Meet Atlassian: One of the Most Famous Companies Not from the Valley

Hey everyone - Harry here, and Good Morning, Good Afternoon, or Good Evening!

Welcome to the Issue #4 of Deep Dive with Inquisition. In this issue, we will go over the story of Atlassian, from its founding to the strategies it used to become one of the most successful tech companies outside of Silicon Valley.

Meet Atlassian, an Australian-American technology company founded by Mike Cannon-Brookes and Scott Farquhar, known for its co-CEO structure and as one of the biggest tech companies in Australia.

Early Days of Atlassian:

Atlassian was started in 2001 by Mike Cannon-Brookes and Scott Farquhar at the University of New South Wales when Mike emailed the entire school to find people interested in helping him start his new company. During that time, Scott was the only person to reply to Mike’s email and showed interest, leading to the co-founding of the company now known as Atlassian. The two founders decided to double down on their credit card debt and initially started with $10,000 in credit card debt.

The company name originates from Atlas, the Titan in Greek mythology whom the gods condemned to hold up the heavens after the Titans were overthrown.

Originally, Atlassian wasn’t a developer-support software tech company. When it first started, it was a support-solution company for other customer support teams. However, the two founders realized that they needed to work on improving the bug-tracking software for tech companies since they realized themselves the core issue with the bug-tracking software during that time.

This was the tipping point for the start of Jira, one of the most widely used software solutions for developers and teams of all sizes.

Overview of the Global Software as a Startup (SaaS) Market:

1. The global SaaS market is growing and the market size during 2024 will be around $247 Billion.

2. Revenue seems to keep growing, with experts predicting global SaaS revenue to reach around $339.10 Billion during 2024.

3. 88% of all SaaS investment goes to Business to Business (B2B) companies (companies that focus on enterprise and Small to Medium-Sized Enterprises - SME).

4. 47% of the Venture Capital deals went to SaaS Business-Model startups during 2023.

Rise of Atlassian: How It First Started

The rise of Atlassian is quite interesting. In the early 2000’s, the company initiated and implemented something that nobody else was doing—it didn't even exist. This was: Product-Led Growth (PLG).

The concept of PLG is simple. It is when the product fuels the growth of the entire company, which is only possible when the company creates a product so good that its users/customers will use it every day and advocate for it (e.g., spreading the word about how good the product is).

Alongside PLG, the company had a unique business model that set them apart as a company specializing in B2B with the freemium model. This model lowered entry barriers while allowing potential users/customers to decide whether it was a fit for them. Aggressive acquisition and integration across a wide variety of available software from its core product made it challenging for users to leave the ecosystem bubble—much like how Apple does it with their “Apple Ecosystem.”

Now, let’s dive deeper into the “Rise of Atlassian” and how they became one of the Australian Tech Giants.

Apart from the core essentials (e.g., good product, unique business model, etc.), there isn't any magic when it comes to startups. It heavily depends on the founders' capability to execute and “make things happen.” Atlassian was no different—in fact, the two co-founders' “fear of death” drove them to approach things differently. They needed to sell one license of Atlassian’s core product, “Jira,” per week to cover their expenses (e.g., food, rent, etc.).

Simply put, the founders were desperate since they had limited resources to leverage, which led them to think “outside the box.” During that time, they went online and made it as easy as possible for people to use the amazing product they had built. Under the general scope of things, PLG was the main growth factor. However, the unique business model also played a crucial role in encouraging potential users to try it out for free. Since the two founders needed to sell one software license per week and if they didn’t, they would be in a very serious situation, they decided to post it online instead. They lowered the entry barrier as much as possible for customers, automated processes, and focused on the volume of sales instead of the number of licenses being sold. This created the now well-known “Freemium” business model, allowing users/customers to enjoy the product at a reasonable price, which was rare for B2B software.

Regarding lowering the entry barrier significantly, it made it easy for users to:

1. Check out what Atlassian is.

2. Use Atlassian and see if it satisfies their needs and wants for free.

3. Easily manage the available licenses (e.g., adding or decreasing them).

Through these non-traditional methods, the company was able to start and ultimately rise to the place it is today. This journey wasn’t easy at all, but not following the traditional startup playbook, having the disadvantage of a geographical location (Silicon Valley vs. Sydney), and being desperate due to limited resources contributed significantly to the two founders thinking and acting differently.

How Atlassian Became One of the Fastest Growing B2B Software Companies:

Atlassian became one of the fastest growing prominent B2B SaaS tech companies not only from having an amazing product (this is a must) or having a unique business model. Its success story can be cited from the customer-centric approach, which led to a series of aggressive acquisitions and smooth integration with its core products like Jira and Confluence in order to provide the best possible experience to its users.

The founders focused on leveraging the existing capital to further branch into new markets that Atlassian can enter and thrive instead of building new products from scratch. This was a very smart move from the company—since it already had strong financials and a growing user base for Jira and Confluence.

The integration of the tools they acquired benefited not only existing users but eliminated competition, expanded new revenue streams, and strengthened the Atlassian ecosystem, which included one of the most widely used developer and project management tools.

Atlassian’s first acquisition was acquiring a company called “Cenqua”—a small Australian startup that was building three tools: Clover (code coverage), FishEye (repository visualization), and Crucible (code review). Cenqua was known for their development tools. This was just the start towards Atlassian’s ambition towards becoming the tech giant for B2B developer to project management software.

From 2007 until 2024, Atlassian has acquired around 19 different startups ranging from small to big acquisitions such as acquiring Trello (project management tool) for $425 million and Loom (video messaging tool for individuals and teams) for $975 million.

