CEO Series: Melanie Perkins, Co-founder & CEO of Canva

Melanie Perkins (Clip):

Right from the start, we really set out to solve a really significant pain point like a having seen firstly when I was teaching design programs and then with fusion like really seeing the pain points that people were having, really seeing the power of having this online collaborative platform and then just being really true to that.

And so I think just being really focused on the customer's pain point and what they are trying to do has been pretty powerful.

SCS (Intro):

Hey there, if you tuned in last week you know we are almost at 100 published episodes?

Hard to believe; and frankly as I was reflecting on some of my learnings over the last almost 2 years that have been captured here, I thought it would be remiss for me not to also feature some of my writings on other platforms as well— in particular my Billion Dollar Moves CEO Series. And so, to celebrate the coming of age of this podcast and our community, I thought it would be a nice touch to also do a special breakdown series of the great CEOs I’ve studied over the years that have in turn, made me a better investor and partner to founders and funders.

You’re tuning into a special feature of the Billion Dollar Moves CEO Series: Melanie Perkins.

[BDM Intro]

Instant millionaires (Clip):

It's a great day to be a staff member of the Mega-Popular DIY design app Canva. 

The Perth founded graphic design company has finalized a share sale worth nearly $4 billion, making some of its staff and long time investors very rich indeed.

SCS:

You may have heard that big name investors Goldman Sachs and Ontario Teachers Pension Plan have emerged as new investors in design software firm Canva, as its blockbuster secondary share sale left some early investors a WANTING FOR MORE since the deal prices the company at $26 billion dollars; which was deemed to be too low.

As a comparison trading at a 13x multiple of its recorded $2 Billion ARR as of December 2023. vs loud based companies like Snowflake and Cloudflare were trading at 18.2x and 17.1x last August.

But hold up, how did we get here?

Canva today is a $26 billion design startup, ready to take on and already is taking on Microsoft and Google and compared to other behemoths; and people have created over 3 billion designs in Canva since 2013. With 170 million users, Approximately 6-7 million designs are created each day in 190 countries.

BUT It was not too long ago that now 36-year-old Canva founder Melanie Perkins was rejected by 100 VCs.

Rick Baker, Blackbird Ventures (Clip):

How many no's did you get to record?

MP (Clip):

Yeah, more than 100. But then also that was from investors and then trying to find team members to join. 

So like trying to find engineers. So that was just like getting rejection just all over the shop. 

Yeah, so was a little frustrating, but worthwhile because it meant that we refined our pitch deck, meant that we ended up with the best people on our tech team that actually had the capability to build this crazy platform that we were dreaming up. 

So even though it was frustrating, I think in retrospect it was very valuable.

SCS:

To call Canva a “once in a lifetime” innovation is an understatement and this is why, Melanie makes second on the list of #BillionDollarMoves we should all be learning from.

Here is my deconstruction of Melanie Perkins’ Billion Dollar Moves:

MP (Clip):

Throughout my life, I've always put a lot of effort into every single thing that I did. And so that could have been a school assignment. That could have been extracurricular activity, which I did pretty much all of them. 

I think that that's actually a really important thing. If you can put your mind and effort into something and then you can actually see that that mind and time and effort and determination actually equates to success. And it means that you get more and more ready to take bigger and bigger risks.

Lesson #1: Solve the problem you know intimately first: don’t be afraid to niche down, in the beginning

MP (Clip):

I guess one of our things is to make complex things simple. And so pretty much there's a very complicated design system, a very complicated design process. 

And we wanted to make it really simple. And that simplicity translates through to our product, but also it translates through the messaging. 

We want to empower the whole world to design.

SCS:

Melanie came up with the idea for Canva in 2006 when she was studying at the University of Western Australia. She was tutoring other students on how to use design programs and realized they were far too complex and expensive. It was then that she decided the future of design was going to be simpler, online and collaborative.

MP (Clip):

I thought, this is completely ridiculous that these are all these desktop based software that was really, really expensive for about $1500 at the time. 

And so what I want to do is just make it really simple and then not only make the software really simple, but then to enable lots of high quality ingredients.

SCS:

To test out the idea, Melanie and her then boyfriend (and now husband) Cliff Obrecht launched FusionBooks from her Mom’s living room, an online design platform for students to tackle one subset of the design problem - yearbooks.

