Can Melanie Perkins convert Canva from start-up to big player?
She’s a tech phenomenon, but can Melanie Perkins convert Canva from start-up darling to significant earner?
Sydney-based entrepreneur Melanie Perkins is a poster girl for the new Australian entrepreneurial age. Some are hailing her online design company Canva as another Atlassian, now an international software giant worth more than $US11 billion. Others argue that Canva’s claims to being a “unicorn” – a tech company valued at more than $US1 billion – must be assessed against the fact that it has lost money for most of its existence and generated just $23 million in revenue last financial year.
But the 30-year-old entrepreneur from Perth has done an impressive job attracting more than $US80 million from venture capital investors over the past five years.
Investors in Canva (the French word for canvas), which operates out of an old warehouse in Surry Hills, have included Blackbird Ventures and Sequoia China.
Along the way, the media-savvy Perkins has won support from high-profile people, including former Apple “evangelist” Guy Kawasaki, who has been “chief evangelist” for Canva since 2014; former Google executive Lars Rasmussen, one of the inventors of Google Maps; and US actors Owen Wilson and Woody Harrelson, who have all invested in the company. Other supporters are Seek co-founder Paul Bassat and Yahoo chief financial officer Ken Goldman.
Founded in 2013, Canva is an online design software system that competes with programs such as Adobe Photoshop. Users include students, graphic designers, social media marketers and bloggers, librarians, real estate agents and other small business operators. Its growth has ridden the boom in demand for low-cost graphics.
“There is such a strong demand across every single industry to create visual content,” Perkins says. “It means Canva is solving a problem that a lot of people have.”
Canva and its young co-founder have long attracted interest, but they received a barrage of glowing media coverage following the company’s announcement in January that it was “Australia’s new unicorn”, with a valuation of $US1 billion. Canva does not release financial details, but said it had just raised $US40 million to bring it up to the billion-dollar mark. It’s a big step forward from 2016, when it was valued at $US345 million.
Canva’s claim to be worth $US1 billion has not been tested by a stock market listing, but it has put the spotlight on Perkins and her rapidly growing enterprise. “We have made it into that exclusive club (the unicorns), which is quite exciting,” she tells The Deal. “We have had a crazy number of investors attempting to get into investing in Canva.”
“It’s a huge milestone for the company,” says Blackbird Ventures co-founder Rick Baker, who has backed Perkins since meeting her seven years ago at a gathering of entrepreneurs and kiteboarding enthusiasts at Margaret River in Western Australia, Perkins’ home sstate.
Canva’s filings with the Australian Securities and Investments Commission show that it lost $3.3 million in the year to June 2017 following a loss of $5.3 million the previous year. Strictly speaking, the company did not need the cash it has just raised as it has not spent all the funds raised in earlier rounds. But Perkins will use it to step up the company’s growth rate, potentially doubling its staff of about 250.
She has come a long way since her school days, when she designed and sold scarves to Perth fashion boutiques. Later, as a student at the University of Western Australia, she earned money teaching people design.
“I was at university and teaching design programs using Photoshop and InDesign, and found they were really complicated,” she says. “I had thought they would be much easier to use.” She figured there must be an easier way.
In 2007, the 19-year-old and her boyfriend Cliff Obrecht launched Fusion Books, which was aimed at helping people produce school yearbooks.
“We started in my mum’s living room,” Perkins says. “It was a funny experience. We ended up hiring staff and having printing presses in my mum’s living room.”
The couple believed the exercise could interest a wider audience and went looking for backers. In 2010, Perkins met US entrepreneur Bill Tai, who was in Perth for a conference.
‘It was the opportunity of a lifetime. When the door crept open just a tiny bit, I dived through it with all my might.’
She managed to get a five-minute slot with him and pitched her idea for an online design program.
“He said if I went to San Francisco he would be happy to meet me,” she recalls.
Determined not to lose the opportunity, Perkins and Obrecht headed there the following year and began pitching to potential investors.
“It was the opportunity of a lifetime,” she says. “When the door crept open just a tiny bit, I dived through it with all my might.”
In San Francisco, she organised a meeting with former Google executive Lars Rasmussen, who was working at Facebook and had an interest in Australian companies, having been based in Sydney previously.
“Meeting him transformed my belief in what was possible,” says Perkins. “He was just a nice and normal person who had created a huge company that had a world-changing effect.
“When I was in Perth I had these big ideas about how I could transform the world, but it didn’t seem realistic that I could actually do it. Meeting him, I thought, maybe it is possible that we can change the world rather than waiting for someone else to do it.”
The connection with Tai, a kiteboarding enthusiast, continued to pay off. Perkins attended an entrepreneur and kiteboarding conference in Hawaii that he organised and where she met other potential investors. The advice was to get a good technical team to build the Canva platform, and in time, Sydney-based Google employee Cameron Adams became a key member of the operation.
But it took several years of pitching before Perkins and Obrecht had the money to finance their new venture.
‘I didn’t think about giving up, but it was extremely tough. Being rejected for a long period was a challenging experience.’
