I think the Figma IPO proves Khan was right. $60B market cap today vs the $20B Adobe offered in 2023.
There was some criticism about regulatory overreach when the deal got blocked. Now Figma employees are rich, the design tools market stays competitive, and we have another major independent tech company instead of just another Adobe product line.
This is exactly why we need regulators willing to tell Big Tech "no" sometimes. Competition creates more value than consolidation.
It absolutely proves that she was right. If you care about market cap? She was right. If you care about employee comp? She was right. If you care about consumer choice, she was right. Number of listings, new potential acquirers for your startup, more diverse office geography, right right right right.
The idea that there's a significant lobby on fucking Hacker News unhappy that a startup IPO'd for a zillion bucks and made everyone rich is twilight zone shit. It makes no sense according to the stated values in the fucking masthead.
I think you're hitting the real divide here. Some people are so ideologically opposed to any regulatory intervention that they can't admit when it works, even when the evidence is staring them in the face. Also notable [0]: "[...] in any given year, we see up to 3,000 merger filings that get reported to us. Around 2% of those actually get a second look by the government, so you have 98% of all deals that, for the most part, are going through. Around 2% of those actually get a second look by the government, so you have 98% of all deals that, for the most part, are going through." The FTC wasn't blocking everything, just the deals that would entrench monopolies.
Suppose that you have an opportunity to play a game. The game is you roll a fair normal six sided die. If it comes up a 6, you get $60B. If it comes up a 5 or 4 you get $30B. If it comes up 3 or less, you get $0.
This is clearly a valuable game! It is worth in expectation $20B. But it also has a 50% chance of being worthless to you.
Someone offers to buy it from you for $20B. You agree, giving up some upside for some downside protection.
But then someone else says that's not allowed. So you play the game and you roll a six and get $60B.
Does that prove the person who made you play it rather than sell it was "right," ex ante?
There’s a lot of people I’ve talked to who didn’t like Lina Khan not because of the Figma thing but because they thought she was having a chilling effect on acquisitions broadly.
The vast majority of startups will never IPO. Acquisition is the only viable exit. That’s because the bar for IPO has risen so high that only massive already incumbent unicorns can reach it. IPO isn’t a way to raise capital to compete. It’s a victory lap if you’ve won already.
Don’t know if this is actually true, that she was having this chilling effect. I am relaying a sentiment I’ve encountered.
Of course the other reason is tech-right echo chamber brain rot. People need to get off Xhitter. (Not a fan of doomer left anti tech brain rot either. There’s more than one kind of brain rot around.)
> The idea that there's a significant lobby on fucking Hacker News unhappy that a startup IPO'd for a zillion bucks and made everyone rich is twilight zone shit. It makes no sense according to the stated values in the fucking masthead.
Blocking the merger was good. But I'm not convinced the IPO was good. I think trying to be a company that's worth tens of billions of dollars is only going to make Figma worse. I care about the users more than the people that got rich.
It doesn't prove it. Khan attempted very fiercely to block Amazon's purchase of iRobot and she, along with the EU authorities, succeeded in preventing it and now iRobot is about to file bankruptcy. We don't have the counterfactual and founders (nor regulatory agencies) can see the future.
Someone made a good analogy on twitter that Khan essentially cut off a genius pianist's right hand, the pianist persevered and somehow succeeded in retaining their talent in spite of having one hand, and now Khan is taking credit for the feat. In the same way, the fact that Figma still exists is not proof that she was right.
IPOs are a really tough path, and can significantly alter the business. I'd hesitate to hold up the big one for this year as vindication for her entire approach. The vast majority of growth tech companies are not going to go public, but need to release value for investors and employees, and PE or acquisition is the only path open to them. If you've ever had experience with PE you might not want to deal with that, and getting bought is all that's left if you owe people a big return soon.
It wasn’t the outcome, it was the bad reasoning and the overall desire for interference
Does it really matter if Figma was bought vs IPO? No of course not. Khan just needs a poster child for her overall intervention philosophy.
Pointing at Figma as a success for her overall world view is like the religious who say “oh god saved me from that flood” while ignoring the hundreds who did die. The Almighty wanted them to die? Or…?
If you’re gonna claim the successes you have to claim the failures
One way to settle the question of whether Khan is right would be for the government to simply make competing offers in these situations, buy the companies, and shepherd them to IPO, or a buyer with fewer antitrust issues if that's not possible.
