Figma growing inside Microsoft, testing longtime deal with Adobe

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Microsoft and Adobe have been pleasant bedfellows for many years. Microsoft’s dominant PC working system has been the gateway for Adobe to succeed in thousands and thousands of enterprise customers with its design software program.

The corporations’ CEOs even attended the identical highschool in India, and each moved to the U.S. within the Eighties for graduate college in laptop science. They share a standard bond over the profitable transition from desktop software program to the cloud.

But inside Microsoft, an rising problem to Adobe is catching fireplace and elevating questions on the way forward for one of many tech trade’s most intimate relationships.

Figma, a San Francisco-based startup that celebrated its tenth anniversary in August, is being utilized by tens of hundreds of staff inside Microsoft and, for a lot of, is on the coronary heart of their day by day work. The variety of customers has steadily elevated lately, although neither firm will say what number of of them are editors with paid accounts.

The cloud-based design software program got here within the door in 2016, when Microsoft acquired cell app improvement platform Xamarin and introduced in a 350-person group that, months after the deal closed, would develop into Figma energy customers. The product has since develop into so central to how Microsoft’s designers do their jobs that Jon Friedman, company vp of design and analysis, stated Figma is “like air and water for us.” It’s additionally utilized by engineers, entrepreneurs and knowledge scientists throughout Microsoft.

“Figma’s become, I would say, sort of the No. 1 common tool we use to collaborate across all of the design community in the community and beyond,” stated Friedman, who’s labored at Microsoft for over 18 years. It’s “really great at helping us collaborate at scale, and at global scale. I can collaborate with teams we have in India, China, Europe, Israel and Africa.”

Venture traders have been all in on the expansion.

In June 2021, throughout the heyday of mega financings, Figma was valued at $10 billion in a funding spherical that included participation from Morgan Stanley’s Counterpoint Global. That was earlier than the 2022 market plunge despatched many cloud shares down by greater than half and largely halted pre-IPO rounds.

Figma hasn’t introduced plans for a inventory market debut, and shareholders aren’t urgent for one anytime quickly, largely as a result of the marketplace for new choices has dried up this yr.

The firm, backed by the likes of Index Ventures, Greylock Partners and Kleiner Perkins, now has the dimensions and development trajectory to land solidly on the radar of public traders. Annualized recurring income has greater than doubled in consecutive years and is poised to prime $400 million in 2022, in response to folks with data of the corporate’s financials who requested to not be named as a result of the numbers are confidential. Figma’s workforce has swelled to 800.

While Microsoft has served as a development driver for Figma, spending thousands and thousands a yr on its deployment, the corporate’s software program has additionally taken off at Google, Oracle and Salesforce, the place it began small and grew organically as followers touted it to their colleagues. Other prospects embrace Airbnb, Dropbox, Herman Miller, Stripe and Twitter.

After Figma founder and CEO Dylan Field tweeted earlier this month in regards to the firm turning 10 years previous, he acquired flattering responses from Salesforce co-CEO Bret Taylor and Atlassian co-CEO Mike Cannon-Brookes. Taylor began his response with, “I [heart emoji] Figma.”

For Figma, getting traction inside huge corporations, significantly inside Microsoft, has required going head-to-head with Adobe’s competing XD program, and successful its fair proportion of offers. That doesn’t suggest the market has fully flipped, or that Adobe is being totally supplanted.

“We’re still heavy on Adobe Illustrator, Photoshop and XD,” Friedman stated.

Adobe and Microsoft have labored collectively for greater than twenty years. In addition to Adobe gaining ubiquity by distributing throughout Windows machines, the 2 corporations have been syncing their merchandise in desktop, cloud and cell computing, with over 50 integrations listed on Microsoft’s web site.

Penetrating that alliance has not all the time been easy for Figma. In 2016, Microsoft acquired Sunrise, a startup with a preferred calendar app. The Sunrise group relied on Figma and continued to make use of it after the deal closed.

Sunrise co-founder Jeremy Le Van stated his staff have been among the many fortunate ones at Microsoft. He stated some Microsoft staffers weren’t in a position to make use of Figma due to the enterprise relationship with Adobe and have been caught utilizing merchandise akin to Photoshop and XD. Despite govt resistance in sure departments, some designers snuck out of the Adobe ecosystem to make use of Figma anyway, stated Le Van, who stayed on as a design director at Microsoft till 2018.

Friedman stated he wasn’t conscious of examples of Figma being shut out. “We have a great relationship with Adobe as well and love their products for many use cases at Microsoft,” he stated.

The identical yr of the Sunrise deal, Adobe stated it will make Microsoft’s Azure its most well-liked cloud for Creative Cloud, in addition to the Marketing Cloud and Document Cloud. To mark the event, Microsoft CEO Satya Nadella and Adobe CEO Shantanu Narayen, who each went to highschool at India’s Hyderabad Public School, appeared at Microsoft’s Ignite convention for IT professionals beneath a banner declaring that Adobe loves Azure.

