[Pure speculation; I don't work in the UI space at all, and at neither of these companies]
I wonder if Adobe is secretly happy about this. They were acquiring Figma at the peak of the market (for growth stock/startup valuations) because of the existential risks that Figma was threatening, due to their collaborative development UX.
But since then:
* Startup valuations have fallen. Ignoring regulatory concerns, a new acquisition deal today would be cheaper.
* Gen AI and Adobe Firefly are the new rage, and Adobe has probably captured back both mental and market share from Figma. And Adobe can now add collaborative features to Firefly, and it doesn't even have to be as good as Figma's to win.
So paying the 1B breakup fee is probably the cheapest and best option for Adobe at this time.
Meanwhile, Figma employees, expecting a big payout, are probably a bit demotivated at this point. And potentially, they might have been working on integrating into Adobe over the past year, so they might have even slowed down in their development pace.
(ex-Adobe, on a team highly related to an area where Figma out-executed XD, less knowledge about genAI stuff)
> Adobe has probably captured back both mental and market share from Figma
GenAI/Firefly's success is in a totally different domain to what Figma's doing. Figma's equivalent at Adobe is XD, which has never held a candle to Figma. The existential problem Adobe tried to buy their way out of still exists in the same form at, if anything, a greater severity. I was at Figma's config conf this year and they're finally shipping stuff I tried unsuccessfully to get from the XD team _years_ ago.
> potentially, they might have been working on integrating into Adobe over the past year
Highly, highly unlikely. I have no insider knowledge of Figma, but Adobe's a grown up company and _really_ does not fuck around on the legal stuff (which is part of the basis of Firefly's success – significantly cleaner legal provenance on their training data). Everyone I've spoken to at Adobe says they've been kept at a long arms length.
As a graphics designer of almost 20 years i have to heavily agree. Firefly is nice for drafting and dabbling with stuff that once would've been served by stock sites, but aside picking a few demo images or making some abstract pattern backgrounds here and there, this has close to zero overlap with the UI/UX into development & design system management process Figma serves. It's almost like saying the Bing bot eats away at Laravels user base.
As a personal aside:
I'd like to commend the initial push you guys did with XD. While Figma was still out of my scope back then, and XD played a major role for me in transitioning away from oldschool Photoshop or Indesign mockup processes into a modern workflow that integrates with my dev team and focuses on component & design token centric thinking.
Figma may have left XD thoroughly in the dust by now, and i honestly couldn't be happier that the merger won't happen, seeing how Adobe has been committed to absolutely dismantling the UX of Photoshop to the point of it only remaining installed on my workstation because Affinity Designer still lacks some core feature parity - but in its earlier days XD has been absolutely crucial to the development and modernization of my whole thinking and workflows!
Curious: what do you find missing in the affinity stuff? I see a bunch of people referring to it generally lacking 'stuff' but I'm curious about the sort of stuff it lacks. Maybe my use case won't be impacted much.
I'm grandfathered in with the introductory CC pricing but there aren't too many threads left in the rope anchoring me to that. I rarely do print design anymore so InDesign isn't the huge sell it used to be, and photoshop is just annoying me more each day. If it weren't for illustrator, I'd probably be gone already, and inkscape just doesn't cut the mustard for that stuff... the type tools alone in illustrator keep me there. Audition suits me way better than audacity but I don't do anything remotely intensive enough with sound to warrant a hundreds-of-dollars a year subscription.
Affinity has various workflow interrupting issues and missing features, from things Adobe figured out 20 years ago. And to be clear, I'd love Affinity to succeed at being a more serious competitor.
Just a handful from one notes file:
- No percentage document scaling drop-down option, despite featuring some uncommonly used units for design work. Instead it's hidden as a non-discoverable feature where you enter a percentage in the pixel field and it auto-converts to that absolute pixel value in-situ...
- Re-opening a document doesn't restore the state of opened/closed groups in the layer panel
- Lack of keyboard navigation for UI dialogs
- Lack of smart objects equivalent (only workaround is placing pre-existing documents).
- Can't paste clipboard contents directly as mask. In PS this is trivial using quick masks and the way they handle masks in general. Brought up in topics as old as 8 years. Agreed with sibling that masking needs love.
- Up until v2 (afaict) there was no way to disable layer auto select for the move tool
- Default zoom when opening documents can't be set to 100%
- Only has binary layer lock option, rather than separate move/edit/etc locking
- Lack of blend/interpolation of vector paths feature (another old and popular requested feature Adobe has had for decades)
- Have experienced random crashes for simple actions (opening menus, preferences, pressing warp transform, dragging layers).
- Vector node editing takes a dive in speed after just a dozen paths in a single layer. Only workaround is using multiple paths instead.
The list goes on. That said Affinity is usable if you don't mind dozens of little things that have been ironed out and included for a long time in PS. And to be fair, it's very fairly priced as such.
I really, really, really want to use the Affinity suite for more stuff, but just the other day when I was trying to knock up a basic drawing of something that exists in real life (a bicycle frame) I found that Designer couldn't draw a line of X length at N angle. It just... didn't have the option.
All I wanted to do was draw a few lines of given lengths and angles and join their ends. Then overlay another set of the same in different colors so I could see how the two groupings compared visually.
But... I couldn't.
That's such a fundamental part of Illustrator that I guess I'll be going back to it.
Quick note on Audition. It's not 100% the same, but Davinci Resolve comes with Fairlight included.
And Davinci Resolve is free.
It's an DAW that is definitely at a professional level and isn't too hard to learn as someone who was used to multitrack editing in Audition. All my VST3 plugins carry over and some of the builtin effects are just as good or better than those in Audition. It's not a light-weight program at all, but comparable to Audition.
I only find myself missing Audition when it comes to repairing original .wav files. But I haven't actually had to do that in many years at this point.
If you haven't tried it, I highly recommend giving it a try.
(I've heard good things about Reaper as a DAW and think I'll try it on my next project.)
Yeah, I love Davinci. Usually when I'm doing sound editing, it's for a pretty different focus, and I've been using Audition since it was Cool Edit Pro in the 90s. I've got a license for Ableton that I'll probably end up switching to.
The Affinity apps being slow to adopt improvements has nothing to do with “enshittification”. They’re not actively doing user-hostile stuff for the sake of their stock price, or anything in that ballpark.
The fact is that different things are “essential” to different users. Whenever they ship a new feature, some users are like “I wanted this!” while many are like “Still not shipping what we’re asking for!”
I do think Affinity should pick up the pace (and they maybe have, a tiny bit, since V2?) and address recurring forum topics more openly. But they’re not “enshittifying” their apps, they’re just not doing what some people wish.
There's also a tradeoff between implementing features and controlling stability that Adobe regularly gets wrong. Show me a professional-- supposedly their target demographic-- that would prefer to have the latest whiz bang sloppy neural network feature or some cockamamie 3D bolt-on before fixing their huge list of shitty bugs.
To be honest it took a long time in Photoshop to have something as good as it is now. Masking is the bane of my existence when I have to do it (but I'm only an amateur, so, not often).
Totally true, but that doesn't change the cost/benefit ratio of actually using the product for professional work. Masking is one of those fundamentally necessary tools for efficiently making professional looking photo composites and even more so for regular graphic design type work. Doing hobby work it would definitely be less of an issue.
> (which is part of the basis of Firefly's success – significantly cleaner legal provenance on their training data).
Yeah... I mean the pre-trained text encoder Firefly uses is filled with copyrighted, unlicensed-for-express-purpose training data.
Firefly is successful in the same sense that DocuSign is, in that it is selling a holistic social experience, but I think maybe don't opine on "legal provenance on their training data" until you have seen the whole pipeline with your own eyes. Sophisticated people sort of know Adobe's claims are bullshit, but what exactly do you expect the community to do, speculate on the exactly zero evidence Adobe has shown of how any of their stuff works?
Anyway, I am pretty sure Adobe is delighted they are not paying $20b for something that is worth way, way less. Like maybe $500m at most.
Meanwhile the people using Figma at many companies are getting laid off. Etsy, Bytedance, Unity Spotify, Salesforce all made massive UX designer cuts.
The real question is, is the thing people are using Figma for even worth $20b? No, no way. Figma users work in the Making Bugs department: they make new buggy things nobody asked for, that aren't lists or spreadsheets but should just be lists and spreadsheets, which makes everything worse. There is nowadays positive ROI to doing less Figmaing. In my opinion there has always been more ROI to doing less Figmaing, to straight up not having those people around and not gathering so many opinions on designing lists from so many stakeholders. That holistic experience is expensive in many ways, and while again you can be successful delivering that, it doesn't mean it makes sense.
Just look at the Spotify app. It's a hot abject mess of absolute garbage UI. They have been diehard Figma users for years. They are the prime example of Figmafication ruining something extremely simple. It's fucking lists! Lists are not worth $20b.
I think this shows that you don't fully understand UI/UX and its importance/role in modern software creation. Moreover, you're conflating your opinions about Spotify with an industry. This would explain what I consider to be an mis assessment of the situation.
As someone close to UX my entire life, Figma is a well positioned and useful app that has no decent substitute on the Adobe side. It has market share and potentially a huge data moat giving them a leg up on the "AI Designer" problem. Now more than ever, it is worth a lot.
That is a pretty cynical take on what UX designers do. The PMs should be dealing with lists and spreadsheets, often they don’t and just tell the designer to just design the product in a mock. It isn’t the way things should go, just like how having programmers decide the UX while they are programming the UI leads to disaster.
What's so bad about the Spotify app? For the most part, it looks like a bunch of lists (not so much spreadsheets) to me...
As someone that is only tangentially in the design space, why do you think collaborative design works so poorly? I have noticed that, in engineering reviews, complex backend designs get scrutiny, but rarely "I feel..", "I prefer..." types of comments, whereas frontend teams get all types of those comments. Is it a matter of too many cooks in the kitchen or something else?
It is a bunch of lists, but the UI is sometimes the lists are scrolling horizontally album covers, sometimes they are popping up from menu buttons, sometimes they go full screen and scroll normally, sometimes they are cut short to 5 elements and you cannot see more, sometimes they continue to 20 elements and you can press to see more, sometimes it's a list with headers that all contain more than a presentable number of elements and you have to tap the header to see more, sometimes it's a mix of horizontal and vertical scrolling sections, sometimes it's squares and sometimes it's rectangles, sometimes your whole list is shrunk because of a popup up top that is going through a list of items they want to notify you about but the popups are shown one session at a time, sometimes they have a full screen popup that is going through that list of items, sometimes you are driving your car or trying to find a song for a baby or trying to do your run and you are being shown many different kinds of lists when a simple, scrolling up and down list with a search box would be preferred, but instead there is so much stuff they want to show you in these lists in so many different shapes that you didn't ask for.
Do you know what the provenance of this morass is, at Spotify? There are many, many Figmas, each a UX designer hoping to reinvent the list in their own way, various product managers competing for attention from the user to introduce a Feature and Increase Engagement for their Key Performance Indicators. The user is better served without any of this stuff.
Man, have you seen the Google Maps and Gmail apps? Google doesn't use Figma either, but the ethos isn't unique to Spotify, it is absolutely toxic. The amount of crap I can accidentally tap on while driving using Google Maps, telling me information I absolutely do not care about, trying to get me to Do Something for Some Product Manager's Product: it's negative ROI.
> why do you think collaborative design works so poorly?
To me, using Figma is a symptom of the incompetent people outnumbering the opinionated and competent. It's not so much that collaborative design works poorly, I'm sure it works very well in Apple's design org. But that's not what the Figma product is. It's a holistic social experience of giving 10x as many people the ability to inscribe their opinions and get credit for participating in a project, as corporate people do, which is very valuable to 10 subscribers as opposed to the 1 person actually doing the work. It's a great business!
It’s always been wild to me how incongruous / inconsistent the experience of using Spotify’s web/ios/android apps have been. It points to an organizational mess rather than a Figma mess, but maybe it also shows that Figma doesn’t address the entire picture yet of addressing org level communication and syncing with prod assets
At least to the specific, valuable role of a UX designer, the biggest problem with Figma is it has no opinions or affordances for improving HCI. The best UX designers have strong HCI opinions and Figma does nothing for them. It is fundamentally a tool to (mis)-style lists. So it is unfortunate it is adopted as much as it is, UX designers should be spending their intellectual energy on more scientific stuff.
> It points to an organizational mess rather than a Figma mess
The two are related. It's like Conway's law.
Figma has some pretty generic opinions about how apps or shit should be made. (https://www.figma.com/blog/working-well/). Like it has this collaborative editing multiplayer thing going on, but you could just ignore that, many bosses effectively use it to tell subordinates exactly what to do without any feedback. Nonetheless they have countless public materials espousing the things it can do and how using those features to the max, especially collaboration, is the Right Way.
However if your way of doing things aligns with its unique value proposition, such as by requiring many people to collaboratively turn simple lists into confusing lists, that is bad.
If you lean into what Figma writes is "Working Well," you will create an app that looks and feels like Spotify. That is what I am saying. It's on Figma.
This isn't a fringe opinion by any means. SAP users get the most success from conforming their business to the way their SAP vertical solution says to do things. Git is also opinionated.
Jira had an opinionated way of working, Agile is a manifesto for how people should do stuff. One task, exactly one assignee is really radical! You can go and read about Jira and Asana saying "no" when people ask to allow multiple assignees. Trello got rid of that, assign as many people to a card or task as you'd like, it's less opinionated, and in my opinion, it's an inherent flaw. And woe be onto people who use Trello, that is telling me right away that they are going to be slower than Jira and Asana users.
> Figma doesn’t address the entire picture yet
The core dynamic they provide software for - and this is just as true of Google Docs and Sharepoint - is that BigCo employees need to touch things and get credit. Every BigCo I've worked with, without fail. There are like 10 people on meetings, and 9 people don't do anything but they use the stuff they touch and the calendar entries as collateral in their performance reviews.
None of the things you've highlighted have ever, as a user, registered with me. What I want from a music app UI is a good search function, playlists, and then it's really down to content, content, content.
For an app like that I just need the UX to be "good enough".
I don't like spotify's UX much either, but I don't blame my hammer for the lopsided chairs I built. Plenty of crappy UIs were designed in Adobe Photoshop before Sketch came around and introduced tooling better suited for UX mockups. It's not the tool it's poor product and experience development you're complaining about.
Wow, I hadn't thought about it through that lens exactly, but you are 100% right. Virtually everyone in large organizations (engineers, PMs, designers) are incentivized to launch things that align with their end-of-year performance goals. Those goals are sometimes at odds with the best overall customer outcome.
I hadn't thought about figma specifically as being a symptom. I'm sure some organizations use it effectively, but I can see how it might spiral out of control to result in an "I'm helping too" sort of ethos, with a poor net outcome.
As a UX writer, the ability of providing feedback or editing UI text before a disastrous piece of Loren Ipsum goes to production is very, very valuable. What's the feedback you think is silly here?
I believe that's what Cory Doctorow calls 'enshittification'. I don't blame UX designers and Figma for it though, and I think this comes from the corporate stakeholders rather than the PMs. Full disclosure, I'm a PM similarly annoyed by the enshittification of once excellent apps. Maybe too many large companies are stuck releasing features on a regular cadence without many interesting user problems to solve.
I never questioned that 20B was high. It's also important to keep in mind that Adobe has failed for years with xD - so the value to them is quite different than it would be to almost any other purchaser
The poster clearly has an axe to grind with Figma and anyone who is involved with UX decisions at most companies. Being mad at Spotify doesn't mean Figma is worth around 1 years of ARR (assuming they met their 2023 growth)
You might be confusing it with something else: Figma is merely for prototyping and designing, it's not the application that is shipped to end users (so it's like blaming the bugs of an app on its photoshop mockup).