“We presented to hundreds of investors over the years,” Perkins says. “Every time we were rejected, it meant two things – we would have to learn something about our business model, or we would get more and more consolidated in what we were doing and [developed] a stronger and firmer belief in it.
“I didn’t think about giving up, but it was extremely tough. Being rejected for a long period of time was definitely a very challenging experience.”
The launch in 2013 was “incredibly exciting” and within eight months the system was being used to create about 350,000 designs a month.
“Twenty months later, this number looked tiny,” says Perkins. “We were creating more than three million designs a month. They were from every single country in the world – including North Korea, which is surprising.”
Canva users now create more than 33 million designs a month and the company is expanding into the office business with a new product, Canva for Work.
Soon after the company was launched, Obrecht discovered that the media-savvy Guy Kawasaki was using Canva to enhance his Twitter account. “He tweeted a photo that had been designed in Canva,” Perkins says. “Cliff tweeted him back and a few days later he was working for us.”
Kawasaki is not a staff member, but his support includes promoting the company at his many public speeches around the world and talking to staff.
Canva’s team-based strategy includes a staff meeting every quarter – or season – to talk about the company’s goals.
“On the first day of each season, we have a season opener where every person gets up and talks about what they are working on over the quarter and presents their big goals,” Perkins says. “When they hit their big goals, we have a celebration. We do all sorts of things, like releasing doves or having a Latina festival or a pirate party. They are funny, quirky celebrations, but it creates a really great environment. It means everyone is shooting towards big goals.”
‘We want to ensure that the whole world can use Canva rather than having a high barrier to entry.’
The company has expanded dramatically in recent years, growing from 100 staff in June last year to 250 last month in its Sydney and smaller Philippines offices.
Perkins has had a deliberate go-for-growth strategy, pricing her product to grow volume by offering the basic version of it free of charge.
“We have always prioritised getting Canva into as many people’s hands as we can,” she says. “We want to ensure that the whole world can use Canva rather than having a high barrier to entry.”
Blackbird’s Rick Baker, a big fan, recalls meeting Perkins and Obrecht through Bill Tai several years ago.
“They were working on Fusion Books at the time,” he says. “We were impressed with what it was doing. There was a real spark around Mel and the way she understood the graphic design market. She pitched to us this idea that they could do so much more than Fusion Books. They realised there was a world of graphic design out there that was a much bigger market than school yearbooks.”
Baker admires Perkins’ “ability to turn from someone who knew very little about Silicon Valley and start-ups to going up the learning curve very quickly”.
Baker says that the couple has a “strong vision and imagining of the product and how it could add value to millions of people. Mel has a particular strength in defining the vision and turning that vision into a product.”
He concedes that a stock market listing, potentially in the US, is an option for the company, particularly following the success of Atlassian, which listed in 2015.
“Canva has earned the right to choose its own destiny,” he says. “It has the option of listing on a US stock exchange or the Australian stock exchange. There is also the option of acquisition or merger with another company.”
Perkins says that there are no plans for a stock market listing for Canva: “Our focus really is on creating an incredible product, and getting it out into the hands of many people across the globe. Millions, hopefully billions, of people across the globe.
“There is so much more for us to do. We have made steps in the right direction but we feel like we are less than 1 per cent of the way there.”
Lunch anyone? Melanie Perkins says Canva’s strong culture is fostered by staff eating lunch together. “Every day at 1pm, the team has lunch together,” she says. “We have incredible chefs who cook up some nutritious and delicious lunches. In our earliest days we always had lunch together as a team. It has been an incredibly great thing for our team culture. It means people are getting to know each other at a much deeper level than just through their work. They are talking to team members who they might not work with on a day-to-day basis, which helps to build a bond across the team.”
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What they think about Canva
Guy Kawasaki, evangelist
Success has many factors. First, Melanie and Cliff foresaw that more people needed to create graphics, and these people could not afford the cost nor allocate the time to learn the existing expensive, high-end products. Second, Canva did not merely take market share from existing high-end products. It created a new market of people who would not, or could not, design graphics before. Canva made the pie bigger. Third, it relentlessly pursued perfection. I have never worked for an organisation that is more obsessed with optimising everything. You finish the product as fast as possible and get it to market. I’ve learnt it is a marathon combined with a decathlon – that is, you have to do a lot of things well for a long time.
Sebastien Eckersley-Maslin, chief executive, Blue Chilli
Achieving unicorn status acts as a lighthouse on [Canva] and their early backers, but also the Australian ecosystem as a whole. Canva is the only private Australian company of the 224 global unicorns and I hope this will encourage more people to work in the start-up ecosystem. When a company such as Aconex or Atlassian exits or lists, it creates opportunities for early employees, who often become millionaires, to start new companies. When Canva exits, it too will create opportunities for its investors to back other companies.
Paul Bassat, co-founder, Seek and Square Peg Capital
We invested in [Canva] in 2012 in an early seed round and then again in 2014. It was one of the first investments we made. It was a small investment that has delivered some pretty exceptional returns. Melanie and Cliff are exceptionally talented entrepreneurs looking to solve a pretty important problem. The team at Canva has made incredible progress over the past six years and has the potential to be one of the most exciting technology companies Australia has ever produced.
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