🎨Canva, Adobe’s $40B problem


September 17, 2021

The Hustle

In 2013, Nile Niami set out to build a 105k-square-foot Bel Air mega mansion with a nightclub, theater, 50-car garage, and 10k-bottle wine cellar. Except it’s still not finished — and Nile has racked up $100m+ in debt. The $500m home has gone into receivership and is likely to list for much, much less.

Today’s rundown:

  • Adobe’s $40B problem: Canva’s path from yearbooks to unicorn.
  • Trouble in Hollywood: Why Christopher Nolan left Warner Bros.
  • Apple vs. Android: Readers told us which they prefer, and why.

Let’s do it.

The big idea
Canva painting

Canva’s recent round valued the design startup at $40B. Here’s how they got there.

If you visited Canva CEO Melanie Perkins in 2007, the road to unicorn status would have seemed rocky at best.

  • She worked out of her mother’s living room in Perth, Australia — about as far from Silicon Valley as it gets
  • Her product was designed specifically for high school yearbooks — about as niche as it gets

This week Canva raised $200m valuing the company at $40B, making it one of the world’s most valuable startups, per Forbes.

Perkins started with an insight

She realized the process to design and print a poster or flyer took way more tools than it should, and set out to build an all-in-one solution that anyone could use.

She tested her idea with yearbooks, and after finding product-market fit, started courting VCs…

… but was promptly shut down by 100+ investors

After finally scoring a $3m seed round (that was matched by the Australian government), Canva launched in 2013.

Three factors helped the team take off from the start:

  1. Timing: Businesses began using Instagram and Twitter to reach customers, and suddenly needed tools to level up their design
  2. Price: Canva launched with a freemium model, allowing most users to get started quickly at no cost
  3. Ease of use: Canva focused on building a template library (now with 800k+ templates) to make users’ lives easier

Today, Canva is being used to create 120 designs every second…

… and forcing Adobe to protect its throne. The design powerhouse launched Adobe Spark in 2016, which offers a similar template-driven approach with a freemium model.

Canva expects to use the new round to double headcount and possibly fuel acquisitions. The company is already profitable and has no plans to IPO.

Perkins also plans to give away most of her shares to charity because, in her words: “If the whole thing was about building wealth, that would be the most uninspiring thing I could possibly imagine.”

Now that’s one heck of a yearbook quote.

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SNIPPETS

Holiday shopping: Reports predict a 7%-9% increase in sales this holiday season as people feel more comfortable going out to stores. #ecommerce-retail

Shell says it’s building a biofuels plant in the Netherlands. It’ll make sustainable aviation fuel and renewable diesel. #clean-energy

AR trip: The Bethel Woods Center for the Arts hosted the OG Woodstock. Now, augmented reality is taking guests back to August 1969. #emerging-tech

Two internets? The New York Times explores how digital privacy is changing the internet, from paid subs to how things may look different for Apple and Google users. #privacy

Bitcoin machines in El Salvador burn as protestors against bitcoin as legal tender light them on fire. #fintech-cryptocurrency

Move over, Tesla: According to Bank of America, EV startup Lucid is the next big thing. #big-tech

Now on MFM: Immersive experiences, how to make money selling niche clothes directly to customers, and more. #mfm

Hollywood Drama
AT&T cartoon image

Christopher Nolan is leaving Warner Bros. — the latest domino to fall in AT&T’s streaming misadventures

You don’t have to unwind a Christopher Nolan time warp plot to get to the heart of this story.

Nolan, famed director of “Dunkirk” and “Inception,” is making his next movie with Universal Pictures, according to Deadline, ending a 19-year relationship with Warner Bros.

AT&T believed in streaming…

… so much so that leadership across AT&T and WarnerMedia decided to put all 2021 Warner Bros. movies on HBO Max at the same time as their theatrical release to boost subscribers.

Nolan wasn’t thrilled with the news, and replied with a devastating burn, saying:

Some of our industry’s biggest filmmakers and most important movie stars went to bed the night before thinking they were working for the greatest movie studio and woke up to find out they were working for the worst streaming service.

