1 00:00:03,760 --> 00:00:06,080 Speaker 1: From The Australian. He is was on the front. I'm 2 00:00:06,160 --> 00:00:12,719 Speaker 1: Claire Harvey. It's Thursday, April nine, twenty twenty six. Then 3 00:00:12,920 --> 00:00:16,560 Speaker 1: Roberts Smith will remain behind bars after he was arrested 4 00:00:16,600 --> 00:00:20,520 Speaker 1: on murder chargers. The VC Recipients lawyers didn't apply for 5 00:00:20,560 --> 00:00:24,320 Speaker 1: bail on Wednesday, meaning he'll be held on remand until 6 00:00:24,360 --> 00:00:29,960 Speaker 1: at least next Friday. Iranian civilians who were preparing for 7 00:00:30,000 --> 00:00:33,479 Speaker 1: further strikes by American forces now fear for their lives 8 00:00:33,560 --> 00:00:37,159 Speaker 1: under the regime after Iran and America agreed to a 9 00:00:37,240 --> 00:00:41,120 Speaker 1: two week ceasefire deal. That stories live right now at 10 00:00:41,159 --> 00:00:47,040 Speaker 1: the Australian dot Com dot a U. Australian design startup 11 00:00:47,240 --> 00:00:50,920 Speaker 1: Canva killed off graphic design as a career choice by 12 00:00:51,000 --> 00:00:56,000 Speaker 1: making everyone a designer. Now the ultimate disruptor is itself 13 00:00:56,080 --> 00:00:59,840 Speaker 1: being disrupted by the rise of vibe coding, where any 14 00:00:59,880 --> 00:01:04,800 Speaker 1: one can tell an AI tool to do something magical. Today. 15 00:01:05,160 --> 00:01:10,160 Speaker 1: Is Canva actually making money and can it survive this moment? 16 00:01:15,160 --> 00:01:18,680 Speaker 1: John Stenzel edits the list Australia's riches to fifty and 17 00:01:18,760 --> 00:01:21,480 Speaker 1: so he gets a great insight into what's really going 18 00:01:21,520 --> 00:01:24,560 Speaker 1: on at some of our most prominent companies. John, I 19 00:01:24,600 --> 00:01:27,080 Speaker 1: must admit I was kind of shocked to read a 20 00:01:27,160 --> 00:01:30,200 Speaker 1: story by you that said that Canva is not really 21 00:01:30,240 --> 00:01:33,520 Speaker 1: as profitable as we might think, and there's some technical 22 00:01:33,560 --> 00:01:36,679 Speaker 1: differences here. But first, just give me the big picture. 23 00:01:37,040 --> 00:01:38,720 Speaker 1: Is Canvas making a profit or not? 24 00:01:39,480 --> 00:01:41,720 Speaker 2: Well, you don't really want to get into gap accounting 25 00:01:41,720 --> 00:01:44,080 Speaker 2: and other various measurements because we'll be here all day 26 00:01:44,080 --> 00:01:46,080 Speaker 2: and I think they're listening smoke a little bit bored. 27 00:01:46,120 --> 00:01:48,600 Speaker 2: But yeah, absolutely, Look, it all depends on whether you 28 00:01:48,600 --> 00:01:50,960 Speaker 2: want to do it by the general accounting principles that 29 00:01:51,000 --> 00:01:52,920 Speaker 2: all the companies have got to use here in Australia, 30 00:01:53,320 --> 00:01:55,800 Speaker 2: whether you're talking whether they're cash flow cash flow profitable 31 00:01:55,880 --> 00:01:58,000 Speaker 2: or not so. In the latter which is offered a 32 00:01:58,040 --> 00:02:00,920 Speaker 2: measurement of how tech companies do these things. Now, the 33 00:02:00,920 --> 00:02:03,320 Speaker 2: reason they do these things because it looks better that way, right, 34 00:02:03,520 --> 00:02:06,520 Speaker 2: and also because they pay their they pay their employees 35 00:02:06,520 --> 00:02:10,040 Speaker 2: and the way of attracting employees through