On Adobe acquiring Figma
build.typogram.co
build.typogram.co
> most startups cut their valuation by a lot in 2022
Most startups are not used by every single other startup, whereas I would be very surprised if any startup doesn't use Figma for UI design. I've never used Canva and never heard a company using it. The only time I heard of Canva is to create a nice looking CV. Comparing outliers to the average/most isn't very helpful.
> Another way to peek at a startup’s valuation is by revenue and growth multiplier.
That is clearly not the only factor in valuation. It also depends on Figma's cash, founders desperation (very low, especially to sell out to Adobe), acquirers desperation (very high), how unique is Figma (Sketch, Adobe XD and Canva are way worse), and loads more factors.
I would guess the real reason the Adobe price tanked was because it was a huge admission of defeat. Previously, you can't see how bad Adobe XD has performed, and now you know it's so low it doesn't matter. They can't build something people want. Nobody wants to use Adobe XD, even when IIRC, it was free at one point.
For canva and other small companies, I would give higher valuation to revenue multiplier.
There's probably a big untapped market for Figma in boring enterprise software and internal design needs for marketing, etc.
I'd bet that Microsoft was bidding for Figma too. In that light, Adobe's $20B price is a sign of strength because they were able to afford to outbid Microsoft for an extremely strategic acquisition. Adobe isn't taking enormous amounts of expensive new debt to fund this. The stock market's opinion of the deal doesn't affect Adobe's finances directly.
What makes you say this metric is "very low"?
Evan seemed (to my eyes) to be the technical drive behind Figma as a product, and left in 2021 (shifting focus to esbuild)
Dylan has come out criticising Adobe (in what mainly seemed like good marketing) in the past, but other than that, his focus has been investment, and - more recently - NFTs, crypto & web3. An exit seems very natural.
have startups stopped using Invision?
>acquirers desperation (very high),
I would think acquirers desperation (very high) would be another word for 'dump this stock' which to me is what the article seems really about. People dumped adobe, why because Figma not worth that unless acquirers desperation (very high). uh oh, who wants to hold a desperate company?
Speaking as a designer, Invision has never felt like a serious design tool and they've had a constant struggle to find their place in the market. Invision started life as a prototyping tool, and they dabbled with Studio sometime around 2019, but recently they've morphed into more of a collaboration/whiteboarding tool. They're probably more akin to Miro or Jamboard than Figma these days.
- "Every startup" does not mean big number. Startup are handful if compared against all kind of business that exist (from car dealers to big retailers to IT behemoths...)
- In typical tech company only handful of people use Figma (Design, PMs, Front end engg)
Whereas Canva's addressable market is anyone and everyone who has need to produce documents that are not wall of text (all young, old - resumes, birthday party invitation,...), all companies (newsletters, flyers for their events,...)
If you're Apple or Microsoft PM. Please make internal noise to purchase a Figma competitor like Sketch and give Adobe/Figma a run for it money. Adobe clearly doesn't like competition.
How it plays out.
VC: Hey Oracle, did you hear salesforce wants to buy XYZ Startup for 1M, you want to counter?
Oracle: Screw Benioff. I'm in for 2MM.
VC: Hey Salesforce, thanks for the first call. Oracle wants to buy XYZ startup for 4M, you want to counter.
Salesforce: Those devils, I'll do 5M.
....
VC continues the game until they've hit the ceiling or are about to, and walks away with a ton of cash.
They threw out some questionable aspects of the purchase but let’s also realize they are not objective. This person worked on XD and haphazardly already consider this a loss of their personal investments in Adobe.
One of their differentiators is their performant web app which is something Apple is very much against. Then collaboration where Apple is also bad at on top of iterating fast, which Apple is also bad at for software.
There's just not much precedent for Apple caring about building out apps for 'pro' work - Final Cut and Logic Pro as historical anomalies.
I’ve used Sketch, Figma, Adobe XD, InVision and am generally unimpressed with these as prototyping tools. They overemphasize pixel perfect screen design & under solve the most important UX task: documenting the end-to-end workflow through a user task. My favorite prototyping tool was App Cooker, a workflow-focused app for iPad that sadly got acquired and discontinued. There’s a ton of room for innovation in the design space.
I'm a bit surprised they even bother with FCP and Motion at this point. I have no idea what they would do with Figma. They can't even get SwiftUI to work after several years, so offering up a design product as part of Xcode or something would definitely be lipstick on a pig.
In 2015, their net income was 630 million dollars with 13,893 employees.
By 2019, through steady growth they have grown their income to 2,951 million dollars with 22,634 employees.
In other words, while in 2015 an employee produced 45347 dollars but in 2019 the same person produced 130739 dollars.
I would be slow to presume they do not know what they are doing.
Does anyone even know when Adobe last had a net loss quarter?
I remember that I found it strange back at the time that almost no-one was mentioning this in the tech media, all eyes were focused on the analytics businesses related to Facebook and Google.
> Who is David Wadhwani, the person Figma is going to report to? I have never heard of this name while working at Adobe. A little further research shows he joined Adobe in June 2021, just over a year ago.
A quick look at his LinkedIn profile shows that he worked at Adobe for nearly 14 years prior to coming back as an exec. A little more digging shows that he came to Adobe back in 2005 via acquisition of Macromedia.
> even with Adobe keeping Figma as independent as it can be, it will develop and grow at a much slower pace since there will be no venture capital funds pouring in
Figma was already profitable. From all the reports, it doesn't seem like they had any intention of raising another round to continue growth.
> With accelerated stock vesting triggered by the acquisition, a lot of Figma employees will jump ship to their next adventure.
There is no accelerated vesting.
It's fine to criticize this deal from a business strategy perspective, but don't make up details to hit the word count...
"After seven years of investment, Adobe XD was bringing in just $15 million in annual recurring revenue on a standalone basis — a minuscule fraction of Figma's $400 million annual recurring revenue. (That, in turn, is a minuscule fraction of Adobe's overall annual revenue of $17 billion.)"[0]
[0] https://www.axios.com/2022/09/23/adobe-defends-figma-deal
..even with Adobe keeping Figma as independent as it can be, it will develop and grow at a much slower pace since there will be no venture capital funds pouring in, and Adobe’s resources drained to pay off the acquisition cost. The only winner is Figma investors. This acquisition is a lose-lose-lose situation for Adobe, Figma, and the design community.
I don't think they paid too much. It will give Adobe 10 more years of subscriptions without effort. Without Figma, they would be reduced to metrics software (in 10 years).
Even if he didn't personally invest in Figma, this doesn't look good at all.
PS: not defending the purchase or Adobe but this statement in the article is factually wrong ¯\_(ツ)_/¯
Also accurate - conflict of interest if he in anyway was part of acquisition efforts.
Or Economist. Both are probably correct.
If they didn't have support for that this would be a pretty egregious lie in the "here's our list of supported features" pitch to buyers?
I recognize that inflation is quickly destroying the value of the dollar, but $20 billion is still a mind numbingly large amount of money to be throwing around at the clear end of a long term tech sector growth cycle.
This speaks as a brutal admission from Adobe corporate leadership that they lack the internal entrepreneurial skills to drive the development of new and innovative products in their market space, and based on the ~10% stock price drop since the announcement I imagine the market sees it the same way.
WOZ way is a reminder of that fact