This $3 billion company thinks business software can be as big as Snapchat

Atlassian cofoundersAtlassianAtlassian Co-Founders Scott Farquhar and Mike Cannon-Brookes

When Australia-based project management software startup Atlassian first launched in 2002, cofounders and co-CEOs Mike Cannon-Brookes and Scott Farquhar set for themselves the goal of nabbing 50,000 customers.

“We just chose it because it seemed far away,” says Cannon-Brookes.

A few months ago, Cannon-Brookes says, Atlassian finally hit that goal.

Between its immensely successful JIRA product, business wiki creator Confluent, code management tool BitBucket, and business chat app HipChat, Atlassian indeed claims 50,000 paying customers in small businesses and large enterprises alike.

More impressively, Atlassian has never taken a dime of venture capital financing or employed any kind of salesperson, growing by word of mouth. These days, Atlassian is profitable, carries a reported $US3.3 billion valuation, and is said to be planning a big IPO in the American markets before the end of the year.

Which all means that Atlassian needs a new goal. And it’s taking its cues from social apps like Facebook and Twitter.

Rather than measure paying customers as the sign of success, Atlassian is now looking at monthly active users, or “MAUS.” And Atlassian says it will consider itself a success when it has 100 million of them, taking it as a massive sign that people actually like using the company’s products.

“It will probably take another 13 years to get there,” Cannon-Brookes says.

100 million monthly users

Most of Atlassian’s customers are made up of software development teams. But as time goes on, more and more customers are using Atlassian’s tools in ways the company never imagined, from the marketing department up to scientific research, and the company has been switching up its products accordingly.

“The software team is incredibly strategic to business, but they need to work with everyone else,” Cannon-Brookes says.

JIRA Software atlassianAtlassianThe new JIRA Software, tailored for programming teams.

100 million MAUs is nothing compared to the likes of, say, Snapchat, which is said to have upwards of 200 million. Earlier today, Facebook announced 1.55 billion monthly active users in the last quarter.

But for an enterprise software company, especially a relatively niche one that’s mainly found success by helping developers collaborate on software projects, it’s a bold goal, and one that “very few” companies of Atlassian’s like have achieved.

“All of our products solve a fundamental problem”

Cannon-Brookes says that setting these lofty, long-term goals helps keep the team focused on improving the products and growing, even as it gets bigger.

“It changes the way we think, it changes the way we win,” Cannon-Brookes says.

He likes to say that rather than focusing on the Fortune 500, Atlassian focuses on the “Fortune 500,000.” Rather than congratulate themselves on a few big deals, Atlassian’s focus on scoring 50,000 customers meant that Cannon-Brookes and Farquhar meant that they never let employees rest on their laurels.

Hipchat apps screenshotAtlassianThis CallCenter app is integrated directly into HipChat.

It’s not a hard-and-fast quota, but rather a mindset.

And while Facebook likes to talk about “the next billion” internet users coming online in the developing world, Cannon-Brookes points out that a lot of them are going to start businesses, build software, and generally need to collaborate.

So while 100 million MAUs sounds super ambitious, Cannon-Brookes says the long-term plan is just going after a bigger slice of a growing pie, providing the tools and support that the next wave of people coming online will need.

“All of our products solve a fundamental problem,” Cannon-Brookes says.

Get better, gradually

Cannon-Brookes also says that the whole “no salespeople” thing has a side-benefit that people don’t really think about in the march towards 100 million MAUs: It means that it has a lot more capital to sink into research and development.

Since the products are Atlassian’s best sales pitch, Cannon-Brookes says, it means that the company can just focus on making them slightly better, year-in and year-out, solving more problems for more customers.

“It’s probably why we’ve had stable, reliable growth over the years,” Cannon-Brookes says.

He says that Apple doesn’t get enough credit for its “incremental improvements” with the iPhone — this year’s new iPhone 6S may not be hugely different than the iPhone 6, but it’s leaps and bounds beyond the original 2007 iPhone.

Steve Jobs original iPhone 2007David Paul Morris/Getty ImagesSteve Jobs introduces the original Apple iPhone in 2007.

Atlassian’s JIRA and the rest are similarly getting just a little better every year, solving different problems for different people. Each individual improvement may not seem like much, but it makes it that little bit more appealing to a customer who’d otherwise not want to take the leap.

And when the company realised that over a third of its customers were using JIRA for stuff outside what Atlassian had originally intended it for, it broke it up into three separate products for three separate needs, just to broaden the appeal.

Different strokes for different folks

It hasn’t always been easy: Cannon-Brookes says that it took Atlassian years to reconfigure its thinking to better serve large enterprise customers, and it’s something the company is still struggling with.

End users loved JIRA and HipChat, he says, but at large scales, it didn’t have the reliability or the features that the IT department demanded. When it’s just a few isolated teams of programmers using the products, it’s one thing.

But when a global company is trying to use Atlassian’s products, downtime isn’t acceptable, even if it’s for maintenance.

“We can’t take JIRA down at 2AM, because there is no 2AM anymore,” Cannon-Brookes says.

Meanwhile, while Atlassian certainly got an early start, the competitive field has never been fiercer thanks to the rise of the programmer.

Silicon Valley darling Slack competes head-on with Atlassian HipChat, while Atlassian BitBucket is often matched up against $US2 billion GitHub. And because both of them are backed by some of the biggest venture capital firms around, they get tons of press, too.

It means that while it may be both popular and profitable, the still-privately-held Atlassian is often an afterthought when talking about the business software market.

“We’re Australian,” Cannon-Brookes says. “We have no problem being the underdog.”

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