Why did Figma agree to join Adobe? (beside of ~$20B)?
Lisa Dziuba
27 replies
Why would the company on the success trajectory agree to join its competitor?
Replies
James Young@jydesign
Sketch Hunt
The following is all pure spontaneous speculation. Having been around this industry for a while, I was sensing some telltale signs in the actions of Figma that seemed to signal “restless investors” vibes.
Things such as their continually evolving monetization strategy leading to notably higher enterprise pricing, which also introduced team and file management complexity. FigJam was both a great (Pandemic Era) idea, as well as a big distraction from further enhancing the core product.
This is often the slingshot effect of a freemium product that offered a lot of value for free out of the gate, having to start clawing out of the debt-hole toward a future of profitability and ROI for investors.
The pressure to not just beat Adobe, Sketch, UXPin et al for the hearts of users, but also become a big profitable business is high. Acquisition is often an attractive shortcut to scale, and a way to placate impatient investors (despite how customers may react).
The promise of Figma’s autonomy from Adobe is interesting. Notes: Private Series E $332.9M total funding via 30 investors going back to 2013 https://www.crunchbase.com/organ...
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@jydesign I was thing a lot about this statement
>. This is often the slingshot effect of a freemium product that offered a lot of value for free out of the gate, having to start clawing out of the debt-hole toward a future of profitability and ROI for investors.
Indeed, with freemium you can acquire a lot of users fast and launch viral growth loops. For Figma it was via organic product usage and inviting team members. It increases maintenance cost for the company, as all those free users needed support, they hosted their files, etc.
Big revenue could come from enterprise clients who were using other tools, but those are longer to get. Sales cycle can be like 6 mon. So was Figma profitable in the first place?
Worst decision ever
Prolinky
This is one of the sad news I've heard this year. As you probably think the same, Adobe will f#$½ it up.
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@boraoztunc @palam_s weird. I don't understand why. Owning Figma means owning a huge share of the market which they have lost.
@boraoztunc @lisadziuba news is coming in that the deal was 2x higher than what analysts expected (their last round valuation)
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@boraoztunc @palam_s hah
Who would sell the company for the price investors paid for it? it's not logical. Investors from the last round got 2x, while could expect 10x.
They wouldn't get a higher valuation based on their current or projected performance. It was an inflated price as Adobe were mostly interested in killing a competitor.
It was a Scrooge McDuckian offer and they should've taken it. It's awful for people who used it and for the project going forward but you'd have done the same thing. We all would have.
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@lisadziuba
Not initially. They'll run it as it is for a time and as they try to fold it into their own offerings. Maybe rebrand it. It'll become more and more of an Adobe product as time goes on until it has wrung every last ounce of good will it had.
Timeframe-wise, I'd say 6 to 18 months.
Most probably, Adobe will mess up with the pricing of the Figma, biggest fear with this acquisition.
AppstoreSpy
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FAM - Social Finance
Damnnnn, I hope MacBook performance doesn't decrease with this acquisition!
I remember when I first heard Figma's (then) young founder talk about how he was going to de-throne Adobe. I thought it brash and probably unrealistic. And then, well, Figma did just that. And while defenestrating Adobe, Figma chopped the legs out from under Sketch, Invision, and numerous other prototyping tools like Axure.
So, if they own the market, why get acquired? The old adage says, "If you can't beat them, join them." But sometimes you beat them and join them anyway. Adobe represents scale and reach for Figma. Plus, as others have noted, twenty-billion buckaroos.
The more interesting question to me, however, is what this means for Adobe XD. I have to imagine Adobe will kill it and port its users over to Figma.
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@mmcwatters Michael, thanks for sharing your thoughts.
Adobe XD has an amazing team behind them. They tried so hard to make XD useful, I followed their journey for some time.
It will be a weird decision to kill something Adobe has been building since 2016.
@lisadziuba It's funny because I actually wrote a post asking if Adobe should have acquired Sketch way back in 2018. https://michaelmcwatters.com/sho...
And then later about how Invision missed the boat altogether with its very promising product, Invision Studio. https://uxdesign.cc/i-dont-know-...