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Today’s post is a fun (and long) one. It’s a piece I am shipping from our recent acquisition of my favourite newsletter on the internet, How They Grow. I have collaborated on a few guest pieces now, and in every case so far, for the most part, it’s been original content.

GUEST POST 💄

Creating Multiplayer & Eating Up Market Share With Figma

It isn’t every day that a product like Figma comes around. Something that quickly becomes so ubiquitous in an industry that it has the incumbent giants literally crying themselves to sleep at night. For some, they are quite literally the things that nightmares are made of.

This is the story of Figma, a design-centred mega-startup, founded by Dylan Field and Evan Wallace, that would take the product world by storm, gobbling up market share like little Pac-Men (and women) day by day, week by week, month by month.

So much so that a decade into their journey, rival Adobe eventually came knocking on their door, chequebook in hand, looking to acquire them, putting an end to their waking nightmares. So, today, to tell us some more of the story of Figma, I am enlisting my buddy, Jaryd Hermann, to dive deeper for us.

To help with this piece, Jaryd was lucky enough to sit down with Figma’s CTO, Kris Rasmussen, to discuss how Figma plans to grow long into the future. Over to you, Jaryd! This one will be a cracker!

A quick 0 to 1 recap

Hey, Jaryd here. For anyone unfamiliar with Figma's backstory, here’s a quick primer for context. Again, if interested, there are much deeper posts on this part of the story. But Kris and I did chat a bit about the earlier days just to get the conversation rolling and calm my nerves, and here are a few things that stood out to me that are tactical and not covered elsewhere.

What if we brought design software to the browser, and at the same time, we made design multiplayer?

It doesn’t sound so crazy now, but back then, as Kris reminded me in our chat, it was a colossal technical challenge. Tech difficulties aside, the next big obstacle was actually getting designers to change their entire workflow and switch tools. The noteworthy players back then were Adobe and innovative startups like Sketch, Framer, and Invision. There was no shortage of competition.

That’s why Dylan and Evan rallied a team and built in stealth for three full years, until September 27, 2016, when—just like Miley said—they flew in like a wrecking ball to the design market.

Today, if you need to design anything, it’s not even a question of where you should do it. Figma is the place. Look at how much market share they have devoured in a few short years.

That’s a significant snatching up of market share, especially considering those other tools were very good. I personally used Sketch, Framer, and Invision all the time at my startup, and I loved them. I asked Kris about what he thought contributed to this breakout success.

Breaking away in a crowded market

The first thing he said, despite popular opinion, is that it wasn’t so rapid a win.

Rather, there was a ton of patience and work behind the scenes as Figma set out to create a new category of design software. Let’s call it browser-based design for simplicity, but in reality, the browser was just the vessel to get to Figma’s true 10X value add and actual category: a platform for teams to design vs. an app for designers alone.

And Kris’s emphasis on patience is an important lesson. A lot of founders are scared to do things that take a long time. They want rapid growth. But for the really big ideas—the category-defining products that go against all conventions—it’s important to do things that might take years, not months.

Dylan and Evan had a strong vision for what the future of design looked like. And they spent a long time working away at that vision, rallying people around it, and motivating stakeholders, all while persevering through a lot of learning and a lot of hard technical challenges.

It takes real grit to work in stealth for almost three full years before they can open the product to the public and start to get real feedback. Let’s touch on the technical challenge the team faced.

Leveraging inflection points

When Dylan and Evan were ideating Figma, two big things were worth noting. First, the state of design tools was entirely desktop-based. Second, it was becoming obvious what the benefits of browser-based tools were, and more people were leaning into them (thanks, Google Docs).

This left a big question: Was it possible to bring a collaborative, browser-based tool for design to the browser? Because historically, browsers weren't good at custom graphics-oriented type things. And that’s table stakes for a design tool. So, Figma took two huge bets.

Both were bets based on seismic shifts they saw in the market: the first, a behavioral shift towards changing consumer needs, and the second, a technology and timing bet.

This gave Figma a very compelling Why Now (WebGL in browsers), which is a classic stripe that most massive and enduring companies have. Lenny has a great post on the importance of Why Now, but in short, startups have a higher chance of success when their insight is built on some big and accelerating change happening in the world.

A change that is in the early innings of playing out, because a) it means the opportunity later on is much bigger than it is today, and b) anyone working against it now has early mover advantages. So, how can you spot a wave to catch? First, know that there are two main types of why nows.

