Atlassian: Mike Cannon-Brookes and Scott Farquhar

In 2001, Mike Cannon-Brookes sent an email to his college classmates in Sydney, asking if anyone was interested in helping him launch a tech startup after graduation. Back then, entrepreneurship wasn't a popular career path in Australia; and Mike's only taker was Scott Farquhar, a fellow student who shared Mike's passion for computers and his frustration for the corporate grind. Together they launched Atlassian, a two-man tech support service that they managed from their bedrooms at all hours of the night. Unable to make money, Scott and Mike decided to pivot and sell some of the software they'd developed for themselves. Out of that grew Jira, a project-management tool that's used in all sorts of endeavors, from pizza delivery to the exploration of Mars. Today, Atlassian is valued at over $50 billion and Scott and Mike are Australia's first startup-to-IPO tech billionaires. HIBT Virtual Event with Jay Shetty - information and tickets at: https://nprpresents.orgSee Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Guy Raz?

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• 0:45Guy Raz?

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• 1:30Guy Raz?

  based on one small decision. Visit usbank.com/business to learn more. The creditor and issuer of this card is US Bank National Association, pursuant to a license from Visa USA, Inc. Some restrictions apply. Our presenting sponsor today is Anthropic, the team behind Claude. Every founder on this show started with a hard question. Not the marketing plan, the 2:00 AM kind. Is this idea any good? Am I the one to build it? Should I quit my job? Anthropic got built the same way. A public benefit corporation founded on one Hard question. How do we make sure AI goes well for people?

• 2:14Guy Raz?

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• 4:24Guy Raz?

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• 5:06Guy Raz?

  or get started building for free today at framer.com/built for 30% off a Framer Pro annual plan. That's framer.com/built. Rules and restrictions may apply. Hey, everyone. Just a quick announcement before we start the show. So, a lot of you may know how much I miss seeing all of you at the live, in-person shows that we do around the country during normal times. So, I am really excited to finally announce our first How I Built This virtual event. It's happening next month with Jay Shetty. Jay is a bestselling author, former monk, and wellness coach. And if you're searching for purpose, peace, and clarity in your life,

• 5:51Guy Raz?

  or you're struggling to find meaning and motivation at work, you will not want to miss this conversation. Please join us. It's happening on Thursday, March 11. And anybody around the world can take part. For more information and tickets, head to nprpresents.org. And I hope to see you there.

• 6:13Guy Raz?

  And one more quick thing, just a quick note. There is a little bit of salty language in this episode, so if you are listening with kids, just be aware. And thanks.

• 6:27Speaker 01

  I would have my computer running 24 hours a day under my bed. Both our mobile phones were turned to the loudest ringtone they possibly could. We'd alternate which nights we were on call and get up at 2:00 in the morning and try and answer the phone calls. It's like, Atlassian? Yep, at work. You know, trying to sound like you're cogent at that time of the morning. And then we realized that actually, it was just such a terrible business that almost anything would be better.

• 7:00Guy Raz?

  From NPR, it's How I Built This, a show about innovators, entrepreneurs, idealists, and the stories behind the movements they built.

• 7:12Guy Raz?

  I'm Guy Raz, and on the show today, how two friends from college started a business named for a Greek titan and built a modern day empire, Atlassian, a software company that's been valued at over $50 billion.

• 7:29Guy Raz?

  Back in 2018, there was an article in a major Australian newspaper, the Sydney Morning Herald. The headline read, "Atlassian: The $30 Billion Tech Giant Nobody Understands." Today, you'd modify that headline slightly to read, "The $50 Billion Tech Giant Nobody Understands." So let me try and explain as best I can. Atlassian is a software company. It makes collaboration tools mainly used by software engineers and project managers. Their applications have been used by teams who sent the Curiosity Rover to Mars, by Domino's every time you order a pizza, and by Audi's designers who rely on Atlassian's

• 8:13Guy Raz?

  project management tool called Jira. By market cap, Atlassian is one of the 20 or so biggest software companies on the planet. And those other companies, you probably know some of them. Microsoft, Oracle, Adobe, Autodesk, Salesforce, Intuit, et cetera. Anyway, if you look at the top 30 or so biggest software companies on earth, you'll start to notice a pattern. Most of them are based in Northern California, in Silicon Valley, which makes Atlassian, an Australian tech company, an outlier. Back in 2015, when the company went public, it turned its founders, Mike Cannon-Brooks and Scott Farquhar,

