Speaker 1: From The Australian. He is was on the front. I'm
Speaker 1: Claire Harvey. It's Thursday, April nine, twenty twenty six. Then
Speaker 1: Roberts Smith will remain behind bars after he was arrested
Speaker 1: on murder chargers. The VC Recipients lawyers didn't apply for
Speaker 1: bail on Wednesday, meaning he'll be held on remand until
Speaker 1: at least next Friday. Iranian civilians who were preparing for
Speaker 1: further strikes by American forces now fear for their lives
Speaker 1: under the regime after Iran and America agreed to a
Speaker 1: two week ceasefire deal. That stories live right now at
Speaker 1: the Australian dot Com dot a U. Australian design startup
Speaker 1: Canva killed off graphic design as a career choice by
Speaker 1: making everyone a designer. Now the ultimate disruptor is itself
Speaker 1: being disrupted by the rise of vibe coding, where any
Speaker 1: one can tell an AI tool to do something magical. Today.
Speaker 1: Is Canva actually making money and can it survive this moment?
Speaker 1: John Stenzel edits the list Australia's riches to fifty and
Speaker 1: so he gets a great insight into what's really going
Speaker 1: on at some of our most prominent companies. John, I
Speaker 1: must admit I was kind of shocked to read a
Speaker 1: story by you that said that Canva is not really
Speaker 1: as profitable as we might think, and there's some technical
Speaker 1: differences here. But first, just give me the big picture.
Speaker 1: Is Canvas making a profit or not?
Speaker 2: Well, you don't really want to get into gap accounting
Speaker 2: and other various measurements because we'll be here all day
Speaker 2: and I think they're listening smoke a little bit bored.
Speaker 2: But yeah, absolutely, Look, it all depends on whether you
Speaker 2: want to do it by the general accounting principles that
Speaker 2: all the companies have got to use here in Australia,
Speaker 2: whether you're talking whether they're cash flow cash flow profitable
Speaker 2: or not so. In the latter which is offered a
Speaker 2: measurement of how tech companies do these things. Now, the
Speaker 2: reason they do these things because it looks better that way, right,
Speaker 2: and also because they pay their they pay their employees
Speaker 2: and the way of attracting employees through stock based compensation,
Speaker 2: which means that they effectively go, we'll pay you some
Speaker 2: in cash, we'll pay you some in shares, and then
Speaker 2: when those shares explode on the stock exchange, you'll make
Speaker 2: lots of money as a result. Now there's an accounting
Speaker 2: measurement where they've got to compensate that on the balance
Speaker 2: sheet and it makes their profits look less. But they're
Speaker 2: basically saying that we are making a lot of money,
Speaker 2: just not in the standard ways that you think we
Speaker 2: might be doing it. We're doing it through other ways.
Speaker 2: So yes in a way, but no in another way.
Speaker 1: Yeah, I guess the test for any business, whether it's
Speaker 1: a fish and chip shop or a giant tech startup,
Speaker 1: is do you have enough money to kind of reinvest
Speaker 1: in things that you need to be buying? In canvas case,
Speaker 1: it's doing a massive renovation on a big city building
Speaker 1: in Sydney and it's buying all sorts of other companies,
Speaker 1: does it have the cash on hand to do those things?
Speaker 2: As of December thirty one, twenty twenty four, which is
Speaker 2: the last time that these accounts Resting Lodge with Assex show.
Speaker 2: By the way, they're about fifteen months late, so I'm
Speaker 2: not sure what Daykiva is doing to get things on
Speaker 2: it in on time. But anyway, they had about six
Speaker 2: hundred ninety nine million dollars in cash on its balance sheet,
Speaker 2: so yes, they do have a lot of cash. Now
Speaker 2: they've raised cash from investors, they've got to use it
Speaker 2: for certain things. They've made acquisitions, they are doing that
Speaker 2: property renovation as you say, they are expanding globally, they
Speaker 2: are hiring a lot more people, they're having to deal
Speaker 2: with AI, so they do have a lot of cash.
Speaker 2: Not necessarily profitable in a normal sense.
Speaker 1: Though I use Canva every day, so do so many
Speaker 1: people across the Australian economy and the world, of course,
Speaker 1: and it's meant that a huge productivity advance is available
Speaker 1: for people like me who are not graphic designers but
Speaker 1: need to use kind of graphic design elements. They really
Speaker 1: helped businesses like ours make a big productivity leap. They
Speaker 1: also decimated the job market for graphic designers overall. Has
Speaker 1: Candra in that way been a success.
