If you work in product design and haven’t been living under a rock, I am sure that you’ve heard the huge news : Adobe is buying Figma for a whopping $20 billion ! And boy oh boy did people have a lot of feelings about this!
Although I’d also like to jump on the bandwagon and pour my own feelings out, I thought I’d instead take a more analytical direction by trying to see the big picture.
Let’s have a look.
What Adobe said
From its press release, it seems clear that Adobe’s strategy is to use Figma as a gateway into the market of creative web-based tools - key phrases such as “on the web” or “in the browser” appear 16 times in the relatively short article. This is not surprising as Figma is clearly a leader among these tools, along other products like Canva, while Adobe is mostly known for its heavy weight software.
The other focal points of the press release are :
- collaboration (appearing 11 times in the article) - Figma’s real time collaboration capabilities has always been a flagship feature since launch, and it seems that Adobe wants in on that.
- product design (appearing 8 times) - we tend to forget that, once upon a time, designers would create user interfaces on Adobe’s Photoshop and Illustrator. This market was lost to Sketch and Figma a couple of years ago, and it seems that Adobe is intent on getting it back. They had already tried by launching their own tool, Adobe XD, and after that failed, this acquisition seems all the more logical.
Together, Adobe and Figma will reimagine the future of creativity and productivity, accelerate creativity on the web, advance product design and inspire global communities of creators, designers and developers.
What Figma said
Dylan, CEO of Figma, seemed to want to address mostly the question of whether Figma would stay Figma in his own announcement
He ensures that the company will stay autonomous, stressing that he will remain CEO, that the Figma team would keep reporting to him, and that they want to continue focusing on Figma, FigJam and the Figma community.
Adobe is deeply committed to keeping Figma operating autonomously and I will continue to serve as CEO. […] We plan to continue to run Figma the way we have always run Figma
At the same time, he states that this acquisition is a way for them to tap into the technology and expertise that Adobe has spent decades building, on things like 3D, photography, font technology, which would help them save a lot of time on development.
My goal is that we look back at this acquisition as an inflection point where Figma started building even faster.
Beware the disclaimer
These announcement all look good and promising, but both are followed by a long disclaimer (when I say long, I mean, it’s almost longer that the announcements themselves), which says that, in a nutshell, nothing that was just written should be taken at face value.
This is, of course, 100% to be expected. The acquisition is not yet finalised, so it is too early to make real plans yet.
But that also means that any attempts at reassuring the design community that “nothing will change” are doomed to fail.
And fail they did.
How designers reacted
If I wanted to sum up the reaction of designers these past two weeks, I would use these emojis: 😱💔🤯😭
After the announcement, the whole of the internet - or at least, the corner of the internet that belongs to UX designers, product designers, and the general product community - has been nothing but reactions, memes, and hot takes, ranging from extreme sadness to real sass.
But where does it all come from ? Here’s my take.
First, a lot of people didn’t see it coming 🤯. Figma has a very engaged community, with which they have created a strong sense of proximity. Ever since launch, Figma has managed to amaze its users by providing awesome features that solve real issues - such as real time collaboration on designs and ideation - in a way that make designers feel like their needs are always at the forefront of the product’s development. Yet this merger has never been a need for any Figma user.
This is were the second feeling comes in : disappointment 💔. Not only this merger wasn’t expected, it was the antithesis of what designers wanted, partly because they trust in Figma’s vision and don’t want it tainted, and partly because they really dislike Adobe. The announcement served as a bitter reminder that, in the end, Figma is still a VC funded company pursuing money - and 20 billion dollars is a lot of money.
It also doesn’t help that Figma’s CEO had once tweeted this 👇, making the acquisition feel even more like a betrayal.
This disappointment and disbelief comes with a lot of 😱 fear and uncertainty for Figma’s future. After all:
- Adobe has a track record of buying companies that pose threats to them, to then either kill them, or strip them down to nothing.
- Some people even worry that the whole idea of this acquisition is to kill Figma in order to push Adobe XD (truth be told, this is unlikely, not with a $20 billion price tag - but we’ll come back to this)
- For a lot of designers, Adobe’s vision and philosophy is very different to Figma’s. Figma’s product is efficient and user friendly. Most Adobe products are deemed bloated and confusing. If both philosophies have to clash, which will prevail?
