Making Design Work. Adobe's $20B Figma Buy

Behind the Adobe-Figma Mega Deal: Balancing Design, Business, Culture, and AI Innovations

Oct 30, 2023

Hi Friends!

Steve Jobs had it right when he said this:

Design isn't just about how things look; it's about how they work.

It's about making sure every element serves a purpose, works efficiently, and comes together to create something amazing.

Imagine a day filled with anticipation, where curiosity fills the air.

Our newly hired designer steps into the spotlight, piquing our interest. With an air of intrigue, he introduces the design mocks of our upcoming product, Highperformr.ai, promising a glimpse into the future of innovation and creativity.

This captivating moment not only showcases the designer's skill but also sparks a question in my mind:

Why would Adobe invest in Figma with a staggering $20 billion deal?

It's a question that sets the stage for a deeper exploration into this monumental merger and the dawn of a new era in collaborative creativity.

So, we decided to revisit this colossal partnership twelve months after its announcement. This acquisition dust settled, and we watch keenly how this massive partnership is unfurling. We gauge the pulse of the industry, understand the nuances of reactions, and witness the ripples this collaboration sent through the hearts of designers and innovators alike.

The story that unfolds is more than just a narrative.

So, without further ado, let’s begin.

1. Tech Tango: The High Stakes of Software Wars

In the records of software history, the stories of Adobe’s acquisitions are etched in contrasting figures and outcomes. Take the pivotal year of 1995, for instance, when Adobe made a decisive move by acquiring the Knoll brothers’ royalty agreement for Photoshop, the iconic image editing software, for a staggering $34.5 million. This move solidified Photoshop's place in Adobe’s arsenal and marked the beginning of its journey towards becoming a household name, a journey that was not just about software but about shaping the very language of design. Photoshop’s dominance was massive. It became a verb. I’m sure if we told you something is “shopped” you know exactly what I’m talking about. And we bet a few of you were surprised to hear that Photoshop was an acquisition in the first place.

Contrast this with the landscape of 1988, a battleground where two industry behemoths, Aldus and Altsys, clashed. This clash gave birth to FreeHand, a vector graphics editor, and PhotoStyler, a graphics program, which posed a direct challenge to Adobe’s Illustrator and Photoshop, respectively. The competitive fervor escalated until 1994, a year that would shape FreeHand’s fate. Adobe Systems, in a bold move, announced a merger agreement with Aldus Corporation, culminating in an enormous $525-million deal. However, amidst the excitement of this merger, FreeHand found itself entangled in a web of uncertainties. The promise of continued existence was overshadowed by the strategic decisions made in boardrooms. And so, the story of FreeHand met its final chapter. The software that once stood tall as a symbol of creative possibilities just ended.

In a nutshell, these stories show the wild side of software business. Sometimes, big acquisitions like Photoshop change the game entirely, making a software iconic. Other times, mergers like the one with FreeHand can lead to uncertainty and even discontinuation. These are just 2 examples that we picked to show you that such strategic acquisitions can go either this way or that way. It's a rollercoaster of creativity, money, and strategic moves, reminding us that behind every software we use, there's a fascinating story of innovation and competition. In fact, spanning over four decades, Adobe's legacy in the software industry is punctuated by a series of strategic acquisitions, totalling over 50 companies. Adobe has a formula to make every acquisition successful, and how!

2. Figma's Incredible Journey: Transforming Digital Design

In the orbit of digital creativity, Figma stands out as a symbol of innovation and teamwork. It started in 2012, a time when it wasn't trying to make money but to change how designers work together. These early years of testing and learning laid the foundation for something big.

In 2017, Figma achieved a significant milestone by printing its first dollar in revenue. This pivotal moment marked the beginning of an extraordinary ascent. Year after year, Figma's Annual Recurring Revenue (ARR) values experienced exponential growth:

$700,000 in 2017
to an impressive $4 million in 2018,
surging to $23 million in 2019,
and catapulting to a staggering $77 million in 2020.
By 2021, Figma had achieved an astounding ARR of $210 million, a remarkable feat in just over a decade.

Figma became popular because it understood what designers needed. Its simple design and the ability to work together in real-time made it a favorite among designers. In 2021, a huge 77% of designers chose Figma over other tools.

