Secondly, we were big into open source. I actually wrote a book on open source Java way back when. We thought maybe we could make some money supporting open source, etc. Within a few months, like the classic pivot, we realized that supporting other people's software was a terrible business model. At the time, we were voracious readers.
I think that we literally read every business book published between and Half of it was bullshit, red herrings, and just endless amounts of crap. But we decided that we had to evolve into a software company because we determined that software was a pretty damn good model.
We had two hunches. The competitor to the app server that we were using—there was an open source one called JBoss that was a bit rubbish—but also sort of ground its way through the world to be okay. And then there was WebLogic, which went to Sun, and is now in our product. WebLogic was the really expensive, shiny option.
But to get it, you had to get a CD; it literally came on a CD and somebody helped you install it. It was just this crazy thing. We always thought that if we could just make decent software—WebLogic quality software, not crappy open source software—at a really good price, maybe we could use the internet to distribute it. Don't forget, everything was still coming on CD in that era which sounds a bit weird. We had a basic hunch that If we could use open source to build really great commercial software and get it to people on the internet, maybe we could sell it cheaply enough and sell a lot of it.
We thought maybe there was a window that would open for us that we could jump through fast, so we started making software applications. We made a commercial knowledge base application called Prometheus. We made a mail archiving tool, like a shared inbox. Almost like a server-side Front. And then we made an issue tracking application called Jira. That's right. When I say we dropped the other two, it was because people seemed interested in Jira. It sounds weird. We poured all our energy into JIRA for the first year.
That's how we started making software. Both of those hunches turned out to be really good, actually. Open source did enable us to make really high quality software very affordably to sell at a low price. Our first customer was in London, our second customer was in Sweden. Eventually, we started getting customers all over the world with this online business model.
Twenty years ago it was quite revolutionary that anyone would pay money on a credit card. Ironically, our first orders came in on a fax machine. That shows how old we are. A fax came in with a cheque and all that jazz. I think what's also similar between you and Tobi is that you built it without really going down the traditional Sand Hill road, VC path. How do you think that dynamic—not being based here in the US, not going down the traditional VC route—influenced the story of Atlassian?
I can explain where I think that comes from. But for us, VC wasn't an option. This is , The world has just blown up. Australia had a couple of VC funds that emerged in and invested in dStore and all these crazy businesses at absurd prices. All those funds completely blew up. So, there was no Australian VC market at all. They were all on their last legs of their respective funds, all the partners had left, and someone was just filing the admin paperwork.
We were two twenty year-olds in Australia with no experience. We didn't even bother looking. We didn't pitch anyone for capital. It wasn't even a thing that you did. We knew what VC was, but there was nothing available in Australia. It wasn't even a choice to not get VC. And so, we had to figure out another way. We were customer-funded. That's an interesting choice. We ran the business cheaply for a long enough period of time that revenue was always higher than expenses on a cash basis.
This seems crazy now given the VC boom, but it's the way a lot of people build their businesses, just not in tech. He had no access to VC, so he didn't even bother looking, which meant that he didn't waste any time. Secondly, if you have technical founders, as long as your own salaries are low enough, you can build something, can do well enough at marketing and other stuff, you can get a wheel going.
Thirdly, we all charged from the start—we had revenue coming in. We actually had a revenue-producing product early on. Lastly, we had patience. The thing about the nuclear winter—that to period—if you actually look at it, amazing companies were founded in that period that had relatively little competition. What a startup has to do in year one in the crazy world we have today, we at Atlassian had three, four, five years to do.
We could afford to be a little slower. Yea But, we were able to survive. It became exponential over time. At the start you can't see that; it looks like it's flat. We had the time to do that because of a lack of competitive spirit amidst a really bleak backdrop. I want to switch gears just a bit. Let's start with a very simple one. Tell me how you spend your time.
What does a calendar in the normal work week look like for you? I always try to be very intentional with my time. Time is the one thing you can't get back. By intentional, I mean that I choose as carefully as I can where to spend my time. Everything flows from that as it creates constraints. That's the first time that goes into the calendar and you cannot book a meeting over it. Being intentional is one thing. Second, I have a lot of interests now.
