Excellent news. I think there should be more products, more companies, and more competition. Adobe just buying up it's competition will only ever directly hurt consumers.
See also, "Adobe says the FTC is looking into its subscription cancellation practices." https://www.theverge.com/2023/12/15/24003532/adobe-says-the-...
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.
The entire purpose of starting a company is to get acquired. Of the literally hundreds of companies that YC has invested in, only 5 have gone public.
The VC market will dry up even more if they see their chances of an exit diminishing because of an overzealous government.
The purpose of a for profit company is to provide a good or service and profit from doing so. You don’t need to be acquired to accomplish that.
provide a good or service
profit from doing so
Is the first actually a requirement? I can think of plenty of companies that do the second part well, but have nothing to do with the first one.
Yes? What company makes money without providing goods or services to someone?
Patent trolling. Domain flipping. Just two I can think of in 30 seconds, I'm sure there are more out there :)
Both provide services.
Ok, lets hear you argue for what service a patent troll provides.
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.
Seems like if you've only come up with patent trolls
I'm not sure how valuable it is to argue with someone who cannot read two messages up in the message hierarchy...
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!
They provide a license to said patent? Pretty obvious - this is not to say that patent trolls are good, though.
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.
Patent trolling is not a company category
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...
Patent trolling. Domain flipping. Just two I can think of in 30 seconds, I'm sure there are more out there :)
In the vast sea of companies, those are a super teeny tiny share of companies.
Comcast?
Comcast provides plenty of services?
Have to admit, my first reading missed the word “or”, and both AT&T and Comcast came immediately to mind.
It would seem my joke about their reliability didn't land.
You're misreading the text. They said "provide A good OR service", they're not saying "provide good service".
I don't think so, I read and understand the "OR" in there.
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!
You are mistaken.
The purpose of a company is to make a profit and provide a good or service. In that order. Everything else is a hobby.
Nope. Profit follows the goods and services, not the other way around.
Tell that to Too BIG to FAIL banks…look at the Billions given from the government to lobbying companies.
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.
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.
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.
There are ways to exit other than being acquired, still.
Those are still exits.
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.
Your definition is the social media-fueled snake oil meme.
One very simply question: What defines value better than an exit? Or the offer to exit? (Hint: Nothing.)
You might not like the definition, but that doesn't mean it's wrong.
Exit valuation doesn't come from God. It comes from metrics like growth, profit, etc., all of which are readily available without actually exiting.
Even if we accept your assertion that it's the best way to value something, that doesn't mean it's the only way to value something.
Nah. Not at all. Those are all proxies.
It comes from The Market. It comes from some other entity saying, "This is worth X to us, and we're willing to pay that. Here's an offer."
THAT is value. I've already said this, but I'll say it again:
Revenue !== value.
Revenue actually is value (a subset of it) delivered to the business's customers. Enterprise value is a different thing. It's an important thing, but it's totally possible to have a business that delivers immense value to its customers and has very low enterprise value. We generally call these "not great businesses," but that doesn't make them not businesses.
So that value just magically appears at the moment of offer to exit?
Yup. Something is only worth what someone else (i.e., The Market) is willing to pay for it. You can stack up a ton of customers and revenue but if no one else wants it...sorry...no value.
At the extreme, imagine all these social media "creators". In some cases, tons of revenue. But their revenue-producing-hobby is such that no one could take the torch and carry on. If that person is abducted by aliens, the company also disappears. No one else can buy it and carry on. That is, no value created.
I'll keep repeating this:
Revenue !== value
Entrepreneurs create value. Not revenue. Value.
The problem with this thread seems to be that people are confusing revenue with value. If it was about revenue, then the definition would say that. It specifically says value.
someone starting a mom & pop business is an entrepreneur. There's nothing about scale in the definition of the word.
I didn't say there was. I said it was about value, as in creating something someone else wishes to acquire.
There's nothing wrong with the mom & pop mindset. But it's not the same mindset as being an entrepreneur and focusing on value; with exit being a clear and ideal way to see the value.
Mom-and-pop businesses fit the definition of entrepreneur just fine. I'm not willing to let Silicon Valley VCs redefine the term.
What happens when the owner(s) wants to retire?
Maybe they just close down the shop.
Or has a serious health issue?
And purchase disability insurance.
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.
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.
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.
You think this is "ideology" that will cause that?
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.
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?
We could guess or we could refer to history to here. Maybe you would rather be doomed to repeat it?
Statistically, 90% of startups go belly up, 6% end up as zombies barely scraping by, 3% are acquired and 1% go public.
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.
There's also always a private equity market that is often a middle ground between IPO and acquisition.
And in my feeling, I've seen PE getting more active in tech last year (maybe just because valuations went down).
PE universally has the worst possible outcomes for all sides of a deal besides the PE firm themselves.
Just because the acquired company falls into the "can't justify higher rev multiple thanks to synergies with the acquiring company" and "not successful enough for the IPO".
If there was no options in that niche, the market objectively would be a lot tougher.
Luckily, successful companies can also be started without VC money.
Realistically, only by the already-wealthy - i.e. those for whom the cost of failure is less than complete personal ruin.
Admittedly these are the people getting the lions share of VC money in the first place though.
The entire purpose of starting a company is to get acquired
The entire purpose of starting a company is to make a profit by delivering a product or service that the market will willingly buy. The operative word there is "profit" -- something that seems to have going conspicuously missing from companies that are being built for the purpose of being "exited".
The entire purpose of starting a company is to make a profit by delivering a product or service that the market will willingly buy
Why? People can start companies for whatever reason, also your company itself can be the product and big tech companies might be the market you're targeting. Users might just be along for the ride (and they get cheaper and/or better products because VCs are willing to subsidize their development).
Or we’ll see more IPOs. It might change valuations as expectations might be lower but it won’t dry up the VC market.
declining frequency of IPOs is mostly driven by regulatory requirements that keep getting harder over time; the 90s were before sarbanes-oxley. I don't see any reason to believe fewer acquisitions will cause more IPOs.
The entire purpose of starting a company is to get acquired.
I imagine this claim is satire, given how outlandish it is. But if I were to take it at face value for a second... Acquired by whom? Other companies... Who were started to... Get acquired themselves? Where did these other companies get the money to begin with? Etc. This is just a stupendously ridiculous take, I just cannot consider it was made in good faith.
Of the literally hundreds of companies that YC has invested in, only 5 have gone public.
YC is a droplet in the ocean of the economy. Even if we just look at the US, about five million businesses were started in 2022 alone. https://www.census.gov/econ/bfs/index.html
No it isn’t just about selling out. It’s to unseat incumbents, deliver better products, make a difference. What do you think Google would have turned out like if Yahoo had bought them for $1m in 1996?
This page indicates that YC invested in 18 companies that went public.
Corporate consolidation is not a good end for capitalism. If you believe in the capitalist system you'd prefer that less acquisitions happen given that we've empirical data where a lot of these acquisitions are made to stamp out competition.
If the business model is to be acquired that will require the business model to change, I'd prefer that than a bunch of companies only working to be acquired, fucking customers in the process (and all of the externalities deriving from that, like wasted man-hours to move away from products that will be killed).
An underzealous government (in regards to antitrust) is as bad as the number of potential acquirers is smaller; in such a monopsony environment purchase prices will be smaller too.
The entire purpose of antitrust regulation is to prevent monopolization.
Both those things can be true and both can be legitimate interests.
You should send this memo to Musk, Zuck and many other entrepeneurs telling them they doing everything wrong.
The entire purpose of starting a company is to get acquired.
Certainly not in terms of expectation value. Most of the value of a startup at any given funding round is driven by the possibility of a public listing. This is true even though most successful startup outcomes are acquisitions.
Of the literally hundreds of companies that YC has invested in, only 5 have gone public.
The correct number is 18, not 5. [1]
[1] https://www.ycombinator.com/topcompanies/valuation (select the "Public" tab.)
The entire purpose of starting a company is to get acquired.
or to make profit. Being acquired used to mean you failed, and had to suck your pride in and let someone else buy you out to pay off your debts.
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?
I imagine you could look at U.S. banking before and after 1980 to get some sense of what an industry looks like before and after mergers became legal.
https://en.wikipedia.org/wiki/Depository_Institutions_Deregu...
How about a merger tax?
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.
Not disagreeing with you, however some mergers can be good for the consumer.
With your example, the local stores could have joined forces to compete against their bigger competitor: the supermarket.
>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.
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 wouldn't go that far.
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.
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.
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.
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.
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.
Inform your local elected official and ask them to contact the FTC.
Vote for politicians who don't run on a platform of deregulation for deregulation's sake.
Talk positively about the current FTC and make sure they don't get booted out next year.
At least the European regulators are. Still waiting for US agencies to do their job...case in point: Intuit.
It seems like the common refrain is to blame Lina Kahn for conservatives stacking the courts against her since before she was born.
Um, no. You've somehow confused the supreme court with the US court system as a whole.
If you look at stats, it's about a 50-50 split in appointments between right vs. left.
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)
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.
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.
This would have gone quickly, to no, if Figma and Adobe had taken the first answer they got from DoJ at face value.
Lina Khan is insane, it would be absurd to take her at face value. If it was up to her, American tech businesses would close up shop and go home.
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.
"The norm" is doing a lot of lifting there.
Trailing historical average doesn't opine on correctness/utility.
It certainly seems "outside the norm" if you compare to the hands off approach that has been taken the past few decades.
It's irrelevant anyway, Lina Khan's views were well known at the time of her selection, this is the desired outcome by Biden.
Or, maybe we could make attempts to regulate our market economy in order to prevent monopolies, and thereby encouraging competition. (aka, disruption)
I didn't truly process the damage that monopolies can do until I heard this podcast with Sean Carroll and Cory Doctorow.
There is a full transcript at this link if you prefer to read the conversation.
https://www.preposterousuniverse.com/podcast/2019/10/21/69-c...
As I said, I'm quite happy with that, but if we do something, let's do it right and not half-assed.
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.
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 somewhat 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]
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.
[1] https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nomi...