Demand driven: This is the shift in what people want and need.

Supply driven: An advancement that makes your solution more possible, affordable, or profitable.

As said, Figma hitched onto both types, which was great because supply why-nows are most powerful when combined with demand why-nows.

And to find them, speak to your customers, get insights from the sales team, stay up to date on advancements in tech by following a few of the right sources, look at which sectors are getting funding, and keep a pulse on your competitors. Speaking of demand-why nows…

Indexing intuition and ignoring naysayers

Again, Figma bet that what designers wanted and needed to design better would have to be delivered through a browser. Sticking to their guns and pushing through towards that vision must have been extra challenging since Figma received a lot of criticism when it launched, with designers being very vocal that this was not where they wanted design to go.

Part of that criticism probably came from the disconnect between what the market saw as currently possible and what the Figma team knew was becoming increasingly possible. This brings us to an important point: You most likely know the most about it.

You’re closer to significant tech advancements than your customers. You're closer to the market, and you’ve probably got much more data and access than the layman…be that the press or a customer. That definitely does not mean ignore your customers. As we’ll see, Figma values a very tight proximity to its community. But it does mean you have to sharpen your sense about what to ignore, even if it seems like existential feedback (e.g I hate your vision).

Just remember, people said they hated Facebook’s News Feed when it launched, which became the foundation of their success, and the first iPhone had plenty of high-profile doubters.

There will always be criticism. And I think that the more vocal the criticism is from a group of people, perhaps there’s some correlation there with the level of success a product will have. Please don’t quote me on that, but I’d rather have a bunch of people saying my product is terrible than nobody saying anything at all.

Incredible customer proximity, product-empowered engineering

One tactical thing worth noting about Figma’s culture in the early days, and to some degree, still through to today, is that they make sure everyone at Figma uses Figma. Dogfooding their own product is a key principle. Another is that they have everyone, including developers, spend time with customer support.

Product-empowered engineering is a key lever to building and shipping fast. When we looked at beehiiv, who build with crazy velocity, this is one of their key speed drivers. You want engineers looped into customer conversations and strategic planning, because it means they have deep context to make decisions quickly while they work. This does not make the PM redundant, but it does make the entire process a lot smoother and lift the quality bar of the product.

And when you use Figma, it’s very easy to see how high that bar really is. Now let’s get into what’s next for Figma.

Growth: For design, not just designers

What the Adobe deal changed

Let’s start by addressing what everyone’s wondering: What now, given that Adobe isn’t acquiring Figma anymore? In short, Figma has cleared the decks. They’re no longer distracted by an acquisition. And, as Kris said, their path is very clear; they have an open road to move even faster on their vision and roadmap.

I think a lot of folks who use Figma are happy to hear they will remain just being Figma. Getting acquired can be exciting, and of course, lucrative. But often from a customer’s standpoint, the best outcome is, by and large, for the team to continue focusing on the product they’ve come to love.

When M&A occurs, integrations usually follow in some form. This almost always means there are tradeoffs between making the integration happen and building new features.

At Figma, any time that would have been spent on integrations and assimilating to a new culture can now be spent on expanding the core and building best-in-class software across the holistic product-building and design stack. All while keeping their startup culture of urgency and making things as fast as they can.

Over the longer term that means Figma will most likely IPO. As a private venture-backed company (with nine fundraising rounds), that’s really now the inevitability. The deal with Adobe was terminated because of too many regulatory roadblocks in the UK and the EU. So, unless for some reason it is picked up again, there isn’t really anyone else who can buy/would buy Figma and not run into the same hurdles. So, the exit path looks very much like going public.

With the team’s focus fully on growing Figma, let’s look at how they’re thinking about the next chapter, potentially making Figma a $50B+ company geared for an IPO.

The big picture, sequential loops, and the WIP

A common thread I kept hearing in my chat with Kris was how Figma was thinking about catalyzing compounding productivity in design. A critical part of this for Figma is expanding the platform beyond the core ‘design’ function. Their insight driving this strategy is that design goes beyond designers. It’s equally all of the conversations around what to build, the feedback cycles, the prototypes with users, and the handoff specs.

Therefore, Figma has core advantages in addressing other key stakeholders, adjacent problems, and big opportunities. The more Figma can stack solutions for them into one tightly integrated platform, the more Figma will be an essential part of every type of team's product delivery process. To illustrate how Figma has rolled out towards this vision:

Once Figma had designers thanks to their best-in-class design tools, that was their break into the company’s product-building function. From here, designers became their internal champions for Figma. So, when they began building products for other folks on the team to help the holistic design process, they had massive distribution advantages.

