Slack CEO Stewart Butterfield on enterprise startup consolidation

Slack CEO Stewart Butterfield talked with Box CEO Aaron Levie at BoxWorks in San Francisco on Thursday.Box

• Slack, the $7.1 billion collaboration startup, uses around 350 different applications to get work done internally, and CEO Stewart Butterfield doesn’t expect that to change any time soon.
• In a conversation with Box CEO Aaron Levie, Butterfield rejected the idea that a major acquirer like Oracle would sweep in and consolidate the scattered market for enterprise startups. 
•  The proliferation of new software companies is “going to continue forever,” Butterfield said, adding that “software will get into finer and finer niches.”

SAN FRANCISCO — The software market is full of hundreds of startups with extremely specific, niche offerings — and that’s not going to change any time soon, according to Slack CEO Stewart Butterfield.

In a chat with Box CEO Aaron Levie on stage at the BoxWorks conference, Butterfield cast doubt on Levie’s suggestion that a major acquirer — like Oracle, in Levie’s example — could swoop in and consolidate the space.

“The idea that we’ll have a single software vendors or a small number that make everything is…preposterous,” Butterfield said.

Even Slack, which has around 1,300 employees, relies on at least 350 different software vendors to get work done, Butterfield said. 

“I couldn’t even name that many,” he added.

It’s a germane question: The big tech companies have long acquired enterprise startups and integrated them into their own offerings — or else, built their own, homegrown competitors. Microsoft, for example, bought Yammer, an enterprise social networking tool, for $1.2 billion in 2012, and integrated it into the Microsoft Office 365 suite. It also offers Microsoft Teams, a competitor to Slack, also built into Office 365. 

But Butterfield sees the future as belonging to startups that specialize. 

“That’s going to continue forever,” Butterfield said of the scattered software space. “That’s just not stopping and software will get into finer and finer niches.”

The software space is full of products that solve extremely specific needs, as evidenced by BoxWorks itself. Before Butterfield took the stage, Levie interviewed CEO Todd McKinnon, whose company Okta made its name selling an identity management platform that lets users log into all of their accounts from one place. It’s now a public company valued at over $6 billion.

Slack, which last week announced $427 million in funding at a $7.1 billion valuation, might know a thing or two about corporate consolidation. Last year, it was rumored that Amazon was a leading bidder to buy the hot startup outright, though no deal ever materialized.