TIVP019: ADOBE (ADBE): DESIGNING A CREATIVE EMPIRE

W/ SHAWN O’MALLEY & DANIEL MAHNCKE

11 May 2025

Shawn O’Malley and Daniel Mahncke break down Adobe (ticker: ADBE), a leading software company providing end-to-end solutions for creative professionals, from design and creation to marketing and performance measurement. Through apps like Photoshop and After Effects, Adobe offers an industry-leading suite of productivity tools for creatives, including freelancers designers, Hollywood design studios, and everyone inbetween. Excel is to the financial world as Adobe is to the creative world, you might say.

In this episode, you’ll learn how Adobe grew out of a garage and became tangled with Apple early on, how the company transitioned to a cloud-based subscription model, whether AI risks to Adobe’s business are overstated, how Adobe is implementing AI into its tool, whether Adobe is as attractively valued as it seems, plus so much more!

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IN THIS EPISODE, YOU’LL LEARN:

  • Adobe’s origin story and how it was created out of a garage.
  • What were Adobe’s first few popular products and how Apple elevated Adobe’s business.
  • Why Adobe transitioned to a subscription-based business model in 2013.
  • Why the market has soured on Adobe’s otherwise wonderfully profitable and growing business.
  • How Adobe is responding to Canva, Figma, and disruptions from AI.
  • What Adobe is doing to keep the next generation of designers using its products.
  • The biggest risks to Adobe’s continued dominance.
  • Whether Adobe is attractively valued at its current beaten down levels.
  • Whether Shawn & Daniel add ADBE to The Intrinsic Value Portfolio.
  • And much, much more!

TRANSCRIPT

Disclaimer: The transcript that follows has been generated using artificial intelligence. We strive to be as accurate as possible, but minor errors and slightly off timestamps may be present due to platform differences.

 

[00:00:00] Shawn O’Malley: And on that point, Photoshop has been the industry standard for 40 years. And at any time you could have probably convinced yourself that some new competitor or technology would upend Adobe’s leadership. Right? Like I, I don’t want to sound like somebody who, who doesn’t understand the innovator’s dilemma and how companies can be disrupted. Because that does happen. But I mean, in reality here we’re talking about a very long runway of dominance and they’ve only continued to intestine in making the service more powerful in just compounding their advantages. Further entrenching Photoshop’s position, for example, as the industry choice for image editing software.

[00:00:43] Daniel Mahncke: Hey guys. Today my cohost Shawn O’Malley is back with another company pitch. And if you’ve ever downloaded a PDF file, enjoyed the firm, skip past an advertisement or consume well just about any type of media. You’ve almost certainly either knowingly or unknowingly interacted with something that was made using one of Adobe’s myriad services.

[00:01:06] Daniel Mahncke: Founded in the early 1980s with the chief aim of addressing format issues when printing the company has since become a vital part of many of our daily lives. Though we might not always notice it. That is true for any great Silicon Valley story. Adobe began with two people in a garage, and from there it has become one of the largest, most ubiquitously known software companies in the world.

[00:01:31] Daniel Mahncke: John, in the next hour or so, you’ll be telling us the story of just how that happened, how the business is doing, what to make of AI disruption, threats, and how to value this behemoth of a company that is still growing surprisingly fast.

[00:01:46] Shawn O’Malley: Hey, Daniel, happy to be here and pitch Adobe today. I do think today’s episode will be a timely one.

[00:01:53] Shawn O’Malley: Adobe is one of these tech juggernauts that has played a pivotal role in the overall market success in the last few years, yet as we’ll talk about the market has really soured on its business and is currently pricing them, like it’s going to completely fall off a cliff. And we just haven’t seen that in the numbers yet.

[00:02:09] Shawn O’Malley: And a lot of that fear is because of all the uncertainty about AI and art creation and also some real competitive threats from Canva and Figma. And I will be trying to make the case for why these fears are overblown and if that is true, what that would mean for Adobe’s valuation.

[00:02:28] Daniel Mahncke: I looked at Adobe a while ago myself, and I just checked before the episode.

[00:02:32] Daniel Mahncke: The last time I looked at them was precisely a year ago. Back then, the price was already down about 30% from all time highs. And even at that point it still seemed a bit too expensive for my taste. And since then it has declined another 25%. And honestly, despite being a bit too expensive, I didn’t see another 25% decline coming.

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