• 8:56Guy Raz?

  into Australia's first tech billionaires. But the thing is, Atlassian's success may have a lot to do with where it started, far away from the tech hubs of Northern California and Seattle. And while that may sound counterintuitive, launching a tech company in Australia in 2001 meant, for starters, less competition, less noise, and fewer distractions. And for Mike and Scott, it also meant not a whole lot of access to startup capital. In fact, in the early days, there was none. And so the two founders didn't really have any investors breathing down their necks trying to micromanage the business.

• 9:37Guy Raz?

  And it gave them room to experiment and to make mistakes and to grow. Mike and Scott met in college. They both grew up in Sydney, but they also both came from very different backgrounds. Here's Scott.

• 9:52Speaker 01

  My dad originally did some computing early in his career, but he had sleep disorder and that affected his ability to work as a computer programmer. And so he ended up doing odd jobs. So he worked at a service station at night. He did some manual labor. My mom was a housewife, growing up, for most of her life, and interspersed that with different jobs. One of the early ones I remember is she would clean someone else's house once a week. Then she worked at Target, or Target, as we like to call it in Australia, and McDonald's at different stages. And so I would say it's a middle-class upbringing. You know, we didn't want for anything, but, you know, we had one holiday a year to the same place every year, type of thing.

• 10:33Guy Raz?

  Yeah. When you were growing up, a teenager, did you feel... Compared to other kids you knew or places you saw that you guys didn't really have a whole lot?

• 10:45Speaker 01

  I didn't really notice the difference in, you know, our economic status, I guess. When you're growing up, you go to a school and everyone in Australia wears a school uniform. So there's no real difference in fashion. I remember in high school, I ended up dating a girl who was from one of the private schools in Sydney. And we would go to lots of different people's houses. And I do remember, you know, quite a few of those houses looked very, very different to the house we grew up in. You know, the house, and particularly when my parents got divorced, we ended up moving into much smaller houses. And when your entire house could fit in someone else's living room, you sort of realize that there's a very different way of people living out there. But I never felt that we missed out on anything.

• 11:24Speaker 01

  I think maybe with one notable exception, which I remember clearly, is that I remember my friends had computers. And I remember kind of asking my parents, why couldn't we have a computer? And I do remember, you know, crying as I went to sleep one night of like, Dad, why can't I get a computer?

• 11:41Guy Raz?

  So were you eventually able to get one?

• 11:44Speaker 01

  It was months or, you know, later, some, you know, old computers that I guess had been, you know, extended, exceeded their useful life at his work. Became available and he bought them and brought them home, thinking, you know, he'd done an amazing thing and helped his son. And but it turned out those computers were not compatible with any of the games that I wanted to play. And I think my foray into programming or even using computers was hours, weeks, months of time spent trying to get those computers to play.

• 12:14Guy Raz?

  Scott, I'm gonna ask you just to stick around for a moment and I wanna, I wanna turn to you, Mike, for a minute. I guess your upbringing was substantially different than Scott's. Your dad was a banker and I guess your family moved around quite a bit when you were young. And you went to a boarding school in the UK, right?

• 12:33Speaker 01

  Yeah, I was five when we moved to Australia and I went to boarding.

• 12:36Speaker 02

  School in England from the age of seven to twelve and then came back to Australia for high school at the age of thirteen.

• 12:42Guy Raz?

  Wow. So you were like far away from your parents for like seven years.

• 12:47Speaker 02

  For six years, yeah, which is um it's kind of odd. It's how I got started in computers because they started the frequent flyer program. So I was flying from Sydney to London four times a year, back and forth and racking up lots of frequent flyer points as a seven year old, eight year old, nine year old. And my parents gave me the catalog one, you know, Christmas or end of year and said, hey, you know, you've you've earned all these points. What do you want to get? And you're kind of looking at like bottles of wine and holidays and as an eight year old kid, you're like, none of this is really good for me. And the back was this computer, an Amstrad PC twenty, four color masterful device. And so I was like, I guess I'll get that. And it was how I got my my first

• 13:29Speaker 02

  computer of myself, my own at eight, eight and a half through freaking fly points.