Now, this is what Figma looks like when you work with your team: a community playground to build beautiful products. So, peaking into Figma’s future, the playbook is clear. Firstly, keep taking design to new levels by raising the ceiling and lowering the floor.

That last point is really the North Star of Figma’s roadmap: vertically integrate the value chain of what it takes to think about, get buy-in for, design, code, ship, and measure software. That could mean building, buying, or partnering.

The more Figma inserts itself along this value chain, the more each step will make Figma an increasingly valuable part of a company’s stack. In turn, this will likely cause some other SaaS licenses a company has to be redundant, increasing their net dollar retention, and selling more seats to the company. This is how Figma will grow—through sequential loops.

Sequential loops

Companies, as Kevin Kwok put it, are “a sequencing of loops.” And while it’s possible to GTM and cruise with an initial core loop that works well, it’s usually not enough. This is because every product has a natural lifecycle ending with a flatter maturity line. Growth rates always taper off.

This is where the idea of S-curves comes in. To keep growing—just like a fire needs fresh logs—a company often needs to keep finding the next loop that piggybacks on existing strengths.

Each S-curve or new product launch will hopefully bring a new growth inflection. Simply, the more problems you solve in one place, the bigger your surface area of value is, and the more of a compound startup you’ll be.

A compound startup is just a company that, instead of just doing one very narrow thing well, tries to build a whole set of different point solution systems in one coherent product and tackles them all at once to solve a much larger problem for someone. Conventional wisdom bucks that going niche and deep on one problem is a winning strategy (at least, to start). So, why would you do this?

Simply, because the companies that tend to be bigger and more ambitious are solving the whole problem as opposed to just building a tool. As Parker Conrad, of Zenefits, Rippling, and corporate espionage fame, describes.

In other words, think in ecosystems. The more you do, the deeper your moat will be. Just take these examples of world-class ecosystem plays.

• Shopify: All things e-commerce.

• Stripe: All things payment infrastructure.

• Atlassian: All things DevOps.

• Alchemy: All things Web3 development.

• HubSpot: All things CRM.

So, to differentiate themselves from a commodity market of design apps and stay ahead of the competition, Figma is gunning to be the ultimate ecosystem for all things design. By building for everyone in the design process, not just designers, they drive growth thanks to cross-side network effects.

Unlike direct network effects, where more people get more value as more people like them join—think social media or messaging apps—cross-side network effects involve multiple groups that grow in size and value as the other group does, too. This is just classic two-sided marketplace dynamics. More buyers mean more sellers, driving more buyers, etc.

As more designers use Figma, they pull in the non-designers they work with. Similarly, as these non-designers use Figma, they encourage the other designers they work with to use Figma. It’s a virtuous circle and a powerful compounding loop. So, how does Figma pick its next loop? Expansion stemming from existing advantages.

FigJam is a great example. During the pandemic, they saw many people using Figma to brainstorm with diagrams and whiteboards. They also knew that a Figma design seat wasn't the best way to monetize the rest of the company, so they built a specialized version of Figma to address this demand. This leads us to our next point.

The WIP, and the balance of being strategically proactive and reactive

Figma has a long-term vision, which leads to a long-term strategy. That is all incredibly important, and everything you work on and prioritize should have a strong story for how it helps get you towards that 5 to 10 target state.

But we also live in a world where things are always in flux. New technology can become rapidly popular. Pandemic could strike. A competitor could make an unexpected move, or your customers may suddenly need something based on some market or world change. Things happen. And as Yuhki Yamashita, Figma’s CPO, put it: We live in a WIP (work in progress) world. In a great post, Yuhki gets into how the WIP drives Figma’s day-to-day product-building philosophy. But it also clearly impacts how they view strategy. Here’s what Kris said.

Now matters. Now can create sudden opportunities for you. While now may not perfectly align with your long-term plan, being adaptive is key to customer-centricity. It reminds me of something Paul Krugman once said, “Economics is really about two stories. One is the story of the old economist and younger economist walking down the street, and the younger economist says, ‘Look, there’s a hundred-dollar bill,’ and the older one says, ‘Nonsense, if it was there somebody would have picked it up already.’ So sometimes you do find hundred-dollar bills lying on the street, but not often—generally people respond to opportunities.”

