Hey subscribers!
Ya’al look good today.
In the news, Slack (the app that all of my companies use to communicate with) just got acquired by Salesforce for…
Might want to sit down for this….
$27.7 BILLION DOLLARS.
Wow.
So who gets rich because of this?
According to Forbes
Per the terms of the acquisition, disclosed in a Salesforce press release, Slack shareholders will get 0.076 shares of Salesforce stock for each Slack share, plus $26.79 per share in cash. Butterfield owns more than 39 million shares of Slack; once the deal goes through, his holdings will convert to a little over 3 million shares of Salesforce, currently worth about $725 million. (The software giant’s stock, which has soared nearly 50% in the past year, closed at $241.35 on Tuesday.)
Butterfield is also set to receive just over $1 billion in cash for his Slack shares, but he’ll likely pay an estimated $390 million in state (California) and federal capital gains tax, netting him about $660 million. Combine that with an estimated $67 million that Butterfield has netted from selling over three million shares of Slack, and he’s worth around $1.45 billion.
Butterfield obviously needed to seek major Venture funding to get Slack to where it is today, so he doesn’t maintain anywhere close to a majority ownership.
Still, pretty nice pay day though :)
One other thing I thought was interesting was this Forbes article…
The headline says it all.
This is why I wrote you the letter today.
Slack actually makes NOWHERE NEAR $27 Billion in PROFIT per year…
They actually make, again, according to Forbes….
Slack is projected to grow 39% to $876.3 million in the fiscal year ending January 31, according to analysts surveyed by Refinitiv.
Only $876 Million in PROFIT per YEAR!
Okay, I know.
That’s a lot of money.
But Salesforce bought them for effectively 27 YEARS of PROFITS!
Think about that for a second……
That is absolutely bonkers.
As the owner, here would be your choices.
1) Try to grow the company so that even if you DOUBLE profits (very hard to do) you will make that much money in 13-14 years…
2) Just sell it. And make that much money TODAY…
Crazy crazy crazy stuff.
So, why does this matter for YOU and ME? People who DON’T own 27 Billion Dollar companies?
It all comes down to mindset, here’s what I would take away from this.
1) Profit is king and SELLING is the holy grail.
Think of any of your favorite famous entrepreneurs.
Heck, just think of Shark Tank.
The majority of the people sitting in those chairs are sitting there because they SOLD a company for millions if not BILLIONS of dollars.
That allowed them to get cash in the bank and also invest in so many cool companies.
SO, as you are starting and growing YOUR company, you should ALREADY have an exit plan in mind!
It’s SO MUCH MORE FUN to have an END GOAL.
Instead of thinking of your business as - “I just want to replace my income”.
Think of it as “I want to replace my income, then double it, then SELL it for 10x my income and get 10 YEARS of FREEDOM in ONE DAY.
2) It IS possible and there is always someone much bigger who can write you a check.
The fact that salesforce is so large that it can just EAT companies like slack for 27 BILLION means that there is ALWAYS someone bigger than you.
Someone can ALWAYS acquire you.
And that’s a GREAT THING.
All that means is that you will have more time and freedom if you are able to attract one of the “big dogs” to buy you.
3) Elon musk brings it all together….
That literally sums it all up.
This letter is designed to make you DREAM BIGGER.
The Slack CEO?
Probably no different than you, he just put in the work for many years.
And I’m sure he had this end goal in mind the whole time….
Why can’t YOU build a company and sell it?
Does it get you fired up knowing that not only is your company DESIGNED to be a money machine for you and your family, you can turn around and SELL the WHOLE MONEY MACHINE to someone else, for MORE MONEY?
I hope it makes sense what I’m trying to say today, just wanted to get you guys dreaming bigger and thinking about potentially being able to sell a company some day.
Let me know if you liked this one.
Have a great day.
Kale
p.s. if you are a subscriber and haven’t read yesterday’s letter about Amazon smashing every CYBER MONDAY RECORD and what it means for you, I would encourage you to check it out (subscribers only) -> https://thekaleletter.substack.com/p/walmart-amazon-and-network-effects
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