Why mass layoffs at Canva could be the ‘best thing that ever happened’ to impacted staff

Even $43.9 billion tech giant Canva is not immune to the slings and arrows of recent economic misfortune.

The Australian software design company announced on Wednesday it would slash 1271 jobs – representing around 22 per cent of its global workforce – cutting staff for the first time in history after moving to drastically scale back the business.

Canva has long been lauded as the poster-child of Australia’s comparably sparse tech industry.

Now, billionaire founders Melanie Perkins and Cliff Obrecht are reckoning with an artificial intelligence (AI) bubble that is threatening to burst.

This “incredibly hard” decision has no doubt raised eyebrows and rang alarm bells that big tech’s AI golden age drawing to a close.

Big tech in the US has already been hammered with a $3.7 trillion market value loss in October after aggressive AI capital expenditure suddenly lost investor momentum.

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Earlier this year, Canva went on its own AI spending spree, acquiring fellow Australian AI tool Simtheory and marketing automation company Ortto for an undisclosed amount.

The deal brought the number of Canva’s AI acquisitions to eight since 2024, with a reported total of $400 million investment made in the rapidly growing technology so far.

But there is a silver lining to Canva’s shrinking staff in Australia, according to the University of Sydney Business School’s entrepreneur-in-residence Matthew Bright.

Bright said Canva’s founders have seen the writing on the wall early enough to “future-proof” the business ahead of the AI bubble bursting.

“This is probably the next unfortunate logical conclusion that was going to have to happen for this next chapter in the company’s history,” Bright said.

“I think they are future-proofing. And I think they’ve done it in a respectful way to staff.”

Though the likes of Canva are raking in billions of dollars in revenue, Bright said it is becoming increasingly difficult to reconcile balance sheets.

This tough chapter in Canva’s history could be a “watershed” moment for AI.

“It’s very much a sense-making stage of where all this bubble goes next,” he added.

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Laid-off staff were presented with what Bright describes as “possibly the most generous Australian redundancy package ever” – including six months of salary, 12 months of continued healthcare coverage, a laptop, free LinkedIn premium and a $US10,000 grant to start their own business.

Soon there will be a 1200-strong team of entrepreneurial and tech-minded workers looking for a job, and Bright said the mass lay-offs could plant the seed for rival tech companies to grow.

That, he said, can only be a good thing for the local start-up economy.

“I would love to see a fresh wave of new founders emerge from this,” he said.

“I’m sure, many of these unfortunately impacted workers will look back in time and go, ‘This was actually the best thing that could have ever happened, because I’ve gone out and built something great afterwards’.

“Some of the best companies have been built off the back of redundancies in downturns where there aren’t other job alternatives.”

Several notable AI firms began after founders were made redundant, including Queensland-based start-up Springboards.ai and NZ-founded software company Joyous.

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Canva began in Perth as a student project for designing yearbooks.

Perkins and Obrecht then moved to Sydney, expanding their company to have 5500 employees across 37 countries, with 220 million active users per month.

As of August, the company was internally valued at $43.9 billion, down by more than $10 billion a year before.

It comes as Canva went live with its highly anticipated AI product Canva Create in April – what it described as its biggest product launch to date.

“To serve 200-plus million users, a very generous free AI product comes with a huge cost and so we needed to get that cost down,” co-founder Obrecht said in August.

“We’ve managed to do that by about 90 per cent, which means we can really scale it up now.”