[2] https://news.adobe.com/news/news-details/2022/Adobe-to-Acqui...
They involve the wealth of nations
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.
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?
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.
Because if you are the only one selling coffee, you can jack up the prices and keep the returns growing as they are required to.
That deal had more to do with national security concerns being addressed and Broadcom's shitty business strategy rather than market share concerns.
This is just straight up factually incorrect: the DOJ never filed a lawsuit to block this deal.
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.
Well he works there and misses out on $$$$ hence his ire.
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".
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?
Kinda relevant don’t you think?
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.
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.
"It is difficult to get a man to understand something, when his salary depends upon his not understanding it!” - Upton Sinclair
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
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.
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.
Its either legal or not.
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.
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.
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.
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.
This article about the DoJ prepping to sue to stop the deal is from February: https://www.bloomberg.com/news/articles/2023-02-23/doj-prepa...
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.
It's actually much earlier than that. https://news.ycombinator.com/item?id=38685644
tl;dr: Their was significant action less than a month after the announcement was made.
https://www.politico.com/news/2022/11/02/doj-review-adobe-20...
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.
https://news.ycombinator.com/item?id=38685680 (it doesn’t seem ideal to post substantially the same reply in two places)
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.
you can expect a serious chilling effect on M&A.
Promise?
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.
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 will is more challenging but is still possible by regulators in the largest domains (US and EU) collaborating to harmonize their policies.
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).
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 a average return 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 capital for new business creation and growth is getting scarcer and more expensive. The point being, this matters to our industry and jobs.
earlier stage startups (which drives most new job creation in the US)
This is absolutely not true.
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.
No one disputes that regulators basically killed this merger.
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.
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.
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.
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.
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.
"I have to assume" -- you do? Why?
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.
Regulators were always opposed to this merger, it's Adobe that wanted to fight it out.
you can expect a serious chilling effect on M&A
Oh no, less corporate consolidation. The horror. Won't someone think of the capital class for once?
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.
https://www.politico.com/news/2022/11/02/doj-review-adobe-20...
When it comes to whole market altering merger - they don't take that long.
The negotiations took that long, to come to nothing. Clearly Adobe couldn't come up with a solution to the problem of a potential monopoly.
Most M&As happen quite quick, mostly dealing with acquiring companies that are outside of the purview of regulators.
There's a $1B fall through fee, I assume that gets paid to Figma now?
I wander if that will make its way to early employees who were hoping for a liquidity event.
I would expect that to only get paid if solely one side were responsible for blowing up the deal. This is expressly saying both have mutually agreed.
Nope, from Adobe’s 8K filed today with the SEC:
“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.
How is this an issue? You can easily wire up to 999 million with just a mobile device any work day.
If you think im joking no I’ve designed it for major banks.
Might be technically possible from an app, but in the USA, the backoffice won't approve it without one-on-one interaction.
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.
Yea I mean how do people think large companies do things like payroll which is easily more than this monthly.
Payroll is done with ACH, not wire transfer. ACH is reversible so it has fewer controls. Wires are not (generally) reversable.
Technical Protocol doesn’t matter we’re talking approval and liquidity here. ACH/Wire same dif.
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
Way to be pedantic when a company like adobe obviously has the liquid and on hand.
You’re arguing the wrong point. In typical HN fashion.
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.
I hope they have big bank... Then again it would also be funny if bank crashed because someone was forced to transfer 1 billion.
banks move so much more daily
Indeed. Also, the money is probably coming out of some money market fund or from selling treasuries.
Yeah I'm sure Adobe is just using a single-branch bank
Bank is going to have to dip deep into their swear jar to come up with the money.
Hah, reminds me of this:
Adobe is highly unlikely to be holding $1bn for any length of time in a no- or low-interest bearing account. It’ll be some combination of investments by their corporate treasury department.
So the money is likely to go through their bank, not from their bank. And $1bn is not very much as money being transferred through major banks goes. (The assets backing the $1bn may well be custodied at the bank, or they may not.)
This is not exactly my industry, but I expect that, at most, the bank will check its risk controls and its contract with Adobe and will confirm that the money coming in and the money coming out match and that the transaction are consistent with their contract. And everyone involved knows what they’re doing, and the transaction will be approved very quickly.
(And, as noted elsewhere in the thread, some kind of fraud verification will likely be done given that Adobe doesn’t wire large sums to Figma on a regular basis.)
If I was the board I’d be calling for the CEO’s head after loosing $1 billion for absolutely nothing.
If I was the board I’d be calling for the CEO’s head after loosing $1 billion for absolutely nothing
The Board signed off on the deal. Given Adobe’s stock is up for the day, I don’t think shareholders are crying over this termination fee.
investors probably figured this out on Dec 13, not today
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.
not nothing: they got to examine Figma's books, IP/code, staff, etc where Figma got to see nothing about Adobe.
Incredible that they have $1b sitting around in cash. Wouldn't you at least put it into a bond or treasury?
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.
Or transfer the bonds/treasury to Figma directly? Why go through the hoop when Figma too will just covert it to bond/treasury anyway?
Is that allowed?
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.
Typically they keep enough for business activities as cash and the rest go into cash equivalent / money market type things that earn some interest.
Wow, thanks for the reference!
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.
There seems to be multiple references to the fee being payable if the deal falls through due to regulatory issue.
"He also noted that the original terms call for Adobe to pay a $1 billion break-up fee even if the deal falls through over regulatory issues."
https://www.barrons.com/articles/adobe-stock-figma-acquisiti...
Perhaps it could make an IPO more likely instead? And that would make its way to early employees.
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?
What's wrong with selling goods and services for more than they cost?
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. What are the examples of this happening in practice (I know Uber is the ur-example but that feels different from something like pure a saas)?
It feels like as long as there is VC money out there, the viability of predatory pricing as a strategy is limited because the second incumbents (even ones with overwhelming market share) try to jack up prices, they immediately create an opportunity for a startup to undercut them?
Genius, just make it illegal to be unprofitable.
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.
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.
Any chance figma can go public?
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.
What are you replying to?
edit: Got it. I just woke up when I asked.
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.
The parent comment poses a question: > If Adobe can't buy them, what other exit options do they have?
Operating as a sustainable business that sells a good product for a profit is apparently not even on people's radar.
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.
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.
“Everyone involved” includes customers
Careful now, you'll give someone an aneurism with talk like that, dontchaknow?
On a serious note, it's depressing how much a comment like this stands out from the crowd.
It doesn't make anyone rich quickly.
It’s hard work!
Much easier to give things away for free and sell the company.
Sanity prevails, at least in some HN comments; this is why I come to HN :)
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.
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.
why not go public? That would also probably be in the public interest.
Anyone else think this has nothing to do with the regulatory agencies but instead the market has dramatically shifted in the past 15 months in terms of valuations and this is a nice cover to cancel the deal?
Figma still gets $1B "investment" without giving up any equity or control and Adobe gets to walk away from a massive $20B fee.
Adobe makes $17B a year in revenue, they would need some pretty strong growth out of Figma to justify the price tag especially after valuations came down.
But it is nice to "blame" the regulatory agencies for the breakup so that both companies save face.
Also just seems unlikely that it was regulatory. Sure Adobe has the market cornered but it doesn't seem like this is where the agencies would suddenly choose to care so much. And if it was regulatory, then shouldn't those agencies come out and say "We blocked this, no go."
Nah, I think this is truly a case of regulatory agencies shutting the deal down. Adobe knows Figma is best-in-class in their category, and even in the current market downturn, $20b still feels like a good bet to own the winner in and up and coming category for the next 5-10 years
I dunno, seems like there are massive risks to Figma as a business at this point with the developments in generative AI. I'm not that confident spending $17bn is justified if its going to take 10-20 years to make it back. Some generative AI startup could easily leapfrog figma.
And Adobe already has its own massive trove of copyright images that it can use for much better generative AI.
I think the last year has put adobe in a much stronger position and figma in a much worse position.
Generative AI isn’t useful without a good editor for humans to manually tweak and integrate the AI’s output, and Figma is essentially the only name in the game for that.
Sketch still exists and is not only very good, but in many ways better.
In what ways is it better? I've found Figma to be vastly superior, especially since they treat design like development, automating tedious processes like manually tweaking the layout and instead having a version of flexbox literally built into the design ("auto constraints"). They're bringing web dev and mobile dev ideas into design software.
My information might be out-of-date, because I gave up on Figma years ago, and I recalled Sketch being significantly more powerful as an actual design tool. But now I'm looking up differences and it seems Figma has improved in areas it was weak in previously, like not having color profiles. From their feature lists they seem about identical.
Who gets a better deal on compute costs, Figma or Adobe? If prices skyrocket, who is better prepared to pivot?
This sounds on point.
In the small startup M&A market, maybe 50% of deals are falling through? Of the 50% that don't fall through, the vast majority are closing only after being renegotiated in the last hour, e.g. buyers promising to pay $x, but in the last hour the buyer changes their offer to $x/2.(These are deals with zero regulatory review)
Most common issues is buyers backing out because they couldn't secure the debt to finance the deal like they expected they could, multiples decreasing in the market, investor sentiment shifting away from riskier tech ventures, etc.
If those trends in small company M&A also apply to large company M&A, the parent's hypothesis is very valid.
Where are you getting those numbers from? The valuations of small acquisitions are closely held information; afaik there is no place to just look this stuff up.
1st hand info / network. I'm a CEO. YC Founder and Techstars founder. My CFO is a fractional CFO that works with other startups clients, same stories.
This kind of information and what really goes on behind the scenes is rarely revealed. Mainly because if I told you about the shitstorm story of a top tier VC trying to buy my company and the deal exploding, that VC will do everything in their power to bury the story and make sure I'm personally not able to operate in the industry in the future.
The people at the top of tech are cut throat individuals. (And the people at the "top of tech" are not CEOs... they're the investors. The people who sit on boards who you never hear about. And that's the way they like it)
Adobe makes $17B a year in revenue, they would need some pretty strong growth out of Figma to justify the price tag especially after valuations came down.
That's not it works.