Obviously sometimes I have a board meeting that takes six hours. But if a week's roughly fifty hours of work, there's five hours that can be done outside of work. My investment team and philanthropic team outside of work receive a certain portion of that and I have to decide how I want to use it over a month or a quarter.
I define storytelling as the broadest version of scaled communication. One of the things that's really hard in a larger company is sharing and repeating stories. What are we trying to achieve? What are we doing? If someone new starts tomorrow, they're going to get directed to the company OKRs throughout the course of onboarding. I think storytelling is incredibly important and that takes a lot of forms. Because of this, I try to divide my time evenly between product strategy and scaled storytelling—town halls, presentations, et cetera.
Ironically, working from home has been amazing. Yesterday I recorded two videos—fifteen to twenty minutes each—that were going to different groups in different formats. I was going to ask this later but I think this is a good segue. A lot of companies have had to adapt to being distributed during the pandemic, yet you have always done this.
I'm curious, what has made it work so well for you? Yes, our curse has become our blessing. We used to say that we were cursed by the Pacific Ocean. Ironically, to your prior question about Silicon Valley, one of the things I think we did well early was that we started a Silicon Valley office around six years into the business. Having a foot in both camps is the important part about that. I'm not doing it. I'm just a regular IT group. But I want to be good.
We've had plenty of people now from the Facebooks and Googles and Amazons, but we also welcome the pragmatic folks with open arms. If you can get the mix right, the balance between the two in the company is really powerful.
The Pacific Ocean is in the middle of these two camps, as it always has been. I used to fly to the US ten times a year for the last fifteen years. Almost every month, across and back. So we are a distributed company and have been for a long time. The second thing that helped us is when we bought a company called Trello four years ago. Trello was a remote company by force. They were in Manhattan and they found it incredibly hard to hire—as NYC is incredibly expensive—and they kept losing staff, especially when employees began to have kids, new parents would move out of Manhattan as they couldn't afford it.
Because of this, Trello was forced to become a remote company and deal with all sorts of these problems. We absorbed and learned from that Trello culture when they became a part of Atlassian. Before the pandemic, we had probably ten to twenty percent remote, highly-distributed workers. Though we were used to meetings on Zoom as a general rule, it was still a leap.
We sent 5, people home at twenty-four hours notice in March last year and that caused a lot of challenges as there were a lot of non-remote processes that we didn't have. For instance, we had to corral some Uber drivers in India to deliver laptops.
That process alone took almost a month to figure out because we are hiring almost one hundred people a week! With the pandemic everyone was forced into this in some ways. For me, coming from the Facebooks or the Googles of the world, that's very unusual. It's almost impossible to be in a senior leadership role where you have to work closely with the founder and CEO if you're not living within a one mile radius of that person. You've managed to make it work.
Before the pandemic, our executive team was split across three offices around the Pacific. Ironically, because it is incredibly painful to drive between San Francisco and Mountain View, our team wouldn't bother to do so even for executive meetings.
Not to mention, our Sydney offices were already on Zoom. Of a team of nine, we had two or three people in Mountain View, two or three people in San Francisco, and then three or four people in Sydney on executive calls before the pandemic. What do you think you got right and how did you make it work?
What do you think worked for you culturally there? In all honesty, I'm not sure. We have done it for such a long time and we have just learned that it has to be made to work. People are now used to it. Though we did do a lot of travel, we used our time together quite intentionally.
We have been through lots of variations in the management team as we have structured our systems over time. At one point, we would get together every eight weeks. Every four months, the entire team would fly to Sydney. And eight weeks later, the Sydney team would fly to the States. The entire team was together for at least thirty-six hours every eight weeks; we did that for a fair while. Our company is built to be distributed.
We do not have a very strong centralized headquarters culture like Google or Facebook do. We have never had that and have managed to thrive without it. That has both strengths and weaknesses. It's a bit more redundant as decisions are made in the far-flung territories rather than in Rome.