stock based compensation, 36 00:02:10,200 --> 00:02:12,240 Speaker 2: which means that they effectively go, we'll pay you some 37 00:02:12,360 --> 00:02:14,440 Speaker 2: in cash, we'll pay you some in shares, and then 38 00:02:14,480 --> 00:02:16,720 Speaker 2: when those shares explode on the stock exchange, you'll make 39 00:02:16,760 --> 00:02:19,600 Speaker 2: lots of money as a result. Now there's an accounting 40 00:02:19,600 --> 00:02:22,639 Speaker 2: measurement where they've got to compensate that on the balance 41 00:02:22,680 --> 00:02:25,640 Speaker 2: sheet and it makes their profits look less. But they're 42 00:02:25,680 --> 00:02:28,520 Speaker 2: basically saying that we are making a lot of money, 43 00:02:28,960 --> 00:02:30,760 Speaker 2: just not in the standard ways that you think we 44 00:02:30,840 --> 00:02:32,920 Speaker 2: might be doing it. We're doing it through other ways. 45 00:02:33,040 --> 00:02:35,959 Speaker 2: So yes in a way, but no in another way. 46 00:02:36,200 --> 00:02:38,400 Speaker 1: Yeah, I guess the test for any business, whether it's 47 00:02:38,400 --> 00:02:40,919 Speaker 1: a fish and chip shop or a giant tech startup, 48 00:02:41,000 --> 00:02:43,120 Speaker 1: is do you have enough money to kind of reinvest 49 00:02:43,160 --> 00:02:46,160 Speaker 1: in things that you need to be buying? In canvas case, 50 00:02:46,200 --> 00:02:48,840 Speaker 1: it's doing a massive renovation on a big city building 51 00:02:48,880 --> 00:02:52,000 Speaker 1: in Sydney and it's buying all sorts of other companies, 52 00:02:52,440 --> 00:02:54,799 Speaker 1: does it have the cash on hand to do those things? 53 00:02:55,160 --> 00:02:57,960 Speaker 2: As of December thirty one, twenty twenty four, which is 54 00:02:58,000 --> 00:03:01,119 Speaker 2: the last time that these accounts Resting Lodge with Assex show. 55 00:03:01,520 --> 00:03:04,480 Speaker 2: By the way, they're about fifteen months late, so I'm 56 00:03:04,520 --> 00:03:06,840 Speaker 2: not sure what Daykiva is doing to get things on 57 00:03:06,919 --> 00:03:09,480 Speaker 2: it in on time. But anyway, they had about six 58 00:03:09,560 --> 00:03:13,200 Speaker 2: hundred ninety nine million dollars in cash on its balance sheet, 59 00:03:13,240 --> 00:03:14,799 Speaker 2: so yes, they do have a lot of cash. Now 60 00:03:14,800 --> 00:03:17,720 Speaker 2: they've raised cash from investors, they've got to use it 61 00:03:17,760 --> 00:03:20,200 Speaker 2: for certain things. They've made acquisitions, they are doing that 62 00:03:20,360 --> 00:03:23,720 Speaker 2: property renovation as you say, they are expanding globally, they 63 00:03:23,760 --> 00:03:26,079 Speaker 2: are hiring a lot more people, they're having to deal 64 00:03:26,080 --> 00:03:28,000 Speaker 2: with AI, so they do have a lot of cash. 65 00:03:28,520 --> 00:03:31,320 Speaker 2: Not necessarily profitable in a normal sense. 66 00:03:31,120 --> 00:03:40,119 Speaker 1: Though I use Canva every day, so do so many 67 00:03:40,120 --> 00:03:42,840 Speaker 1: people across the Australian economy and the world, of course, 68 00:03:42,880 --> 00:03:47,080 Speaker 1: and it's meant that a huge productivity advance is available 69 00:03:47,160 --> 00:03:49,280 Speaker 1: for people like me who are not graphic designers but 70 00:03:49,400 --> 00:03:52,280 Speaker 1: need to use kind of graphic design elements. They really 71 00:03:52,400 --> 00:03:56,280 Speaker 1: helped businesses like ours make a big productivity leap. They 72 00:03:56,320 --> 00:04:01,640 Speaker 1: also decimated the job market for graphic designers overall. Has 73 00:04:01,760 --> 00:04:03,640 Speaker 1: Candra in that way been a success. 