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Envato founders Cyan and Collis Ta'eed.
Digital assets marketplace startup Envato has made its first major acquisition, taking over Mexican mockup and design startup Placeit, but co-founder Collis Ta’eed says the move was not so much about the location, but more about a meeting of minds.
Founded in 2006 by husband and wife team, Cyan and Collis Ta’eed, Envato now has a community of more than 10 million users, and an annual revenue of around $74 million.
The startup has been called one of Australia’s best places to work, and has made deliberate efforts to improve diversity within its workforce, most recently through a new apprenticeship scheme.
Last year, the startup’s subscription business Envato Elements saw revenues of $21 million, representing more than 100% growth on the previous year.
Envato is working on creating a “Netflix for design”, Collis Ta’eed tells StartupSmart, and the acquisition of Placeit is a part of this.
Ta’eed isn’t able to disclose any of terms of the acquisition, but he does reveal that Placeit, founded in 2012, boasts annual revenues of around $3 million, with more than half of this coming from subscriptions.
Although the acquisition represents an expansion into North America for Envato, according to Ta’eed, the location wasn’t necessarily part of the strategy.
Envato’s customer base has always been global, he says. Only 5% of its customer base is located in Australia, but it’s “not one of those companies that deliberately decided to leave Australia”, Ta’eed says.
“That wasn’t a big draw, it was more of a neat circumstance,” he adds.
While having a location in that time-zone will be convenient, there’s an opportunity to draw on new talent and “grow in two locations at once”.
The acquisition was more about reaching a “broader segment of customers”, Ta’eed says, specifically to businesses in the marketing space.
The needs of most businesses include websites, marketing materials and, increasingly, video, he added.
Placeit was very aligned with Envato in terms of its approach, providing “template content that’s really design-focused, but it’s really easy”.
From Placeit’s point of view, Ta’eed says the startup is also looking to build its client base and expand its team — “things that we have done already”, he says.
“We have a larger audience to draw from and lots of hard-won lessons about scaling a business,” he adds.
But, for Ta’eed, it was also about a meeting of minds. In fact, Placeit founder Navid Safabakhsh is a long-standing Envato customer and someone Ta’eed had considered going into business with in the past.
“Years ago we had chatted about building a product together,” he says.
One thing Placeit does is t-shirt mockups. Ta’eed needed a mockup of a design, stumbled across the company, and realised he knew the founder.
“It had gotten a bit bigger than I had realised, branching into design and video,” Ta’eed says.
“We saw the potential of bringing the two businesses together.”
Eventually Ta’eed met the team in Mexico.
“It’s a really great team — a team of creatives, digital people,” he says.
“It already felt like Envato.”
For Ta’eed, it’s “critical” to keep Placeit’s current team on board, adding “I barely speak Spanish.”
In fact, Envato is planning to expand the team.
“One of the things we’re buying is traction, they’ve a product that’s working,” he says.
“You really don’t want to lose the goose that’s laying the golden eggs … You want it to stay together and work well, and for us to add to it.”
Ta’eed already had a history with Safabakhsh, but it was less about that preexisting contact and more about the fact that they were on the same page business-wise.
They both “naturally got the plan,” Ta’eed says.
“You want to find alignment of values and also alignment of vision,” he says.
Envato has previously spoken to other founders regarding potential deals, where “it’s become clear that we have different ideas about what we’re going to do”.
“Acquiring a company is easy, making an acquisition work is much harder,” Ta’eed says.
This isn’t the first acquisition Envato has made — it has taken on small services in the past — but it’s by far the largest, Ta’eed says. Envato has come a long way since 2006, but the co-founder says it’s still a strange feeling to be the “elder founder” in the relationship with Placeit.
“I’m the one who’s some sort of grizzled veteran,” he says.
Going through an acquisition process feels “very grown up,” he says, “I feel like I should put on a suit or something.”
“For any founder there’s a lot of ups and downs. When you start to see some success it does feel very weird,” he adds.
NOW READ: From tech to chocolate: Why Envato co-founder Cyan Ta’eed stepped back to launch chocolate startup Hey Tiger
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