If the government is net ahead after a decade or so, then we'd know.
This approach to antitrust wouldn't work in cases like the Apple case, where the power is worth it to the company only because they can misuse it, but it would be a very fair and accounting-transparent remedy for the "startup gets bought by competitor" case.
Adobe killed their Figma competitor (XD), so the reality of the UI design tools niche in the design tools market is that Figma actually has a near monopoly. Sketch still chugs along, but its market share is negligible. Penpot is a neat idealistic community effort that is lightyears behind.
This is one of the reasons why Figma continues to tighten the screws on their userbase, who doesn't like it one bit, but continues to pay.
Now, this is all not to say, that it would've been any better with Adobe's involvement, more like lamenting the fact that Figma lived long enough to become a villain.
Figma has a near monopoly because it built the better product. This is the preferred outcome compared to Adobe broadening their monopoly not by building a better product, but just by acquiring/squashing their competition.
Monopolies aren't illegal. Preventing competition is the thing we want to stop. As far as I can see, Figma doesn't do anything to give themselves an unfair advantage or prevent other players from entering the market.
Adobe is in maintenance mode. They aren't willing to compete with figma because they have basically never had to compete with anyone since the 90s. They forgot how
I don't see why the market cap proves whether she is correct or not. You'd have to compare it to the counter-factual of what the value of a Figma subsidiary would be under Adobe today.
This is not obvious at all to me. Instagram (bought for $1B) is probably worth ~700 B of Meta's market cap.
PSA that no regulator simply means the sharkest shark regulates. There is no such thing as no regulator. People will regulate. The question is who and how
If I suggest putting your net worth on black at roulette and it lands on black, does that make my advice right?
Khan forced the employees and investors to continue working and gambling on a company they might not have wanted to continue working for or gambling on. It doesn't really matter that the gamble succeeded in this case.
I'm sympathetic to a prohibition on big companies buying their competitors, but a 3x difference over two years seems too low to suggest that antitrust creates more pure business value.
First this is all hindsight now. We don't know the probabilities of this outcome vs. others. Figma's shareholders didn't at the time, which is why they chose to sell. Khan didn't either.
Second, 3x over two years isn't that much. There must be many opportunities in SV for all of Figma's employees and investors that could have given them a much higher return than that with much less risk.
I don't have this data, but one could look at secondary sales in the past two years as a measure of the increased risk and opportunity cost, right?
Any delay of people getting liquid impacts the creation of other startups, both by the Figma people who can now leave and do their own thing and for the companies Figma stakeholders would have invested in . This is super hard to measure but it is the kind of thing markets are good at measuring when they ask shareholders "sell now to Adobe or wait to IPO?"
This seems really good for Figma users, most of all. Most of the value destroyed by the acquisition would have been in the distortion and likely ultimate destruction of a company culture that made an insanely good product.
But those people are capable of going and making new products, and maybe Figma at its current phase is now too boring a thing for their talents, and should be managed by a more boring organization staffed by people who are slightly less able to make another Figma.
Who knows, but I doubt Khan (or any one individual or organization) is in a better position to assess the optimal delivery of what people want than the incentivized distributed intelligence of all the stakeholders and the people and markets around them.
Again, there are other reasons to do this that markets wouldn't quantify.
The lengths people will go to to avoid the facts on this are fucking remarkable. I'll let Opus explain:
"The Bottom Line
A 73% annualized return would:
Easily rank in the top 10-20 best-documented investment returns of all time if sustained for multiple years
Significantly outperform virtually all professional fund managers and legendary investors
Be 7x higher than the long-term stock market average
Turn $10,000 into $30,000 in just 2 years (your 3x example)
Such returns are typically only achieved during:
Early-stage growth of revolutionary companies (like early Apple, Amazon, or Netflix)
Cryptocurrency bull runs
Highly leveraged trades
Exceptional market timing during recovery periods
Small/micro-cap stocks experiencing explosive growth
While spectacular, returns of this magnitude are extremely difficult to sustain and often involve significant risk."
As is the case with many startups, especially those with a limited product portfolio, it's rare for them to exceed their IPO valuation in the future. So, I think we'll have to wait and see if Figma can continue its growth.
the only thing I will refute is the $60Bn market cap is due to IPO. Once they start reporting earnings, in a year or two once the hype dies down we will find the true value.
a lot of tech darlings have been decimated by the stock market. & Adobe can still buy them once they're public, maybe even cheaper than $20bn.
yep. So perhaps don’t block every potential transaction on flimsy pretense? Icing the transaction market seems like a great way to scare off potential competing acquirers in the name of social engineering.