MP (Clip):

So rather than trying to tackle the entire world of design, I decided to tackle school yearbooks in Australia. So my co-founder and my boyfriend became my co-founder and we took over my mom's living room.

That became our office and we set it to work and we created an online design system to create school yearbooks because teachers often had a really hard time creating a yearbook. They would get thrown in. They had no design experience and had to create one from scratch that would be seen by their entire school community. 

We kept on getting questions for our customers and they were like, hey, can I use this to design in our marketing materials like canteen menus and other things?

And we're like, surely it's been done now that there's other software available that enables easy design and it certainly still wasn't the case.

SCS:

FusionBooks took off in schools across Australia, New Zealand, and France, and soon Melanie was able to prove that her new approach to design was indeed possible and very much needed. 

Notably she didn’t start with what we know as Canva today as a non-technical founder, and frankly one who didn’t know much about business in the beginning. BUT she kept improving the product, set out to apply the ease of use principles of FusionBooks to a broader audience, and THIS led to the birth of Canva.

And remember—this is not unlike Jeff Bezos who recall, started Amazon by focusing on books!

Lesson #2: Good things take time—stay grounded, lean and persistent

MP (Clip):

I think most people would probably give up before the 100th provision to their pitch, before the 100th investor their pitch to.

But it's just you have to believe in what you're doing before anyone else. Well, you have to keep on persisting and pushing through. 

And it's not easy. There's nothing about starting a company that's easy. It's like, by its very nature, it’s going completely against the grain, but it's so worth it. 

And if you enjoy a challenge, you don't get a better one than a startup.

SCS:

It can be easy to forget how some of the best companies today, including Canva took awhile to get to an inflection point, let alone get started. For Canva between the first idea in 2006, to launching 2013: that was a span of 7 good years.

What took so long? In Melanie’s own words “we had very little business, marketing, software development experience — to be fair, any relevant experience”.

Their first customer found them through the web in March 2008; and they (being then Cliff and Melanie) used their tax return, and any money they earned from their part-time jobs to fund their marketing budget. 

They experimented with direct mail campaigns to schools around Australia. It was all very manual, but they learnt the ropes and got to learn about running and growing a business, developing software and marketing. Importantly, they learned the fundamentals of how to create a product that provides enough value that people are happy to pay for it.

MP (Clip):

Solve a problem that affects a lot of people. And I think that fundamental starting premise of a company is so incredibly critical. 

Because just solving a problem that no one cares about is going to be a lot harder to get your first customer, and certainly going to be a lot harder to get anyone to pay for it. So that fundamental premise is really critical and cannot be underestimated. 

I think if you have a product that you are able to give away for free or at least a good amount where people could really get to know your product and get to love it. That freemium model is incredibly important, but I guess we took it one step further than just freemium and such because we actually wanted to create a free product that was incredibly valuable that even if you didn't have the financial capacity to pay for a free subscription, you could certainly get value out of it.

SCS:

And then, it was a long journey of going to San Francisco and pitching people:

some three years between initially pitching investors and actually landing investment.

And after eventually landing investment, hard to believe but it was a year pitching engineers as well, many who believed Canva’s dream was going to actually cost an astronomical amount. With the help of their tech advisor and the co-founder of Google Maps, Lars Rasmussen, Melanie and Cliff found a tech co-founder in Cameron Adams and a tech developer in Dave Hearnden.

MP (Clip):

He (Lars) was really happy to help find a tech team. But what this actually entailed was just me trying to bring every single engineer I met on LinkedIn, met on the bus… anyone that would possibly join my tech team and him rejecting them just time and time and time again.

And it was incredibly frustrating because this went on for a whole year of him just being like, nope, like this person isn't good enough. You got a really hard technical project. You need to have someone amazing that's like built a huge scalable platform before. 

And like that was really frustrating, I wanted to get started on the Future Publishing. But then eventually after a year, ended up finding our amazing co-founder Cameron Adams and CTO Dave Hearnden and eventually got to work.

Jason Calacanis (Clip):

So they forced you to find a tech team?

MP (Clip):

Yeah.

Jason Calacanis (Clip):

And they were right.

MP (Clip):

They were actually. I'm really, truly grateful for that pain.

SCS:

Once they finally landed the engineers, by a year of development followed and then in 2013, Canva finally launched with a $3 million investment.

