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Canva Uncovered: How A Young Australian Kitesurfer Built A $3.2 Billion (Profitable!) Startup Phenom
On a steamy May morning in 2013, Canva CEO Melanie Perkins found herself adrift on a kiteboard in the channel between billionaire Richard Bransonâs private Necker and Moskito islands.
Her 30-foot sail floating deflated and useless beside her in the strong eastern Caribbean current, the 26-year-old entrepreneur waited for hours to be rescued. As she treaded water, her left leg scarred by a past collision with a coral reef, she reminded herself that her dangerous new hobby was worth it. After all, it was key to the fundraising strategy for the design-software startup sheâd cofounded with her boyfriend six years before.
Canva was based in Australia, thousands of miles from techâs Silicon Valley power corridor. Getting a meetingâmuch less fundingâwas proving tough. Perkins heard ânoâ from more than 100 investors. So when she met the organizer of a group of kitesurfing venture capitalists at a pitch competition in her native Perth, Perkins got to training. The next time the group met to hear startup pitches and potentially write crucial early-stage funding checks, sheâd have a seat at the tableâeven if it meant having to brave treacherous waters.
âIt was like, risk: serious damage; reward: start company,â Perkins says. âIf you get your foot in the door just a tiny bit, you have to kind of wedge it all the way in.â
Such perseverance has long been a necessity at Canva, which began as a modest yearbook-design business in the state capital of Perth on Australiaâs west coast. From those remote origins, Canva has grown into a global juggernaut. Twenty-million-plus users from 190 countries use the companyâs âfreemiumâ Web-based app to design everything from splashy Pinterest graphics to elegant restaurant menus. Besides an impossible-to-beat price (millions of users pay nothing at all), Canvaâs key advantage over rival products from tech giants like Adobe has been its ease of use. Before Canva, amateurs had to stitch together designs in Microsoft Word or pay through the nose for confusing professional tools. Today, anyone, anywhere, can download Canva and be creating within ten minutes.
The companyâs revenue comes from upselling to a $10-a-month premium version with snazzier features or, more recently, from sales of a streamlined corporate account option. High-quality stock photosâof which Canva has millionsâcost another $1. It adds up. This year the company expects to more than double its revenue to $200 million; its most recent $85 million funding round valued it at $3.2 billion. Perkins, now 32 and an alum of the 2016 Forbes 30 Under 30 Asia list, has an estimated 15% stake, valued at $430 million. Throw in her 34-year-old cofounderâand now fiancĂ©âCliff Obrechtâs similar stake, and the Aussie power couple are likely worth more than $800 million.
In an era of billion-dollar checks from SoftBank and high-profile profligacy at WeWork, Perkins and Obrecht do things differently. They are couch surfers who prefer budget trips to private jets. (This summer, with Canva already valued at more than $2 billion, Obrecht proposed to Perkins in Turkeyâs backpacker-friendly Cappadocia region with a $30 engagement ring.) Rarest of all: Canva says itâs been profitableâat least using the favored startup metric of adjusted EBITDA, which strips out stock-option expenses, financing and tax costsâsince 2017. âWe have been really conscientious about not taking on too much capital because weâve been profitable for the last two years,â Perkins says.
It all starts with Perkins, who onboards every new employee (now 700 in total) with a thorough rundown of Canvaâs most sensitive financial numbers and past investor pitch decks. Other unicorn founders boast. Perkins keeps receipts. And as Canva grows sheâs trying to prove you can build a global tech giant from anywhere. âMelanie is a rare breed of entrepreneur, the likes of which you donât find often anywhere,â says Mary Meeker, a seasoned internet investor whose new firm, Bond Capital, made Canva its first official investment in May.
Perkinsâ family jokes that she has a 100-point plan for changing the world. First, Canva has a much more straightforward challenge: win over big business. Like Atlassian, Slack and Zoom before it, Canva faces a classic dilemma: a freemium model can make you viral, but most users will never pay a dime. And though Canva says it has users inside almost every large corporation today, theyâre typically rogue individuals or small teams, not official corporate accounts. Moving upmarket means increasingly brushing up against Adobe, the $149 billion (market cap) graphics giant that took in $1.65 billion in revenue last quarter from its design-focused unit alone. Then there are a host of high-flying startups like Figma and Sketch that cater to pros but could easily move into the consumer space. And thatâs not even considering Canvaâs ambitions in new mediums like video and presentations, which could pit it against everything from small Instagram video-making apps to Microsoft, maker of the blockbuster PowerPoint.
