Photoshopping
Yesterday software design giant Adobe announced a $20bn deal to buy Figma, its browser-based rival that was only founded in 2012.The idea for Figma came to a 19-year-old Dylan Field, who had dropped out of Brown University after accepting a $100k grant from technologist Peter Thiel. The grant was one of 20 designed to encourage young over-achievers to leave college and pursue ambitious work outside of traditional higher education. Field grasped the chance and decided, with his co-founder Evan Wallace, to take on the world of digital design. That decision worked out.
With a relentless focus on making design software that was more collaborative and lightweight, Figma, and competitors like Canva, have been snapping at the heels of Adobe's tools like Photoshop and Illustrator for the last decade. But, as stiff as that competition has been, it hasn't stopped Adobe from having a remarkable decade of its own. Around the time Figma was getting started, Adobe was realizing that recurring subscriptions of its creative design software, rather than one-off sales, might be a better long-term business model. The result? A subscription business that last year was 21x the size it was in 2012.
Airbrush the details
Adobe will be looking to add to its roster of design subscription products, which is why acquiring a red-hot competitor like Figma makes a lot of sense on paper. But, Adobe has seriously splashed out to get the deal done. Figma is expected to pass $400m in annual recurring revenue this year, meaning Adobe has coughed up roughly 50x Figma's annual sales. That's an extraordinary price that didn't go down well with investors when paired with an underwhelming quarterly report. Adobe's shares are down 20% since Wednesday, wiping some $30bn+ from the company's value.
