Hi frens, 👋

Today I would like to introduce Jaryd. The machine behind How they Grow Newsletter.

How They Grow In-depth analyses on the growth of popular companies, including their early strategies, current tactics, and the business-building lessons we can learn from them. By Jaryd Hermann

I picked up on How They Grow, late last year & it quickly rose up to the top of my newsletter feeds. In a way, it is the sequel to many of my issues. I spend a lot of my time researching, talking to founders and thinking about the early-day growth and Jaryd does the same but for the later stages of a company’s life.

The synergy was so natural, so I tapped Jaryd today to tell us the Canva story. From the very early days until yesterday

Jaryd, over to you!
—
By Jaryd Hermann

I love writing and going down all sorts of research rabbit holes, and my newsletter How They Grow allows me to do a lot of that while also learning from the best companies out there. It’s been a blast, and thank you so much for the kind words that let me know you’re enjoying it too. For instance, “Dude I’m only half way thru your OpenAI deep dive and I have like 10 tabs open to read for later — this is amazing”. You know who you are, thank you…

Now, depending on how long you’ve been reading my stuff, you may have noticed this newsletter allows me to do something else I really love…

Design!

When there’s a visual I want to include in a post (e.g a timeline, market map, biz model, or flywheel) I get all giddy inside because design is just one of those things that I enjoy doing probably a lot more than I should. But, I’m no designer. And I think I’d be deeply lost in tools made for designers (i.e the Adobe stuff) — and if that’s all that was available, you’d have a lot less/worse graphics in these deep dives.

So, today, we’re going to look at the company that makes design easy and accessible to over 100M people. The startup that kicked the latest evolutionary stage of design from complex desktop publishing tools to simple web publishing tools in motion — finding an extremely value gap in the $128b design services market. The startup from down under that makes me, mom-and-pops’, and people from Fortune 500 companies happy every week. Today, we’re going deep on Canva.

Alrighty, here’s what to expect today:

• How Canva started

• Canva’s early growth and GTM strategy → from 0 their first 150k users

• How Canva drives their growth today → from 150K to +100M users

Let’s get right to it. 🎨

NB: If you’re reading this in your email right now, click to read the full thing 👇

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How They Started

Canva is in the business of making the world a better looking place. And they’re doing it by breaking down the walled gardens of design and making it possible for everyday folks to create things that look good and get the job done.

Design is all around us…but before Canva came along the status quo was either hire a designer, or bushwhack your way to a graphic yourself…usually hurting many eyes along the way.

And then Melanie Perkins, Cliff Obrecht, and Cameron Adams came along in 2013 with their free-to-use, do-it-yourself design platform with everything “lowercase d” designers could ever need. Like an intuitive UI that doesn’t scare people away, simple and powerful tools that don’t require any training, and beautiful templates to get the ball rolling. Plus, it was brought online into the browser…no more downloads/licenses/updates.

We now live in a world where there isn’t really an excuse for poor design.

But 17 years ago, it wasn’t so obvious to most people that we’d get here. In 2006, Melanie Perkins had a big vision for the future of design: “to take the entire design ecosystem, integrate it into one page, and then make it accessible to the whole world”.

That’s a big vision for a big market, but 100s of VC’s turned it down.

So let’s take a look at how Canva broke into the world of Adobe and Microsoft and got to work on Melanie’s huge goal for the future of design.

Big dreams (mostly) start small

It all started in Perth, at the University of Western Australia.

It was 2006, and Melanie Perkins was working her side hustle of teaching other students basic design on programs like InDesign and Photoshop. Being hands-on with students regularly, she soon identified a pattern. People who had no interest in being designers by trade found the platforms available hard and unnecessarily infuriating to learn. And like most founding stories go… she felt there must be a better way.

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.

Desktop design tools seemed excessively difficult and it seemed crazy they were desktop based.

People would have to spend an entire semester learning where the buttons were, and that seemed completely ridiculous. I thought that in the future, it was all going to be online and collaborative and much, much simpler than these really hard tools.

— Melanie Perkins, Co-Founder and CEO

She recalls the process of designing and printing a poster — composing it in Photoshop or Word, converting to the right size and saving as a PDF, then going to a store to print. It all seemed cumbersome and unnecessary in the age of the internet.

💡Wouldn’t it be much better to do it all in one place with one online tool?💡

The idea of making design really simple was born. And although this pitch deck would not come for another few years, these two slides sum up how Melanie was thinking about where design was going, and how her big idea would fit in.

The problem felt so obvious, and she feared if she didn’t move fast someone else would beat her to it.

So, Melanie and her boyfriend, Cliff Obrecht, decided the best way to move quickly on this ambitious idea and test the concept was to break it down and start small. Being at university and close to the lives of students, she knew there was one niche that was right there, and underserved — school yearbooks. Typically the responsibility of student volunteers, and typically a tedious process because of the learning curve of the design tools and all the steps to get from A to Z, they knew this was how to get their foot in the door.

So, they hired freelancers to help them build the site, dubbed in Fusion Books, and spun up their operation (including printing) in Melanie’s mom’s lounge. This initial pre-Canva product allowed students and schools to create their own yearbooks with simple drag and drop tools, and offered a library of customizable templates. While tightly focused on a very specific niche and use case — this concept became the core of Canva.

