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- The Story of Atlassian 💙
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Read Time: 6 minutes 17 seconds
Last week I asked you if you liked this new format and, funny enough, the result again was split equally 50/50😅
As a reminder, I want to satisfy both type of readers, the ones who only wants to read the summary and the ones who love a crisp deep dive with more details. That’s why I’m trying the same format again to see your reaction:
Keep The Summary with only the key details at the top.
And whoever wants to dive deeper and more details can keep reading.
Let me know in the poll below if you like this format or not 🙏 And as always, if you would like to see something else, just let me know by answering directly to this email.
How do you sell a product to American Airlines from Australia without a sales team?
By literally inventing PLG in 2002 because your product is just too good.
This is exactly what Mike Cannon-Brookes and Scott Farquhar did when they built Atlassian.
Let’s get into it. This is the Story of Atlassian 💙✨
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👶 Mike Cannon-Brookes and Scott Farquhar both met at the University of New South Wales (UNSW), where they participated in a work/study program.
🎓 During one of his early work placements in this program, Mike realized he hated the corporate grind. So he decided to drop out and pursue his own entrepreneurial venture.
💡 Mike's first venture was BookmarkBox, a service that synced users' bookmarks across browsers. He raised some money from friends and family, but when a US competitor, Blink, raised $35 million to do the same thing, he knew they couldn't compete.
💬 Mike reached out to Blink, flew to NYC, and sold BookmarkBox, ensuring he could pay back his investors, including his dad, who had invested $10,000.
📞 Scott, meanwhile, continued in the work/study program, gaining experience at companies like IBM and PwC.
💰 With Mike having some cash from his exit, he messaged all his classmates to join him to build something new. Scott was the only one who replied.
💙 In 2002, they founded Atlassian with a $10,000 credit card loan.
💬 They initially built a bug tracking tool for themselves, which evolved into their flagship product, JIRA. It quickly became popular among software development teams for its powerful features and ease of use.
💻 In 2004, they launched Confluence, a team collaboration platform.
💯 In 2005 they reached 1000 customers taking them 3 years.
🚀 The launch of Atlassian Marketplace in 2012 allowed third-party developers to create and sell plugins.
💰 Atlassian went public in 2015, with an IPO valuing the company at $4.37 billion.
🔧 They acquired Trello in 2017
🔬 Atlassian created new products like Bitbucket for source code management and Statuspage for incident communication.
🔥 After that they released Atlassian Cloud, moving their offerings to a cloud-based platform.
💸 In 2023, Atlassian's revenue surpassed $3.53 billion with a valuation of $44B and 300,000 customers worldwide.
In short, to grow, Atlassian focused on 3 things:
They couldn’t sell → JIRA had to be bought, not sold
They didn’t have time → JIRA had to be sold quick and easy
They didn’t have funding → JIRA had to be sold cheaply with high volume
With this they basically invented Product-Led-Growth, they just didn’t know it yet.
When American Airlines purchased JIRA without a single sales call, they might have thought that there’s something though…
Want more details? Keep reading👇
It’s the late 90s in Sydney, Australia.
Mike Cannon-Brookes and Scott Farquhar were studying at the University of New South Wales, part of a work/study program that sent them out to the real world for experience.
But Mike realized quickly that he hated the corporate grind.
So like every successful founder, Mike dropped out of school and started BookmarkBox, a service to sync bookmarks across browsers.
He wrote the code and operated the business for a year, raising some money from friends and family.
And at the same time, another US company, Blink, raised $35M to do the exact same thing. He realized quickly that he couldn’t compete and would get crushed.
But Mike had built something with a couple hundred thousand users, so he reached out, flew to NYC, and sold to Blink to at least get something out of it.
He paid people back, including his dad. Which, funny story, because he thought 0% ROI was a bad investment, he skipped the opportunity to be first to invest in Atlassian 😅
Meanwhile, Scott was also fed up with corporate culture and ready for something different. When Mike emailed a group of classmates with a simple pitch:
“Before you all take grad jobs, do you want to do something crazy and try our own thing?”
Scott was the only one who responded with:
“I’m in”
With no idea what their startup would be, but a strong desire to break away from the corporate path, they started Atlassian.
Their first idea was… not great.
They found this Swedish enterprise software company that had a good product but poor support and documentation.
So they had this idea: provide customers with great (missing) documentation and support for it.
But in their case, the company wasn’t even involved in this process. Basically they’d run tech support for someone else’s software. And they did this totally rouge.
No involvement or buy-in from the company, just two dudes from Australia writing docs and running a two-man support shop from their bedrooms at all hours of the night (even taking customer calls at parties).
To make it official, they founded Atlassian, registered the LLC for $100, and split the shares 50:50.
Btw, when they formalized Atlassian’s shareholder agreement, they needed to address how they’d officially resolve issues and disagreements given the equal split.
The best way? → Rock-Paper-Scissors 😅
And seriously, no BS — that was the clause in their formal shareholders agreement all the way up until they IPO’d, where I guess they knew Wall Street would’t have been too happy with multi-billion dollar decisions resting on rock beating scissors.
