Adobe to Acquire Figma
Lauren Simonds (in June):
Rapid growth, a massive user base and stealing the market out from under an industry Goliath — this is the stuff of which tech startup founders dream. It’s also the story of Figma, a cloud-based platform for designing websites, apps, logos or just about any software, created by game-changers Dylan Field and Evan Wallace.
Dubbed “the Google Docs of design” for its flexible simplicity, Figma lets teams of product, user experience (UX) and user interface (UI) designers collaborate, edit and comment on projects in real time.
Adobe (Hacker News):
Today, Adobe (Nasdaq:ADBE) announced it has entered into a definitive merger agreement to acquire Figma, a leading web-first collaborative design platform, for approximately $20 billion in cash and stock. The combination of Adobe and Figma will usher in a new era of collaborative creativity.
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Figma’s web-based, multi-player capabilities will accelerate the delivery of Adobe’s Creative Cloud technologies on the web, making the creative process more productive and accessible to more people.
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Figma has a total addressable market of $16.5 billion by 2025. The company is expected to add approximately $200 million in net new ARR this year, surpassing $400 million in total ARR exiting 2022, with best-in-class net dollar retention of greater than 150 percent. With gross margins of approximately 90 percent and positive operating cash flows, Figma has built an efficient, high-growth business.
Dylan Field (tweet):
When we started Figma, our stated vision was to “eliminate the gap between imagination and reality.” I believe we can reach this goal substantially faster through our plan to join forces with Adobe and leveraging their legendary team plus decades of expertise.
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Adobe is deeply committed to keeping Figma operating autonomously and I will continue to serve as CEO, reporting to David Wadhwani. David is someone I’ve known for a few years now and we have a strong relationship of mutual respect; I’m very excited for us to collaborate with him on how to continue growing Figma’s business. The entire Figma team will report to me. We plan to continue to run Figma the way we have always run Figma — continuing to do what we believe is best for our community, our culture and our business.
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Recognizing that we are in an unpredictable, inflationary environment, we currently have no plan to change Figma’s pricing. Finally, all of Figma will continue to be free for education.
Figma was first founded 10 years ago by Dylan Field and Evan Wallace, and the collaborative design platform has become key for many businesses in recent years. Thousands of designers and developers at Microsoft rely on Figma every day to build Office, Windows, and more. It’s used so heavily at Microsoft that it has been testing the company’s relationship with Adobe, a close partnership that will only get closer now.
Figma is all about the web, which is something Adobe and other rivals have been struggling to compete with. Adobe now plans to combine its own community with Figma, and it’s likely that will involve bundling Figma products and services into Adobe Creative Suite at some point in the future.
2021 was the year when startups raising money did it on valuations that have almost all collapsed by now. Figma raised at a ~$10B valuation then.
The fact that they are selling to Adobe for close to double is nothing short of remarkable (also shows Adobe desperately needs Figma)
I’ve long thought that the conflation of Figma, design, and design systems was concerning but now I think it will become a real problem. Unlike engineering where you can easily switch languages and environments in a modular manner the choice in design is now Adobe or Sketch.
Figma’s breakthrough is that it was the first web-app to establish itself as a leading tool for professional designers. It’s hard to overstate how profoundly Figma disrupted Adobe’s status as the undisputed leader in design tools, because Figma made collaboration a first-class part of its workflow. Adobe has had many competitors over the decades, but Figma was the first that seemingly was reducing Adobe’s relevance to professional designers.
Its growth created real competition to Adobe’s products for the first time in a while because it is focused on vector editing tools for digital applications. Web and application designers loved it. It was certainly a better option than trying to design user interfaces in Photoshop or Illustrator, and it pushed Adobe to try to compete by building XD.
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That was a good thing, too. If you just look at feature checklists, you could argue Adobe still innovated in its post-Macromedia years. But most any user of the company’s products can tell you the reality: Adobe Creative Cloud is a suite of bug-infested, unreliable, bloated, and slow software that makes being a designer uniquely frustrating, and it is downright embarrassing how few choices we have for tools in this industry.
Previously:
Update (2022-09-26): Amal Dorai:
I’m not surprised that Adobe is acquiring Figma for $20B, nor that Wall Street doesn’t understand it and $ADBE stock is down more than $20B today. It’s a smart move for Adobe because it’s nearly impossible to make legacy software applications multi-user collaborative.
I know this because I founded a startup, LiveLoop, to make MS Office real-time collaborative. Microsoft acquired us in 2015 and has invested heavily in making Office real-time collaborative, and Office collaboration is now much better than in 2016. But it’s still not Google Apps.
This all makes sense, but also this model for multi-user collaboration sounds… bad actually?
VCS (e.g. git) solves this problem without compromising the ability to make local or offline changes and without ceding control of all of your files to some centralised third party.
Stay SaaSy (via Hacker News):
In my opinion Figma is different in a way that a lot of people may not realize. With Figma getting acquired for approximately 1.3 gazillion dollars by Adobe, here are some quick SaaS and product strategy reactions from a Figma fan.
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Figma ate up all of the mindshare in the Designer community essentially instantaneously. Within roughly one renewal cycle of our prior product, Figma was already taking over – we literally went from purchasing one design product to purchasing Figma while still under contract with our prior contract because the industry was moving en masse.
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I’m not sure that the broader technology and business community appreciates how unique this dominance is, because they don’t work closely with designers. Designers are not like engineering or marketing teams that love hopping to the sexy new product. Design products are complicated; it isn’t “fun” to try out a new vector graphics editor. It is weird that all designers suddenly wanted to move to Figma. It would be like half the world’s sales teams quit using Salesforce overnight.
Figma quickly become more capable, more collaborative, and more fun to use than the competition, and it was constantly gave you new goodies to improve your work.
