Why Adobe and Figma Designed their Marriage?

And why it made waves in the design community like no other deal

Adobe’s Home Turf and Figma’s Ground Work

Products like Photoshop, Illustrator, and XD have been the designer community’s darling for a long time.

These tools helped the designers to bring their creative imagination to reality and Adobe which has its DNA into it- become a software giant and gained market share.

Adobe was in cruise control!!

Meanwhile, Figma’s story started in 2012 when its founder Evan Wallace dreamt of building a tool that could be accessed on any browser and offer limitless capabilities.

But, why a browser tool?

To remove the boundaries of collaboration on software which was a major friction point for the designers.

Figma was released publicly in 2016 and broke the shackles of software tools and went on to have a meteoric rise because of no cap on premium features and a brilliant free plan that product companies of all sizes adopted it.

Adobe was still the leader with the AdobeXD tool in UI.

And, enters the pandemic!!

The pandemic created disruptions across industries and organizations and human needs and behavior. People needed to be in their homes, and interact over Zoom and Teams.

Adobe was lagging to adapt as quickly as needed for this. Meanwhile, Figma- a relatively late entrant in the space made waves.

Figma went from Strength to Strength

The team at Figma did take a different approach, one that was tailor-made for the new era:

  • Democratize Design— Figma’s team understood design and designers’ associated pain points. They made the tool for all by building it for browsers.
  • Adaptive from Day 1— They made a tool with features for all. Simple enough to be leaned and subtle enough to give designers, and PMs a free hand to experiment with their creative ideas, share effortlessly, and work together with others.
  • Freemium Model — Figma’s core functionalities remained free to use, attracting thousands of early adopters to the platform. Good feedback coupled with Figma’s user-centricity ensured a sharp rise in users.

The Economics of the Deal- Simplified

Adobe is paying $20 billion for the acquisition. What for?

  • Figma has a user base of 4 million at present.
  • It last reported having over 150M in recurring revenue with insane retention metrics.
  • With the browser capability, it expanded the TAM( Total Addressable Market) to endless boundaries.

“It’s about positioning the business to define new categories and drive growth for decades to come,” said Chief Financial Officer Daniel Durn.

Still, after the Sept 15 announcement, $ADBE lost almost $30 billion in market cap. That’s more than the $20 billion acquisition of Figma.

The market didn’t like the deal.
But why?
Did Adobe over-paid?
Is it a strategic blunder?

What Does This Acquisition Mean for Designers?

Surely, the Adobe team thinks this takeover will cement its design dominance.

Their idea is to create a seamless connection between existing Adobe tools and Figma, essentially building a one-stop tool for designers and PMs.

They see the opportunity to accelerate the growth and innovation of the Figma platform.

See what the CEO of Figma, Dylan Field said-

“We will have the opportunity to incorporate their expertise in imaging, photography, illustration, video, 3D, and font technology to the Figma platform. Additionally, we will have the opportunity to reimagine what the best creative tools could look like within the Figma technology stack.”

There is an assurance to the designer community that they will continue to enjoy Figma as it is with no change in pricing at least in near future.

Conclusion

Mergers and acquisitions deals like this happen once in a few years.

  • Facebook(Meta) acquiring WhatsApp
  • IBM acquiring Red Hat
  • Microsoft taking over Activision Blizzard
  • Google shopping Android

Adobe + Figma takes the design and the tech community into a new era.

If this marriage will keep the shareholders of Adobe and the people who use the products happy, only time will tell.

Excited?

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Mandeep Lakra

In pursuit of more confidence at the end of each day. What excites me- Storytelling, Travel, Poetry, Sustainability, Management, Investing, Data Analytics