Yeah usually the step kids aren't allowed to talk to each other until after the ceremony. In fact it might be illegal for the two companies to do anything regarding the merger until the transaction is concluded. That is when you'll see the HR, Marketing, Sales, and Legal teams have layoffs because typically post-merger those areas don't require duplicate teams.
Anecdotally, but at least three studio's and designers I work with switched to Figma because "it became Adobe". They made the switch because Adobe gave it some sort of "stamp of approval".
From two, I'm certain they'll never go back to XD and/or illustrator. One, I'm not too sure because all their onboarding, libraries and education is around "adobe products".
So, at least from N=3, I dare say that the attempted merger only made the existential problem for Adobe worse.
Curious: would you say that's reflective of Adobe's dev culture as a whole? I heard some similar comments coming out of a (claimed?) Lightroom developer about the motivations for that project...
Also ex-Adobe, worked directly with regulatory compliance in my role there. Adobe is a huge company with a diverse set of dev team cultures, but is a monoculture in regards to legal and regulatory compliance. They do not fuck around. (They're also very serious about security post-2013.)
How is/was Figma so superior to XD exactly? I used to work with XD and briefly also used Figma, but never really liked it (seemed like a crude version of XD in a way), so never understood all the Figma rage. Genuine question, not challenging the view at all. The only pluses I saw for Figma over XD were that it was perhaps easier to collaborate and didn't need installation (because it is web based).
In my view the fact that figma has been built for realtime collab just places it on totally different league. It's like office vs gdocs. It tool Microsoft years (a decade?) To catch-up and accept that most people collab online one way or the other
+1 this. Website design has become an increasingly iterative, collaborative process inside companies. You can't just launch a new website and surprise your team. People need to annotate comments, and constant iteration is the name of the game. Design, solicit feedback, integrate, iterate, repeat.
There's also a lot of work needed up-front on responsive design (as opposed to it being an also-ran or afterthought), and a move away from older typical WordPress-oriented static designs to modern dynamic JAMstack-oriented development methodologies.
Except people in a typical company who might provide quality feedback on the new website, do not want to "browse Figma". They want an actual website to view - dev site or the actual new live site.
> "You can't just launch a new website and surprise your team."
Yes you can. Nothing beats launching a new site to motivate quality feedback. If you expect feedback to arrive soon after launch, you can use this to your advantage.
If you like the sound of crickets, share a link to Figma and ask people for feedback. Designers and developers will respond, others like sales and non-technical staff often won't. Why? Because people prefer the security of their web browser's familiar reference point when assessing a website. As opposed to browsing an app that gives them a special window to a slippery canvas where an impression of the website is found.
That’s why you send them the link to the prototype, which opens in their browser, not the figma link.
That’s like half the point of prototyping software vs graphic design / illustration software!
Non-designers want to see “the site” open in their browser and be able to click through the pages, instead of use some design app—that’s like half the point of figma.
> Adobe has probably captured back both mental and market share from Figma
Unlikely. Based on the google trends [1], Figma sees around 10x more traffic than Firefly, but more importantly it experiences severe weekend drop-offs, meaning people are using it for work. Firefly on the other hand has a constant amount of attention, in line with people playing around with it but not committing to it for serious projects.
Anecdotally I work in UI/UX space as a contractor and I've been given every design in Figma, I hadn't even heard of Firefly until this comment.
Things happen quickly and AI will change things quickly. Figma is nearly 8 years old and Firefly isn't even a year old.
Of course a massive tool is going to be bigger than a very new tool and there is a lot of momentum at companies.
The future is going to be AI/prompt based because it's a 100x speed savings. Who wins that pie is up for debate but Figma as it stands right now is very disruptable.
That is a very silly way of viewing things. AI has already dramatically change logo creation and all sorts of image generation. The impact on design is already being felt and is going to rapidly increase.
Sadly this is how we look at art thanks to AI. "It's just like a real person thought about it and made it intentionally -- but it's nearly free!". No one paying cares if it's just copied from other works and nearly randomly put together at the expense of those who can barely make a living doing it. Why don't we focus more on automating C-suite jobs? That's where a lot of corporate costs come from. Automating a logo design saves you 20k or likey (much) less. Automating a corporate merger saves you millions of dollars and years of time.
I am incredibly happy about this. Otherwise it's like lamenting the invention of the car because it would eliminate all the jobs making buggies and whips.
> No one paying cares if it's just copied from other works
There are probably zero artists alive who didn't learn by copying other works or learning to make art in that style.
It's no different with an AI. An AI is something that learns from others and creates it's own art. There isn't anything illegal about it any more so than you learning to draw and making characters that are similar to Mickey Mouse.
You can trademark a specific thing but not a style.
So at the end of the day, how is it any different than a person doing it other than the fact now a person won't be getting paid?
>I am incredibly happy about this. Otherwise it's like lamenting the invention of the car because it would eliminate all the jobs making buggies and whips.
Between road accidents, air pollution, noise, horrendous cities and suburbs built around car use, and so on, I don't mind lamenting the invetion of the car either...
In general it's pretty naive to celebrate new technologies without considering drawbacks. Especially if they are just stuffed down everyone's throats, whether they want them or not, and even more so if the technology has the potential to eliminate human creativity and cheapen creative output. Even more so if the technology has so much potential for abuse (for government surveillance, automated spam, all the way to far worse cases, so much so that even its creators warn about the potential existential threat).
I guess what's the remove of creativity, or the existential threat, and countless of other negatives, compared to cheap logos, or (assuming it lives up to hype the way you say) killing off graphic design as a profession?
>So at the end of the day, how is it any different than a person doing it other than the fact now a person won't be getting paid?
In the removal of human creativity in the design, and its delegation to an algorithm.
> even more so if the technology has the potential to eliminate human creativity
This is completely overboard. People will always be creative. There is no way in which this stops anyone from being creative but actually allows not artists to be much more creative.
It also allows the same for artists as they can now create in styles they aren't skilled in.
> killing off graphic design as a profession?
It likely will dramatically kill it and free up those people for other types of jobs as they can now be more productive.
Humans will still continue to be creative and draw and paint. That won't change.
No reason to hold society back just to hold on to some jobs
>This is completely overboard. People will always be creative.
Just not in the fields where AI will replace them? Hardly a consolation that "people will always be creative" in e.g. interpretive dancing, if the music in our culture end ups being dominated by AI musak.
And I don't just care for my own music consumption, to be consoled that "some people will still be doing human music". I also care about the role of music in society in general.
I'd say the same for graphic design and illustration. Yeah, some people will be creative in those fields still. But I don't care for a world where 90% of the illustrations and graphic design we see are AI crap.
And I'm not saying it because AI does great illustrations, but because it does crap illustrations cheaper - which for the undiscerning manager will be "good enough", and for spam farms and the like will be a godsend.
>It likely will dramatically kill it and free up those people for other types of jobs as they can now be more productive.
>Humans will still continue to be creative and draw and paint. That won't change.
No, just the ability to make a living out of it, as opposed to getting a drab office or factory job will. That, and being confronted 24/7 by AI "art", would be the changes.
>No reason to hold society back just to hold on to some jobs
Who exactly did sign up for that, and who said this is "forward" and not following it's "holding back"?
Not every BS we invent is a possitive. Nor is "increased technology" == "better".
>> People will always be creative.
> Just not in the fields where AI will replace them? ... if the music in our culture end ups being dominated by AI musak.
Will AI dominate music? Probably. Is there anything that can be done to stop that? No. Even if you outlawed it in the US it won't stop it. It's coming and there is nothing that can be done. If that is a good or bad thing IDK. Most modern music is so awful that to me this doesn't matter anyway.
> but because it does crap illustrations cheaper
The work it outputs is astounding, if it was crap no one would want to use it.
>>Humans will still continue to be creative and draw and paint. That won't change.
>No, just the ability to make a living out of it, as opposed to getting a drab office or factory job will.
AI is coming for factor and office jobs too. But yes this will cut the ability to make money on it.
> Who exactly did sign up for that, and who said this is "forward" and not following it's "holding back"?
It doesn't matter what someone signs up for. That's not how the world works. More efficient processes take over less efficient ones. Paying someone 7k to work on something for 2 weeks is much less efficient than generating a similar image in 2 minutes for 25 cents.
Few people are going to be so enamored with the image that it would matter if it's not quite as good (though it may be better).
> Not every BS we invent is a possitive. Nor is "increased technology" == "better".
Anything that increases efficiency without hurting people is a good thing and it's why we enjoy the quality of living we do now.
I didn't say that all technology is beneficial. I think smart phones have been a disaster for society overall. They have brought a lot of productivity gains but has been a double edged sword.
Same for the internet too. Lots of benefits but now all the nut jobs can congregate and share conspiracy theories and the youth is exposed to a lot of insane stuff a much younger age.
I mean stuff that guys from the 50's never saw in all their life. So yeah technology can definitely be bad. But as far as productivity gains you can't stop it and the freight train is coming. It will bring a higher quality of life in practical terms but who knows what it does to society.
Adobe Firefly is cute but it wont get you any customers from Figma because it's different product for completely different purpose.
Figma has something that Adobe lacks and wanted probably more than Figmas customers. Huge database of essentially all web/ui design done in past 3 years. If Firefly is such a hit wait once FigmaAI will start generating their stuff.
Also it doesn't seem Figma as product was slowed too much - they have recently launched dev mode. One of the biggest features in a while. That put them more ahead of the competition.
>* Startup valuations have fallen. Ignoring regulatory concerns, a new acquisition deal today would be cheaper.
Figma reached $400M in 2022 and on its way to hit $600M this year 2023. For perspective they reached $200M in 2021, and $75M in 2020. That is pretty impressive growth rate.
Straightly on a revenue / market cap, Adobe makes $20B Revenue and values at $270B. That is 13.5x multiple. If we expect Figma to hit $1B mark by 2025, they could be worth $13.5B. i.e Even with today's market, I dont think it is hard to do an IPO with that $13.5B valuation.
And if Adobe were to acquire a listed company with 30% premium, that is $17.5B. Not that far off from $20B. Now that Figma has an extra $1B cash flow, I hope they spend it wisely and continue to do well. So while some may argue this is bad for employees and investors. I dont think it is that bad.
I do hope they consider IPO, as I am slightly worried the window of opportunity may be gone when market turns.
What does Gen AI and Adobe Firefly has to do with Figma? Not even the target group is similar - Figma didn't even try to touch raster/illustration. Building or acquiring a product is not a one-shot try at a popularity contest.
" Adobe can now add collaborative features to Firefly" - Except they won't. If you have been inside old big tech companies you'd know. Hard for me to articulate though. An open acknowledgment of this phenomenon is Satya staying out of OpenAI and still sucking the milk. They can never hope to move the same. Sathya's brilliance is that he decided and quietly said to himself and his board.. "And that's ok". Being humble brought MS back into the race. Adobe should have done the same with Figma.
I see where you're coming from, but there are a few critical points about the Adobe-Figma deal that you got wrong. (I am an ex-Adobe XD employee)
When Adobe announced its plan to acquire Figma in September 2022, the timing was actually at the valley of startup valuations. The market was really down then. Since that time, the market has actually warmed up, not cooled down. This means if Adobe were to negotiate a deal now, it would likely cost them even more than what they agreed upon last year. Contrary to what you said.
Speaking of the negotiation, I think Adobe dropped the ball. They agreed to a whopping 20 billion dollars, which in my view was four times too high given Figma's real valuation at that time, especially considering the low market (I wrote about how I calculate this 5B valuation in https://typogram.co/build/on-adobe-acquiring-figma/). Then, with the deal being halted by regulators, Adobe still had to pay the full breakup fee, within just three days! It's kind of laughable how poor their negotiation strategy was.
About Adobe's product strategy, there's a bit of confusion. Firefly, their new thing, isn't even about UX tooling; it's more focused on creative AI. The real product that is actually relevant here is Adobe XD, which Adobe has just put on maintenance mode (since at least September). a change I noticed on their help page as recently as this September (https://helpx.adobe.com/support/xd.html#troubleshooting). This move is a huge strategic mistake. It's a clear loss of momentum for Adobe in the UX tooling space, making them even less competitive against Figma. Meanwhile, Figma hasn’t missed a beat and continues to surge ahead.
As I've been involved in 3 successive acquisitions of the company I work for, I can tell you that no integration happens at all until the deal is signed. Some plans may have been draws at the top executive level, but that stops here. Everything is done under the legal department supervision and "mitigate risks" is the primary concern. The time before signing the deal is spent mostly dealing with writing the contract between the 2 parties, not integrating.
UX is going to get a shake up from AI. We're already seeing a bit of the new paradigm of on-demand UI/UX with Gemini (and the various me-too demos). Both Figma and Adobe are now vulnerable to disruption in this space. Adobe can use the time to ape Figma while flexing their rather good AI expertise.
I dunno. I work with a lot of designers and there's so much substantive back and forth in terms of clarifying goals, objectives, understanding design choices, and business priorities. I.e., there's a ton of nuance that is uncovered and deconstructed in those conversations. I'm skeptical that AI, at least in its current and foreseeable form, can fill those shoes in any meaningful way.
I liken it to engineers who respond to the threat of AI making them obsolete with "Half my job is clarifying requirements and/or changes in priorities...can Copilot do that?" I think it's the same for UX/UI/Design.
I say that as a very vocal supporter of this latest generation of AI. Both personally and professionally it's upped my game significantly.
Oh don’t get me wrong. You’re 100% right - but this provides a level of disruption that would make the Figma buy out not as competitive as originally imagined. Neither are, of course, in the on-demand UX space, but both will need to be.
Until then AI concept building is coming, this being the idea of freeing the designers from repetition and ground work, while speeding up concept development. (I.e pretty much what copilot is for coding.)
I wonder about the UX created by AI when we start delegating browsing to AI. The major search engines already are looking to lean on AI and we complain about ads enough that it's clear we see browsing as a chore. It's only a matter of time before the web is written in a new bytecode that is meant for AI only. Turtles all the way down...
I think this is what the "Digital Assistant" will become. At the moment we craft some kind of prompt then scour the results which are largely book-like representations of information.
Per your suggestion, it would be logical that alongside our usual text-driven sites we have digital information repositories for AIs to query information rather than trying to glean it from the text-driven webpage. Google Knowledge and Siri Knowledge are both implementations of this idea, but I assume it will grow to something that is more general purpose, so any AI could access it. Then extend that to all manner of services, such as bookings, tickets, shopping, etc. That's where the real turtles are.
I think they probably are. I follow Adobe closely and when the acquisition was announced I was pretty skeptical it would be net good for Adobe in the long-run. The problem wasn't the idea of buying Figma, it was the very rich price being paid. Adobe has a history of not doing a lot of big acquisitions (for it's size and massive cash position). When it does acquire big, Adobe is mostly strategic and a "value shopper", meaning they generally don't pay extremely high prices bid up by frothy auctions. This means Adobe must walk away from a lot of deals we never hear about over price. That's why the Figma deal struck me as so unusual.
In the >year since the deal was announced, it's started to look even less plausible to me. Despite being required to pay a large break-up fee, I suspect, Adobe's management is relieved.
Google was too expensive for Yahoo multiple times. You should look this from a bigger time scale. Sure they were paying a lot of goodwill on the deal. But if, down the road, Figma now starts their trajectory to become an equal to Adobe it sure would have been nice to capture that market all to yourself. Like Nvidia or TSMC.
For the record, I am happy this fell through since it's clear Adobe needs competition to stop it abusing its market position.
I don't know about Adobe's motives, but it sure looks like despite the "we ended the process by mutual agreement" talk, Adobe somehow walked away... otherwise they wouldn't let $1bn out of the window - unless they actually signed something along the lines "we will take responsibility if antitrust throws the deal away" but that would be quite unlikely in such a high profile transaction.
>unless they actually signed something along the lines "we will take responsibility if antitrust throws the deal away" but that would be quite unlikely in such a high profile transaction.
