▶️ Listen now on Apple, Spotify, and YouTube
With the $20 billion acquisition of Figma, and the recent announcement of Canva's productivity suite, there has been some major moves in the creative corner of Martech. In this episode Scott and Juan talk about the Figma acquisition, the growth in B2B software marketplaces, the recent Snowflake and Salesforce partnership and AI prompt engineering.
In another BIG week in Martech:
🗞️ The Headlines
- G2 Software Buyer Behaviour Report: Why software purchases are increasingly coming from 3rd-party marketplaces
- Snowflake and Salesforce: An unlikely partnership and what it signals about the growing disconnect between customer data repositories and the apps that facilitate experiences or analytics.
💁♂️ The Big Chat
Adobe and Figma. With the $20 billion acquisition of Figma, and the recent announcement of Canva's productivity suite, there has been some major moves in the creative corner of Martech. In this episode we talk about how Adobe missed the browser opportunity in digital design, unbundling creativity software, what the acquisition means to the customer and how an industry will often assign underdog status to software, only to be disappointed.
- PromptBase: A “prompt engineering” marketplace for AI, and prompt design as a marketable skill.
- Why Craigslist never innovated: An interesting viewpoint from the founder of Craigslist on why tech companies don't need to chase endless iteration.
▶️ Listen now on Apple, Spotify, and YouTube
📚 Talked About On The Show
📖 Read The Show: Adobe & Figma
Scott: All right. Well, hey man, what's our big chat for this?
Juan: Well, the big chat is the big news that came out Thursday last week about the acquisition of Figma by Adobe.
Now, a few quick stats on this one. It was a 20 billion acquisition. They split 50 50 in Adobe stock and cash. So the founders over there just had the payday of their lifetime. Can you imagine 10 billion in cash? I can't even imagine that amount of money.
The valuation of Figma in the deal was also about 50 times the company's ARR. And in our market right now in the tech space, we've been in a three to four month period of downturn. This multiple on the ARR is massive and it's kind of unheard of in the design industry.
But one other stat I found really interesting is that this is the sixth largest software acquisition ever.
I think if I could sum up the UX design community's response to this acquisition, it was basically this image, which is one of the last scenes in Star Wars episode three Return of the Sith, where you have Obi-Wan Kenobi and his apprentice Anakin Skywalker.
They're battling out on this sort of embankment and then Obi-Wan Kenobi cuts Anakin in half. And then he says, this famous line: You were chosen, one. It was was said that you were supposed to destroy the Sith, not join them!
And this meme is sort of that same concept - whether you like it or not, Figma was that underdog. The company was seen as an Adobe killer for a few reasons. A novel, unique take and approach towards design and UX. Their ability to do collaboration with almost anyone in the tool and the last one is they did it in the browser. And if you look at the Adobe Creative Cloud, all the software is downloadable and they also competed on price as well.
And so you have this collective side from the design community basically saying, Wow. Why would you do this? Figma was supposed to be an Adobe killer. You are supposed to bring balance to the design software industry, not join Adobe!
Now one of the interesting things here is that the, even though Figma had this novel, unique take on design and browser collaboration. They also competed on price point as well. They're not the only one. There's a number of tools in that, in that sort of design, creativity ecosystem that really started to unbundle and unpack all the different products and features that in the Adobe ecosystem.
This is a little graphic I put together just to show I guess the, how the industry's changed over the past 10 years. In the way that our people use design and creativity tools. So if you look at Adobe Creative Cloud, there's sort of four big categories.
There's content, which is Photoshop, UX design, that's the XD tool. There's design, which is Adobe Illustrator and then video, which is Premier and After Effects. Now, Adobe is a massive company. It's huge, and they go in all directions, including analytics, right through to customer experience and personalization.
But in the creative suite you've got all this unbundling that's happening. Canva is a really good example. Canva saw Adobe and they said, Why do you need professional tools to create social media posts or a graphic for a presentation. That doesn't make sense? So they came along and said, Well, why don't we unbundle Photoshop and give users the opportunity in the browser to create designs in a really easy and effective way at close to zero marginal cost.
There's also Affinity photo editor, which did the old school kind of like reverse disruption where they said, Hey, you're downloading software, but you buy it once. And then you never have to pay for it again, which is, I think, the way nature intended software. Adobe's subscription model is very expensive across the creative cloud.
And then you have like tools like Instagram. I mean, Instagram really changed how photo editing was done, particularly on the mobile device where you have filters, you can crop, you can change designs. That's the photoshop workload in your phone.
In the UX design domain you've got Balsamic, which has been around forever, which is a really cheap and easy to use. Sort of like a wire framing tool, Miro for collaboration and one of the more important companies - Sketch.
Sketch and Figma are like sisters. Very similar approach. In the browser, highly collaborative and compete on price point, but Sketch is really focused on handoff to developers, so turning your designs and your concepts into code and handing that off. So that's where they differentiate a little bit more through that.