Speaker 2: It's incredible how popular it is around the world. So
Speaker 2: they're saying now they've got more than two hundred and
Speaker 2: sixty five million monthly active views, so it's huge. I mean,
Speaker 2: can you imagine that's what ten times the population of Australia, right,
Speaker 2: I mean, it's incredible this success story that an Australian
Speaker 2: based business has become on a global basis and how
Speaker 2: easy it has made things for a lot of people.
Speaker 2: Now you know, it's constantly evolving. They're going to have
Speaker 2: to deal with competition as time goes on. But yes,
Speaker 2: from a user point of view, it's staggering how popular
Speaker 2: this is a company that was founded by a couple
Speaker 2: of young Australians in Melanie Perkins and ow husband Quiff
Speaker 2: obrack in Camera Addams as well, who's still there and
Speaker 2: they're all billionaires in our list, But just it's hard
Speaker 2: to think of what else has become so popular from
Speaker 2: Australia so quickly. Now, obviously the Internet helps things grow quickly,
Speaker 2: but the ease of their products and the amount of
Speaker 2: people that use them from primary school level up whatever
Speaker 2: it is is incredible. I mean, the success that they
Speaker 2: have made in such a quick time in that way
Speaker 2: has not been replicated by any Australian business ever.
Speaker 1: It started out with basically templates, So if you were
Speaker 1: designing a social media post for your business or a
Speaker 1: birthday invitation for your kids, canvas designers would have designed
Speaker 1: a template for you that you could adjust moving things around.
Speaker 1: Then they very quickly saw that they needed to incorporate
Speaker 1: AI into their products and that meant buying other businesses
Speaker 1: that could do AI kind of things that then they
Speaker 1: incorporated into the platform. One of those was a video
Speaker 1: generation platform called Leonardo. Has that been a good purchase.
Speaker 2: It's an incredible platform or technology that Leonardo users, but
Speaker 2: I think the jury is definitely still out on that.
Speaker 2: So a couple of my colleagues, David Ross and Tanzi
Speaker 2: Hardcore reported a little while ago, now, about a month
Speaker 2: or so ago, that Leonardo's acquisition hasn't gone as well
Speaker 2: as what the Canvas executives, the owners would have hoped to.
Speaker 2: They paid about three undred and sevny million dollars for
Speaker 2: this company that's based in North Sydney. There's been layoffs,
Speaker 2: there's been I guess a sort of recalibration of the
Speaker 2: staff that are in there. They've had to be sort
Speaker 2: of put in other places in Canvas, just you know,
Speaker 2: to say things quite simply. So I think that that
Speaker 2: maybe that technology is probably ahead of what people or
Speaker 2: consumers are able to use or able to pay for.
Speaker 2: So in that way, I think it probably hasn't been
Speaker 2: a success yet. Now look, I mean, corporate history is
Speaker 2: littered with acquisitions that don't work, and I think in
Speaker 2: this situation, the jury is I said, the jury is
Speaker 2: still out as to whether Cliff and mill have been
Speaker 2: able to pull off a successful acquisition and integrated into
Speaker 2: what Canva already has.
Speaker 1: It sort of failed to anticipate the rise of what
Speaker 1: they now call vibe coding, where you can type into
Speaker 1: an AI something like in language, make me a birthday
Speaker 1: party invitation that includes unicorns and balloons for a seven
Speaker 1: year old girl called Katie, you know, or make me
Speaker 1: a social post that speaks to my business audience about
Speaker 1: why my fish and chip shop is growing in all
Speaker 1: the right directions. That's what Canva kind of failed to anticipate,
Speaker 1: isn't it. It thought that people would want to keep
Speaker 1: doing what they were already doing on Canva, which is
Speaker 1: moving things around manually themselves, adjusting things, and not necessarily
Speaker 1: going elsewhere for that product. Did they assume that they
Speaker 1: kind of owned the idea of designing things yourself.
Speaker 2: Look, I don't think anyone in the software industry would
Speaker 2: have been the forecast how quickly AI has grown and
Speaker 2: impacted on their business, right, I mean, for now Cliff
Speaker 2: in particular, Cliffobreck has been pretty out there, pretty vivise
Speaker 2: about that you're saying, Look, AI is really good for Canvas.