And from here, Melanie and Cliff got their first customers for Fusion Books with boots-on-the-ground tactics — tapping into their student network and good-ol’ direct mail and phone calls.

We experimented with direct mail campaigns to schools around Australia. Our families helped us to fold every letter, stuff every envelope and stick and lick the post-stamps. It was all very manual, but we learnt the ropes and got to learn about running and growing a business, developing software and marketing. Importantly, we learned the fundamentals of how to create a product that provides enough value that people are happy to pay for it.

But were trying everything we knew how in order to find our customers. We flew over to attend an education expo in Sydney, there were more exhibitors than attendees so that was definitely a flop!

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.

— Melanie Perkins

But Melanie knew this wasn’t going to be the industry changing business she envisioned. How could it be when yearbooks happen only once a year and your total market demand is basically capped. Still, this very early concept got to the core problem they wanted to solve — easy online design — and they were very close to their customers. So they leaned into it to learn as much as they could.

And Fusion Books grew into a nice lifestyle business. Surprisingly, it wasn’t until 4 years later that they starting getting closer to democratizing design for all.

It was 2011 when Melanie spotted the narrowest of opportunities. Bill Tai, a Silicon Valley VC, was in Perth to judge a startup competition and get some kitesurfing in. They approached him after the event for a quick chat. Bill liked what they were putting down and invited them to San Francisco to pitch the idea.

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.

We didn’t really make a conscious choice between being bootstrapped or being funded. We bootstrapped because that was the only thing we knew when we started and we pursued funding because it seemed like the only feasible path to truly pursue our vision and build out ‘the future of publishing’.

— Melanie Perkins

A few months later, after anxiously figuring things out in Perth and preparing for the world of venture capital — she flew to SF to meet Bill.

In short, there was a very messy middle between flying to the states and eventually raising money and launching Canva. She was met with a lot of rejection, and it wasn’t before she recruited their technical co-founder, Cameron Adams, that they managed to raise a seed round of $3M.

And on the 28th June 2012, Melanie, Cliff, and Cameron founded Canva. With a fresh new entity, cash in the bank, and a founding team — they were ready to get to work on changing how the world would design things.

Let’s see how they did it.

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Canva’s early growth and GTM strategy

We’ll start off by looking at Canva’s go-to-market strategy, covering an important concept in GTM motions that comes from WW2— the beachhead. 🪖 The tactics we’ll look at here got them some pretty incredible growth, and give us some great lessons for builders.

We’ll then look beyond their GTM and unpack Canva’s current drivers of growth, the stuff that brings them +100% annual growth across a variety of their key metrics.

Canva’s path to 150K users

To make sense of Canva’s approach to breaking into the market, let’s first look at a concept I came across while reading Geoffrey Moore’s iconic business book, “Crossing The Chasm: Marketing and Selling High-Tech Products to Mainstream Customers”.

We’ll kick it off with this visual…

On the far left, you’ll notice the smaller chasm. This first market hurdle is where a new product has to translate its idea into something beneficial and usable to people beyond a small group of die hard tech enthusiast — known as innovators. These are the people that will just try just about anything as long as it has something novel to it and they like what it stands for. They don’t care for bugs and will tolerate all sorts of product issues that the rest of the market won’t.

The key to getting beyond the enthusiasts and winning over a visionary [Early Adopters] is to show that the new technology enables some strategic leap forward, something never before possible, which has an intrinsic value and appeal to the non-technologist.

― Geoffrey A. Moore, Crossing the Chasm: Marketing and Selling Disruptive Products to Mainstream Customers

Then there is the big scary chasm. This is the main chasm the book focuses on, and it’s where startups often die in their journey to going mainstream.

And as the graphic above shows, it represents the big gap between two distinct markets:

1. Early market adopters and insiders → “Visionaries. The people who are quick to appreciate the benefits of a new product as long as it has utility and works.

2. Mainstream market → “Pragmatists”. The people who want to benefit from new tech but don’t want to “experience” the growing pains of it.

Trying to cross the chasm without taking a niche market approach is like trying to light a fire without kindling.

— Geoffrey A. Moore, Crossing the Chasm: Marketing and Selling High-Tech Products to Mainstream Customers

Finding a beachhead

In other words, the key to crossing the chasm is positioning and securing a “beachhead” in a mainstream market.

Okay, what’s a beachhead though?

Simply put, your beachhead is the smallest customer segment you can target that serves as a point of attack into the main market you want to break into. This niche has a set of characteristics that make it an ideal place to focus your initial effort.

While I learned about it in Geoffrey’s book — the idea actually goes back to WW2.

It’s a military strategy that advocates that, as you are approaching an enemy territory, you should plan and focus all your resources on winning a small border area that becomes a stronghold area from which to advance into the enemy territory.

The term references the 1944 invasion of Normandy where allied troops focused their attention on the Normandy beaches, which they used to stage a counter-invasion of Europe and win the Second World War.