The Evolution of UI Design Tools: A Comparative Analysis

Considering Figma's impact on the design world, let's explore how it compares to other UI design tools in the industry. Because, in this digital design space, the choice of tools can make all the difference. UI design tools are the artist's brushstrokes, shaping the digital landscapes we interact with daily. In 2021, these tools weren't just software; they were instruments of creativity, enabling designers to breathe life into ideas.

Introducing our UI Design Tools Comparison Chart – a visual narrative that delves deep into the statistics, providing insights into the industry's pulse.

You don’t need alt text for this image I explain it in the text

Image Credits: https://uxdesign.cc/

With this, we just want to let the numbers do the talking and tell you the story of innovation, preference, and the future of digital design.

3. Visionary Collaboration: Bridging Imagination and Reality

Alright, buckle up, creative dreamers, because we're now diving into a space where imagination meets reality in the most extraordinary way! Figma, with its audacious goal of erasing the line between what we dream up and what we create, started a revolution. Further, with the collaboration making headlines, Figma's aspiration to bridge the gap between imagination and reality has received a significant boost. In the words of the big boss himself, Chairman and CEO of Adobe, Shantanu Narayen, “The combination of Adobe and Figma is transformational and will accelerate our vision for collaborative creativity.” Let that sink in for a moment. It's not just a statement; it's a promise, a commitment to turning dreams into digital realities. Fuelled by Adobe's mission to change the world through digital experiences, today's design outlook is more than pixels and vectors; it's about dreams taking shape with the click of a mouse. This is the essence behind the visionary collaboration.

4. No Bossing Around: Figma Stays Figma!

Now, addressing the elephant in the room: the big, burning question on every designer's mind. Is Figma going to lose its cool factor under the big Adobe umbrella? Well, the answer to this is ‘No!’ Figma's Co-Founder and CEO, Dylan Field, isn't going anywhere. In his own words,

Especially in a time when AI-generated models make us question the role of human creativity, this opportunity is also a huge responsibility. I look forward to the years ahead and continuing to serve this amazing community.

But wait, there’s more good news! Here’s the insider scoop: Figma’s heart and soul will remain intact. Dylan is staying firmly at the helm as the captain of the Figma ship, steering it toward even more creative horizons. According to Dylan, Adobe is deeply committed to keeping Figma operating autonomously and he will continue to serve as CEO.

Furthermore, the entire Figma team will be reporting directly to Dylan. You heard it right – it's business as usual, but with a whole lot of excitement sprinkled on top. Figma isn’t just a tool; it's a community, a culture, and a way of creating that we all love. And rest assured, it’s staying true to its roots.

5. Money Talk: Figma’s Big Bucks and Big Heart!

In the fast-paced world of digital design, Figma continues to soar to new heights. As of 2023, Figma boasts a staggering total addressable market (TAM) of $16.5 billion by 2025, a testament to its unrivalled impact on the industry. Throughout the previous year, Figma showcased its remarkable growth, adding an impressive $200 million in net new Annual Recurring Revenue (ARR). By the end of 2022, its total ARR had soared past the $400 million mark, a testament to the platform's widespread adoption. What's even more astounding is Figma's net dollar retention rate, standing tall at greater than 150 percent, showcasing not only its ability to retain existing users but also to attract new ones.

Fuelling this exponential growth are Figma's exceptional financials. Operating with gross margins of approximately 90 percent and boasting positive operating cash flows, Figma has solidified its position as an efficient, high-growth business. And guess what? All this growth isn't changing their heart. Figma’s keeping its doors wide open for education, because nurturing the next generation of creatives? That's priceless!

Amidst their lofty product goals, Figma remains steadfast in its dedication to the community. The Friends of Figma initiative will persist, reaching out to new local communities and fostering collaboration. Despite the unpredictable inflation, Figma stands apart by retaining its pricing unchanged. Notably, Figma reaffirms its commitment to education, offering its platform entirely free for educational purposes. This move underscores Figma's belief in the priceless value of education and aligns seamlessly with Adobe's vision of empowering a growing global community of designers, developers, and creatives.

