Workplace — the app originally built as a version of Facebook for employees to communicate — now has over 7 million users, earning a place for itself as an app that helps businesses communicate internally using essentially the same tools that have proven themselves. be clingy in your lives with friends and family. This traction, it seems, has given Workplace another kind of attention.
We learned that Facebook (before it was renamed Meta) was approached by corporate investors who offered the social network a proposition: unlink the organization, they said, and let us support it as a startup. A deal would have valued a newly independent Workplace as a “unicorn” (at least $1 billion), according to the source.
One source tells us the conversations haven’t progressed, mainly because Facebook (and now Meta) saw Workplace as a “strategic asset” – not because Workplace generates sales close to the billions Meta makes from advertising on platforms like Facebook and Instagram, but important because it presents a more diversified face to the market. To regulators, this shows that Facebook/Meta is more than just an overpowered social network; and for organizations, that Facebook can do more for them than just selling ads.
“This helps make Facebook [and Meta] looks like an adult,” the source said.
Spokespeople for Meta and Workplace said they had nothing to share and declined to comment on this article.
It’s unclear which investors were involved, but one source says they were among those focused on late-growth investments, aiming to inject capital specifically into entrepreneurial opportunities.
Their approach to funding a Workplace spun off last year would have come at a time when late-stage and private equity investors were (and still are) ramping up their activities to snap up large, mature tech companies. Thomas Bravo last year was raising $35 billion to enhance further acquisition opportunities in the space (and has been making a large number of investments and acquisitions for this). Bloomberg estimates that private equity acquisitions totaled another nearly $80 billion in 2021, an increase of more than 140% compared to 2020.
That pace doesn’t appear to be slowing this year, and includes PE companies approaching tech giants to spin off operations as they look to optimize and get more capital out of less critical, possibly unprofitable, or more lagging assets. Earlier today, Francisco Partners announced an agreement to acquire IBM’s Watson Health business, reportedly for around $1 billion.
Building a SaaS Bridgehead
For Meta, an approach to unbundling Workplace highlights developments on two fronts.
On the corporate side, there have been calls to spin off the company – the latest development on that front earlier this month is that the courts have ruled that the US Federal Trade Commission can proceed with a lawsuit demanding the sale of WhatsApp and Instagram, alongside, reportedly, a separate investigation by its VR division for antitrust violations. It’s a situation that some investors and shareholders will see as an opportunity, a strain that Meta may need to weigh more and more as it justifies holding on to its various assets.
For Workplace, the division has found itself at an important crossroads in recent months.
On the one hand, Workplace has seen several key departures, including none other than its two top execs, Karandeep Anand (who this month was named chief product officer at Brex) and Julien Codorniou, who left to become a partner at London VC Felix Capital. Several others also left the building to pursue other opportunities elsewhere.
The logic behind some of this movement has been described to me, charitably, not as a response to the bad PR that Meta has faced, but as a natural wear and tear: here was a group of people coming together to create and build Workplace from the ground up. , and now that it’s a more mature product with a clearer focus, it’s the right time for new people to step in and work on the next stage. (My personal opinion: Workplace’s new boss Ujjwal Singh seems like a solid choice to lead it now.)
But even if there are reports contradictory While workers may feel worn out by the fact that Meta is constantly criticized in the court of public opinion, Workplace has not been immune to this either. We understand that Workplace has signed a major deal with a major restaurant chain, one of the biggest, but the client asked to delay the announcement of victory last fall because of the cycle of bad news and “reputation issues”.
“This shit doesn’t happen to other SaaS companies,” said one person.
This, it would seem, would have been an argument in favor of distancing Workplace even further from its father, perhaps through a spinout, but it seems Meta has the opposite idea.
Workplace has changed a lot over the years since it was launched as a product.
Originally founded as a “work” version of Facebook – expanding on how Facebook employees already used Facebook to communicate with each other in private groups – Workplace was launched as a response to the rise of Slack and other chat apps. chat for the workplace. Workplace’s logic was that it had a natural advantage as billions were already using Facebook. And, bringing a new service aimed at a different type of user, with a different business model – paid, not supported by ads – opened the door to new business possibilities for the company.
This remains the company’s strategy, even as the focus has shifted to Workplace. It originally introduced a series of integrations with other workplace productivity tools aimed at knowledge workers, part of a larger effort to compete more directly with companies like Slack and Teams. But over time, almost by accident, Workplace found an audience with deskless workers who communicated with their employers primarily by cell phone. So what emerged as the sweet spot for Workplace is to be a communication app for both categories of workers simultaneously.
“We’ve realized that instead of asking our customers to choose between Teams or Slack and Workplace, you can have both,” said a source. “Others can handle real-time messaging communications for knowledge workers, while Workplace does its best asynchronously for everyone.”
And that seems to be the guiding idea behind Workplace’s strategy now, which has recently seen more Microsoft Teams features on its platform to complement Workplace, and yesterday to announce a new integration with WhatsApp, which is already very popular with frontline teams, and will now become a more formal interface for Workplace communications. As we understand it, closer integrations and services are also underway involving Meta’s VR businesses and Portal.
While the company is not expected to update user numbers until later this year, one source tells us that there are now around 10 million users on Workplace, with key customers including some of the world’s biggest employers such as Walmart, Astra Zeneca and others.
While Workplace has been sold to customers in the past as a standalone product, “I don’t think it will be sold as a standalone app again,” a source said.
Instead, it will be part of a package, for example selling commercial messages plus Workplace, or together with a Facebook login feature, opening up the prospects of how Meta can engage with these companies. (The broader sales pitch for companies is also likely behind their motivation to acquire Kustomer, the CRM startup, though that deal has yet to close.)
Far from being ready to part ways with Workplace, it appears Meta is now positioning it as part of a beachhead that comprises a larger SaaS business. Can it mobilize as an independent company might have done to realize this opportunity? VCs could still be waiting in the wings if that doesn’t happen.