the all-digital, work-from-anywhere world. 

Slack’s CEO, Steward Butterfield, also joined in the praise of this perfect union:

As software plays a more and more critical role in the performance of every organization, we share a vision of reduced complexity, increased power and flexibility, and ultimately a greater degree of alignment and organizational agility. Personally, I believe this is the most strategic combination in the history of software, and I can’t wait to get going.

Both companies were ending 2020 to high praise and investor excitement, so Monday's mishap wasn’t ideal. Slack has a history of mishaps like this. Not to mention, it entered 2020 losing about 40% of its value since it went public in April 2019. Slack needed this Salesforce deal to maintain its valuation and continue on a profitable path. However, this deal was also something that Salesforce was hoping for. It would give the company the chance to ramp up competition with its rival Microsoft (NASDAQ: MSFT). Microsoft’s Teams product has been competing with Slack in the market, and Microsoft has been increasing its efforts due to the high demand for a platform that’s seamlessly integrated. The company that does it the best will see massive user growth. 

Now more than ever, the need for an easy and effective platform for businesses that are working remotely is increasing. While yesterday's outage might not have shown Slack can always meet that need, it’s still is seen as a valuable tool to many free and paid users. Slack has set itself apart with its ability to integrate with other enterprise software. This acquisition could put Salesforce in a unique position that allows it to have an even more competitive advantage. The company has a solid ecosystem of cloud applications that could make it a strong market leader. It could solidify that lead with the acquisition of Slack. 

Until next time,

Monica Savaglia Signature Park Avenue Digest

Monica Savaglia

Monica Savaglia is Wealth Daily’s IPO specialist. With passion and knowledge, she wants to open up the world of IPOs and their long-term potential to everyday investors. She does this through her newsletter IPO Authority, a one-stop resource for everything IPO. She also contributes regularly to the Wealth Daily e-letter. To learn more about Monica, click here.

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