Lesson #3: Focus on what you can change, not what you can’t

I was struck by Melanie’s response to Guy Kawasaki’s insistent questioning on his podcast, Remarkable People:

Guy Kawasaki (Clip):

If you were a man and you were in Silicon Valley, do you believe you would have got funded earlier, faster, or easier?

MP (Clip):

I have no idea, and I don't really spend a lot of time thinking about that particular topic.

There were so many reasons people exquisitely rejected us or people would exquisitely reject us for being based in Australia, people would exquisitely reject us for a whole host of reasons. We were “too early”, “it was too big an idea”.

One investor said that we couldn't possibly tackle digital products at the same time as tackling physically printed products, that they had to be separated. So there was so many different reasons we were rejected. 

Some of them I'm sure were reasons, we certainly went the typical mold of Silicon Valley startup for a million of reasons under the sun.

But I think that one of the really valuable things in all of the rejection was that every time we were rejected, we would refine our pitch deck. And so, the pitch deck became stronger and stronger and became more and more sure that this is definitely the future. 

Every time we got a rejection, we would refine the deck. And the harder the question, the earlier we'd put it in the deck.

So people would be like, "Oh, you're the same as some other random company." We were like, "We're totally not." So one of the first sides in our deck became a pitcher of the market, and we'd say, "This is a huge gap in the market." And it was literally a big circle.

Another way to say, "I don't understand your industry. I can't possibly invest in design because I don't understand design." And so then, the only page in our deck became all of the industry and this is how the current design process works and how it's really complicated. And our goal is to take this entire design system, integrate it into one page and make it accessible to whole world.

And so, every time we were being rejected, we were refining our deck time and time again. And I think that was really helpful process, albeit rather frustrating.

SCS:

And beyond that, let’s also talk about everything Melanie was willing to do to get Canva to the next stage from 430am trains to learning to kitesurf!

Melanie’s pivotal moment was meeting investor Bill Tai at a conference:

MP (Clip):

He was in Perth and I met him at a conference and we had a five minute chat and he said, yeah, if I went to Silicon Valley, meet with me. And so I jumped on the fire in Silicon Valley actually, truth be told, I emailed him a number of times asking him to stay in India and he kind of didn't respond to my emails.

And then I messaged him a few times, didn't get much of a response, and then I was like, okay, well, hey, I'm going to be in the area. I was totally not going to be in the area, but I'm going to be in the area like you want to catch up. And he was like, Yes.

And I sat down with Bill. It was on University Avenue University Cafe, trying to eat my lunch and trying to flick through the future of publishing while trying to sell the vision of the future of publishing. 

And he was very attentive. He didn't seem to be interested, he was on his phone and I was like, oh my god, this is the worst thing ever. I've completely flopped. 

But I went back and he messaged me and he said that he'd be happy to invest if I could find a tech team.

And so he'd also introduced me to Lars Rasmussen. He co-founded Google Maps, and I met up with him the next day and I chatted to him for hours and we realized there was a lot of alignment in what we believe the future of communication would be like.

Winding the story back a little. When I came to Silicon Valley for the first time, my visa expired and then I got kicked out of the country. Then I went back to Perth, moved my company from Perth to Sydney, and then learn to kite surf, to go to these Kitesurfing Entrepreneurship Conference to try and meet more investors.

This came for another three months here and then landed investment.

Jason Calacanis (Clip):

Was it MaiTai?

MP (Clip):

Yeah right. And yeah, there's three years between pitching investors and landing investment and then it was a year of development. And then finally in 2013, we launched.

Lesson #4: Get comfortable going against the grain

SCS:

To some early, Canva was writing its own death certificate in what seemed like a red ocean with well-established incumbents in design software, like Adobe. But Canva’s consumer obsessed approach enabled it to become the "David" to Adobe's "Goliath", exactly by doing things differently. The stark contrast between Adobe's suite, which catered primarily to professionals, and Canva’s user-friendly interface, became evident. While Adobe's robust set of tools necessitated a steep learning curve, Canva provided a more approachable gateway into the world of design with its plethora of pre-made templates and a vast library of resources; in effect democratizing design.

MP (Clip):

I just saw so many people struggling to learn like, where are the buttons? Like how to actually create something. But then it's not just the tool that you have to learn. 

You then have to go and purchase photos from a stock photography library and then go to a font library and a template library and collaborate over email and go backwards and forwards many times getting all the content from people. Then you can design. 