- Cost is also a real concern. Adobe has long used its dominant position in the market to get away with high prices (for instance, in 2013, if you wanted to buy a Creative Suit licence in Australia, it was cheaper for you to fly to the US and buy it there than to buy it in Australia). Currently, each individual Adobe product has a subscription cost of ~$20 / month, with the full Creative Suite (bundle of 20+ apps) costing ~$55/month. In contrast, Figma costs $12/month. This is for individuals / small teams, so the 40% saving (at worst) is nothing to overlook. Also to be noted : Figma offers a 100% free version, and is also free for educational purpose, whereas Adobe only offers a free trial and a discount for students. It is therefore understandable that a lot of Figma’s free and individual subscription holders are worried for their wallets.
- Designers are so worried that they are starting to look into alternatives, in prevision of Figma’s presumed demise.
In just a couple of days, competitor and open source alternative Penpot has seen their growth increase by 5600%, which allowed them to raise $8 millions. Sketch, the previous king of the hill, has also taken this opportunity to welcome back previous users that had jumped ship.
How the market reacted
Designers are worried about their little darling Figma and are showing it - but what does everyone else think? By everyone else, I mean people who observe the acquisition with an external point of view, so mostly investors, regulators and the media.
Well, they are puzzled for sure 🤔 . Not so much by the acquisition itself, which makes sense - a juggernaut buying a tool that has replaced its existing products and outshined its attempts at getting the market back, that’s definitively makes sense - but by the timing and size of the deal.
$20 billion dollars is a lot of money.
To put it into perspective :
- At Figma’s last fund raising last year, they were valued at $10 billions dollars - that’s a x2 gap in one year.
- Figma’s revenue is predicted to reach $400 millions this year - that’s a huge x50 gap! Usually companies don’t pay for more than x10 the annual recurring revenue.
- Adobe has had record revenues this year (~$4 billions last quarter), but will still need to borrow a sizeable amount to finance the deal.
- The whole deal is actually worth $22 billions, as Adobe is also throwing in a record breaking retention package worth more than $2 billions to get Figma’s CEO and some key employees to stay - more than half of it for Dylan Field alone.
All this in a difficult market for tech companies, with slowed down fundings and lower valuations. For some investors, this high price and weird timing can only mean that Adobe was negotiating from a weaker position, making the acquisition defensive, desperate, or both.
In addition, antitrust regulators are already starting to look into the deal, and might block it if there is a risk of monopoly. Especially recently, tech acquisitions are going under a lot more scrutiny. Nowadays, Google’s acquisition of Youtube or Facebook’s acquisition of WhatsApp wouldn’t go through anymore.
Following the announcement, Adobe stock has lost more than 20% of its value - which translates to a loss of around $35 billions - way more than the $22 billions they are putting on the table!
So clearly, Adobe is taking a big gamble - the question now is whether it’s going to pay off.
Are the reactions justified?
Well, the reactions are rooted in a lot of facts for sure, and looking at how Adobe has handled past acquisitions, I understand why designers worry.
I do not buy the “Adobe is going to kill Figma” narrative though - that’s just too much money to put into a product that you plan on breaking anyways. The huge retention package aimed at Figma’s top personnel also gives me hope: this amount of effort hints at the intention to keep Figma’s heart and soul - at least for now.
Whether or not that intention is kept, that is another story. Only time will tell whether Figma and Adobe manage to work well together. So many things could go right - this could usher a new age of collaborative tools on the web 🤩 - but so many things could go wrong too. If Figma can’t regain the trust of its once loyal and die hard fans, what’s to say what will happen?
On a brighter note, I firmly believe that, whatever happens, we as designers will not end up being losers. Once upon a time, I was dead set on the fact that Sketch was the best tool ever built. Then Figma came along and blew my expectations away - I jumped ship almost immediately and never looked back. I am sure that somewhere out there, the next Figma is already being built. Maybe this was just the opportunity they needed to come into the light 🌱
PS: all the memes!
Do you not care at all about this subject, and are just here for the memes? Well, here’s a little compilation.
Here are some of my favorites :
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