74 00:04:04,000 --> 00:04:06,160 Speaker 2: It's incredible how popular it is around the world. So 75 00:04:06,200 --> 00:04:08,200 Speaker 2: they're saying now they've got more than two hundred and 76 00:04:08,240 --> 00:04:12,560 Speaker 2: sixty five million monthly active views, so it's huge. I mean, 77 00:04:12,560 --> 00:04:16,600 Speaker 2: can you imagine that's what ten times the population of Australia, right, 78 00:04:16,600 --> 00:04:19,560 Speaker 2: I mean, it's incredible this success story that an Australian 79 00:04:19,600 --> 00:04:23,159 Speaker 2: based business has become on a global basis and how 80 00:04:23,200 --> 00:04:25,640 Speaker 2: easy it has made things for a lot of people. 81 00:04:25,680 --> 00:04:27,800 Speaker 2: Now you know, it's constantly evolving. They're going to have 82 00:04:27,839 --> 00:04:30,560 Speaker 2: to deal with competition as time goes on. But yes, 83 00:04:30,640 --> 00:04:33,520 Speaker 2: from a user point of view, it's staggering how popular 84 00:04:33,960 --> 00:04:36,600 Speaker 2: this is a company that was founded by a couple 85 00:04:36,680 --> 00:04:39,800 Speaker 2: of young Australians in Melanie Perkins and ow husband Quiff 86 00:04:39,839 --> 00:04:42,000 Speaker 2: obrack in Camera Addams as well, who's still there and 87 00:04:42,040 --> 00:04:45,640 Speaker 2: they're all billionaires in our list, But just it's hard 88 00:04:45,680 --> 00:04:48,680 Speaker 2: to think of what else has become so popular from 89 00:04:48,680 --> 00:04:52,520 Speaker 2: Australia so quickly. Now, obviously the Internet helps things grow quickly, 90 00:04:53,000 --> 00:04:56,920 Speaker 2: but the ease of their products and the amount of 91 00:04:56,960 --> 00:04:59,640 Speaker 2: people that use them from primary school level up whatever 92 00:04:59,680 --> 00:05:03,000 Speaker 2: it is is incredible. I mean, the success that they 93 00:05:03,000 --> 00:05:05,200 Speaker 2: have made in such a quick time in that way 94 00:05:05,520 --> 00:05:07,840 Speaker 2: has not been replicated by any Australian business ever. 95 00:05:08,920 --> 00:05:11,520 Speaker 1: It started out with basically templates, So if you were 96 00:05:11,560 --> 00:05:14,000 Speaker 1: designing a social media post for your business or a 97 00:05:14,000 --> 00:05:17,520 Speaker 1: birthday invitation for your kids, canvas designers would have designed 98 00:05:17,520 --> 00:05:20,120 Speaker 1: a template for you that you could adjust moving things around. 99 00:05:20,320 --> 00:05:23,360 Speaker 1: Then they very quickly saw that they needed to incorporate 100 00:05:23,440 --> 00:05:27,400 Speaker 1: AI into their products and that meant buying other businesses 101 00:05:27,440 --> 00:05:29,640 Speaker 1: that could do AI kind of things that then they 102 00:05:29,680 --> 00:05:32,839 Speaker 1: incorporated into the platform. One of those was a video 103 00:05:32,880 --> 00:05:37,279 Speaker 1: generation platform called Leonardo. Has that been a good purchase. 