6. The Canva Mystery: Why Canva Didn’t Make the Cut!

Ever wondered why Adobe didn’t snag Canva too? Our speculation: it's a blend of numbers, strategy, and vibes. Canva's $40 billion valuation might have been a tad steep for Adobe's wallet. Plus, their strategies might not have aligned well – it might have looked like fitting a square peg in a round hole.

Adobe, confident in its in-house innovation, might not have felt the need for Canva's expertise. Regulatory hurdles and cultural mismatch with this most valuable Australian startup could have added complications. Timing, that ever-critical factor, might not have been in their favor. So, while we speculate, the true narrative remains locked within the boardrooms, where decisions shape the destinies of companies, creating ripples across the business landscape.

7. High-Tech Magic: AI and the Future of Design!

As technologists, writing about the future without talking about AI makes this whole content pointless. Let’s talk about Adobe’s Project Primrose, Figma’s acquisition of Diagram, and their beta partnership with Google Chromebooks.

Project Primrose: A Fashion-Tech Marvel by Adobe

Unveiling Project Primrose at Adobe Max 2023, Adobe introduced this interactive dress, a groundbreaking initiative. Created with Adobe Firefly, Adobe After Effects, Adobe Stock, and Adobe Illustrator, this flexible textile with miniature displays, seamlessly blends fashion with technology. Powered by Adobe's cutting-edge tools, this dress challenges conventional fashion norms. With the speed at which developments in the AI space are taking place, it might not be long before you wear these interactive dresses to a party.

Figma's AI Integration: Empowering the Next Generation of Designers

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Next in line is Figma's venture into the future of design with AI. In 2023, AI isn't just a buzzword; it's a transformative force. Figma, recognizing the potential of AI, has strategically acquired Diagram, a brilliant project by Jordan Singer, a company specializing in AI-assisted design tools. This partnership amplifies Figma's commitment to seamlessly integrating AI into creative workflows. Picture this: tools that not only enhance your design process but also accelerate your workflow, enabling you to express yourself visually like never before.

Figma's vision extends beyond just professionals; it encompasses the next generation of designers and thinkers. In this direction, as part of their Figma for Education initiative, they teamed up with Google Chromebooks, conducted classroom experiments, and voilà, now every school in the US can dive into design fun for free! And guess what? Figma has spread the love to students of all ages not only in the US but also in Japan too.

8. European Commission Investigates Adobe's $20B Figma Purchase

Have you ever thought of this simile - A plot without a twist is like a puzzle missing its final piece?

You are thinking right. The European Commission (EC) has hit pause on Adobe's massive $20 billion deal with Figma. Why the fuss?

The EC smells potential market monopoly. Figma, a heavyweight in interactive design, has the EC concerned that post-merger, there might not be any worthy rivals left, limiting designers' choices.

But what's Adobe's move? That's the million-dollar question. Will they make concessions? The EC's deadline for a decision is December 14, 2023. Brace yourselves; the design universe might be in for a seismic shift! Stay tuned for updates on this game-changing face-off!

9. What's Next? A Future Designed by You — Amidst Uncertainty!

As we navigate the intersection of technology and creativity, the collaboration between Adobe and Figma paves the way for an innovative future. It's not just about the advanced AI tools or interactive fashion; it's about practical, real-world changes that you, the designer, will experience.

However, amidst this exciting prospect, there's a cloud of uncertainty looming over the creative horizon. The European Commission’s investigation introduces a twist in the tale, challenging the very essence of this collaboration.

The design world holds its breath as we await the outcome. Will there be concessions? Adjustments? Or perhaps an entirely new direction? The answers lie in the hands of regulators and the future decisions of these industry giants.

Yet, one thing remains certain — your ideas, your creativity, and your innovation will continue to shape the evolving backdrop of design. Despite the uncertainties, the spirit of creativity remains unbounded.

So, let's stay tuned, adapt to changes, and continue pushing the boundaries of creativity because even amidst ambiguity, innovation knows no bounds and what lies ahead is a marvelously inclusive creative world. But all we can appreciate now is the excitement in the room as our designer takes us through the rest of the Figma mocks of our product. Yes, we are determined to build a product that the Growth Marketer cannot afford to ignore, and make him/her the ultimate lead-gen specialist in the organisation.

So, thats it for today’s edition. With such inspiration and passion, Sri and I make a small step into the world of product design at Highperformr.

Until next time, 👋

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