‘We each needed it’

Figma’s collaborative capabilities are central to its reputation. Multiple editors of a doc can see each other working in actual time, and non-editors can view designs and depart feedback. Companies pay for Figma primarily based on the variety of editors they’ve for his or her information.

“Any designer, product manager or engineer can jump in and see the design system at play in any particular product,” Friedman stated.

Last week, Figma launched a model of its service that individuals can use in Microsoft’s Teams communication app, eradicating the necessity to open a browser tab.

“We both wanted it,” stated Field, who began Figma after scoring a Thiel Fellowship, which got here with a $100,000 grant from enterprise investor Peter Thiel on the situation that he drop out of school (Brown University) and pursue a brand new challenge.

The Teams integration is a device that advantages any person of Microsoft merchandise, not simply staff. Adobe, which affords Teams apps for Acrobat and Creative Cloud, is aware of all in regards to the energy of tying into the Microsoft ecosystem. It’s been an enormous a part of the corporate’s success in its 40-year run as much as nearly $17 billion in annual income.

Figma needed to begin small. Like many organizations, Microsoft started utilizing it totally free. Today, a buyer will pay Figma every month primarily based on the quantity of people that make modifications to information, whereas a extra restricted model of the service is offered for gratis.

In 2017, a yr after the Xamarin acquisition, Field hosted Friedman at his firm’s San Francisco headquarters. Field says he remembers asking Friedman why Microsoft did not need to hold utilizing the free model of Figma.

“‘Look, we’re all worried you’re going to die as a company,” Field recalled Friedman telling him. “We can’t spread it inside Microsoft as a company even though we like it, because you’re not charging.”

It wasn’t nearly protecting Figma alive. As a big-spending buyer, Microsoft was in place to start out asking for extra options.

A workspace inside Building 21 on the Microsoft campus in Redmond, Washington, on March 3, 2022. Microsoft Corp. has begun calling staff again to its headquarters in current weeks, however its return-to-office technique hinges on hybrid work.

Chona Kasinger | Bloomberg | Getty Images

Field stated Microsoft’s suggestions led to a number of enhancements. For instance, Figma engineers labored to make it simpler to maneuver from display screen to display screen in a single Figma file. The firm additionally added help for enter from Xbox sport controllers and made prototype previews work sooner on cell gadgets.

Ultimately, Microsoft’s requests helped Figma develop its top-tier enterprise plan, Field stated, including to the free model and paid month-to-month premium packages that vary from $12 to $45 per editor per thirty days. The enterprise bundle runs at $75 per editor and consists of devoted account managers and superior password administration.

Václav Vančura remembers when issues have been very totally different.

Vančura was a senior designer at Xamarin, whose software program helped corporations construct Android and iOS apps with Microsoft’s C# programming language.

When Figma introduced its launch in late 2015, Vančura was impressed with the corporate’s thought for shared design part libraries. He signed up for a preview launch and acquired entry in the summertime of 2016. He inspired his colleagues to leap on board, beginning with David Siegel, Xamarin’s head of design.

Vančura and Siegel encountered snags whereas sharing information from design competitor Sketch. After one Xamarin worker uploaded a file to a Dropbox folder, their teammates typically struggled to get it working on their computer systems, both as a result of they did not have the appropriate fonts put in or as a result of that they had totally different variations of the software program.

Unlike Sketch, which was solely out there on MacOS, Figma was on the browser. That meant fewer sharing points. You grant others entry by copying a hyperlink or coming into their e mail addresses, similar to in Google Docs. But efficiency was an issue.

Vančura made advanced designs in Figma, inflicting the software program to decelerate, freeze and crash. The Xamarin employees despatched Vančura’s information to Figma engineers, who made Figma speedier and extra secure.

In 2017, Vančura flew from the Czech Republic, the place he lives, to Seattle, after which made the quick trek to Microsoft’s headquarters in Redmond. He took the chance to point out Figma to his group, lots of whom have been accustomed to working in Photoshop and Illustrator.

“It was amazing. It was like watching Formula 1,” Vančura stated. “There were so many mouse pointers on the screen, and everybody designed something, even if it meant they were pasting GIFs or drawing rectangles. All of them were so blown away. I think that was the moment these people figured out this was a huge time saver.”

Gaining traction

Siegel, who had develop into Microsoft’s head of design for developer providers, needed to get the phrase out extra broadly that Microsoft was evolving and wasn’t caught to its previous remoted methods. In 2018, he posted a manifesto of kinds on-line.

