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Entrepreneurial Spirit

With over 10,000 commercial customers in 98+ countries, Atlassian is one of the world's fastest growing companies. But in 2002, fresh out of university, Scott Farquhar and Mike Cannon-Brookes could not have obtained funding to start a company if they had wanted. No one would have funded two idealistic but untested 22 year olds to build a different kind of software company. These days, ironically enough, they are approached by the best in the venture capital community on a regular basis; but their highly profitable company has no need for external funding.

Five years ago, dissatisfied with the current state of enterprise software, which was difficult to install, expensive and hard to use, they decided to go into business — to offer customers an alternative. Using only a $1,000 credit card loan, Scott and Mike formed Atlassian. Ignoring all advice that they could never sell enough to make a profit, they decided to apply a consumer model to selling enterprise software.

Instead of following the traditional business model of selling complicated software to a handful of customers via an expensive direct sales force, Scott and Mike decided to sell enterprise software online to a large number of customers; to make their software simple to install and use; and to charge only a moderate price.

They entered a crowded market with the launch of JIRA, an innovative software product to track issues and tasks that occur throughout projects. Most project management software is used as a tool by project managers, who track the projects, and then send status reports to stakeholders. What differentiated JIRA was that it was simple enough for everybody in an organization to use, allowing all parties insight into and involvement with the project's progress.

Over the ensuing year, as Atlassian grew from two people to a team of six, the need for internal collaboration and documentation increased. Deciding that the usual route of email and share-drives was clunky and hard to search, they investigated 'wikis' - a web-based collaboration system that had been around in technical circles since 1997, and is today often labeled 'Web 2.0'.

After installing, using and then discarding three of the existing wikis Scott and Mike saw an opportunity. For wikis to be adopted widely by businesses they needed more enterprise features such as search, security and usability, and thus Atlassian's second product, Confluence, was born.

Rather than focus on the smaller Australian market, the Internet provided both a shop-front to the world, allowing customers to learn, browse and purchase; and a medium by which happy customers could tell others about their experience with Atlassian. The combination of the company's open business model and remarkable products has led to an army of loyal customer evangelists around the world who talk about Atlassian — leading to more customers and an upwards virtuous cycle.

Today, Scott and Mike still choose to eschew the typical sales, consulting and professional services revenue streams that divert focus away from customers, instead maintaining their focus on creating exceptional software. Two main principles guide Atlassian. Firstly, to produce enterprise software that is easy to use; and secondly, to price that software at a level that makes it affordable for all businesses (not just large corporations).

Financial Performance

Atlassian has consistently doubled or tripled its revenue every year, with FY06 revenue of $USD12.2m.

Originally chalking up customer wins one at a time on a whiteboard, Atlassian now gains hundreds of new customers a month. In the first year of operations, Atlassian reached 100 customers. It took another year to get to 1,000 customers. At the start of 2007, Atlassian has over 5,000 customers using its four products. It is estimated that on any given day, close to a million people will use an Atlassian product.

Customer loyalty is demonstrated by the 80% of customers who pay for another year of support and upgrades. Over 30% of Atlassian's revenue is derived from existing customers paying for optional annual maintenance.

Today, JIRA has more than 6,000 customers; and Confluence, which launched in 2004, has 3,500. In just one month since their February 2007 launch, Atlassian's newest products Bamboo and Crowd have already attracted 100 customers.

For the past two years, Atlassian ranked in the top 10 fastest growing companies in Australia.

Strategic Direction

Atlassian's vision differs from that of most 'traditional' software companies. It is an extremely open company in every sense. Software pricing is available on the company's website, and no discounts are given. Atlassian's software development process is transparent — customers can raise feature requests as well as see what bugs have been reported. (Customers today don't expect software to be flawless; they do expect it to be continually improving.) All customers receive full source code, allowing them to customize Atlassian's products to suit their own environment.

Atlassian works very closely with the open source software community — in fact, the relationship is symbiotic. All of Atlassian's products are built using open source components, many of which have been developed by Atlassian and donated back to the community. This enables Atlassian to develop software much faster and at a lower cost than would otherwise be possible.

By having a low purchase price and no sales force (since sales are conducted over the internet via a secure online purchasing form), Atlassian takes a consumer-like approach to enterprise software. Think of it as Amazon-like usability, building products anyone's Mum could use so therefore people within a large enterprise will want to use. Just because it's an 'enterprise product', software shouldn't be complicated to use or require an army of consultants to install and customize it.

Customers are Atlassian's biggest advocates, so their major form of marketing is letting customers speak for themselves — through testimonials and case studies. As the company grows, considerable effort is being made to ensure that the quality of customer service is maintained, by paying attention to the 'little things' — such as ensuring that all incoming communication is answered within 24 hours. Customers can call and speak directly to the person who can help, from a customer service representative through to senior software developers.