This is absolutely standard in M/A. Part of the risk of accepting an acquisition offer is that you're essentially putting your company's strategic future on hold, and if what you're doing that for falls through for any reason (including regulatory oversight) you want compensation for at least some of the lost time. Specifically, you won't even sign the acquisition contract without such a guarantee; the only real question is price.
Gen AI isn't going to solve a number of the problems a system like Figma are used for today - not in this generation or foreseeable next ones. It may be a shiny new ball to chase but it's not going to make Adobe's problem in the area go away (if they still care).
Having gone through one major acquisition, my experience was that legal put a huge block on any technical integrations and even meetings that might reveal ip until the ink was dried. I'm skeptical they started any kind of collaborative work other than pie-in-the-sky, "wouldn't it be cool if" type meetings with lawyers present.
Correct, till all legal things a cleared upon both companies must act as there were no acquisition. Only specific M&A teams can look deeper and plan for integration.
This leads to a complicated limbo for acquired companies as customers consider the acquisition (buy now before new owner raises the price or hold out as they will cancel the product line?), employees are uncertain (conflicting products on both sides, which will continue, with which direction? Will yesterday's priorities still count tomorrow?) while all are counting their shares and make plans.
Hmph, I was more under the assumption that this was more of a "We're going to get into Adobe's space" and become a competitor to drive up our valuation.
I think this is great. Figma gets a free undiluted infusion of 1B cash. I’m surprised break-up fees aren’t negotiated as an investment instead of a pure cash transfer. Sure it may have impacted company focus, it didn’t impact their revenue that much (1.5x growth vs 2x growth in previous years although that could have also been caused by an adverse economic climate with sales slowing across many companies and industries). The one-time 1B infusion puts their revenue growth quite a bit higher for 2023 than they would have had organically I suspect (4x growth vs best case of 2x). If Figma fixes their sales trajectory in 2024 this bodes extremely well for them. They do need to have a better story about generative AI which is a real thing in their space (e.g. wireframe -> mockup automatic conversion, wireframe construction assistants, etc etc). Will be interesting to see if they build that in-house or via acquisition.
It could be negotiated as an investment, but that only benefits Adobe. Figma wouldn't want it (would you want your biggest competitor to be an investor? they'd have information and leverage you wouldn't want them to have), and it defeats the purpose of a break-up fee (Figma negotiated for it because they didn't want to spend a year of their lives focusing on something that would benefit their competitor if it's all for nothing... Adobe gained a year, has a ton of information, and distracted Figma).
> And in reality, Adobe actually lost progress on XD and Figma has come out with an incredible amount of features this year.
Features and free advertising. Many people knew of Figma, but now everyone knows of Figma. It's the tool that was good enough to scare Adobe into paying 20B and stopped by regulators.
Being an investor doesn’t necessarily entitle you to information/leverage. For example, Apple earlier had plenty of board members from competitors & they would excuse themselves from certain discussions. Similarly, an investment doesn’t guarantee you a board seat. So there’s all sorts of ways to structure things and it’s all a negotiation (e.g. the break up fee could have been a 2B investment instead or something).
Anyway, I agree this turned out phenomenally well for Figma and if I were an employee I’d be really happy about how this all turned out both for Figma and the industry (modulo the delay in cashing out).
Fun fact: Figma's ARR in 2022 was around $400M. That $1B cash infusion could be invested in treasuries with an ARR of ~$50M; this isn't just a liquidity infusion of a billion dollars, it increases their net income by like 10%, basically free of charge.
Plus, if the best that Figma can do with a billion dollars is just invest it in Treasuries (and I'm not saying that's the case), then they should just give it to their shareholders and see if they can get a better return. I only point this out because many people are often confused by the effects of higher interest rates, e.g. "Why did this company lay off all these people when they're still profitable?" Your example highlights the reason why perfectly - if you're a company with a billion dollars of investment and the best profit you can muster is $50 million a year, you're a great business if Treasuries are only paying 1%, but when they're paying 5% you should just basically close up shop as people can get the same return just sticking their money in Treasuries.
I think they're saying net income because they're assuming there wasn't any cost for it. But they do have to pay taxes on it, and the lawyers and executives time spent on trying to make the deal work did cost something. Probably much higher margin work than their core business though.
If only you could repeatedly negotiate and then recover breakup fees as a business..
Point is adding $1B on the balance sheet is definitely a plus. How figma uses it is up to them. But yes, companies don't use all the cash right away and do put some of it into short term investments.
Weird comparison. High growth unicorn revenue and income from a bond.
Probably should just compare $1bn cash to their company valuation and what another round of investment might look like. How much equity did they get to “keep”.
Making it an investment could be tripped up by whatever might trip up a merger. It’s also more difficult to value the investment. (How much equity should they give up? Same valuation as the implied purchase?)
Maybe? I haven’t heard of any regulatory oversight of investments, only mergers. Do you have any links I can read up more on this?
As for valuation, same as valuations a purchase or how they get valued whenever there’s a round of investment (basically you do a sophisticated argument over value using comparables as a way to try to establish a baseline). The equity purchased would equal how much cash gets infused vs the valuation established by the deal.
I mean it’s a massive exit missed for him and he has to now gamble with more fickle public markets in an adverse environment. I’d be bummed too in his shoes because it means I’d have to keep working hard with a continued risk after already taking such a massive risk.
That is wild. It's a good thing as it means Adobe won't ruin Figma like they did with so many great software products before, but just imagine founders, investors and employees, thinking they had a really good exit.. That must hurt, I hope they can stay motivated.
If Adobe can't buy them, what other exit options do they have? Go public?
I think this is my favorite comment of the year. We've all become so inured to the idea, especially in startup land, that the purpose of building a business is just the exit (and hopefully we can get out soon enough with someone else "holding the bag").
As you point out, if Figma can build a growing, profitable business, there is no reason they can't IPO at some point. But still, this shows how even the purpose of an IPO these days is completely opposite from the original intention. I.e. the original intention was to get access to public market funds to grow a business. Now it's usually just a method of "exit" to let retail investors take the lion's share of the risk - one only need to look at 95%+ of the past few years' SPAC deals to see how much of a "pump and dump" the market has become.
> the original intention was to get access to public market funds to grow a business. Now it's usually just a method of "exit" to let retail investors take the lion's share of the risk
Founders and employees would be totally OK with staying private, if the board would ever permit issuing a dividend. That's the "normal" way to have an "exit" (i.e. return profits to shareholders) without a public offering. The purpose of delaying issuing a dividend is to reinvest profits / additional fundraising for growth, but that growth should still result in a dividend in the future, just a larger one if the investment in growth succeeds.
Instead, founders and employees are encouraged to look forward to an IPO precisely because somehow we've come to believe that it's sinful for a company to issue a dividend, as if doing so means giving up on the idea that further growth is possible, when really it's only an acknowledgement of the fact that (a) there's a healthy rate of growth, (b) that healthy rate of growth costs $X, (c) if the company has $Y cash >> $X growth cost, then the healthy thing to do is to issue a dividend (so that shareholders can invest the excess into companies that are currently better recipients), rather than attempting to force growth faster than the company can support.
In the case where a private company has issued options or shares as a part of compensation, another way to pay back employees would be to do a stock buyback program. E.g. if I was an early employee and got options with a $1/share strike price, but the current going rate for new-employee options is $5/share, the company could offer to buy back my options from me at $4 each (or if I'd exercised those options, they could buy the shares back at the full $5 price).
If the general understanding was that the founders (well, board) weren't chasing an acquisition or IPO, this might be a good deal for employees. Of course, if the company is VC-backed (and the founders don't have majority control anymore), the VCs probably wouldn't go for this sort of thing.
I do actually wonder if the current trend of consolidation is driven in part by the standard VC-backed startup formula. Getting acquired is usually a lot easier than going public. Instead of startups fueling long-term competition, they just end up getting gobbled up by larger players most of the time, fueling consolidation and monopolistic behavior.
Even if it's VC backed, there's little reason for the VCs to prevent them doing a non-takeover tender offer in order to allow employees to cash out some (often capped) portion of their vested options and let in a new private shareholder.
And as someone who went through an acquisition exit in a just-shy-of-unicorn startup by a very big dog, yes, everyone's/VC's aversion to IPOs is definitely making it easier for said big dog companies to acquire people who in the past would have been shoe-ins for excellent IPOs.
This is good analysis. As the owner of a business, I often find myself bewildered at the valuation-centric, IPO-gazing startup culture that has developed especially in tech.
Most businesses in technology are nothing like the VC-funded, exit-oriented, and/or hyper-growth culture would have you think. Yet it seems like the glitz of a great IPO or being able to shell out for a $200 million annual corporate event blinds many to the reality of most businesses.
I have wondered how much of this naïveté contributes to the failure rate of technology startups.
I’m on my second business and I intend for it to be my last, though time will tell. The key thing I’ve learned is that hyper-growth, IPOs, and VCs aren’t really good for anyone other than the equity holders. Once you start selling ownership in your business, your customers are no longer your first North Star.
As if the employees would ever see any of that dividend. If startups paid out dividends, VCs would require them to be part of the liquidation preference clause.
IPOs and huge sales far above the liquidation preference is the only way any of the employees would see any of that money.
The purpose of the stock market is that a company can issue its own currency, and then print more of that currency whenever it needs to raise money, which automatically absorbs value from all outstanding investors (i.e. shareholders).
> that the purpose of building a business is just the exit
The majority of those affected negatively by this are not the founders, but the employees. Many of them may have turned down FAANG positions that come with predictable liquid RSUs. Some may have kids (in fact, I know someone at Figma who had a kid in the past year).
Liquidity's not necessarily about opportunistically passing on risk...sometimes it's just about making a competitive living relative to being at a public company.
I don't disagree with what you're saying, at all, but the implication is still basically "And employees want someone else to be a bag holder, too!"
And having been in that position several times, I definitely don't blame them! Employees also have the much tougher constraints that they can't diversify their employment like VCs can diversify their investments.
But still, it's the same dynamic that people want to get rich, and the downstream consequences be damned.
In practice, employee shares in a private company are not an "investment" because they can't be traded in an open market. So no, employees don't want someone else to hold the bag. Employees want a return on their investment, and the most viable way of doing that is through an exit.
Yep, shares are part of the comp package, it's entirely natural that employees want to turn the fruits of their labour into liquid cash at some point.
There is a valid argument that that's a perverse incentive, and that companies should just pay employees better to begin with, or have various longevity/performance-associated bonuses, but if the company isn't profitable, share value is perhaps the best way to represent that.
And on top of that, employee share schemes tend to get very favourable tax treatment. So overall "skin in the game" is no bad thing, the problem is that, in many/most cases, an exit is the only way you're going to get your skin back out of the game.
That seems like an odd way to frame it, imo. "Holding the bag" usually implies something negative, as in someone will be "caught" with something bad. As in the employees are looking to dupe someone into buying what they are selling. But employees, outside of company officers, do not control what information investors get about what they are buying. They can't trick anyone into buying something, although they could theoretically benefit if someone else did trick buyers.
But it's a weird take, because employees are already the ones "holding the bag". Office space, cloud compute, etc. are all sold as COGS. VCs usually have some ability to sell their shares on the private market since they can negotiate to get their capital. Employees are often the only ones which are taking an IOU for their time and effort compared to what they could get elsewhere in the market. Employees are often the lowest class of shares which get paid out last and often reliant on the board to be able to sell on the private market. Yes, the employees decided to take this offer, on good faith, that their management would look after them. They are adults who made a, theoretically, informed decision. But structurally, they are set up to be the ones "holding the bag" if things were to go wrong with an exit.
So of course they want an exit. They literally have no other choice to get a return on their time/effort than for that to happen. (or some odd third thing like private dividends, but again, they have practically no control over that happening)
Sure they have (had) another choice: they could have taken employment at a more stable (possibly public) company, where compensation would have been more predictable.
But they chose to work at a smaller, private company, and accepted private-company equity as part of their compensation, which 9 times out of 10 ends up being worth zero dollars. This idea that they're somehow entitled to a payout is ridiculous.
The situation that the VCs and founders are in is often enviable, but isn't really relevant here. Regular employees need to be financially responsible about accepting jobs with private-company equity comp, and not expect miracles. That's the bottom line.
(I agree that "holding the bag" is a weird way to frame this, though.)
> The situation that the VCs and founders are in is often enviable, but isn't really relevant here.
Respectfully disagree. It's relevant to the extent the parent comment was talking about employees wanting to have someone else "hold the bag".
> Regular employees need to be financially responsible about accepting jobs with private-company equity comp, and not expect miracles.
Agree that it's their responsibility and no one should be starting a kickstarter for them or anything. But that doesn't mean you can't sympathize with them. They are often fairly young people who aren't experts on contract law. It's not unreasonable to say that at least some of them have been exploited with excessive promises. The industry would be a better place if rather than say "they should have known better", we instead said "employers shouldn't exploit people". A precedent of bad behavior shouldn't excuse it.
Employees have much higher risk profiles, even if they hold no shares at all, than”bag holders” because they tend to have 100% of their families financial well being invested in a single company. Virtually no investors have even close to such a big bag holders
And that's the risk/bargain those employees accepted when they took the job at Figma rather than some public company with predictable equity comp.
Look, it sucks, I get that. I was an employee at a successful startup that did end up going public and made me a bunch of money. But I also worked at three other startups that didn't go anywhere and my options/stock ended up being worthless. I also worked at a "boring" public company with equity comp that amounted to a pretty small (but helpful!) quarterly bonus.
I accepted each of those jobs knowing what I was getting into, and knowing that I probably wouldn't see any kind of big payday (the one where I did was life-changing, but if that hadn't happened, I'd still be fine, financially). That's the nature of the beast. It's disappointing when it doesn't work out, but don't play the "some of them have kids" card: people need to plan their finances based on normal, expected outcomes, not on the moonshot.
And regardless, Figma still seems like a great company, with great products. Employees will still likely do really well, whether through a different acquisition or by going public. They'll just have to wait longer.
> The majority of those affected negatively by this are not the founders, but the employees.
Well yes there are typically many more employees than there are founders. Despite this, founders probably missed out on orders of magnitude more money than all of the employees combined.
My favourite comment as well in this world so full of pump and dump shows. The mentality is so intrenched that if you are not one of these pump and dump shows with an exit strategy then you are labelled a lifestyle business instead of a proper "startup".
[Off topic] That is some throwaway account with 60k+ karma and almost 7 years in age.
There are lots of pump and dumps but this one isn't a pump and dump. Figma was founded in 2012, they pretty much took over UI design, did $400M ARR in 2022, great retention, rapid growth, great margins, there is a lots of actual value there and still quite a bit of potential left.
A "proper" startup does indeed include an exit as that's the point where they give a return on investment to their VC's. That is the startup game, use the VC money to accelerate growth, then exit/go public.
Not saying I like it, but once you take the VC money that is the game you play.
My bad. I was just responding to the parent comment and the comment(by showbug) they were replying to in isolation. Figma is a product I liked and was so terribly disappointed with the news of acquisition by adobe.
Regarding startups, I just did google "define: startup" and in the dictionary definition there has no VC and no exit.
We can debate definitions and labels but that's not really relevant to the discussion imo, name it whatever you want, what I'm referring to is a company taking VC money to accelerate growth.
Once you take VC money, like Figma did, your goal is a lucrative exit.
It's high risk, high reward. It's a different way to build a company, and it's not really possible to change that once you take that route.
Doesn't mean you have to do this. I am all for building steady profitable private companies that aim for the long run, I think it's a great way to build great companies, but then you should stay far away from VC money, take a lot less risk, have different compensation strategies etc etc.
For everyone else, notably generally those that actually produced the thing of value, the reward is that if you're VERY VERY LUCKY, you get to keep your job.
Totally agree with you. It feels like nowadays businesses are not really about making a profitable business. But about vanity metrics and get a huge exit ASAP even if the business doesn't really survive without VC injections.
That's the intended outcome of the incentive structure of startup compensation.