1. Adobe is at $19B in revenue
2. Adobe's market cap is $272B and just shy of its ATH.
3. Acquisitions, especially at this level, are usually paid with debt and equity, not just cash.
4. The proposed acquisition smells of both one for value (e.g. we buy you and we add $20B to our market cap...ok thats not exactly how it works, but that's the general ide) and one for defense (protect our existing market cap).
5. You have no idea what Figma's revenue and growth rates our (speculation says $400M rev). If you borrow at 10% interest to acquire the biz and the company is growing their profit annually at 20%, then Adobe can still net out in the long run. (again, not that simple, but illustrative is the point)
Could Adobe have overpaid given the timing? Absolutely.
Could Adobe have realized this and when it came time to go through anti-trust they just threw the b-team lawyers at it? Totally plausible.
And if it was regulatory, then shouldn't those agencies come out and say "We blocked this, no go."
Not necessarily. Behind closed doors, they might have said "during our reviews with regulators we've been advised that the fight with regulators would be too risky and costly if we didn't succeed"
There are multiple factors that could sour this deal from a financial standpoint. ARR multiples have been falling, interest rates have risen, and Adobe's performance has been quite strong without Figma.
Meanwhile, from what I've observed, Figma is approaching 100% market penetration among designers, so they will need to look beyond their core to sell things like Figjam to "normal" people. With full access to financials, Adobe may have seen the growth curve tapering off much sooner than expected. Just a hunch.
I could believe this but if so why wouldn’t Figma fight to get the deal through? $20B is a lot to leave on the table, assuming they’d already emotionally accepted to lose control of the company? Why settle for the $1B “fuck off” consolation?
What would you want Figma to do that Adobe cannot do itself?
In the end 3 probes is way too much legal tape for even Adobe to step into hence the abandoned deal being cheaper in the long run than fighting to acquire Figma.
I mean, the Fed is a kind of regulatory agency, so it's not a total lie :)
you are right also with genAI trend adobe is drinking the kool-aid like everyone else and most likely all investment will go to that. to be fair they are the best company to ride this wave and the new photoshop features already proves that
Sure Adobe has the market cornered but it doesn't seem like this is where the agencies would suddenly choose to care so much. And if it was regulatory, then shouldn't those agencies come out and say "We blocked this, no go."
Both the EU and UK had already provisionally found that the deal was a problem, and the DoJ was expected to file suit. The companies had a meeting with the DoJ last Thursday [0]. They previously met with the EU on the 8th, and had a deadline to submit a settlement offer to them (not sure what that means) on the 21st.
Maybe all of those meetings were actually going better than they're trying to make it sound, but the regulators certainly appear to have been paying very close attention to this one, and the timing of the deal cancellation is about right for it to be due to regulatory pressure.
[0] https://www.politico.com/news/2023/12/15/adobe-figma-meet-wi...
Curious why you are referring to the termination fee as an investment, does Adobe get anything back in return for it?
Along those lines, maybe that would have been a better course of action in the first place, give Figma some money as an investor and own a piece of the upside as Figma grows, would probably have faced little or no regulatory resistance
Regulation doesn't have to say "no" to suppress activity, it can also make it painfully long.
They were being investigated in the UK, the EU and the US.
It seemed very unlikely (to me, at least) that all three would approve.
That being said, if valuations hadn't changed so much then maybe they'd have stuck it out.
It's not completely implausible what you're getting at is right, even if your numbers don't quite make sense.
Consider also the fact - news of this merger was almost universally received poorly by Figma users. The internet was awash with "open source equivalents" - "You don't need Figma" articles, etc.
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.
Which I think is overall good for the consumer, many of the companies are only merging to lessen competition, not provide any extra value to us.
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.
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.
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'.
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.
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
"May". Less small business and more corporate control isn't making the world good enough to say we need more M&A.
In the same way that animal cruelty laws is bad for the cock-fighting market. Is the "M&A market" a valuable market worth having?
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.
I'm not sure.
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.
Extremely few companies meet an “inherently moral requirement for society” standard.
Right :)
And good for users because it means Adobe can't nickel and dime creatives by buying out competitors. Tell me you're an MBA without saying it.
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
[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.
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...
(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 less 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.
So paying the 1B breakup fee is probably the cheapest and best option for Adobe at this time.
Do they still have to pay the fee if the reason was regulatory in nature?
Yes. They do
Adobe’s market cap is $272bn. They’re not sweating about $10bn
Almost 5% of market cap is a very significant amount.
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.
[1] https://trends.google.com/trends/explore?date=today%203-m&ge...
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.
Badly run startup valuations fell.
The good SaaS cos that are publicly traded are almost all closer to highs than lows.
The company is still likely worth at least $10B if not much more.
Gen AI and Adobe Firefly are the new rage
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).
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 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.
" 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.
This really makes me sad as an aspiring entrepreneur.
What would be the use of starting a business if the government can arbitrarily block it from being acquired?
I understand this happening in Europe but not America.
I think America is going to lag behind in tech entrepreneurship just like Europe and I wonder what the next potential tech entrepreneurship hub will be.
Ummm. This seems like a huge overreaction. Do you think the founder of Figma -- which is still worth $B's, making him obscenely wealthy 'on paper' (but 'on paper' in a way that most wealth is counted) -- plus, he likely sold enough via secondaries during the later rounds to be set for life -- is bemoaning his career path?
Furthermore, there's something like 20k M&A deals / yr completed in North America alone, the majority that are still life-changing wealth creation events for the founders.
So don't despair - 1 problematic anti-competitive M&A deal blocked by the government does not signal the end of entrepreneurship in the US.
What I find most sad about entrepreneurship is that almost all the successful founders appear to have been 'chosen' by a famous VC or investor. It's almost like what you do doesn't really matter. I've seen some 'chosen entrepreneurs' keep failing and they keep getting second, third, fourth chances and eventually succeed. Being chosen seems to be the most important element for success. But how to become chosen? It seems so random, in a world of 8 billion people, you need to be hand-picked by one of maybe 100 people... And the criteria is weird; basically they need to like you and for that to happen, you basically need to remind them of a young version of themselves... Which is not something you can control.
If you're very different, none of the famous investors will like you (that's assuming they even learn about your existence) and your chances in this industry will be very bad.
Is the main goal for every entrepreneur to be acquired? Also, there is nothing “arbitrary “ about antitrust laws.
How is this 'arbitrary' ("based on random choice or personal whim, rather than any reason or system")?
Perhaps you could aim to actually make money through your business? As in, selling a product at a profit? Taking dividends? I know it sounds wild, but that's how it went down in the olden days.
Why would you start a business with the end goal of selling it?
The use would be to make a profit
There seems to be some misconceptions here. This wasn’t arbitrary. Most acquisitions are not blocked. The US government can block a lot of things for companies, but is generally speaking pro-business. That said there’s a longish history of regulating monopolies, in order to benefit consumers and the economy, so no evidence of a new trend wrt Europe based on this case. (Consider whether that history may be part of why the US had a lead in tech entrepreneurship in the first place.)
Maybe you're an aspiring entrepreneur for the wrong reason, then.
Start a business to solve a problem.
If you really build something users like, with a decent market, you will do fine (as will/have the founders of Figma).
If you hope to use getting "acquihired" to get rich even if you fail, then sorry, the world doesn't need more founders like you.
I am currently working for a company with a few thousands employees around the world.
The founder is still the CEO owning a majority of shares and his second and third in command (or their families) hold most of the remaining shares. He's getting close to retirement and probably will do so in a few years passing the torch on to his children.
AFAIK he came from a very upper middle class background but not real wealth and kept the company alive by being profitable (not Tech margins though). That seems to be a quite sustainable business model that made him, his cofounders wealthy enough to not worry about money even we'd close tomorrow.
Nothing wrong with that and certainly something an aspiring entrepreneur could aim for. It's more difficult though and you need to run a tight ship at times and actually think longterm and how to sustain your business.
It's not been arbitrarily blocked.
I don’t even use Figma, but I a glad Adobe won’t be owning them.
Yeah I miss Adobe Lightroom but you don’t get to install it, adobe takes over your computer
It’s total madness, isn’t it. Long time user, from 1-5, then everything fell apart with CC, subscriptions and the clusterfuck of shite installed on my Mac.
I'm in the same boat. A very long time user and I really liked everything about it. When they started pulling that subscription shit with tons of crapware I had enough. Cancelling subscription (even a short one) was also a terrible (I would even call it criminal) experience. Tried couple of alternatives, and frankly I don't like them. They are either slow, got abandoned in a year or have unintuitive workflows.
I would even pay $500 for a LR Classic without all of their other crapware, but they just like that too much to take my money.
I found a loophole - check my older comments - to let me get out of their system, but they may have closed it. I bought Affinity for a laugh but switched to Capture One for better skin tones, Photo Mechanic Plus for better management. Both those have gone to the terrible subscription model but I’m just going to freeze my Mac‘s OS where it is and have a reliable machine for this.
I bought the Affinity Suite during Black Friday, just to have some decent software on mac to do some editing. I'm far from a professional though and I have no idea how good their software actually is.
Pixelmator/Photomator is an interesting alternative with robust software for both Mac and iPad. I’m a bit too fond of Photoshop layers right now, but I’m tempted to switch.
Confronted with the same sort of problem, I ended up with Capture One and couldn't be happier. There are other options out there, which you should definitely explore.
> then everything fell apart with CC, subscriptions and the clusterfuck of shite installed on my Mac
except it also made Adobe more valuable than it ever was before and pretty much jump-started the ARR / SaaS valuation model that defines Tech today, so it's not ever going away
This part is so true. Adobe under-the-hood SWE feels so shoddy. It feels as if their products, although delivering the good, is strung up by different patchworks. And it spawns files & folders all over your system
Same, I miss the ownership of my photos and photographic workflows from the older lightroom days. It's sad that the industry rolled over to accept this and it trickled to the consumers.
I tried the subscription for Lightroom CC and left my computer on at night to sync my meager 50-100GB to their cloud clusterfuck. Trial period ended after 2 weeks and the sync hadn’t finished – and no it wasn’t an issue with my bandwidth.