— via Corporate Financial Institue

To illustrate…

And the strategy can be summarized like this:

1. Select your beachhead (Who is our target customer?): The idea is not to focus on a target market or target segment, but rather on a target customer you can access — AKA your High Expectation Customer (HXC). This is how you keep it super narrow and specific. A great example of a company we looked at that did this was Superhuman. You can learn more about how to tactically find your HXF here.
   And an important note…bigger niches are almost never better than smaller ones. According to the Geoffrey Moore, “the only time when a niche is too small is if it’s too small to generate half of next year’s sales”.
   

2. Get your product offer right for them (Why are they selecting our product over competition?): The key difference between early and mainstream markets is that the former are willing to take responsibility for piecing together the whole product… the latter are not.
   What you want to do is (1) get your value proposition right, and (2) develop a whole product, which solves all problems for a niche, then go from there. It’s about being laser focused on the customer and the product they need.

3. Nail your distribution (What channels are we going to use to reach these customers?): Figure out the best way to reach this segment. Find out where they’re hanging out (think online and offline) and meet them where they are.

4. Push into your next wave of target customers (How does this initial customer group help us get to the rest of the market?): Once you’ve got your foot in the door (AKA your wedge), use that leverage and push onwards.

And while Crossing the Chasm came out in 1991, that same year…another person was centering their strategy around the same principle. Only the mind behind what’s now the most valuable company on the planet.

Taking a page from Steve Jobs’ → finding their niche

If there’s one suggestion I ever make that you take seriously, I hope it’s this one.

Watch this video by Steve Jobs talking about his strategy for NeXT computers — he articulates this idea of a beachhead so perfectly, plus it’s an 18 minute masterclass on clarity and strategic communication. To me, this sits at the heart of not just go-to-markets, but marketing.

And as we bring this quick theory session back to Canva-specifics — we’ll see they did exactly this.

At the most zoomed out level — Melanie and Cliff knew there was this massive, growing, and underserved market of amateur/consumer designs. And as we covered earlier, they picked designers of school year books as their beachhead.

Fusion Books (a super niche product) then transformed into Canva (a much more widely applicable tool). This approach helped them form a much deeper understanding of their target audience and their Job-To-Be-Done — helping them craft a better product.

And with the earliest version of Canva, equipped with a more finessed whole product, we can see they pushed a bit further into the mainstream market they were after.

But that middle segment (consumer designers) isn’t exactly niche. In fact, it’s massive. So, they narrowed it down to a specific use case — people needing to make content for Facebook. And more specifically, social media marketers and bloggers who needed to create lots of beautiful visual content but didn’t necessarily have any design experience. In 2013, small businesses were flocking to FB, and they needed professional-looking graphics like cover photos, flyers, social posts, event banners, etc. Canva identified this trend/problem and saw how they could position their product to easily appeal to this slice of the market and solve this huge pain point.

So, going back to our theory from above — #1, “Select your beachhead” — we know who they targeted and why. But, how did they actually acquire their first customers?

Let’s investigate.

Leveraging communities for feedback and distribution.

Canva started out in a private beta and used waitlists to control onboarding and build up demand. And before releasing publicly, they had over 50K people waiting to get access.

How?

The main thing they did was generate buzz within the design community and adjacent groups needing design help. Melanie and Cliff chased press, and reached out to blogs, podcasts, and conferences to offer “early access” to their audiences.

And anyone on the waitlist who tweeted about Canva usually onboarded immediately. This pushed Canva’s name further and drummed up more hype.

Taking a more gradual ramp up with waitlists is a highly effective strategy (tactics outlined here in our Superhuman deep dive) — and this closed beta allowed the team to run a tight feedback cycle and iterate on the product before the next bigger wave of customers were given access.

Once we identified the problem we wanted to solve, we then broke it down into more tangible goals. We listened to and worked closely with our community to build a product they wanted, felt empowered by, and loved using to reach their goals.

— Camera Adams, Co-founder and Chief Product Officer

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Watching users, removing friction, and showing people how to use the product

Towards their goal of launching a whole product that people loved using, Canva spent a lot of time user testing during the pre-release period (via usertesting.com). This turned out to be key to unlocking their early growth— because they found a pretty significant issue. Their target customers who had never used any design software before “were scared to touch buttons”.

It became quickly apparent that it was not just the tools themselves that were preventing people from creating great designs, but also people’s own belief that they can’t design.

Users were scared to click much and when they did they wandered around aimlessly, struggled with a few things, created something that looked pretty average and then left feeling dejected. Not quite the fun journey we were hoping for users to experience.

In order for Canva to take off — we had to get every person who came into our product to have a great experience in a couple of minutes. We needed to change their own self belief about their design abilities, we needed to give them design needs and we needed to make them feel happy and confident clicking around. We needed to get them to explore and play in Canva. No short order! So we spent months perfecting the onboarding experience paying particular attention to users’ emotional journey.

— MP

So, to boost confidence, new users went through a “how-to” guide before entering the product. Canva also built very basic starter challenges, like changing the color of a circle or adding a hat to a monkey - which helped users get familiar with the platform. “We continuously refined the experience until we got it to a point that people could jump in, and within five minutes had designed something,” says Perkins.

This is a great example of how focusing on the customer and their experience is key to kickstarting growth. Get rid of the friction!

Ok, so following our beachhead framework here, that’s how Canva did #2, “Get your product offer right for them” ✅. And below, we can also see how Canva ticked off #3 “Nail your distribution”.

