How Canva Democratized Design & Built A Billion Dollar Company

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Growth Story is a weekly podcast that breaks down the strategy and tactics utilized by high growth companies, in a short case study format hosted by Scott D. Clary (@scottdclary)

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Welcome to success story, the most useful podcast in the world. I'm your host, Scott D clary. The success story podcast is part of the hub spot podcast network. The House spot podcast network is the audio destination for business professionals who seek the best education and inspiration on how to grow a business. Whether or not you're starting a side hustle, looking to scale, looking to branch out, looking to grow, looking to en x, whatever it is, the house spot podcast network acts as an on demand mentor, delivering insights and strategies to help you with whatever it is you're trying to do. Listen, learn and grow with the hub spot podcast network at hub spotcoms podcast network. Today I'm going to be speaking about CANVA. This is a business growth story. I'm going to break down exactly how canvas started, how the founders came to the decision to try and democratize design and to take on the photoshops of the world. We're going to talk about some of the highs and the lows and the winds and the losses and hopefully you can all learn some lessons that you can take into your own business to help you build your own thing. Let's jump right into it. This is the growth story of CANVA. If you're somebody that works in graphic design or just likes to create visual content, is a really good chance that you've heard of CANVA. CANAVA is a platform that's used for creating social media content, presentations, posters, documents, basically anything visual. It can also now create some animated content, it can create some video content, so it does quite a bit. The founder, her name is Melanie Perkins. She's an Australian. She has a remarkable story. She was an entrepreneur from a very, very young age. The mindset was there. So, as a fourteen year old girl, she started doing business selling scarves in her hometown. This is this is what she said. She went on record saying, quote, she loved the freedom and excitement of building a business, and that is not something that is a normal thing for...

...a fourteen year old girl to say. I know that when I was fourteen years old I was not focused on building a business or building something to sell the people. But she obviously was very curious, very tenacious, just very ambitious from very young age and it really showed and I think that's something that you see in a lot of entrepreneurs when they're interested in something when they need to figure something out. It's a personality and you just can't you can't put a damper on that. And from a very young age she was just fueled with ambition to build. She didn't really manifest or do anything like incredibly impressive until later on. Now we're going to fast forward to university. When she was a university she was teaching other students graphic design and this is when she uncovered her what you may call a lightbulb moment. She witnessed students struggling with the basics due to complicated, non user friendly graphic design software. So we're talking about photoshop at the time. The software was also extremely expensive. At the time it was upwards of a thousand dollars for a license and it just killed a lot of projects, especially if you weren't learning at a university. You probably unless you were an accomplished designer, you're not going to spend a thousand dollars for a piece of software that you're going to use at home just for side project or something along those lines. So there had to be a better way. This is classic entrepreneurship and this is what I actually think is broken in entrepreneurship. Melanie did it right. Melanie was an expert in her field. Melanie was teaching graphic design. Melanie saw a problem in graphic design. They needed to be fixed. She didn't jump into something or a new industry that she had no experience in. She she was the classic definition of what is considered to be the most successful type of entrepreneur, somebody that does something after having a lot of experience in the field and then they solve a problem that they would like to solve for themselves or, in this case, or of students. I guess that's actually kind of solving it for herself, because if she's a teacher and she can help her students learn better, that is kind of a problem that she wants to fix. And then obviously their end up being successful because they're solving a true problem. So this is just...