Yeah..
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’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.
Or maybe the goal ought to change.
Maybe everything getting acquired by a huge corporation is not a good thing.
I wonder how Autodesk has been able to essentially acquire everything Adobe hasn't virtually unchecked for decades though.
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 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.
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.
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-$15b valuation.
Yeah, can't wait.
it would seem regulatory issues would start to scare away investment
In certain narrow cases maybe, where you really want the monopoly-holder to buy the startup. But overall this is better for VCs because competition breeds both investment and acquisition opportunities. In most cases 3 big competitors seeking to acquire your startup is better than 1 big monopoly seeking to acquire your startup.
What a disaster for Adobe.
They signal they can't build something to outcompete Figma. Their stock price falls
They axe their existing competing product, and is therefore now way behind.
They face problems with the acquisition, which makes their stock price fall again because it signals that not only can they not build products they can't use their money to buy companies that do.
Then it's confirmed they can't acquire Figma.
Then they have to lose 1bn dollars.
And that money is going to a competitor that they took seriously enough to try and acquire at a sky-high price.
I don't think that's a correct analysis.
Adobe is very good at building software. It's not the problem. It's not that Adobe can't compete with Figma. It's that they don't want to.
Adobe has a great engineering team and ships wonderful products. The problem with Adobe is that the business side is anticompetitive, exploitative, and sleazy. Buying Figma, they lose a competitor. Competitors have a nasty tendency to expand to adjacent markets, and that's the sort of thing Adobe likes to nip as early as possible.
If not for their business practices, I would totally buy Adobe products, because they're great.
As is, I don't know if Adobe won't triple prices tomorrow for me to continue to be able to edit my own documents (once they know I'm locked in), or find some other way to !@#$ me up the !@#$. The slight hit to product quality going to competing products and open-source is more than made up for with the stability of having a reliable business partner, or source code I can build myself, respectively.
Adobe is very good at building software.
Is that actually true? XD attempted to directly compete with Sketch and Figma, and was not generally considered to be a success at that primarily because they couldn’t ship features fast enough to catch up.
At the same time, however, Adobe maintains products with no clear competitors due to their quality. This is especially true for After Effects (for motion graphics in videos).
This is especially true for After Effects
Or Illustrator, Photoshop, InDesign, Acrobat...
I know, Affinity exists but as everybody in the graphic industry has learned on Adobe software, switching over is hard.
At the same time, however, Adobe maintains products with no clear competitors due to their quality. This is especially true for After Effects (for motion graphics in videos).
Really not sure if this is true. Probably due more to "network effects". It's hard to compete with Photoshop or Illustrator if everyone is familiar with their UIs and has all their files as PSDs or Illustrator files. Also anyone who would be reasonably close to creating a good competitor would be bought.
Take a look at their five other industry-leading products. UX design was never their forté, but they have the rest of the design world in the bag.
As a former designer, I can tell you from experience that the designers I encountered would much rather have the newest tools at their hand for a subscription fee than be behind in software. There's so much the competitors cannot do (or can't do well), and if your prodcut doesn't work on a subscription model you're never going to be giving the latest features away in updates.
Photoshop is one of the best pieces of software, period.
Premier is, well, the premier photo editing app.
Every designer knows illustrator. UX/UI is just a subset of design.
Many web developers who were around before the HTML5 era will swear by Dreamweaver.
Figma had revenue about in line with Heroku, with a similar growth curve. However, Figma has an even more difficult expansion story than Heroku because it's already near 100% market penetration for its core market.
Salesforce bought Heroku for $212 million. By avoiding spending $20 billion for a similar company, in my estimation Adobe has finally come to its senses.
This really seems like an executive wanted to make an unrealistic long bet a couple of years ago, and since then Adobe has seen Figma's financials and cooler heads prevailed.
They didn’t just pay $20b for something that’s probably worth $500m so I think they won this round.
The US should start doing something about these foreign governments meddling in US business before it's too late.
EU and UK and seemingly everyone else is passing laws and setting up bureaucracies specifically to implement unfair trade restrictions and barriers against US companies and they're basically doing it unopposed, you'd think these actions would at least trigger some tariff threats and WTO complains sadly the government is in a self destruct spiral at the moment.
Let's forget Europe and let's focus on the US market alone.
If we do the math, we have to ask - where would those 20 billion dollars come from that were to be paid by Adobe to Figma investors? I'm sure not from Adobe's coffers, their bean counters would place them onto subscription pricing with a time cap to recoup all that cost. For sure.
I would assume that regulators aren't unaware of that in the said markets (UK/Europe) and are not pro investor (few hundreds) rather pro consumers (millions)
And? Companies aren't allowed to make money anymore?
Total investment is around 350 million dollars. Adobe is paying 20 billion dollars.
What company is making money in this?
It is the investors that poured in 300+ million were going to have a massively inflated payback day, later compensated and loaded on to the backs of unsuspecting end users.
Investors get rewarded for their early bets, and Adobe gets to bet on future profits and growth by acquiring some valuable assets and hiring some talented people this is exactly how it should work.
It’s very easy, just don’t operate in said jurisdictions.
That's not how free trade works or not how it's supposed to anyway.
You can't just go after a sector of your trade partner's economy just to compensate for your home sector's deficiencies.
So governments are supposed to let corporations run unabashed in their jurisdictions?
You can't just go after a sector of your trade partner's economy just to compensate for your home sector's deficiencies.
Is that what the EU is doing, or is it what you yourself think they are doing?
Only if the US wants to lose those pesky UK and EU markets.
EU and UK authorities are not quite as corrupt as the US.
Figma got out better than it was before. It's still a strong product. And Adobe abandoned XD basically giving up this market to Figma.
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?
There was only one company to which Figma was worth $20 billion and that was Adobe, because it was a long term threat.
I just hope Google or Msft doesn't get any funny idea to buy Figma.
I could definitely see MSFT making an attempt, to bring Figma + VSCode closer together.
Sush… don’t give them any ideas
Not to mention the $1 billion termination fee Adobe now owes them.
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.
Oof, that’s a really good point. That would be utterly demotivating.
Instead imagine that the workers actually did get that huge chunk of cash but still had to come into work every day.
Every time a merger fails, an angel gets its wings.
Force megacorps to actually compete rather than just snapping up their potential competitors.
Force startups to aspire to create an actual product rather than just manipulating the lizard-brain fears of irrational megacorp execs in the hopes of a payout.
Force startups to aspire to create an actual product rather
I'm getting on to 10 years in the software industry as an engineer at the moment and in my view this is one of its most disappointing and frustrating aspects.
The whole software start-up scene just feels saturated with FIRE-obsessed individuals who prefer just about anything (money, vacation, travel, fame, ...) over company, product, real building, craftsmanship, etc.
I legitimately hear phrases like "5th time's the charm for an exit and payout!" way too often. It frequently just exacerbates the consolidation of technology, knowledge, wealth, and often hurts innovation, let alone can result in the solid team(s) of engineers left out to dry (although some can be also gunning for the payout in the end too).
In my view, there are just too many sell-outs pawning off solid products and teams to the highest bidder. I wish it wasn't that way.
Every time I hear someone say craftsmanship it's a red flag. I worry the next thing out of their mouth is probably going to be "lets rewrite it in rust". No one gives a damn about how your code is 'crafted', not even your mother. Software engineers are mercenaries hired to create value for shareholders, and anything else is just delusion.
Software engineers are mercenaries hired to create value for shareholders, and anything else is just delusion.
Value is a sustainable product, not some shovelware piece of crap. If the shareholders don't see that then that's their problem, and it's probably best to part ways and warn everyone you know from working with them.
The truth is probably somewhere between yours and Invictus0 comment
This is essentially what I replied to the comment with. Hard agree.
This, in my view, is quite a utilitarian (dare I say brutal) look on work and the world.
You are technically correct, in the same way "following the letter of the law" can be technically correct whilst missing the spirit.
For what it's worth, the engineers I have worked with in the past who take this utilitarian view of work often produce the poorer quality work and sometimes be really quite difficult to work with. This is because, with this view, "documentation", "design", "planning", "quality", and all those sorts of things tend to take a back seat in their mind as they become totally engrossed by "MVP", "well it works, so?", etc.
Personally, I think nuance is important here - I agree, there's a time for keeping the lights on, getting something to show, appeasing shareholders, and so on. However, there's also a time for taking a step back and taking some time to design, plan, optimize, ensuring quality, long-term stability, and hell, dare I say a bit of craftsmanship; life is short, might as well enjoy what you are doing for 1/3 of it and lavish in the art.
Takes all to make a world, I guess.
Wonder how this shifts funding. VCs won’t get same returns/horizons if companies can’t aim for acquisition exits.
Given how Adobe's last purchase of a drawing program (buying Macromedia ten years after being told to wait a decade after buying Aldus and it being split off to be acquired by Macromedia and then off-shoring Freehand/MX to India and then burying it), good.
I still mourn the end of Freehand. Illustrator’s UI never matched Freehand.
And Fireworks
I still keep a copy of CS6 on my windows machine just for access to fireworks. I should probably learn something new at this point but there is just something about the presentation of the canvas, pixel snapping, and palettes that I can't give up.
They really hit the sweet spot with Fireworks.
I wouldn't be surprised if Adobe's decision to phase it out resulted in all these new UI design apps to appear in the market (Sketch, InVision, Figma, etc).
And Dreamweaver
Fireworks so elegantly captured the vector level control along with bitmap effects like Photoshop!
Fireworks crew in the house! Still use it, although I've tried and tried, and am still trying to transition to Affinity.
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.
Sad.
There is no way a company Adobe's size should ever be allowed to grow by acquisition. At a certain point that route needs to be cut off forever.
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.
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?
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.
As someone who enjoyed using Figma, this is an excellent news.
However, I am afraid they will sell to someone else. Namely, Microsoft.
That's still a better long term outcome than selling to Adobe
Agree 100%. Microsoft would actually make the product a lot better and add useful AI elements to it. I just don’t trust Adobe.
Depressing to see people trusting M$ over literally anything else...
