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Atlassian Set To Acquire Video Messaging Giant Loom For $975 Million

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A Shift in Valuation

Atlassian has made headlines with its announcement to acquire the video messaging service, Loom, for a whopping $975 million. This comes as a significant move, especially considering Loom’s previous valuation of $1.53 billion in May 2021, following its $130 million Series C announcement. The shift in valuation reflects the evolving landscape of cloud-based work and the changing perceptions of the company’s worth.

Loom’s Value Proposition

Despite the fluctuation in Loom’s valuation, Atlassian perceives the company, with its impressive 25 million customers and over 5 million video conversations monthly, as a prized asset. Atlassian envisions Loom as a potent collaboration tool, particularly for its renowned platforms, Jira and Confluence. Mike Cannon-Brookes, Atlassian’s Co-Founder and Co-CEO, emphasized the importance of asynchronous video as the future of team collaboration. He believes that the partnership with Loom will enable distributed teams to communicate in more “deeply human ways.”

AI’s Role in Enhancing Collaboration

Atlassian is not just looking at Loom’s current capabilities but is also excited about the potential of AI in enhancing the platform. Features such as video transcripts, summaries, and the subsequent workflows can provide diverse avenues for teams to connect and collaborate more effectively.

Loom’s Perspective on the Acquisition

Joe Thomas, the Co-Founder and CEO of Loom, expressed optimism about the acquisition. He stated that Loom’s primary vision has always been to enhance workplace communication, irrespective of location. By becoming a part of Atlassian, Loom hopes to expedite this mission and further “unleash the potential of every team.” This sentiment echoes the common belief that mergers can often lead to accelerated growth and innovation.

Loom’s Journey and Clientele

Founded in 2015, Loom has had an eventful journey, raising over $200 million in funding. Their Series B funding in 2019 saw participation from industry stalwarts like Figma CEO Dylan Field, Front CEO Mathilde Collin, and Instagram Co-Founders Kevin Systrom and Mike Krieger, along with prominent VC firms Sequoia and Kleiner Perkins. Loom boasts of a stellar customer list, featuring giants like Ford, Tesla, Disney, Walmart, Goldman Sachs, and Amazon.

Challenges and the Road Ahead

While Loom has had its share of successes, it has also faced challenges. The company’s decision to lay off 14% of its workforce last June might have been an early indicator of underlying issues. With a business model that heavily promoted its free tier, it’s possible that the balance between free users and paying customers was skewed.

As for the acquisition’s logistics, Atlassian intends to fund the purchase with its cash reserves. The deal is anticipated to be finalized in the third quarter of the upcoming year, pending standard conditions and regulatory approvals.

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