Design software maker Canva is cutting 22% of its staff, amounting to 1,271 people, amid a growth slowdown.
The company’s co-founder and CEO, Melanie Perkins, in a note to employees said while Canva has scaled so far, it needs to change to address slowing growth.
“Over the past thirteen years, we’ve turned a dream in a pitch deck into a platform used by hundreds of millions of people. None of it would have been possible without the talent, imagination, and care of every single person who has been part of this journey. Yet success in our first chapter doesn’t guarantee success in the next. This has been our hardest year yet, and as we shared earlier this year, our growth has slowed for the first time in a decade,” Perkins wrote.
Canva is reshuffling its organizational chart and merging its product, growth and platform teams to reduce communication friction. The company is also reducing “subspecialisation,” which means its employees might be asked to take up more responsibilities. The company is also moving towards hybrid work and asking people to work from an office a few days a week.
The company has been shipping its own AI models to reduce costs and reliance on third-party models, but it still had to cut its revenue growth forecast to 20% from 30% to address ballooning AI costs. This also resulted in Canva’s early investors cutting its valuation to about $35 billion earlier this year.
Canva is also facing increasing competition from AI startups and general-purpose chatbots like ChatGPT and Gemini, whose image generation capabilities allow people to easily put together posters and presentations.
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Key Takeaways
- Canva is implementing a significant workforce reduction of 22% (1,271 employees), signaling a strategic pivot in response to decelerated growth after a decade of rapid expansion.
- The company faces a dual challenge from Artificial Intelligence: ballooning development costs for its own AI models and fierce competition from general-purpose AI tools like ChatGPT and Gemini.
- In addition to layoffs, Canva is undertaking a major internal reorganization, merging key teams and shifting to a hybrid work model, all aimed at improving efficiency and agility in a rapidly evolving market.
The design software giant Canva, a name synonymous with democratizing visual creativity, is undergoing its most significant transformation yet. The company announced a substantial layoff, cutting 22% of its global workforce, amounting to 1,271 employees. This move, communicated directly by co-founder and CEO Melanie Perkins, underscores a pivotal shift for a tech unicorn that has long been celebrated for its explosive growth and user-friendly platform.
Perkins’ candid message to employees acknowledges that while Canva has scaled dramatically over thirteen years, building a platform used by hundreds of millions, its current trajectory demands change. “Success in our first chapter doesn’t guarantee success in the next,” she wrote, admitting that “our growth has slowed for the first time in a decade” and marking the current period as “our hardest year yet.” This slowdown, coming after a period of unprecedented expansion for many tech companies, forces Canva to re-evaluate its operational model and strategic direction.
The AI Double-Edged Sword: Costs and Competition
At the heart of Canva’s challenges lies the complex and rapidly evolving landscape of Artificial Intelligence. While the company has proactively invested in shipping its own AI models – a commendable move to reduce reliance on third-party solutions and control costs – this innovation comes with its own financial burden. The “ballooning AI costs” have forced Canva to revise its revenue growth forecast down from an ambitious 30% to a more conservative 20%. This adjustment alone speaks volumes about the significant capital expenditure required to stay competitive in the AI arms race.
Compounding the cost issue is the escalating competition from a new generation of AI tools. General-purpose chatbots like OpenAI’s ChatGPT and Google’s Gemini are rapidly advancing their image generation and content creation capabilities. What once required a dedicated design tool can now, to some extent, be accomplished through simple text prompts. Users can ask these chatbots to “generate a poster for a summer festival” or “create a presentation outline about sustainable energy” and receive surprisingly coherent and visually appealing results. This democratization of design, arguably what Canva pioneered, is now being taken to an even more accessible level by generative AI, directly challenging Canva’s core value proposition and market share.
The market has already reacted to these pressures. Earlier this year, early investors in Canva reportedly cut its valuation to approximately $35 billion, a stark contrast to its peak of $40 billion in 2021. While still a formidable figure, this reduction reflects investor apprehension regarding the company’s ability to maintain its growth trajectory amidst the twin forces of increased competition and high AI development costs.
Internal Restructuring for Future Agility
Canva’s response to these headwinds is not limited to layoffs and revised forecasts. The company is implementing a sweeping internal reorganization designed to foster greater agility and efficiency. Key among these changes is the merging of its product, growth, and platform teams. The rationale behind this consolidation is clear: to reduce communication friction and streamline decision-making. In a fast-paced environment where market dynamics can shift overnight due to AI advancements, a more integrated and responsive organizational structure is paramount.
Furthermore, Canva is reducing what it calls “subspecialization.” This means employees may be asked to take on broader responsibilities, moving away from hyper-focused roles towards a more versatile workforce. This could empower individuals with a greater understanding of the entire product lifecycle and encourage a more holistic approach to problem-solving. Alongside these structural changes, Canva is also formalizing a move towards hybrid work, requiring employees to be in the office a few days a week. This blend of remote flexibility and in-person collaboration aims to strike a balance between individual autonomy and team cohesion, while potentially also optimizing operational overheads.
Melanie Perkins’ message acknowledges the painful reality of these decisions, emphasizing the need for transformation to secure future success. The shifts at Canva reflect a broader trend in the tech industry where companies that once prioritized hyper-growth are now focusing on sustainable profitability, operational efficiency, and strategic adaptation in the face of disruptive technologies like AI.
The Bottom Line
Canva’s significant layoffs and strategic reorganization mark a critical inflection point for a company that once seemed unstoppable. Faced with slowing growth, escalating AI development costs, and intense competition from powerful new AI tools, Canva is undertaking a painful but necessary pivot. This bold move underscores the profound impact of generative AI on established tech platforms, forcing even market leaders to fundamentally rethink their structures, strategies, and even their core value propositions to navigate an increasingly complex and competitive digital landscape. The coming years will reveal whether these decisive actions will successfully propel Canva into its next chapter of sustainable innovation and growth.
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