To find and grab those $100 bills, strike the balance between big growth bets, and ‘what do people need today.’ Of course, you don’t always have to build something yourself to lean into a short or long-term opportunity.

M&A and operationalizing integrations

When the Adobe deal fell through, Adobe had to pay a $1 billion separation fee. This gave Figma a nice cash injection, filling up their war chest. Now, as Figma expands across the design value chain and enters new verticals, M&A becomes a very viable strategy. Either they can invest in building, or they can invest in buying. For instance, they recently acquired Dynaboard, which plays well into their push into the design-to-code phase of the chain.

They’re betting big on developer tools, and here M&A accelerates their growth in this area by: a) bringing in great talent to grow the team, and b) folding in new tech to add further functionality.

In other words, Figma will buy talent and technology to either: a) add a new sequential loop, or b) enhance an existing loop. Both will expand their ecosystem vertically, and when buying a company for this reason, it presents the potential to drive a better experience for your customers. This builds real value instead of a roll-up strategy with a portfolio of disjointed products.

Customers enjoy the convenience of features that talk to each other, better personalization thanks to their data being in one place, whilst also receiving favorable, bundled pricing. For the company, there are a ton of reasons why this works, too.

• You can cross-sell between customers.

• You retain your customers for longer in your ecosystem (they don’t need to use other tools).

• You have control of product quality and can influence the supply/value chain.

• You unlock new revenue since you can charge for solving new types of problems.

• You create network effects, increase switching costs, and generally just build a moat for yourself.

For this to work, you as the acquirer need to: 1) understand your audience super well, 2) identify adjacent problems in their lives that a) you are not solving, and b) make sense for you to solve, and 3) pick potential acquisition targets that align with your strategy. One great example of this is Atlassian’s suite of acquisitions across the DevOps pipeline.

Balancing resources across a portfolio of bets

It's always challenging for companies to go from 1 to n products. One of those challenges is managing the shift in resource allocation between a company’s core business and future expansions.

Because even if it’s not about vertical integration, every company should have a diverse portfolio of bets on its roadmap. Some bets will be a small lift, others, like FigJam or Dev Mode, are bigger bets that need real teams behind them. The question is always, how do you staff them? There are always tradeoffs and opportunity costs, right?

To help with this problem, first, Figma emphasises the time spent on discovery and conviction building. They don’t jump to solutions, and through engineering and design crits (brainstorming rituals where no decisions are made), they ideate in the problem space until there is enough confidence in the hypothesis and proposed solution. This means prototypes and a lot of assumption testing.

From there, they start with a small team to get to building. You would never guess, but FigJam was built with just one product manager, one developer, and one designer. As the market validates their idea further, they ramp up the team.

It can be tempting to just fully staff a big and exciting initiative, and while there are certainly situations where you need to move fast on a big bet, and investing big early on is necessary, it’s usually best to think about allocating your resources based on a function of confidence and impact.

Kris and I also discussed economies of scale here. This is how one engineer built FigJam in six months. It was built on the same engine as Dev Mode.

Essentially, Figma has built a unique tech stack for itself, and this stack has become a shared engine with shared operating principles, systems, permissions, and data models that can power all its new initiatives. This has three very clear benefits.

• Engineers who have worked on one product area can easily transfer over to another product area

• New product initiatives need less infrastructure to get going, meaning 1 person can build an entirely new product

• When working on one product area and making improvements, other product areas also improve, creating a self-reinforcing flywheel

How AI will lower the floor and raise the ceiling of design

So far, we’ve spoken about Figma’s future being continued expansion through more and more connected loops along the design value chain. This is all towards their vision of turning imagination into reality. While speaking with Kris, I kept thinking of Ben Thompson’s concept of the Idea Propagation Value Chain. Here’s an excerpt from his essay.

That last point is spot on, and around that creation to substantiation piece of the chain, there are tremendous opportunities that AI and ML present for turning ideas into reality quickly, and with a little learning curve. Essentially, AI will give superpowers to professional designers, raising the limits of how good you can be at designing. While also giving enough power to non-designers so they can design too, lowering the minimum skill required to even participate in design.

And here’s a snapshot of Noah Levin’s presentation from Config 2023 that visualizes it.

Raising the ceiling will make Figma more valuable for its existing customer base since most professional designers already use it. But lowering the floor will help Figma move down market into some of Canva’s territory. Plenty of non-customers out there could start coming to Figma if AI makes getting their ideas into some wireframe or whatever much easier.

