Salesforce and the future of remote work
Salesforce has approached Slack about a deal, DealBook hears, confirming a report in The Wall Street Journal. A takeover could be announced as soon as this week. The potential deal is a bet on remote working, an area that bankers tell us will be a hot spot for consolidation in the months ahead, as highly valued software companies look to roll up the fragmented market for collaboration tools.
Work practices may never return to pre-pandemic norms. Or at least that’s the premise behind moves like the one Salesforce is making, with companies hoping to cash in on the shift by assembling a suite of services to make remote working easier. Slack had a market capitalization of about $17 billion before news of the potential deal broke, and it’s now worth around $23 billion. Until the recent pop, it had recorded relatively muted growth in its share price, perhaps because its videoconferencing tools have lagged rivals like Zoom and Microsoft.
Who’s next? Many software companies are riding high with surging stock prices, sitting on large cash piles and able to tap more capital easily if they need to. In addition to Salesforce, bankers say potential buyers include Adobe (which bought Workfront earlier this month), Twilio (purchaser of Segment and Sendgrid) and ServiceNow. Potential targets include Airtable, Asana, Box, DocuSign, Dropbox and Smartsheet. These deals won’t be cheap, but as the shares of buyers rise in tandem with targets, that may simply mean more stock-for-stock deals.
Microsoft is the elephant in the (virtual) room. The computing giant’s Office software is already installed on most workplace computers, which makes it easy to integrate its Slack-like collaboration tool, Teams. (Slack contends in an antitrust suit against Microsoft in Europe that its bundling of Teams with Office is anticompetitive.) Microsoft has been acquisitive throughout the pandemic, trying to scoop up TikTok and announcing a deal to buy the gaming company Zenimax Media. It may face more regulatory scrutiny than rivals, but it can certainly afford plenty more purchases. It’s sitting on roughly $136 billion in cash and it is one of the few companies with a AAA credit rating.
HERE’S WHAT’S HAPPENING
S&P Global agrees to buy IHS Markit. The transaction, worth about $44 billion, will combine two of the world’s biggest financial data providers. It’s the latest move to capitalize on the value of data, following the London Stock Exchange’s $27 billion offer for the analytics firm Refinitiv, Intercontinental Exchange’s $11 billion purchase of Ellie Mae and others.
New York City will reopen public elementary schools. The abrupt reversal came after Mayor Bill de Blasio was criticized for shutting the nation’s biggest school system, while letting businesses like indoor restaurant dining stay open. Middle and high schools will remain shut.
The E.U. plans to ask the U.S. to form an alliance to stand up to China. The bloc will call on America to set aside differences on trade and global taxes to create a unified approach on regulations and overhauling the World Health Organization, The Financial Times reports.
Nike and Coke lobby against a bill that would ban imports from the Xianjiang region of China. They are among several big companies pushing to weaken the legislation, which would prohibit goods made with forced labor by persecuted Muslim minorities in the region. Opponents of the bill say they oppose human rights violations but also fear disrupted supply chains.
The longtime business partner of Robert Smith resigns. Brian Sheth, the president and co-founder of Vista Equity Partners, announced his departure on Thanksgiving, a month after Mr. Smith agreed to pay $140 million to settle a federal investigation into a scheme to evade taxes.
Biden’s economic team takes shape
President-elect Joe Biden is set to name more of his economic team this week, and his likely choices imply the continuation of two themes: a focus on progressive labor economics, and picks that may upset the left wing of his party.
Cecilia Rouse, the Princeton economist, is expected to run the Council of Economic Advisers, with Jared Bernstein and Heather Boushey also serving on the group. The labor-focused economists — along with Janet Yellen as Treasury secretary — suggest a “strong focus on worker empowerment as a tool for economic growth,” The Times’s Alan Rappeport writes.
Other picks may be more contentious. Mr. Biden has chosen Brian Deese, who helped lead the Obama administration’s auto bailout and advised on climate change, to lead the National Economic Council. He has also picked Adewale Adeyemo, who helped negotiate the Trans-Pacific Partnership, as deputy Treasury secretary.
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Both have spent time at the investment giant BlackRock, potentially making them problematic to progressives urging Mr. Biden to avoid picks from the corporate world. Such ties may make it “less likely that the federal government will rein in BlackRock as it should be,” Jeff Hauser of the Revolving Door Project told Politico.
And then there’s Neera Tanden. Ms. Tanden, the head of the Center for American Progress, the left-leaning think tank, is Mr. Biden’s pick to lead the White House Office of Management and Budget. Conservatives and progressives alike are wary of Ms. Tanden, who’s close to Hillary Clinton. A former aide to Senator Mitch McConnell, the majority leader, suggested she may be a “sacrifice to the confirmation gods,” meaning she could be set up to take the heat while other nominees pass the Senate.