Sometimes more than half of your expected compensation at a startup is in equity upside, either from an IPO or acquisition.
If that is to no longer be the expectation, then hiring at startups will be _much_ more challenging because startups cannot generally afford the salaries or benefits that larger companies can offer.
There is nothing wrong with that if that is the type of company you build from the start. VC funded startups generally want to have an exit/IPO to get a return for their investors and give their founders and employees an opportunity to cash out and de-risk. Without an exit or IPO that is a lot harder, especially for employees.
It's about the expectation of everyone involved.
Eventually every company needs to turn a profit, so for the company it might not make that big of a difference or even be better (if they can turn a profit which I assume Figma can), but for the investors and individuals involved it's a very different situation as it means their capital is pretty much stuck. And I bet a $20B exit would be life changing money for a lot of people involved.
I think the issue is that when you buy up your competition there’s nothing stopping you from charging obscene prices in either direction. Charge low to wipe out potential competitors then high when there’s no one left. It very clearly stifles innovation and god knows we don’t regulate monopolies anymore.
Dropping prices below cost to wipe out competitors is predatory pricing which is prohibited under the antitrust laws. It's not always easy to prosecute, but it against the law nevertheless.
What does that mean when it comes to software though? For something like Uber or Instacart that seems pretty straightforward, but for most tech companies I'm not sure how to determine what is predatory. Otherwise aren't all unprofitable companies selling below cost?
Yes, it's a bit of a problem for the field! Like many aspects of antitrust, predatory pricing applies cleanly for an industrial-era economy but as you point out, it's less clear how to translate it into the context of 21st century informational capitalism. A significant amount of legal and economic research in the field is asking these kinds of questions, and the answers are still forthcoming.
Got it, that makes sense that its not well established. I saw from your profile that this is actually something you are studying, which is very cool! I've always wondered what the examples of this (predatory pricing -> drive out competition -> jack up prices) happening in practice are? I know Uber is the ur-example but that feels different from something like pure a saas?
I wonder if as long as there is VC money out there, the viability of this strategy is limited because the moment incumbents (even ones with overwhelming market share) try to jack up prices, they immediately create an opportunity for a startup to undercut them.
I can't think of a good example for a sass product. I'm sure it goes on though and I'm always interested in hearing about examples!
A similar strategy which seems to be quite common these days is to cross-subsidise, which is when a firm sells one product at an artificially low price by using profits it makes from selling another product. If we think about cross-subsidisation, then lots of multi-product sass offerings might fall under our scope. That said, cross-subsidisation has economic benefits, so it's not clear-cut.
As I said, to properly adjust to digital markets I think antitrust will have to identify new patterns of harm and invent new metrics to measure them. Predatory pricing (and similar offences) will always be useful, but they might just not fit well onto these kinds of markets.
It seems like the implicit assumption is that there must be a harm somewhere, we just haven't found it yet. But as a consumer, I'm not sure that is true? Even the Amazon paper seems to admit that there isn't any consumer harm to be found, only harm to smaller competitors' businesses. But that feels like an odd standard to apply since isn't any business's primary purpose to compete with / harm competitors?
> It seems like the implicit assumption is that there must be a harm somewhere, we just haven't found it yet... isn't any business's primary purpose to compete with / harm competitors?
As a general rule, firms want to escape competition in order to make higher profits. There's nothing wrong with that! Indeed, the mechanism by which economic competition generates many of its benefits is that firms innovate in order to escape competition, and for those innovations to be useful for us all. So, where does competition/antitrust law come in? In part, it's about ensuring that firms escape competition in the way that we want. Innovation and competition on the merits is good, underhanded tactics to harm competitors is bad. All competitions need these kind of rules, regardless of whether they're economic, political, sporting, etc. When you have a large population of thousands of firms, you can be sure that some of them will be trying to compete unfairly, hence the assumption that there is some harm that we're yet to find.
> there isn't any consumer harm to be found, only harm to smaller competitors' businesses
We can distinguish between 'static' and 'dynamic' harms. Static harms are those which happen in the short run, such as a cartel agreeing to increase prices or not innovate. These harms are quite concrete and easy to define. Dynamic harms are those which affect the way a market might function in the future. For instance, a harm to innovation may result in people not having access to new products. It's hard to say for sure whether these harms will actually manifest, so we're usually talking about tendencies instead of certainties. It's perfectly reasonable to consider tendencies under the law though (e.g. we might prohibit drink-driving for the same reason). Dynamic harms usually have harm to consumers as a second order effect (e.g. reduced innovation or choice).
The analogy to drunk driving makes sense, but in the context of business is it so important to get ahead of the harms that we have to legislate against pre-harms? Innovation and merit and underhanded tactics are in the eye of the beholder, and it seems like we apply a LOT of preexisting notions of who is a good company and who sucks when we evaluate behaviors. That doesn't feel like a sustainable way to write and enforce laws.
No worries :) You're right that the law shouldn't be arbitrary. Lots of what the law is applied only when a cases passes legal tests to determine if some conduct violates the law. These tests are applied the same way to everybody and are thus impartial. Naturally, there's lots of debate and research into which legal tests we should use, and what their substance is.
Firstly, I didn't spot what paper you mean other than 'related to Amazon', but it's plain to see what can happen to an Amazon. Once it's finished destroying competitor businesses the only way it can get more profit is by continuing to get paid, but ceasing to deliver services. And this is already happening in various ways. I'm sure I'm not the only person, even on Hacker News, to have grudgingly written off an Amazon purchase that simply never was delivered, a cheap and trivial thing that didn't pan out, a 'problem with this order' that the system simply ate.
At the point when you're taking consumer money and not having to do anything, that's harm. You can get away with it because your system is invincible. (I also feel like this about the insurance industry: I think it's set up to not pay, and has better legal representation than the consumer does)
To the extent that a business's primary purpose is to make money, these are successes. To the extent that the primary purpose is to hurt competitors, these are still successes, to the extent they're possible and not just undermining your position: you have to be monopolistic or at least in control to be able to pull that stuff off, but then you're wealthier, giving you more power to hurt competitors.
None of this serves a market economy for providing goods and services. It may exist, but it hurts capitalism as a functioning concept.
> I didn't spot what paper you mean other than 'related to Amazon'
Lina Khan (FTC chair) wrote an influential paper called The Amazon Paradox laying out a new antitrust doctrine which argues that rather than consumer harm, the standard for antitrust should be harm to competitors.
> it's plain to see what can happen to an Amazon... you have to be monopolistic or at least in control to be able to pull that stuff off, but then you're wealthier, giving you more power to hurt competitors.
"Can" happen is not the same as "has" or "will" happen. If they are causing consumer harm, they should be punished. But as far as I can tell, there hasn't really been strong evidence of that yet (your example of a bad delivery experience is not unique to Amazon), and I don't think we should punish pre-crimes. Ultimately, it feels like you and many others are starting from a position of "Amazon et al should not exist" and working backwards to a justification.
The employees are sold shares in the business that they expect to accrue a certain amount of value and with scale get very serious multiples in a liquidity event. With that promise broken the value proposition they originally signed up for no longer holds, some perhaps wasted the best years of their lives here when other options were on the table. If all you want to do is sell goods and services for more than they cost, then open up a bakery.
> The employees are sold shares in the business that they expect to accrue a certain amount of value and with scale get very serious multiples in a liquidity event.
> If all you want to do is sell goods and services for more than they cost, then open up a bakery.
What's the endgame to ever-increasing share value exactly? It's easy to say that a company should never stop growing, but there's no way that's a realistic ideal.
Being downvoted is a great example of ideological thinking on HN because people get mad when you challenge underlying assumptions in their thinking. Remember that when e/acc nerds on twitter pretend they're just rational thinkere or whatever else they claim
I could even prune that down some more. What's wrong with selling goods and services?
Not as a means to the accumulation of enough wealth to cash out and cease selling goods and services, which is what the startup world is trained to do. There's this hyper-focus on financialization, in that nothing means anything beyond the eventual payout, and all things are designed to either succeed or fail at going public and delivering that jackpot.
What about… doing the thing? Making a good, doing a service? What if that thing is in itself a thing to do, a purpose to have? In that case if you are either breaking even and retaining control, or amortizing the cost against something else, then you're pursuing some kind of idea that is not itself 'money'.
Why not that? Why not, directly, a thing that isn't money? I'm given to understand the idea of money is to accumulate the power and resources to do whatever thing your dream envisions. Well, how about cut out the middlemoney and do the thing?
Well, if you're an employee joining because the stated path is to find a successful exit vs build a sustainable business, your comp expectations may have reflected that and been lower than normal.
Stocks of successful companies typically pay dividends. That's what makes them valuable in the first place. Not being able to sell them just means you can't get the value up front as a lump sum.
Owning just one company that does that has a much worse risk profile than owning a little bit of many companies that do that. That's why founders, angel investors and employees want to sell their share of the company to a huge fund and then invest their money back in that fund.
Unfortunately taking investment means you are accountable to their interests, not just your own. This includes the employees whose investment was opportunity cost.
I think they're responding to the question "If Adobe can't buy them, what other exit options do they have? Go public?". It's a bit tongue in cheek, but it's a fair point that we're in a weird place if the idea of founding a company with the goal of being sustainably profitable indefinitely rather than just being acquired by a much larger company is somehow the suboptimal backup plan rather than the main goal.
I doubt we'll see anything in the next 12-18 months, but at some point in 2025-26 I would expect one of the following, in order of likelihood:
1. Microsoft acquisition
2. IPO
3. Salesforce acquisition
The above are also in descending order of valuation. Adobe's $20B was pure pandemic-bubble premium; I doubt MSFT would pay much over half that, Salesforce less still, with an IPO somewhere in the middle.
The more interesting thing to me is actually what Adobe is going to do now, given their near-wind-down of XD. Narayen has almost certainly thought of this, and while it may not exactly be Adobe's typical MO... the opportunity they have now is the old "commoditize your complements." Specifically, to become the biggest corporate sponsor of Penpot.
I generally doubt they will, as it's not really in Adobe's DNA, but they could, and it would be quite an interesting turn of events.
They just got a billion dollars as a breakup fee. A billion dollars could be: $500M to early investors, $250M to the people that built the company, $400k each for anyone employed before the merger announcement, $100k each for anyone hired since, $50M under a pillow for safekeeping.
And that's without needing to give up ownership. Is that not a good 'exit'?
Is there any reason why you think that the billion dollars will "trickle down" to the people who would have enjoyed the benefits of the merger?
Sure, your hypothetical payout sounds good, especially assuming they don't have to give up anything, but it's still hypothetical and I doubt that anything close to what you described is going to happen with that billion dollars.
But the comment was "just imagine founders, investors and employees, thinking they had a really good exit".
If the company cared about "a really good exit" for everyone, it can make that happen with a billion dollars of nearly-free money. If the company doesn't want to make that happen, then why should we expect the merger would have made people any happier? What makes this demotivating?
My understanding (and correct me if I'm wrong) is that the people would have sold their stocks, something that is not very liquid and therefore worth less without an IPO or merger. Now, with no merger, they can't get "real" money for their stocks.
> What makes this demotivating?
Well, maybe yesterday they thought they'd soon have a multimillion dollar payout, and all that is gone. I can see how that can be frustrating to some.
All of their rounds have added up to $333M; most of that is in the past 3-5 years; the early investment rounds were very tiny. $500M on $333M isn't the home run that the investors were looking for, but maybe in today's environment may be the best they can hope for. That said, they may not want to set that precedent.
They wouldn't necessarily have to give up any ownership, so they could keep hoping for a home run to occur later. I feel like that's a pretty good deal.
Figma's press release doesn't mention it, but they've now got an extra $1bn from the merger termination fee to bank, so presumably they could reinvest that into the company and stakeholders.
If it's not Adobe, won't it be someone else? It seems ike it's just a matter of time. I'd think of Figma was looking to stick it out as it's own company for the long-term they wouldn't have entertained Adobe's offer in the first place. Unless of course something during the Adobe deal soured them on the idea of acquisitions all together, to the point where they are no longer looking for an exit.
I agree, this is a big win for Figma customers as they aren't hampered by “even bigger” corporate politics and can be more nimble. I'm not so sure about stockholders at the companies, though. Furthermore, I'm sure they would have liked the boost. I don't care much about their stockholders though, they certainly don't care about me as a user :) .
Is it just me or is every single merger a cause for disappointment and frustration with a government that once broke up monopolies, and every single failed merger a cause for celebration because it means slower 'enshittification' of everything?
I'm still pissed that Morgan Stanley was allowed to buy etrade for some fucking reason and immediately made my entire debit card experience worse, and made absolutely nothing better* for me, the customer.
For what it's worth, it's not just you. I sympathize completely. I watch for things like this affecting my life in the knowledge that every single time such a merger or acquisition happens, it's going to do me some kind of harm for no benefit.
Someone got paid for something, and that's the only purpose that was accomplished, and that someone wasn't (and never will be) me.
Figma's employees are probably devastated and demotivated. Their exit dollar signs just went poof. And they've probably been working on Adobe's roadmap / integration for the past 15 months.
I'm not so sure Figma is in a better spot, even with this new cash in hand.
> and they've probably been working on Adobe's roadmap / integration for the past 15 months.
$1B would be enough to cover that completely, but as a person who has been in companies that have been acquired. (multiple times), that's not really how it works.
I've never worked anywhere that started working on integrating or unifying roadmaps before the contracts were inked and the deal fully ratified.
> I've never worked anywhere that started working on integrating or unifying roadmaps before the contracts were inked and the deal fully ratified.
Because it's not really legal. I've been a similar situation previously, and we were specifically forbidden from working on any integration projects until the deal closed, as in the legal department gave a company-wide presentation on exactly what kind of work was and wasn't allowed (e.g. obviously execs/legal folks could work towards completing the merger, but working on actual engineering integration was expressly forbidden).
They were not devastated or demotivated. The morale is still high from what I heard from the inside. 1B is 5% of the original deal. Without liquidating any equity, they can get 5% of the original payout, which is still large! (I think Dylan Field the CEO might do this, to make the team happy. I can imagine the outside investor being left out on this, since this is not a liquidation event, then even more “free” money for the team)
Also, they are not working on any Adobe roadmap. Other than a few offsite brainstorm session, no real work has been put into integrating with Adobe.
Good point, and I agree, but nevertheless the product itself will probably suffer less in the current situation, and meanwhile Figma gets another bite at the apple down the road, and that might be a MUCH bigger bite and apple later.
What if some of the people behind this very effective and successful tool are there because they're enthusiastic about the work they're doing?
I'd bet cash money that there are at least some for whom the paycheck means they can do their thing and not have to take a day job. These are the sorts of people who create a Figma instead of an enshittification.
The trick is always to get paid something instead of having to get a day job. And I'm sure there are folks who 'have to come into work' and are still doing good and worthy jobs… but man! You figure they are all like that? At Figma, of all places?
Never work in the music business, is all I can say. Or filmmaking. There are entire industries that ride on the ability to wildly underpay talented people just so they can do the things they're excited about doing. Far from 'not promising a huge payout', you can absolutely screw large numbers of people if they get to hear the band play, or get to look through the viewfinder and see the rushes.
I wonder what this does to their valuation? It's not really my area so I don't know, but once a company is willing to buy you at a certain price, you're kinda "worth" that price right?
In all fairness, I thought GitHub got tons of useful features after the acquisition. The stability definitely felt like it suffered, but I kinda just chalked that up to growth and difficulty stabilizing new features. But at least recently its stability seems to have improved (no jinxing...)
Renewed anti-trust is an interesting experiment. I don't what the consequences will be, but I am excited to find out!
If a nothing else, I want people to think "we should try more policy experiments to become wiser" rather than "oh no, effect uncertain, better stick with status quo".
The experiment is quickly varying the policy. Trying to compare n=1 decades apart, in the century that saw the greatest change in human history (so far), is a cool intellectual exercise but not simple-stupid enough to be empirical.