One common theme from all of these acquisitions was that Atlassian was strictly focused on improving the experience for everything B2B-related. Meaning, it was focused on providing the best possible experience for its core users (e.g., fulfilling the needs and wants) while having everything integrated with the core Atlassian software.

Apart from the acquisitions and integrations, another thing it aced on was its partnership program. Atlassian does not have a dedicated sales team; this was by design. One of the first things that the founders set for the company was to never have a dedicated “sales-only” team. This was because the founders firmly believed that having a good business model from the beginning with an attractive product will fuel the growth and allow it to further scale, which turned out to be right. However, the company invested heavily into creating a community for the loyal customers of Atlassian products. The community strategy can be seen via the “Atlassian Solutions Partner”, “Atlassian Marketplace”, and “Atlassian Academy”.

Community is a must for any and every company around the world. No matter how strong and unique your business model, product, etc. is, - without having a loyal fanbase who truly loves your product, the story and aligns with the mission - nothing can be long-term. Creating a community and loyal fan base is something Atlassian aced.

The community at Atlassian is quite different from other companies. It is structured with three different types, with the first one being the “Atlassian Solutions Partner”—this is basically a group of people who are experts of Atlassian products (e.g., Jira, Confluence, etc.) who are willing to advocate and help other new users to use the Atlassian software. This type of community is only possible due to two reasons:

1. The partners are receiving tremendous value.

2. It is a self-sales program where the “Solutions Partners” are the sales team for Atlassian.

In which, Atlassian Marketplace is a place where the customers can try, buy, and integrate with software that is built for Atlassian software (You can think of Chrome extensions but for Atlassian software). Since the company strongly encouraged other companies to build plug-ins and apps for Atlassian software, the individuals and companies who have built software for Atlassian products will naturally:

1. Become one of the best salespeople for Atlassian products.

2. Improve the general user experience for Atlassian products.

3. Become active and continuously provide feedback for the Atlassian products.

Lastly, the Atlassian Academy is a separate dedicated platform for people to learn how to effectively use the available Atlassian software. People can receive certificates, take exams, and use it as a credential on their resume. Since the company reached a level of influence, it decided to allow people to further navigate and advance their careers by providing an official certificate program for people to become “Atlassian Experts” which leads to:

1. Organic sales for Atlassian products.

2. Higher value of Atlassian products.

3. Exposure of Atlassian via the certificates (e.g., individuals inside the career field posting about the certificates on different social media platforms).

Ultimately, the obsession over customers while conducting strategic aggressive acquisitions over the years, smooth integration within the core products, and investing early in building its community and capturing its users can be understood as the recipe for Atlassian to become one of the fastest growing B2B SaaS startups.

Challenges for Atlassian:

Existing and rising competition:

→ A lot of competition continues to exist from traditional companies (e.g., Microsoft and Google); however, at the same time, a lot of startups with massive funding also become a serious threat (e.g., Notion). Apart from the small and big competitors, there are a lot of options for the B2B SaaS users/customers, making it more challenging for Atlassian to thrive compared to 10 years ago since the general venture capital fundraising has shifted heavily towards the B2B SaaS space.

Revenue or Profit? Atlassian’s challenge with its financials:

→ Atlassian is currently not profitable and hasn’t been over the past two decades. Luckily, the company has been growing in double digits YoY, however it is still a continuous major challenge.

Future of Atlassian:

1. Further strengthening its market share inside the global B2B SaaS industry will be crucial.

   → The industry right now is very saturated and no players, even if they are big or small, can relax. This is why Atlassian will continue to follow its strategy of aggressive acquisitions and integration between its core products.

2. Conducting a successful full transition to cloud services.

   → The company recently made a decision to transition into cloud services for every single one of its products offered. Before then, it was based on the individual company’s server connected with the specific Atlassian product. However, during 2022, the company made an announcement to fully transition into the cloud just like how the current industry is, which is still an ongoing process.

Key Takeaways from the Story of Atlassian:

There isn’t any doubt when it comes to one of the most successful tech companies—Atlassian is one of them. There isn’t any doubt when it comes to the influence of Atlassian products inside the Product Management sector. It reshaped how we manage and track different projects, whether in small or big organizations.

Below are the strategies that Atlassian used to become one of the biggest tech companies in the world, and something that can be used for your own business:

1. Never be scared to take risks and be “different.”

→ A lot of the things done by Atlassian were different from the traditional playbook. In fact, the two founders didn’t have the typical traditional playbook nor a local example to look ahead and benchmark during then (2002). This is why it is crucial for us to be different (e.g., not following the typical business model or method to scale) and good to be taking risks since there is always room for us to have another method of building and scaling our company inside the playbook of “Startups.”

2. Holding the Customer-Centric Approach:

→ Atlassian was obsessive over its customers and always searched for solutions on how to solve its users/customers’ pain points through their services.

3. Community Building:

→ Atlassian was able to further scale due to its community building efforts such as the “Atlassian Solutions Partner” program. The company still does not have an official sales team even after 20+ years inside the industry and specifically targeting B2B customers. This is only possible because apart from the good business model, product, and smooth integration—having a dedicated Atlassian community where people can get connected with Atlassian experts, talk to other users via forums, and continuous improvement based on the needs and wants from its users is the lesson all companies should learn. Atlassian can be viewed as one of the most successful companies that applied core musts alongside the future way of marketing: Community Building.

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Thank you so much for reading!

-Harry