Ten years ago, the vast majority of designers were working in Adobe Photoshop, a powerful tool with fine-tuned controls for almost every kind of image manipulation one could imagine. But it was a tool built for an analog world focused on photos, flyers and print magazines; there were no collaborative features, and much more importantly for designers, there were no other options.
Since then, a handful of major players have stepped up to dominate the market alongside the behemoth, including InVision, Sketch, Figma and Canva.
And with the shift in the way designers fit into organizations and the way design fits into business overall, the design ecosystem is following the same path blazed by enterprise SaaS companies in recent years. Undoubtedly, investors are ready to place their bets in design.
Seed stage design tools, low code/no code software, and/or collaboration tools are getting $10 on $40m term sheets.
Not an isolated case.
Shows their bullishness on these spaces. And some FOMO.
— Bilal Zuberi (@bznotes) August 21, 2019
But the question still remains over whether the design industry will follow in the footprints of the sales stack — with Salesforce reigning as king and hundreds of much smaller startup subjects serving at its pleasure — or if it will go the way of the marketing stack, where a lively ecosystem of smaller niche players exist under the umbrella of a handful of major, general-use players.
“Deca-billion-dollar SaaS categories aren’t born everyday,” said InVision CEO Clark Valberg. “From my perspective, the majority of investors are still trying to understand the ontology of the space, while remaining sufficiently aware of its current and future economic impact so as to eagerly secure their foothold. The space is new and important enough to create gold-rush momentum, but evolving at a speed to produce the illusion of micro-categorization, which, in many cases, will ultimately fail to pass the test of time and avoid inevitable consolidation.”
I spoke to several notable players in the design space — Sketch CEO Pieter Omvlee, InVision CEO Clark Valberg, Figma CEO Dylan Field, Adobe Product Director Mark Webster, InVision VP and former VP of Design at Twitter Mike Davidson, Sequoia General Partner Andrew Reed and FirstMark Capital General Partner Amish Jani — and asked them what the fierce competition means for the future of the ecosystem.
But let’s first back up.
Past
Sketch launched in 2010, offering the first viable alternative to Photoshop. Made for design and not photo-editing with a specific focus on UI and UX design, Sketch arrived just as the app craze was picking up serious steam.
A year later, InVision landed in the mix. Rather than focus on the tools designers used, it concentrated on the evolution of design within organizations. With designers consolidating from many specialties to overarching positions like product and user experience designers, and with the screen becoming a primary point of contact between every company and its customers, InVision filled the gap of collaboration with its focus on prototypes.
If designs could look and feel like the real thing — without the resources spent by engineering — to allow executives, product leads and others to weigh in, the time it takes to bring a product to market could be cut significantly, and InVision capitalized on this new efficiency.
In 2012, came Canva, a product that focused primarily on non-designers and folks who need to ‘design’ without all the bells and whistles professionals use. The thesis: no matter which department you work in, you still need design, whether it’s for an internal meeting, an external sales deck, or simply a side project you’re working on in your personal time. Canva, like many tech firms these days, has taken its top-of-funnel approach to the enterprise, giving businesses an opportunity to unify non-designers within the org for their various decks and materials.
In 2016, the industry felt two more big shifts. In the first, Adobe woke up, realized it still had to compete and launched Adobe XD, which allowed designers to collaborate amongst themselves and within the organization, not unlike InVision, complete with prototyping capabilities. The second shift was the introduction of a little company called Figma.
Where Sketch innovated on price, focus and usability, and where InVision helped evolve design’s position within an organization, Figma changed the game with straight-up technology. If Github is Google Drive, Figma is Google Docs. Not only does Figma allow organizations to store and share design files, it actually allows multiple designers to work in the same file at one time. Oh, and it’s all on the web.
In 2018, InVision started to move up stream with the launch of Studio, a design tool meant to take on the likes of Adobe and Sketch and, yes, Figma.
Present
When it comes to design tools in 2019, we have an embarrassment of riches, but the success of these players can’t be fully credited to the products themselves.
A shift in the way businesses think about digital presence has been underway since the early 2000s. In the not-too-distant past, not every company had a website and many that did offered a very basic site without much utility.