That would be an incredibly strong position to be in—having one product suitable for servicing the entire spectrum, from amateurs to pros. Figma is philosophically thinking of using AI across their platform by shifting the thinking from atoms—the pixels and small details—to patterns. For example, in the current collaborate to iterate cycle, here’s what Figma is thinking.

• Brainstorming with FigJam: Use AI to spin up generative concepts, clustering ideas, summarizing feedback

• Designing with Figma: Use AI to get started faster, create variations, create design systems, complete user flows, convert designs to versions in new languages, or even on new device types.

• Building with Dev Mode: Use AI to help with handoffs, generate code, and match components.

Essentially, Figma will build new loops across the value chain to join the loops better, making transitions super smooth, shortening the time spent in each loop. You can think of it as a lubricant that will make the entire process way easier. Plus, Figma has tons of first-party data that gives it huge advantages here.

Finally, what makes a great product builder at Figma?

I asked Kris what he sees as the most common trait of successful product managers and operators at Figma, and he gave me two great answers that can be applied to most roles.

There’s definitely a correlation here with junior to senior folks. The less experienced you are as a product manager, the more you want to prove that your fingerprints are all over things. Partly because that’s how you get promoted—showing that you led to impact. But as you push up towards leadership, that matters so much less because you’re more measured on your ability to be a force multiplier.

What you start to care far more about is team and product progress, and recognition or attribution becomes a distant second. The best way to lean into this skill is simply to listen much more than you speak. Ask questions of your team, and be a facilitator of conversation, not a public speaker. Even if you have the best product sense and design intuition, let others speak first and truly be curious to understand opinions that go against your own. This applies to everything in life.

The second thing that Kris said the best talent has in common is their ability to reason about things at multiple levels of abstraction. To give you an example of what that means, you can think of this image.

_{A collection of light and dark pixels, ora collection of carefully arranged dots, ora collection of letters, ora collection of words, orvarious parts of speech (a pronoun, a verb, an adverb, an article, a noun), ora subject and a predicate, ora sentence, ora thought.}

In product, this means the best product managers can think simultaneously about the user experience and reason about features as a system. They know the technical constraints well enough, and consider how doing X may add complexity to the existing Y and Z. They also can reason through the implications of their work on the pricing and packaging model, even if that isn’t their product area.

Working through varying levels of abstraction is also how you build trust as a product manager. When you know enough about the technical side, engineers trust you. When you reason through design choices, designers trust you. When you reason from a business angle, leadership trusts you.

Product management is largely a game of trust since we generally influence without authority. If you can’t influence, you can’t get anything done.

How to think about this

• Understand the fundamentals: The best place to start is solidifying your understanding of the core concepts related to your product and industry. This includes both the technical aspects (how the product is built, the tech stack used) and the business aspects (market needs, business model, user personas). Having a strong foundational knowledge makes it way easier to navigate quickly between detailed and high-level perspectives.

• Practice system thinking: System thinking is a way of understanding how different parts of a system interact with each other within the whole. It’s particularly useful in identifying leverage points where a small change could have a big impact (like what growth models aim to do). Practice mapping out systems, identifying interdependencies, and considering outcomes of changes within those systems.

• Practice articulating your thought process: Try to regularly explain your reasoning from both a high-level strategic perspective and a detailed perspective. The simplest step is just discussing your thoughts with your team and walking people through your decision. Just saying it aloud will force you to clarify your thoughts and make the connections between different levels of abstraction more concrete.

• Develop scenario analysis skills: Practice exploring how different decisions might play out across various layers of abstraction. This involves considering multiple future scenarios (best case, worst case, most likely, etc.) and identifying how changes at one level would impact others. This exercise can sharpen your ability to anticipate and reason through complex, multi-layered situations.

Until next time

And that’s a wrap, folks, on one of the greatest software products of our generation. A product created by two young entrepreneurs, driving the UX/UI of most software products you use today.

If you want to get into the weeds of Figma’s product-led growth and their flywheels, this is the post to read. Finally, a huge thank you to Kris for making the time to help with this piece, and Doc and Open Source CEO for giving it some extra airtime. Peace!

Extra reading

• Why Figma Wins - June, 2020

• How Figma defined the modern designer - September, 2023

• Lessons in Product Scaling and Storytelling from Figma’s CPO

And that’s it! You can also connect with Jaryd on LinkedIn here and over on Twitter here.

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