Focusing on a use case that was inherently viral

The niche use case that Canva picked for their GTM was designs for Facebook — this was tactically brilliant because at the time, FB was a great distribution channel to get Canva designs in front of as many people as possible.

The Facebook templates drove referrals as users invited their colleagues to collaborate. It also drove word of mouth because when people posted a Canva graphic on Facebook, others would ask how they made it.

Plus, Canva made it super easy for users to share the design (with one click) on Pinterest, Facebook, and Twitter. By doing this, a small number of users opened up a much larger audience.

This graphic from Canva’s seed deck illustrates this strategy perfectly.

Another example of this was how Canva leaned into a seasonal trend — holiday cards. For their first holiday season, they collaborated with artists to create 30+ templates for digital cards. Most were distributed via Facebook and email, which again funneled users back to Canva.

And the most important fuel to Canva’s early growth was much simpler than all of this. People are inherently proud of their creations. Canva allowed people to create, and word of mouth organically drove a ton of growth.

Leveraging social proof vs paid advertising

These early adopters became Canva’s growth engine by sharing their designs with their friends.

Social currency in the sense of our community has always been incredibly valuable for us. More than 10 million people use Canva in 179 countries, and much of that growth has come through word of mouth and our users sharing about us.

— MP

Lots of startups looking to kickstart growth go straight to paid advertising, but besides hurting the bank, there’s diminishing returns when it comes to growth via ad dollars. As Reid DeRamus explains:

It’s important to note that paid ads are often not the best way to drive growth early on. Like many other types of investments, investing in paid ads and marketing typically work best to accelerate growth. If it feels like you’re pushing a boulder up the hill, it’s probably best to avoid paid ads. But if it feels like the wind is at your back — your product is in a good spot, you’ve found your audience, and you’re experiencing solid organic growth — paid ads can be a great way to amplify growth.

— Reid DeRamus (Growth at Substack), via Driving Growth with Paid Ads

Ditto.

I’m a strong believer that in most cases, you want to get a sustainable engine of growth working before leaning into paid advertising. Not only because it’s “free” growth that compounds on itself, but because it’s a signal that you have PMF. People don’t expend their valuable social credibility telling people about stuff they don’t like.

That being said, while word of mouth is great (and often conflated with viral growth), Ben Thompson raises an interesting point:

The problem with a word-of-mouth business and exponential growth is people run out of people to talk to.

That’s the limiting factor. There’s a little bit of exponential with every new subscriber, because they will tell new people, but networks get exhausted.

— Ben Thompson, via Acquired Podcast

Okay, we’re at the point in Canva’s growth story where what they did next, I would have typically dubbed viral growth. Except, if I called it that, I think I’d be wrong… 😬

Lenny Rachitsky wrote a piece recently that changed my view on what is “viral” — or rather, what isn’t. Let’s take a quick look, and then see how it applies to Canva.

One-to-many broadcasts, AKA Canva’s turbo boosts

Over the holiday break I was reading Hit Makers by Derek Thompson and one of the chapters forever changed the way I think about growth. […]

One of his most surprising findings (at least for me) was that going “viral” is mostly a myth. We think that products often grow through friends telling friends, who tell more friends, and this cascades to so-called viral growth. It turns out this is almost never how products grow. Instead, products explode in popularity when someone (or a few someones) with a large platform shares the product with their audience.

Here’s Derek Thompson describing this phenomenon:

People are social creatures—they talk, they share, they pass things along. But unlike with an actual virus, a person chooses to be infected by an idea, and most people who confront any given thing don’t pass it along. Viral diseases tend to spread slowly, steadily, across many generations of infection. But information cascades are the opposite: They tend to spread in short bursts and die quickly.

The gospel of virality has convinced some marketers that the only way that things become popular these days is by buzz and viral spread. But these marketers vastly overestimate the reliable power of word of mouth. Much of what outsiders call virality is really a function of what one might call ‘dark broadcasters’—people or companies distributing information to many viewers at once, but whose influence isn’t always visible to people outside of the network.

— Virality is a myth (mostly), Lenny Rachitsky

In his post, Lenny goes on to argue that what we usually think is “viral” hardly ever is. Most things aren’t actually driven by “many people telling many other people”. Rather, it’s the result of someone with a large audience broadcasting it (i.e. one-to-many). Derek Thompson gives this example in his book:

Imagine you go to work on a Monday and a coworker tells you about a new guacamole recipe she read in the New York Times. Several hours later, you go to lunch with another coworker, who asks if you’ve heard about the new guacamole recipe he read about in the  New York Times. After work, you go home to your spouse, whose coworker evangelized a new guacamole recipe she found in the New York Times. The common observation is: “The  Times article about guacamole went absolutely viral.” But the truer observation is that the article didn’t go viral in any meaningful sense of the word. It reached a lot of people who read the recipe section of a large international newspaper, and a few of them talked about it.

That being said, Lenny notes that optimizing for viral engines like word of mouth is still important, and to kickstart (and restart) things like word of mouth you need to invest in large one-to-many broadcasts (i.e press, influencers, big ads).

Now, bringing this quick theory interlude back Canva.