In short, designers were needed and valued at digital-first businesses and consumer-facing companies moving toward e-commerce, but very early-stage digital products, or incumbents in traditional industries had a free pass to focus on issues other than design. Remember the original MySpace? Here’s what Amazon looked like when it launched.
In the not-too-distant past, the aesthetic bar for internet design was very, very low. That’s no longer the case.
“Customers today demand good design much more so than corporate buyers in the past would and that means great user experience is of paramount importance,” said Pieter Omvlee, CEO at Sketch.
The proof was in the pudding a couple years ago when IBM announced that it would heavily invest in its design department. In 2012, IBM employed one designer for every 72 engineers on its payroll. In 2017, that ratio moved to 1:8; similarly, Atlassian moved from 1:25 in 2012 to 1:8 by 2017.
They’re not alone. Dropbox, LinkedIn, Uber and other big tech companies moved in the same direction, which, in turn, has led non-tech companies to embrace design as integral to their way of life.
It’s not just that we expect Apple and Facebook to be thinking about user experience; we expect apps in beta to look and feel beautiful, and we expect our bank’s website to look like it was built in 2019. By default, booking a ticket on Delta’s website should be as user-friendly as calling an Uber.
When I sat down to work on this story, I reached out to several big players in design, from investors who have led rounds in the design startups listed above to the founders themselves. Almost all of them agreed on one thing: whoever has the best product will win. But their approaches to ‘best’ were very different.
“There will always be a small, enthusiastic, vocal set of designers and design influencers who want to try the new, cool thing,” said Mark Webster, director of product for Voice UI/UX at Adobe. “But most designers use their tools within a larger organization, so it is important to understand how these organizations work, and how they purchase software, which is not commonly discussed, but is the is the most important part of growing a design tools business.”
“The best customer acquisition strategy is to have a product people love,” said Andrew Reed, general partner at Sequoia and investor in Figma. “This is true in every market, but especially true in design, where users are highly opinionated and the design tool is open for 8 hours a day, 5 days a week. The best software companies of today’s era are collaboration-first. Collaboration can’t be stapled to a few features — the whole product needs to be constructed for people to work together. Given that, a customer acquisition strategy that allows for widespread adoption is critical.”
“There are roughly 1.5 to 2 million digital product designers in the world, which means that a relatively small cohort of core end-users drive a massively disproportionate amount of organizational influence and spend,” said Clark Valberg, CEO at InVision. “Without question, this is a double-sided funnel market. Bottom-up: individual designers make sovereign tool choices that travel up the organizational ladder. Top down: design and product leaders align the organization around practice and platform standards. The unique factor is that top-down motion is far less autocratic than in other SaaS categories. […] This means that in order to deliver millions of dollars worth of enterprise-oriented value, design tooling companies need to inspire designers while understanding the dynamics of the enterprise context. Without this, the addressable market simply isn’t big enough to produce hundreds of millions of ARR dollars.”
Future
The big question for the future is whether there is enough room for a handful of giant, general-use design tools to coexist. Their presence, and competition, fosters an ecosystem that allows small players, plug-in makers and non-design firm integrations to thrive and serve every crevice and corner of the market. That same ecosystem of niche, targeted players can also exist under a single sovereign, like we’ve seen with Salesforce.
“Designers ultimately are going to use the tools that make it easiest to produce the most beautiful product for what it is their software does,” said Amish Jani, partner at FirstMark and investor in InVision. “And what any piece [of] software does is specific to the vertical and the context. So yes, of course, the best product will win. But that sort of treats the market as a homogeny. You’ll have certain broad line tools that will emerge. They’ll have fans and advocates that use them in a general sense. But there’s lots of room for specialists that work on very specific activities.”
He likened it to the marketing stack. Companies like Eloqua, Marketo and Hubspot compete over the broad line market, but hundreds of companies that optimize for things like email flow and website landing page are also in the running. So, too, will ecosystems form around a couple of these top design players.
And while Jani sees plenty of room in the market for top-line competition, InVision CEO Clark Valberg seems wistful for the day that consolidation comes a knockin’.
