Canva's growth story hits a speed bump as slowing revenue and rising AI competition force its first major round of job cuts.
Background: Canva has become one of Australia's biggest tech success stories. The software company is known for making it easy for anyone to create social media posts, presentations... without a design degree.
And it all started back in 2006, with 19-year-old Aussie entrepreneur Melanie Perkins. She noticed her uni classmates struggling with the basics when using design tools like Adobe. So, she and her partner, Cliff Obrecht, started an online yearbook business before eventually pitching a bigger idea to investors.
After securing backing and building a team of engineers, Canva launched in 2013 (just as social media was taking off). It quickly became a go-to design tool, reached unicorn status and expanded into business collaboration. The pandemic gave it another major growth boost, and the company eventually grew to around 6,000 employees.
What happened: This week, Canva announced a major restructure affecting around 1,200 staff (roughly 22% of its workforce). It's the first major redundancy round in the company's 13-year history.
Why: Canva's annual revenue sat at around US$3.7 billion at the end of October, roughly where it started the year and well below its US$5.2 billion target. The business isn't necessarily losing money, but its growth has slowed.
And it all comes as AI competitors like Claude and ChatGPT have launched design features which give users cheaper, faster ways to create images. Canva's been bleeding active users ever since. Get this: Canva’s active monthly users fell by 12 million compared to the same time last year.So while Canva hasn't directly blamed AI for these cuts, it says new technologies have "transformed customer expectations."
But with this being the first big restructure since Canva launched, it's also pretty normal for a fast-growing company to hit a plateau at some point...
🌟 Getting bigger can make a business slower. More people, processes and management layers can make it harder to move quickly and stay nimble.
🌟 Staying nimble is pretty important for a company not only competing with AI tools... but also using the same technology in its product. Software companies like Atlassian and WiseTech Global have faced similar challenges, both letting thousands of staff go earlier this year.
🌟 Canva's success came from disrupting the design industry... now it's facing a major disruptor itself in AI. The big test now is whether it can pick up speed before AI overtakes it... and restructuring its workforce looks like the lever it's had to pull to do that.
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