Adobe Illustrator has competitors too - you've got Pixel, you've got a whole bunch of other tools there. And with video editing you have Premier, you have tools like Descript. I use descript for this show. Wonderful tool for video editing. And then you've got a number of other tools here that really sort of speak to the need to really think about how I guess how video can be transformed and changed without having this heavyweight software to manipulate and make edits as well.
There's one last one there, which is Frame.io. Adobe actually acquired that company, it's a collaborative video editing software as well. So there's a lot of unbundling in the Adobe space, particularly around creativity tools. And I think the $20 billion price point speaks to the missed opportunity for Adobe to move creativity into the cloud and into the browser.
Scott: Yeah. Wow. There's so many things to go here, and I'm sure Adobe greatly appreciates the Star Wars analogies. You don't realize the power of the dark side. So I think the unbundling is really smart.
I think you know, certainly this ability to create software that lives natively in the browser has been on the catalyst for that. Part of what I see when I see in that diagram there though, is actually this embrace, of the philosophy of no code in a very, very broad sense. It's this idea exactly as you were saying.
I don't need this whole suite of like super sophisticated, ultra professional tools, for the vast majority of people who are business users, marketers, you know, actually simplifying things and leveraging, some of the latest AI capabilities to just make it really, really easy for me.
I'm not a professional video editor, but hey, okay, I can pull together this podcast, you know, And it looks great. It sounds great. You know Canva obviously is just like an absolute master at this, and I think accessibility is a real challenge for companies like Adobe.
This is the classic Clay Christensen, disruptive innovation curve - when you are serving the sophisticated end of the market, it's so easy to look at the low end tools and dismiss them and be like, Now that's just a toy, That's just a play thing, you know? Oh, what, you know, our professional users want is they want this next generation of even the more sophisticated capability, and you keep sort of rising up, but meanwhile these disrupted players you know, and I think Canva is exactly like that. You could argue Figma too, although part of what they were doing was really starting with a very specific community use case.
Yeah, we can just dismiss the Figma proposition. But they're like serving these huge underserved communities for whom, you know, these lower end tools actually serve their needs beautifully. They do it faster, it's easier, it's cheaper, and then over time those tools expand and they add more capabilities and they start to bring in more audiences.
I think you could make the argument that Adobe played this exactly the way they should. You know, the thing I look at you know, for these large, big tech companies is they are constantly under threat of being disrupted by the next new wave. And it's very hard for them just organizationally to be on the ground floor of those things.
It's the nature of the difference between being a gigantic enterprise and being a scrappy entrepreneurial start-up. But the greatest asset they have is a huge frigging bank account and a huge market valuation. You know, and for them to basically say, okay, well once we're clear what the winner is gonna be in a particular next generation, we'll just buy it - thank you so much for building this for us.
We'll take over from here. Now how the community responds to that and you know, can they hold onto that and leverage it and build it, I guess is the trick. But I don't know. If I was a betting person, I'll give Adobe better than decent odds of being able to pull that.
Juan: Do you remember that Andy Warhol quote, that really famous one where I think he said, In the future everyone will be world famous for 15 minutes?
Scott: Yeah. Does everybody get 20 billion for 15 minutes, ?
Juan: Well, I think, I think there's an interesting spin on that quote, which is not that everyone will be world famous every every 15 minutes, but everyone will make others famous through being able to create their own content.
I mean the unbundling of Adobe into all of these apps As you were saying these no code tools are actually about the accessibility for the everyday person to create content. I mean, even look at TikTok, really good example at turning a whole generation into video editors. And that's a skill that we never really learned at a mass scale like that before, where learning how to create a good TikTok is part of interacting on the social media ecosystem.
I think Adobe has made an interesting move. I still question where the customer sits in that move. Like, is this really a priority for the customer? And how does this actually make UX design more accessible or even more enjoyable, easier to use. That's a question that's still outstanding for me.
This seems more of a as competitive acquisition to take away one of the major players out in the market and put them into, into the Adobe camp. But let's wait and see, we'll see what happens. Maybe the innovation will continue.
Let's hope it doesn't go say the way, the, the way that Waze did when a Google acquired that company. It wasn't many years ago when a fantastic article from the, from the founder said, they got into the business. He was still the founder of Waze, but he was blocked every turn to actually innovate and move like startup should move.
But anyway, Congrats to Figma. 20 billion. I mean, look, if somebody gives you a briefcase with 20 billion in it, you're not gonna say no. I mean, I'm not gonna say no. It's probably more like a jumbo jet plane, but I mean, That's a, that's a lot of money.
So congratulations to the team. They made an excellent choice, very tasteful on how they built a product, and in a lot of ways, a lot like Adobe in the early days. I mean, they went from print to digital design and they saw that curve right back 20 to 30 years ago. So I think I think Adobe's looking at Figma like the little brother that that that they've always had.