Inside Mike Cannon-Brookes's world of Atlassian and the future of work

(R to L) Mike Cannon-Brookes and fellow founder of Atlassian, Scott Farquhar pictured together in their Sydney headquarters

About 12 years ago, Mike Cannon-Brookes came to India with his bride, Annie Todd, a fashion designer, for their honeymoon. Since then “I’ve been back a series of times on vacations and trips and for work … I’m big fan of the country,” he says. Three years ago, he gave himself a reason to take an even greater interest in India, setting up a research and development centre in Bengaluru, for Atlassian, the company co-founded by him and his college mate Scott Farquhar.

The Bengaluru centre has grown to be an 800-strong team, with hundreds more recruitments planned, playing a growing role in developing software products for Atlassian. The Sydney-headquartered company is 20-years old, and along the way, it made its two co-founders and co-CEOs Australia’s first tech billionaires, nearly 12,000 kilometres from Silicon Valley, across the Pacific Ocean.

They still hold about 30.4 percent stake each in the company, which is today valued at nearly $86 billion.

Atlassian, was called ‘a very boring software company’ by The New York Times in a 2019 piece, in jest because it makes software for businesses, something that would not resonate with an individual consumer like a social media app would.

Atlassian makes enterprise software products for teams in businesses around the world. Through its flagship product Jira, for software project management and bug tracking, and other products including Confluence, a knowledge management system, and Trello, a list maker and organiser, the company supports project management, productivity and communications for teams in functions including engineering, software development, finance, human resources and marketing.

“Our mission is to unleash the potential of every team,” Cannon-Brookes cites the company’s motto, in an interview with Forbes India on a Zoom call in the first week of August. The 41-year old billionaire was wearing his beard with a bit more modest trim than many of his famous pictures show in Australian press. The T-shirt was there, but his trademark baseball cap was missing, perhaps because he was doing the interview indoors.

The Covid-19 pandemic has made Atlassian more relevant, as customers around the world rush to implement more technology to support remote working and accelerate the digitalisation of their business operations.

“Multiple of the global vaccine creators have used Atlassian applications. Logistics companies have used our software to organise billions of deliveries," Cannon-Brookes says. The world’s biggest organisations and companies use Atlassian’s products. Among them are Domino’s Pizza, Bank of America, NASA, Facebook, Twitter, Redfin, Dropbox and Hitachi. In India, Reliance Industries, Flipkart and Ola are among its customers.

Atlassian itself has moved to an organisational structure it calls ‘TEAM Anywhere’ starting in August 2020. The company has major offices in eight or nine countries and staff in many more than that. Team anywhere means that staff no longer have to come back to an office, and every Atlassian gets the choice of working in an office or from home or wherever she is located — as long as the company has a nearby base and the time zones aren’t too off.

“That was a pretty big change, and we're still working through that.” It's also allowed the company to hire a much more diverse workforce around the world, Cannon-Brookes says.

In July, the company reported a record quarter and fiscal year. “Our Q4 was a ripper of a quarter — as we Aussies say - as we added over 23,000 new customers, grew subscription revenue 50 percent year-over-year, and continued to see cloud momentum build,” Cannon-Brookes said in a press release. “We continued to innovate with five new products built on top of our cloud platform, surpassed 200,000 customers and $2 billion in revenue, and added over 1,500 new Atlassians to the team.”

Revenue went from $1.6 billion for the year ended June 30, 2020, to $2.1 billion for the year ended June 30, 2021. Net loss was $696 million for fiscal year 2021, compared with a net loss of $351 million for fiscal year 2020, under the international accounting rules IFRS. The number of customers went from 174,000 to 236,000. Monthly active users are at over 10 million and the number of employees rose from 4,900 to more than 6,400.

“Looking ahead to fiscal 2022 and beyond, the opportunities in front of Atlassian have never been greater,” Farquhar said in the release. “We are reimagining the future of work and are keen to seize the massive opportunities that we see across our three core markets: Agile development, IT service management, and work management for all teams.”

Single pane of glass

Atlassian is in three major markets. The first is in software development, where the company can provide “a single pane of glass” to support two widely used sets of practices — ‘Agile’ and ‘DevOps.’ The first, as the name suggests, is a way of developing software quickly, and the second, is about breaking down the silos between software developers and the operational folks who install and maintain that software.