What other beloved product has MS acquired and made a lot better?
Interesting thought - why do you say Microsoft?
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).
[1]: https://www.cnbc.com/2023/01/11/microsoft-looked-at-figma-bu...
Photographers: is Adobe Photoshop still the king of photo editing?
I strongly dislike Adobe’s “subscription only” business model, but it seems the market is telling them that subscriptions are a-OK: Adobe’s profits are very steady and are up 70+% in five years. [https://valustox.com/ADBE]
I'm not a photographer, but pretty much everyone I know who does anything with photos or image manipulation is using Photoshop. I'm the only person I know who uses a Photoshop alternative in any capacity (pixelmator)
The Affinity suite of products is pretty popular, at least what I've seen from non-professional use. Not sure what their professional use numbers look like, but for at least Photoshop/Illustrator/Publisher they seem like a real competitor.
I like Capture One as an alternative to lightroom for a fujifilm camera, it has great integrations with the camera’s film styles feature. It doesn’t offer the more powerful image manipulation features of photoshop though. It can be one-time purchased for the yearly release or subscribed for continual updates
For photo editing, PixelMator Pro and Affinity Photo are great.
I feel like there are actually more great options out there today than back in the pre-subscription days of Adobe. It all depends on what parts of Photoshop you're actually using, but between Affinity Photo, Pixelmator, Capture One and many others, there's a good chance that you can find something for your needs.
Depends on what kind of editing is needed. Most professional photographers I encounter use Lightroom, but they don't do any heavy editing like cutting out/in actual objects, but just modify color curves and whatnot.
Besides, Photoshop really isn't a competitor in any way to Figma, they have two very different use cases. Closest competitor would be Adobe Illustrator.
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.
Isn't Zeplin a competitor?
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).
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?
Sketch
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.
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?"
A CEO also owes it to their employees and investors to let everyone have a massive payday.
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?
Here here. One word, nay, one letter in response:
X
Do you actually believe that, or are you mocking a bit of startup-culture hubris?
when is the other shoe going to drop?
Keep an eye out for the IPO, that'll be their next chance to sell out their customers.
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?
The $20B price was a massive overpay is the most likely reason.
This exactly. When someone offers you $20B, it's hard to turn it down. In Adobe's case, $20B is a bargain price to stifle a competitor.
Even if Figma founders didn't want to sell, all the VCs and other investors would force the hand.
Assuming your numbers are correct, they sold for 50x ARR, which is a very very good price. I bet that’s why. It’s hard to do better than that.
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.
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.
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.
Prices will creep up, product segmentation will be introduced, pop-ups pushing expensive service add-ons will eventually appear
Have you used Figma lately? All of those things have been happening for years with Figma, even before rumors about the Adobe purchase appeared.
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.
Absolutely, that I agree with.
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.
The UK regulator blew this deal up. Founders should think twice about doing business in the UK.
The DOJ was surely going to sue, and most likely win. Adobe killed their own worse product to buy a competitor. Seems like an open and shut case.
Your analysis seems extremely short-sighted.
So you're saying if you try to build a product, fail and want to acquire that product from another company - now that you have 0 competition with that product - that should somehow be illegal? Why exactly?
Also what product did Adobe had that was in direct competition with Figma?
Adobe XD: https://en.wikipedia.org/wiki/Adobe_XD
Adobe XD was a Figma competitor. However, Adobe stopped development after they announced the Figma merger, and you can still use it today.
I am opening a bottle of champagne as we speak.
It is time to remove electron based app and invest in something that will have a proper memory management. Not only 2gb. My phone has more than this.
You have cornered the market. Now deliver.
It's amazing though. The performance of Figma is better than all native vector apps out there.
Has performance in Sketch fallen in recent years? I know it's not as popular any more, but years ago when I used Sketch the performance was always top notch.
Yes and no. Everything is fine until you hit the 2gb limit. The average professional laptop has a 16gb ram. Figma is not only the vector app. If someone wants serious vector work, Illustrator and Affinity Designer provide a solution.
Figma is more than this, and the complexity of the workflows requires offline support and more memory available to the app.:)
Honestly, as a Figma user and fan, this is great news. For Figma employees probably not so much.
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.
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.
I can not describe how happy this makes me. Fuck Adobe. I will never forgive them for buying and killing Macromedia.
Yes, but they will probably just sell to number 2 on the buyer list, who may not be much better than Adobe.
Have to be positive. Just about any company is better than Adobe.
Counterintuitively this will lead to more monopolies since with less likelihood of "exiting" startups via mergers and acquisitions there'll be reduced interest in venture capital and therefore fewer startups capitalised to the extent that they can compete against large monopolies.
If you think VCs are rational, you’d be in for a fun ride.
I don't think that you need VCs to be rational for what I'm saying to be true.
LPs will see this as reducing the likelihood of making their money back via investing in VCs -- or at least, this is a reasonable theses, and those that grow their customer's funds the most might make this assessment. In the long-term this would transform the landscape of VC which is downstream from institutional investors.
It can also have a cascading effect due to how reports and disclosures over investment strategies get shared and firms benchmark themselves against leading firms.
How much does figma lose from a year's worth of operational focus being distracted by this impending merger?
Adobe is paying Figma a 1 billion dollar breakup fee this week. Sounds like a very good deal for Figma.
I guess not much seeing what they have been shipping.
I tried to cancel an Adobe CC subscription the other day and they wanted to clawback $60 for a $120 yearly subscription. And their customer support wasn’t helpful at all. Needless to say, we don’t need more of this kind of behavior, especially with Figma!
I've been there too, it turns out to be a battle of persistence.
I just kept the chat window open for 3 hours one afternoon while working, replying every 5 minutes that no, it wasn't acceptable, and I wouldn't pay anything. Slowly they started reducing the amount until they got to 0.
At points they got extremely aggressive, but from reading other people's stories online, that's just part of their training.
Can Figma issue bonuses out of the $1B payout?
That would be a really smart move to keep employees motivated. They're probably extremely upset and anxious about this deal falling through.
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.
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.
Go public? Why shouldn't you have to pay taxes on it? Are you going to stop using the roads when you are rich?
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 have the feeling this is only getting worse now that borrowing money is suddenly more expensive..
Adobe acts like a proper "wealth manager" and not a creative company - good for Figma!
Or they could see the competitive landscape for creativity changing fast and view that Figma's product is an evolutionary dead end.
They might see a Gen AI approach to Figma that will kill Figma in 5 years.
completely unexpected. wonder what this means for the long-term future of Adobe. I only see Figma growing in importance from here
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.
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.
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".
How is this an experiment? Don't we remember Standard Oil, AT&T, DOJ vs MS, etc?
Bad news for Figma. I am hundred percent sure that Adobe's alternative product will dominate the entire design market.
Adobe discontinued their product. What do you mean?
someone help me understand: Figma is a UI designer/Balsamiq like app worth a billion dollars?
Great news for Figma lovers.
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.
Good.
Yeah that's sad because couldn't pull a VMWare onto unsuspecting UX desgin community I suppose.
What's wrong with staying a small profitable company that loves what it builds and cares for its customers?
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
Amazing news!!!!!!!
Figma’s founding vision was to “eliminate the gap between imagination and reality.”
While this is the first time I’ve seen their vision written down, it feels like they’ve done a great job in fulfilling this initially for software product design. Excited to see what comes with a renewed independent focus!
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.
I wonder if Figma is cashflow positive. They must've hired an army of people over the past 18 months. The $1billion cash infusion will help for sure.
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.
I’m just shocked that it’s been over a year since this merger was announced, I feel like it was sometime this summer, turns out it was last summer!
"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?
Best news ever. I don't know anyone in design community who was happy about this.
Good news. I guess there are some valid (societaly desirable) reasons for companies to buy other companies, but this doesn't seem to be one.
Now, I want to read that Microsoft is abandoning the Activision/Blizzard acquisition, a similarly anti-competition deal.
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.
Sorry my melancholy but it seems that sooner or later everyone sells out.
That's great news.
I wish someone would undo Adobe's Allegorithmic buyout, they lost all their ambition after buyout.
Can someone tldr why Figma is so important? I’m not familiar with their offering.
Wow regulators win for a change!!
So will Adobe put more resources to help their pre-maturely abandoned XD catchup?
Imagine being Dylan Field staring at a $1 billion+ payday, and the government tells you that ain't happening, lol
Good! This would have created yet another monopoly and adobe would have ruined the company
How hard is it for Adobe to offer a competing product? It's not like the new features are deal breakers.
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?
I am curious if XD will still stay EoL or if they write a blog post about it's bright future in 1-2 days.
Wonderful news. Adobe was bound to ruin this product, whether on purpose or not. This is a win for the consumers (for once).
Except outlawing acquisitions by larger tech companies will absolutely reduce funding and incentives to start companies, and result in less products, less companies, and less competition.
I'm fine with some other company buying-up Figma, just not Adobe. Microsoft could buy them (and hopefully not repeat what happened to Expression Blend) - or maybe Alludo could resurrect the Corel brand and launch Figma under that title?
The reality is that for extremely high-growth companies such as Figma, only companies with an extremely strong existing business and strategic fit can afford to acquire them. Corel, for example, was valued at $1bn in their 2019 acquisition. There's absolutely no way they could acquire Figma. At the same time, VCs are betting on Figma-like outsized exits for their model work.
I get people are dying to stick it to the big tech cos, but the reality is that the long-term effect of actions like this is reduced funding and less new, disruptive companies – and strengthening the situation for the cash-rich behemoths like Microsoft, Google, etc.
How would Figma be disruptive or weakening tech giants if their plan is to be acquired by them?
Clearly Figma is providing a valuable product to the market. In part visible here by how people celebrate this decision. But people are celebrating Figma's continued independence without understanding that without the possibility of being acquired for a large amount of money, the funding and incentive situation that resulted in the beloved independent Figma wouldn't exist.
This is not as much about Figma, which is big already and will be fine, but the 100 other potential Figmas that might not even been started yet. They will have more difficulty finding funding, attracting employees with equity, etc., when the scenario 'big tech co acquires company for lots of $' doesn't exist anymore.