Black Friday’s online bonanza
According to Adobe Analytics, American consumers spent $9 billion at online retailers on Friday. That was nearly 22 percent higher than Black Friday last year, boosted by shoppers staying away from malls and big-box stores for health reasons. Indeed, Facteus, a research firm that monitors card payments, recorded a huge gap between online and offline sales activity on Black Friday that was especially stark at department stores and electronics retailers. It’s no wonder that Amazon has been adding 1,400 new workers per day this year.
The week ahead
Today, the U.S. Supreme Court considers arguments on President Trump’s order to exclude undocumented immigrants from the census count used to allocate House seats. On Tuesday, the high court will hear a case in which former child slaves in Ivory Coast have sued Nestlé over alleged human rights violations at cocoa farms.
Fresh from their disagreement over the use of funds designated for pandemic stimulus programs, the Treasury secretary, Steven Mnuchin, and the Fed chairman, Jay Powell, will testify before Congress about … pandemic stimulus programs. They appear in the Senate on Tuesday and the House on Wednesday.
Tech companies are on deck for earnings, with Zoom reporting today, Box and Salesforce on Tuesday, and Snowflake on Wednesday.
The U.S. employment report due Friday is expected to show that 500,000 jobs were added in November, less than the 638,000 gained in October, a potential sign that the resurgence in coronavirus cases is slowing the economic recovery.
Friday is also the latest deadline set by the U.S. government for TikTok to sell itself to Oracle and Walmart. The date has already been delayed twice.
Remembering Tony Hsieh
Tony Hsieh, the 46-year-old entrepreneur and venture capitalist who turned the online shoe retailer Zappos into a billion-dollar business, died on Friday from injuries suffered in a house fire. He stepped down as chief executive of Zappos in August, after more than two decades leading the company with a mission to “create fun and a little weirdness.”
He was obsessed with company culture. Shortly after Amazon bought Zappos for $1.2 billion in 2009, Mr. Hsieh documented the challenges of the growing venture. He lamented that “at company happy hours, you don’t see as many employees from different departments hanging out with one another.” So Zappos began to track the “number and strength” of cross-departmental relationships, aiming to foster more friendships among co-workers. Attention to the little things that help relationships flourish was key to success in business, Mr. Hsieh believed.
He hoped to inspire a management revolution. In 2010, he wrote a best-selling book about the philosophy that drove Zappos, which he dubbed “Delivering Happiness.” He said that prioritizing employee and customer satisfaction was worth the cost. Later, Zappos adopted Holacracy, a radical approach to governance that abolished all titles and hierarchies, intended to free employees to improve processes and meet customers’ needs.
He bet on the physical world, too, trying to revitalize a dilapidated area of downtown Las Vegas. He hoped Zappos’ presence would transform the area and invested $350 million in local real estate and redevelopment. “A lot of companies talk about work-life balance,” he said. “We’re more about work-life integration.”
He realized that not everyone shared his intensity. Zappos became known for an intriguing deal for new hires: it offered some workers up to $1,000 if they wanted to leave. Mr. Hsieh figured that whoever took the offer wasn’t fully committed to the company mission.
His death is under investigation. Recordings of first responders in New London, Conn., where the blaze took place, referred to a man “trapped” or “barricaded” in a burning home, according to The Wall Street Journal.
THE SPEED READ
Deals
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Ant Group’s planned I.P.O., which was delayed by regulators, looks increasingly unlikely to be rescheduled for next year, according to Chinese officials. (Bloomberg)
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Perella Weinberg Partners is near a deal to go public by merging with a blank-check company run by the banking entrepreneur Betsy Cohen. (FT)
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Compass, the retail brokerage backed by SoftBank’s Vision Fund, has hired Goldman Sachs and Morgan Stanley to advise on an I.P.O. that could take place next year. (Bloomberg)
Politics and policy
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Staff members at the Environmental Protection Agency are rebelling against the Trump administration’s final deregulatory push. (NYT)
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The White House reportedly plans to add the semiconductor maker SMIC and the oil and gas producer CNOOC to a blacklist of Chinese companies with alleged military ties. (Reuters)
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A close look at Newsmax, the media outlet that pushes President Trump’s baseless claims of a stolen election — even though its founder doesn’t believe them. (NYT)
Tech
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The price of Bitcoin slumped when the C.E.O. of Coinbase, Brian Armstrong, tweeted about rumors of rushed new regulations on cryptocurrencies. (CoinDesk)
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Adding Tesla to the S&P 500 will be a major technical challenge. (WSJ)
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The fight over luxury e-commerce is a familiar tale: Amazon versus everyone else. (NYT)
Best of the rest
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What New York City restaurants really want for the holidays is … outdoor heaters. (NYT)
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The N.F.L.’s travails show why pro sports needs bubbles to operate in a pandemic. (WaPo)
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“The World’s Most Glamorous Quarantine Project” (NYT)
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