Earlier this month, it was widely reported that Canva, the Sydney-based (but Perth originated) online design business’s latest private raising valued the company north of US$1B. We hear from cofounders Cliff and Mel …
As we noted last week, there are 244 ‘unicorns’ (private companies with a valuation above US$1B) in the world currently, and only one, Canva, is Australian.
When the announcement was made a few weeks ago, Canva’s cofounders Melanie Perkins and Cliff Obrecht were inundated for interviews. In response, Mel wrote this excellent Medium post. Startup News contacted them both, and Cliff gave an interview and permissions for us to quote from Mel’s post.
Can you tell us how you guys got together in business with Fusion Books straight out of university 10 years ago?
Mel: “When I was at university in Perth in 2008, I was teaching design programs part-time. I found that the design tools I was teaching were really clunky and difficult to use. I thought it seemed silly that they were all desktop-based and absurd that it took so long to use them. Facebook was taking off at the time — people could jump in and use that so easily and yet design tools took years of training to learn. I wanted to make design software simple, online and collaborative.”
As Mel’s Mum was a teacher, and had the unenviable job of putting together the school year book, Mel decided the first application of this idea would be Fusion Books. Her boyfriend Cliff became her business partner, and her Mum’s living room, the office.
With a loan and some wire frame ideas, they eventually found a Perth-based business that could make the site for a reasonable amount. The quotations varied tremendously. In March 2008 they had their first customer, obtained over the web.
As the ecosystem was not as developed then – no angel networks, no coworking spaces, no events – how did you get going? who helped?
Cliff: “We had no idea we were a startup, we thought we were a small business. We eventually met with some angels, however, they were looking for revenues and didn’t seem to be investing in tech.”
Mel: “In the end, we found calling schools and sending them a sample yearbook proved to be the most effective way to generate leads. We continued doing this every year, with our very kind families (in support). Soon Mum’s living room was taken over, as was the driveway and hall. Printing operations were going 24/7.”
The simple idea was the school could use the software all year round laying out their yearbook, but then had to print their yearbook via Fusion Books.
Building for teachers and students meant that the solution had to be really simple. It wasn’t being developed for tech heads and high-end computer users. It was these principles that were to flow into Canva years later, making its interface so user-friendly, and the take up so strong.
Fusion Books entered the WA Innovator of the Year Awards in 2008, coming runners up. It was here that they had a quick chat with Bill Tai, a Silicon Valley investor, who was there to deliver a speech.
Meeting Bill Tai – was that the turning point that set you off on your current path?
Mel: “He was the first investor we’d ever met, and the short five-minute chat felt like a window had opened into a whole new world. He sent me his contact details and said if I ever went to Silicon Valley, he’d meet. I couldn’t believe my luck. There was a whole world of companies out there who were trying to create software.”
Mel decided to visit San Francisco, and stay with her brother who was over there working. He followed up with Bill, who introduced her to Lars Rasmussen, the man behind Google Maps and Wave. Lars was now working at Facebook.
Interestingly, this author was in San Francisco at the same time (mid 2011) attending a real estate tech conference. We met up at a tea house and she told me how she was trying to assemble a crack team. I was struck by her positive, never say die attitude. It seemed she was entering an amazingly exciting world, many moons away from the humble online real estate business I was leading at the time. for her, it was all about getting the people right at the outset, before launching Canva.
In fact, I later found out she did not find what she was looking for, so returned to Perth. But all was not lost. After a busy year, they decided to move Fusion Books to Sydney.
Why the move to Sydney? Could you have done the same in Perth, or was Sydney important for the connections, staffing, funding, closer time zone to USA, etc?
Cliff: “For Fusion Books, most of our customers were in NSW, so it was about being close to our customers (same timezone), the availability of talent (Google and Atlassian are HQ’d in Sydney) and proximity to investors.”
It was around this time that they received an invitation to attend MaiTai, Susi Mai and Bill Tai’s gathering of tech execs who like water sports, which is sometimes referred to as the “golf course” of Silicon Valley. Mel was into kite surfing, so they both attended.
Mel: “We were petrified of all of the people at the event, there were a lot people who had created well known technology companies.”
They made lots of great contacts, and were again taking up Mel’s brother’s generosity to stay with him in San Francisco. They gave it another try to find the founding team for Canva. And this time, it was successful.
Lars had introduced them to Cameron Adams, a world class engineer and web developer, cofounder of fluent.io. He agreed to come on board as tech cofounder.
Mel: “Cam gave us the credibility that we needed to land the investment, but he’s also incredibly talented and a genuinely great guy — it’s been a privilege working with him for the last five years.”
So, they had their tech cofounder – but had not written a line of code – were in San Francisco and thought the capital raising would be straightforward. Despite having a few things going for them, they were outsiders, based in Australia, and had not been to the Stanford or Harvard. They received rejection after rejection from VCs.
