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.
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.
"Have you heard about Figma?"
It's a market efficiency, I guess, otherwise they'd stick with the R&D approach.
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?
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.
Figma's flagship product was private equity. The design tool was secondary.
Care to elaborate?
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.
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?
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?
Vesting periods are quite common in employee incentives but not at all common in mergers and acquisitions.
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.
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.
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.
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.