🦄 InVision, once valued at $2B, is shutting down

Hey Founders,

Welcome to The Runway Ventures, a weekly newsletter where I deep dive into startup mistakes and lessons learned to help you become a better founder.

Let’s get to it! 🚀

☠️ 1 Failed Startup: InVision

🚀 The Rise of InVision

InVision was founded in 2011 that allowed designers to create interactive UX designs (wireframes, prototypes), revolutionising the entire digital design space by making the design process 10x easier and allowing designers to collaborate with various teams seamlessly.

One of the main reasons why InVision grew exponentially was its collaborative features that allowed designers to sync their designs directly from Sketch/Photoshop to InVision for sharing and interactive prototyping with their teams.

Personally, I started using InVision in 2019 to design mockups for my early startup ideas — and I loved it. However, something was lacking and I slowly switched to Figma shortly after (story for another time).

📉 The Fall of InVision

While the collaborative features of InVision were great, it wasn’t enough due to the intense competition from other players like Sketch, Figma, and Adobe XD. InVision realised what they built was a feature, not a product. In order for them to survive, they had to build their own design tool to maintain their market position, that’s when InVision Studio was born in 2017.

However, despite its marketing efforts, InVision Studio failed to gain wide adoption due to its performance issues and limited functionalities. Meantime, Figma was growing rapidly with its great product functionalities, ease of use, and limitless free features.

InVision has been shrinking (1200 → 600 employees) since 2020. In 2022, InVision’s revenue dropped 50% to $50 million, indicating its shrinking market share. In November 2023. InVision sold part of their business (Freehand app) to Miro, which I believed was the final move to salvage their business.

Finally, on 4th January 2024, Michael Shenkman (CEO of InVision) made an official announcement to discontinue all InVision’s design services at the end of 2024:

So how did InVision go from $2B to $0 after 12 years? 🤔

I’ve summarised 2 costly mistakes that InVision made and the lessons we can learn from them as a founder.

Want to learn more about InVision’s downfall?

• Email: InVision design collaboration services shutdown

• Breaking News: InVision shutting down in 2024

• InVision design collaboration services shutdown

⚠️ 2 Mistakes

Mistake 1: Lack of Focus on the Product

InVision had a good start, but it was unable to move beyond their original simple prototyping platform. It was essentially building its own Sketch clone. It started with capturing a huge chunk of Sketch’s customers with its collaborative features. However, it was a feature, not a product.

When InVision started building InVision Studio, it lacked Sketch’s features and was outcompeted by Figma’s speed and a strong focus on product development and community building.

Even worse, InVision focused too much on marketing and growth hacks to gain market share, that they forgot they only had a mediocre product, waiting to be outcompeted by competitors.

Mistake 2: Moved too Slow to Innovate

InVision was founded around the same time as Figma, but it failed to move fast enough to innovate like Figma. It only launched InVision Studio in 2017 (after 6 years in the startup journey), and it was too late.

Figma was already growing exponentially with its great product and diehard fans, capturing the market share in the digital design industry.

Despite the $350M+ funding that InVision had, it still didn’t have the product-market fit. They were burning cash to ride on the wave from the very beginning without continuously innovating and building products that addressed user needs.

🧠 3 Lessons Learned

Lesson 1: Great product is everything

It was publicly known that Tesla spent $0 in marketing and most of their money on building the best electric cars they could. Why? Because Elon Musk believed in the importance of building a great product that addresses user needs with great experience.

While InVision created hype around their product by dumping millions of dollars into their marketing, eventually the product has to live up to its promise with differentiated features and benefits.

Lesson 2: Move fast

InVision was outcompeted by its competitors (i.e. Figma) because it didn’t move fast enough to innovate and build a product that users loved.

One of the unfair advantages of a startup is the ability to move fast, build fast, fail fast, and learn fast to adapt to the ever-changing business landscape. Even though InVision had raised $350M+ from big investors, a business can only survive and thrive when it can continuously generate profits.

Many InVision’s customers switched to Figma (or other alternatives) after using the product for a few months, taking a huge chunk of profits away from InVision.

Lesson 3: Always be paranoid

InVision might have rested on its laurels in the first few years because of the exponential growth it had in the beginning. Little did they know that their competitors (Figma, Adobe XD) were slowly catching up with better products before InVision Studio was launched in 2017.

By the time InVision realised their mistakes, it was too late. Their users already switched to alternatives. Their market share already shrunk significantly. Their product failed to innovate with the market demand.

One of the lessons I’ve learned is to always remain paranoid in business to constantly think about the potential disasters ahead, build for the future, and prepare for the worst.

That's all for today

Thanks for reading. I hope you enjoyed today's issue. More than that, I hope it has helped you in some ways and brought you some peace of mind.

You can always write to me by simply replying to this newsletter and we can chat.

See you again next week.

- Admond

Disclaimer: The Runway Ventures content is for informational purposes only. Unless otherwise stated, any opinions expressed above belong solely to the author.