On the contrary, the ability for startups to be purchased by larger companies is the majority of the financial incentive towards creating startups. If competition regulators prohibit these transactions, it will harm the startup ecosystem and reduce innovation.
UK competition regulator finds Adobe’s purchase of Figma could reduce innovation
21–30 of 78 posts
Re: UK competition regulator finds Adobe’s purchase of Figma could reduce innovation
#22Unsurprisingly. [0] Did people here really think that the regulators are going to allow this merger to happen? Adobe might as well pay the $1BN break up fee and the Figma will just use that to fund their IPO. [0] https://news.ycombinator.com/item?id=33919862
Figma has about $500M annual revenue, AFAICT.
In the current environment, money-losing software companies aren’t exactly hot. The valuation from an IPO would be extremely disappointing for investors compared to the $20 billion Adobe is paying. A price/sales multiple of 10x would be generous, and that would be a $5B valuation.
Re: UK competition regulator finds Adobe’s purchase of Figma could reduce innovation
#23How does it work if the UK blocks it and the rest of the world doesn't?
Possibly a spinoff organization like Figma UK Operations LTD that handles the UK business separately from Adobe.
Re: UK competition regulator finds Adobe’s purchase of Figma could reduce innovation
#24On the contrary, the ability for startups to be purchased by larger companies is the majority of the financial incentive towards creating startups. If competition regulators prohibit these transactions, it will harm the startup ecosystem and reduce innovation.
This argument makes absolutely no sense to me.
The large tech acquirers have extremely high market valuations partly because of the expectation that they continue to get away with doing exactly this.
If we had more competent competition regulators and this sort of acquisition was basically not on the cards at all, ever, once a company reaches a certain size then that value would stay in the innovating startups until they IPO or are acquired by a smaller, less predatory/monopolistic company. Either way there’s still an attractive exit.
We need to stop inventing reasons to tolerate and justify this behaviour that is clearly bad for society and start pushing for a more diverse tech ecosystem with proper antitrust enforcement.
Re: UK competition regulator finds Adobe’s purchase of Figma could reduce innovation
#25I wonder if Adobe will respond by saying the UK isnt a good place to invest in as well.
Re: UK competition regulator finds Adobe’s purchase of Figma could reduce innovation
#26On the contrary, the ability for startups to be purchased by larger companies is the majority of the financial incentive towards creating startups. If competition regulators prohibit these transactions, it will harm the startup ecosystem and reduce innovation.
This argument makes absolutely no sense to me. The large tech acquirers have extremely high market valuations partly because of the expectation that they continue to get away with doing exactly this. If we had more competent competition regulators and this sort of acquisition was basically not on the cards at all, ever, once a company reaches a certain size then that value would stay in the innovating startups until…
> This argument makes absolutely no sense to me.
There are some business models where acquisition is the only viable way to make money.
Deepmind, Shazam, and Giphy were largely valuable because they create value for other big tech companies with respect to customer acquisition, market positioning and intellectual property. These companies had limited ability to make profits on their own.
One can still argue though that such acquisitions are still against the public interest even if they’re helpful to a class of startups.
Re: UK competition regulator finds Adobe’s purchase of Figma could reduce innovation
#27Unsurprisingly. [0] Did people here really think that the regulators are going to allow this merger to happen? Adobe might as well pay the $1BN break up fee and the Figma will just use that to fund their IPO. [0] https://news.ycombinator.com/item?id=33919862
Figma has about $500M annual revenue, AFAICT. In the current environment, money-losing software companies aren’t exactly hot. The valuation from an IPO would be extremely disappointing for investors compared to the $20 billion Adobe is paying. A price/sales multiple of 10x would be generous, and that would be a $5B valuation.
Adobe's actually done investors a favour and made a realistic enterprise valuation of the company for everyone. If it's worth $20bn to them then it's not likely to float for $5bn. They clearly think there's value there or some kind of competitive advantage that makes the company worth that much.
Re: UK competition regulator finds Adobe’s purchase of Figma could reduce innovation
#28Earlier quoted context omitted.
Figma has about $500M annual revenue, AFAICT. In the current environment, money-losing software companies aren’t exactly hot. The valuation from an IPO would be extremely disappointing for investors compared to the $20 billion Adobe is paying. A price/sales multiple of 10x would be generous, and that would be a $5B valuation.
Adobe's actually done investors a favour and made a realistic enterprise valuation of the company for everyone. If it's worth $20bn to them then it's not likely to float for $5bn. They clearly think there's value there or some kind of competitive advantage that makes the company worth that much.
The problem is that the company is worth $20 billion only to Adobe.
And that explains why antitrust authorities around the world are interested in this deal: that kind of discrepancy suggests a market distortion in progress.
Re: UK competition regulator finds Adobe’s purchase of Figma could reduce innovation
#29Earlier quoted context omitted.
This argument makes absolutely no sense to me. The large tech acquirers have extremely high market valuations partly because of the expectation that they continue to get away with doing exactly this. If we had more competent competition regulators and this sort of acquisition was basically not on the cards at all, ever, once a company reaches a certain size then that value would stay in the innovating startups until…
> This argument makes absolutely no sense to me. There are some business models where acquisition is the only viable way to make money. Deepmind, Shazam, and Giphy were largely valuable because they create value for other big tech companies with respect to customer acquisition, market positioning and intellectual property. These companies had limited ability to make profits on their own. One can still argue though th…
Seems like companies that could have made money through licensing their product instead of being bought out?
Re: UK competition regulator finds Adobe’s purchase of Figma could reduce innovation
#30I think many Figma users are concerned with Adobe's purchase of Figma. I've already removed Adobe products twice from my life (professional and personal) and would prefer to not have to do it again. That said, I can't see the acquisition being a problem for competition in this particular space. It's not hard to imagine someone just making figma-but-different and becoming the next big thing. There are also countless o…
It would be very hard to build a product from scratch that competed with Figma. Even if you just straight-up stole all their product choices, features and UX and so on, the engineering under the hood seems pretty high level. Anything is possible, but it would not be trivial.