...an a side but the most successful entrepreneurs in the world are not the people that go to Harvard or Stanford and graduate or even drop out. Those are the those are the stories of the Steve Jobs in the marks. You know, the Mark Zuckerberg's and all that, but that's not the majority. The majority of that are successful entrepreneurs other people that are between three thousand to forty that have spent years in a field, in an industry and then, after years in a field or industry, they discover a problem and then they build out a business to solve a problem. That the main expertise really serves them well and that's a higher percentage success rate and somebody way higher, way, way, way higher than somebody who just drops out of school at a very young age or just jumps into a start up right out of university. So she did it. I don't know if it was planned that way, but she did it right. So she did it the way that she did it in a way that she was solving a pain point, she was scratching her own itch, so to speak. So she had a vision that design software in the future would be online, collaborative and more accessible than existing complicated tools. So she was still very young, by the way, like she was teaching graphic design software at nineteen years old, so she wasn't experienced, but she was still in her field. So at nineteen years old, her her and her boyfriend, her boyfriend's name was cliff Obrecht, started to test out this concept, this first idea. They called it fusion books. So this was the first business they tried to build. So fusion books was a print design company that was used online. So it was still SASS platform, or software as a service platform, and allowed people to make their own designs for the site with fusions templates. So you log in, you're allowed to use some of fusing templates then you order them from this site. So it made a very turnkey, quick, cost effective, easy graphic is sign plus printing solution. That allowed you to have some graphic design tools, but then it also allowed you to not worry about printing and obviously melanie is still not that old. Over the past ten years less and less people have cared about having a printer in their house and this was obviously a nice alternative. So the...

...couple, so melanie and cliff, they grew the company and if they ran it for about five years, it became quite successful and it is still successful and it's still operating to date. Fusion books is still fully operational and it's the largest print and Yearbook Company in Australia. So after five years of fusion books they decided to expand. They expanded fusion books to France and New Zealand. But when they were running fusion books they still had that first idea of how do we create on better online graphic design software? And this thought process was the start of what we would know today is canva. So this process, or this second company they wanted to take on after a very significant success with the first one, started in two thousand and eleven. Melanie and cliff they both went in together another you know, this was a this was a partnership. They started canva and it was a big risk because they already had a successful company. There were other competitors in the market, for example Adobe Photoshop, which is just been a behemoth in the in the in this category. But they continue regardless. Melanie wouldn't give it up. She just didn't give it up, which is again like a trait that you see again and again and again in auto or just relentless. It's like a drive, like a passion. It doesn't like it defies logic. Sometimes you think she already had a successful business for five years. She could have kept growing that. No, she's like I want to take on a new challenge. I want to take on this enormous competitor, Photoshop, and I want to do what I originally set out to do, which I kind of got there, but I want to like double down, to take it a step further. So in two thousand and eleven they started canva. The mission or the vision or the goal for Canva was to, quote unquote, be the simplest way possible to design images with just drag and drop functionality of template that are accessible to everybody with an Internet connection. That was the vision. Now she wanted to sheet. She had revenue, but she didn't want to cannabalize her existing business. So she did a smart move and she did what is called going after OPM or other people's money. She was looking for investment. You want an investment because it was still a risk, it was still, you know, still a theory at this point. Nothing was built out. So but she...

...wanted to build it out with an investment and partner, a VC whatever angel investor. So she was based in Australia. She didn't have access to the US tech market and she had trouble from overseas truly accessing capital. So she actually went to live with her brother for three months in San Francisco just so she could have the proximity to capital she could stand in front of VC's, she could pitch her idea and she pitched it to more than one hundred venture capitalists. She went through a hundred facetoface pitches, get and shut down again and again and again and again. And she said, actually, she quoted in an interview. She said I remember thinking, why is this so hard? So after a hundred, a hundred vcs, hundred pitches, hundred rejections, she finally met a VC, the name was bill tie, at a conference back in Perth, Australia, funny enough, and he was interested in the startup. So she met bill in two thousand and ten, so right before canva had started and actually right before she had gone on this this tour, for lack of a better term, the US for three months to hang out and in San Francisco, hang out with her brother and pitch. She's hundred vcs. So she met bill, went on her tour, got rejected a hundred times. Six months later he reconnects with her and he introduces her to Google maps cofounder Lars Rasmussen. So again here's a lesson. She built that connection with bill way before she ever even thought that she would need him. She didn't even think like she knew bill and she still went to San Francisco for three months pitch a hundred vcs. But then things come full circle. Lesson there build out connections before you need them, because this is how this is how you can use and leverage your network as you evolve in your business or in your career or in your professional life. It's just good to have these people in your circle because you never know what can come around. So bill introduced to Lars Rasmussen. Lars and bill together worked with Melanie and cliff. They introduced them to their own circle, who was all fill full...