I think on average, more competition is better for consumers than all these massive oligopolies. I doubt it is for stockholders, though, especially those who want to ditch the stock soon.
> Fifteen months into the regulatory review process, Figma and Adobe no longer see a path toward regulatory approval
How in the world did it take fifteen months for regulators to reject this? That’s an absurdly long time to be operating a business in limbo, and I have to assume it’s the regulators dragging their feet since the companies have every incentive to move quickly.
I don’t have an opinion on whether or not the merger should be approved, but regulators need to make up their minds quicker or else you can expect a serious chilling effect on M&A. Can you imagine agreeing to get acquired knowing that it can take up to 2 years to close? Anyone operating a real business would be crazy to sign on for the distraction.
I would argue that the regulators made their point pretty clear early on when the DOJ opened a lawsuit against Adobe. The people most responsible for keeping this in limbo were Adobe’s lawyers.
I'll admit when I'm wrong. The DOJ announced back in February that it was "preparing to sue", but appears to have never officially filed that lawsuit. My mistake.
Nonetheless, I think my point still stands in that the FTC and DOJ made how they felt about the deal pretty clear.
Your comments are straight up factually misrepresenting what happened. There were plenty of news reports early this year that DoJ was preparing to file suit against the merger. I guarantee they were in close contact with Adobe's lawyers, and the normal process here is that Adobe's lawyers/execs come back and say "hold up, let's see if we can make a deal" - that's essentially what happens in the vast majority of lawsuits.
Adobe (and Figma) knew full well this deal wasn't a slam dunk from the beginning.
Threatening a lawsuit is better than nothing but it definitely didn't lead to a quick resolution. At a certain point the answer to whether they can make a deal needs to be "no", not "we'll wait".
You’ve posted this about me twice. I haven’t shown any ire and I think it’s counter to the spirit of hacker news to suggest bad faith in my posts based on my proximity to the topic.
Have you mentioned at all in this thread where you are vociferously and borderline disingenuously defending your employer that you are in fact a figma employee?
Speaking for myself and not for Figma and I wouldn’t want to muddy that fact or imply that I have meaningful non-public information. I don’t think anything I’ve said is either vociferous or disingenuous.
I actually haven’t even said whether or not I agree with the decision or whether or not I think the timeline is reasonable (in the sense of whether the benefits and needs of the timeline justify the cost of it), so that doesn’t seem vociferous to me.
If I was being disingenuous I’d post on a throwaway, not an account that you can trivially connect to my identity.
This deal already has fallen through. What I type here has no possible impact. So idk what the motive here really is.
I have a bunch of different feelings about it of course, but I think what I have said here has been factual and verifiable against public information.
One of the things I’ve always enjoyed about hacker news is that it isn’t purely a peanut gallery and people involved in the companies and technologies we talk about do post here. Attributing bad faith to those people when they do participate seems antithetical to the spirit of this place.
The Broadcom & VMware merger took similarly long and was approved. The duration is completely unacceptable and poison to business. I'm general against mergers and think it's better for consumers and the market if competitors fight to the (metaphorical) death instead, but if we do something, let's do it smoothly and right.
That said, for mergers like that a ton of countries are involved which makes things even more complicated and makes it harder to point out where we need to make things smoother.
> Broadcom & VMware merger took similarly long and was approved. The duration is completely unacceptable and poison to business
The number of such mergers, globally every year, is countable on two hands. They involve the wealth of nations (this one’s similar to Malta’s GDP [1][2]).
It would be unreasonable to permanently staff the regulatory force that would be required to quickly review such deals in any industry.
Do they though? People often compare rich people or companies to a country GDP's, but GDP is based on a single year. The size of a company's bank account is not. A year is pretty arbitrary. In some sense it's like saying the distance between New York and Washington is 200 miles which is not that long, because a Ferrari's top speed is 200 mph.
> it's like saying the distance between New York and Washington is 200 miles which is not that long, because a Ferrari's top speed is 200 mph
It’s saying the distance is within a class negotiable by a Ferrari.
In the GDP to value case, we’re saying that the consideration at hand is comparable to all of the work of a small country for a year. So the care the latter gets is in the same class as the care the former should receive.
I don't understand. If there are several per year, and they're going to take a couple months even at maximum speed, then permanently staffing the regulatory force sounds very reasonable to me! (For the US and EU which are going to weigh in on a big fraction.)
Why would you want to be hiring and firing constantly?
> permanently staffing the regulatory force sounds very reasonable
There are permanent staff. There are also legions of industry experts contracted on a case by case basis. Full staff on standby would mean having, on retainer, experts in every industry where a merger might happen.
There are permanent staff. The issue of time isn't any individual regulator - it's that there's regulators in every country they operate in. And the company is negotiating with them all simultaneously - figuring out what would make the EU say yes, and then taking that to the US and see if that will let them say yes, then going to Japan and making sure they'll say yes, then going to India - and you don't want some of them knowing that everyone else has already said yes, because then they'll hold out to get some last special thing.
These are complicated negotiations, in many complicated jurisdictions.
How quick do you think they should be? For everyone to understand the potential ramifications and consult appropriate industry experts? Let competitors et al file briefs?
Once they get working on it, I would think they could get consultation and competitor briefs back within a month. Then have an initial answer within two months of the announcement, and if that answer is a "no" they'd have a good idea of what would need to be changed.
And I don't see a great reason that negotiations should more than triple that amount of time. If they're not budging, make the "no" final. So two months initial, six months max, would be good numbers.
If the company wants to negotiate with everyone in serial... that's their problem.
> and you don't want some of them knowing that everyone else has already said yes, because then they'll hold out to get some last special thing
Wasn't the thesis of this comment line that government regulators are being slow or being a problem? This supports that idea, I think.
I don't know anything about the Adobe / Figma situation, but "If you just don't question the government they won't make your life so hard" doesn't seem like a very strong response to accusations of overreach.
Your completely correct if you mean the norm since the 80's when antitrust enforcement was abandoned. Her stances completely align with the standing anti-laws and regulations that have existed for over 80 years. The anti-trust bar and big business have been trying to redefine what anti-trust is for the past 30-40 years which is what got us into this mess of giant firms and too big to fail economics.
The perspective that bringing back regulatory action is outside the norm shows just how skewed economic thinking has been in the US.
It's not just "regulatory action" that the FTC under Khan is embarking on - it's outright hostility and refusal to even work with companies she personally doesn't like.
There is a difference between enforcing laws and then just trying to burn down everything you touch. Khan is embarking on the latter quest (see the way she tried to handle the Within Unlimited acquisition.)
It would be different if the FTC actually attempted to engage in good faith. As someone that has seen them in action recently, they do not.
I agree there. We seem to be recovering from a cycle of not caring about monopolies at all, and corporations are now as strong as they were in the late 19th century. I am not surprised that anti-trust is slow and unpredictable today. I hope that we settle into a more predictable regime, no matter which political party is in power.
For historical references, anti-trust filings began against Standard Oil in 1906, and it was broken up in 1911. [0]
The AT&T breakup took four years, from 1978 to 1982. [1]
When the powers that be decide to block a merger, they have to make the case. There's looking at the proposed merger and being able to say "this is bad and may be antitrust," and then there's actually making the case when it comes down to it. That takes time. And you can expect companies like Adobe to fight rather than just saying "oh, you don't like this? OK. We'll withdraw."
The DOJ and other bodies voiced opposition early on. They signaled quickly that they were not in favor of this. The interim between those actions and today were the regulatory bodies actively making cases against it and/or negotiating with Adobe & Figma how they could proceed in a way that the regulatory bodies would want to approve of the deal.
The whole idea that this was "half-assed" in some way is misguided.
Note that I worked for Red Hat while IBM was acquiring it. It took from (IIRC) October 2018 to July 2019 without strong opposition. When you're talking about companies that have that much impact on a market, it takes a while.
And it should -- the larger market doesn't benefit from waking up to find out that a major software supplier has been gobbled up overnight. You can see the pain that VMware employees + customers are going through right now and they've had a lot of time to process the idea.
> it's better for consumers and the market if competitors fight to the (metaphorical) death instead
I never understand why this is the only other option. If you're in a town and open a coffee shop, and someone else opens a coffee shop, if the town is big enough, you can both thrive. You don't have to try to take out the competition. But every big corporation decides it's the only option.
VMW-AVGO was held up by the Chinese and South Korean regulators - it gets geopolitical. sure would be nice if everything was clear and clean for businesses but also it would be nice if I had a pony and magic shoes.
> That’s an absurdly long time to be operating a business in limbo, and I have to assume it’s the regulators dragging their feet since the companies have every incentive to move quickly.
Your understanding here is fundamentally wrong. Regulators in the US said very early on they were against this merger and were going to fight it. So most of what goes on in the meantime is Adobe and Figma (a) seeing if they can give something up to appease regulators (e.g. it's common for regulators to only sign off on a deal if one of the companies sells off some assets) or (b) decide if they're going to fight the regulators in court.
Your idea of the regulators just "dragging their feet" is incorrect
The regulators moved fast. I had detailed conversations with regulators about this merger weeks after it was filed. They moved extremely quickly to signal that they were going to block it.
This is a really inaccurate factual understanding of the sequence of events here: I would urge you to look at the actual timeline of events around the CMA and the DOJ before you keep spreading it.
The idea, proposed by the comment I was responding to, that regulators were just twiddling their thumbs and then only gave a thumbs down to Adobe after 15 months is wrong and completely misunderstands how the regulatory process for merger approval works.
It also said the lawsuit would be filed “in February or March”, but it was never actually filed, so what factual relevance do you think that article really has? Moreover, the DOJ wins less than one in three of these kinds of cases: the US system is an adversarial one where the courts decide so it makes no sense to immediately abandon in the face of DOJ opposition.
What is also true is that the uk finished its phase 1 review (where they decide to send it for further phase 2 review) in June, so 9 months after the deal was announced. Phase 2 leads to changes in about 50% of deals. The phase 2 deadline was late February 2024, about 18 months later.
I don't think any of this is indicative of anyone sitting on their hands or twiddling their thumbs, but it’s clearly a slow process and that uncertainty clearly isn’t good for the parties involved.
That's a little over a month after the announcement was made. That is "very early on" in the 15 month "sequence of events."
Keep in mind, this was the announcements. FTA: "The DOJ has been contacting customers and competitors of Adobe and Figma, as well as Figma’s venture capital investors, in recent weeks, the people said. According to one of the people, the DOJ has already issued civil investigative demands — information requests similar to subpoenas — an unusual move at this early juncture in the probe."
So, we are talking about significant action being taken less than a month after the announcement.
I'll grant you "very early on" is subjective, but I feel any reasonable person would say that this constitutes "very early on".
In short, I would urge you to look at the actual timeline of events around the CMA and the DOJ before you keep spreading an inaccurate factual understanding of the sequence of events here.
It seems wrong/illegal that they can just "decide they're against the merger" and sink it by dragging their feet. Its either legal or not. I haven't dug into the details, but based on this one line alone it sounds like this is abuse of power.
They literally indicated they were against it from early on, but Adobe tried to brute force it through and after careful review they said, “still no.”
Also, it’s not as if Figma has been sitting around all this time waiting for their dear Adobe to close. My understanding is that more than 500 new people have been hired since the deal was announced (total is now like 1300+) and growth continues.
I’m just glad Figma can now move on without having to do some “roadmap alignment exercise” or doing the “gradually falling apart” that so many Adobe acquisitions have done.
The real thought should be why Adobe was willing to pay twice the recent valuation to take Figma out as a competitor, and why only European regulators had a problem with it. They have a tendency to kneecap anyone who’s a substantive threat to their market, and we need viable competition in the space.
It may not have been particularly timely in terms of review, but it was never inconsistent. And we have no idea what kinds of delays were put on the deal, including delays from the Figma and Adobe teams.
Another way to say "decide they're against the merger" is "evaluate the situation and make a timely ruling that they oppose the merger as illegal."
Which is exactly what they were supposed to do. Adobe and Figma tried to argue with the regulators or find a compromise, but couldn't come up with a solution that satisfied all parties.
If you try to extract subtle implications from the phrasing of a commenter on HN, you're likely to jump to the wrong conclusion.
But that's the point: it's not timely. It's a massive millstone to Figma, who now have to figure out what to do with their pixel-perfect UI designer collaboration tool in a world of an and coming Adobe Firefly.
It seems they are saying the merger as is will be illegal, however they give both companies some time to do something that will make the deal work. 15 months is a short time if you have to sell enterprise assets or let competition emerge to show the merger isn’t a danger to the market.
If companies want a fast answer they can ask for one and it will be no.
All said I do not worry about if billion dollar companies are being fairly treated. They have the capital and expertise to protect their own interests and it’s not worth it to preemptively fight on their behalf.
Perhaps I should introduce you to the legal system? Adobe proposes the merger, DoJ says they will sue to stop it. At that point, if the parties can't come to an agreement, it goes to the courts.
I think it's fine to argue our legal system is too slow, but again, this idea that regulators are just "dragging their feet" to slow things down is fundamentally incorrect. Regulators announced quite quickly they would fight this deal.
Welcome to the world of antitrust, where almost everything is in a grey area and vibes-based. Never seen anyone who studied this area (and who didn't already work for a related Federal agency) who didn't conclude that this was a big mess, no matter their opinions on how it should work.
we have no idea when they filed what papers where ... and when regulators answered and what, and then how the companies reacted, and when, and ...
on the announcement, Sep 15, Adobe stock fell by 17%. the FTC opened some investigation on Nov 2. some EU thing started its process in February (based on filings by refering countries, and of course we have no idea of the details of those country-level processes)
so, all in all, it's likely that relevant authorities quite soon signaled that Adobe-Figma is facing an uphill battle, and now, as they announced, they backed down.
we have no idea of the negotiations, who was fast or not, who recommended what, asked for what guarantees, and so on.
> How in the world did it take fifteen months for regulators to reject this?
They didn't. They started seriously investigating it less than a month after the announcement and publicly shared this information just over a month later.
> but regulators need to make up their minds quicker
They did. Adobe and Figma were trying to appease regulators by figuring out if there was a way to handle their concerns. They aren't willing to divest themselves enough from their existing portfolio or offer concessions.
If you want them to make up their minds quicker, then the default answer should be No. With weeks not even being an acceptable time frame for action, anything other than No is harmful.
It is not a simple yes/no response from the regulators. First, they will request additional information. That will take some time to prepare. Then they would offer some changes to the proposal. I.e. we cannot approve this deal until some additional requirements are met. Then parties involved evaluate these requirements and counter. At some point business will decide that there are too many constraints and abandon the deal.
The DOJ already signaled it wanted to block this on antitrust grounds almost a year ago. If "regulators" had immediately rejected the deal, there'd be a similar "oh, this will have a chilling effect" complaint because they slapped it down without adequate due diligence.
This is one M&A deal out of many. The vast majority -- even some that shouldn't be approved IMO -- sail through or squeak through due to persistence. I just can't find it within myself to feel bad for Adobe in this, since the most likely outcome was to just solidify Adobe's grip on the market and reduce competition. I know quite a few people who use Figma who were absolutely dreading this merger.
Not a good thing when it's taken to absurd lengths. See Lina Khan's attempt to block the Within Unlimited acquisition. The problem with the current administration is that there's no good-faith path forwards to get anything done. If you have worked with the FTC recently you'd understand what a hostile clusterfuck it is.
you should really link to something about it that your specifying. Cause it really looks simiar to blocking Microsoft from buying Activision.. A company that makes the hardware trying to buy up all the independant software vendors and have them only make software for their hardware is getting really, really old. I think the only people that would complain are the ones who would directly benefit.
I want it to be taken to absurd lengths. If and/or when the negative ramifications of discouraging mergers/acquisitions even begin to approach the damage that encouraging them has done to our economy and society, and only then, we can consider slowly reducing the pressure against.