• Canva continued to invest in mechanisms of virality — like one-click sharing of designs to social media, referrals, and generally building a great/easy-to-use product people wanted to talk about.

• But, they also invested in a strategy of driving growth via one-to-many broadcasts. This kept adding various turbo boosts (i.e one-off events that accelerate growth temporarily but don’t last) to their word of mouth engine.

According to Lenny and Dan Hockeinmeir who created the Racecar Growth Framework —there are 10 different kinds of turbo boosts.

Let’s look a bit closer at the turbo boosts they used to keep throwing logs on their WoM fire. 🔥

• Getting influencers to mention them (#4):

  • Canva teamed up with tech influencer Guy Kawasaki. He was known for his credibility in the industry with previous roles at Apple, Motorola and Google, and it was only a matter of time before he’d position Canva in the same league. He helped them triple their users in just two months. But more importantly, Guy became the “Chief Evangelist of Canva” — continuously recommending Canva to his network of millions. On top of this they regularly got tweets and shoutouts from their investors and other big names.

• Getting PR (#1):

  • Melanie and Cliff worked actively to get Canva’s story in front of huge publications during their early days, like TechCrunch.

• Creating viral content / marketing campaign (#2 and #5)

  • They created an aspirational launch video to help spread the word, putting some ad dollars behind it to make it a widespread awareness campaign.

• Going on podcasts/TV (#10)

  • Melanie and Cliff constantly reached out to podcasts to get the Canva name out there, from doing features on episodes to sponsoring some ads.

And that’s how Canva kickstarted their early growth and built up and impressive 150K in less than 24 months. 8 years later, they’ve almost 1000X that. How? 👇

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How Canva grows today

As far as I can tell — there are 4 main forces behind this:

• Product-led growth (PLG)

• Later adding on a sales-led motion to move upstream (SLG)

• Using content and winning SEO via backlinks

• Localizing and partnering to expand geographically

Today we will only go deep on PLG, since (1) it’s the core driver of Canva’s growth, (2) it’s one of the most important for a B2C SaaS company, and (3) there are a lot of brass tacks building lessons to learn here. We’ll lightly touch on the rest.

Canva’s deep PLG iceberg

We live in the era of product-led growth. Whether it means creating top of the funnel (ToFu) through virality, guiding users through their activation and engagement journeys, or taking the first steps in an assisted sale, at product led growth companies, the product is the lead actor, and sales, marketing, and engineering are the supporting cast.

— Rahul Krishnan, Arjun Rakesh, and Ruchin Kulkarni, via Top of The Lyne

In other words — PLG is a growth model where product usage drives customer acquisition, retention, and expansion. It’s a strategy where the product takes center stage and converts users into paying customers (vs sales or marketing). And for consumers businesses, where each individual person is a decision maker, PLG is really the most effective way to onboard and convert them. A normal sales process just isn’t feasible.

Canva is a brilliant example of a company that understands how to turn users into product-qualified leads (PQLs), which is great for growth since PQLs convert to paid customers on average 25% of the time.

Now, before you get users whipping out their cards…first things first.

When somebody is considering a new product, the very first thing they think about, whether they know it or not, is “how does this product help me solve this problem I have?”.

The problem could be an aspirational one (i.e the desire to feel fancy), or a practical one (i.e I need to drill this hole). If that answer is hard to find or poorly communicated, everything else inside the product doesn’t really matter, because nobody will care to get there.

Analogy time.

Think of it like an iceberg. [Let me run over to Canva to illustrate 🧑‍🎨]

Layer 1 and layer 2 are the easy-to-see showstoppers. It’s what will visibly causes a PLG company to fail, and it’s essential to have right if this is how a company is choosing to grow. That’s why most PLG companies end up getting this right. Every single iceberg (even a baby one) has a tip.

But layer 3 and onwards are not technically essential and are harder to perfect. But the companies that do nail each layer become bigger and more formidable icebergs — meaning they will stick around for a lot longer. And this depth is what will sink competitors passing through. 🚢

Running with our iceberg analogy (which as far as I can tell we just invented here 🤘), upon closer investigation we can see Canva is doing every single layer extremely well.

The tip → Communicating their value (L1 and L2)

If I Googled something like “how to make a logo”, I’d quickly find myself on this page.

Dead simple, and super clear that Canva solves this problem for me. And Canva has tons of search optimized landing pages for the breadth of problems they solve for consumer designers.

Each page is personalized for the specific use case, and touches on specific value points that somebody considering designing, say, a resume will be thinking.

And given Canva is free to use — this makes the decision easy to move along.

Going deeper along the PLG iceberg….

Removing friction during onboarding (L3)

Canva’s onboarding is seamless. They use single-sign on (i.e Google, FB) to make creating an account simple, and based on the landing page you’re coming from they bake in a lot of context around why you’re joining Canva.

Then, with just a few easy questions — they suggest templates that will help you get the job done as quickly as possible (moving you closer to that Aha! moment).

All in, getting from a landing page into the product, and having a working canvas to start your design, takes less than a minute This makes Canva extremely easy to try, with literally no risk.

But onboarding goes beyond just the browser. For example, if you haven’t taken an action within an hour of signing up, you get an email with the subject “Design? You can do that.”