...of investors, tech investors, and she did another trounsch of pitches, but with Lars and bill, now two more tenured, senior, I guess, I don't want to say more respected, but they've already accomplished significant things. Not to say that Melanie's first venture, fusion books, wasn't impressive, but Lars and bill just had a little bit more to their name. So they worked with Melanie and cliff for two years. So now this is a hundred vcs and two years later she was finally able to raise a seed round and I would probably want to look more into this to make sure got my facts right. But usually bill and lars would all have their own money as well. But they were trying to find other people to go in on the deal with them. So finally things were, you know, taking a turn for the better. She was introduced to Woody Harrelson and Owen Wilson. They also invested in the round, along with Lars and bill and some other, some other private money. And also she was able to work with Lars long term. So after she had raised the seed round, then rest Mussen had agreed to be her tech advisor. So he said, listen, I will vet all of the people that sign up to be developers, engineers on your team, because I know what I've worked for Google, I've built out products for Google. I know what it takes to be successful. I know what to look for, I know who's bessing me, I know who can actually deliver. So now they have their seed money. Melanie is throwing resume after resume after resume at Lars. He's like no, I don't like them, I don't want her, I don't want him, and he's just shutting everything that he like. Literally shut everything now, not even like I want to jump on a call. He shut everything down. This one on for months. Perkins was like Livid upset. She just wanted to get started. She had her seed money. It was incredibly frustrating. They're still managing fusion books off on one end, you know, over over there, and they're trying to figure out also how to scale this canva idea and lars is just like Nope, nope, nope, nope, no. Lars finally said yes to lead developer Dave hearned and cofounder Cameron Adams. Both also were from Google, and...

Lars recognized that the skill sets they brought to the table we're going to be the skill sets that Melanie canva and team needed to really really make this project and product a reality. So after they found so goes seed round, they found Dave and Cameron and then they close their first round of funding. So this is all sort of happening at the same time. So Melanie is trying to hire getting shut down by Lars. She's already coming off, you know, she was already like just spent three years trying to raise capital and now she is trying to raise another around her first round or series a, and lars finally agrees to let Dave and Cameron on like this is this is stressful, but finally things are to look you know, they look up for her. Cameron and Dave work out a start building that product. They closed their series and the company starts to see day one, right after the closer series, a some very significant growth. So the lesson here is patients and sometimes sometimes, if you are relying on a mentor or somebody to help you or advise you and there and they've gone through this before, their ideas may seem unorthodox at times, but the talent that lars found and Dave and cameron eventually paid off. So if you are going to ask for somebody's counsel, listen to them, because it paid off. Even if you feel like it's taking a little bit too long or perhaps you don't see the full picture, you can ask them to clarify. But waiting a little bit definitely paid off for melony. So canvo was finally launched August of two thousand and thirteen. When it was first launched, the MVP, because of the talent that Lars had found, was actually so good that they had to start getting their engineers to stay up late work overtime, work weekends because their team was still small, just to keep up with the growth. Because it's the fremium model, so people could sign up a sap and use it for free and then you get you can pay for premium and you can upgrade and whatnot. So, because it was because the first iteration of this product is so well engineered, for lack of a better term, it kind of blew up. It had fiftyzero...

...users and its first month, and this was also there was a couple things right, like so the fact that they had a great mvp and they had a great team, because they really vetted the team. And also this was also when everybody was trying to really put out content on social and everyone from a school to an author to like a bowling alleys caring about their online presence and all the only real major competitor is Photoshop at this point. So Melanie really focus on building an incredible product. She trusted the mentors didn't cut corners. First month, fiftyzero users because everybody loved the product so much. And this is actually a smart, a smart product led growth or product led marketing point. If your product is so great, you don't actually have to market it as much as you would is if it's a subpart or mediocre product. Because canva focused on creating great product. Canvas users where the marketing engine that grew at to fiftyzero users in month one. There wasn't some incredible marketing strategy that went into fiftyzero users. It was just hitting the market when the market needed it. The product market fit was obviously there and it was just such a well engineered product. And this is what product led marketing or product led growth is. It was such a well engineered product that the users, the users, shared it, they shared it on social they shared it with their friends and their family, they shared it with their peers and they evangelized it and they spoke about it and that's what led to basically the initial like incredible success. Fiftyzero users in one month is unheard of without some sort of significant marketing strategy, unless you find true product market fit. So after that point, fiftyzero users in month one, you definitely have that product market fit. CANVA raised three million dollars in two thousand and fourteen to two thousand and thirteen at lunch month. One hundred fifty thousand users by two thousand and fourteen, when it raises three million dollars, it had six hundred thousand active users that have made more over three point five million designs, and just in just under one year, which is again incredible growth. So that patients was definitely worth it. Six years later, the startup was, of course, one of...