Seems like regulators didn’t reject it, but tarpitted it?
And with market conditions having changed so much in 15 months, this could just as easily be buyer/sellers remorse before the deal actually closes. For a 15+ month closing, it wouldn’t be the first time!
Actually completing mergers/buyouts takes years anyway.
> How in the world did it take fifteen months for regulators to reject this?
Presumably regulators in a few countries were interested, each with their own processes, and presumably there's some fairly significant back and forth between the regulators and adobe/figma as adobe/figma tried to convince the regulators that the deal should go ahead.
15 months seems very believable for a deal of this size.
> How in the world did it take fifteen months for regulators to reject this?
I agree with your overall point that the current regulatory process related to anti-trust M&A very much needs to be improved. While the delay may be the proximate cause, focusing on that risks failing to address the fundamental root cause of the problem, which is A) lack of clarity in regulatory policies and the underlying laws authorizing them, and B) their inconsistent application across different industry contexts and between different international jurisdictions.
The lack of clarity can be improved by regulators adopting clearer public guidelines about how they will interpret and apply the rules (and then establish credibility by actually sticking with those guidelines over time). Improving consistency across jurisdictions is more challenging but still possible if regulators in the largest domains (US and EU) collaborate to harmonize their policies (as is done in many other regulatory contexts).
Recently, Lina Khan in the US has made this problem far worse by aggressively pursuing quite extreme interpretations of anti-trust law, and worse, doing so without establishing any corresponding framework or justification. As a result, this bungling has caused her agency to lose several high-profile cases. So far, much of this bungling seems to be "just for show" (ie political posturing) since it's not working.
Unfortunately, it also has the effect of nerfing the market for entrepreneurial exits via acquisition. While it's true that acquisitions large enough to attract anti-trust scrutiny are outliers, much of the money invested in earlier stage startups (which drives most new job creation in the US), is justified by average returns substantially propped up by a few such >100x acquisitions. Half the extreme high-end outliers being lopped off by regulatory uncertainty around large acquisitions is one reason capital for new business creation and growth is getting scarcer and more expensive. The point being, this matters to our industry and jobs.
I was referring not to just valley tech startups but investing in new small businesses overall. Per the U.S. Gov Small Business Administration:
> "Despite the jobs lost during the recession, large businesses generated 6.7 million net new jobs over the past 25 years. During the same period, small businesses generated 12.9 million net new jobs, meaning small businesses have accounted for 66 percent of employment growth over the last 25 years."
> "18% of small businesses fail within their first year, while 50% fail after five years and approximately 65% by their tenth year in business. This information is as per the Bureau of Labor Statistics."
Combined with the long-term (25-year) data I cited further above, this indicates the majority of small businesses are started up recently. The pool of small companies is constantly turning over and refilling with new startups - of which the vast majority die in less than ten years and a very few grow to be large companies (thus no longer counted in the pool). By definition, the shape of the small business pool must be a very slender, very long curve when graphed by employee count.
I think the tech community has perhaps a different set of connotations associated with the term "startup" than the non-tech, non-valley populace. The vast majority of startups (ie small companies started in the past five years) aren't technology companies and aren't fast growth. Yet there are so many of them, they comprise two-thirds of new job creation. Even better, many of these newly created jobs are entry-level, don't require advanced degrees or rare skills and don't require relocation to costly and crowded urban centers.
I think this misconception of small businesses is pretty common in the high tech community. Before I was a tech entrepreneur in the valley, I started out as a non-tech entrepreneur far from the valley. Then I was a tech entrepreneur far from the valley, in a mid-western U.S. state. Despite being in the fairly large state capital, the largest regional newspaper wrote a story about "Tech Companies Here in the Capitol", citing my software startup and the local Radio Shack store as the only two :-). Yet the local Chamber of Commerce, Small Business Administration and entrepreneurship clubs were overflowing with pre-launch and just launched new startups ranging from a new kind of farm animal feed distributor to sandwich shops to (non-franchise) local restaurants to karate studios. Together these small businesses employed thousands of people in a city whose population could probably all fit within a few square blocks of NYC.
I also want to point out, the organic, diverse, self-renewing nature of small business reality outside the tech, valley, urban bubbles is incredibly encouraging. As much as I love tech (and how rewarding it's been for me personally), I'm thankful the fickle, boom/bust, incestuous nature of high-tech startups is statistically the rare exception of new companies being started which drive new job creation.
Well, I'd just call those new businesses, but dictionaries agree with you. I was using Paul Graham's definition of "startup", which is something more specific: http://paulgraham.com/growth.html. That's about growth, not tech, so feed distributors could qualify.
Keep in mind that you are reading a corporate press release/propaganda piece, not journalism. It is going to be inherently one sided and will not tell the whole truth. Never take these kinds of statements at face value.
The current administration has made it very clear they will block nearly all attempts at mergers and if they can't block it will drag the process out as long as possible to make it as unappealing as possible.
I'm going to guess regulators are plenty busy with a long list of things to do. When the acquisition gets announced it gets added to the list and they make their way to it.
I really doubt regulators are dragging their feet. They are most likely understaffed and overworked. Things this big should take time for all sides.
“On December 17, 2023, the Company and Figma mutually agreed to terminate the Merger Agreement and entered into a mutual termination agreement effective as of such date (the “Termination Agreement”). The mutual termination of the Merger Agreement was approved by the Company’s and Figma’s respective Boards of Directors. In accordance with the terms of the Termination Agreement, the Company will make a cash payment to Figma in the previously agreed amount of one billion dollars ($1,000,000,000) (the “Termination Fee”) within three business days following the date thereof. The Termination Fee is the sole and exclusive remedy under the Merger Agreement, and the Company and Figma have each waived any and all other claims in connection with the Merger Agreement and the transactions contemplated thereby.”
> the Company will make a cash payment to Figma in the previously agreed amount of one billion dollars ($1,000,000,000) (the “Termination Fee”) within three business days following the date thereof
Three business days to wire $1b, the week before Christmas. That has to be a fun phone call with the bank.
Here is how it is going to go, Adobe will tell their accountant to wire the money, the accountant will get the details from Figma. Adobe accountant will call their bank or maybe even go in to the branch. And tell them they are sending X to X. It will take a few stamps and confirmation and it will be done in about 5 mins. Some computer somewhere will go - 1 billion Adobe and + 1 billion Figma.
On the bank side nothing really happens unless Figma decides it wants to withdrawal all 1 billion. Then X bank will owe Y bank money, that loan will be balanced at some point. It will probably take a few days so Figma will be told it needs a few days.
Even if Figma decides to pay all their employees a share, that's also just - 50k Figma, + 50k Bob Smith in a computer somewhere.
There is no actual exchange of money until stuff is balanced at some point or you withdrawal. It's all just 1s and 0s in a record.
The problem here is not doing the transfer, but holding 1 cool B in cash being ready to transfer. Even if it is in liquid assets, 3 days to liquidate 1B is quite short.
I appreciate the insight from someone who has expertise in this area, but I think it's worth thinking about whether there are more constructive ways of phrasing this. Almost nobody who reads your comment will ever be in a position to "wire up to 999 million" at any point in their life, easily with just a mobile device or otherwise.
Sending a billion dollars is not the same thing as having a billion liquid dollars in one place to send. It is the difference between Accounts Payable and the Finance department of a company
> in the USA, the backoffice won't approve it without one-on-one interaction
For a business like Adobe, yes. They’ll probably want a verification call. Plenty of funds, however, handle similarly-sized transactions with completely electronic verifications.
You’d have to be a _very_ large payroll to have leverage over adp.
For many payroll operations between big employers and payroll processors it’s an inner bank ledger transfer as the big payroll processors have good reason to maintain accounts at many banks.
Vice versa is also true. If you have a very large payroll your treasury team is not put out by having accounts at lots of banks.
1 billi and they didn’t even have to give up any equity. I’m not a fan of the regulators screwing this deal the way they have (primarily due to the precedent they’re setting), but in the grand scheme of things, methinks this is actually a great outcome for Figma. 15 months of hassle with $1B cash at the end, to be delivered within 3 business days.
It’s a common term in these sorts of acquisition attempts now. AT&T paid T-mobile $3 billion.
A failed acquisition attempt can be very damaging to the company being acquired. You can lose employees who don’t want to work at the new entity that never happened. It can change your product roadmap (are you really going to invest in directions the acquirer won’t want after completion?) and make your executive team start job hunting. Etc.
So it’s not unreasonable or uncommon for the acquirer to agree to such a provision. And the board was presumably highly involved in a large offer like that.
If the value of Figma has fallen by more than $1B since they signed the deal (which I think it probably has) then passing up $1B to get out of the deal is not nuts, especially considering the regulatory opposition. Though it depends more on whether the value of Figma to Adobe and less the agreed acquisition cost has fallen below -$1B, since Adobe was presumably agreeing on a deal that they thought gave them significant surplus.
Nothing that is public that I've seen says this is true. You can get a bridge loan for $1b backed by whatever iliquid assets you have from any major bank, and then it's up to you how quickly you want to unwind other things. The loan might even be interest free if the bank wants to keep Adobe's business for other M&A activities.
I used the term bridge loan as a sort of umbrella term that might be technically not the best as my training isn't in finance and I know some of this stuff from exposure by proximity. What I'm referring to sometimes is also called a revolving line of credit, the most famous case was Enron's revolvers for example. The point is big banks will normally allow companies to take out large short term loans for this type of thing, usually having large amounts pre-approved.
It probably is in a bond or treasury note. The "within 3 days" probably covers the selling of the bond/treasury, waiting for the funds to clear, and then sending it over to Figma's account.
I'm sure a company as big as Adobe has multiple billions in capacity on revolving lines of credit at attractive rates from a syndicate of top banks. They do have cash and short term investments of close to $8b to borrow against!
On the one hand, as a designer who uses Figma every day, this is great news. On the other hand, the fact that Dylan Field was willing to do it in the first place felt like a bit of a heel turn. Yeah, it's a lot of money, I know. Maybe I'm alone in this, but I've already shifted my expectations for the long term direction of the product from "they can do no wrong" to "when is the other shoe going to drop?"
I think this is at the core of the rot of American society. The thinking that a CEO "owes" the marketing of their company so as to cash it in or even turn profits is, in my opinion, is a mark of the biggest moral ineptitude of the western world's thinking. Yes, I realize this is the 'norm', but it clashes with deep values of the people who aren't shareholders, but are no doubt vested in the product the company produces, mainly the customers. It ignores their needs completely because they don't own stock.
"We sold the company, and the new owners bastardized it by slapping their logo on it by eliminating the free tier" is almost commonplace now in business dogma, and yes, most people think it is the kind of strategy 'owed' to shareholders, but this one-sided thinking ignores the better interest of users who the company has built their business on the backs of, and who will now be bait-and-switched into a subscription model, never mind the needs that drove them to the product in the first place. Yes, this is how capitalism works. What I'm saying is that capitalism, as a model, is flawed from a moralistically balanced point of view. It's a never-ending race to the bottom by optimizing for greed until every drop of monetization is squeezed out and every person is left without. Should the owner's employees make money, I mean after all they do the work? Yes, but who takes into account the inestimable value added by the initial users who's interaction with the product shaped it into what it is today?
"it clashes with deep values of the people who aren't shareholders, but are no doubt vested in the product the company produces, mainly the customers. It ignores their needs completely because they don't own stock."
Presumably companies generate value for shareholders by selling things to customers and generating profits, which makes customers the ultimate beneficiaries. What companies are you thinking of that ignores their customers' needs completely and are still quite successful and valuable for shareholders?
I’m about as anti-consolidation as someone can be, but I’m not about to blame a CEO for selling when you’re offered a price way above any realistic valuation. I put this at the feet of Adobe and regulators, not the guy taking the biggest payday opportunity possible for his employees and shareholders.
While I do see this as great news (for all the reasons others have outlined), I wonder how this will impact VC in the future; If the current goal is for companies to get VC money, burn that cash for years and years and years, and then have a huge IPO or acquisition (that makes it all worth it), it would seem regulatory issues would start to scare away investment.
I think the main effect will be to push VC funded companies more towards sustainable growth, with less emphasis on growth at all costs. This strikes me as a good thing overall. That probably won't harm the fundraising prospects for solid businesses much if at all.
Highly speculative or hyped companies will probably have a somewhat more difficult time attracting VC investors, but so many of those turn out to be frauds or vaporware that I'm not too concerned. Companies like the ones that benefitted from the SPAC boom a couple years ago. Most of those ended up being highly overvalued companies that lost money for the post-VC investors.
Eh, this is probably true. It was fun in the days when it was all about getting acquired by Google or Facebook, but I guess this spurred a lot of unsustainable businesses. If you were making revenue you were seen as dumb. "Lol, why would you charge money? Doesn't you know how to build a business?"
A couple agencies having certainly been flexing like that
The chilling effect may be more around the design tools market specifically
The case of Adobe is a bit different than anti-monopoly movements against other $T because the lack of 'serious' $100B+ market cap competitors here. So while say an adtech can have multiple big buyers in the $100B+ club, it's unlikely to see Autodesk, Corel, Canva, etc to do a $20B purchase here. AFAICT only Microsoft would sensibly be able to put its hat in the ring at high levels, made even more sane b/c the GitHub purchase, but even that was at $7.5B. So if there is no such thing as a decacorn in design tools b/c Adobe can't do big M&A, then VCs are only looking at exits at $1B, and funding + valuations get less frothy vs other markets.
All that starts mattering around Series A or Series B stage, as they look at how much $ they can exit at, and how big of a follow-on round the company can get with the same constraints. If a VC has a fund of > $50M, a pitch that cannot exit at above $B may break their portfolio design.
If they just wanted to cash out, they could still IPO or be acquired by almost literally any other company in the country. Adobe might be the only one who cause regulatory issues.
I'd rather have "regulatory issues" in a case like this even if it does slow down VC money
I’d hope this somehow influences regulators too. 15+ months of uncertainty and it’s the tiny UK market that tanks things. The lack of regulatory certainty will push for more lobbying and influence peddling which I think is net worse for the global industry.
It's not really the UK regulator's fault though, if anything they were the best as they gave their response first (a provisional no). The EU was still investigating and the US DOJ was also preparing similar investigations. The CMA also provided Adobe with a list of changes they could make in order for the application to be approved, so it's not even like they were unwilling to entertain it.
As we saw with the Blizzard acquisition the UK CMA will bend to international pressure if it's the only one holding out.
> the Blizzard acquisition the UK CMA will bend to international pressure if it's the only one holding out.
I read that MS agreed to remedial changes for the purchase to be approved by CMA, but those changes were the same ones that CMA originally asked for at the start that MS refused. So CMA got what it wanted but it's still seen as a MS as eventual winner and CMA loser.
> it would seem regulatory issues would start to scare away investment
In certain narrow cases maybe, where you really want the monopoly-holder to buy the startup. But overall this is better for VCs because competition breeds both investment and acquisition opportunities. In most cases 3 big competitors seeking to acquire your startup is better than 1 big monopoly seeking to acquire your startup.
I think the door is still open for Microsoft, Google, Apple or Salesforce to make a play. Figma was rumored to have approached Microsoft during their talks with Adobe but Microsoft declined to put in an offer as they were working through the Activision Blizzard acquisition at the time. Either one could probably get a "deal" at a $10-$15b valuation.
100% agree. I thought similarly with Plaid and Visa. It feels like it will stifle competition because it's now harder to get funding. Back when Facebook and Google were making so many acquisitions, it seemed like money was just flowing. Bad for competition. Good for incumbents.
Best outcome for consumers. I really hope the experience was expensive enough for Adobe (due diligence, lawyer fees, "lobbying" 3-4 different governments, $1B break-up fee) that the entire big tech M&A market takes a hit.
Great news. Adobe is already the kind of company that should be forcefully closed down for scamming people with their subscription practices.