104 00:05:37,600 --> 00:05:40,599 Speaker 2: It's an incredible platform or technology that Leonardo users, but 105 00:05:40,640 --> 00:05:42,400 Speaker 2: I think the jury is definitely still out on that. 106 00:05:42,520 --> 00:05:44,880 Speaker 2: So a couple of my colleagues, David Ross and Tanzi 107 00:05:44,920 --> 00:05:48,200 Speaker 2: Hardcore reported a little while ago, now, about a month 108 00:05:48,279 --> 00:05:51,960 Speaker 2: or so ago, that Leonardo's acquisition hasn't gone as well 109 00:05:52,360 --> 00:05:55,560 Speaker 2: as what the Canvas executives, the owners would have hoped to. 110 00:05:55,560 --> 00:05:57,200 Speaker 2: They paid about three undred and sevny million dollars for 111 00:05:57,240 --> 00:06:00,000 Speaker 2: this company that's based in North Sydney. There's been layoffs, 112 00:06:00,560 --> 00:06:03,320 Speaker 2: there's been I guess a sort of recalibration of the 113 00:06:03,360 --> 00:06:05,479 Speaker 2: staff that are in there. They've had to be sort 114 00:06:05,480 --> 00:06:07,680 Speaker 2: of put in other places in Canvas, just you know, 115 00:06:07,760 --> 00:06:11,440 Speaker 2: to say things quite simply. So I think that that 116 00:06:11,520 --> 00:06:14,400 Speaker 2: maybe that technology is probably ahead of what people or 117 00:06:14,400 --> 00:06:16,760 Speaker 2: consumers are able to use or able to pay for. 118 00:06:17,360 --> 00:06:20,880 Speaker 2: So in that way, I think it probably hasn't been 119 00:06:20,880 --> 00:06:24,360 Speaker 2: a success yet. Now look, I mean, corporate history is 120 00:06:24,360 --> 00:06:28,000 Speaker 2: littered with acquisitions that don't work, and I think in 121 00:06:28,000 --> 00:06:30,760 Speaker 2: this situation, the jury is I said, the jury is 122 00:06:30,800 --> 00:06:32,760 Speaker 2: still out as to whether Cliff and mill have been 123 00:06:32,760 --> 00:06:36,360 Speaker 2: able to pull off a successful acquisition and integrated into 124 00:06:36,360 --> 00:06:37,760 Speaker 2: what Canva already has. 125 00:06:38,360 --> 00:06:41,120 Speaker 1: It sort of failed to anticipate the rise of what 126 00:06:41,160 --> 00:06:44,040 Speaker 1: they now call vibe coding, where you can type into 127 00:06:44,120 --> 00:06:47,600 Speaker 1: an AI something like in language, make me a birthday 128 00:06:47,600 --> 00:06:50,760 Speaker 1: party invitation that includes unicorns and balloons for a seven 129 00:06:50,839 --> 00:06:53,599 Speaker 1: year old girl called Katie, you know, or make me 130 00:06:53,680 --> 00:06:56,240 Speaker 1: a social post that speaks to my business audience about 131 00:06:56,279 --> 00:06:58,880 Speaker 1: why my fish and chip shop is growing in all 132 00:06:58,880 --> 00:07:03,280 Speaker 1: the right directions. That's what Canva kind of failed to anticipate, 133 00:07:03,320 --> 00:07:05,360 Speaker 1: isn't it. It thought that people would want to keep 134 00:07:05,400 --> 00:07:07,760 Speaker 1: doing what they were already doing on Canva, which is 135 00:07:07,800 --> 00:07:12,200 Speaker 1: moving things around manually themselves, adjusting things, and not necessarily 136 00:07:12,240 --> 00:07:15,600 Speaker 1: going elsewhere for that product. Did they assume that they 137 00:07:15,920 --> 00:07:19,160 Speaker 1: kind of owned the idea of designing things yourself. 138 00:07:19,880 --> 00:07:22,360 Speaker 2: Look, I don't think anyone in the software industry would 139 00:07:22,360 --> 00:07:24,760 Speaker 2: have been the forecast how quickly AI has grown and 140 00:07:24,960 --> 00:07:29,120 Speaker 2: impacted on their business, right, I mean, for now Cliff 141 00:07:29,120 --> 00:07:32,120 Speaker 2: in particular, Cliffobreck has been pretty out there, pretty vivise 142 00:07:32,160 --> 00:07:35,000 Speaker 2: about that you're saying, Look, AI is really good for Canvas. 