Canva's an amazing story. I think everyone here is familiar with it. Do you want to give us just like the quick update on where you guys are today? And in particular, I mean, we're going to spend a lot of time talking about AI, but what you guys are in the middle of at the moment.
Yeah, so we were born, I guess, as a company in 2013. Started the company with my wife, who's my boss. It's always fun.
I mean, that's always the case, whether it's whether you realize it or not.
You're in a similar situation building a business with someone you got close relationship with. But you know, we've had an exciting 13-year run. We're in the middle of the biggest transition of our whole lives as a company in sort of taking Canva from a creative platform in the SaaS world to really being the combination of a creative platform, productivity platform, and intelligence platform in the AI world. So, that comes with a lot of challenges and excitement, and it's yeah, it's super fun.
How did Canva get to scale? What's the backstory of how you guys got massive?
I think all companies get massive by having the best product in the world that's ruthlessly focused on solving customer problems. And then part of the special sauce was really our freemium model. We didn't try to over-monetize too early. When we first launched Canva—there's a lot of people over there. I didn't realize. Hey, everyone.
Yeah, you could only buy images for a dollar. So, it was very much a free platform with $1 purchases. And then after a while, we realized we should add a subscription model to this, and that's when it really started to take off. But we really always respected that free user base, and we really saw that as our word-of-mouth marketing channel. And it's that channel that's really always growing the business.
Did you do a lot to engineer the virality or did it come organically?
We did all the basic things, you know? I mean, obviously really building in seamless sharing. We never wanted to watermark the product and deprecate the experience of our free users in order to get that brand awareness more externally. So, we actually thought that the whole strategy was being very free, being very generous, giving people what they wanted. And we saw a pattern over time and over the many years customers use Canva that more and more of them would upgrade, particularly as we added more premium features. The more value they got, the more acceptance they had to pay. And yeah.
How do you think about where you should—so, most of your users are free users, and then the business bills are paid by the paid users. And so, you're always drawing a graduation point, right? Where it's like, it's time to leave the nest, free user, and flap your wings and become a paying Canva subscriber. So, when are they ready to leave the nest?
We were very happy with our free-to-paid monetization rates forever, and they've always been very, very healthy. We also have a lot of education users that are essentially perpetually free, other than when they upgrade coming into college. But AI has totally changed that because the cost of goods to serve a user has gone from cents per month to now many, many more cents per month. And so, that's really sort of changed the dynamics of the cost to serve and also sort of the dynamics of the business. But yeah, it's been an evolution.
Concretely, that means just for anyone—I mean, we know this at Stripe, I'm sure a lot of you in the audience are feeling this—just building any kind of non-deterministic AI product, that's a totally different kind of product than the free products that they're replacing. And so, they come with a different monetization path, and you can't just naturally import whatever the graduation path was from free to paid in the old product. That has to be different in the AI-powered product.
Correct. Yeah, so the cost to create a design historically cost us essentially nothing. But now if you're to use a full agentic loop and you're to do web research, you're to call the brand, you're to create a whole campaign being many different designs that include images, graphs, all types of things, and then you're to deploy it, then you want to understand how that content is actually performing once it's been deployed, intelligence needs to be run behind all of these things and many different systems need to be connected, and all those tokens cost money. And so the cost to create a design before, which was essentially nothing, has now turned into cents. And that, at hundreds of millions of users scale, really has a fundamental sort of effect on the business that we've had to adapt to.
I feel like in the discussion about AI, you know, we get asked about the effect of AI and payments, which, you know, we're happy to talk at length about, but I feel like as people talk about the effects of AI in the economy generally, design is often one of the examples that people use, you know what I mean? Where it's like the robots eating the jobs example. Obviously, it's much more complex than that because also you're empowering people to do their own design where they don't need a designer anymore. You can just have much more design happening. What is your grand unified theory for design in the age of AI?
I think it's very similar to when we launched Canva. Before Canva, you only had the Adobe products. They were very difficult to use. They were only accessible by cost and by the actual need to learn these tools to less than 1% of the internet-using population. We introduced Canva, and there was a lot of sentiment, "Oh, Canva's destroying design jobs." Ultimately, we created hundreds of millions of more designers and lots and lots of opportunities. And then we empowered those professional designers to build templates, submit them on our platform. And we are now one of the only platforms, if not the only platform, where you can generate with AI and reference templates created by real humans that we then pay those real humans for those input images, rather than just training on the internet. So, we really believe human-in-the-loop is critical, particularly when it comes to creativity, and we really believe in paying our creators for the beautiful content and the design trends that they're setting that people can leverage with AI.