The sign up, and cancelling process of their various services are so "dark design" it's criminal. I've had to wait in a chat window for days to have a service cancelled after signing up for something i clearly didn't sign up for, a yearly payment instead of a monthly with no warning for a very expensive suit, and many are in the same boat almost bankrupting entire small companies.
More and more places does this and they should all banned and their CEO's put in jail because they prey on vulnerable people, steal millions and waste everyone else's time.
I'm not kidding one bit with the jail thing, lines have been crossed so much it's getting ridiculous now, i don't care how rich or powerful you are. This is why we need strict regulation and serious consequences for CEO's and shareholders of straight up criminal companies.
I see a lot of people in the thread thinking this is a good thing, it's not.
First of all the reason for the UK not allowing the merger is completely absurd and based on a false premise which is most likely based on not understanding the field they are regulating.
Regulation based on speculation about the future means that regulators can simply just make up reasons. Thats akin to when kings could just make up reason for their ruling. We were supposed to move away from that so that rule of law was the base.
Second, the fact that the UK can kill a deal like this is wildly problematic and unfortunately not the first time. They did the same with Facebook and Giphy where it made no sense either. It's immature and they obviously aren't understanding the field they regulate. Talk about undermining the growth of society.
Lastly I see a lot of people saying exits is not a good thing and shouldn't be the purpose. But the fact is that a healthy M&A culture is good for startups as that will encourage investors. Once you start killing the ability for exits by introducing such unquantifiable into the settings you are making investors more nervous of spending their money and much more risk averse.
You're surely entitled to your opinion. It doesn't mean you're right.
I tend to agree the CMA is pushing some esoteric arguments in their rulings, but I don't thinks deal is at all like Facebook / Giphy.
"A healthy M&A culture" isn't undone by a single deal being pulled, especially when that deal is clearly an anti-competitive one.
Also if anything, Adobe overpaid for Figma given it was one of the last deals before Tech stocks properly melted, so even Adobe shareholders can be happy with this outcome
You are right its not like Facbook/Giphy, it's worse and we aren't talking about a single deal being pulled but multiple.
It's not clearly anti-competitive in fact if anything in the B2B space M&A done by bigger companies is where products go to die and opens up for a whole new set of competitors.
You don't measure this on the size of the company but on market share. By that definition of course it should be allowed. There are many powerful competitors in this space Canva being just one of them.
Depending on how exactly you segment the market, Adobe's market share is somewhere between 33% and 75%. The runner-up is in the single digits.
In my view, the case for blocking this acquisition couldn't be any clearer. If Adobe wants to grow in this space, it should make better software or cut prices or both.
This is a well rehearsed segmentation game that market leaders like to play until even the biggest companies on earth no longer appear to be dominant in any specific segment.
I don't buy it. It's not just about indvidual verticals in their current state. For these conglomerates it's always about buying rising competitors out of the market before they can become a strategic threat.
Figma could have expanded beyond any particular vertical they are currently in. Figma could have been bought buy a stronger competitor from outside the graphics space (such as Microsoft). Adobe didn't want to let that happen.
We should block all of these defensive acquisitions. And we should block all acquisitions that help an already big conglomerate capture the next neighboring vertical without doing any actual engineering work (except for small acqui-hires perhaps)
>You don't have to buy it. That's the reality. [...] You guys are simply factually wrong.
It's the argument and the conclusion that I don't buy, not your (and Adobe's) carefully selected set of facts.
Here's a very big player in the graphics software market that tried to buy a potential strategic threat out of the market. This is the fact that matters in my view.
I wouldn't let the top 5 in any market buy another company that is or could soon become a significant competitor in that or a closely related market.
Again that's not how antitrust regulation works. I am not sure why you keep repeating the same mistake.
Figma have 3 million users. In what world would a purchase of them be dominating Canva with 135 million monthly users and with 16 million paying subscribers.
You are confusing Adobe being a big company with why they are a big company.
Apparently anti-trust regulators disagree. They put up enough of a fight to at least give Adobe an excuse for letting the deal fall through.
>You are confusing Adobe being a big company with why they are a big company.
I have heard your argument and I understand what you are saying. Unfortunately, you're not responding to my counter arguments, which makes this not a very interesting debate.
No they don't and both the US and EU had approved it. The UK is using a novel theory that have no basis in reality where they are claiming to be able to predict the future.
You don't have a counter argument, you just have your own opinion on how it should be done. Antitrust is not being done that way you seem to think it's not the reason why the UK didn't allow it.
Canva is nowhere near Adobe. Adobe is the dominant software seller for creatives. Figma and Canva are the two only notable competitors to have emerged in the past 10 years or so. Doing away with one of them isn't better for society.
Why did Figma want to sell itself to Adobe in the first place?
Even though their revenue is only about $400MM, As far as I know, they make a very healthy profit (operating margin of ~90%), and they’ve also been expanding through organic and acquisition means (e.g. they bought Diagram).
Is it because they see the ability to grow the company’s products even more given the Adobe footprint?
I think they saw 20 billion reasons to sell to Adobe. Their last valuation was $10billion in 2021 so a 2x on that a year later would be hard for anyone to pass up. They can pretend they went with Adobe for aspirational aims to make the product better, but at the end of the day it was about the very juicy multiple Adobe was offering.
What makes you think they have an operating margin of 90%? The blog post says in the last 15 months alone they've hired 500 additional employees ("figmates"), there's no way their margin is anywhere close to what you cite.
If countries want to heavily regulate business deals, I think the quid pro quo should be a tax system that provides a good way for founders and early employees to take some money off the table without having to sell to big companies like Adobe, by going public, or having half of any gain wiped out in taxes. Why shouldn't those folks able to pick up a lump sum for their work and the risk they took? They may as well have got a job at a big enterprise if an annual paycheck was all that mattered, and then you end up with fewer new companies and entrepreneurial risk-taking.
Not no taxes, just something that maintains a good reward/risk balance and an invcentive for people to be founders or early employees of these types of companies. The UK used to have so-called Entrepreneur's Relief, for example. Some countries have low capital gains tax regimes. It's not an uncommon thing.
(Sure, a country could gleefully milk everyone to the max, but then they can't complain when they lack for entrepreneurship.)
It just makes no sense and has never been necessary to incentivize Americans to take business risk. I don't understand why the entrepreneur, who is presumably getting a big exit in this scenario, deserves additional tax relief on top of that windfall. That sounds like another way for the rich to get even richer.
If I was Figma, and I had to choose, I would go with Adobe. Adobe would have made Figma a core strategic product and would have made them much more relevant in a space that they deeply care about. Microsoft would never care that much about Figma, because the design/UX space isn't core to Microsoft. Also, Figma is too small for Microsoft to make it a centrepiece of any of their strategic initiatives.
>The point is the value of not having Figma sell to its largest competitor.
Adobe does not compete with Microsoft in any meaningful way. There is some overlap in some products here or there, but it's not meaningful competition.
Microsoft seems to be pretty hands off when it comes to acquisitions. Github/LinkedIn were both a acquired and each have grown a lot since the acquisition.
It's rumored Dylan Field (CEO of Figma) approached Microsoft [1] around the same time they were talking to Adobe but Microsoft declined to make a deal at the time (seemingly due to Microsoft's then in-process $69billion acquisition of Activision Blizzard).
I don't use Figma or Adobe tools so I don't really know or care about this acquisition. It seems like public opinion is split - some saw this as a good thing and others as a bad thing for Figma.
Who I really feel bad for is some of the early employees that just saw life-changing amounts of money vanish in the blink of an eye.
I can't imagine how gutted they must be headed into the Holidays. Obviously that value isn't truly gone - but it certainly changes things, and I am sure many of them did not plan for this.
> The decision by Adobe and Figma to spike their $20 billion merger on Monday dented the imminent dream of startup riches for Figma investors and employees. But Figma’s business is still growing quicker than that of most mature startups, potentially putting it in position for an initial public offering in 2025 or later. And the billion-dollar breakup fee from Adobe will strengthen Figma’s already robust balance sheet.
> The design software firm expects to finish this year with over $600 million in annual recurring revenue, an increase of more than 40% over the past year, people familiar with the matter said. The San Francisco–based company has also been generating cash for a few years, the people said. That financial picture likely makes it one of the best-performing late-stage private tech companies, particularly in a year when many firms have struggled with sagging growth rates as corporate clients have cut their software spending.
The core of what Adobe offers is centered around a deteriorating print paradigm with digital capabilities tacked-on. Figma is of the Web whole cloth. They may look similar and do similar things, but there's a reason they made a move. Adobe has done a few cool things in the interim, but nothing that truly compensates for the jank eroding their cloud bundle, which is mostly smoke and mirrors (and if that's your thing, davinci or blender are probably what you're reaching for).
This is sad for the overall M&A market. Companies are going to be scared to enter into these agreements because it’s just a waste of time and money when it inevitably ends up like this.
The value accrues in the form of incentivizing new products and companies to enter the market. The two options these founders (and their investors) have to capitalize on building a good company is to either go public or get acquired.
Severely limiting the ability to be acquired reduces the incentives for new founders as well as investors in new companies if the only realistic path is waiting for them to go public. Especially since being acquired doesn't require you to be in nearly as good a financial position in terms of profit as going public does.
I can't think of a single time that was overall beneficial for the US in the last decade. A bunch of time sucking sites I don't consider life improving. It won't stop small business and it'll stop big companies from their shitty VC style squeeze everyone out of the market tactic? I don't mind losing that 'value'.
However, product innovation doesn't happen without competition. Acquisitions aren't necessarily bad, but a company being bought by a competitor with a similar product lessens competition and can lead to less innovation.
While I agree that this deal was ultimately bad for consumers, weaker M&A markets, in the long run, may hurt consumers equally as bad. A lot of “copycat” companies get created when they see a particular company doing well. While sheer profitability is the major factor in this, M&A, and the likelihood of a liquidity event play a large role here too.
Hopefully future us won’t look back at this deal as the beginning of a weak M&A market
There’s a bigger picture than just the consumer. If there is not a chance to exit then founders won’t be incentivized to create these companies and employees won’t be incentivized to join or stay at these companies. If M&A markets are limited then the only option is IPO which goes through major cycles and probably can’t support the number of companies needed. Plus many companies can’t get big enough to IPO.
Is this true? I assume there must be founders who won't start companies if they can't get acquired, but I'm not one of them. And I think my closest friends aren't either.
Do companies like YouTube and Instagram get started and funded less frequently if the climate evolves to “it’s impossible to have large mergers approved”?
It’s a bit like asking in 2009 if the secondary mortgage market is a valuable market worth having. It provides significant good (IMO) to support real estate transactions.
But, I don't think that YouTube or Instagram are an inherent moral requirement for society, so I don't think it's the end of the world if they never existed.
It's sad for the bad part of the M&A market that is against competition. there's tons of good M&A that will still get approved. it's not bad that companies need to think twice and consider anti-trust before getting deals done
A consideration: could these regulatory issues not rather be some welcome pretense for Adobe to cancel the merger since Adobe by now realized that they would overpay for Figma?
Figma is VC-funded. Now that they’re not going to be part of Adobe, they’ll just more slowly turn into another Adobe because the investors want the exit.
Prices will creep up, product segmentation will be introduced, pop-ups pushing expensive service add-ons will eventually appear. And when the revenue number is pumped enough, it goes public or is sold to private equity which has no trouble with antitrust regulators.
In terms of pricing model Adobe is generous compared to Figma. Someone with their own creative cloud subscription can open my .psd's. But if I want to collaborate with someone in Figma, I need to pay for their access even if they have their own paid Figma account.
But even so, Figma's prices have been increasing, the product is being segmented, they're increasingly pushing for various addons, even if Figma still is cheaper than Adobe.
Yes. Which is why I’m surprised that people seem to think this break-up will prevent Figma from turning into yet another Adobe-like SaaS with heavy upsell.
Since due diligence can take 12-24 months, I wonder what other than a much lower valuation being worth it caused this
Did Adobe get or figure out enough tips and tricks for their other products?
I have used adobe a bit over the years but no relation to either group.
That is a lot of subscription to walk away from for a company who is good at subscription, unless one of their parked projects was able to be written in webassembly.
I'm wondering why is there zero competition for Figma? I understand their app is basically a browser-like engine running inside the browser - which is cutting-edge tech, tough to copy, etc.
But given enough interest in this space and the valuation Figma has now - I'm wondering why isn't other big tech companies not building their own Figma alternatives.
Because literally 90% of developers today are wholly incapable of producing the cutting edge performance Figma requires. It's an engineering marvel. It's like wondering why more people can't just compete in F1. Money and talent at the rarest levels. Most companies engineer at the performance level of Atlassian. Which is not remotely sufficient.
where can i read more about the engineering behind Figma? Is it not just a UI for rendering polygons? Is all the technology in getting high performant rendering on top of a javascript engine? If so that doesn't seem like anything that crazy.
The hard part is the multiplayer editing, which works seamlessly with quite large groups, even on less-than-ideal internet. You can even see everyone's mouse cursors moving in real time! This is something most video games struggle with, let alone productivity tools.
I will suggest that perhaps: 1) because the valuation is wrong? 2) because Figma has not actually created a new category/market? this is where you get new entrants into the market. Take AI chips for example.
I think its entirely possible that Adobe has realized 1) and/or 2) and didn't fight all that hard to make the deal work?
That's like 7 patents, not sure it's particularly impressive from a tech patent portfolio perspective unless a few of them are real bangers, and/or Figma is known to be litigious which I don't think they are?
Zeplin doesn't do what Figma does, but Figma does what Zeplin does, if that makes sense. You wouldn't stop using Figma and use Zeplin instead, you'd only supplement your Figma license with Zeplin if you thought Zeplin did design handoff better than Figma (maybe it does, I haven't used it in years, but that wasn't the case a few years ago).
So, which company is Figma going to try to sell itself off to next? Atlassian maybe? I guess that Microsoft wouldn't be interested since they abandoned Expression/Blend/etc., Apple isn't in the market for web tools, and Miro is probably too small. So, Atlassian makes some sense to capture more of the developer audience.
I think on the contrary, Microsoft may look into it as another AI driven or AI enabled product that can deliver UIs on the fly, and hence can attract creative crowd towards them. TBH, possibilities are limitless.
"The companies have signed a termination agreement that resolves all outstanding matters from the transaction, including Adobe paying Figma the previously agreed upon termination fee." - that's from the announcement on the Adobe blog. Does that mean that they do not have to pay the $1bn break-up fee to Figma now?
regulators in the eu and us didn't seem to mind this, a few select regulators in the uk for some reason seemed to care off of some strange speculation.
this seems like a really bad thing that it was held up for so long and without any good reasoning. nightmare scenarios both in and coming out of the uk right now
Anyone know how this outcome is affecting Figma employees? I can imagine it's a huge letdown waiting 1.5 years for a big liquidity event and having it evaporate. Do employees see any benefit from that $1B termination fee?
This is good news for Figma. They make amazing products and the last thing they need is the Adobe enshitification.
Adobe needs to get their shit together. 15 years ago they were universally loved and now everyone hates them. Their software is super bloated and Creative Cloud runs so much crap in the background even when you're not running any Adobe app and even when you've disabled its background apps in macOS.
They will go public and can unload then. It’s an opportunity for figma to offer their customers early access to shares before IPO. Many of us will support them.
Yeah, I do feel a little bad for the employees with equity but honestly I'm really glad Adobe isn't allowed to buy it. I hope they find a much better company to sell to if that's what they want to do.
It’s not about the quality of the tool but the fact that regulators will most likely think that this merger will violate anti-trust laws and lawyers from both companies can’t argue for why this isn’t the case
That's assuming the company still has motivation to continue and improve. I can only imagine there's a lingering feeling of dejection at Figma right now.
Oh thank god. I've used Adobe tools professionally for about two decades now. They are too big, and their software suffers for it. Sigma is rad. I'm glad they aren't going to get enshitified by Adobe.