After a user gets the first welcome email, if they haven’t clicked on the ‘get started’ button, they get some helpful and concise content to encourage that first action. And once the user has activated (started their first design) — Canva sends out weekly newsletters that cover things like: new templates, how to create on-trend designs, new features, and the beginning of their upsell with the benefits of Canva Pro.

Canva keeps their marketing material practical — focusing on educating vs selling.

Simply, because education brings users close to value, and repeat value.

Value discovery and Aha! moments (L4 and L5)

Canva’s whole shtick is that it’s the easiest design tool, period.

And it has to be if they’re on a mission to make design available to anyone.

The benefit of this is that they bring their learning curve way down. Education during onboarding can be friendly and more of a nudge, vs “documentation” and intense product tours that can be overwhelming.

If you’re downloading Adobe Illustrator, it’ll be far longer before you find yourself staring at a canvas you’re proud of.

Take a look:

Chalk and cheese.

Where the cheese here is clearly much less intimidating than traditional design software. Meaning the time to an end-product that makes people feel proud of themselves is orders of magnitude quicker.

As their CPO says, a key philosophy of theirs is “have great defaults”, and defaults along with a huge template library make learning much easier. This makes the early discovery of the tool quick, but still allows users to go deeper with functionality as they get more comfortable.

And when it takes just 20 minutes to make a logo vs 20 hours…people are likely to talk about it.

That’s the shareable Aha! moment

Aha! → again and again (L6)

But providing just one key value experience isn’t enough to build an enduring business against. You to deliver value over and over again  — and ideally, you’re not making that impossible by hiding your core product value behind a paywall.

Canva gives us a masterclass on how to do this. Again, they’re free-to-use. But their freemium product isn’t time based, and it’s not usage based (i.e you can only design 3 things). This gives people open road to keep coming into Canva and making unlimited designs, forming a habit around the tool. For a consumer business, this habit forming is really important.

But, how do they get people to keep coming back?

First, they cover a huge range of use cases. If you came for a logo, you may well stay for presentations and social media posts. And there’s a lot of sideways product marketing and education to get you trying new things in Canva. This makes them much more sticky because all your designs now live in one place.

Second, and this one is a biggie — Canva is vertically integrating the value chain of design.

Way back in 2006 when Melanie had the idea to make design easy, she wanted “to take the entire design ecosystem, integrate it into one page, and then make it accessible to the whole world”. This was framed well in their first investor deck.

They’ve executed on that vision. No more working across multiple tools and piecemealing your workflow together. Canva has made one place for everything, where they get to craft a perfect user experience. For instance:

• An integrated stock library — no more hopping around to Getty or Shutterstock.

• Tools to edit images and designs. If Canva doesn’t offer it natively, they have an app marketplace that covers a broad range of other use cases.

• On-demand printing — bringing your designs to your door, with free delivery.

• Sharing and collaborating — no more exporting and using tools like Drive of Dropbox.

And third, Canva is obsessed with listening to their users and evolving their product in response to their changing behaviors. Here’s their Chief Product Officer and co-founder, Cameron Adams, to show you how.

Building a good product or service is not a one-and-done effort. You need to be constantly listening to your community and coming up with new, imaginative ways of evolving your product or service to meet their needs (and defy their expectations).

Take what has happened over the last 2 years: the COVID-19 pandemic has totally changed the way we (and many others) do business forever. […]

We saw the world’s accelerated transition into a remote world of work as an opportunity to evolve our product to support our community. We noticed traditional ways of communicating and consuming information were changing, and teams and organizations were looking for more asynchronous tools to help facilitate communication, collaboration, and the breaking down of silos. We shifted all our time and energy into creating a suite of new workplace products and features such as Docs, Websites and Whiteboards, and features including Talking Presentations, real-time collaboration, comments and notifications to help them adapt to this new way of working.

So by (1) covering a ton of design use cases, (2) vertically integrating across all value stages, and (3) always evolving their product to meet users needs, they’ve created one very sticky ecosystem.

Now, what good is a sticky ecosystem if you’re not making money with it?

Monetization: Canva’s free → paid conversion strategy (L7)

Canva’s monetization strategy simple. Offer extensive free plans, help people see value upfront, and back the product to engage and retain people for long enough so they convert themselves into paid customers that are less likely to churn.

When going after a large total addressable market of consumers — free plans are a key acquisition strategy.

Once Canva has their engaged base of users set up, it’s then about segmenting them and finding the people that have a higher willingness to pay. From here, they can focus on delivering extra value to those segments. For example, they realized that SMB marketing teams were their sweet spot, turning their main Product-Led Sales playbook into a domino effect strategy (i.e converting individual users into teams). They lean into this by dropping well-placed paywalls on features like premium templates, brand guides, and advanced collaboration to nudge people using Canva on single-player mode to shift into multi-player mode.

Now, while they have paywalled features and obviously want as many people as possible subscribing —they do this very unobtrusively.

In an interview with Canva’s Product Growth Lead, he says that the main way they actually drive this segment of people to their premium offering is to “generally just let it happen”, because they’ve found that the people who use the product more frequently organically land on the paywalls sooner, have the highest conversion rate, and lowest churn rate.