Then you have to prepare for web or print. And like we thought, this is completely ridiculous. And it was all desktop based and thought that it should be online and collaborative.

SCS:

And in recent years, Canva acquired the Affinity creative software suite, which gives the company ownership over Affinity Designer, Photo, and Publisher — three popular creative applications for Windows, Mac, and iPad that provide similar features to Adobe’s Illustrator, Photoshop, and InDesign software, respectively.

Very, very smart - this acquisition makes sense as the Australian-based company tries to attract more creative professionals. As of January this year, Canva’s design platform attracted around 170 million monthly global users. 

That’s a lot of people who probably aren’t using equivalent Adobe software like Express, but unlike Adobe, Canva doesn’t have its own design applications that target creative professionals like illustrators, photographers, and video editors. And this is it.

MP (Clip):

You'll see some common trends. It's going to become more efficient, it's going to become simpler and easier. That's always what happens in my head. 

And so I guess if you ensure that the company that you're trying to build will help to build out this world, build towards the world that you're wanting to see created.

I think that helps a lot because then it all of a sudden it became, hang on a second, the investors just don't understand. They're not understanding what I'm trying to do here. And so it became I'm not explaining it right.

 And so then it became about me, just trying to reiterate upon my, the explanation and the strategy that was presented in my pitch deck.

Lesson #5: You can do it all, but not all at once

SCS:

Melanie shares how she learned we can do it all, but not all at once – and by making tough decisions on what to focus on now and what seeds we really need to be planting, that is how we can continue to harvest with long-term benefits years into the future.

I see this a lot among founders who have built a good product that in effect have multiple applications and are tempted to sell the big vision and do it all. But as Melanie learned: prioritizing resources with precision is key.

MP (Clip):

What you don't want to have is a small mission. So you kind of like get to the top of the ladder and you're like, “oh, what now? I had no idea.”

You also don't want to have such a wild dream that you don't take any steps towards it. What you want to do is have the perfect balance where you have a wild dream, and then you just take step after step, after step, after step, in order to get there.

So a mission is where you want to go in the long run. And a goal, I believe, is an important step towards that mission. Goals have been part of our DNA at Canva for many years. In fact, one of our values is to set crazy, big goals and make them happen.

Let me give you an example. So our mission, to empower the world to design in order to do so, it's rather important that we are in every language. But when we launched in 2013, we launched just in English. By then that was goal one. The next one, we're going to launch in Spanish.

The next one we're going to launch in 20 languages. And then we did. We set the next goal, launch in 100 languages, and then we did. Then we were launching in hard languages like Chinese and Right-to-Left languages like Arabic and Hebrew and Urdu. And then we want to have a truly localized experience and then become truly local.

And you can see how just every year after year we pick off goals towards that mission. And now, non-English markets make up more than 50% of Canva’s community. 

I'll give you another example. So, to empower the world to design, it's really important to be able to be on every device. And so we launched Canva just on Web.

That was all we could do for our very first launch. And then we launched on iPad and then we launched an iPhone and then Android and then tablet. 

And then we got we had a huge focus for two years on cross-platform parity and then we launched our desktop app and now 50% of our community is on mobile. So you can see how just continually picking up goal after goal towards your mission after a decade pays really big dividends. 

Another part of our mission to empower the world to design, we need to empower them to design anything all the way back even before canvas shift, we were doing fusion books. My first company, which is an online design system to create school yearbooks. 

So I picked off the very first thing. And just over the years and years and years and years and years now you can pretty much design anything on Canva, but we actually always as a company are continuously thinking about what else could you design? And we made that quite literally, and there's so much more for us to be doing over the years to come.

I think this can be a little underrated. It's not very flashy, consistently working towards your mission, kicking off goal after goal year after year, but breaking it down into tiny steps. 

And the first step can be really, really tiny. Eventually, if you continue to pursue that year after year, eventually you'll hopefully get somewhere pretty cool.

3 Actionable Questions for You

SCS:

And there you have it, to make Billion Dollar Moves like Melanie. Here are three actionable questions you can ask yourself today:

1. What niche can I focus on to prove out my thesis?
2. What do I need to be doing more of, and less of? How can I prioritize not just my tasks but my energy with precision?
3. And finally, how can I access the right people for a pivotal area of my business?