Already, InVision has tried to set up a framework for that consolidation. Upstream, it’s taken significant investment from Atlassian and worked to integrate with products like Jira, Confluence and Trello, where engineers work. But it’s also created the InVision Design Forward Fund, offering $5 million in equity rounds, grants and/or partnerships to companies working on problems in the design field. And let’s not forget the 10 acquisitions InVision has made since its inception in the design space.
He has often talked about Salesforce as a model to emulate, expanding to cover every niche and every connective fiber that touches sales, whether through integrations, plug-ins, or outright acquisitions. For what it’s worth, Salesforce has made 60 acquisitions, according to Crunchbase.
The point? There is a huge opportunity right now for founders to look at the design workflow, comprehend its evolution over time and solve problems that haven’t been properly evaluated yet. Even in a consolidated market (let’s just pretend that InVision is the winner, here), a single company simply can’t build everything for everyone.
“If any company tells you that they solve every use case under the sun, they’re being arrogant,” said Dylan Field. “Our bet on this is around platform, so we’re trying to create the best platform through plug-ins, integrations, and APIs to make it so that people can integrate with Figma and work with us. We’re definitely trying to create a vertical experience and we’re an all-in-one tool for the major workflows. But there are so many workflows outside of that. And the flourishing of the plug-in system points to the fact that we can’t do everything. […] There’s a lot of room for smaller companies, especially as the market continues to grow at this rapid pace.”
But the question of whether or not one design tooling firm will win does not answer the question of whether or not one of these companies should win. The competition is, indeed, part of the reason that the role of designers has changed and grown so much in the past decade.
“Isn’t it great that we live in a world where the best product can win?” asked Mike Davidson. “When I was growing up in design I didn’t have the choice we have now. We used one company’s products and were beholden to the pace at which that company happened to develop their products. Some releases would be good and others would slow things down, but we had no choice. We were all stuck using the same tool everyone else was using. But we no longer live in that world. Designers are now free to migrate from one tool to the next depending on what they think is the best product out there. We finally have competition in the marketplace to fight over the hearts and minds of designers, engineers, product managers and executives.”
The truth is, many companies use a mashup of various products to get the job done; Facebook uses a combination of Sketch and InVision. In fact, Sketch is relatively unrecognizable to Facebook designers who have built their own infrastructure on top of the app.
The key, according to Davidson, is not to build a tool that people can’t leave, but to provide a software suite that allows users to do as much as possible using the built-in capabilities of that tool and build for themselves the extra functionality they might need.
Whether it consolidates under one roof, or a handful, the point is that there is movement within this industry. Founders have a real opportunity to get in on the action and build something that fits in or on to one of these growing players, particularly while the heat of competition is keeping them hungry.
But even for founders not interested in building for the design ecosystem, there’s a big takeaway: design talent will likely continue to be at a shortage.
Each organization thinks about design differently. Designers have not only grown in numbers, they’ve grown in influence — but universities haven’t caught up with demand. Even with millions in VC backing, new wave educational initiatives like CodeAcademy and Khan Academy focus primarily on coding, not design education. Indeed, big companies like IBM and Shopify outright bought design firms to quickly pick up design talent.
According to InVision’s Product Design Hiring Report, 70 percent of surveyed people managers said that they were increasing the headcount of their design department this year. The survey also found that 81 percent of product designers are contacted by recruiters on a monthly basis.
Figma is working on its own ways to solve for the design talent shortage, aiming to make design education more accessible. The company recently launched a tool called Community that allows designers to share their live files so that others can learn from them, and even remix them. Canva, meanwhile, has always focused on making design accessible to non-designers.
Now that quality design is a requirement, everywhere, the growth of the industry as a whole is only slowed by the pace at which new designers can emerge.
“It’s amazing how early we are in terms of broad awareness,” said Reed. “Part of this is because Adobe was so dominant, unchallenged, and stagnant for so long. I don’t think there are even any Adobe beat reporters, and they are a $140B company. Now things are heating up, and people with much broader followings are taking notice. I think the world is going to wake up to this in short order.”
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