Today, software developers are often no longer handing over the software to an operational team to deploy it, but they are doing it themselves. The single pane of glass view that developers and IT teams can get, using Atlassian’s products, catalyses more efficient and effective software development.

The second big market is in IT service management, where Atlassian makes software to help IT teams better manage the services they provide to users — be it a password reset on a laptop or providing a specific level of access to certain parts of a company’s network. The third is in helping teams across different functions collaborate.

“We are driving, hopefully, and riding a giant wave of businesses becoming more digital and faster to respond as their environments change, and that's driving more usage of our products and more customer growth,” Cannon-Brookes says. “So we're in a really exciting spot.” The longer-term ambition is to see every one of the world’s 500,000 biggest companies as a customer. “That's a multi-year or a multi-decade mission. We're still on that same mission.”

And that journey is predominantly on the cloud now, although it is a non-trivial change for Atlassian and its customers alike, involving security and compliance regulations and data residency rules. Well over nine out of 10 customers that pick Atlassian today, choose its cloud-based versions. And the company will end support for on-premises versions by February 2024.

The move to the cloud has also allowed Atlassian to offer products that help its customers be a lot more connected across functions at a scale that only being on the internet can offer. There is a loop that goes from the earliest stages of making a product, be it a pizza or an electric car or a personalised loan, to getting it to the market and back. That loop is going faster every day as companies digitalise.

 “And that puts Atlassian at a pretty pivotal spot,” Cannon-Brookes says.

And, over the years, Atlassian has also successfully fostered an ecosystem of partners around the world, including app developers in India. It has a large marketplace of enterprise software apps, which has more than 5,000 different applications, and integrations from over a thousand different vendors that allow Atlassian users to extend, change, and add onto its family applications in many customised ways.

“It's long been a goal of ours to have more people working full time on Atlassian applications outside Atlassian than inside. We sort of, well eclipsed that mark a while ago,” he says.

All this has helped Atlassian to continue to be able to add customers who pay for say, one user account of Trello, to companies paying for tens of thousands of users of multiple Atlassian products. Customers often start using Atlassian long before they become big, and Flipkart and Ola are examples in India of companies that were using it “long before they became tech giants,” he says.

“We spend as much time worrying about five and 10-person teams as we do about 5,000 or 10,000-person teams.” While Atlassian saw strong increases in customers paying $1 million or more annually to subscribe to its products, its latest fiscal year also saw thousands of single-user account additions as well, for products like Trello.

Cannon-Brookes and Farquhar have not been shy of bringing in talent and products via acquisitions too. The company has made more than 30 acquisitions over the last 10 years, spending over a billion dollars, according to The Motley Fool, a financial and investing advice company. Trello, is perhaps the best known, which Atlassian acquired in 2017 for $425 million. Jira Align is another product that came in via an acquisition — that of AgileCraft in 2019. In April this year, Atlassian made another tuck-in acquisition when it purchased ThinkTilt, an Australian startup.

About half the company’s product set has come from internally built applications or very small engineering teams, of one or two people, that it acquired and then invested in heavily, and the other half came from larger acquisitions, Cannon-Brookes says.

An important feature of Atlassian’s products is that it allows people to do asynchronous work. In an office, one can just go into a meeting room to bring everyone on the same page. When everyone’s remote, spending time preparing a ‘Trello board’, for example, a shareable board of digital sticky notes of sorts, helps make online meetings shorter. As a result, end users are using these products more often and for longer.

Atlassian India

As the company grew, and with India’s software-as-a-service (SaaS) ecosystem developing to offer a critical mass of talent, Atlassian opened a centre in Bengaluru in 2018.

“It's been fantastic. We knew, with the engineering talent in India that it would be a place that very much aligned with our long-term goals,” the co-CEO says.

The large Indian diaspora in Australia and the common love of and rivalry in cricket also contributes to knowing more about India. "So we thought culturally, there's a good match there. And three years later it's been a huge success for us as an office and as a location.” This year, Atlassian India participated for the first time in Great Place to Work Institute’s survey and was listed among the top 20 employers in the country.