• 13:33Guy Raz?

  What did you do with that computer?

• 13:35Speaker 02

  I used to um play lots of really bad video games that seemed like the best thing in the world at the time. Um and the internet took off, so I was on the internet pretty early, luckily. My sister, one of my sisters went to university in Edinburgh in Scotland. And I managed to convince my parents that we could email her and that this would be a lot cheaper than sending letters. You know, paying for those forty five cent stamps would be expensive. So instead, we joined an ISP in Sydney called DialX, which I can still remember. It was one cent per minute. And it was all, you know, text based and had the old modem making those funny noises as you logged in and all that sort of thing. But that got the internet into our house.

• 14:14Guy Raz?

  Yep.

• 14:15Speaker 02

  That was definitely a revelation for me.

• 14:16Guy Raz?

  Your sister's email address was probably something like S T three, seven, two, five, five, nine, at Edinburgh dot A C dot C C dot U K.

• 14:26Speaker 02

  It was something, something very close to that, yeah.

• 14:29Guy Raz?

  I remember those days, yeah. Um and and I guess when it was time for you to go to college, you got this pretty prestigious like computer science scholarship to go to the University of New South Wales, which is in is in Sydney, right? And this is a program, I guess, where like part of the deal is you get a scholarship to be part of this program, but you kind of agree to go work for one of the companies that is going to sponsor, that sponsors the scholarship, right? Is that right?

• 14:56Speaker 02

  Yeah, it's called a co-op scholarship. So the whole idea is the triangle between industry, academia, and the students.

• 15:02Guy Raz?

  Right. And this is where the two of you met because Scott had been accepted into the same program, right, Scott?

• 15:09Speaker 01

  Yes, and there's quite a lot of luck involved in where Mike and I have ended up. And one of the lucky things was that the programming languages that we got taught and the skills we got taught were actually pretty in line with what we needed to build a software company. We weren't being taught esoteric programming languages that you couldn't use or compiler details where you were sort of down in the bowels of a computer, trying to get it to work. We're actually building languages, programming languages that could be used to build applications and build specifically build web applications, which of course is where most software is these days.

• 15:45Guy Raz?

  And Scott, were you and Mike close friends in college? Or did you kind of have your own, like your own groups? Or did you hang out a lot?

• 15:53Speaker 01

  I think both of us gravitated towards group assignments where other people, much smarter than us, did all the work. So I think we found ourselves in, offered the same group assignments early on. We'd go to the same parties together, but I don't think we'd be hanging out on a Tuesday night at each other's houses.

• 16:09Guy Raz?

  And Mike, what was your first impression of Scott? Do you remember him?

• 16:13Speaker 02

  Yeah, I remember my early impressions, he was clearly a leader. Like, hey, I'm going to take charge of the situation. I'm going to sort it out, whatever it was, whether we were organizing which pub to go to, or how we should all plan for studying, or where we should meet, or whatever. There were certain kids that just took charge and he was very much a take charge kind of leader, which was really good. And he was clearly into the same things I was, you know, computers, and was always a good match.

• 16:38Guy Raz?

  All right. So you were in this program. It's like part, it's like a work-study program. You got to do a couple of months of school, of like classwork, and then a couple of months of working in a In a company and you get your assignments and what did you end up doing? Where did you have to work? Mike?

• 16:55Speaker 02

  So we, you're supposed to do three six months assignments. And I got my first assignment, which was at Bay Networks, which is a networking vendor that became Nortel Networks before I joined because I got bought by Nortel. This was in the sort of late nineties where networking, equipment, Cisco, you know, this was a real hot, hot area. I spent six months just plugging in machinery. It was the most boring six month assignment. I can say that now Nortel's out of business. So it was not a fun or exciting six months. And I think that was one of those signs that maybe, maybe the big corporate thing wasn't, wasn't so much for me. I was like, man, if this is what work life's going to be like, this sucks.

• 17:34Guy Raz?

  Yeah.

• 17:34Speaker 02

  So I actually left the scholarship program after that.

• 17:39Guy Raz?

  Yeah.

• 17:39Speaker 02

  A lot of that six months was spent working on my first startup with another scholarship kid called Nikki, who now runs Australia's best venture capital firm. And we actually dropped out of the scholarship course to pursue that startup after that first of three six month stints. So about two years into our four year degree.