Why would anyone go worth at a small company for equity if there's no chance to get liquidity? Why would investors invest? This decision might improve the short-term situation of the market, but over the long-term, I can only see how it benefits the big companies, which rely on today's cashflows / RSUs to attract people.
Are you saying that the business of "we make a thing and we ask for money from our users for said thing" model cannot work?
Presumably because they hope the company become successful and it sells many licences and they get a share from that pile of money.
I'm saying that companies like Figma, which has raised $333 million dollars in venture capital, at up to a $10bn valuation, cannot exist if those investors don't see sufficient options for liquidity.
And given that people strongly value companies like Figma, as evident in this very thread, that would be a bad outcome all in all. The only market participants for whom this wouldn't be a bad outcomes would be big, established businesses that have to fear less startup competition.
We value Figma the product. I couldn't care less about how much money they raised.
This is why I'm asking if you think it is impossible to make a Figma like product financed from you know the users paying for that product.
"I value Figma the product, I couldn't care less about how much money they raised" is an argument like "My power comes out the socket, so I couldn't care less about building power plants". It's hard to have one without the other. Figma the product was built with the the money they raised.
They couldn't acquire Figma for $20 billion but that doesn't mean Figma isn't acquirable. It just means the founders and investors get a bit less.
It certainly isn't good for Adobe as they will have a strong competitor in Figma to deal with.
It is good for Adobe: they'll be forced to make their products better.
...I hope!
Which they thought was harder than spending $20 billion acquiring a competitor.
Maybe it would be more accurate to say that they that there is no way for them to make a product that will steal Figma's market for less than $20 billion.
Adobe's despised reputation in business practices makes it hard for users to choose Adobe when any other creative option when it is available.
That would certainly be good for Adobe's users, but it means they'll have to put in a lot of work, which costs money that could otherwise buy so many yachts.
I think the "disruption" narrative has played itself out by now. Nothing has been disrupted. Society still largely functions the same way as it did 20 years ago, and the same firms are mostly still running the same businesses.
We were promised a radical new world, what we got was a couple of apps for fast food delivery from McDonald's.
Hmm... I struggle with your post. What about AMD vs Intel? Or TSMC / Samsung vs Intel? Intel is far weaker that it was 20 years ago, and chips are cheaper (inflation adjusted) and WAY faster 20 years later. Is that not a win? I feel like desktop computing is basically flying cars at this point. For 1500 USD, you can get 5GHz CPU, 32 GB RAM, 2 TB NVMe drive, reasonable GPU that is utterly light speed compared to 20 years ago. The first time I ever used an NVMe drive, I literally thought the Linux commands were not running correct because they finished so quickly!
Last one: I promise that I am not trolling here: What about psuedo-self-driving that Tesla and a few others have in cars now? On an expressway, it is pretty amazing -- hands off the wheel, talk with your friends with no worries of distraction.
I think the person you’re replying to was referring to the post-smartphone startup era. All those hardware companies you mentioned are older than dirt. None of them qualify as “disruptive, VC-backed startups” like Figma, Uber, or Airbnb.
Back in the olden days before the free-money-zero-interest rate policy, companies subsisted on selling their product, not their company.
I'm fine with some other company that has a track record of doing bad things to the things they've purchased, which is no different than the company I'm against buying this company.
How are you okay with MSFT? The logic is not very sound
This is so far from outlawing. And we are soooooo far from having a shortage of tech startups.
It's not that far. A bureaucrat will decide if you can exit the way you want to. Still want to fund this venture?
Because there hasn't been a fear of them blocking exits.
It's not up to the bureaucrat but to the courts. The FTC doesn't "approve" or "reject" deals--it can just take legal action to try to stop a deal, but that still gets adjudicated either in a federal court or in an FTC administrative law court to a judge which is appointed independently.
https://www.ftc.gov/enforcement/merger-review
https://www.ftc.gov/legal-library/browse/administrative-law-...
Adding a legal battle with the FTC to the cost of any acquisition can chill and kill otherwise obvious deals, and or sap value out of those that push through.
FWIW, I think there are good reasons to limit tech consolidation, including this one. But anyone should realize that it will reshape the industry in unpredictable ways, including some that harm "real" consumers and builders.
But anti-trust isn't being invented now. It's always existed. Companies already factor in anti-trust risk when doing M&A—it's just hard to quantify the expected value of that risk
If anything, IMHO, we've been too lenient with anti-trust in Tech in particular over the past 5-10 years. This just dials things back a little, and makes it so that "hard to quantify" risk is a little more likely than it was before, and certainly a little more likely than zero
I don't think Adobe / Figma specifically is an "otherwise obvious deal" precisely because it has such obvious anti-trust risk. The fact that this merger was even announced is all the proof I need that we were being too lenient. Figma can still sell to any number of huge Tech companies
Published guidance is the correct tool. Blocking acquisitions doesn’t really decrease uncertainty.
The guidance already exists. Don't buy your biggest competitor, unless you're but one player in a diversified sector.
Blocking acquisitions creates precedents.
What’s net new about this? It has been the case for decades that if you try to sell to the only major competitor that it could be blocked under antitrust.
True in the US, not true in the UK or EU.
Fair, I'm not as familiar with the UK/EU regulatory environment
That’s who’s blocking the sale according to Adobe’s press release: https://news.adobe.com/news/news-details/2023/Adobe-and-Figm...
Depending on specifics, the EU stopping blockbuster acquisitions in the US startup ecosystem feels ripe for abuse.
I can assure you the EU isn't blocking this to prevent US founders from making money
I’m pretty sure no VCs are kicking themselves for having invested in Figma.
Or, and this is a crazy idea I know, maybe start a company with the notion that it will be a profitable, long-term success instead of a lottery ticket
A bureaucrat also decides the amount of lead you can put in your product and sell.
In fact, there are all kinds of things you can't arbitrarily do because it hurts consumers, both physically and financially. This includes strengthening industry monopolies which has time and time again demonstrated that it causes incredible harm to entire segments of society.
I think it's fine if no one starts vampiric companies that dump free services on the public destroying the perceived value of software for the purpose of a fast unicorn exit. Of course, these companies always look to advertising for funding so they are obtrusive.
Unless you are thinking of real companies that would be affected by this ban? Retail stores don't care about this ban. Companies that sell real products wouldn't care. If they sell real software services and plan to turn a positive profit rather than exit this wouldn't impact anyone other than unicorn chasers, which are bad for everyone.
But Figma isn’t a vampiric company dumping free services for the purpose of a fast exit. It’s been around for over a decade and charges _more_ for its principal product than Adobe charges for comparable products.
So by your own definition, real companies are affected by this!
I didn't know Figma was going bankrupt, is it?
I don’t see the relevance of that question: outcomes for companies fall onto positivity/negativity ranges beyond merely a bankrupt / not bankrupt bjnary.
The company will probably do well for the reasons you mentioned, only some late shareholders are affected. A good exit for the economy would be actually an IPO.
If your only goal in founding a company is to get acquired, you haven't made a company; you've made a product, and probably not a profitable one.
We should be encouraging way more medium-sized companies, that operate sustainable business models, make money for their founders and employees, and aren't subsidized by cheap money. I think if startups actually had to sustain themselves we'd see a lot less grift and waste in VC.
I don’t disagree with the notion that there should be more medium sized, self sustaining (“lifestyle?”) companies, but such statements are rarely if ever followed up with _why_ this is a desirable outcome for everyone involved.
Or no lifestyle companies. What would be the harm without them?
I guess it comes back to how you view the current system. If you find the idea of unicorns and acquisitions and the further centralization of capital distasteful, it's kind of self-evident why you'd want to see something that represents a break from that norm.
For me, yes, I see the obvious argument that more money leads to more (and faster) innovation. But it can also result in an economy that is too tightly coupled and dependent on the might of a few massive companies, whereas an economy that is distributed across more smaller businesses is more robust.
At the extreme, you might imagine South Korea: a country that is highly consolidated into one or two major cities and propped up by massive, economy-shaping corporations. I don't think anyone would disagree that Korea made massive economic strides in a short period of time, but I think there's much more debate about the long-term health of the Korean economy and people now that their continued prosperity is so centralized.
And, of course, there's the consumer angle; though I can't claim any scientific methodology, my impression of the sentiments surrounding this merger are that it was pretty popular with Figma's investors and employees (understandably so, as they stood to gain from the merger), but was deeply unpopular with their customers. You could make the argument that "a Figma owned by Adobe is better than no Figma at all," but consumers have seen it all before at this point: a good product is acquired, and then either a) the pricing model changes, b) the rate of innovation slows down, c) the product is ultimately abandoned somewhere down the line, etc, etc. None of these outcomes are essential truths, but they are common outcomes of companies getting larger and larger to the point where a business unit that is otherwise healthy is deprioritized because it is not profitable enough or growing fast enough for the larger parent to care; or, conversely, the smaller parts suffer because the larger parent encounters trouble and can no longer sustain their acquisitions, even if they are keeping the bloat afloat.
Yeah, I get it, some founders start their startup motivated by a potential MA. And this is great for them.
However, as a customer, I absolutely hate this. Instead of finding a way to actually make the product/service self-sustainable, they just increase the number of (usually) free users. But once they sell, normally the new owner either shuts the service down or turns it into crap.
Yeah. Keybase was the one that really showed this model to me, and soured me on the whole startup scene. What a crap way that is to run a business.
It’s a personality thing. The type of person who starts companies tends to start a lot of them. The idea of sticking around at a company and keeping a steady hand on the tiller (after all the big product problems have been solved) is anathema to these folks. What they need is a succession plan.
It just happened that mergers and acquisitions turned out to be the cleanest, easiest way for founders to hand over the reins. In days past, companies would go through this transition process internally, often by succession through the founder’s family. The founder may have been a very entrepreneurial type, but the child who was raised to be the successor was more of a managerial type. When it worked out, anyway. Sometimes none of the founder’s kids were suitable. Or the founder tapped the wrong kid to take over.
