Why Salesforce Buying Quip Might Transform the CRM Category

Lots of eyebrows were raised today when Salesforce bought Quip for ~ $750 M in cash and stock.

Was it largely a talent acquisition for Bret Taylor and team? What could have been worth such a massive revenue multiple and premium?

This is a strategic and transformational deal for a number of reasons.

1 / Messaging based collaboration is growing exponentially in the enterprise. Professionals are increasingly using iMessage, Whatsapp, and of course Slack. But, they are also constantly switching between the messaging platforms and productivity apps like Box, Dropbox, Google Docs and Sheets to work on individual files. In the current model, the creation of documents on the cloud is terribly disconnected from collaborating on them in a messaging context, especially at a sub-document level. Quip addresses this elegantly and is the equivalent of Google Docs + Drive + Slack all-in-one. For Salesforce, Quip is the next evolution of Chatter infused with a native ability to create and manage documents.

2 /Mobile-first and Cloud-first productivity tools are ready for mainstream adoption. Quip re-imagines the process of creating and working together with multiple people without a traditional file-based model. This can dramatically enhance productivity, especially in mainstream CRM use cases like sales where the user base is primarily mobile-based and on the road. Quip Desktop ensures that the user can continue to work where he left off when he returns home or to his office.

3/ Emerging Market Play: Most of the next 2 B users in emerging markets do not have desktops or laptops and have never used Word, Excel or Google Docs. For them, mobile-first products like Quip might become the most natural way to create documents.

4 /Consumerization of the Enterprise: Salesforce needs new talent that understands how to build enterprise products that look, feel and work like the best consumer internet applications. Bret Taylor and team bring much-needed consumer sensibilities and technology chops to Salesforce.

5 / The CRM Market is more than traditional definitions of sales, service, and marketing: CRM increasingly is morphing into a larger and more holistic opportunity that represents a new way of employee collaboration and customer engagement that touches every aspect of how an enterprise works. Employee productivity and collaboration is the most basic component there is and represents a massive addressable market. With Quip, Salesforce now gets a mainstream enterprise productivity play that may eventually provide a viable alternative to the likes of Google Docs, Microsoft Office 365, and Slack.