Itâs daunting, to say the least, but for Perkins, who has already turned doubting Silicon Valley players into eager supporters and mastered the Chinese marketâand has built a $200 million-plus bank accountâitâs all according to plan. âI feel like weâve done an incredible job, but weâve done very little compared to what we want to do. Weâve done 1% of what I think is possible,â Perkins says. âOur company mission is to empower the world to design. And we really mean the whole world.â
Perkins started working on what became Canva in 2007 from her momâs living room in Perth. The daughter of an Australian-born teacher and a Malaysian engineer of Filipino and Sri Lankan heritage, Perkins had wanted to be a professional figure skater, enduring an adolescence of 4:30 a.m. wake-up calls before enrolling at the University of Western Australia. There, while teaching fellow students basic computer design as part of her communications and commerce studies, she had an idea. The process of designing and printing a poster or a flyerâcomposing it in Adobe Photoshop or Microsoft Word, converting it to the right size and saving it as a PDF, and taking it to a store like Staples to printâseemed cumbersome in the age of the internet. Wouldnât it be much better to do it all in one place with one online tool?
âThe idea of making design really simple was the first idea,â she says.
The problem felt so obvious that Perkins feared someone else would build a solution first if she delayed. So she hired freelancers to build a Flash website to target one niche she identified as steady and underserved: school yearbooks, typically the responsibility of student volunteers. Obrecht and Perkinsâ startup, Fusion Books, found a market immediately. And with one semester of college left, Perkins put her studies on pause. In peak season, Perkinsâ mom fed the printers ink overnight. Obrecht worked the phones cold-calling prospects. When schools asked to speak to a manager, Obrecht simply lowered his voice. The business eventually reached 400 schools, with licensees as far off as France. It was a start. But Perkins couldnât go much farther without venture funding, then virtually impossible to find in Perth, a city built on mining and petrochemicals.
Perkins spottedâand seizedâthe narrowest of opportunities in 2011 when a longtime Silicon Valley venture capitalist named Bill Tai came to Perth to judge a startup competition. A skilled kitesurfer who had backed TweetDeck and Zoom, Tai was in town mainly to play in Perthâs killer waves. Perkins and Obrecht sniffed out a dinner Tai was hosting and ambushed attendees with a pitch for something called Canvas Chef: a metaphorical pizza, with design elements as the toppings and document typesâflyer, business card, restaurant menuâas the dough. âIt wasnât the most stylish analogy,â says Rick Baker, an investor who saw the pitch that night.
The founders left without any capitalâbut with a newfound enthusiasm for extreme water sports. They became fixtures at Taiâs subsequent kitesurfing gatherings, which featured prominent tech executives looking to invest in new startups. In Maui, after a friend of Peter Thielâs told them they needed a single leader, Perkins became sole CEO.
Perkins and Obrecht were having worse luck in their visits to Silicon Valleyâs venture capital gatekeepers on Sand Hill Road. Dozens of firms passed on the little-known, romantically linked cofounders from a startup dead zone. âIâm honestly, and unfortunately, not comfortable doing a deal in Australia,â wrote one. âI am not sure itâs going to make sense just yet,â another said.
In the end, the wave-chasing connections paid off. Through the group they met Cameron Adams, 40, an ex-Googler who had founded a startup based in Sydney. Expecting to meet with them as an advisor in March 2012, Adams would sign on as third cofounder the following June. Now that they had a technical leader, the founders broke through: Canva raised $3 million in seed funding in two tranches in 2012 and early 2013, including a crucial matching grant from the Australian government.