What does a good product review, business review, or business update meeting with you look like? What does a bad one look like? On the product—whatever it is that we're building—I always think about whether we've combined technology and creativity in a clever way. You can just see it working. That's a lock. That's a win. That one there—done.
Just ship it. That thing's great. It's very hard to explain why that is. I would say the closest thing is when you see the potent creativity and technology mix, when art and science have merged in the right way. I know that sounds like a weird or a simple answer, however, you can pick up on things if you've watched or managed teams for long enough.
It knows what it's trying to do. It seems to have the right level of leadership. If it's just the product manager answering questions, that's a bit of an alarm. At Atlassian, we operate on a triad model—we have many different triads between the product manager, designer, and engineering lead. If the designer and engineer are answering each other's questions, that's usually a good sign that the team knows what they're trying to do. You can feel the energy in the room when the team is in sync, getting along, and excited.
You can just feel it in the room if you've been there enough times. Two other things: Confidence is vital. I like to see if senior leaders disagree with founders. As I get older, I increasingly ask open questions and note if opinions change or not once I weigh in.
If a leader disagrees and pushes back on something with evidence to back it up, that's a good sign. It is vital to instill the team with the confidence to disagree with senior leaders. Here's why I think that we should hit the bottom of the pricing curve.
Disagreement with seniority in a constructive way usually shows that the team has their shit together. It means that they know more than you do and that's good. They inevitably should know more than I do. One of Scott's favorite techniques—which I've started to adopt over the years— is to scratch one area quite deeply.
We often use it in interviews. For instance, I have asked people to tell me about what happens when you click a button in a web browser in technical interviews. I try to go as deeply as I freaking can. Okay, cool. And that runs into TCP? How does that work? They should always be aware of first principles. Similarly, you can ask me about Atlassian strategy and I can go six levels deep on anything straight off the top of my head. That's my job. Joe's got this tiny esoteric detail correct.
I trust that you figured out everything else. Say a product has five pillars. Why did you come to that? Was there customer research? What have the customers said? That's usually a good sign that the team is going to be successful.
What does that mean? The decision tree originally came from the book Fierce Conversations, but I don't know if author Susan Scott stole it from somewhere else. It's a learning device, an onboarding device, a scaling device, and a communication device.
I love communication devices. I often think in business it would help if we depersonalize communication. The decision tree really helps to depersonalize challenges in the course of one on one communication. The basics of the decision tree are root, trunk, branch, and leaf. So you have four types of decisions and they vary on two axes in a generalized decision model. The two axes refer to the person making the decision and the information that is broadcast about the decision.
To break it down, a leaf decision is a decision where you're working for me, you make the decision, you don't tell me, and I don't need to know. People make thousands of leaf decisions every day. I don't need to weigh into that decision. The trunk sits in the middle of the prior three and is my decision to make. I think A and B are the big choices. You have to make this decision. What goes wrong in business is that people get all of these decisions mixed up.
As you grow with a job, more of the decisions should move from root-trunk to trunk-branch or branch-leaf. Jay [Simons] is a good example. After thirteen years here at Atlassian. Jay would bring me almost nothing. He worked for me for the entire thirteen years and our trust level was so high—along with his knowledge of the business—that he knew exactly what I was going to answer, so we just skipped that unnecessary step and things moved even more quickly.
Additionally, the decision tree is a really useful depersonalization device if things go wrong. The name is a little unclear, but perhaps it's the Obama Priority System? In short, it allows you to assign tasks priority from P1 to P4. Though I did a lot of Googling, I could not find any evidence of President Obama actually using this tactic.
I inquired a long time ago about how Obama prioritized. I found that it was basically a simplified form of Kanban in a world where he did not control what was actually happening. The way I remember reading about Obama's prioritization system was that every big issue going on for him as President was assigned Priority 1, 2, 3, or 4. He had a certain number of P1s and P2s that came directly to him, as he was going to make the call on those particular issues.
