Issue 020The business of acquiring Figma
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Designers and media alike have been unpacking the news that Adobe has tabled a deal to buy Figma for an eyewatering $20 Billion.
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The dust has settled on this month's big news that Adobe is acquiring Figma. Away from hot takes on Design Twitter, It's been fascinating to see the move make mainstream headlines.
Analysis of the deal by those who don't depend on the tool has been an eye-opener, shedding a more objective light on the motivations behind the sale and how it could affect future product development. |
All In Podcast - episode 96 (from 00:59)
I gleaned a lot from All In Podcast's breakdown. Particularly how the enormous $20Bn price tag - a record for a privately owned acquisition - is calculated based on Figma's projected annual recurring revenue from subscriptions, or ARR.
That valuation puzzled many. It would equate to 50x the amount Figma generated in revenue from its paying subscribers in 2021: this is an exceptionally high multiple. But Figma's growth has outperformed expectations for years, and that trend shows no sign of letting up.
But the price Adobe paid doesn't just reflect the future earning potential of Figma, it's an irresistible offer necessary to diffuse the biggest threat to Adobe's existence.
The hosts also discuss the risks to Figma's growth if Adobe restructure (or scrap) Figma's high performing sales teams.Although Adobe's announcement states a desire to keep Figma independent, analysts expect Figma could form part of the Creative Cloud bundle in time. As a result, Figma could lose the independent and notoriously customer-obsessed sales team that has contributed to those impressive ARR figures and a responsive product mindset.
Hitting projected revenue targets would heavily depend on the continued appreciation of the needs and challenges of higher-value corporate accounts. Losing focus here could be one of the most significant factors limiting Figma's future product innovation and projected growth.
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You lose the pulse of the market when you lose your dedicated sales team
David Sacks, co-host and analyst for the All In Podcast and co-founder and partner at Craft Ventures.
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The Guardian
John Naughton takes a more critical view of both the valuation and regulators, describing the deal as a "naked land grab". He sees Figma as a small player in the broader design tooling space but a potential giant in the workflow business.Adobe has struggled to fit cloud and collaboration features into its products for some time. In contrast, Figma emerged with performance and workflow at the core.
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So why would Adobe want to lay out such a mountain of cash to acquire this minnow?The answer is that its leaders are thinking ahead and they see a strategic threat in the making. In the networked world, more and more work is being done by geographically dispersed teams who have to collaborate online.And in that context, project management and the creation of workflows that are efficient, user-friendly and agile is moving centre stage.
John Naughton, professor of the public understanding of technology at the Open University.
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Forbes
Not a take on the acquisition, but this profile piece from 2021 explains part of the reason why Figma has attracted such impressive funding over recent years. CEO Dylan Field's customer-obsessed approach runs deep: visits to users, diving into support tickets, checking mentions on Twitter.If there were ever a poster business for the power of software customer-centricity, it would be Figma.
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Most workdays, Field checks Twitter for mentions of Figma and design, or reads customer support tickets as they come in. "Not all of them are happy, because here's this thing they want fixed, and that gives me a pulse on what's going on," he says. "And the people that are happy, that's when I get really stoked. And that motivates me so much."
Alex Konrad, senior editor at Forbes.
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The Verge
Finally, The Verge covers Adobe's acquisition history and competitor views on the deal. XD was Adobe's attempt to compete in the cloud collaboration space, a product it's been seemingly reducing investment in for some time. Transitioning XD customers to Figma is the most likely strategy to maintain this existing user base.
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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.
Jay Peters, news writer at The Verge.
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