Now it’s around 1999-2000.
Their business model was simple — a customer pays $360 if Mike or Scott successfully resolved their issue. (Sidenote: This is what Intercom charges now with their new AI chatbot called Fin - charge based on resolved tasks)
The problem was, they ended up writing such great documentation that the only calls they got were the hardest issues, and at the worst hours.
They handled customer calls at all hours, even at parties, and quickly realized it was unsustainable.
“We kept getting phone calls at 4am in the morning, and my girlfriend at the time was very unhappy with this business.”
They needed to pivot.
What they had been doing behind the scenes—writing software to manage their support business—showed them the real opportunity: building tools for developers.
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In 2001, they created the Atlassian Support System (ASS), a tool to manage support tickets and issues.
Btw, imagine using ASS daily instead JIRA🤣
Combined with the operational nightmares of being a support shop on different time zones, writing software showed them where their passion actually lied, and where the real opportunity was.
They saw how the Swedish company got to write the software once and just continuously monetize it. Whereas each dollar they made was directly correlated to the time they put in.
Realizing the scalability of software, they decided to focus on software development tools. Instead of supporting software, they went to building software.
During the support phase, they had created 3 different apps which they used themselves, and decided to put them out into the world to see if anyone else needed them.
They did some promotion, and ASS was the clear winner. Using Mike’s credit card, they developed, renamed and released Jira within six months.
Jira allowed developers to manage multiple software projects in one place, solving a significant pain point for the tech community.
Now, they had found their niche and beachhead.
Initially, in 2002, they didn’t have venture capital or a tech ecosystem to support them.
So to:
Try to pay back Mike’s credit card debt
Just survive and avoid the corporate world
They had one goal: Sell a single copy of Jira per week, initially priced at $800. This would allow them to eat and pay rent.
“If we didn’t sell 1 copy a week, we were screwed. The fear of death was clear.”
But back then, all the examples Mike and Scott had to look at around how to actually sell that one copy a week were sales-led. But they didn’t have money to hire sales people. 🤔
So, this situational circumstance and necessity all led to their novel go-to-market model: Atlassian needs to be bought, not sold.💡
“We knew that in order to reach that goal whilst remaining in Australia, we’d have to sell online, at low prices, and in massive volume. So our business model was heavily influenced by geography – and it worked.
Our experience with computers was downloading and using computer games, and that was a different world to the way that enterprise software was sold back then.
But not today, these days you download enterprise software in the same way as computer game, and we were at the forefront of how that happened.
The thing we built in that model is actually less important than the fact that we changed the business model of how people adopted software to be much more consumer like.”
In other words… they created what we know today as Product-Led-Growth or PLG. 🙇
10 acquisition channels Atlassian used to grow
Atlassian had an advantage here because both Mike and Scott were already popular among the open-source community.
Open source helped. Communities (mailing lists! newsgroups! IRC!) helped. Constant marketing (Jira Jira Jira Mike was my name for a while). Free beer. Uneconomic prices. Great customer service.
But still it took Atlassian ~3 years to hit their 1,000th customer.
While they continued to use the channels above, these are some of the other things they started doing that helped them to grow.
Growing with a different kind of sales force
Simple and transparent pricing (KISS)
Improving the product with user groups
Launching their second product — Confluence — and the beginning of cross-selling
And this strategy of cross-selling was wildly successful. Confluence customers became Jira customers, and visa-versa.
Today, over 90% of their customers paying $50K+ a year have purchased more than 3 Atlassian products.
Because similar to Apple products there were 3 things that helped Atlassian:
Network effects - same to Apple, once you’re in the ecosystem it’s amazing
Switching cost - similar to Apple, when you have a few of their products it’s hard to switch
Scale economies - the focus is to get a customer to use 1 Atlassian product, after that it’s way easier to cross-sell
By the end of 2007, with the winning duo of Jira + Confluence they had over 10,000 customers in ~100 countries. And they also found their way into big wig companies like Oracle, Citi, Boeing, AT&T, and even the US Supreme Court.
Atlassian’s acquisition strategy
To grow even further they kept on building great tools along the DevOps pipeline or acquiring other companies along the way such as Bitbucket, Opsgenie and Trello.
Moving from Product-Led-Growth to Acquisition-Led-Growth.
Today, they have over 300,000 customers worldwide while making $3.53 billion in revenue with a valuation of $44B.
Btw, another funny and smart growth hack they did early on was to NOT attend tech conferences, yes not attend.
Tech conferences like JavaOne in San Francisco were great with all their target customers but booths starting at $20-50k were too expensive for them.
So instead they bought 15-20 cases of beer and put Atlassian stickers on them and distributed them amongst the attendees.
The free drinks were such a success that the speakers at the event gave Atlassian a great shout-out, the team got mentioned in a popular podcast, and for about $3000 of cost (beer), Atlassian scored booth space worth several 10s of thousands of dollars!
Thank you for taking the time to read the Story of Atlassian. Since last week’s poll was a tie, I want to know your opinion on the format again.
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