Exporting to Xcode from XD would be nice, but not nearly sufficient IMO.
Sketch was never an option for us because we’re a company of hundreds, and of course we’re not all using Macs.
We tried using XD for a year since it was part of Creative Cloud, which we already paid for.
The experience was okay, but nowhere near Figma.
Adobe has a history of buying up some of the biggest tools in the creative space, acquiring companies like Frame.io, a video production collaboration tool, and Behance, which lets people showcase their creative work. (Belsky first joined Adobe through this acquisition.) The company has bought a lot of companies — even Photoshop was an acquisition. That makes the Figma purchase all the more concerning for designers; one of the few notable challengers to Adobe has been swept up, meaning Adobe will continue to consolidate creative app power in one location.
As usual, @benthompson has the best take I’ve seen on Figma.
I didn’t realize how much “close to the metal” code they wrote to achieve the breakthrough UX they have.
Lost in the hubbub: a historic $2.3 billion retention package for Figma CEO Dylan Field and employees offered on top.
I dove into the billion extra reasons Adobe is giving Field to stick around...
Hunter Walk (via Hacker News):
Figma had crossed the ‘this matters to Adobe’s future’ rubicon. They hit $400m ARR and were continuing to double. Figma revenue, independent of margin, was increasingly displacing revenue that might have gone to Adobe, or more specifically, creating pricing pressure on Adobe.
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When the autonomous car company Cruise got quickly snapped up by GM in 2016 jaws dropped at the $1b+ reported price (we were small investors in Cruise). The answer there was the same: if autonomy is the potential future of your industry and you’re not yet strong in that area, what’s percent of your market cap is it worth to bring those cards into your hand. In that case it was roughly ~2.5% if I’m remembering correctly. In Adobe’s case it was a larger percentage because Figma is way further along as a business and the certainty the future of design at least looks like Figma is high.
Update (2022-10-07): Casey Newton:
I last wrote about Figma here in April 2021, as the company introduced its FigJam virtual whiteboard and Field navigated his team into a hybrid in-person and remote workplace. When news of the acquisition hit, I wondered how Field planned to navigate everything that’s now in front of him: antitrust issues, keeping control of his product road map, and whatever DALL-E and other AI tools might mean for the future of design.
Highlights of our conversation follow[…]
It’s interesting that Figma didn’t usher in a new age of super cool web apps. They released a super impressive WASM app 6 years ago. Everyone was blown away & then proceeded to… talk about WASM as a future technology & just went back to arguing about React vs. Vue or whatever.
But where was the intellectual curiosity? THE poster child of “you’ll never do this on the web” native apps — PHOTOSHOP — was conquered on the web and… nothing? No gold rush of web apps? No Cambrian explosion of 20 competing WASM frameworks now that we knew this was possible?
Not every investor of ADBE stock is like me, who held a grudge because they worked on the internal competitor product. Why do other investors hate the acquisition, as shown by the stock price plunge? The simple answer is that the $20 billion price tag is too expensive.
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After the acquisition announcement, the “design Twitter” jokingly mocked up Figma’s app icon in Creative Cloud form — it was transparent to everyone that Figma would be part of Creative Cloud; then why does the Figma CEO not report to the head of Creative Cloud?
Update (2022-10-19): See also: All-In Podcast.
Update (2022-11-09): Nilay Petel:
So I wanted to talk to Dylan about the deal, why he’s doing it, how he made the decision to sell, and what things he can do as part of Adobe that he couldn’t do as an independent company.
Dylan’s also a pretty expansive thinker, so after we talked about his company getting the “fuck you” money from Adobe, we talked about making VR Figma for the metaverse and AGI, which is artificial general intelligence, or the kind of AI that can fully think for itself.
Update (2023-03-10): Gergely Orosz:
I have heard most designers I know move over to Figma. However, until I saw this graph I was surprised why Adobe would pay ~12% of its market cap for a purchase. Especially that they built a competitor: Adobe XD.
Previously:
10 Comments RSS · Twitter
The web is for apps
They're going to ruin the product in at least 4 ways:
(a) unnecessary user interface changes to make it more Adobe-like
(b) integrations with other Adobe products that no one really asked for
(c) additional feature bloat that the product absolutely doesn't need
(d) their painful licensing tactics
I hope the FTC blocks this.
I find this highly ironic.
On the one hand, if one had a standalone desktop copy of this software, one would be able to use it forever. One would have paid once, and one would have been done.
On the other hand, users applaud Apple when it makes distributing desktop copies of software harder, because you can never trust those evil greedy developers. (e.g. of making life difficult: https://mjtsai.com/blog/2022/09/08/mac-app-store-and-investing-engineering-time/) And you so much can't trust them on your phone either, that you must prohibit side-loading.
People reap what they sow... Either you like large corporations being allowed to determine what you are allowed to do, or you don't.
This isn't so much about app stores as it's about big companies buying their competition and then letting them suffocate.
I think it's about the consequences of ceding power to large corporations.
Large corporations exist because they did that which helped them grow and fend off competition, if any presented itself. Therefore to expect them not to 'buy their competition' is illogical. It seems to me that once they become large enough, they rely more heavily on less risky mechanisms than improving their products to maintain market share.
I agree. The US has had an abysmal antitrust legislation since Reaan was president. And since the entire globe has to play by americas rules that has had a massive impact around the globe.
Looks like Lina Kahn is here to save competition though. Fingers crossed.
I wonder how much of a factor this predatory sharing feature has on Figma’s financial success:
https://forum.figma.com/t/clearer-indication-when-charging-for-additional-editors/6908
Yep, that is one dirty feature for sure.
Isn’t there an obvious antitrust issue here? I doubt the US DOJ will touch it, but maybe the EU will take a look.