The Future of Creativity 🎨

July 10, 2023

Hi friends,

It’s been years since I’ve published a letter to my email list. But it’s halfway through 2023 and now’s a better time than any to kickstart a writing habit. If you’re not interested in my ever-evolving thoughts on startups and tech, scroll to the bottom of this email and press unsubscribe. For everyone else, I look forward to connecting more deeply through writing every so often.

It’s been one full year since I had my last alcoholic drink. Sobriety is something that I never knew would be a part of my life but it’s changed so much for me. It’s had a large impact on me and how I operate. There’s so much I’d like to share about this part of my journey but I’ll save that for another day.

The creative curve

So much has changed since I left WeWork in 2016. If there’s anything I’ve learned, it’s that the way we work is constantly changing. The companies that get ahead (and stay ahead) are those that aren’t afraid to experiment, try new things, and propel the rest of us forward with them.

I’ve been thinking a lot about the future of work lately. I recently came across a wild statistic that made me go down a rabbit hole—the market for creative tools in the workplace grew 30% last year, from $30B in 2021 to over $40B in 2022. So I decided to take a closer look.

Last year, Adobe announced that it would acquire Figma, the leading web-first collaborative design platform, for $20B. Prior to the acquisition, Figma had raised nearly $333 million from prominent investors: Founders Fund, Index Ventures, and a16z.

In 40 years, Adobe has revolutionized the digital media landscape. Illustrator, Photoshop, and PageMaker have formed the foundation for the industry-standard Adobe Creative Suite.

In 2012, Adobe transitioned from selling software to launching Adobe Creative Cloud. This shift resulted in $233M in recurring revenues within a year. Today, Adobe’s annual revenue exceeds $19B with a market cap of around $221B as of writing this. While Figma has not yet established itself as a direct competitor to the design giant Adobe, its rise in popularity since 2017 has been undeniable.

The market for creative tools surpassed $40B in 2022 across 3 categories: creatives ($20B), communicators ($15B), and consumers ($6B).

  • Creatives: make a living through their work

  • Communicators: use tools to collab w/ creatives

  • Consumers: don’t rely on creative skills for income

The TAM for creative tools grew 33% YoY in 2022. This growth can be attributed to three key factors:

  1. The availability of suitable tools has revealed that creativity is not limited to professional designers; almost everyone desires to express their creativity. Startups like Canva and Podcastle have tapped into this market, making graphic design and podcasting accessible to a wider audience.

  2. Communication professionals such as marketers and HR personnel now have the ability to create content themselves using user-friendly software. This reduces expenses and opens up revenue opportunities for startups like PlayPlay and Jasper.ai.

  3. The trend of organizations becoming design-centric has expanded the market for creative software beyond design-focused, software-first companies. Creative software has the potential to become a horizontal category, enlarging the overall addressable market.

Collaboration within creative software is on the rise, with a growing demand for native features and collaborative tools. Startups like Figma and Gravity Sketch enable collaborative design, attracting business users, technical professionals, and physical product designers all into a single workspace.

Tech advancements offer additional opportunities for disruption in the creative software market. Startups like PhotoRoom, Shapr3D, and Gravity Sketch are developing mobile-first creative tools that leverage the intuitive nature of mobile interfaces.

AI plays a big role in reshaping the creative software market. It empowers non-professional creators and accelerates processes for professionals, holding tremendous potential for the industry. Projects like Synthesia, DALL·E 2, and Stable Diffusion enable anyone to create original images from a text description.

Building a community around creative software is essential for success. Engaged communities inspire and connect creatives, contributing to the growth of creative software companies. Platforms like Behance and social media accounts of companies like Gravity Sketch facilitate this community-building.

Despite the promising future, achieving the level of success attained by Figma or Canva is challenging. Startups face obstacles such as Adobe's dominant market position and bundling power, breaking established habits of professional designers, and addressing low willingness to pay and high churn among non-professional users.

While Adobe continues to innovate in the creative software industry, there are paradigm shifts, emerging mediums, and untapped audiences that larger organizations like Adobe may overlook. Startups have the opportunity to disrupt and excel in this evolving landscape.

Until next time,

Jesse

👋 Hi, I’m Jesse, a seed-stage VC at Flybridge. If you find a fast-growing niche or paradigm shift in the future of work, reply to this email with 1-2 short, compelling paragraphs. I answer as many emails as humanly possible.