He goes on to say:

The question is, how irreplaceable is your product before you add that friction [of a paywall]? A lot of companies tend to get that balance wrong because there is always this perceived need to add the paywall sooner and get 5% of user paying today, vs waiting 3 months and getting 10% of users converting later.

But this can be modeled out quantitatively — if users get paywalls to soon, maybe you can convert a fraction of them upfront and get that revenue now, but if you invest in making a habit out of them and delay that gratification to a point where the product is an integral part of their lives, and you let them arrive there organically after using the product more — a lot more users will opt into paying for your product.

— Anshul Patel, Product Growth Lead at Canva

A great example of another consumer app that nails this balance is Spotify, who has a 46% conversion rate. I remember when I switched over from Apple Music back in 2018. I was broke and was more than happy to stick to the free plan. At first, I was okay with only 6 skips an hour, or whatever it was. At first, the ads were peppered in occasionally. But as the weeks passed and Spotify became part of my everyday, the ads became more frequent and more annoying.

Eventually I paid. But if they’d made the free experience too gated (and therefore less enjoyable), I may well have churned.

Canva strikes this balance well. Most people who’ve never “designed” before would be very hesitant to pay too early. So Canva lets them build habits and backs the downstream conversion.

As an side: Canva has gradually also moved upstream, trying to get more enterprise customers. And with enterprises come sales people. This addition of a sales-led motion onto of a product-led one is very common. If you’re a PLG founder wondering what this might look like, there’s a podcast interview with John Eitel from Canva who gets into everything you need to know about adding a top-down motion to a bottom-up, product-led foundation.

And now we get to the deepest level of the iceberg — getting your users to bring you more users.

Creating a growth loop (L8)

We’ve spoken about word of mouth already and how Canva facilitates this with one-click publishing, etc. We’ve also just touched on teams…where there’s obviously an invite mechanism here. Both of those have a flywheel effect. But let’s look at something else in the works that Canva has setup. 🧐

At face value, you wouldn’t think Canva is a marketplace.

But under the hood, they’ve actually created a content marketplace that introduces a very neat flywheel unique to a marketplace business — supply driving demand.

We covered this in our deep dive on Etsy. Here’s an excerpt:

Etsy enabled their supply to drive demand — something many platforms and marketplaces, including DoorDash, Cameo, Behance, Product Hunt and Substack have done.

Sellers were doing their own grassroots marketing, and that became a big growth driver. Etsy pushed sellers to promote their shops to their communities in order to drive growth of their shops, which in turn drove growth of the marketplace overall.

—Nickey Skarstad and Dan McKinley

Note — regardless of the type of product or business, if you create a growth loop, you’ve got a sustainable engine to drive growth.

How Etsy Grows

While that visual is Etsy-specific, you can imagine it works them same way when pro designers can come in and list their templates/designs to make passive income.

And that’s the Canva PLG iceberg.

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To summarize some action items to help you get your own iceberg in motion, here is a great visual by Kyle Poyar, Partner an Open View and author of Growth Unhinged.

The next driving force behind Canva’s growth is content, which has helped them build “a backlink empire”.

Content and winning at SEO

Content is the foundation of customer acquisition. If you get content marketing working, then you are able to retarget people. You are able to build lookalike audiences on different channels. If you’re creating great content, it builds links, which brings your domain authority up.

You can write more content and then you can collect more emails and optimize your conversion rate from there, but everything starts with content first. Look at a lot of media companies – they’re building agency services divisions now. It’s easier to build an audience first, and then from there you can start to branch out into other areas.

— Eric Siu, CEO, Single Grain, Inside Intercom podcast

Canva is an excellent example of a company that’s used content marketing to build brand and drive real results using an inbound marketing funnel. At the heart of their strategy sits this quote by Silicon Valley marketer, Regis McKenna:

“The best marketing is education.”

All of Canva’s content is around helping users create better designs on Canva.

But content is a massive term. In our deep dive on Intercom where we looked closely at content-driven growth, I wrote this:

At the highest level — content can be broken up based on (1) what you’re trying to optimize for, and (2) how the content is getting created.

1. What: SEO value, or Virality.

2. How: Is your team creating it, or are users creating it?

Here is the landscape broken up into quadrants again.

Looking at where Canva sits in that quadrant, we can see that their content is created by employees and optimized for SEO.

This strategy, dubbed by Lenny Rachitsky, is called Editorially-Generated SEO-Optimized (EGSO). People on the Canva team create content with the goal of ranking higher for certain keywords. Besides Canva, this helps drives the growth of companies like Ahrefs, Intercom, and HubSpot.

And in short, Canva succeeds here by:

1. Creating value-adding content to help user build design skills (educate) and get the most out of the product;

2. Solution-focused SEO using a Jobs-To-Be-Done intent strategy (AKA Jobs-based marketing);

3. Building a scalable backlink program (driving domain authority) via active outreach

4. Staying on top of cultural trends and creating content to remain relevant

Strategy 1: Value-adding Content

All of Canva’s content — from their blog, articles, and design school — is focused on education, and either making people feel either more confident to create their first design, or inspiring them to develop their skills and push how they use the tool. This helps reduce friction in their market of “amateur/consumer designers) and build Canva’s brand.