I don’t know. All I know is that Lina is out of power, and suddenly we see an upswing in M&A. Coincidence, I’m sure.
I'm not a Khan fan, like, at all, but by the time you're at the point where the FTC is getting involved in your M&A, you've crossed the threshold of success; all the signals to future startups about your path being promising have been sent.
Her point is that m&a isn’t the best thing for the economy or founders. Unchecked m&a creates cannibal capitalism where one mega zombie firm scoops up all competition.
Lina claims she let the vast majority of deals through. I wonder what the data shows.
>While her aggressive stance led to intense criticism from corners of the tech industry, she defended her approach by saying that only a tiny percentage of deals received “a second look”
Except the majority of the Figma IPO was captured by banks due to it's severe pop. So while everyone made a lot of money, the overwhelming majority went to the underwriters [0].
The founding team at Figma would have gotten a similar amount much sooner if the acquisition was let thru OR if the underwriters didn't screw them over by underpricing at $33.
The IPO "pop" is not captured by banks: it's captured by the banks customers that pre-buy at the IPO price.
Basically, before an IPO, the underwriters take the company on a "roadshow" in which they pitch the IPO to potential buyers.
There's a hierarchy of these: the best are very large buyers that place large orders and trade seldom. Pensions, sovereign wealth funds, etc.
Those buyers then make offers ("I'll buy 50MM at $100"), which the bank uses to set the IPO price. The bank then gives them an allocation.
If you're a high (10MM+) net worth individual that banks with one of the underwriters, you can often get an allocation in an IPO. The richer you are, the more of an allocation you can get.
When an IPO pops, it's these people that get the benefit.
The benefit for the company is that the stock is owned by prime people the bank selected: you crucially _don't_ want to just sell to the highest bidder if they are going to dump the stock immediately after the pop (or that's the theory, at least). They have stable shareholders with a vision aligned with management.
The benefit to the bank is that they get to reward their customers with access to profitable trades--but the bank itself does not profit.
So blocking a sale at a $20B valuation so the company can IPO at a $19.3B valuation 3 years later (a loss of $700M in value over 3 years) is a success?
Yes? Not everything is about capital owners and their profits. There is a lot of importance in the competition in the market and customers having choice of best products around. Figma competing with adobe is one of the examples.
Even from capital point of view everyone is now forced to make their bet - either on adobe or figma, so it’s more efficient capital allocation too.
1. Figma actually lost money because their acquisition price was higher than their shares sold in the IPO.
2. Yes, Figma luckily IPOed in an extremely hot market
Getting a bit lucky doesn't mean this was a success overall. The conclusion has many more years to go before it gets written. Either way, I don't like the over reach by Lina Khan.
Why would Figma have sold to Adobe if they were not paying a premium, assuming they’d grow?
I can understand you looking at the headline valuation but as an independent company traded with lots of potential to grow with AI tools their stock will probably double… a quick Google appears to suggest a 250% uplift from the IPO price so the company would potentially have added $58bn (the figure I’ve seen quoted) to Adobe’s bottom line.
The IPO only sold a few percentage of their shares. Even if we assume they sold all of them at opening price, by close the company and employees still hold like 80% of their shares that are worth triple what Adobe would have paid. Besides, antitrust is also about consumers, not JUST about businesses. We will all benefit immensely from real competition instead of having Adobe continue to dominate the market. We're talking about Adobe FFS, they have some crazy prices and shitty dark patterns around trials & cancellations.
We'll see but post-IPO their valuation is $58b, so it's not clearly wrong
But also as you said this is 3 years later, which is a long time in the tech business and all sorts of things have changed, positive and negative... so she's not clearly right either...
IPO valuation is pretty much always set to undervalue so it gets a good pop(1). The market cap after 90 days of trading (generally speaking when insiders lock-up provisions expire and there is no longer a limit on the number of shares that can be sold) is a much better estimate of the actual value of the company. We don't have that yet, but right now the stock is ~3x the valuation that Adobe was going to buy at. Every equity owner is currently booking this as a win. We'll see what the price is when the lock-out provisions end, but right now definitely the shareholders are glad that they didn't merge.
