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Figma and Adobe abandon proposed merger

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Re: Figma and Adobe abandon proposed merger

#821

Post by wentin »

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.

Here are the references I mentioned:

[^1]. My initial thoughts on Adobe acquiring Figma: [Typogram](https://typogram.co/build/on-adobe-acquiring-figma/)

[^2]. Adobe XD Enters Maintenance Mode: [Typogram](https://build.typogram.co/p/adobe-xd-enters-maintenance-mode)

[^3]. Design Tool Survey Report: [Survey 2022](https://uxtools.co/survey/2022/toolkit), [Survey 2023](https://uxtools.co/survey/2023/toolkit)

Re: Figma and Adobe abandon proposed merger

#822

Post by xvector »

NeuNeurosis wrote: post #694
Matticus_Rex wrote: post #576

Earlier quoted context omitted.

You're getting downvotes, but IMO it's because people don't realize how far outside the norm Lina Khan's stances and approach has been.

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 t…

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.

Re: Figma and Adobe abandon proposed merger

#823

Post by itishappy »

robertlagrant wrote: post #591
itishappy wrote: post #185

Earlier quoted context omitted.

Yes. Your quote is an example of the exact ideology that leads to Standard Oil and company towns.

What is that ideology? "Government shouldn't be involved unless there's a great reason to do so"? If you think preventing company towns isn't a great reason to need approval, fair enough, but then why are you saying company towns are bad?

No. I think anti-trust regulations are really important. Don't you?

Re: Figma and Adobe abandon proposed merger

#824

Post by tomgeoco »

wentin wrote: post #821

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 dea…

FYI, the 2023 version of the design tools survey was published recently: https://uxtools.co/survey/2023/

Re: Figma and Adobe abandon proposed merger

#825

Post by rapht »

tsycho wrote: post #549

[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 a…

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.

Re: Figma and Adobe abandon proposed merger

#826

Post by kpandit »

codeptualize wrote: post #809
kpandit wrote: post #785

Earlier quoted context omitted.

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 start…

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.

Re: Figma and Adobe abandon proposed merger

#827

Post by vlovich123 »

mathattack wrote: post #819
vlovich123 wrote: post #775

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 industri…

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.

Re: Figma and Adobe abandon proposed merger

#828

Post by schneems »

hliyan wrote: post #106
schneems wrote: post #81

Earlier quoted context omitted.

What’s the best way to send signals to regulators?

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.

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.

I just wish I knew where that somewhere was.

Re: Figma and Adobe abandon proposed merger

#829

Post by hn_throwaway_99 »

dijit wrote: post #678
echelon wrote: post #592

Earlier quoted context omitted.

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).

Re: Figma and Adobe abandon proposed merger

#830

Post by wentin »

tsycho wrote: post #549

[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 a…

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.

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