• 17:58Guy Raz?

  Wow. So you dropped out of the scholarship program and what was your startup, by the way?

• 18:03Speaker 02

  It was called The Bookmark Box. So Hotmail had just kind of appeared and we were going back and forth from home to this IT placement to student computers at, at school. You know, you had to log in on the student network and everything. And we synced people's bookmarks across their browsers and different things through a kind of a web app.

• 18:23Guy Raz?

  Sure. Yeah.

• 18:24Speaker 02

  And I've always said it was a one year amazing experience, right? The two of us, I can viscerally remember the formative moment. We got an office in a local kind of what would now be an accelerator incubator at the Australian Technology Park. And the office was a room about the size of this podcast studio and we got our own whiteboard and we had a table and we walked in and the two of us were like, right, now we better do something. You know what I mean? The, the staring at a blank whiteboard in your first office with no windows was very much okay. Now it's time to get, get serious, but we learned a ton.

• 18:56Guy Raz?

  And what happened at the startup?

• 18:58Speaker 02

  We ran for about 12 months. We raised a little bit of money from what would now be called friends and family, parents and uncles and stuff who felt sorry for us and gave us five grand or 10 grand. And we had two competitors. One was called blink.com and one was called something else. I forget what the other one was called. Anyway, blink raised thirty five million dollars. And we were sitting in Sydney and we were just like, holy shit, we're gonna get smoked.

• 19:23Guy Raz?

  Yeah.

• 19:23Speaker 02

  There's no way. So we called up the two or three guys that had raised a big bunch of money and said, look, we got, we got a couple of million bookmarks and we got, I think we had a couple of hundred thousand users. Um, do you wanna, do you wanna buy this thing off us? And one of them said yes. So I, I flew to New York and did a bit of negotiating with blink and we sold it to them for a couple of hundred grand or something and, and paid the investors back their money. And ironically, uh, the, the, the worst, well, the funniest part about that story, my dad would hate me saying this, is he, I think my, my dad put in five or 10 grand and, uh, you know, barely got his money back kind of thing and, and decided that maybe I wasn't worth backing. And so he never invested in Atlassian.

• 20:05Guy Raz?

  Right.

• 20:05Speaker 02

  And he's always kind of said, hey, man, I backed the wrong one there, basically, right? And I was like, well, sorry.

• 20:12Guy Raz?

  Did your parents support your decision to, to drop out of the scholarship program?

• 20:15Speaker 02

  No, no, my mom was not, this was not, not an okay thing. I remember her saying to me that the only thing she made me promise is that I would get my degree.

• 20:24Guy Raz?

  So Scott, all right, you are still in the program. You do not drop out of it. And while you were in this program, did you start to have thoughts about what you would do when it was over? Did you just assume that you'd end up working for one of these companies that sponsored the, the scholarship?

• 20:39Speaker 01

  I worked for three companies during my scholarship. It was, um, IBM, then PWC, then ASX, the Australian Stock Exchange, all three letter acronym companies. And my experience of that was working in a large organization was just full of people that were trying their best, but didn't seem to be really on the path to success. And

• 21:02Speaker 02

  I remember during my IBM process, it was the middle of the year 2000 Y2K problem. And my job was not, you know, to go into the code and fix the Y2K problem. If it existed, it was really to go and make sure that all the contracts that they had with their customers excluded that so that they wouldn't be legally liable if they had any problems. And I, you know, roughly similar experiences at the other companies that I worked at. And so after that, it was definitely not an encouraging sign in terms of working for corporate Australia.

• 21:34Guy Raz?

  All right. So, so Scott, it sounds like you're clearly getting disillusioned with, with the corporate work that you're doing as part of this scholarship program. And, and Mike, you've left the program, but you're still a student at the university and, and you've already sold your first company at this point.

• 21:49Speaker 02

  That's right.

• 21:49Guy Raz?

  And then I guess what around 2001, Mike, you send out an email like to some of the people in your class or your cohort of friends, see if anyone wanted to do another startup with you, like what, what was the email that you sent out? What was the pitch?