Speaker 2: Canvas is actually a disruptor. Look we're fine. You know,
Speaker 2: our valuations still hold up. You know, the sixty billion
Speaker 2: dollars valuation for the company is still there. Now, I
Speaker 2: think maybe you're going to say, Claire, that we've heard
Speaker 2: this before. There's a notable company called Atlasian. It's boss
Speaker 2: mar Cannon Books made similar noses about only a couple
Speaker 2: of months ago before laying off sixteen hundred workers recently.
Speaker 2: So look, no one knows. I think how quickly AI
Speaker 2: is going to do disrupt companies that were already disruptors themselves.
Speaker 2: Now for now they're saying that it's good for them.
Speaker 2: They haven't gone public on a stock exchange yet. Now,
Speaker 2: how quickly that happens. Better be later this year or
Speaker 2: by next year, probably the latest. Maybe if that's delayed,
Speaker 2: it probably shows that there is some more issues behind
Speaker 2: the scenes that we know of.
Speaker 1: It might be that I don't own any shares in
Speaker 1: any of these companies myself, John, but I do kind
Speaker 1: of enjoy the disruptors being disrupted so quickly. When we
Speaker 1: had you on the front to talk about this year's edition,
Speaker 1: off the list Australia's Riches two fifty. You made the
Speaker 1: point that one of Atlassian's issues is that the market
Speaker 1: is saying to at Lassian, now, you know, growth is great,
Speaker 1: but we actually need you to make some profit in
Speaker 1: a very kind of old fashioned way. I feel like
Speaker 1: there's been an expectation with tech companies, maybe in the
Speaker 1: past decade, that we understand that it takes a long
Speaker 1: time to get to profitability, and what they do for
Speaker 1: the first part of their life is just grow and
Speaker 1: grow and grow. Is that changing?
Speaker 2: Absolutely, It's all been about growth, and I think when
Speaker 2: you go as it lastin has for fifteen years without
Speaker 2: making a decent profit, then people are going to start
Speaker 2: asking questions, particularly when that growth levels off. So if
Speaker 2: you're not growing, you need to be managing your costs
Speaker 2: accordingly and making that profit and giving some sort of
Speaker 2: a return to share or is whether it's dividends or
Speaker 2: what have you. So I think that's a very big
Speaker 2: test for a company like Camba. Now they're claiming a
Speaker 2: four billion dollars in US and your revenue forty percent
Speaker 2: and your growth, so that growth is still there for them,
Speaker 2: and whether that growth is going to be there for
Speaker 2: them next year and the year after. I think, look,
Speaker 2: you time will tell clearly, but it'll be a fascinating
Speaker 2: perspectus if they do go public as to what that
Speaker 2: shows has been happening more recently and more importantly, what
Speaker 2: they're projecting in the next few years after.
Speaker 1: Is there a lesson there? Do you think, John, if
Speaker 1: you and I were starting a startup in our garage today,
Speaker 1: would you be saying, look, we need to get to
Speaker 1: profit faster than previously we might have thought we did.
Speaker 2: Well they are with the company like at Lasting, for example,
Speaker 2: was very profitable very early days until when Global on
Speaker 2: the stock exchange point of view, went on the NASDEK
Speaker 2: and then the spending, the stock based compensation and other
Speaker 2: expenses kept going up and up and haven't and the
Speaker 2: growth in revenue hasn't kept up. So yeah, I think
Speaker 2: if you're going to be both high growth and decently
Speaker 2: profitable in your early days from that garage startup, you'd
Speaker 2: have the best of both worlds. Now, it's a very
Speaker 2: hard thing to pull off, obviously, it really is.
Speaker 1: I'm also kind of fearful that Canva might collapse, like
Speaker 1: I really need it now.
Speaker 2: I'm not sure it's collapsing. I think it's just a
Speaker 2: matter of where it will be valuation and financially wise.
Speaker 1: Really, John Stenzel, thank you very much. Thanks John Stenzel
Speaker 1: edits the least Australia's Riches two fifty. You can check
Speaker 1: out how the billionaires really make their money right now
Speaker 1: at Riches two fifty dot com dot au that's richest.
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