Atlassian's President told us about how a double-down bet during the GFC put the company on the path to success

Atlassian President Jay Simons. Picture: Atlassian

  • Atlassian’s President Jay Simons has spoken about what it was like to be starting up as the GFC kicked in.
  • As 638,000 Australian businesses folded, Atlassian chose to go on a spending spree.
  • The company announced a new $US295 million acquisition at last week’s Atlassian Summit 18.

Tech industry history is littered with anecdotes about CEOs who made extraordinary bets.

Many ended up costing their companies billions. Rupert Murdoch’s $US500 million splurge on MySpace. BlackBerry waiting for the keyboard to come back.

It still hurts to read about and recall the slow death of Yahoo.

But the gamblers that survived to tell the tale are now considered visionaries. Wherever the unpredictable Elon Musk is headed, his portfolio today would be whole lot emptier had he not sunk $US100 million of his own money into an electric car company on the brink of collapse.

Larry Page and Sergey Brin bought YouTube for an outrageous $US1.65 billion. Steve Jobs thought phones could do with a major overhaul.

And some $US20 billion later, you can add Atlassian’s leadership trio of Scott Farquhar, Mike Cannon-Brookes and Jay Simons to the list of those that rolled the dice way back then and won.

At Atlassian’s Summit in Barcelona last week, company President Jay Simons reflected on just passing his 10-year anniversary as president of Australia’s most successful startup.

Although he didn’t know it then, when he joined from BEA in mid-2008, Simons really couldn’t have picked a worse time to join a couple of Aussies trying to light a fire under their workflow management software startup with a mantra of “don’t f..k the customer”.

It was a time when many, many customers were getting dudded, especially those who coughed up $250 for this kind of thing:

Picture: Getty Images

It was also a time just before the worst fallout from the Global Financial Crisis really began to rain down.

Right when Atlassian needed businesses to start spending, those businesses started going broke, overnight. Even far from the US, in Australia – and it’s staggering to consider now – more than 638,000 businesses folded in the two years from June 2007.

And when just about everyone else was reacting to that by laying off staff to survive, Atlassian started hiring.

“We chose to double down on hiring at a time at a time when everybody else was either firing or basically hunkering down for some dark winter,” Simons said.

“We took that as an opportunity to… buck convention. Where everyone else is huddled into a shell, we’re actually going to go out and say ‘Hey guys, we’re hiring’.

“And not only that, we went on a campaign we called something like ’30 for 30′ – I might get it wrong – but we were only 100 or so people at the time and we were gonna hire 30 people in 30 days.

“We did this whole marketing tour, we went out and hired 30% of the company in the next 30 days. And it was great. We found great people.”

Not only did it spend even more money on staff, Simons, Farquhar and Cannon-Brookes made the call to basically give away their product.

“We took a licence that was $1000 at the time, and we made it $10,” Simons says. “It was virtually free.”

That’s right. Atlassian’s famous bet on a near freemium model was made during a time when more companies than ever needed to get some money in.

“We chose to do that, in part because we felt, we recognised in the GFC that particular segment, the starter segment – small teams and small companies – $1000 was a lot for them,” Simons says.

“And we could have just held our guns and have that flatline, or maybe we could just give it away for free, help a lot of those teams and then get more of them, potentially.

“But to do that means that we were basically writing off 10% of the top line.”

Atlassian co-CEO Mike Cannon-Brookes. Picture: Peter Farquhar

Last week, 10 years on, he watched Cannon-Brookes and Farquhar address a room packed with hundreds of representatives from more than 2500 companies servicing 125,000 customers worldwide.

It was not a rock star reception, because that’s not their style. It is perhaps their most remarkable achievement that the two CEOs can walk the floor of Summit – Cannon-Brookes herding his kids – unmolested, then idly chat with a team that probably didn’t sleep last night trying to win the conference Ship It challenge to solve a problem using Atlassian tools within 48 hours.

Farquhar and Cannon-Brookes are treated exactly the way they in turn have established how Atlassian must treat its employees and customers – like people.

The cheers were reserved for Atlassian’s Head of Server Business Cameron Deatsch, because Deatsch was the guy who got to reveal what they all came for – workflow solutions.

Enterprise software is not a sexy thing to write or read about. You don’t even know what it is.

All you need to know is by making it better, Atlassian changes people’s lives. A lot of people’s lives.

In fact, search “Atlassian” with a couple of other key words and you’ll get one of those boxes that offers the questions most people want answers to. At the top, most of the time, is:

The crowd at Atlassian Summit don’t care.

With every new update Cameron reels off, you can feel the weight lifting off the shoulders of people you most likely never knew existed. The software architects, engineers, developers, resolution teams that inhabit the world behind our world.

“We’re introducing patch email notifications!”

CHEERS.

“Shared files and dashboards!”

CHEERS. WHISTLES.

“An entirely new experience in Confluence search results!”

CHEERS. WHISTLES. A WOO.

Seven seconds saved! Picture: Peter Farquhar

You might not use Atlassian products. You absolutely use services from the 40,000 odd companies that rely on them.

Companies like Domino’s. Dow Jones. CSIRO. NASA. Qantas. Spotify. Twitter. Xero. IBM. BuzzFeed. eBay, Tesla, LinkedIn, Sony and Tesla.

The biggest cheer, however – and it’s one loaded with relief – was reserved for Scott Farquhar’s reveal of Atlassian’s latest product, Jira Ops — a one-stop shop for companies using Atlassian solutions to get their business back online as soon as possible after an outage.

Last year in the US alone, outages cost US businesses $700 billion.

In Australia, it cost tens of thousands of people their chance to view the World Cup.

And to give Jira Ops the boost it needed to hit the ground running, Atlassian announced an acquisition.

Joining the family at Atlassian Summit 18 was OpsGenie and the expertise it has used since launching six years ago to help 3000 customers including Air Canada, The Washington Post and Overstock out of their jams, quickly.

Somewhere in the crowd, there were probably the kind of tears welling up that only the long-suffering IT person in your office would understand.

You certainly don’t need to understand how Jira Ops works; only to know that someone at Atlassian decided to spend $US295 million and because of that, it is now much better placed to ensure you’re not stuck in a queue at the airport for six hours.

And Atlassian is also, thanks to that arguably reckless desire in the middle of one of the biggest market meltdowns in human history to help people work better, now in a position to make more, and bigger acquisitions such as OpsGenie.

Atlassian earlier announced a stronger partnership with cloud-based digital product designer InVision. Just a month before that came the bombshell news of the deeper integration with Slack, the workplace collaboration company many assumed was Atlassian’s key rival.

What risk-taking looks like now

From an outsider’s perspective, that looks like the biggest month-and-a-bit in Atlassian’s 16-year history. It may not be in keeping what’s widely considered Atlassian’s carefully managed, consistent growth trajectory, but perhaps shows a touch of that early day bravado is still in the company DNA.

Now a public company, could Atlassian take the same kind of risks next year if another GFC dropped in?

“You can,” Simons says. “You have to… the difference is that when you’re private you don’t have to explain the potential consequence or outcome of the risk.

“And the hard part about a risk like that maybe would be the outcome of that was a little uncertain, a bit of a gamble.

“It could be that we basically made those licences free and the upside benefit that we were anticipating didn’t happen.

“I think if you were to do something significant you need to explain to shareholders or investors why you’re doing that, what you hope to get in exchange for it.”

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