Adobe and Figma: Today and tomorrow

Authors: Trish Burgess & Gretchen Rodriguez

Summary: This post is the TLDR (Too Long, Didn't Read) version of a longer, and more in-depth document we wrote together about Adobe and Figma. There we go deeper into the acquisition itself, we discuss the synergies between the companies, and finally we imagine Adobe's future: Building the Creator’s OS in a future where ‘social media is becoming ‘creators media’; expanding its capabilities in the gaming and 3D spaces; increasing its role in EdTech and HealthTech.

We hope you will have the time, and the inclination, to read both. 

Special thank you to Laura Prieto and David True, for their help.

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Adobe’s acquisition of Figma prompted many conversations and deep debates between us. 

Initially, we focused on the acquisition itself - the price tag, the announcement, the official statements coming from both companies - but as many experts, columnists, designers, and other professionals started to share their concerns that ‘incumbent Adobe’ would squash all that is good about Figma, our conversation shifted. 

We started to review Adobe’s history, including its many successful acquisitions, and its industry-leading shift to become a SaaS provider. Also to discuss the strengths and weaknesses of both Adobe and Figma, and even more importantly, to sketch what we thought the future could hold for Adobe: Building the Creator’s OS in a future where ‘social media is becoming ‘creators media’; expanding its capabilities in the gaming and 3D spaces; increasing its role in EdTech.

We formalized our thinking into a document titled ‘Adobe and Figma: Today and Tomorrow’, the same name as this post, meant to be the TLDR (Too Long, Didn’t Read) of the document. We hope you have the time, and the inclination, to read both. 

Big thanks to Laura Prieto (layout and design) and David True (guest editor), for their contributions to the paper. It takes a village!

Background

Adobe and Figma are two growth companies playing in the creative space. They are also in two very different stages of growth. 

• Adobe is the 40-year-old incumbent, and over time has converted a range of stand-alone tools (some developed internally, many acquired), into a suite of integrated subscription-based solutions. This suite includes Creative Cloud (to cover all needs for creative projects), Experience Cloud (to easily manage the entire customer experience with real-time data and scalable personalization), and Document Cloud (to solve all digital documents and eSignature needs, featuring Adobe Acrobat and Adobe Sign).
• Figma is a 10-year-old design software solution that has gathered about 4M customers by making it easy for design-led cross-functional teams to prototype the full customer journey and experience of websites and apps. Its secret sauce has three key ingredients: intuitive and simple-to-use UI, a web-based tool to enable easy real-time cross-team collaboration (design & share in the same place), and friendly pricing that offers users a great experience. It is often called the ‘Google Docs for UI design, and with its Open Design Philosophy, it has become ‘GitHub for designers.

The Acquisition

Adobe’s acquisition of Figma for $20B in September of 2022, roughly 50 times revenue at a time when multiples for top cloud companies are around 9 times revenue, is an expensive one. There is an additional $2.3B in retention packages, which proves that the acquisition is as much about Figma’s technology and customer base, as it is about bringing in-house Figma’s culture and its approach to building product and community. 

There is certainly the opportunity to cross-sell: two-thirds of Figma’s 4 million users aren’t among Adobe’s core designer customers, and Adobe’s Creative Cloud has 26 million customers, but this is just the beginning. More exciting will be to bring  Adobe’s integrated suite of apps (e.g. AI / ML immense capabilities, photo and video editing tools), and its integrations with many other key players (e.g. Unity and Unreal gaming engines) to Figma. And of course, to really expand the reach of Figma, and FigJam, to users outside of Adobe and Figma’s current user base.

The challenge will be to integrate Figma without hurting its growth, or losing the simplicity and openness that have made it so beloved among the design community. We have good reasons to believe this will be the case, as top Adobe executives have been clear about what Figma has gotten right and what Adobe has gotten wrong.

The opportunity beyond

Adobe’s integrated suite of products supports creators and designers across - all mediums (audio, video, illustration…), all levels of complexity, and for all purposes (education, entertainment, gaming, commerce…). Adobe allows users to turn ideas into reality, in a beautiful and meaningful way, and while the acquisition of Figma will enable exciting new products, there are many other opportunities that Adobe can capitalize on to move the industry forward in significant ways. 

Become the Creators’ Operating System

We believe that Adobe has the potential to become the Creators’ Operating System. With the number of creators worldwide almost doubling in the last two years (from 165M to 303M) and about 40% of them aspiring to become business owners (stats from Adobe’s ‘Creators in the Creator Economy’ global study), they will need tools that are tailored to their needs, and support them along the full creator chain. The OS’ stack could have the 7 layers described in Figure 1.

Adobe is already strong in three areas: Sketch and easy prototyping, design and advanced design, and finally in providing creators with a platform to showcase their work and collaborate (Behance). There is still a lot of work to be done across the other four layers for Adobe to truly build a strong ecosystem, or operating system, for creators. 

Metaverse and 3D Gaming

Adobe has a strong foothold in the 3D space via many of its apps, and the opportunity to:

• Grow even stronger through partnerships with (or maybe acquisitions of) game engines (Unity comes to mind).
• Apply its Content Authenticity Initiative more broadly to ‘verify’ user and avatar identity.
• Facilitate ‘access and discovery of content to help creators go viral and grow their businesses.

Education Technology (EdTech)

The same way that Adobe could transform the onboarding process of new creators into this space by providing design and business training, it could also become a trusted issuer of professional credentials and certifications for professional designers and developers.

Health Technology (HealthTech)

Adobe’s tools could be used much more widely across the medical field to design and deliver more efficient, relaxing, comfortable, and refreshing experiences for patients. A purposefully crafted environment can reduce the normal anxiety felt at certain doctor visits and becomes particularly important when we think about extended hospital stays or continued visits to treat chronic illnesses and long recovery processes. 

Headwinds

All in all, although Adobe has many opportunities to grow, innovate and expand, it is certainly true that it is also facing increased competition on many fronts. From other players that are close competitors to Figma that keep gaining traction - such as Miro and Canva - to the likes of Unity expanding their reach in the 3D world and marketing, to eCommerce platforms providing more design and analytic tools to merchants - such as Shopify. Adobe will need to make bold moves in order to sustain its lead in the long term.

Adobe has already proven its ability to morph and evolve, ahead of the competition, acting with the courage of conviction, even in the face of very negative market and user responses, as was the case in their move to a SaaS business model. Many of the thought leaders that took the company through this transformation are still at the helm, including Shantanu Narayen, Adobe’s CEO should give us further comfort for their future, as we witness the beginning of Adobe’s next big evolution.

Next steps

This post is just a small taste of the paper that we wrote, and where we delve much deeper into all the topics highlighted here. We would love to hear your point of view, and for you to share where we hit or missed the mark. Join our conversation!

Link to our long-form article

Link to this post in my personal webpage