Oh please elaborate!
But I can guess that a lot of confidential information was shared during the due diligence and that’s, even worse, most Figma employees already assumed it was a done deal and started openly sharing source code etc. with Adobe.
Thank fucking god. I am worried though that Figma will take the cancellation fee and start the layoffs to maximize it for an eventual IPO, and then blame the merger.
That’s a reasonable worry because that’s a reasonable path for the company to take, isn’t it?
Try to sell to the buyer who would maximize the return to company [shareholders]; when that falls through, take whatever the next best path for them is.
I’m an ex-Adobe employee who worked on Adobe XD, which is basically Adobe's answer to Figma. when Adobe decided to buy Figma, my first reaction was pretty much "Wait, what?" I wrote down my initial thoughts about it[^1], it felt like a losing situation all around - for Adobe, Figma, and all the designers out there. The only folks who really seemed to win were Figma's investors.
Now, let's talk how bad the breakup deal is for Adobe. You've got Elon Musk buying Twitter for a massive 54 billion, with a breakup fee of 1 billion if it doesn't go through. But then, there's Adobe, buying Figma for 20 billion, and they also get slapped with a 1 billion breakup fee. Musk tried to back out of his deal, no real reason, and didn't want to pay the fee. But Adobe? Their deal gets killed by regulators, and they still have to pay the full 1 billion. Makes you really think about the decision-makers' negotiation at Adobe, do they work for Figma?
Before the deal was sealed, Figma didn't start integrating their tech with Adobe’s. However, Adobe put XD on the maintaince mode[^2], losing market share since then. Yes, XD wasn't as cool as Figma, but it had its sizable share of big corporate users. The data backs this up[^3].
The whole fallout from this? For the design community and Figma, it's kind of a win. The CEO of Figma is pretty well-respected for how he treats his team. That 1 billion from Adobe might help out the Figma folks who got left in the lurch. Morale over there is still pretty high. But Adobe stopping development on XD? I think that was a misstep. I suspect they might have done that to please the regulators. Now put the team back together and continue development? That takes time for big machine like Adobe, spoken from my past experience. But I am happy XD get to live on, at least hopefully.
It looks like regulators are actually doing their job. I would love to see more of this, along with breaking up companies that have gotten too big for their britches.
Public approval like this is a good signal to send to the regulators (and disapproval when they fail to do their job) -- it helps counterbalance the pressure from lobbyists and politicians aligned with industries.
I think more people talking about it publicly on social media will do. Today, social media seems to drive at least some part of traditional media coverage, and traditional media coverage at least in part drives political debate and at least a part of that drives actual policy.
> talking about it publicly on social media will do
No way. Slacktivism is a pejorative for a reason. Compared to an upvote or a comment on [social media platform], a call or physical letter will have between 10 and 10,000 times the impact on your targeted public servant.
I think public discourse on social media is close to being ruined by bots. Petitions which require id to authenticate might be a better measure, although has it's flaws for sure.
Possibly if you mention them, likely not even then. Most accounts are run by staffers.
Getting media attention is a long shot.
I asked the original question. I was hoping for a “here’s a list of people you can email or call or write to” resource.
Social media is better than nothing, but it would be a lot more impactful to go the extra distance to make sure it lands somewhere people are already looking.
The problem is nearly all company mergers, both big and small, are detrimental to competition...
Even my local corner store merging with a corner store in the next town over is bad for suppliers (combined negotiations when buying stock), and bad for consumers (prices set the same between the two towns).
I wonder what a world where company mergers were banned would look like?
If companies can't be sold, there is less reason to start them.
In the mainstream economist view, mergers are generally good, both for the companies and society. If they don't produce some efficiency surplus, there is no reason for the companies to do them.
Every time a company merges, say 10% of the combined value of the new company is given to the government (perhaps with a discount if one or other of the merging companies has recently paid the merger tax).
The lack of the 10% fee for a company who didn't merge is effectively compensation for the fact it has less market control than peers in the same market who did merge.
>The problem is nearly all company mergers, both big and small, are detrimental to competition...
Mergers are not the only way in which market concentration happens though. You can't ban asset sales and you can't ban companies from hiring employees of weaker or defunct competitors.
If the owners of Figma decided that Figma wasn't viable as a standalone company, they could sell the software and fire all employees so they could be re-hired by whoever bought the software. No regulator in the world would mandate the software to be destroyed and the employees exiled.
Also, I don't think a market without mergers and acquisitions would necessarily be very competitive. It could well trend towards an equilibrium where a few big incumbants would rule their respective turfs unchallenged and a large number of tiny companies without the capital to do anything big.
I think merging legal entities is just a more efficient, less messy way of handling asset sales.
If instead of Adobe buying Figma, it was Adobe's biggest competitor, that would probably increase competition by making that company a more viable competitor to Adobe.
coops usually seem like a net-win for everyone. If you ban mergers, that probably also impacts co-operations.
Joint-ventures might also be a postive. I can think of ARM, and the alignment in the automotive industry to standardise parts and platforms to lower total costs.
I really think we should distinguish between people providing goods to the public, for which there is an immediate need for competition, and B2B services like Figma. Monopolization of the former can cause active harm to individuals right now. Monopolization of the latter leads to... businesses having to spend more and provides incentives for other competitors. In particular, what I think a lot of people are missing is that this could be the end for Figma too. I'm going to guess the workers there were really hoping for a payout. If they don't get that, there's going to be de-motivation. Especially having basically been told they're too big to acquire. An IPO is possible, but the opportunity costs given the current markets are almost too much to bear. I feel sorry for them.
Any policy that disincetivizes growth by unsustainable practices is good policy IMO. We need less companies who's end goal is getting acquired, and more that are in it to build a self sustainable business. Having employee motivation hinge on a acquisition is one of the most toxic business practices.
My general rule of thumb is that unless the company is putting you in a position where you actually get to drive, stock should be treated only as icing on the cake of an already worth while salary. (Unless it's a publicly traded company where you can reasonably assert that stock price will most likely go up or stay around the same)
I think the state of “build to be acquired” is actually pretty gross and I wouldn’t mind it being pruned back a bit. To call this “overzealous government” is a bit ridiculous. Figma being acquired by Adobe was not good for customers, in most cases the government just allows shit like this to happen, this is the exception, not the rule.
> in most cases the government just allows shit like this to happen
Good. Agreements should as much as possible be free between consenting parties. It shouldn't be normal to expect the government to be involved in approving things except where there's a great reason to need it.
Especially things like when a company owns the entire town and pays their workers in scrip. Both the company and worker is a consenting party, so the government should stay out of it.
The problem with this ideology is that will destroy society and reduce it to ashes.
I'm really struggling to understand why you're asking questions tartly instead of just reading what I said, which I tried to make very simple to understand, and replying just as simply.
I've read it. I'm asking questions because I'm struggling to understand the point you're trying to make. I thought I understood, but your response was so far off of my intent that I'm no longer certain.
You said the government shouldn't involve itself "unless there's a great reason to do so," which I interpret as implying you disagree with the reasons. Do you think anti-trust measures are a great reason?
I agree with your statistics and want to add extra context that these statistics are about (US?) _startups_. There are a lot of companies being started that don't pursue huge growth. I believe they are sometimes referred to as "mom and pop" shops in the US. In europe they're just called businesses or SME's.
I don't have any numbers and probably more than 50% do fail, but not 90%. Plenty of bakers, restaurants, accountants and small shops succeed in making money for the owners, employment for the staff and value for the customers.
Yes. But when you're driven by the idea of exit striving towards such things becomes ultra focused. Put another way, exit is the ultimate recognition that these purpose(s) have been acheived.
Look at the corporate raiders of the 1980s. Firing people, loading up a company with debt. And taking them bankrupt makes a ton of money for private equity. No product required, immensely profitable!
If you're licensing a patent to others with reasonable terms, it's not a patent troll.
I understand you think they provide a service since you seem to not understand what a patent troll is.
As a reminder, a patent troll company is a company "that attempts to enforce patent rights against accused infringers far beyond the patent's actual value or contribution to the prior art" (https://en.wikipedia.org/wiki/Patent_troll)
They don't sell any services, don't do any (reasonable) licensing, nor provide any goods.
Patent trolling is not a company category, rather a behavior of a company. Furthermore patents themselves are goods that can be licensed, so my point stands.
Not to mention “trolling” is already passing judgement on the activity to begin with. The actual service is licensing. I’ll leave it to the courts to determine whether enforcement of patents qualifies as trolling or not.
Oh I'm sorry. I meant to say "Patent Trolling Companies", is it easier to understand now?
I'm sure you are aware that there actually is a category of companies that just participate in "patent trolling", and do nothing else. Not sure why you're being so pedantic about the grammar instead of trying to reply to the actual arguments...
Seems like if you've only come up with patent trolls, then "plenty of companies" doesn't apply. Patent trolls weaponise the legal system against other companies. They exist because the government can't make a good enough patent system.
They don't seem to be significant enough to the overall general statement that companies exist to serve their customers with goods and/or services.
> I'm not sure how valuable it is to argue with someone who cannot read two messages up in the message hierarchy...
Do you mean the one you mentioned 4 messages up? And dropped with this?
> Ok, lets hear you argue for what service a patent troll provides.
Sure - the one you dropped was domain flipping. Clearly buying something at a certain price and then selling it again is not nothing - that's why people pay for it. Just like house flipping. Or just buying anything speculatively. I assume you realised that, and dropped it for that reason.
Look at the corporate raiders of the 1980s. Firing people, loading up a company with debt. And taking them bankrupt makes a ton of money for private equity. No product required, immensely profitable!
Depends on your worldview. Historically, companies had a purpose first and profit second. You needed approval by the crown before you were allowed to start a company. Then, once your company fit the purpose as seen by the crown, you were allowed to make profit with it.
That has changed, especially since the 80s, where the prevalent world view turned to "let's have the market figure out purpose", which equates to anything that is profitable is good.
We've since learned that this isn't automatically true (as exemplified in this abandoned merger, for example), and my understanding is that right now there's no clear opinion in society whether profit or purpose comes first in companies.
When there are elected officials who say that maybe capitalism is more important than democracy, it becomes clear that consensus is going to be difficult to achieve.
Why do you say that, and how does it work? Are you making a completely different statement than the point the parent was making? Sure you usually need to sell something in order to get the profit, but that doesn’t mean that the good or service or it’s quality was prioritized above getting any profit, which is what I think parent was talking about.
Generally speaking, private non-subsidized companies that offer goods and services for sale cannot actually survive without any profit, right? They can bootstrap for a while with investment, but they tend to die, statistically speaking, if they prioritize goods and services over profit. The way companies tend to survive death is by doing everything they can to ensure that the sale of their goods or services generates a profit. You might also be temporarily forgetting that it’s also incredibly common for companies to pivot on what products they make and sell whenever they’re not making enough profit.
TBH it actually seems really funny to me argue about which comes first, because the kind of company we’re talking about needs both, it doesn’t otherwise exist. But the idea parent shared, that profit takes the highest priority, is often absolutely true in practice, many companies will do everything they can to avoid not making a profit, from lowering the quality of their goods and services, to coming up with other more profitable products, to merging with another company that has more customers for your product and/or a longer runway.
> The entire purpose of starting a company is to get acquired.
The vast majority of companies are little "lifestyle" businesses without any intention of ever getting acquired by anyone. Your local pizza shop doesn't expect to be a unicorn.
And *this* is The Key difference between an entrepreneur and a mom & pop.
That said, even a mom & pop should be mindful of exit. What happens when the owner(s) wants to retire? Or has a serious health issue? Or has a family member with a health issue? Etc.?
You don't have to be a unicorn to build something that someone else wants to acquire.
Editorial: And this is why I dislike words like solopreneur, mompreneur, and so on. Sure you can have a one person business with a steady revenue stream. But that's not a 'preneur. If you are the business and the business is you, you're ability to exit is highly limited. That's not a 'preneur. If you get hit by a bus and your customers are screwed and the business tanks. That's not a 'preneur. You're much closer to a m&p TBH.
I realize that's counter to conventional wisdom on social media, but such snake oil ideas deserve to be called out already.
> But that's not a 'preneur. If you are the business and the business is you, you're ability to exit is highly limited. That's not a 'preneur. If you get hit by a bus and your customers are screwed and the business tanks. That's not a 'preneur.
Sorry, but it absolutely is. Entrepreneurship is just starting a business and taking on the majority of the risks and rewards. There is nothing in the definition that says you have to sell the business or exit in any way.
I'd argue that taking on VC money is actually less entrepreneurial than going it alone - you're offloading a big chunk of the risk to your investors.
"Entrepreneurship is the creation or extraction of economic value"
Exactly!
But sure, I'll entertain you...
Person 1 is a so called solopreneur. Works hard. Pays bills. But eventually burns out and because no one want her/his "shares", she/he closes shop. "Damn I wish they told me about exit and the value there of...," she/he thinks. A hobby that produces revenue is not the same as producing value.
Person 2 is also solo. Does the same (i.e., works hard, etc). But she/he is constantly concerned about the shareholders. Sure, it just so happens those shareholders are her/him. Nonetheless, there are - in the mind of P2 - shareholders. Eventually, she/he sells the company to some other entity for a respectable amount of money (read: value purely defined).
Person 2 !== Person 1. No way. No how.
Again, I ask, what defines value better than, "We'll pay you for your company."? (Hint: Nuttin' does.)
Friend, the confusion is all yours. You can contort it all you want, but The Truth is:
"We want your company" === value.
p.s. A Google search? That's funny. SERPs? Talk about a lesson in lack of value.
> Person 1 is a so called solopreneur. Works hard. Pays bills. But eventually burns out and because no one want her/his "shares", she/he closes shop. "Damn I wish they told me about exit and the value there of...," she/he thinks. A hobby that produces revenue is not the same as producing value.
My old boss closed shop. Didn't want to fuss with selling to someone. He'd generated plenty of economic value to retire on and travel around the world for his retirement years. Nice big house, boat, no debt, lots in the bank. Profits for his clients, salaries for his workers, revenue to his selected vendors.
No acquisition. Plenty of economic value generated.
You can continue to be aggressively wrong and watch your comments descend into the grey and get flagged as a result, but I'm out. Constructive debate requires a shared reality and set of facts.
There's nothing wrong with being Person 1. But it's foolish, at best, to keep confusing Person 1 with Person 2. You're willing to commit to that insanity. I am not.
Aggressive? When did stating the obvious become aggressive?
The point is, regardless of circumstances, if no one wants to acquire the business then the business by definition has not created value (in the eyes of the market).
Being a mom & pop is not the same as being an entrepreneur. They are two separate mindsets. One use exit as a North Star the other just retires and closes up shop.
I'm pretty sure Sam Walton didn't establish Walmart with the hope of being acquired.
It's bizarre that we live in a time where we can't even fathom a business that is fundamentally very profitable, we just envision growing the company until it's attractive enough for someone else to take on the unsustainable cost of running the business: either get acquired by a large company or hoist your debt onto the public market.
Investment really did used to be about more than a complex "greater fool" game.
I wonder if Adobe is secretly happy about this. They were acquiring Figma at the peak of the market (for growth stock/startup valuations) because of the existential risks that Figma was threatening, due to their collaborative development UX.
But since then:
* Startup valuations have fallen. Ignoring regulatory concerns, a new acquisition deal today would be cheaper.
* Gen AI and Adobe Firefly are the new rage, and Adobe has probably captured back both mental and market share from Figma. And Adobe can now add collaborative features to Firefly, and it doesn't even have to be as good as Figma's to win.
So paying the 1B breakup fee is probably the cheapest and best option for Adobe at this time.
Meanwhile, Figma employees, expecting a big payout, are probably a bit demotivated at this point. And potentially, they might have been working on integrating into Adobe over the past year, so they might have even slowed down in their development pace.