Mel: “When we were getting push back about being located in Australia we added the slide below in our Appendix the Commercialisation Australia grant opportunity (now called ‘Accelerating Commercialisation’) that would essentially double their funding.”
[Full disclosure – this author work on the AC grant programme.]
Using the possibility of federal grant funding is an interesting way of turning a negative (being over in Australia) into a possible positive (a federal grant to double investors’ money).
Mel: “In retrospect (staying in Australia) was one of the best decisions we have ever made — as we’ve been able to create the best team I could possibly imagine, with people who have moved from every corner of Australia and across the world.”
After a while, they decided to ask for advice rather than ask for money. As time went on, they received less advice and more interest from backers. Here again, they were cleverly using reverse psychology to move things forward. In the end, they asked Bill Tai directly if he would invest, and he agreed on $100K. Eventually, they did close a US$1.6M round which also included Lars Rasmussen and VC funds Matrix Partners, InterWest Partners and Blackbird Partners.
The Commercialisation Australia (now ‘Accelerating Commercialisation’) grant added a further $1.4M, so the team now had $3M. All they had to do now, was build it.
Months later they went live. It was a nerve-wracking moment. Fortunately they had built it well. Tech crunch hailed Canva as “a graphic design platform anyone can use” and users on Twitter praised it with comments such as “one must tool for every entrepreneur – just saved me a ton of time and money” and “I’ve seen a ton of graphics tools on the web, but I was absolutely blown away by Canva – the onboarding is genius.”
8 months in, over 350,000 designs were being created per month on the platform. 20 months in, this number grew to 3 million. Today, over 34 million designs a month, that’s more than 13 a second.
What advice do you have for Perth based startups wanting to follow in your footsteps? Things to be wary of?
Mel: “The most important growth tip I can give is to create a product that solves a problem for a lot of people. Offer a free tier that delivers a lot of value. Start niche then go wide.”
Cliff: “Get started, figure it all out as you go. Read blog posts on pertinent topics. Perth’s a great place to start a business and test ideas before going global.”
Do you get back to Perth much? is Perth still ‘home’ for you? Or are your roots now set in Sydney?
Cliff: “We consider both Perth and Sydney our homes. We get back 3 or 4 times a year.”
Does the “unicorn” status freak you out a bit, or something you don’t really think about?
Cliff: “Not something we think about, it’s a nice milestone, but our primary focus is building Canva and delivering value to users.”
Mel: “(When we announced the latest round and valuation) I felt really scared and nervous. This financing has been in the works for some time and I’m really confident with where our company is headed — we really have an incredible team, we have a community who loves our product, we are in a great financial position, our charts are moving in the right direction and we have some really great new products in the works.”
How is the business going? (number of users, staff, growth, profitability…)
Cliff: “We are profitable, have 250 full time employees and over 10 million users. We are continually blow away by the growth.”
Mel: “(Beyond business) I would love to see every business, every VC, every producer, every journalist, every single person — step up and to take heed of their power to help make this a better world for everyone who lives here. It’s easy to think that it’s someone else’s responsibility — but it’s not, it’s all of ours.”
What are some of your next steps? Is a listing of some kind inevitable one day, or not in the thinking at the moment?
Cliff: “Right now we are focused on building out a great core product and growth.”
Mel: “For a long time, we’ve had a simple two step plan:
1. Build one of the world’s most valuable companies, and
2. Figure out how we can have the most positive impact in the world, and of course, do it!
We still have a long way to go on Step 1. We really are less than 1% of the way there, but hopefully we are headed in the right direction! It feels insanely lucky that this even seems semi-plausible and will definitely need a huge amount of effort in order to make this a reality.”
How important is it to take time off, have time away, balance your work-home-friends life? How do you guys do this?
Cliff: “Very important. We usually go on short trips. Last year we rode horses in Mongolia and we recently stayed in tree houses in Laos.”
Mel: “I find going away on holidays, even for the weekend or a week, can be incredibly refreshing. I personally like to go on quite adventurous holidays as it doesn’t give me time to let my mind think about other things. It’s important to give your brain a break sometimes so it can come back refreshed.”
What strikes me about the Canva story is their absolute resolve to form the best team first, before even writing a single line of code. ‘Getting the best people on the bus’ (Jim Collins) seems to be a mantra they have adopted, and it has served them well. They did not even try to raise funds for Canva until they had some crack engineers and managers. Even when they landed investors, they chose wisely.
In a rush to get startups out there, sometimes we can cut corners. As I read recently in Eddie Izzard’s wonderful autobiography, it’s not speed that’s important, it’s quality. How fast you get there is not important, it’s that you get there. And you get there by building something wonderful, remarkable, disruptive and brilliant with the best collaborators and colleagues.
Mel and Cliff have come a long way from Duncraig 10 years ago, but the fact is it’s taken 10 years, and they both feel they have only just begun.