143 00:07:35,400 --> 00:07:38,040 Speaker 2: Canvas is actually a disruptor. Look we're fine. You know, 144 00:07:38,160 --> 00:07:40,400 Speaker 2: our valuations still hold up. You know, the sixty billion 145 00:07:40,440 --> 00:07:44,120 Speaker 2: dollars valuation for the company is still there. Now, I 146 00:07:44,120 --> 00:07:46,200 Speaker 2: think maybe you're going to say, Claire, that we've heard 147 00:07:46,240 --> 00:07:49,280 Speaker 2: this before. There's a notable company called Atlasian. It's boss 148 00:07:49,360 --> 00:07:52,520 Speaker 2: mar Cannon Books made similar noses about only a couple 149 00:07:52,560 --> 00:07:55,920 Speaker 2: of months ago before laying off sixteen hundred workers recently. 150 00:07:56,000 --> 00:07:59,440 Speaker 2: So look, no one knows. I think how quickly AI 151 00:07:59,600 --> 00:08:02,880 Speaker 2: is going to do disrupt companies that were already disruptors themselves. 152 00:08:02,920 --> 00:08:05,080 Speaker 2: Now for now they're saying that it's good for them. 153 00:08:05,400 --> 00:08:08,120 Speaker 2: They haven't gone public on a stock exchange yet. Now, 154 00:08:08,120 --> 00:08:11,520 Speaker 2: how quickly that happens. Better be later this year or 155 00:08:11,680 --> 00:08:15,240 Speaker 2: by next year, probably the latest. Maybe if that's delayed, 156 00:08:15,240 --> 00:08:17,160 Speaker 2: it probably shows that there is some more issues behind 157 00:08:17,160 --> 00:08:17,920 Speaker 2: the scenes that we know of. 158 00:08:25,480 --> 00:08:27,120 Speaker 1: It might be that I don't own any shares in 159 00:08:27,160 --> 00:08:29,280 Speaker 1: any of these companies myself, John, but I do kind 160 00:08:29,280 --> 00:08:32,600 Speaker 1: of enjoy the disruptors being disrupted so quickly. When we 161 00:08:32,679 --> 00:08:35,040 Speaker 1: had you on the front to talk about this year's edition, 162 00:08:35,200 --> 00:08:37,920 Speaker 1: off the list Australia's Riches two fifty. You made the 163 00:08:37,960 --> 00:08:41,320 Speaker 1: point that one of Atlassian's issues is that the market 164 00:08:41,400 --> 00:08:44,480 Speaker 1: is saying to at Lassian, now, you know, growth is great, 165 00:08:44,520 --> 00:08:46,400 Speaker 1: but we actually need you to make some profit in 166 00:08:46,440 --> 00:08:49,000 Speaker 1: a very kind of old fashioned way. I feel like 167 00:08:49,040 --> 00:08:52,120 Speaker 1: there's been an expectation with tech companies, maybe in the 168 00:08:52,160 --> 00:08:54,640 Speaker 1: past decade, that we understand that it takes a long 169 00:08:54,720 --> 00:08:56,800 Speaker 1: time to get to profitability, and what they do for 170 00:08:56,840 --> 00:08:58,720 Speaker 1: the first part of their life is just grow and 171 00:08:58,760 --> 00:09:00,680 Speaker 1: grow and grow. Is that changing? 