So, just maybe we could deep dive on this because I think again it's an interesting micro-story for what's going on more broadly. I agree with you there's clearly the effect that Canva is making much more design possible. So, for a given job previously you needed to go get a designer to do it. You know, if you're a restaurant looking for a menu designer or something, previously you needed to get a designer to do it. Now you do not. It's also the case that the number of design jobs has just gone up over time. And so, for those designers, how is like if you were previously designing restaurant menus, what are you doing now? Like, how has the design job changed? Are you now making Canva templates, or just how has that work changed for people whose full-time job is a designer?
Yeah, especially in large organizations, designers are really becoming the brand architects and the design architects. And so, similar to how designers in organizations used to create templates, now they can create mood board styles, brands for all their different sort of sub-assets within an organization. Every campaign has its own sort of brand. And then they can empower the rest of the organization to either create with those templates or leverage those base bits of creativity, feed that into AI to create things for whatever they want, but within that same brand framework.
Despite this obviously being true and the numbers being what they are, you do still get this persistent "robots are eating all the jobs, design jobs under threat from AI." You know, the headlines still are what they are. Does that bother you? Do you go trying to correct the record? Just how do you feel about the fact that people want to write a certain story? And again, I presume in particular with history, a lot of people have been writing the story of, you know, Canva replacing designers.
It actually hasn't been too heavy recently. It was more so when we launched. But yeah, there certainly is that general sentiment, but just like with when we launched Canva, we really think it does empower professional creatives to do more. And actually with AI, having on-brand content is actually more important than ever. There is so much AI slop out there that you really need custodians of the brand within organizations. And so I still think the role of designers, brand designers, and anyone in that space really has a lot of value to add and is increasingly becoming more and more valuable.
I feel like a lot of AI tools have a certain aesthetic. Like people talk about with LLMs, they have this very distinctive writing style, right? "You've hit on a great point. Here's the quietly load-bearing parts." It's so distinctive. And similarly with visual styles, Midjourney, one of the early image models, had this particular aesthetic that it went for. I noticed that whenever AI builds a website, you've probably noticed this like a default CSS that the AI-built websites really like going for. What do you think of as the visual style or kind of the design values that you're trying to inculcate in Canva's product?
Well, really what we really want is to give optionality. These models can do amazing things, but they can do even better things if you give them guidance. So, if you're a brand, how do you set up the brand architecture to give the model that guidance so it adheres to what you want, but also expresses creativity? And the human can also express their creativity by adding more prompts, and they can be visual prompts or written prompts. And the combination of that brand architecture with the human interaction can lead to better outcomes that you can guide, or you can let it be sort of massively creative. And it's about the inputs to what is generated that ultimately guides it to being the generic brand slop or things that are brought to scale.
Can't it not always be in person? Like, you know, if you're buying a house and you're touring different houses, at a certain point you maybe say, "Oh, this is the one. I really like this." But if you've been asked to specify the house that you want, you wouldn't necessarily have come up with all those design cues. And so, people to some extent are like picking and won't necessarily have—they won't be able to prompt exactly what it is they want.
That's exactly what we do. We've got over 165 million templates, images, and graphic assets on the library, and we really don't think the prompt box is the right vector for creating visual content. People don't know they want a psychedelic retro '80s-themed birthday party invitation, but when they see it they're like, "Oh jeez, I really like that." And they can use that as the input to then add their own content to and make it their own.
I see. Yeah. So, you are—
It's template-first, content-first.
Space. Yeah, yeah, yeah. I really like that. And I guess we jump kind of into—
And we pay the creators. So, if you spot that psychedelic template, then if you import that into your creation, then we also give the attribution and payment to that creator.
Are those creators people who do this for fun? Is this people who it's their full-time job? Do they have some other business and they also put the stuff on Canva? How does the creator side of things work?
It's all of the above. We have full-time creators. We have people doing it in their spare time. We have graphic designers that are adding their content that they don't use for a customer to it. So, yeah, all of the above. We really help them as well, guide them. "Hey, there's a gap in this market for this particular doc type," and put a call out, and then they fill those callouts based on our search queries.
Yes. Do you see youngsters doing this? I remember like when I was growing up, if you're an enterprising youngster designing websites and building websites for the olds who didn't really know who they are, you could work with a local business owner and help them build a website and they would pay you a thousand euros for it. And like to a teenager, that is an infinite amount of money basically. And so, do you also see this as how young people are getting into design and getting into—
Well, yeah. I mean, Canva is a critical skill on Upwork, Fiverr, LinkedIn. And so, there's multiple things. You can be a youngster and contribute to our library and get paid, or you can just do jobs on Canva. And a lot of people now require their content to be delivered in Canva format because it's editable. They don't want an Illustrator file. They don't want just a JPEG. They want a Canva format because they want to then reuse that design within their small business.