Global Impact

Given that its first ever sale was to Sweden, it's perhaps not unexpected that Atlassian has grown to become an international software powerhouse, selling to over 85 countries across the globe. While the majority of customers are located in North America and Europe, Atlassian also sell to lesser-known countries such as Kazakhstan, Gibraltar and the Faeroe Islands.

The online business model has allowed Atlassian to sell globally without any local presence. Indeed, Atlassian had over 1,000 customers in North America before setting up its San Francisco office.

Determined to use Atlassian's software in their native tongue, customers have donated their own time to translate JIRA into 16 languages.

Atlassian now provides jobs for 100 people across three continents. The Sydney head office is home to the majority of R&D, while the San Francisco office, which opened in 2005, handles customer service operations for the local time zone. A staff of 12 in Malaysia handles regional customer support enquiries. In all its locations Atlassian aims to be an employer of choice, with generous benefits packages for all staff.

In the spirit of Atlassian, the company's greatest validation lies in the stories of its customers:

• Technology — from start-ups to technology giants like Apple, Cisco, HP, Oracle, Samsung, SAP and Siemens. IBM currently has 50,000 staff using Confluence. There are 500,000 registered users in SAP's online Confluence instance.
• Finance — almost every major investment bank in the world uses JIRA. From the World Bank, to the Bank of America, Citigroup and Merrill Lynch in the USA, to ABN Amro, BNP Paribas, Deutsche Bank and HSBC in Europe.
• Science and Research — the two major particle accelerators in the world (at Stanford and CERN) are both customers, as are NASA's Kennedy Space centre and the European Space Agency. On the corporate side, Pfizer, Baxter, Imclone, GlaxoSmithKline and Johnson & Johnson are all in good company.
• Manufacturing — another strong sector, with broad industry leaders like GE and 3M, to auto giants like BMW, Honda and Toyota, to resources behemoths like BHP Billiton, BP and Shell.
• Telecommunications and Media — like a satellite media empire, Atlassian spans the globe from huge telcos AT&T, Verizon and Vodafone, to TV networks like the BBC and HBO, to media conglomerates Disney and Universal, to major internet companies Yahoo! and AOL.

Atlassian's customers' own words, unsolicited, speak volumes. Here is a short sampling:

• "Adoption within our enterprise has been epidemic."
• "A sensational product, I have never seen so many colleagues get so addicted to something so quickly."
• "Without JIRA and Confluence, we wouldn't be able to deliver as high a quality as we do. They are now core systems to everything we do."
• "I just wanted to say what a brilliant product you guys have put together. I am so impressed by the product, the sales team, the support and the no-hassle licensing terms. I frankly can't imagine using any other tool to manage my projects now."
• "We now have a pretty simple rule for products from Atlassian — if they've built it, we'll buy it."
  
  

Innovation

Atlassian's fair and transparent approach extends beyond its pricing model to the products themselves.

Realizing that customers could be able to share their product customizations with other customers, Atlassian developed a 'plug-in' system so that companies can easily extend the products and integrate them with other systems. Atlassian encourage customers to develop plug-ins and share them with other users, which has resulted in the growth of a large and vibrant developer community. Whilst some plug-ins are commercial, most are licensed to the community free of charge.

In 2006, to promote creativity amongst its staff, Atlassian introduced 'FedEx Day', where developers must create something of their choice and 'ship' it in 24 hours. This concept has since been copied by other companies including Yahoo! with their 'Hack Day'.

Both Confluence and JIRA received 2007 Jolt Awards, which "recognize the most innovative, trend-making, ahead-of-the-curve products." This is the third year in a row that JIRA has won this award. In recognition of its industry standing as an innovative company, Scott and Mike are highly sought out to speak at technical conferences.

Personal Integrity/Influence

Atlassian donates its software free of charge for non-profit organizations. Since it opened its doors just five years ago, Atlassian has donated over 2,500 licenses to charities and not-for-profits. Some well-known charities that use Atlassian software include World Vision, The United Nations, The Fox Chase Cancer Center, The Sierra Club, The MS Society, The National Breast Cancer Foundation, The Red Cross, UNICEF and Amnesty International.

In late 2006, Atlassian created a non-profit foundation to focus the charitable giving that had previously been ad-hoc by the founders. The Foundation has adopted a '1%' model: 1% of staff time (up to six days per employee per year), 1% of revenue and 1% of equity is donated to its Foundation. By June 2007, Atlassian had donated over $USD325,000.

Whilst some employees have chosen to work in soup kitchens for their six days a year, many have opted to put their technical skills to good use, helping charities build the websites or internal systems that they need. They often end up installing or customizing the donated Atlassian software.

Conscious of the environment, Atlassian uses only green power, recycles as much as possible, and has engaged a firm to move them towards being carbon neutral in 2007. Atlassian located its headquarters near a major public transport route, and every person walks, rides or catches public transport to work.

Recognizing the importance of education in its success, Atlassian annually sponsors $USD60,000 worth of scholarships at the University of NSW. These scholarships encourage students to enter the IT profession, and are often awarded to country students who otherwise could not afford to move to the city for university.