Late bloomin'
September 19, 2022
You may have heard this past week about one of the largest acquisitions ever made of a private company - Adobe buys Figma for $20B, about 50x their current year ARR. The media loves to highlight the final number but behind the scenes was a 12 year journey where the future was not always so bright or definitely not so certain.
In the first 8 years of the company's life, their valuation and their ARR was just a blip on the map. It took time, persistence, and grit to get them to where they are today. Great companies are never built overnight and more often than not, the ones who fly too hot fizzle out just as fast.
I still remember the early days of Figma in 2014/2015 as my last company used to have designers who always tinkered with the shiny new objects. Back then, web and mobile applications were designed in Adobe Photoshop, the industry behemoth that no one thought could be taken down. Everything was done in Photoshop! It was the jack of all trades do everything software that could create anything you could ever imagine!
But then Sketch came out, a completely brand new way of doing web and mobile design that actually solved real pain points for the designers - exporting specific icons for development, duplicating screens on same board, creating templated objects like a navigation that could be applied across different screens, the list went on. By going after a very specific use case that was taking off, web and mobile apps, and providing a solution that was exponentially better than the swiss army knife solution that was Photoshop, designers adopted Sketch in droves.
And yet there was one thing missing from Sketch - collaboration. Designers, and in turn their end client, whether it was the Product Manager or an actual customer, constantly need to share versions of a design and discuss specific elements of a screen they like and don't like, and Sketch simply had nothing of the sort. It was an evolution of Photoshop optimally designed for web and mobile, not a revolution. Figma was built from the ground up with collaboration in mind where anyone, the designer, the client, the product manager, it doesn't matter, can just click a URL and see the designs in real time and comment and mark it up on the spot. This was the true revolution and in the ensuing years, the network effects began to build. One designer who sends a design using Figma implicitly becomes their best salesperson, putting the spotlight on the software and all its functionality. As a result of it being a tool built around collaboration, Figma could organically build its user base by just having more and more people get invited to view somebody's design.
Sketch was caught flatfooted and Adobe even more so as the $100B+ market cap public company could never dream of building something like this in house without it costing several hundreds of millions of dollars and over a decade of bureaucracy to get over the line. At that point, Figma could end up being more than just the industry standard for web and mobile design, it could threaten the core of Adobe itself. So when it comes to buying Figma vs. building it themselves, the choice was easy, even if it meant paying 50x of what Figma is currently doing today in revenue.
No company is ever an overnight success and there are several critical moments in every company's life where their chips are on the table and the cards could all come tumbling down. Figma has gone through the same, an existential crisis of whether they can take down not just the industry stalwart, but another startup equally as invested in making themselves into a success, and emerged as the clear victor. We are on this same journey and there will be no overnight success, but we are better because of it. Measured, methodical, practical, strategic, insightful, these are all adjectives that describe our approach to scaling Percent. Learn the pain points (underwriting $1B of transactions), build the foundation (borrower, underwriter, investor portals), and with this Series B, let the network effects take hold and revenue will follow suit. It's been a four and a half year journey that may seem like an eternity in startup land but in reality it's what it takes to build once-in-a-generation companies.
Nothing wrong with being a late bloomer... Figma has demonstrated it twenty billion times over 💰