America is Atlassian’s biggest market, accounting for about half its revenue. Silicon Valley is also Atlassian’s biggest base by number of employees: In June 2019, a Financial Times report put about about half of Atlassian’s staff in Silicon Valley. Today, India is emerging as a hot location of talent for the company.

“Not only is India the company’s fastest growing R&D site globally, but it is also our fastest growing talent location,” Cannon-Brookes said in a press release in June. Atlassian as a whole spends a third of its revenue on research and development, making it one of the biggest Nasdaq-listed spenders on R&D by proportion of revenue, Cannon-Brookes says.

The company started with a couple of small groups and functions in India. Today, big parts of its products for the IT service management market are built out of India, as well as a lot of its commerce and backend systems. And, increasingly, large parts of its cloud platform and infrastructure — which, as Atlassian becomes a completely SaaS-based company, will be a common platform — are being built in Bengaluru.

“We want to do really meaningful work in India and it's had a truly global impact on our business. It’s an essential part of our global R&D force,” Cannon-Brookes says. Having a direct presence in India has also helped make the region one of the faster-growing markets in Asia for Atlassian.

Atlassian has always had to rely on global talent. The company expanded to the US in about five years after it was started. But the founders are also trying to grow the local tech ecosystem in Australia. For example, Cannon-Brookes and Farquhar are backing a project to create a hub called Tech Central in Sydney to attract global talent and grow local innovation.

Atlassian will be an anchor tenant of that hub, the plan for which was announced last year by the Australian state government of New South Wales. Sydney is the state capital, and Australia’s largest city. Atlassian is planning a new tower, which will be the world’s tallest building made of hybrid timbre, with a glass and steel facade, for its Sydney headquarters at Tech Central. The tower, expected to be completed in 2025, will be able to house 4,000 staff.

Billionaire celebrities

Cannon-Brookes is the son of a former Citigroup banker and had a privileged upbringing, while Farquhar came from a more humble background. As billionaires, they have also become celebrities, for example, as owners of two of Australia’s most expensive homes side-by-side on Sydney’s waterfront, previously owned by the country’s newspaper dynasties. They cut a hole in the fences between their houses and made a dirt track through so their children could play together.

The purchase of those homes was also seen by some in Australia as a transition of influence from the old, conservative, guard to the tech generation, according to the The New York Times report of February 2019. Farquhar himself echoed that sentiment in that report. And, in a country better known for its mining industry, Cannon-Brookes has also been outspoken on issues ranging from the effect of Australia’s immigration policies on its tech industry, and the need to do more to tackle climate change.

They started Atlassian in 2002 straight out of college, with $10,000 (about $7,350) of credit card debt, because they did not want regular jobs and they thought their own business would be more interesting. They were both 22 at the time. Early on, they tried out various things, including supporting products from other tech companies, but quickly realised that they needed to build their own.

Their company was making money pretty much from the get-go, but it took them the first five years to figure out the DNA of the company, Cannon-Brookes says. In 2010, they took $60 million in VC funding from Accel. While the money would help them acquire other startups, backing of the famous VC firm got them noticed, opened doors, and brought them additional credibility.

When they went public on the Nasdaq in December 2015, Atlassian hit a market capitalisation of $4.4 billion.

Today, IT market research and consulting company Gartner’s ‘magic quadrant’ rating shows Atlassian as a leader in what it does, and the company is also an inspiration to some of India’s up and coming SaaS entrepreneurs. Some of those entrepreneurs, like Girish Mathrubootham, who started Freshworks, even compete in some parts of the markets that Atlassian operates in.

Outside Covid-19, some of these trends will be what Atlassian will be watching very closely, because the future will boil down to a fight for talent. “Our biggest challenge as a business is always, attracting and growing the people that we have,” Cannon-Brookes says. “Technology is built by people. So fundamentally, the quality of people we can attract, the work we can give them to do, the autonomy and the creativity with which they can attack those tasks is a non-trivial challenge.”

Being in the top 20 places to work in India is a strong example, while Atlassian has won such recognition around the world. Cannon-Brookes says, “But we're going to have to stay there and hopefully move up those types of rankings to keep attracting and growing the talent that we have to have a bigger impact on the world.”