[bears-n-beets]

As a current software engineer at Adobe, I was really disappointed when I got the internal email announcing this this morning. It's reminiscent of Microsoft's anticompetitive behavior in the early 00s. Figma is the better product and Adobe knows it - but instead of using that to light a fire under them and work harder to create a better product, Adobe just used its deep pockets to make the problem go away. I was already planning on leaving the company for other reasons but this is the nail in the coffin for me.

[tus666]

Isn't this how competition works?

Big payoffs create massive incentives for people to create great products in the hope they will be bought out.

Adobe may have "destroyed" one great product, but think of the hundreds of new ones they have incentivized to be created.

People look at this all wrong and ignore the downstream effect.

[epolanski]

I count more software that has been ruined and/or killed by acquisitions than the one bred by those.

[jaxrtech]

Would agree in large part. I think the ones that were successful, they're successful enough that you forget it was an acquisition.

One off the top my head is Google Docs[1] which, for the longest time, I was pretty sure it was in-house tech. It's actually a number of acquisitions for the collaborative editor tech and then MS Office support.

It seems now that most incumbents have enough cash to not care about being that strategic about acquisitions.

[1]: https://en.m.wikipedia.org/wiki/Google_Docs#History

[epolanski]

I have not implied that all acquisitions are bad, but acquisitions to kill do not necessarily breed more better competition.

[boltzmann-brain]

This acquisition sounds like the start of a twitch streamer joke.

"Have you heard about Figma?"

[KptMarchewa]

Google Maps, Google Earth, Youtube, Android - all acquisitions.

[flir]

It's the outsourcing of R&D. Behemoths used to have huge R&D budgets, now they let the market decide and harvest the successful solutions.

It's a market efficiency, I guess, otherwise they'd stick with the R&D approach.

[kjellsbells]

The "used to" is a long long time ago. Before FAANG there was, for example Intel, Microsoft and Cisco, and they were very happy to vacuum up companies instead of holding a big r&d bag. Cisco got to be very good at it, in particular. And of course this is very much standard practice in pharma drug discovery.

I think the Golden Age of internal R&D was probably 1960-1980 at Bell Labs, IBM and the really large engineering cos like Boeing?

[nindalf]

How about Android? The original team joined Google and pivoted their product once the iPhone was demoed.

[thewileyone]

Really depends on the management of the acquiring company. Adobe acquired Aldus and didn't help the Aldus market.

[rmbyrro]

Weren't most of these ruined software bred by the prospects of acquisition in the first place?

[sure_about_that]

Does this include the people who got paid out and went on to build new software companies?

[BurningFrog]

This sounds like a very complicated study to design.

[DoctorOW]

I think people thought because software cannot really be scarce that it was immune to the flaws of capitalism but that doesn't seem to be the case.

[cowuser666]

It seems like the model here is just a series of temporary alternatives (if we're lucky, creating value isn't easy). But people need software to be long-term viable to invest in learning and locking into the ecosystem. Seems good for the founders though.

[isnhp]

Adobe loses the game with their skill and use money to win it. Figma won the game with their skill but lose the money game.

[adventured]

Adobe got the money in the first place via skill. Photoshop has been the leading photo editing software for a generation. Hundreds of companies over decades, some with deep pockets, have tried to knock them off and have failed.

Figma didn't lose the money game, they sold out specifically to reap the money. The owners of Figma - where the profits tend to go in a business - are extracting at an epic scale. They sold out at a valuation far beyond anything sane. They won the money game big time.

[unstrategic]

Arguably, the money game is exactly what Figma was playing all along. Dylan's good at this game, as are the VCs he partnered with.

Figma's flagship product was private equity. The design tool was secondary.

[feanaro]

Makes you wonder whether all of this makes any sense, since the end result isn't humanity ending up with great tools to assist human lives, but a select few with capital getting even more capital, to the detriment of the former goal.

[bel_marinaio]

You're just figuring out how the world works today?

[feanaro]

Yes.

[NavinF]

> Figma's flagship product was private equity.

Care to elaborate?

[jahnu]

Photopea guy must be making large coughing noises right now.

[HellDunkel]

They have not failed because they couldn’t get a great product out. They have failed because so many people are trained on Adobe products an just use those.

[clcaev]

Yes. At an individual level, they ask the question: "Delay my deliverables a week or two in frustration as I retrain; or, pay $300". User by user, the decision is obvious: pay the ransom and move on with your life.