Agreed. I think if you’re passionate about an idea then you should be able to channel that energy into making it a sustainable business. If you can’t motivate yourself to do that… maybe let someone else who is motivated do it.
I think this is net-negative for consumers, in a pretty significant way. If the most incentivised lifecycle is to seek VC investment to make a non-susitainable product in the hope of being acquired and swallowed into The Borg and shut down, we still end up with less good products.
- Product life-cycles become short, consumers are weary of anything new. How many times have you seen product launches here on HN where the top comments are worrying about sustainability? That either there will be a rug-pull for consumers in the future, or they just plan to be acquired and shut down.
- Larger companies continue to have no incentive to actually improve their product and compete with others if they just purchase everything in the market.
"Aim for the moon so if you miss you still end up amongst the stars."
The actual _goal_ is to be an independent successful company, but getting bought is the back up option that provides a safety net. If it was success-or-bust (no "-or-get-bought") the risk calculus would not make it worth it. It would make the American economy much more conservative and much more like Europe.
But when the most common business plan is "1. Spend VC millions, 2. Acquire non-paying customers, 3. ???, 4. Profit!" it kinda seems like the un-written step 3 is "get acquired by a MAGMA company". You just say something like "oh, we'll get revenue by adding advertising / premium accounts later" as a fig-leaf for the public.
I doubt that is true.
Let's say you're pitching your startup to a potential investor. Would you pitch it as "the next Adobe" or "something Adobe might want to buy"? Which one would you be more likely to invest in?
I get your point, but that is not really the right framing because that is not how to pitch your startup.
Tell me what it does, what its long term vision is, how and by when you’ll make money, what’s your moat, how you will grow.
Acquisitions also reduce competition. If competition only exists to be acquired you are only funding an ever-growing oligopoly, the more acquisitions into the oligopoly the more power they have, diminishing the number of available markets to compete in (since one of the oligopolistic companies will certainly have more capital than a newcomer).
Anti-trust is not a new thing, it's even considered a foundational aspect of competitive capitalism by some thinkers...
Tech acquisitions haven't been outlawed. And this particular situation is applicable to perhaps 2 or 3 a year (all of which are multi-billion dollar values).
I doubt very much if this will stop funding of new companies except perhaps at the level of Uber/WeWork.
Just like when there WERE no megacorps to buy smaller companies and we were left with none at all.
This isn't that though. This is a company with a clear monopoly trying to hoover up smaller competition to reduce competition. We shouldn't incentivise this behaviour, on either end.
If this is the liquidity event that Figma were betting on from day 1 that's their mistake for not foreseeing regulators being unhappy about it.
I think it's the opposite. Because many companies start with the dream of an exit with a high price tag, and what they end up developing is a missing feature from a bigger software suite, which is already enshittified by a big software house to the core.
Instead, smaller companies can start and slowly get bigger while getting bigger. Affinity suite is a great example. While their photo tool is not my cup of tea, designer is great, IMHO.
"Oh no!, this hampers my ability to harm industry competition and hurt society, this isn't fair!"
How about you go and fling yourself in front of a bus
Got bit by this. It felt absolutely horrible to not have any recourse. We had a yearly adobe sign contract, it was based on a particular usage estimate and quite high. Called in weeks before the renewal and they said we missed the window to cancel. There was no option out of it. No escalation. Had to stomach a massive bill for of a product we weren't going to use.
Is not paying an option? Ran into this issue with a large software provider once but they had some actual account management negligence / weren't responsive so we used that to hang our hat on not paying and eventually they let it go.
No, because contract law is built for centuries past and lets Adobe screw you for trying this. Not sure if they do, but they definitely could.
Back when communication latency was days or weeks, allowing sticky auto-renew that ignored payment failure and asked for a lot of heads up time on a cancellation made sense. It was exploitable, but it was worth it to buffer the latency. Now we don't have the latency, so it's just exploitable, the law hasn't caught up yet, and Adobe is happy to exercise this advantage against you.
I'm curious, what exactly are the ramifications of this "contract law" in the context of Adobe subscriptions? Adobe will sue you? Are they suing large amounts of customers?
They'll send you to collections, which'll ruin your credit.
How does that work? I don’t think Adobe has your social security number.
You don't need someone's social security number to send them to collections.
How does it affect your credit score then?
The information you provide with payment - name and address - is sufficient to add a delinquent account to your credit report, which will immediately tank it. Again, SSN is not necessary for this.
Does it though? I thought only credit accounts affected your credit score. This really isn't that...
Gym memberships, cell phone plans, utility bills, unpaid parking tickets, etc. will all report to your credit report if you miss payments. Debt, not just credit cards. A delinquent account on your account will drop it by 100-150 points immediately.
The risk-reward here is out of balance for SMB, so while we could just not pay it was more headache not to. Here is hoping for some class action. Perhaps small claims but its pretty frustrating that a company as large as Adobe has this in place.
Also that their cancellation window has limits on both sides - I told them more than six months I advance to cancel my renewal and the refused and toll me to call up again in a particular 30 day period close to the expiry date...
When your business has to depend on subscription engineering like this, it means the underlying product is not good enough to stand on it's own feet.
That's the worst part, the products are great. $20/month is reasonable for PS/LR considering that yearly releases were retailing for $500+ in the CS6 era. Cloud storage and generative AI credits are rolled into those costs. New features are showing up again. Regarding Photoshop, there are no real alternatives.
It's not that Adobe's depending on subscription engineering, it's creative pros 100% dependent on Adobe products being willing to put up with this shit because they have quality products with no alternatives.
Unfortunately, the same is true for Illustrator. There are competitors that have 95% of the features, but that remaining 5% is critical for serious professionals.
Exactly. The downside of subscription software is that companies like Adobe become life insurance companies that produce software. Their enterprise value is defined by churn rates and there's a strong incentive to lock customers down to reduce that risk.
I work for a huge org, and we tell companies like this to go fuck off with terms like this. The real scam of Adobe is that there is no way to assess engagement rates with their tools. The only way to get this data is by metering PCs or datamining your IdP.
The problem is that Photoshop is actually pretty good (although Affinity definitely gives it a run for its money and is as good for simple things).
Adobe CC not strong enough? That's not it.
Subscription retention practices like this are to juice quarterly numbers to delight analysts on the earnings calls. If Adobe was a private company this level of lock-in desperation wouldn't be necessary. We'd still be able to buy the software once like we used to.
It probably is, but rent seeking has no limits.
Your comment makes me think you have no experience with Adobe's product line if you think it can't stand on it's own feet. In fact, after Windows, I'd imagine Adobe software being one of the most pirated apps out there. Doubtful people would pirate software that's no good.
While your whimsical comment might apply to some rent seeking subscription products, as phrased, it does seem like you are totally out of line with it application in this thread.
Have you tried not paying?
One of the key functions of procurement: Checking for automatic renewal clauses in contracts and removing them when found. This is a red flag in many companies.
Many states are cracking down on these practices and no longer consider “sorry you forgot to cancel” as a legal agreement binding you to a renewal. Common sense says you should have to consciously renew vs accidentally doing so via some bogus contract clause.
Of course if you’re relying on such gotchas to keep subscription numbers up you’ve already failed and are just on a slow march to irrelevance while leaving pain and destruction in your wake.
Great news, where do I testify? Adobe tried to bribe me personally to not fight their subscription cancellation policies for the company I was representing. Given how obviously unimpressed I was with the whole thing and how I was clearly not the target market of a creative cloud subscription, I can only assume that this is a policy that the sales rep tried to push, rather than a one-off they thought might work.
Looking at your profile, it says you work for Google, so I assume this is in the context of google? You guys probably have the internal legal resources to advice you. If it was not in that context, ChatGPT at least suggest that this is first of all a federal fucking crime (Domestic Bribery Act seems to apply here) and you can contact the Department of Justice, the FBI or report it to the SEC which offers a whistleblower program.
Please consider your next steps carefully though and contact legal counsel basically immediately since you just publicly accused adobe representatives of a federal crime! Frankly, I would ask Dan to remove your comment ASAP.
Fun Fact: The SEC offers financial incentives to people who report those violations!
This sounds it might be like a hallucination. I've never heard of any "Domestic Bribery Act" and I'm unable to find one in cursory online searching. (In 18 USC there are prohibitions on bribing public officials, but that doesn't seem relevant here.)
Fascinating, i think you are correct. This website at least suggests that there are some other laws regarding domestic bribes: https://www.globalcompliancenews.com/anti-corruption/anti-co...
But "Domestic Bribery Act" seems to be a hallucination. I have so far only encountered fake sources or links that don't exist, this kind of hallucination is new and unexpected.
Thanks for making me aware of this, quite scary how utterly convincing chatGPT was in this instance.
Also FWIW, I'm in the UK and was likely dealing with a UK subsidiary of Adobe, so the laws would likely be different anyway.
The UK Bribery Act is, on paper, very strong and broad in application. Unfortunately prosecutions under it are exceptionally rare.
The SEC effectively has worldwide jurisdiction, for something that relates to a USA-listed company. The tip submission form seems relatively lightweight. https://www.sec.gov/whistleblower/submit-a-tip
ChatGPT is trained to sound convincing, not to be correct.
I don’t think it’s new or unexpected at all. Remember the lawyers who used ChatGPT and it ended up fabricating case law?
ChatGPT is interesting and all but it’s seriously untrustworthy.
ChatGPT is not a good place to get legal advice. Regardless, there are a variety of ways that you can get boned for accepting bribes in your capacity as an employee. In the US, the "honest services" laws have been weakened by Supreme Court action, but there are other paths to criminal prosecution.
The advice of "STFU and get the comment removed" is spot on.
This was several years ago in a different role before my current employer, and has nothing to do with my current employer. I agree that legal advice would have been good here, but to be honest I was just glad to cancel the subscriptions and move on with more important things. The company I worked for is sadly out of business now so wouldn't be a target of any action, and I stand by my comments in a personal capacity so have no wish to take them down currently, but thank you for the advice.
I wouldn't be (and am not) making this sort of accusation on behalf of any operating company without prior approval.
