📝 Here's why Adobe acquired Figma
Unless you were living under a rock or on a social detox or something, by now you should know that Adobe acquired Figma for $20 Billion.
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This is one of the 25 acquisitions by Adobe so far 🤯
Here's what's next for Figma <> Adobe users ⬇️
Quick context 🗓
Last night in a surprising move, the IPO bound, Figma was acquired in half cash & rest in stock deal by Adobe. In turn, wiping out Adobe's biggest competition in collaborative category of design. Interestingly, Adobe has a similar product to Figma called "Adobe XD".
Why the acquisition now? ✈️
Figma is on $81 million revenue run rate (Adobe believes it will reach $400 million this year). Figma was eating a small pie in Adobe's $4.43 billion revenue. It would be fair to say this category is "owned" by adobe & it's suite. But, the pie was increasing.
Figma grew from $50 million revenue to 60% year on year.
That's crazy if you think about it for a scaled company.
But there's more to this deal 🤭
Adobe has offered Figma an insane revenue multiple valuation. The deal is almost 2.1X of Figma's last valuation of $9.1 Billion. Now, if you look at public markets for internet companies IPO'ing, the story hasn't been great.
The Figma board & founders saw this & could not resist but take this deal.
Nothing wrong in it. They deserve the exit.
What was Figma's win(s)? ⬇️
First, Collaborative design 🤝
Creative process is collaboration first and that's what Figma focused on day 1. Sketch (from apple) / Adobe XD has so many problems with this collaboration (public vs private pages).
Second, the platform 🖥
Figma focused on web apps as much as it focused on the desktop client app. This is a major insight founders had so early on. Most low capacity macs/windows laptops can not run heavy Adobe suite.
Third, low friction to adopt ✨
My dad could potentially use figma with an hour of YouTube lessons. That's how easy it is. I feel figma took a lesson from Canva's learning book.
Fourth, the price point 💰
Again, it read the lesson out of Tally's book. Give your software for free for personal use and don't go hard on number of guests per workspace on figma.
You have millions of users signing up, get addicted to figma and when they go & work in a team, they will have to signup for the team plan. They'll happily get their employers pay for it.
So what's next for Figma? 🎯
Most of the designer community is worried about the free to paid plans. I don't think Adobe is penny wise & pound foolish. It'll make Figma scale to market ceiling & then force employers pay for it, making billion dollar revenues every quarter.
But, it will go beyond 🚀
If you read the fine print of what Figma founder said in the PR release, it says "we will have the opportunity to reimagine what the best creative tools could look like within the Figma technology stack". So, Adobe suite integration inside figma is possible with cross selling. That’s all on the Figma <> Adobe saga.
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