• 22:05Speaker 02

  Yeah, I sent an email to a bunch of folks saying, before you all take grad jobs kind of things, do you want, you know, does anyone want to do something, something crazy and try our own thing? And the thinking was to not get a real job.

• 22:19Guy Raz?

  Right.

• 22:19Speaker 02

  Right? Like e- even if we built a really crappy company and we'd been able to kind of survive and go through, that would have been more exciting to me than going to work in a very large company with a suit and tie as all our friends, you know, were sort of heading to do. It just wasn't, wasn't my thing, you know? And so I wondered if other people wanted to have that, that fun experience too.

• 22:38Guy Raz?

  And, and a bunch of people answered that email, right?

• 22:41Speaker 02

  Just one.

• 22:42Guy Raz?

  Just one?

• 22:42Speaker 02

  Just, just one, I think. Yeah. So it ended up pretty quickly, just Mike and myself and.

• 22:48Guy Raz?

  You answered the email and said, I'm in.

• 22:50Speaker 02

  Yeah, I'm in and, and okay, great. What are we going to do? We got to get a website and we got to get going.

• 22:56Guy Raz?

  To do what? What was the idea? What were you going to sell? What was your business?

• 23:00Speaker 02

  Look, I, I think it was obvious it was going to be some sort of a digital business.

• 23:02Guy Raz?

  Right.

• 23:03Speaker 02

  Right? We were in technology. We, we were all, you know, into using technology and building technology things.

• 23:09Guy Raz?

  Yeah.

• 23:10Speaker 02

  I should probably formally at some stage thank IBM, PWC and the ASX for putting Scott off the corporate career because that was probably one of the reasons he said, yeah, let's try something else because he'd also had a pretty negative journey there. And then, you know, we kind of hung out a lot and tried things, tried various ways to make money.

• 23:30Guy Raz?

  Scott, I'm trying to understand how you would have taken that kind of risk at that age because you didn't grow up with money and you got this scholarship. And I'm sure everyone was really proud of you. I'm sure your parents were really proud of you and you were going to be set. You were going to have a really good, solid, stable job. You were going to make decent cash and you were giving that up. So why? Why were you willing to take that risk at that point?

• 23:55Speaker 01

  It sounds trite like, but it didn't feel like a big risk to, to give up, you know, a corporate job. Maybe we were young and naive, but I always felt that landed on my feet with whatever I'd done, you know, as a smart kid, I could, you know, there will always be jobs for smart kids out there. And if I didn't get a job with this particular graduate year, I'll get a job in the next graduate year. And I just felt like, wow, I've got better things to do in my life than, you know, kind of be downstream of a whole bunch of poor choices. And I remember the local Thai place and three satay chicken skewers and rice was $4.50 at the, at the local Thai place. And if I could get dinner for $4.50, you don't, you don't have much money to live. And Mike was a really smart guy.

• 24:40Guy Raz?

  You thought, hey, this guy already took a risk, started something, successfully sold it. So maybe, yeah, maybe there's something there. And, and you knew him already and you liked him?

• 24:50Speaker 01

  Yeah. He's a smart guy. He's totally trustworthy. And the decision to start with Mike, you know, wasn't, didn't seem really risky because the graduate salary I remember was $48,500 if you went and worked at PWC. And the thesis was if we can earn $48,500 and not have to wear a suit to work and a tie to work and work with, you know, kind of average people, then, you know, we've won.

• 25:15Guy Raz?

  So what, what was the idea? What was the business that you came up with?

• 25:19Speaker 01

  The initial business was, it's actually a pretty bad business idea, and I'm actually grateful that it was so bad that it failed. But the original business idea was to provide support for someone else's software. And it was a company out of Sweden that produced software and we'd been using it previously. We thought it was a great bit of software. They had terrible support, you know, great software, terrible support like, wow, we can provide that amazing support. I could have match made in heaven. So we got an email address, got a web server, put up some content so that people would find us. We, our pricing model was horrifically broken. We would have it such that you would only pay us if we were successful in solving your case, which meant that.

• 25:59Guy Raz?

  Wow.

• 26:00Speaker 01

  You know, and I think you had to pay us three hundred dollars.

• 26:02Speaker 02

  Three hundred, three hundred and sixty US dollars was the initial price.

• 26:05Guy Raz?