I know that because if the metric you cite was something that the investors and managers cared about, they could have done other things to boost it (see footnote 1). They didn't, ergo they don't consider that metric to be a useful gauge of the company value. It sure looks like you tried to find the worst performing metric to claim that there was a loss, when so far this has been a major win for the shareholders(2).
1: If you don't want this and want to IPO at the highest valuation, you do a direct listing like Spotify did, or a SPAC reverse merger like Trump Media did. But there are reasons that the vast majority of companies choose to do a traditional IPO. For most companies, this is a one-time transaction that will make the managers very very rich, and they want to get the best guidance on navigating it- and are willing to pay handsomely for that guidance, since this is the only time in their lives they will be CEO for a major company that is starting to list. So they follow the IPO/greenshoes/pop route.
2: The most important nuance on that statement is that it took them a year and a half to extract that extra value by doing an IPO, and now they are exposed to market risk. We will have to see what the market conditions are like in another few months when the lock-ups expire.
I’m not especially in favor of all of Khan’s actions but this was an accretive acquisition prospect for Adobe in a way that makes it worth more to them vs as a standalone company. Think how Urchin Analytics was worth a lot to Google but less by itself.
Also, Adobe was massively overpaying, arguably even if you consider that. Even if you assume it was due to seeing Figma as a huge competitive threat the stock nosedived due to the acquisition price.
You do not understand how IPOs work. They only sold a small number of shares (about $1.2B) in the IPO. That’s why it’s called an “initial offering” of shares.
Investors can feel free to hold onto their remaining shares and sell whenever they want, outside of a window following the IPO where they can’t.
More companies going public, earlier is better for markets and society.
Having companies stay private growing from 0 to 100B value allows VC bros to capture all the growth and then unload onto the public via IPO or selling to a larger BigTech firm.
> More companies going public, earlier is better for markets and society.
I would disagree. Japan is a good example of a market where there are a lot of small public companies and they're largely held by the founders. There is not enough share holder pressure and these small public companies are often barely profitable and run poorly. I am sure there are other markets that are similar to Japan where there are publicly traded companies without enough buyers or liquidity or transparency, etc.
I wouldn't automatically say this is bad. If the money that would end up being more profits percolates throughout society, employees, communities etc., and even the founders themselves (as opposed to concentrated capital), it is actually fine and could produce a healthier society. On the other hand, I grant you that it might (also) feed corruption. But then, I wouldn't bet on concentrated capital not being corrupt as well.
Japan does not have a growing stock market index or economy. So Japan with aging population is not a good example. It does not grow in real terms. It's just an old peoples country at this point and for the future. Nikkei performed bad for decades
If you mean specifically the case of VC companies, this is true. I think the opposite is the case when we’re talking about “naturally grown” companies that didn’t take on serial investor money.
What a stupid comment at the end of the article. The vindication is of having the company exist in the market in such a way as to encourage competition.
My experience with mergers and acquisitions is that it's akin to keeping a warm body on life support. When I worked at a company that did a lot of M&A I was sitting around like, "Why couldn't you have just built that?" When I worked at a company that was recently acquired and went through the merger process I was like, "wow I see why you bozos would've never built this yourselves." That isn't to say there aren't companies that do them well or there aren't places where it makes sense in an ultra-competitive landscape but I'm curious - when was the last time anyone really considered tech an ultra competitive landscape?
Post-2015 other than large language models this industry has mostly been riding on intellectual property consolidation. That's basically Lina's point; nobody actually benefits from this - not customers, not share holders, not the American people. The over practice of M&A leaves a small pool of winners who are not the kind of people that post on or read this forum.
If you mean the ones transacting in derivatives, no, they don't. The US market isn't India where the size of the secondary market was bigger than the primary market. If you mean that financial markets drive real markets, that's also wrong. While yes, certain products need a infusion of cash to get to market, that's not the same as having a company acquire the possibility of a new product and just sit on it.
That if Amazon acquired it, this would enable it to horizontally integrate and take control of yet another market? This, eventually, woudl lead to lower prices for consumers...
That Amazon wasn't acquiring it for it's business acumen and was actually acquiring it for some secondary purpose (i.e. market consolidation, data extraction)
I wonder if a simpler solution to all this regulartion would be something like imposing a tax (fee?) when larger companies acquire smaller companies? So something like, "For every order of magnitude difference between the acquirer and the aquiree, there will be a 100% tax on the acquisition price paid to the US Federal government."