The company launched in August 2013 to a couple of reviews on tech blogs and few users. Adams and Canvaâs engineers, who stayed up late in Sydney (the company relocated there in February 2012) to handle the expected influx of sign-ups, went to sleep dejected. What no one knew yet was that Canvaâs timing was perfect. The rise of Instagram and Twitter were changing how businesses reached customers. From schools to sheriffâs offices, skating rinks to self-published authors, everyone suddenly cared a lot about their online presence. Canva was an affordable way to look good. The trickle of sign-ups grew to 50,000 users in the first month; by 2014, when Canva raised another $3 million from Thielâs Founders Fund and Shasta Ventures, 600,000 users had made 3.5 million designs.
In China, historically a foolâs-errand market for Western software makers, Canva is a rare success. Obrechtâa tall, amiable presence who, as COO, often rallies the troops (or delivers bad news)âopened Canvaâs first office outside of Sydney, in Manila, in 2014, then hired the former head of LinkedInâs China unit to build an office in mainland China. Today, a local engineering team handles a China-first version of Canva built from the ground up with features like deep integrations with Chinese messaging apps and easy-to-create QR codes, which are popular there. McDonaldâs China is a customer, as is a nationwide real-estate brokerage that offers the software to its 1,000 agents.
When it comes to serving big businesses, Canva is still a rookie. Its October launch of Canva for Enterprise came at a private event in New York. Perkins addressed staffers from about 100 companies, including Equinox, JPMorgan and HubSpot.
A slow start for Canvaâs enterprise business wonât sink the company. This December, the company matched more of Adobeâs own features by announcing a video-editing tool and an apps suite; itâs still working on improvements to its free alternative to Microsoft PowerPoint, which has already been used to make 80 million presentations. But Canvaâs long-term growth prospects depend on whether corporations will progress from small pockets of fans to accounts reaching thousands of employees. After years of adding more features to Canvaâs suite, Perkins is betting on the opposite approach for corporate America. By offering limited sets of templates and options, Canva hopes execs will trust more employees to create their own content. At Realty Austin, a midsize Texas residential and commercial real-estate firm, a marketing team of six used to create all printed handouts and digital assets for its agents to promote events like open houses. Now, with Canva, the companyâs 550-plus agents create material for their own listings, faster and on their own time.
Adobe isnât sleeping while all this goes down. It has offered its own freemium, templates-driven app, called Adobe Spark, since 2016. While Canva claims that its tools are used at 50,000 universities and 25,000 nonprofits, Adobe says itâs given out 23 million free Spark accounts to students and teachers. In December 2017, Adobe reunited with Scott Belsky, the entrepreneur whose social media business Behance it acquired in 2012, to instill a scrappier ethos in its product teams. âThey feel like theyâre the underdog because theyâre like, âWeâre not the coolest startup,âââ says Belsky, chief product officer of Adobeâs Creative Cloud unit.
Then there are the typical startup growing pains. Until two years ago, Canvaâs tool for editing its core code was so clunky that only five engineers could work on it at a time. Much of the companyâs focus last year was on a complete rewrite of the front-end interface of its app. âWeâre growing so fast that things are breaking constantly,â Obrecht admits. And in May, Canva suffered its biggest test of customer trust to date. Days after Canva announced that Meekerâs investment had valued the company at $2.5 billion, a hacker in Europe breached its systems, downloading 139 million user names and email addresses before Canva could stop the attack.
Stuck in California, Perkins and Obrecht called and texted with Atlassianâs co-CEOs and cofounders (and Canva investors), Mike Cannon-Brookes and Scott Farquhar, reaching Farquhar as the billionaire was on a runway in Peru en route to Machu Picchu. At their urging, Canva called the FBI and launched a formal review; two weeks later, Canva announced two-factor authentication for all users. Though Perkins says Canvaâs users responded by rallying behind the company, it was a warning: With better recognition comes a bigger target on your back.
Those close to Perkins are confident that she can handle the pressure. Guy Kawasaki started his career as a hype-man for Steve Jobs, traveling the world to tout all things Apple in the 1980s. The former Forbes columnist says heâs happy to end his career doing the same for Perkins, investing in Canva and joining the company as âchief evangelistâ back in 2014. âMore people can use the democratization of design than can use a Macintosh,â he says. âYou donât have to be in Silicon Valleyâyou donât even need to be in Americaâto be successful. Holy cow.â
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Alex Konrad
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Forbes
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