Jeff Veen: turning pirates into customers

I met Jeff Veen when we worked together at Wired magazine. Jeff came on board in 1994 and built websites for Wired and Hotwired. After that, Jeff went on to do a bunch of cool things, such as launching Typekit (a web font serving service) and serving as Adobe's VP of Design. Today he lives in London and is design partner at True Ventures.

He's interviewed in the first episode of Stephan Ango's new podcast called Well Made.

Stephan: Well, as someone who spends a lot of time in those applications, I saw it as a big benefit because I always say that if I hadn't pirated Adobe products, I probably would have never become a designer.

Jeff: Totally.

Stephan: I started using Photoshop when I was in middle school, and I would have never been able to pay $600 or however much it cost at the time. And eventually that has to break, you know? For me it happened when I was in design school. I had to start paying for this thing, and I was much happier to do it once Adobe switched to services. Not only was it more of a modern business model that fit in with the way people were buying operating systems now, in fact not buying them because they've become free, but also a way to basically make money from people who were pirating their software this entire time because pirating was easier because there was no big upfront cost.

Jeff: Yeah. I remember being in a meeting one time with the CEO of Adobe and the Head of Sales, and the CFO, all these people, and talking about strategy and stuff and somebody was talking about piracy and pirates. And I said, "You know instead of calling them pirates, why don't we just call them future customers?" Just silence in the room. You know, because they look at the numbers and it's like it's an extra billion dollars in revenue that's going to piracy. And I'm like, "Yeah, well you could also call that our freemium model."

But anyway, to your point, yes. It was a very difficult transition from inside. One, because I mean 30 years of doing business was going to stop and go a different direction, and that's significant no matter how you cut it. But it was also more than a billion dollars in business that we're just going to put on the line, and just say like, "We're going to do it differently now." And if you go and look at the last four years of Adobe revenue, there's just a huge, huge dip where there was this expectation in the spring of 2012 that everybody would buy Adobe Creative Suite 7, or whatever the next version was… And everybody would sort of dole out their $800 upgrade fee, but instead everybody switched to $10 a month or $50 a month. So you imagine this huge dip in revenue, but it's recurring revenue and so it'll build over time and like the executives at Adobe did a tremendous job like walking the Wall Street through that and saying, "We're going to come back next quarter with a lot less revenue than you're expecting, but it's all going to be good." And it was, and you look at the stock price over the last four five years and it's been phenomenal. Totally, totally worked.

But what I liked about it is the point that you brought up which is that made the software so much more accessible to so many more people. And the stark reality of that business is that, honestly there is just no market anymore for $1,200 software. Like, nobody buys a big giant box of software with a huge manual in it for $1,200 like they did 10 years ago, and Adobe was seeing that and the revenues on that were getting flat. They were recovering from the 2008 recession, and things were looking a little troubling and so this was an attempt to revitalize that in a way that has made the software available to so many more people, that even at the much lower price, the revenue has just been fantastic. The growth has been fantastic for Adobe.