Unless you have clear proof of that (saved emails...) and own the company, or you were acting as third party (consultant,...) I would advise not making those accusation in a public place without consulting with their legal representative. It is simply not in your personal interest, and if someone starts an inquiry into this and said company doesn't want to help much you might find yourself in the middle of two legal giants in need of a scapegoat.
I’m pretty sure adobe is not dumb enough to start a lawsuit that would give the defendant the right to go through their records …
Thank you for your advice. The company no longer exists. I don't have any records of this because it was over the phone and probably 4 years ago.
It’s great to see the FTC is looking into this. Every time I’ve had to deal with Adobe subscriptions it always feels like they put you through some maze which usually ends in being forced to pay a cancellation fee or losing in some other way. I recently lost 160 asset tokens I had saved up in Adobe Stock after canceling my subscription. I’m sure it mentions this in the fine print somewhere but the only reason I had saved that many tokens up was because I couldn’t cancel without paying the fee. So they trapped me, took my money and then took back the tokens I only paid for because they locked me in with a cancellation fee in the first place. At the very least I should be able to keep the asset tokens. The whole thing seemed absolutely ridiculous to me.
There is only a cancellation fee if you buy an annual subscription, paid monthly, and then you don't pay for the 12 months you committed to. For people who don't want to buy a year at a time there is a monthly plan that is more expensive since you are no longer buying in bulk.
I looked around, and I can't find any names to pin to the investigation. There's a very low-tech way to find public staff contact information, but you need a name. I don't even have a telephone number for what is probably the correct group (Division of Financial Practices), just their DC mailing address. Regardless, I can tell you that right now that Washington offices are empty. Skeleton crews only. Check back in after the first of the year.
Most effective thing to do relative to your time is probably participating in relevant FTC requests for public comments: https://www.ftc.gov/policy/public-comments
Is that even legal?
imo, Adobe is falling behind. Photoshop's generative AI is substantially worse than what I can get from models on Tensorart/CivitAI + an upscaler.
It's way easier to produce something that can go live right now without much editing in CivitAI -> Upscale in Magnific -> Add to Canva.
I couldn't care less about AI in Photoshop but I'd love AI in Illustrator to generate vector stuff.
AI sucks pretty hard at generating Vectors. The only option for now is to generate something in an illustration style and have it vectorized.
Text to Vector appears to be a beta feature in Illustrator currently: https://helpx.adobe.com/illustrator/using/text-to-vector-gra...
I think what you mean to say is Stable Diffusion. CivitAI is primarily a host for SD models to download and run locally.
You can run many of the models directly through CivitAI. You get lower quality images, but you can upscale them through an upscaler.
Just go to any model and click "Create". You can even use examples from the model to prefill the prompt.
For example, you can scroll down and click "Start Creating" on this page: https://civitai.com/images/3908138
CivitAI’s web tools are great for someone getting their feet wet but it presents an extremely stripped down options UI relative what’s available in Draw Things on iOS/macOS or SHARK on Windows.
But with Photoshops, I can generate things to be seamlessly placed into my existing scene, with it understanding things like placing the wheels of the car it just inserted on the ground, with a shadow underneath and such, again seamlessly integrated with my existing image.
It's very much not just about generating an entirely new AI image.
Can I do that with Tensorart/CivitAI?
Isn't that just inpanting? Stable Diffusion has had it for a while.
Eg: https://www.youtube.com/watch?v=No1_sq-i_5U
You can do that with any part of the image, this video shows a face sample.
It might be.
https://youtu.be/Sp6K3qpVFO0?t=95
But at the very least, it seems like it's easier to work with in Photoshop.
Worse or not, a meaningful majority of users will never even understand the alternate workflow you just described.
Then they will be outproduced. I, a graphic design noob, managed to create a bunch of social media posts for an upcoming project that included a completely custom 3D character in precisely the poses I wanted, all within an hour. Without gen AI, I would have likely spent hours digging through stock photos, modifying lighting and colors, and still not achieved what I wanted to.
Not using the latest and greatest tools in your profession isn't really a flex.
Adobe's vision is fully supporting the content lifecycle, not only the creative aspect. In this sense, Figma made far more sense for Experience Cloud rather than what it gives to Creative Cloud.
Maybe they are hampered by "doing the right thing" and only training on Adobe Stock content?
Firefly (Adobe's generative AI) works well if you're already stuck in a Photoshop-heavy workflow, for quick successive generations right in the canvas if you're editing or extending an existing image. Better than Stable Diffusion Photoshop plugins I've tried.
What Adobe product is intended to compete with Figma, Adobe XD?
Yes, XD directly competes with Figma.
It could. XD is dead but maybe this might inspire Adobe to revive it.
They will be forced to now, isn't it? I am sure they wouldn't want to start from scratch. But have to admit, XD was nothing as compared to Figma right now.
XD never took off. If Adobe wants to get into the UI market they would need to go back to the drawing board and start from scratch. If you're starting with a failed product you're most likely going to fail again.
Hmm. May be they see Penpot and learn something from it.
They had a really good core in my opinion. The overall performance and especially the prototype preview was really nice. Every change was instant and not even heavy animations were a problem. Much nicer than the Sketch slideshow style prototypes and Figma prototypes that load very slow, not to mention the bugginess.
Judging by the 20bil price they wanted to pay, I guess they know what kind of investment would be needed to compete now.
Once upon a time, digital product design happened in Photoshop and Illustrator. Then competitors like Sketch and Figma came out with a better product. This made Adobe create XD to compete, but it was unable to make a good product so instead they tried to purcahse their competition instead of making something better.
9 months after Adobe announced it was to purchase Figma (and 3 months before it hoped the deal would close), Adobe discontinued XD.
Fireworks tried to fill the gaps between PS and Illustrator, but never got traction.
That was my understanding as well, hmm
Fireworks wasn't an original Adobe product but a Macromedia one they got during the acquisition. Adobe seems to have had some massive lack of effort for those (Flash being the prime exemple).
Yet another example of Adobe purchasing their biggest competition and then shutting it down!
I couldn't disagree more. Fireworks was a perfect blend of raster and vector editing and was killer for early 2000s web design work. It was an amazing Macromedia product that got neglected by Adobe.
If I'm in a cynical mood I sometimes think it's because an up-to-date Fireworks would have cannibalized the sales of PS/AI, but I think that gives too much credit to Adobe.
RIP to Fireworks, it's the first tool I ever used for design.
I'd bet they're hoping to just have an AI alternative by 2025
Adobes cancellation practices are literally illegal in the Netherlands by the way. The deceptive trick of "pay monthly for a full year" and then hitting you with the cancellation fee is against local law. (It's called de wet van Dam for the curious.)
You have to threaten their customer support with legal complaints to make them comply with it, it's super frustrating to deal with. They do fold immediately when you do this though, so they know it's illegal but hope the frustration of getting through customer support will deter people (and avoids the legal problems).
And yes I know you can just switch subscriptions and use the early cancellation period there to avoid the hit back fee from cancelling. It's the principle that's scummy.
I recommend using virtual credit cards for subscriptions. I just cancel the card if the account cancellation process is hostile in anyway.
What's the best way to acquire those?
The bank's smartphone app?
Not all banks have these unfortunately, even though one time virtual cards should really be the standard for all online purchases
Yeah, sadly. But really it's the best way to do virtual cards.
If a bank doesn't offer these, next best thing is to go to the bank that does.
If you're in the US, then I can recommend privacy.com
My current bank (Wise) also offers virtual debit cards. I am in the UK now and Wise works well. I still use both since I still have my American bank account though.
Being on the receiving side of that can be very frustrating. Even though users can cancel easily and without any human interaction, they cancel their credit card which then costs us multiple months of revenue in cancellation fees.
Which is why I'd not do it to a small company with a clean cancellation process and also why it is a good thing to do it to Adobe (multiple times a day ideally).
Why do people keep recommending this? If you do this the next step they take is sending your debt to collections, and now you have either ruined credit or a court case.
A virtual debit card should prevent collections from getting involved though, since there's literally no debt.
In Europe just cancel your credit card authorization at the bank, or your SEPA mandate, or your PayPal authorization, depending on.
They will try to scare you and ultimately won't go after you because the legality of this for b2c is very very iffy (because of the way they present the information on the sale page, which doesn't meet any informed consent level required). At least in my country, apparently in NL too, and if it ever got to the European level it would be smashed easily.
I doubt this. The early termination fee is 50% what you were obligated to pay. If Adobe got rid of this than consumers would have to pay 100% of this. De wet van Dam is about the about not being able to cancel the subscription itself and not about being able to pay to get out of what you were suppsoed to pay for a subscription period.
Keep in mind there is a normal monthly subscription and when buying the product the three choices of monthly, annual billed monthly, and yearly billed up front are equally displayed.
I agree to be honest, I do find it refreshing too that they're both Willing to part ways instead of trying to manipulate the system. I don't think this could just customers but even the companies themselves I don't see a loss.
They themselves said they spent 15 months trying to manipulate the system and are only doing this because they failed, let's not be naive about them doing this out of the goodness of their hearts lol
This genuinely made me laugh thank you. But no, they're not refreshingly "willing to part ways", just that their extensive legal teams assessed every possible angle to force this through and the big chairs made a call that proceeding in the face of such harsh opposition was going to be too costly.
It is refreshing that they weren't able to get away with it, anyway.
They were trying to manipulate the system, just failed at that
Maybe they failed to find a way round the rules? That seems more likely than a spontaneous desire to "do the right thing".
Glad the FTC is going after them. All predatory subscription practices need to be abolished by law.
If you like what the FTC has been doing lately, be sure to vote in 11 months...
I mean, sure, but what the FTC is doing is not a concern in the slightest compared to the issues at stake there. It's nice that the agency is doing something I like, though.
Totally agree. I resent the fact that they’d try cash out that way. At least ipo or something. More fragmentation is good for preventing monopoly.
If Adobe’s a buyer at $20b, they’re a buyer at $20b. I don’t see how selling stock to the public along the way increases fragmentation or prevents monopoly.
I can't tell if this is a general statement about monopolies or a statement about Adobe's products.