Do you find businesses wanting to—is a deliverable essentially a design language that the business can then—
Work with? Sometimes. That's what we call a brand kit and brand templates. Or it could just be, "Hey, I have a campaign. I want 20 different Facebook ads or Instagram ads advertising my new shoes."
We can jump into all the AI stuff, but we have to back up a bit because you are broadly known as Canva the design tool. You are now becoming Canva the AI lab developing image models. Do you want to just talk about that transition?
Yeah. When we launched or tried to launch our AI product at our Canva Create in April, we launched it with a lot of frontier intelligence: third-party image models, third-party LLMs. And they were amazing at what they did, but they're also very expensive. And if you want to deploy AI to hundreds of millions of people, you need to really in-source a lot of that model development, particularly core competency weeks around image and design generation. And you also need to own a lot of the gigantic loops and also manage the inferences well to get cost down. And so, since we launched in April, we actually had to really slow down that rollout whilst we get those costs in check, but whilst also hitting quality and latency goals as well. And it's the combination of quality, cost, and latency that is the kind of holy trinity. And it's only when you get those three things right that you can actually afford to give a really great, generous free product to our free users, as well as a generous product to our paying customers.
Okay, so you think it's just not possible to build the kind of Canva product that you want to build when you are shelling out to someone else's image model.
You can build it if we had 10,000 customers that were all paying us the economics—
At our scale, when we've got sort of 200-plus million free users and say 30-plus million paying users, the paying users need to subsidize the free users as well as get a generous product themselves. And so, to serve 200-plus million users a very generous free AI product comes with a huge cost. And so, we needed to get that cost down, and we've managed to do that by about 90%, which means we can really sort of scale it up now.
If you just—there are lots of people who do lots of AI who choose not to train their own frontier models. If you rewind to the Canva leadership team offsite in, I don't know, whatever year it was you guys were making that decision, was it a decision where, you know, we could go the Amazon route where Amazon does lots of AI with all their customers, but they choose to help customers use others' AI models as opposed to train their own? Was that a path you guys seriously considered, or was it just preordained by the business logic that you're describing?
We actually got into AI over 6 years ago. One of the most loved features in Canva was the background remover, so you could essentially remove a background from anything. And so, we partnered with a great company called Kaleido in Austria, of all places, where my grandfather was from. And that product upgraded so many users, we decided to acquire that company. And that company had deep—
AI is how I ended up paying for Canva, now that you say it. I need to remove the background from an image.
Templates and background remover used to be our number one sort of drivers of upgrades. And so, yes, that's exactly right. So, that was a visual AI lab that essentially had to do the deep research in order to figure out how to see an image and then decompose the different layers. And so, that kind of inadvertently got us into the AI space. We had a research team that constantly worked on that. And then, once we realized that image generation and design generation was such a core competency, we acquired a local company called Leonardo, who had also built their foundational model. And really, you can take the scattergun approach of running evals—what's the best cost, quality, latency—but if you really want to own those and optimize those three things, you need to own those models yourselves because you can probably get the quality, but the cost and latency you're going to lose out on. And only by building your own research team and training your own models, particularly for image and design—LLMs is a bit more sort of fungible—but for image and design, we really needed to be in control of our own destiny there.
I want to go back to the background image removal because I think there's kind of a deep point there about iterating on product-market fit as a scaling-up company where in the beginning you have to make something that works for kind of some set of customers. But I feel like the 1x to 10x to 1,000x often comes from getting the loop right of seeing behaviors that work well on the platform and then extending the product based on them. Like my favorite example of this is Twitter, where basically all of the Twitter features you can think of were invented by the community and then regularized by Twitter. So, the notion of like hashtags, people just started doing it in their tweets and they're like, "Oh, I guess we should make them clickable and searchable." Or replies, or tweet threads, or putting images in tweets, or all this kind of stuff. People just started doing it, and previously they would just have like an ugly-looking URL in the tweet. It's like, "Oh, I guess we should actually put the image in the tweet." Anyway, so I think there's this mechanic for scaling-up companies where you want to see how people are using the product and then really go whole hog on supporting it and extending it.
I think most growth loops in companies—companies often don't have infinite growth loops, and the majority of their growth comes from three or four key things that work really well for them. So, for example, at Canva we have a huge template library and we thought, "Well, let's expose these templates to SEO. Let's do it for—" You always start small, right? Holy, we're number one on Google for business card templates. Then it's like, "Okay, well, let's do the SEO research. Let's figure out everything everyone's looking for, which then informs the strategy to actually create that content which people ultimately want in the platform."
