The archive · Developer & Business Tools · Strategic decision · 2002–2015
Atlassian bootstrapped dev tools with no sales team to $319.5M revenue and a $5.78B IPO
Two Sydney grads started Jira and Confluence on credit cards, stayed profitable for a decade, and IPO'd without a sales staff.
Atlassian
What the business is
Developer collaboration software — Jira for project and issue tracking, Confluence for documentation — sold online as licenses and subscriptions.
Starting capital：$10,000 in credit card debt
How it started
In 2002, UNSW students Cannon-Brookes and Farquhar founded Atlassian with $10,000 on credit cards after Farquhar turned down a $48,500 job at PwC. Their stated goal was to earn more than that salary and not wear a suit, betting that software would disrupt every industry.
What happened
The company was profitable almost from the start, bringing in about $1.3 million in 2003, and financed growth from cash flow. It rejected venture money for years; the first big deal was a largely secondary $60 million Accel investment in 2010. By fiscal 2015 revenue reached $319.5 million with $6.8 million net income, 5 million monthly active users, and 48,000 customers — still with no sales force.
How it ended up
Atlassian filed an F-1 in November 2015 and listed on Nasdaq in December 2015 at $21; the stock closed its first day at $27.78, up 32%, valuing the company at $5.78 billion. Cannon-Brookes and Farquhar each kept 37.7% of the company, stakes worth over $2 billion each at the close.
Background
Atlassian was founded in 2002 by two University of New South Wales students, Mike Cannon-Brookes and Scott Farquhar, after Farquhar turned down a $48,500 job at PwC. They started with $10,000 on credit cards, with the modest goal of earning more than that salary without wearing a suit, betting that software would disrupt every industry.
The bet was that software teams would buy simple developer tools online, self-serve, at low prices. Being based in Australia, far from customers, pushed them to a no-sales model: no cold calls, no discounts, all pricing online. That kept the company profitable from early on — about $1.3 million in revenue in 2003 — and it rejected venture money for years; its first big investment was a largely secondary $60 million Accel round in 2010.
By fiscal 2015, Atlassian had $319.5 million in revenue, $6.8 million in net income, 5 million monthly active users, and 48,000 customers, profitable for ten straight years. It listed on Nasdaq in December 2015 at $21; the stock closed the first day at $27.78, up 32%, valuing the company at $5.78 billion. The co-founders each kept 37.7% of the company, worth over $2 billion apiece at the close.
What has to be true
- The founders started in a dot-com bust when budgets were tight, so a cheap, self-serve product matched what buyers could afford.
- Australia's distance from customers forced online sales with public pricing, which scaled without a sales force.
- Profitability from year one meant growth never depended on raising money, so founders kept 75%+ control for thirteen years.
- Word of mouth and a free/cheap entry price carried the product into organizations one team at a time.
What can be applied
Selling simple software online at low prices scales without a sales team; profitability from day one meant the founders never had to trade control for growth, and word of mouth did the prospecting.
Aftermath
After the IPO, Cannon-Brookes told Wired the model would not change: Atlassian would keep relying on online sales and standard pricing rather than a sales staff. The founders' stakes were worth more than $2 billion each at the first-day close, and Atlassian continued as a listed company.
Sources
- Atlassian story: How two indebted suburban guys from Sydney created a $US 3 billion tech juggernaut
- Enterprise Software Co Atlassian Files IPO On Sales Of $320M, Net Income Of $6.8M In 2015
- A Bright Spot for Tech IPOs As Atlassian Beats Expectations
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