  And, and did you get authorization from the company that made the software to be their tech support?

• 26:10Speaker 02

  Not really.

• 26:11Guy Raz?

  No, I got you. Okay.

• 26:12Speaker 02

  They, they were renowned as having amazing software and terrible documentation, support, everything. So we thought, well, if we write their documentation. Sort of people will come and read it. And then when they have a problem, they'll, they'll call us and maybe they'll pay us some money to do that. Now, the problem is the documentation we wrote was pretty good, that they would only call us with the hardest possible problems. And then the three hundred and sixty dollars was totally not a worthwhile business model to solve what were the one percent of really, really hard problems.

• 26:43Speaker 01

  One of our first support calls was at a party and I remember disappearing upstairs in the middle of this party. It was actually Mike's house and I had to get him to. Give me his password for his computer and I had to sound, you know, very official, like, uh, hello, Atlassian. Of course, there's. Party going on, music, people screaming, like people downing alcohol and, uh. Think I spent the next five hours trying to debug this person's support call and not surprising, I didn't. End up solving that customer's support call at four AM in the morning in Sydney time, but I do remember waking up. The next morning, I don't know what time it was, eleven or something and. Walking down the street and, and coming to me the answer to their support call. I ended up solving it, I guess, in my sleep. That night and, uh, that weekend.

• 27:27Speaker 02

  Vaidas or computer associates or someone, someone like that. They faxed us, I remember their, their check, three hundred and sixty bucks.

• 27:33Guy Raz?

  Wow.

• 27:33Speaker 02

  It's on a fax machine.

• 27:34Guy Raz?

  And you called the business Atlassian from the beginning, right?

• 27:38Speaker 02

  Yes.

• 27:38Guy Raz?

  Where did that name come from? I mean, Atlas, I guess.

• 27:42Speaker 02

  So my, my mom is a Latin and ancient Greek major, I suppose you would say in America.

• 27:48Guy Raz?

  Yeah.

• 27:49Speaker 02

  And because.

• 27:51Speaker 02

  We were initially going to provide customer service. That's what we were doing, right? We were providing tech support. Atlas was a Greek Titan. He was actually a bit of a bad guy and his punishment was to theoretically hold up the sky. And so we thought this was kind of a, uh, what we used to, we had this branded term legendary service. We were going to go above and beyond to just deliver this amazing legendary service, right? And he was a legend that was providing service to the world.

• 28:17Guy Raz?

  Holding up the sky?

• 28:18Speaker 02

  Sky would have fallen down theoretically. And so we sort of turned it into an adjective, uh, because atlas.com was taken. So Atlassian was a, an Atlassian effort, you know, was a, was a legendary service effort.

• 28:31Guy Raz?

  So when you started this tech support company, I mean, you're both so young, you were, you're kids. You, you had some experience starting up a business, Mike, and, and selling it. But did you guys go through the whole formal, like, you know, in the U S you would incorporate and do an LLC? I mean, sometimes it depends. I mean, you would have a conversation about equity and who got what. Did you, did you do that? Any of that in, in those days?

• 28:55Speaker 02

  So we did, we did the incorporation thing. Yeah, we went and bought a business name. In Australia, it was a hundred and $10 or so. You'd get into the little local agency. And somewhere we still have is a laminated piece of paper with the Atlassian business name somewhere. And then, you know, there was two of us. So it was a hundred shares. I think you got 50 shares each.

• 29:13Speaker 01

  And, uh, I, I remember, um, actually going into a bank and, cause we had wanted to set up a business account. And I remember going into the bank and thinking, shit, I hope no one knows, notices that I have no idea what I'm doing. And like, are we a legitimate business? Like, are you allowed to open a business account? Like, do we need to have done something businessy before we could open this account? And then, you know, later on in, in life, we, you know, got a lawyer to kind of look at the, you know, we started having employees and wanted to make sure it was more solidified, I guess, you know, a shareholders agreement. And the lawyer, you know, sort of says, oh, great. It was 50 50. If you were gonna settle a dispute, how do you, you know, settle it? And, um, I think, you know, there was some escalation processes, but at the very end, it's like, well,

• 29:57Speaker 01

  what's the final way of doing it? And we put in, uh, Rochambeau or rock, paper, scissors.

• 30:02Guy Raz?