And then you expose that to the public, and we ranked number one in all the categories for the longest period of time. And then that becomes essentially—that was 60% of our growth for a while. And then people are designing—
Being business card creation?
Oh, no, no, the broad spectrum of all templates. So, every single template, and then you go down to subcategories. You can go like three-year-old birthday something in psychedelic, you know what I mean? Yeah. But then you realize people are using your product, they're collaborating and sharing. So, how do you make that sharing collaboration feature really seamless so you can connect people, connect teams? And then that becomes another growth flywheel, etc., etc.
I totally agree in these growth loops, and we have had kind of similar growth loops at Stripe over time where an early version of this at Stripe was the sharing economy, where we noticed that people cared about scaled payout logic more than pay-in nets because they were building apps like Lyft, Instacart, DoorDash, and all these kind of things. And so, that very quickly led us to building for kind of marketplace functionality, and that kind of true line has continued to this day. I feel like one of the challenges with these growth loops is companies are organized—so, this is a bit complex, but I'm actually very curious. Companies are organized functionally. And so, when you say people are doing templates or people want to remove image backgrounds, there's part of that that's product where you need like the image background removal to be good. There's part of that that's SEO where you want "how do I remove the background to an image"—you want to rank first on that, and that could be like a huge source of traffic. There's content to drive the SEO. There's like a lot of other things that go into it. And so, how do you actually make these growth loops work when they live in seven different parts of the organization?
So, as you know, this is the complexity of running a large organization.
Yes, I want to know. Asking for a friend.
It's a trade-off between sort of deep alignment and self-contained teams with everything they need in order to deliver, which is always the fastest way to deliver a great product to your customers, compared to a matrixed product, right? And so, now we have a matrixed organization, and so content is—you have the verticals, which for us are the product surface areas, and we want as few product surface areas as possible because having too many product surfaces creates sprawl and it creates even more alignment challenges between the horizontals and the verticals. And then you have the horizontals, which may be content and personalization. And so content needs to show up in landing pages, it needs to show up in our marketplace, it needs to show up in the home page. It needs to also be deeply guided by personalization once it hits the home page. Are you a small business in Mexico? You need to see vastly different content than a large organization in Japan. And so it's how you kind of have the matrix work together, how you define priorities. Because that content team has a million different teams asking for its services, and you need to be really clear at defining the goals at the top of the organizational structure in order to define sort of how these goals flow down and what's prioritized within the different teams in all parts of the org. That answer your question?
It does. Okay, so you've got this matrix: functions on one axis, and then how granular do the product areas—or I'm not sure what you call them—how granular do you get on those other sides of the matrix? It sounds like pretty granular.
Product surfaces, that's—
Well, you need to architect your product so it all is essentially an integrated platform that's serviceable. So that's why I was talking about the intersection of personalization and content. And then if you look at the home page, the home page isn't custom-configured for every—it's configured just like Netflix with a bunch of configurable rows. And based on sort of like the attributes we have on the customer, we feed content from the content service. So if you're that sort of small business in Mexico, we go call the Mexican small business content and then deliver it within the platform. So you need to architect it so it's not just sort of like whack-a-mole in trying to fix these things per market, per user intent. It's really a system that's led by sort of machine learning and feedback and all that sort of stuff.
What products did Canva displace as we talk about these use cases? Like you mentioned the Adobe suite as one, but in general, what were people using before that Canva was simplifying?
No one really had the ability to create designs. People used PowerPoint, Paint. Like the amount of people that were designing in PowerPoint and Paint, that was kind of the status quo. Or they would sort of figure out Photoshop—they'd go pirate Photoshop and they'd figure out how to get their job done, for example. Microsoft Word was also a big sort of pushing that to its absolute limits.
We started Canva with a school yearbook company. I used to be a school teacher, and Mel was at university teaching design, teaching the Adobe suite, and realized this is really tough. But we're in Perth, Western Australia. We had no money. We were kind of how do we make money out of this thing? I was like, well, school yearbooks are something where some school teacher gets allocated this job to do, they hate it, and they have to create a 200-page essentially professional magazine with no design skills. And so, we took those two ideas, we merged them together, created a company called Fusion Books, which solved the yearbook problem. But then all these schools started saying, "Can we use it for newsletters? Can we use it for like email design?" All these different things. And we were like, "Okay, there's something beyond school yearbooks here," which was the intention from the start.