172 00:09:01,240 --> 00:09:03,560 Speaker 2: Absolutely, It's all been about growth, and I think when 173 00:09:03,600 --> 00:09:07,199 Speaker 2: you go as it lastin has for fifteen years without 174 00:09:07,200 --> 00:09:09,480 Speaker 2: making a decent profit, then people are going to start 175 00:09:09,520 --> 00:09:12,280 Speaker 2: asking questions, particularly when that growth levels off. So if 176 00:09:12,320 --> 00:09:15,120 Speaker 2: you're not growing, you need to be managing your costs 177 00:09:15,120 --> 00:09:17,280 Speaker 2: accordingly and making that profit and giving some sort of 178 00:09:17,320 --> 00:09:19,280 Speaker 2: a return to share or is whether it's dividends or 179 00:09:19,760 --> 00:09:21,240 Speaker 2: what have you. So I think that's a very big 180 00:09:21,280 --> 00:09:23,679 Speaker 2: test for a company like Camba. Now they're claiming a 181 00:09:24,120 --> 00:09:27,680 Speaker 2: four billion dollars in US and your revenue forty percent 182 00:09:27,679 --> 00:09:30,120 Speaker 2: and your growth, so that growth is still there for them, 183 00:09:30,480 --> 00:09:32,200 Speaker 2: and whether that growth is going to be there for 184 00:09:32,280 --> 00:09:34,880 Speaker 2: them next year and the year after. I think, look, 185 00:09:34,920 --> 00:09:38,040 Speaker 2: you time will tell clearly, but it'll be a fascinating 186 00:09:38,080 --> 00:09:40,160 Speaker 2: perspectus if they do go public as to what that 187 00:09:41,080 --> 00:09:44,640 Speaker 2: shows has been happening more recently and more importantly, what 188 00:09:44,679 --> 00:09:46,400 Speaker 2: they're projecting in the next few years after. 189 00:09:47,160 --> 00:09:48,920 Speaker 1: Is there a lesson there? Do you think, John, if 190 00:09:48,960 --> 00:09:51,600 Speaker 1: you and I were starting a startup in our garage today, 191 00:09:52,320 --> 00:09:54,200 Speaker 1: would you be saying, look, we need to get to 192 00:09:54,240 --> 00:09:56,880 Speaker 1: profit faster than previously we might have thought we did. 193 00:09:56,920 --> 00:09:59,080 Speaker 2: Well they are with the company like at Lasting, for example, 194 00:09:59,200 --> 00:10:01,960 Speaker 2: was very profitable very early days until when Global on 195 00:10:02,000 --> 00:10:03,840 Speaker 2: the stock exchange point of view, went on the NASDEK 196 00:10:03,840 --> 00:10:07,000 Speaker 2: and then the spending, the stock based compensation and other 197 00:10:07,120 --> 00:10:10,080 Speaker 2: expenses kept going up and up and haven't and the 198 00:10:10,120 --> 00:10:12,160 Speaker 2: growth in revenue hasn't kept up. So yeah, I think 199 00:10:12,200 --> 00:10:15,320 Speaker 2: if you're going to be both high growth and decently 200 00:10:15,480 --> 00:10:17,760 Speaker 2: profitable in your early days from that garage startup, you'd 201 00:10:17,800 --> 00:10:19,760 Speaker 2: have the best of both worlds. Now, it's a very 202 00:10:19,760 --> 00:10:22,200 Speaker 2: hard thing to pull off, obviously, it really is. 203 00:10:22,520 --> 00:10:24,840 Speaker 1: I'm also kind of fearful that Canva might collapse, like 204 00:10:24,880 --> 00:10:25,760 Speaker 1: I really need it now. 205 00:10:26,040 --> 00:10:28,320 Speaker 2: I'm not sure it's collapsing. I think it's just a 206 00:10:28,360 --> 00:10:31,120 Speaker 2: matter of where it will be valuation and financially wise. 207 00:10:31,160 --> 00:10:42,400 Speaker 1: Really, John Stenzel, thank you very much. Thanks John Stenzel 208 00:10:42,640 --> 00:10:46,040 Speaker 1: edits the least Australia's Riches two fifty. You can check 209 00:10:46,040 --> 00:10:49,040 Speaker 1: out how the billionaires really make their money right now 210 00:10:49,160 --> 00:10:53,320 Speaker 1: at Riches two fifty dot com dot au that's richest. 211 00:10:53,440 --> 00:10:55,880 Speaker 1: Two five zero dot com dot Au