So this would basically encourage companies to either have their own IPO (no fee at all) or be acquired (merged really) by a company of equivalent size. If you are acquired by a much larger company, that company will have to pay a (logarithmicaly) large fee relative to the acquisition price. If they really want it, no problem, but it will be "cheaper" for a more correctly sized company to acquire them.
Seems like the regulation works well when it is applied. Why is there a need for a simpler solution? Why try to replace it with a 'simpler' tax with none of the human consideration about how the m/a could lead to less competition.
Like if this regulation was replaced in favor of this tax, a big company merging with another big company would be considered fine when obviously big company mergers can be just as concerning as larger companies buying smaller ones
>In the matter of reforming things, as distinct from deforming them, there is one plain and simple principle; a principle which will probably be called a paradox. There exists in such a case a certain institution or law; let us say, for the sake of simplicity, a fence or gate erected across a road. The more modern type of reformer goes gaily up to it and says, "I don't see the use of this; let us clear it away." To which the more intelligent type of reformer will do well to answer: "If you don't see the use of it, I certainly won't let you clear it away. Go away and think. Then, when you can come back and tell me that you do see the use of it, I may allow you to destroy it."
Then the companies will just poach all the good employees they want and “license” the IP if they care about it from the shell of the former company. We see that now.
I agree with taxing large companies more, however the log fee could also hinder the sale of companies that are legit only interesting enough for large companies to buy, preventing certain startups from being able to successfully sell.
I haven’t given this much thought, but my gut feeling is that it should be OK for a big company to acquire a smaller one if both sides agree and it’s not blatant anti-trust material (as with Meta acquiring Instagram).
Readit News
The idea that there's a significant lobby on fucking Hacker News unhappy that a startup IPO'd for a zillion bucks and made everyone rich is twilight zone shit. It makes no sense according to the stated values in the fucking masthead.
[0] https://techcrunch.com/2024/06/15/ftc-chair-lina-khan-on-sta...
This is clearly a valuable game! It is worth in expectation $20B. But it also has a 50% chance of being worthless to you.
Someone offers to buy it from you for $20B. You agree, giving up some upside for some downside protection.
But then someone else says that's not allowed. So you play the game and you roll a six and get $60B.
Does that prove the person who made you play it rather than sell it was "right," ex ante?
The vast majority of startups will never IPO. Acquisition is the only viable exit. That’s because the bar for IPO has risen so high that only massive already incumbent unicorns can reach it. IPO isn’t a way to raise capital to compete. It’s a victory lap if you’ve won already.
Don’t know if this is actually true, that she was having this chilling effect. I am relaying a sentiment I’ve encountered.
Of course the other reason is tech-right echo chamber brain rot. People need to get off Xhitter. (Not a fan of doomer left anti tech brain rot either. There’s more than one kind of brain rot around.)
It's that she was incredibly ineffective.
Of course she was right. That's what made her practical ineffectiveness so problematic.
She was often 100% right on what should be done but could only achieve 0-10% of it.
I'd rather have someone who is 70% right on what should be done, but can achieve almost all of it, as some previous FTC chairs were.
Blocking the merger was good. But I'm not convinced the IPO was good. I think trying to be a company that's worth tens of billions of dollars is only going to make Figma worse. I care about the users more than the people that got rich.
None of the FTC's business
> If you care about employee comp? She was right.
None of the FTC's business
> Number of listings, new potential acquirers for your startup, more diverse office geography, right right right right.
None of the FTC's business x3
> If you care about consumer choice, she was right.
Ok, so this is the FTC's business. But does Figma compete with Adobe in any major areas? I'm not aware of any major Adobe products like that.
Someone made a good analogy on twitter that Khan essentially cut off a genius pianist's right hand, the pianist persevered and somehow succeeded in retaining their talent in spite of having one hand, and now Khan is taking credit for the feat. In the same way, the fact that Figma still exists is not proof that she was right.
Does it really matter if Figma was bought vs IPO? No of course not. Khan just needs a poster child for her overall intervention philosophy.
Pointing at Figma as a success for her overall world view is like the religious who say “oh god saved me from that flood” while ignoring the hundreds who did die. The Almighty wanted them to die? Or…?
If you’re gonna claim the successes you have to claim the failures
If the government is net ahead after a decade or so, then we'd know.