With P3s, maybe he knew about them and advised from afar, but he did not delve into the weeds. P4s were off his radar completely. He could only have two P1s and four P2s simultaneously to prevent decision fatigue and overwhelm. Because he was President, there was a natural limitation to this Kanban strategy.
Every week—sometimes every day—he would have to rejuggle this schedule because he lacked control over his inputs. For example, if Syria starts a war with Yemen, that becomes an immediate P1. He didn't get to choose that. It immediately went to the top of his pile. That said, what Obama did so brilliantly was develop a system to rearrange his priorities. Without this, he would not be able to think clearly amidst the chaos of his office. He would move one of the two P1s to P2; one of the P2s to P3; and so on.
Again, the basic idea was that he, as President, couldn't control his inputs. Though he had many issues that he wanted to tackle—Obamacare, for instance—he allowed himself two big issues and four small issues to work on simultaneously. Everything else was passed to other people down the chain. I try to use this in my own thinking. There's a whole chain underneath that reassigns tasks automatically.
That said, it's a useful mental model as I can only really focus on two big things and four small things. I think that's a good model and a good segue to shifting into you and your personal life. Could you talk to us a little bit about how you balance work, life, and family? And second—this is very connected—I heard a story about the IPO roadshow where you couldn't make it back and you wanted to prioritize family. Could you talk to us about that because I think they all go together.
I finish work most days at PM pretty strictly and I have dinner at home. I sit down for dinner at 6PM and have done so since my kids were very young. Maybe I'll go back to work at nine o'clock and knock out some stuff. I find ways to fit work in, but my family is my priority. I think mental health is both really important and really challenging. In my mind, the story of entrepreneurs and mental health is far too seldom told. All too often, we hear tragic stories where occasionally things don't work really well.
I think that the reality is, there are very many mental health challenges that come with being an entrepreneur. I used to talk about the entrepreneurial pendulum with the exclamation mark on one end and the question mark at the other end. You want to be squarely in the middle, not at either side.
Why did we ever think we could do this? It's not going to work. Being from Australia, between the IPO roadshow itself and the lead up, I had flown to and from the States, three times in under a month. We had done ten days on the roadshow, beginning on the West Coast and then going to the East Coast. Atlasssian also did a round of financing with VC firm Accel in But those are the only two times it raised money from outside investors.
Related: Is this a slow motion tech wreck? That IPO, combined with a tepid debut from fellow unicorn Pure Storage PSTG , had many experts predicting that buzzy startups would be in trouble if they tried to go public next year. I wonder if there were Vegemite sandwiches during the roadshow? First, let's look at what the company does. In a nutshell, it helps Men and Women At Work. I really love that song. Related: Square IPO pops, but only after it lowered price.
Atlassian has several popular products geared toward businesses -- such as JIRA, HipChat and Confluence -- that helps teams collaborate. It even chose the ticker symbol TEAM for its stock. The company also has no salespeople. Instead, it uses viral word-of-mouth marketing to pitch its products.
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A final price will be set the day before the stock begins trading. Atlassian, which has offices in Sydney and San Francisco, makes software products for businesses to collaborate, communicate and manage their operations more effectively. Founded in , Atlassian is a rare tech company that has not raised any venture capital funding to support its operations and has been profitable for the last 10 years, according to the filing with the US Securities and Exchange Commission.
None of that funding went to support operations, according to the company. Atlassian is expected to begin its roadshow this week, signaling a Wall Street debut before the end of what has been a lackluster year for IPOs. The decline was due to increased investment in research and development, the company said in its IPO filing.
The company, which has more than employees, will trade on the Nasdaq under the ticker symbol "TEAM. Primary shareholders are co-founders and co-chief executives Scott Farquhar and Michael Cannon-Brookes, who each own Got a news tip for our journalists? Share it with us anonymously here.
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The tech listings in have delivered an average total return of 1. Skip to navigation Skip to content Skip to footer Help using this website - Accessibility statement. Close menu Search Search. Technology Print article. John Kehoe Economics editor. Nov 29, — 8. Save Log in or Subscribe to save article. He writes on economics, politics and business. He joined the Financial Review in from Treasury.
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