The HBO Max experiment has produced mixed results

  • The good: HBO and HBOMax added ~11m more US subscribers than last year by the end of Q2.
  • The bad: After “Godzilla vs. Kong” and “Mortal Kombat” produced solid showings, recent Warner Bros. films like “The Suicide Squad” ($26.5m debut) and “Malignant” ($5.6m debut) have bombed at the box office.
  • The ugly: Now, Nolan, whose films have grossed ~$5B worldwide, is taking his talent elsewhere.

His next flick (about J. Robert Oppenheimer and the A-bomb) might have been the blockbuster Warner Bros. needs… but perhaps not the one it deserves.

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Mobile Devices
Android vs iPhone

We asked readers: ‘iPhone or Android, and why?’ They had a lot to say.

Well, this was probably the most heated survey we’ve ever run.

Across 1.3k respondents, ~46% were Android users and ~54% were iPhone users.

One notable stat: 16.7% of the Android users said they have less respect for iPhone users while 27.2% of the iPhone users said the same about Android users. (Yikes.)

Which answers appeared the most?

Answers both for and against the “Apple ecosystem” accounted for ~62% of all responses.

The root word “ease” was included in 17.8% of all answers, and “custom” and “flexibility” appeared across ~10%.

Somewhat unsurprisingly, “cult” and “green texts” appeared in ~4% of answers.

Here’s what some folks had to say:

  • “I don’t wanna be the person in the group making texts green. No one likes that person.” — (Stuart from Cincinnati)
  • “It amuses me to be the ‘green bubble’ — it’s my favorite color afterall.” — (Mari from San Antonio)
  • “The iPhone speaks something that Android doesn’t: Culture.” — (David from San Juan)
  • “I’d prefer to have better technology at a better price rather than a mere symbol of how ‘cool’ I am.” — (Josh from Thibodaux)
  • “I love everything Apple, they can do no wrong.” — (Maggie from Toronto)
  • “I don’t join cults.” — (Jim from Nashua)
  • “The back button on Androids.” — (15 people)
  • “I switch every year so I know how to operate both phones.” — (Jorge from Caracas)
  • “Apple is a great brand, but doesn’t necessarily make better products.” — (Tiana from Detroit)

Thanks to all who answered, especially Simoné from Boston, whose response was too long to fit in this email — but unforgettable.

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AROUND THE WEB

🏟️ On this day: In 1961, Pittsburgh’s Civic Arena opened. Made of ~3k tons of Pittsburgh steel, it was the 1st sports stadium with a retractable roof.

🧑‍🍳 That’s cool: You’ve probably seen those simple cookbooks that churches, clubs, and schools sell for funding. This is the Nebraska company that publishes them.

📉 That’s interesting: The microCOVID Project is a tool that predicts how likely it is you’d encounter COVID depending on what you’re doing, where you are, who you’re with, and your vaccination status.

🧑‍💼 How to: How do you lead a company while still following your ethics? Consultant Michael Beer explains.

👂 Useful: Forvo helps you pronounce words in other languages, as pronounced and uploaded by native speakers. The database currently contains ~6m words in 430+ languages.

📺 Cure boredom: This retro TV player lets you watch countless programs from the ‘60s, ‘70s, ‘80s, ‘90s, and ‘00s. Just pick your year and click to change channels. Here’s the ‘90s.

IN CASE YOU MISSED IT

(A roundup of our best reads from the past couple weeks…)

Why most gas stations don’t make money from selling gas.

🦣 A company just raised $15m to ‘resurrect’ woolly mammoths.

📊Visualized: The United States of pumpkin spice, and RVs are flying off the shelves.

🤵The family business that owns a share of the $7B James Bond franchise.

😓 Bezosism: The operating philosophy powering Amazon’s warehouses, explained.

Shower Thoughts
  1. “If you do a free online IQ test then pay to see the result, you’ve failed.”
  2. “Zoom has ended the idea of a snow day at school.”
  3. “The Simpson’s show has endured long enough to watch a different Treehouse of Horror episode each day in October.”
  4. “Samurai are considered cool even though they wear socks with sandals.”
  5. “75% of adults wear glasses or contact lenses. Humans having poor vision is a pretty big evolutionary flaw.”
via Reddit
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