The Verdict™ on ___ · Investor series · Mandate · By Siong Yoong
The moat Adobe valued at $20 billion
In 2016 the consensus was that Adobe owned design and browsers couldn’t do real design work. The one dimension the incumbents dismissed became the standard — and Adobe’s $20B offer to remove it.
~4 min read
AI thumbnail — to generate
“just a toy” / Contrarian ODDS™: the moat the market mispriced
Illustrative read — these are teaching numbers, not a live score.
TL;DR — Multiplayer-in-the-browser looked like a toy in 2016, and the toy was the moat. The crowd priced Figma as a lightweight also-ran; Adobe later offered about $20 billion to remove it. The trick isn’t spotting a good product — it’s reading the one thing the market has mispriced. Here’s how to do that on your own deals.
In 2016 the consensus was settled. Adobe owned design, and browsers couldn’t do real design work. A web tool with two people editing the same file at once read as a novelty for students, not a threat to professionals. Six years later Adobe agreed to buy that novelty for about $20 billion, then walked away in December 2023 under regulatory pressure and paid a $1 billion break fee just to exit. Adobe never owned Figma — but the number it named is the point.
Verdict Insight™
For years I watched rooms pass on companies like this for the most reasonable-sounding reason there is: everyone agreed they were toys. And they were right about the product as it looked that day. What they missed is that the strongest moats almost always start life looking like toys — because if the thing were obviously serious, the incumbent would have built it already.
The tell with Figma was the one feature the market laughed at: two designers working live in the same file. That wasn’t a feature, it was a trap door. Once a whole team lived inside a shared file, the cost of leaving rose with every person who joined — and a moat that gets deeper the more people use it is exactly the kind an incumbent can’t copy fast enough to matter. The crowd priced the toy. It never priced the trap door.
How to read it on your own deals
Next time the market tells you a category is owned, don’t argue with the consensus — go find the one thing it’s laughing at. Ask what the incumbent would have to buy or rebuild if that one thing became the standard, and whether the product gets harder to leave the more people use it. If the answer is yes, you’re not looking at a toy. You’re looking at the thing the crowd has mispriced — and mispricing is where the return lives. Read Figma that way and it comes out roughly 75/25 in its favour, not because the product was polished in 2016, but because the one thing everyone dismissed turned out to be the whole company.
Run it by hand — or let a skill run it for you
You can do this read yourself now — you just did. When you want it faster, I’ve packaged the same contrarian read into a free Claude skill: register and it’s yours to point at any deal, no subscription, no catch. Inside Verdict™ we call it Contrarian ODDS™ — the read that names the side the crowd has mispriced. That’s where this leads: the read you just did, done for you. Get the free skill →
Sources
The coin split and any Verdict™ score shown above are illustrative teaching reads, not actual Verdict™ assessments. The facts, figures and dates are drawn from the sources listed here.
- Adobe Inc. — Form 8-K — termination of the Figma merger agreement (SEC EDGAR). 18 Dec 2023
- Adobe — Adobe and Figma mutually agree to terminate merger agreement. 18 Dec 2023
- CNBC — Adobe and Figma call off $20 billion acquisition. 18 Dec 2023