[HellDunkel]

I did not mean it this way. The user will always ask the question: „Can i use another software for less money/more value“. Those who can will turn their back on adobe as the company is greedy and lazy. Problem is: if your company/client is a large cooperation you dont have any choice. Never underestimate professional users.

[pcurve]

Yep. Everybody has a price.

It's not that Figma was worth $20 billion.

It's that Adobe was likely seeing subscription revenue take hit from customers that realized there's no need for creative cloud subscription.

[unstrategic]

> It's that Adobe was likely seeing subscription revenue take hit from customers

While being pummeled by public markets, and being forced to make a move that might keep shareholders from calling for blood.

This is certainly not the first time that Adobe has presented a number to Figma's board — but it has to be the biggest number yet, by far.

From Figma's position: take your chances on an IPO while the Fed is cracking skulls around inflation — or flip the bit on that liability, and cash out to a desperate Adobe?

[majani]

Another interesting layer to this is that Adobe only has $5b in cash according to their balance sheet, so the overwhelming majority of this deal is probably in Adobe stock with a long vesting period. Also the deal being done in a downturn means that the difference between this and an IPO is academic in my view

[unstrategic]

> the difference between this and an IPO is academic in my view

More theatrical than academic — if both options have a risky short-term outlook, optimize for the story.

Sold for $20B? Or lackluster IPO? As GP of a VC fund, which story is going to better-enable you to raise your next several funds?

[wikfwikf]

Why do you think there will be a long vesting period?

Vesting periods are quite common in employee incentives but not at all common in mergers and acquisitions.

[majani]

Because it's just common sense to not want close to $20 billion of stock flooding the market in a short period of time

[brokencode]

It’s hard to say they lost the money game when they ended up with $20B.

[HelloNurse]

They can definitely fund the development of a new good product with that kind of money.

[ulfw]

What a weird way of looking at things.

Microsoft bought Powerpoint, bought Excel basically too. There wouldn't be an Office suite otherwise.

Google bought Keyhole, there wouldn't be a Google Maps otherwise. Google bought Youtube. They couldn't win with Google Video. Google bought Android.

etc etc etc

This is how the industry works. In general.

[DecoPerson]

PowerPoint, Excel, Keyhole, YouTube, Google Maps and Android could be significantly better. There’s no competition, which means they keep their users, which means they’re not incentivised to find those ways in which those products could be significantly better.

Okay wait, Excel does have some competition now, with Google Sheets, and that can be seen in Microsoft’s recent push to distinguish Excel from Google Sheets with new features like the ‘LET’ and ‘XLOOKUP’ formula functions.

[71bw]

Android has no competition? I could swear there is iOS. Same with Maps - Bing, Here, Waze, Apple, Yandex even OSM provide their own maps. Do I fail to recognize a point you're making here?

[nly]

Waze is owned by Google.

[chagaif]

That's barely enough competition...

[71bw]

Fuck yeah, let's have 50 different websites doing the exact same thing. The problem with your utopic vision of competition is the fact that people need to get paid for their work.

[chagaif]

The result of this little competition means that Huawei is now struggling to build its own reliable push notification server because it is not allowed to use Google's one. I'm not saying they should use different code bases and I'm not saying they shouldn't get paid for their work, also not saying that there should be 50 different websites, but I think another 4-5 would be healthy for everyone.

[veritas20]

In the examples that you site, the acquisitions were complementary additions. In this case, Adobe already has a competing product suite.

[true_religion]

In the YouTube example, Google already had in house tech. Google videos even continued to run for a few more years.

[spiderice]

Why are we just taking for granted that the Youtube acquisition wasn't anti-competitive? There is a reason that Youtube hasn't had any competitors in the 15 years that Google bought it. It's because video can't be done as cheaply as Youtube does it, unless you have an entirely separate industry propping it up. Selling on product at a massive loss and propping it up with a separate industry is anti-competitive.

Nobody can compete on Youtube-style video unless they first create Google. If that isn't true, where are the competitors? TikTok is the first one to even resemble a competitor, but it took 17 years and even that isn't really the same thing.

[zjaffee]

Adobe shouldn't be compared to Microsoft or Google, or hell even Salesforce, which are really good at integrating new companies into their existing suite of tools.

Adobe is comparable to Oracle or IBM, where acquisitions mean the death of product innovation as Adobe has a hard time attracting and retaining engineers to the same degree as the above companies.

[Ketchup901]

Are these examples supposed to be arguing for the purchase? Lol.

[boxed]

Those are all cautionary tales...