Profiling Unicorn Builders — Canva
A couple of weeks ago, Canva announced a $200m fundraising round led by T.Rowe Price — at a $40B+ valuation. This news officially places Canva as one the most valuable private software companies in the world. Huge congrats to Melanie, Cliff, Cameron and the entire Canva team.
Canva started out late 2012 and officially launched their first product in 2013. I invested in 2014 with a $750k cheque which is now worth a few hundred million dollars and is a 600x+ multiple on my first cheque into the business.
It’s not every day we see Software companies of this scale being built and so we thought it may be insightful to share a few observations of why we believe the Canva founders had the right traits to build a category-defining company. I will release a follow up post in due course, which goes into more detail on the other factors I was excited about which are more product and business related, but for now we will focus on the founders behind the wheel of the company which is our core focus now at Jigsaw.
We launched Jigsaw with a thesis on investing in the best entrepreneurial talent. Our approach is robust, having distilled the common characteristics across thousands of early-stage Founders including the 80+ companies we’ve backed historically and all of Europe’s most successful entrepreneurs over the past 15 years.
The Founders of Canva, and most of the successful entrepreneurs we’ve been fortunate enough to invest in, exhibit the following traits:
- Prior entrepreneurial experience, which optimises the conditions for success.
Repeat founders are between 2–6x more likely to succeed regardless of whether they have been successful with their first company or not. This is because they’ve built up a conscious understanding of what works and what doesn’t in building a culture, team and product. Founders learn a huge amount from their first business, avoiding many of the common pitfalls of inexperienced founders which greatly reduces their likelihood of failure that startups are renowned for. World-class founders manage these startup ‘hygiene factors’ quickly and effectively, freeing themselves up to focus on those strategic points of leverage that generate enormous value.
Even founders who have demonstrated entrepreneurial traits in other settings outside of technology and startups still create the right conditions for success.
This was the case with Melanie and Cliffs first business, Fusion Year Books, which was a student yearbook design and printing business which is still operational today and has become one of the largest year book publishers in Australia, expanding into France and New Zealand. Whilst Fusion was a successful business in its own right, it can be categorized more as a lifestyle business which was difficult to scale by typical VC standards. But by going through the process of building a business which was not that scalable, Melanie & Cliff learnt a lot of painful lessons which they solved with their second business, Canva.
These past experiences were of paramount importance when launching Canva.
Melanie and Cliff also showed great tenacity and perseverance to build another company in the design category which is a hugely positive signal given the all-consuming nature of building a company from scratch, not to mention the personal sacrifice demanded from the entrepreneurial lifestyle. This can result in founders falling out of love with their chosen domain. Not the case with these founders! Their passion for design fuelled their determination to succeed with Canva.
2. Significant domain expertise in their chosen market or problem space they’re addressing.
Melanie is obsessed with graphic design and was previously teaching design programs at University, so she was at the forefront of witnessing the long and tedious process it took for beginners to get professional results with existing legacy design tools. This was the initial genesis of the idea which became Canva. Her first company, Fusion Year Books, was also a design related business and also suffered from the same issues with producing and collaborating around designs. Melanie had a clear vision to create a tool with a very simple user interface where users could simply drag and drop components into their designs, access thousands of templates and fonts, without doing lots of fine tuning. The ultimate vision was to democratise access to the tool for everyone (not just designers) regardless of platform, device or language.
Cliff used to spend hours each day cold-calling students at colleges and universities to sell Year Books so this first-hand pain of cold sales outreach may well have influenced their thinking on a self service design tool which is a classic example of a product-led growth business.
We focus on founders who deeply understand their chosen markets and thus have unpicked an opportunity which they are uniquely positioned to solve. Their strong design-led orientation as founders helped them build a world-class product in very short order. We like to call this ‘founder market fit’ and we see this as hugely important in aligning the right skills with the right vision to successfully execute in a big market.
Quite often we see founders unearth opportunities whilst operating their previous business which was certainly the case with Melanie and Cliff.
3. Exceptional emotional intelligence and growth mindset that’s critical for attracting the best talent.
One of the people they initially convinced was Lars Rasmussen who was the founder of Where 2 Technologies (acquired by Google) which became the nucleus for Google Maps. Lars is an incredible technologist and has held senior engineering roles at both Google and Facebook. Lars was hugely important in building out the initial technology and product team by bringing his former colleague Cameron Adams in as co-founder and Dave Hearnden as tech developer. A few months later the company closed its first oversubscribed seed round.
Interestingly when raising capital, repeat founders do not over-index on a VC’s brand but instead seek strong relationships with advisors and investors who can help them solve specific business related problems. We like to describe this by saying ‘the best founders ‘know what they don’t know’. Whilst Melanie and Cliff had a very clear vision of the product they wanted to create, the technology and product skills needed to achieve was a huge undertaking and neither of the co-founders were equipped with the skills to deliver on this. They were however well aware of their weakness in this area and over-indexed on bringing aboard the best employees, advisors and investors who could help them in this area.
This also speaks to the high degree of emotional intelligence of such founders in that many of the best founders have no/low ego and are excited by the prospect of bringing in the most talented people. For many it’s their no.1 priority when building a company. The old adage of ‘A players hire A players’ or ‘if you’re the smartest person in the room, then you’re in the wrong room’ holds true here. Building out the best leadership team is even proven to be the key determinant in generating unicorn outcomes.
Great founders have a strong internal locus of control and are less likely to conform, don’t seek approval or validation from others and therefore make great agents for change when trying to build a new disruptive business. A low ego helps avoid being dogmatic in their thinking as they stay on the right side of ‘strong beliefs, loosely held’.
Canva didn’t focus on going head to head with existing design tools focused on more professional designers like Figma, Adobe or Sketch, but chose to go after everyone else instead. The focus was on democratizing access to design by becoming the design template for the masses, focusing on simplicity and ease of use to be the catalyst that enabled collaboration.
Fast forward 7 years and Canva now has over 60 million active users across over 180 countries and the company is only just getting started.
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Whilst we see several commonalities between founders, there are many founder traits with varied configurations that may result in high performing teams building exceptional companies. So our goal here is not to create a ‘one size fits all’ self reflection tool for founders or an assessment tool for VCs. Rather, we think about the relevancy of the founders’ skills and experiences — in other words, why is this the right founder for this specific opportunity (Founder-Market fit) and how complete and cohesive is the team. This helps us to work transparently with founders as partners in reflecting on the balance of skills and experiences in the team to plug any skill gaps or uncover any blind spots with the goal of maximising their chance of success.
