Canva lays off over 1,200 people amid slowing growth

Your design tool's feature set may change as Canva reorganizes its teams and shifts to a hybrid work model.

Canva, the design software company, has announced layoffs affecting 1,271 employees, which represents 22% of its total workforce. CEO Melanie Perkins cited a slowdown in growth as the primary reason for the significant workforce reduction, noting that the company's growth has decelerated for the first time in thirteen years. To adapt to these changing market conditions, Canva is restructuring its organization by merging its product, growth, and platform teams to improve communication efficiency. The company is also moving towards a hybrid work model, requiring employees to spend some days in the office each week. Additionally, Canva has lowered its revenue growth forecast from 30% to 20% due to escalating costs associated with developing and deploying its own AI models, and the increasing competition from AI startups and general-purpose chatbots.

The significant staff reduction at Canva indicates a broader industry trend of established tech companies reassessing their growth strategies and operational structures in response to slowing economic conditions and evolving market demands. By merging teams and reducing 'subspecialisation,' Canva aims to streamline its product development and go-to-market efforts, signaling a potential shift towards more integrated and agile product roadmaps. This move suggests a focus on internal efficiencies to better navigate increased competition and manage rising operational costs, particularly those related to AI development.

Canva's strategic adjustments, including its move towards hybrid work and the internal development of AI models, reflect a larger recalibration within the tech sector. The company's decreased revenue growth forecast and the earlier valuation cut by investors highlight the financial pressures faced by even successful tech firms. As AI capabilities become more accessible through various platforms, established players like Canva are compelled to innovate and optimize their offerings to maintain market share against both specialized AI startups and broad AI tools like ChatGPT, potentially leading to more focused feature sets and altered pricing strategies for users.