Figma’s IPO: The Full Breakdown & Why Melio’s $2.5BN Acquisition is “Discouraging”
Jason Lemkin (guest), Rory O’Driscoll (guest), Harry Stebbings (host)
In this episode of The Twenty Minute VC, featuring Jason Lemkin and Rory O’Driscoll, Figma’s IPO: The Full Breakdown & Why Melio’s $2.5BN Acquisition is “Discouraging” explores figma’s IPO, Melio’s sale, and AI’s brutal new venture math The episode dissects Figma’s S-1, arguing it’s a rare billion‑dollar ARR, rule‑of‑80 SaaS asset that validates Adobe’s aborted $20B acquisition and will strongly reward early investors like Index. They contrast this with Melio’s $2.5B sale to Xero, seeing it as strategically logical yet discouraging on a revenue multiple basis and a warning about late‑stage valuations and preferences. The conversation then widens into how AI, massive capex, and winner‑take‑most dynamics are reshaping venture: reserves, down rounds, PE exits, roll‑ups, founder secondaries, and why being “AI native” (or at least AI‑relevant by mid‑2024) is now existential. They close on the surge of CEO turnover, mega‑funds like Menlo’s, the hollowing out of mid‑tier outcomes, and examples like Oracle and Vlex showing who is actually making the AI transition versus who is getting left behind.
Figma’s IPO, Melio’s sale, and AI’s brutal new venture math
The episode dissects Figma’s S-1, arguing it’s a rare billion‑dollar ARR, rule‑of‑80 SaaS asset that validates Adobe’s aborted $20B acquisition and will strongly reward early investors like Index. They contrast this with Melio’s $2.5B sale to Xero, seeing it as strategically logical yet discouraging on a revenue multiple basis and a warning about late‑stage valuations and preferences. The conversation then widens into how AI, massive capex, and winner‑take‑most dynamics are reshaping venture: reserves, down rounds, PE exits, roll‑ups, founder secondaries, and why being “AI native” (or at least AI‑relevant by mid‑2024) is now existential. They close on the surge of CEO turnover, mega‑funds like Menlo’s, the hollowing out of mid‑tier outcomes, and examples like Oracle and Vlex showing who is actually making the AI transition versus who is getting left behind.
Key Takeaways
Figma is a once‑in‑a‑cycle SaaS IPO that retroactively justifies Adobe’s ‘overpriced’ bid.
With ~$821M revenue, ~46% growth, strong free cash flow, and rule‑of‑80 performance, Figma could list near or above the prior $20B Adobe deal, validating Scott Belsky’s push to buy it and showing how high-quality, scaled SaaS can still command premium multiples.
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Melio’s $2.5B exit looks strategic but is worrying as a benchmark multiple.
At roughly $150–200M ARR and triple‑digit historical growth, selling for ~13–15x revenue is not a blowout in today’s AI‑inflated world; it highlights how crowded, slower‑growth fintech categories and heavy pref stacks compress returns and challenge assumptions about $1–3B ‘mid-tier’ outcomes.
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Reserves and down‑round ‘rescues’ rarely create home runs; time is the real opportunity cost.
They argue follow‑ons disproportionately go to fastest growers, but ex‑post many expected fund‑returners aren’t; pay‑to‑plays and messy down situations generally cap upside at modest multiples while consuming huge partner time that could be better spent on new winners.
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AI is driving an extreme winner‑take‑most regime—both in startups and in venture funds.
LPs understand the math: jumbo funds now require multiple multi‑billion‑dollar outcomes, and capital is concentrating into a tiny set of AI leaders (Anthropic, Cursor, etc. ...
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Being AI-native—or at least AI‑relevant by mid‑2024—is increasingly a survival threshold.
Their heuristic: if your product and growth haven’t materially improved from AI by now, you’ve effectively failed; examples like Intercom, Airtable, Vlex, and even Oracle show legacy players can adapt quickly, but many SaaS companies are already past their window.
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Mid‑scale SaaS exits via PE or roll‑ups will happen, but likely at painful multiples.
Deals like Couchbase at ~5. ...
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Founder incentives, secondaries, and burnout are central to governance in long journeys.
With 10–15 year company timelines and 2021 foie‑gras secondaries, many founders and CEOs are either re‑upping, stepping aside, or leaving for better‑positioned platforms; co‑sell rights help, but board dynamics, orphaned deals, and misaligned incentives can still quietly destroy value.