Australia's biggest and the hottest new businesses. Mary Meeker, an investor in Silicone Valley, led the eighty five million dollar funding round in two thousand and nineteen, which valued the company at three point two billion dollars. That's Unicorn status. Additionally, it makes it one of the most valuable woman led tech companies in the world. Eighty five percent of fortune five hundred companies utilize the platform and now it's a companied value at fifteen billion dollars today. So a few lessons out of this. First of all, when the growth came, the growth hit, Melanie was ready for it. So she took these funding rounds. She took the massive on boarding of new users very seriously. She immediately scaled her team to several hundred, seven hundred to be exact. She opened offices in Sydney, Beijing, Manila. She focused on he focused on growth. He focused on growth because she knew she had a great product day one. So a few other non growth related lessons. Number one, she built a product for problems she was trying to solve. Again, it's very the chances of you succeeding are much higher if you understand if you're scratching your own itch, so to speak. So she taught graphic design, use photoshop, realized it was too expensive to comber some she built something that she needed for a paint point that she found in an industry. Just so happened that it fell in line with the fact that everybody's using social but even if it was at a different point in time, it still would have been successful just because she figures out that this is something that people actually need. If you're building something that solves a multiple customer problems and it does it better and or simpler than other products, you can feel confident going into a saturated market. Graphic design. Pre CANVA was not considered a blue ocean like there's a lot of red. There's a lot of red there. So she just focused on making a better product and making it simpler. The the fact that it was cheaper. Well, it was. It was really just because the only other operate options in the market were incredibly expensive. That's probably a little bit of a rarity. Photoshop is a very expensive tool, but it was mostly focused on simplicity, user experience and just a great product led growth and marketing strategy was...

...just putting that product and how you build it out and how you create this wonderful product that people love using. That's the core of your strategy. And then, lastly, you will be rejected a lot when you build anything or when you really try and push yourself outside your comfort zone. She was rejected by over a hundred vcs on her own and then she was rejected by probably some more when she was trying to raise money with bill and Laurs, because that took her two years to raise a seed round, which is a fair amount of time. So expect to fail, be prepared to fail. Under stand and get out of your own head that it's not on you, and all those hundred VC's that passed up a fifteen billion dollar company, they're shaking their head right now. So it's not on you. If you are rejected. It's hard of the process. Get used to it, get resilient, get that great get the determination push through it, because if she had, if she had, for example, just quit after ninety nine nose or a hundred nose and never went back and spoke to bill or anything along those lines, canva wouldn't be a product, it wouldn't be a company. So always, always, always, persevere, because rejection is part of the process, part for the course, so you're going to have to deal with it anyway. That is how canva went from one relatively successful business with fusion books to a fifteen billion dollar Unicorn, thanks to Melanie, thanks to cliff and thanks to her tenacity and disorder great, entrene entrepreneurial traits. Hope you enjoyed if you found value in this, I would really really appreciate if you are listening to this on Itunes, leave a rating and review. That's how more people find us through on spotify. Hit that follow button. That's how spotify's algorithm works. If you are watching this on Youtube, you got to like subscribe leave a content comment. Scuse me. That's on where people can find us on Youtube. And if you have any businesses that you want to hear their growth story or their growth strategy, hit me up and I will definitely break it down for you. Have a great week and we'LL SPEAK AGAIN SOON.

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