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If I was to try to steel man an argument for why acquisitions like this are good it would be that a lot of startups like Figma only exist because acquisitions a
by kypro 3y ago
If I was to try to steel man an argument for why acquisitions like this are good it would be that a lot of startups like Figma only exist because acquisitions are common and therefore offers early investors an exit on their investment that isn't 1-2 decades in the future.
If we got rid of M&A in tech there would significantly less investment and much less innovation, which I think you could argue is bad for the ecosystem as a whole and the end consumer of these products – even if individual acquisitions are often not great when viewed independently.
Or to look at it another way, big tech basically outsources their R&D to startups and the successful projects (companies) are then acquired. And this goes both ways given the goal of a lot startups is to be acquired.
- crote 3y agoThe problem isn't that they are acquired, the problem is that they are acquired by their primary competitor, leading to a quasi-monopoly. If Figma was being acquired by literally any other company the regulators wouldn't have any problems with it.
- jliptzin 3y agoInvestors don’t have to structure their deals such that selling the company or an IPO is the only way to get their money out though. They could say give me 10% of profit until I get 10x my investment, etc. At least that way investors are aligned with creating a company with sustainable profits, rather than the VC pump and dump that we’re all familiar with.
- capybara_2020 3y agoAlternate argument. Maybe these kinds of investments are bad and we would have more realistic companies if founders and investors focused on profitable companies and making sure their customers were actually happy rather than trying to look appealing to some behemoth that will buy them down the line or other investors.
- fakedang 3y ago> if founders and investors focused on profitable companies and making sure their customers were actually happy rather than trying to look appealing to some behemoth that will buy them down the line or other investors. This right here. What happened to IPOs being the endgame?
- candiddevmike 3y agoThe worst part is, these companies outcompete and end up destroying "realistic companies" because they don't have to live hand-to-mouth.
- richiebful1 3y agoThere are other big tech companies that could acquire Figma without decreasing competition. I could see Microsoft buying it for example. They don't have a play in the graphic design space, and could potentially benefit from the acquisition
- dannyw 3y agoThe idea that higher valuations drive more innovation is probably not meaningful at the scale we are today. Would the founders work as hard as they did, if instead of making $5bn, they made $2bn? Probably just as hard. Yes, price signals work, but not linearly at these scales.
- dustypotato 3y agoThis is a good argument, but it would drive their valuations even higher if there were two competitors leading to a bidding war , instead of just one Adobe
- s3p 3y agoFigma has a business model, no? They can stay self sustaining from their paid service?
- dimal 3y ago> a lot of startups like Figma only exist because acquisitions are common and therefore offers early investors an exit on their investment that isn't 1-2 decades in the future. > If we got rid of M&A in tech there would significantly less investment and much less innovation It appears this way because of the path we took with our economy, but that doesn’t mean that an alternate path isn’t viable. The giants didn’t get big through innovation. They all created some initial innovation that allowed them to print money, which then allowed them to gobble up any other company that could either be of use or compete against them. If they weren’t able to acquire, that money wouldn’t disappear from the economy. It could be sent back to shareholders in the form of dividends, who would find other investments for it. Perhaps the market would find the best use for that money instead of having it controlled by a few giant entities. I tend to think that’s how the stock market was supposed to work.