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Notable Quotes
“If you haven’t grown because of AI, you’ve failed.”
— Jason Lemkin
“If Oracle can get AI native by June 30th and your startup can’t, I mean, I’ll smile, but I’d give up.”
— Jason Lemkin
“Everything goes back in life to incentives… if your board member can’t speak to the money anymore, they’re basically useless.”
— Rory O’Driscoll
“The late‑stage business is a lovely rigged game: if you always get a 1x on your losers and have enough winners, by definition you have a positive IRR.”
— Rory O’Driscoll
“Pessimists sound smart and optimists make money.”
— Rory O’Driscoll
Questions Answered in This Episode
How should investors and founders decide between selling a fast-growing company like Melio at a ‘reasonable’ multiple versus holding out for a potentially much bigger but more uncertain outcome?
The episode dissects Figma’s S-1, arguing it’s a rare billion‑dollar ARR, rule‑of‑80 SaaS asset that validates Adobe’s aborted $20B acquisition and will strongly reward early investors like Index. ...
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Given the difficulty of predicting fund‑returners, how should early‑stage funds rethink reserves allocation and their willingness to double down on apparent winners?
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Where is the line between being prudently AI‑aware and over‑investing in AI infrastructure that may not deliver positive NPV in a few years’ time?
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What realistic exit paths exist for the hundreds of $100–300M ARR SaaS companies that haven’t re‑accelerated with AI—PE at 2–4x, strategic roll‑ups, or simply grinding out cashflows?
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How should boards and LPs think about re‑incentivizing or replacing founders in decade‑long journeys, especially in an environment of skyrocketing secondaries and CEO turnover?
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Transcript Preview
My rule is if you haven't grown because of AI, (upbeat music) you've failed.
The amount of money we're investing in AI right now are $300 to $400 billion a year in CapEx. Will you get the near-in ROI? Will it be an economically rational decision when you look back two, three years from now? I don't know.
I think venture's just gonna rip. You're getting a lot of money back as an LP, right? Just massive amounts of cash coming back. I mean, if Oracle can get AI native by June 30th, and your portfolio, your startup can't, I mean, I'll smile, but I'd give up.
Ready to go? Well, listen boys, I am so excited for this. This is (laughs) the holiday edition. Uh, we have, uh, some travels from two of us. So listen, thank you so much guys for joining me on the travels, Rory and Jason, for staying up late and making this happen.
Very exciting. It's a lot- a lot going on in the world of AI and, and more.
Absolutely.
All righty. Let's kick it off. So Figma filed for their S1 last night. Numbers were pretty phenomenal. You have, um, uh, 821 million in revenue, 46% up year-on-year growth. You have, uh, a billion five in cash, no debt. There's a lot to like about this. And so I wanted to hear your thoughts on where you think it will go out at, and how you analyze this S1 dropping.
There was a lot to like. I mean, awful lot to like. I mean, I went through it literally on my phone late at night and gone, went, "Wow." And you didn't even mention one of the more impressive ones, which is kind of the profitability and free cash- free cash flow margins last quarter, like 40% plus. So op inc positive, free cash flow positive, growing 46%. So again, rough math on an i- on an iPhone on a small screen, it's like rule of 80, right, plus. So it's a company clearly tracking a billion dollars at rule of 80, plus or minus. I think it's gonna get a great reception.
I mean, for sure. It's- this- this is just games to figure out what the model's gonna be, right? Is it gonna be 20 billion or 25 billion or 30 billion. And, um, will- will they listen to Bill Gurley? (laughs) I don't think ... I mean, Figma is not, uh, i- is not consumer, but it's got a big enough brand they don't need to leave money on ... I doubt they need to leave money on the table, right? So it's a minor issue, but world of trade. I- I- it's, um ... You know, the only thing is at 20 billion, it- you know, which is just what Adobe was gonna pay almost 24 months to today, 20 billion's 20 times current revenue, right? Um, it's not ... Even at 20 billion, it's not cheap, right? It's not cheap. So, uh, you know, the- the overall NASDAQ's on fire, but, you know, um, you know, Bill McDermott from- from ServiceNow just joined. That's about as good as it gets in the enterprise. They're not trading at 20x. So I actually am not smart enough to know exactly where it will tw- where ... how much it will trade above 20, um, and how that compares to the IRR of selling to Adobe for cash and having no lockup (laughs) -
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