This approach to antitrust wouldn't work in cases like the Apple case, where the power is worth it to the company only because they can misuse it, but it would be a very fair and accounting-transparent remedy for the "startup gets bought by competitor" case.
Adobe killed their Figma competitor (XD), so the reality of the UI design tools niche in the design tools market is that Figma actually has a near monopoly. Sketch still chugs along, but its market share is negligible. Penpot is a neat idealistic community effort that is lightyears behind.
This is one of the reasons why Figma continues to tighten the screws on their userbase, who doesn't like it one bit, but continues to pay.
Now, this is all not to say, that it would've been any better with Adobe's involvement, more like lamenting the fact that Figma lived long enough to become a villain.
Monopolies aren't illegal. Preventing competition is the thing we want to stop. As far as I can see, Figma doesn't do anything to give themselves an unfair advantage or prevent other players from entering the market.
This is not obvious at all to me. Instagram (bought for $1B) is probably worth ~700 B of Meta's market cap.
At some point, "Big Tech" is really "Big Finance" in disguise.
Khan forced the employees and investors to continue working and gambling on a company they might not have wanted to continue working for or gambling on. It doesn't really matter that the gamble succeeded in this case.
First this is all hindsight now. We don't know the probabilities of this outcome vs. others. Figma's shareholders didn't at the time, which is why they chose to sell. Khan didn't either.
Second, 3x over two years isn't that much. There must be many opportunities in SV for all of Figma's employees and investors that could have given them a much higher return than that with much less risk.
I don't have this data, but one could look at secondary sales in the past two years as a measure of the increased risk and opportunity cost, right?
Any delay of people getting liquid impacts the creation of other startups, both by the Figma people who can now leave and do their own thing and for the companies Figma stakeholders would have invested in . This is super hard to measure but it is the kind of thing markets are good at measuring when they ask shareholders "sell now to Adobe or wait to IPO?"
This seems really good for Figma users, most of all. Most of the value destroyed by the acquisition would have been in the distortion and likely ultimate destruction of a company culture that made an insanely good product.
But those people are capable of going and making new products, and maybe Figma at its current phase is now too boring a thing for their talents, and should be managed by a more boring organization staffed by people who are slightly less able to make another Figma.
Who knows, but I doubt Khan (or any one individual or organization) is in a better position to assess the optimal delivery of what people want than the incentivized distributed intelligence of all the stakeholders and the people and markets around them.
Again, there are other reasons to do this that markets wouldn't quantify.
"The Bottom Line
A 73% annualized return would:
Such returns are typically only achieved during: While spectacular, returns of this magnitude are extremely difficult to sustain and often involve significant risk."a lot of tech darlings have been decimated by the stock market. & Adobe can still buy them once they're public, maybe even cheaper than $20bn.
Real talk Lina
I don’t know. All I know is that Lina is out of power, and suddenly we see an upswing in M&A. Coincidence, I’m sure.
Lina Khan was entering a market that was deeply flawed thanks to decades of bad policy.
>While her aggressive stance led to intense criticism from corners of the tech industry, she defended her approach by saying that only a tiny percentage of deals received “a second look”
The founding team at Figma would have gotten a similar amount much sooner if the acquisition was let thru OR if the underwriters didn't screw them over by underpricing at $33.
[0] - https://pitchbook.com/news/articles/figma-ipo-pop-spotlight-...
Basically, before an IPO, the underwriters take the company on a "roadshow" in which they pitch the IPO to potential buyers.
There's a hierarchy of these: the best are very large buyers that place large orders and trade seldom. Pensions, sovereign wealth funds, etc.
Those buyers then make offers ("I'll buy 50MM at $100"), which the bank uses to set the IPO price. The bank then gives them an allocation.
If you're a high (10MM+) net worth individual that banks with one of the underwriters, you can often get an allocation in an IPO. The richer you are, the more of an allocation you can get.
When an IPO pops, it's these people that get the benefit.
The benefit for the company is that the stock is owned by prime people the bank selected: you crucially _don't_ want to just sell to the highest bidder if they are going to dump the stock immediately after the pop (or that's the theory, at least). They have stable shareholders with a vision aligned with management.
The benefit to the bank is that they get to reward their customers with access to profitable trades--but the bank itself does not profit.
Even from capital point of view everyone is now forced to make their bet - either on adobe or figma, so it’s more efficient capital allocation too.
