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

Episode Summary

Executive Summary: This episode of the All-In podcast covers the $27.7 billion Salesforce acquisition of Slack, analyzing the strategic reasons, missed opportunities, and implications. The hosts debate Slack's slow adoption of enterprise sales, the deal's valuation, and the 'intercompany edge' network effect. They also discuss DeepMind's AlphaFold breakthrough in predicting protein folding from amino acid sequences, its potential applications in medicine and environmental science, and the broader significance of such AI advances. The conversation touches on investment lessons, particularly the importance of holding onto winners.

Main Topics: Salesforce Acquisition of Slack (Priority: 5/5): Analysis of the $27.7 billion deal, including strategic rationale, valuation, and implications for both companies. Discussion of Slack's intercompany network effect as a key asset. Slack's Enterprise Sales Failure (Priority: 4/5): Debate over Slack's slow adoption of enterprise sales as a missed opportunity that may have led to the acquisition. Comparison with Yammer's experience and Salesforce's aggressive sales culture. Investment Lessons: Letting Winners Run (Priority: 4/5): Hosts share personal experiences with selling shares of successful companies too early, emphasizing the value of holding concentrated positions in top-performing investments. AlphaFold and Protein Folding Breakthrough (Priority: 5/5): Explanation of the protein folding problem, DeepMind's AlphaFold solution, and its potential to revolutionize fields like medicine, environmental science, and materials design. Implications of AI in Biology (Priority: 3/5): Discussion of the dual-use potential of AI-driven protein design, including both beneficial applications and risks like designer pathogens or prions. Tech Antitrust and Big Company Innovation (Priority: 3/5): Argument that large tech companies like Google are uniquely positioned to fund long-term, high-risk research like DeepMind, countering calls for breaking up big tech. Salesforce vs. Microsoft in Enterprise Collaboration (Priority: 3/5): Historical context of Salesforce's failed Chatter product, Benioff's attempt to acquire Yammer, and the competitive dynamics with Microsoft.

Key Arguments: Slack's key asset is its 'intercompany edge' effect—cross-company communication via channels—positioning it as an email substitute, justifying its high valuation. (Chamath) Slack's slow adoption of enterprise sales was a critical failure; a dedicated sales team could have increased revenue and avoided the acquisition. (Sachs, Jason) Salesforce bought Slack to gain a wall-to-wall enterprise product, while Slack needed Salesforce's scale for enterprise distribution; the deal reflects mutual fear of disruption. (Chamath) The $27.7B price was a relatively low premium (~10%) over Slack's recent trading, indicating weakness from Slack's board and possibly weak internal forecasts. (Friedberg) AlphaFold represents a landmark AI breakthrough in predicting protein folding from amino acid sequences, with accuracy matching experimental methods, enabling rational protein design. (Friedberg) The ability to design proteins will transform medicine, environmental science (e.g., plastic degradation), and agriculture (e.g., nitrogen fixation), with near-term and long-term impacts. (Friedberg) Investors should let winners run and avoid selling too early; concentration in top ideas is key for outsized returns, as demonstrated by PayPal's eventual value. (Sachs, Chamath) Large tech companies like Google are uniquely positioned to fund moonshot projects like DeepMind, justifying their size despite antitrust concerns. (Chamath) Benioff's history with Yammer and Chatter shows his persistent ambition to own enterprise collaboration, but his product failed due to high pricing and internal build-first mentality. (Sachs)

Data Points: Salesforce purchase price for Slack: $27.7 billion - SaaS M&A transaction Slack daily active users vs. Facebook: 10 million vs 2 billion - Comparison of DAU, highlighting Slack's higher productivity value per user Slack revenue: 800 million run rate - Approximately $1B run rate at acquisition Salesforce revenue: $20 billion - Salesforce's revenue at time of deal; Slack represented ~5% of revenue Slack growth rate vs. Salesforce growth rate: 60% vs. 22% - Slack's faster growth, but still sold at ~10% premium to recent trading Slack direct listing price: $40-41 - Compared to acquisition price of ~$45 AlphaFold accuracy improvement: From 40 to nearly 90 - Score improvement; accuracy now within experimental microscopy error margins Yammer acquisition price: ~$1.2 billion - Sold to Microsoft after Salesforce offered $250M PayPal current valuation vs. 2002 sale price: $250 billion vs $1.5 billion - Illustrates cost of selling too early (<1% of eventual value) DeepMind acquisition price: $400 million - Considered a 'steal' by hosts; Founders Fund and Elon Musk tried to prevent sale Google's 'Other Bets' spending: $4-5 billion per year - Funds moonshots like DeepMind; YouTube and Android cited as successful bets Incremental revenue from DeepMind on YouTube: $15 billion annualized - From improvements in ad targeting and user engagement

Pivotal Quotes: "We ignored the revenue and ARR. ... The single biggest thing that we were attracted to was something that we looked at and which was called intercompany edges." — Chamath Palihapitiya: Explaining the investment thesis for Slack's Series A, highlighting cross-company communication as the key disruptive element. "Nobody ever got rich in their seventh best idea." — Chamath Palihapitiya: Quoting Warren Buffett to argue for concentrated portfolios and the importance of holding winners. "If you have a function you want to undertake in biology, you can design a protein to do that function for you. ... It is literally dollars and pennies to make proteins." — David Friedberg: Describing the transformative potential of AlphaFold for rational protein design across many applications.

Implications: The Slack acquisition signals that enterprise SaaS companies must embrace sales-led growth to maximize value. AlphaFold promises to democratize protein design, accelerating breakthroughs in medicine, materials, and sustainability within 1-5 years. The dual-use nature of AI in biology demands careful governance, but the potential upside is vast. Investors are reminded to hold winners and avoid premature selling.