The takeaway?

Get your content to:

• Help people get their desired job/task done better and faster

• Educate — help build skills

• Help people get more out of your product (maximize the value)

Strategy 2: Content that matches user intent

Simply, search intent is the purpose of a user’s search.

When you type something into search, Google makes assumptions about what you’re trying to find (your goal), and serves you what they think are the most relevant results.

And how well you understand search intent as part of your content strategy impacts your ability to rank and whether the people that come to your pages are satisfied with your content.

Canva uses a goal-related and solution focused keyword strategy for SEO. They focus on what their users are trying to achieve (i.e make a logo), and then connect them to a specific solution they're looking for on a dedicated landing page (i.e a free logo maker).

The keywords they use are all based on jobs you can accomplish with the product — paving the way for high conversion rates because they do an excellent job at bringing users to content that is super relevant.

Strategy 3: Building a backlink program

Backlinks are all the inbound links to your content. The more people that drop in URLs to your stuff, the higher you rank on search. But…

Getting backlinks doesn’t happen overnight.

It’s a process that requires long-term investment if you want it to pay dividends in organic traffic. The landing pages created by Canva to rank for transactional queries like “infographic maker” or “certificate templates” haven’t picked up all those backlinks by chance. Canva has intentionally invested in these pages to capture backlinks from third parties such as bloggers and journalists.

Canva has developed a team of outreach specialists who identify content that mentions things like “invitations,” “posters” or “digital marketing tools.” Then they reach out to the creators.

— Foundation Inc, The Canva Backlink Empire: How SEO, Outreach & Content Led To A $6B Valuation

☝️FYI, that’s a backlink I just gave — making that article more visible in search.

By being very intentional about getting more backlinks, Canva has come to dominate SEO.

Strategy 4: Staying on top of consumer trends

Canva creates content in response to new demand, keeping them relevant and always in the conversation, and creating new lead magnets around the zeitgeist.

The rise of remote work around the world led to a massive increase in the adoption of Zoom. Teleconferencing software was one of the most popular SaaS industries during the initial wave of COVID-19.

At first glance, it doesn’t seem like Canva would benefit much from the rise of telecommuting and remote work—but they did.

The increased demand for Zoom resulted in the increased demand for custom Zoom backgrounds. Take a look at this Google Trends track for the query “Zoom Background”:

When demand spiked, Canva reacted by developing a new vertical dedicated to Zoom backgrounds. They spun up new landing pages to match search intent, and they even went to Product Hunt to drum up some interest. How startup-like.

And that’s the high-level view of how Canva is using content and SEO to grow. The last driver of growth we’ll look at (very briefly) is how Canva is expanding internationally.

Going global → localization & partnerships

In the 5th edition of 5-Bit Friday’s, I wrote this while looking at the growth machine that is MrBeast (the worlds biggest content creator):

Cast the widest net, catch the most fish.

A large part of his success can be attributed to his global expansion strategy, which relies heavily on localization. Simply put, this is the process of tailoring content to the expectations, habits, and needs of a specific market. This can be anything from translating text into different languages to using culturally-relevant references and humor.

Localization doesn’t simply mean translating the words in your videos—it’s about understanding the nuances of different cultures and how to appeal to them. And it’s a strategy that has paid off big time for MrBeast.

Jimmy has localized this by creating separate channels for different languages.

MrBeast’s success story shows us that localization is a powerful tool for expanding the reach to foreign markets and driving global revenue. His empire has exponentially grown thanks to his ability to connect with international audiences on a local level.

When you create content that is relevant and relatable to your target audience, you build an emotional connection with them that goes beyond language barriers. You create a bond that can lead to lifelong customers and fans. The great thing about localization is that you don’t need to start from scratch in every market—you can adapt your existing content to fit the needs of different cultures.

— Phase, What Brands Can Learn About Global Reach from the Best-Paid YouTuber

With Canva, it’s very clear that international expansion is a key part of their growth. They’ve invested heavily in localization, as well as building in-country growth teams.

Today, they’re in 190 countries and the platform is available in 100 languages. And with each new country/language Canva focused on supporting, their total addressable market got bigger.

Here’s Cameron Adams talking about localization at Canva:

The first version of our product was something that we were proud of, but it was also only something that you could use if you spoke English. Something that played a massive role in our early growth was making Canva a tool that anyone in the world can pick up. This is often phrased in two different ways: internationalization and localization. Very broadly speaking, internationalization is about the nuts of bolts of offering your product in different languages, whereas localization is about making it appropriate for every users’ context and culture.

For us, it’s how we think about expanding into new global markets by building hyperlocal products — ones that are not only available in different languages but have culturally relevant and engaging features and content libraries that feel truly local. This creates a really powerful network effect where word-of-mouth and social sharing are some of our largest growth drivers, helping us build a strong community of Canva advocates across the globe — many of whom then create and grow build their own Canva communities.

Curious on how to start your own localization strategy? Check this out. 🌎

— Jaryd ✌️

Thank you Jaryd for an amazing breakdown of Canva.

You can find more of Jaryd’s writing on the growth models powering companies like OpenAI, Etsy and Stripe by subscribing to his weekly newsletter.

Until we meet next week,
Ali Abouelatta