2. Yes, Figma luckily IPOed in an extremely hot market
Getting a bit lucky doesn't mean this was a success overall. The conclusion has many more years to go before it gets written. Either way, I don't like the over reach by Lina Khan.
The market works best with competion. It's better for the workers, the customers, society and innovation in general.
A giant monopoly buying potential competitors is bad for everyone other than owners of that giant monopoly.
Caplan said it best. The market is great at doing good things that sound bad. The government is great at doing bad things that sound good.
I can understand you looking at the headline valuation but as an independent company traded with lots of potential to grow with AI tools their stock will probably double… a quick Google appears to suggest a 250% uplift from the IPO price so the company would potentially have added $58bn (the figure I’ve seen quoted) to Adobe’s bottom line.
Lina Khan was right at least on this merger!
But also as you said this is 3 years later, which is a long time in the tech business and all sorts of things have changed, positive and negative... so she's not clearly right either...
I know that because if the metric you cite was something that the investors and managers cared about, they could have done other things to boost it (see footnote 1). They didn't, ergo they don't consider that metric to be a useful gauge of the company value. It sure looks like you tried to find the worst performing metric to claim that there was a loss, when so far this has been a major win for the shareholders(2).
1: If you don't want this and want to IPO at the highest valuation, you do a direct listing like Spotify did, or a SPAC reverse merger like Trump Media did. But there are reasons that the vast majority of companies choose to do a traditional IPO. For most companies, this is a one-time transaction that will make the managers very very rich, and they want to get the best guidance on navigating it- and are willing to pay handsomely for that guidance, since this is the only time in their lives they will be CEO for a major company that is starting to list. So they follow the IPO/greenshoes/pop route.
2: The most important nuance on that statement is that it took them a year and a half to extract that extra value by doing an IPO, and now they are exposed to market risk. We will have to see what the market conditions are like in another few months when the lock-ups expire.
Also, Adobe was massively overpaying, arguably even if you consider that. Even if you assume it was due to seeing Figma as a huge competitive threat the stock nosedived due to the acquisition price.
Investors can feel free to hold onto their remaining shares and sell whenever they want, outside of a window following the IPO where they can’t.
Having companies stay private growing from 0 to 100B value allows VC bros to capture all the growth and then unload onto the public via IPO or selling to a larger BigTech firm.
I would disagree. Japan is a good example of a market where there are a lot of small public companies and they're largely held by the founders. There is not enough share holder pressure and these small public companies are often barely profitable and run poorly. I am sure there are other markets that are similar to Japan where there are publicly traded companies without enough buyers or liquidity or transparency, etc.
this implies they're unloading at a valuation that is higher than it is worth. If so, why do "the public" make the purchase?
It’s called FOMO.
Given that this sell side analyst defines success as growth, this seems rather like a tautology.
Post-2015 other than large language models this industry has mostly been riding on intellectual property consolidation. That's basically Lina's point; nobody actually benefits from this - not customers, not share holders, not the American people. The over practice of M&A leaves a small pool of winners who are not the kind of people that post on or read this forum.
The secondary market drives the primary market.
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What incentive would Amazon have to drop prices after vertical integration is done?
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So this would basically encourage companies to either have their own IPO (no fee at all) or be acquired (merged really) by a company of equivalent size. If you are acquired by a much larger company, that company will have to pay a (logarithmicaly) large fee relative to the acquisition price. If they really want it, no problem, but it will be "cheaper" for a more correctly sized company to acquire them.
Like if this regulation was replaced in favor of this tax, a big company merging with another big company would be considered fine when obviously big company mergers can be just as concerning as larger companies buying smaller ones
>In the matter of reforming things, as distinct from deforming them, there is one plain and simple principle; a principle which will probably be called a paradox. There exists in such a case a certain institution or law; let us say, for the sake of simplicity, a fence or gate erected across a road. The more modern type of reformer goes gaily up to it and says, "I don't see the use of this; let us clear it away." To which the more intelligent type of reformer will do well to answer: "If you don't see the use of it, I certainly won't let you clear it away. Go away and think. Then, when you can come back and tell me that you do see the use of it, I may allow you to destroy it."
I haven’t given this much thought, but my gut feeling is that it should be OK for a big company to acquire a smaller one if both sides agree and it’s not blatant anti-trust material (as with Meta acquiring Instagram).