Adobe acquires Figma for $20B, TPB SPAC, FedEx CEO's recession warning, macro picture & more

The recording starts mid-banter. One speaker says they would rather not talk about "regaining" because things are getting crazy and they had to moderate their own material. Another asks whether "brigades" means MAGA brigades, and the group jokes that a name in the transcript (rendered "Jake Allen") is being brigaded by MAGA and is tapping out. The exchange is play-acting, with the hosts pretending to call the brigade off.

The bit closes with a mock introduction of the hosts and a line about open-sourcing something to the fans. The transcript is noisy here, so the exact references are unclear and are best read as a comedic prelude.

The host opens episode 96 with the news that Adobe has agreed to acquire Figma for $20,000,000,000, which he calls astounding and, as he puts it, the largest private company purchase in history. He explains Figma as a tool for designing web apps and user interfaces, replacing the old practice of passing mock-ups around as images or PDFs with real-time collaboration, like commenting in Google Docs.

He adds that Figma is a fixture for anyone in startups and that Adobe stock fell as much as 18% on Thursday. Figma's last valuation was $10,000,000,000 in its June 2021 Series E, at what he calls peak market, after raising 200,000,000. He then asks Sacks what the price says about the market, given that it is double that peak figure.

Sacks says the market hated the deal: Adobe fell about 15% on a company of roughly $150,000,000,000, so it lost nearly the whole purchase price in market value. He calls that an overreaction. Press coverage focuses on Adobe paying around 50 times revenue, when multiples for high-growth SaaS are now more like 8 to 10 times, but he argues this misses how fast Figma is growing.

He defines ARR as annually recurring subscription revenue, then sketches the history: founded around 2011 or 2012, a roughly five-year "wilderness" period, a private beta in 2015, a public launch in 2016, monetization from 2017 and an enterprise tier in 2018. He stresses the ARR figures are "scuttlebutt" from conversations in Silicon Valley, not numbers the company has confirmed.

The figures he reads out are year-end ARR of 700,000 in 2017, 4,000,000 in 2018, 23,000,000 in 2019, 77,000,000 in 2020 and 210,000,000 in 2021. For this year he cites an estimate of 450, with 400,000,000 publicly reported as the current level, and a 2023 forecast he says he heard, though the figure is garbled in the transcript. He calls the ramp phenomenal compared with the "triple, triple, double, double" pattern VCs look for.

Asked whether the 2020 tripling was a COVID pull-forward, he allows it is possible but sees no huge slowdown in the numbers so far. He accepts that growth gets harder at hundreds of millions of ARR. On his math, Adobe pays about 50 times current ARR but roughly 25 times end-of-next-year ARR, and he expects Figma could reach one and a half to two billion in a couple of years after that, so he does not think Adobe is making a bad deal. He raises market saturation as the open question.

One speaker says he has used Photoshop since around 1992 and that Figma was built web-first for collaboration, while Adobe's attempts to add cloud features to a desktop product give what he calls a terrible user experience. In his view the right price is whatever Adobe sees as the risk and reward for its own business, and he frames the deal as paying about 12% dilution to remove the biggest threat to the company.

Another speaker disputes that figure and says the stock drawdown must be counted. The discussion turns to terms the speaker says he read the night before: about 10,000,000,000 in cash plus 10,000,000,000 in shares at the announcement price, with a fixed share count, so a roughly 20% fall in the stock leaves that portion near 8,000,000,000 and the whole deal near 18,000,000,000. There are also 2,000,000,000 of deferred RSUs and stock-based compensation. The speaker puts the share issuance at about 6% of shares outstanding, roughly 12% dilution once combined with the rest, and says a term loan may fund the cash.

A speaker gives kudos to the Figma CEO, team and investors, calling it a big win that keeps Silicon Valley going. He cites a profile of the founder, which he says described months of visiting customers worldwide and reading help-desk tickets even on vacation, and argues that customer-obsessed CEOs typically produce good outcomes.

Turning to Adobe, he compares the deal with the Zendesk and SurveyMonkey merger, which crossed the stock threshold requiring a shareholder vote and was voted down amid market turbulence. He says Adobe was clever to split the price between cash and stock so it stays below that threshold and avoids a vote.

He then argues the real cost is larger once the stock's re-rating is included, giving a figure of $30 to $40 billion in effective price tag. Public investors, he says, rebuilt their models: paying such a premium suggests the product is disrupting and that Adobe's existing revenue base is less safe than assumed. Rising interest rates, a cash-and-stock mix, decaying core earnings and a year-three accretion target (which he reads as a promise of at least a penny of profit) add pressure, and he says Figma would need to contribute about $1,000,000,000 of free cash flow. He presents all of this as his own read on why the stock was hit.