“We use PCs, Macs, Figma, Sketch, GitHub, JavaScript, ZEIT, and other modern tools to design, prototype, and build the future of software development,” Siegel wrote on Xamarin’s web site. There was a hyperlink to a Figma file that Microsoft staff might open.

The web site reached the entrance web page of Hacker News, a dialogue board for software program builders.

“This is some incredible self-awareness,” one commenter wrote.

Soon after, Benedikt Lehnert, a Microsoft product design director, instructed Friedman that the corporate wanted everybody on the identical program, whether or not it was Figma or XD. Microsoft selected Figma, Lehnert stated.

Scott Belsky, chief product officer and govt vp for Creative Cloud at Adobe after which a enterprise accomplice at Benchmark, speaks onstage on the TechCrunch Disrupt convention in San Francisco on Sept. 13, 2016.

Steve Jennings | TechCrunch | Getty Images

Vančura stated that at Microsoft, “Figma spread across the company so fast that I don’t think Adobe was even able to catch up.”

Figma is not shy about going up in opposition to an trade heavyweight. On its web site, Figma says, “Don’t sync to the cloud with Adobe XD. Work in the cloud with Figma.” It asserts that designers are transferring away from Adobe’s Creative Cloud bundle, the product that accounts for 59% of Adobe’s income.

in 2020, Adobe added Figma to the listing of rivals it publishes in its annual report.

Analysts have raised questions on Figma to Adobe executives on not less than three events this yr. Alex Zukin of Wolfe Research requested throughout a January fireplace chat with Adobe executives Scott Belsky and David Wadhwani if Figma was taking market share.

Belsky, Adobe’s product chief and govt vp for Creative Cloud, did not reply the query instantly. But he acknowledged that enterprise capitalists have been funneling cash into the area.

“It is exciting that VCs see the same thing we’re seeing,” Belsky stated. “Five-plus years ago, you didn’t see any material dollars going into the creative tools. I think now everyone sees that.”

Belsky stated Adobe can make the most of a chance to convey Creative Cloud to the net, which it is finished for Illustrator and Photoshop however not XD, a product that was launched in preview in 2016.

An Adobe spokesperson declined to speak about plans for an online model of XD, and stated the corporate will speak about plans for Creative Cloud at its Max convention in October.

“We do not see an impact to the Photoshop business resulting from players in the product design category,” the spokesperson stated. “We developed and have evolved Adobe XD to address the needs of our core design customers, who are designing marketing experiences for screens, rather than the distinct category of product design and development.”

Many challenges

Still, the stress on Adobe is intensifying.

In the previous three months, Figma’s app for iOS gadgets has persistently ranked above Adobe XD within the graphics and design part of Apple’s App Store, in response to figures from Data.ai, previously often known as App Annie.

Wells Fargo analyst Michael Turrin stated Figma has potential to develop.

“What Figma is trying to create is more of a broader platform that could become more of a system of record within this market, and that’s why I think this could become more important,” he stated.

Figma is not the one upstart within the area making waves. An open-source different referred to as Penpot, which might mechanically generate the underlying supply code for designs folks make within the software program, can be gaining momentum.

Microsoft staff are utilizing Penpot and have contributed to it, stated Pablo Ruiz-Muzquiz, who co-founded the challenge. Of the individuals who check Penpot, nearly 20% are coming from Figma, he stated.

Penpot’s code lives on GitHub, which Microsoft owns, beneath an open-source license, permitting folks to obtain the code, modify it and run it on their very own servers. That’s not true of Figma, which retains its personal supply code non-public.

But Figma is evolving. One job description suggests Figma is contemplating a major replace to its iPad app that would offer an area to make new designs and never simply view or share them.

And Figma has been busy increasing its govt ranks. In June, the corporate promoted Praveer Melwani, its head of enterprise operations and finance, to the finance chief place. The subsequent month, former Deutsche Bank and Goldman Sachs govt Kate DeLeo joined Figma as vp of investor relations and enterprise operations.

As the corporate marches towards an eventual introduction to Wall Street, getting extra out of its relationship with Microsoft presents a chance for development. Expanding the variety of methods Figma will get used is one avenue.

“It works great as a presentation tool,” Friedman stated.

Figma most likely will not ever change Microsoft’s homegrown PowerPoint software program or Adobe’s PDF format, however Field stated his product boasts distinct benefits. For one, Figma avoids the issue of the continuous back-and-forth emailing of a presentation by letting folks merely share a hyperlink. A Microsoft spokesperson stated PowerPoint customers also can use hyperlinks to ship paperwork.

“I’d be surprised if there’s no salespeople at Microsoft that use it. My guess is there’s some,” Field stated, concerning Figma. “Is it significant? No, probably not.”

Not but, anyway.

WATCH: Adobe CEO reacts to Q1 earnings: Our fundamentals proceed to be extraordinarily robust

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