Canva acquires Affinity: The product strategy behind the battle of the design tools

Yesterday, Canva acquired Affinity’s design tools for an undisclosed amount. In this article, we’ll explore why this is a brilliant execution of astute product strategy from Canva—and how Adobe might retaliate.

First, here's what you need to know:

For a long time, Canva and Adobe coexisted peacefully: Canva’s design tools targeted non-designers. Adobe’s design tools target professional designers. Adobe has very imaginable feature, Canva has every imaginable template.

Neither had reason to attack each other. In fact, people getting a taste for design in Canva might even graduate to Adobe. Canva executed this first part of good product strategy perfectly: Build a high-performing product for an underserved market.

This is exactly what Canva did with their Photoshop-but-easy tool. Adobe, the seemingly unassailable behemoth, didn’t have to worry. By definition, it was a market they didn’t cater to. Adobe also had the comfort of being the incumbent: Distribution, cash reserves and the cultural footprint of Photoshop being both product and verb.

But it’s the job of startups to make incumbents shudder. So then comes Canva’s second act of good product strategy: Introducing additional use cases. Canva slowly added video editing and grew its arsenal of templates. This made Canva the right tool for ever more jobs to be done for many non-designer knowledge workers.

In “Crossing the Chasm” lingo, this would be the beachhead segment: A slice of the market that lets you launch your eventual campaign to go mainstream and replace the incumbent.

This turned Canva into a successful business with 175 million of users and a $26 billion valuation. While Adobe was certainly paying attention, it’s hard to imagine them being worried. After all, their market cap is about 10x Canva’s valuation (in March ‘24). And if you’ve ever tried to do anything advanced in Canva, you know there was no real competition with Photoshop, Illustrator or Premiere Pro. Coexistence.

That changed today when Canva acquired Affinity Software, long one of the few real Adobe alternatives. It’s popular because of its pay-once-use-forever pricing and among anyone dissatisfied with Adobe’s products (which are often called bloated).

Canva describes its reasoning for this move like this: “While our last decade at Canva has focused heavily on the 99% of knowledge workers without design training, truly empowering the world to design includes empowering professional designers too.”

To translate that from press release to English: We’re coming for you, Adobe!

This is the final step for disruptive innovation—the challenger attacks the incumbent in their core market, where they’re strongest to supplant them completely.

This is incredibly hard to pull off from a pure product perspective. Beating Adobe’s Creative Cloud (which includes 20+ products) on features is a losing battle. But Canva’s Affinity acquisition might win through other means:

• Bundling: In 2020, Microsoft Teams raced past Slack’s active users when Microsoft added it to Office 365 for free. Canva might pursue the same strategy, bundling Affinity’s tools (possibly rebranded) with Canva for free. If Affinity’s products are a good enough substitute to Photoshop and co, teams currently using Canva may cancel or never buy a Creative Cloud subscription.

A secondary effect of bundling would be that new Canva users (possibly early in their careers) gain exposure to Canva’s higher-end tools before they ever hear of Adobe. That would sap Canva’s new cohort growth.

• Core product innovation: Instead of keeping Affinity’s tools as separate, though possibly relabeled tools, Canva might add the advanced functionality to its core product, making the same tool useful for both designers and non-designers. This would obviate the need for Creative Cloud for both new and existing Canva users.

Canva has pledged to keep Affinity alive as a separate product, but that doesn’t mean it won’t also add Affinity features to its product.

We’ll see which product strategy Canva ultimately pursues with its Affinity acquisition. Whether it opts for one product that can serve everyone or copies Adobe’s strategy of a portfolio of products, it remains differentiated from Adobe: While Adobe creates professional-grade tools for various professions, Canva creates design tools for various types of designers.

The only thing that’s certain is that Adobe will retaliate if they deem the threat serious enough. They might launch their own Canva competitor and bundle it with Creative Cloud (to sap Canva’s new user growth).

Adobe does have its hands tied more than Canva does: With its $20b Figma acquisition being blocked by regulators, M&A is an uncertain way to to block Canva’s assault on their position.

Was this the impetus for Canva to finally attack Adobe where it hurts? I guess we’ll only find out when Melanie Perkins retires and starts writing a Substack.