  Scissors, yeah.

• 30:03Speaker 01

  Uh, into our shareholders agreement. And so it's changed now. We're a public company. We, we can't solve problems like that anymore.

• 30:09Guy Raz?

  Yeah.

• 30:09Speaker 01

  Uh, but you know, for the first few years, if we disagreed, um, it would have ended up at rock, paper, scissors. Um, and I was highly incentivized to never let that happen because I think I, I, I lose every single game of that, whether I've ever played with Mike. So it was.

• 30:21Guy Raz?

  You lost every game of rock, paper, scissors?

• 30:23Speaker 01

  It don't know. It's statistically very unlikely that that is possible, but it feels like that, like, yeah.

• 30:28Guy Raz?

  It's, I mean, statistically, rock wins the most.

• 30:30Speaker 01

  Of course.

• 30:31Guy Raz?

  Yeah.

• 30:33Guy Raz?

  So you guys have, you've got this service business, this tech support business for this one product. And how long does that last? How long are you in the service business before you realize it's not working?

• 30:47Speaker 01

  I think it was less than a year that we were in the service business. I would have my computer running 24 hours a day under my bed, you know, so I had the sort of fan spinning up and, and down while you're trying to sleep. Both our mobile phones were turned on to the loudest ringtone they possibly could. We'd alternate which nights we were on call. And you'd get up at two in the morning and try and answer, you know, the phone calls like,

• 31:12Speaker 01

  Atlassian? That's, yep. We're, you know, trying to sound like you're cogent at that time in the morning. And then, you know, trying to sound like you're a big company. We realized that actually, uh, it was, it was just such a terrible business that almost anything would be better. And our true passion was not supporting software, it was building it. And from that, uh, we then started exploring where we wanted to, you know, build software.

• 31:34Guy Raz?

  Was there a point where, where one or both of you consciously sat down and said, hey, you know, this isn't working. Let's do something different. Or did it just, did that just happen organically? What do you remember?

• 31:45Speaker 02

  I think what we started to do is we started to write software to try to make our own business better. So we wrote an application to put a lot of that content, the documentation online. It kind of was like a knowledge base type thing. We wrote an email archiving tool because a lot of it was done via email and you, you had no archives of the shared inboxes sort of thing. So we wrote one of those. Uh, and then we wrote a support system, which actually we called the Atlassian Support System, which has since gotten us in a lot of trouble. Um, because it was known by its acronym and it was not, um,

• 32:18Guy Raz?

  Yeah.

• 32:19Speaker 02

  particularly well branded.

• 32:20Guy Raz?

  It's a great acronym.

• 32:21Speaker 01

  Yeah, we totally, nobody realized this for years. I gotta be honest. And then suddenly someone said, hey, do you realize? And we were like, oh no.

• 32:27Speaker 02

  Um. So that was a application to provide that support, right? So people could file a ticket and there was comments and all that sort of business.

• 32:34Guy Raz?

  This is like pre-Google Docs, where you could just put everything in the margins. You're just like sending these back and forth.

• 32:39Speaker 02

  Yeah, it was a pretty primitive application for for uh providing support online, I suppose. And that writing of software convinced us that that was a much more both fun thing to do. And obviously, in the application we were supporting, we saw that they were making a lot more money in selling the software thousands of times and writing at once than we were every single time to make a dollar, we had to provide this support. It was a very non-scalable business, right? If we'd read enough business books, we would have probably realized that a lot earlier than we did. So we we sort of pivoted to try to sell some of the applications that we had made for ourselves, thinking maybe other people wanted to use these software applications.

• 33:20Guy Raz?

  And and just to be clear, these were basically applications to to assist people who were building online businesses at the time, right?

• 33:28Speaker 02

  Yeah, um, back then, the all the scaffolding to build an internet business didn't exist.

• 33:33Guy Raz?

  Right.

• 33:34Speaker 02

  Um, you know, there was no ELA Quor, there was no Front, there was no HubSpot, Survey Monkey, you know, kind of all these things that people take for granted just didn't exist. And so we built almost all of them from scratch in-house. And, you know, so, yeah, we built an email archiving tool that would be, you know, probably equivalent to something like, you know, Front or, you know, other email group tools. Today, we built a way to track our visitors across our website. We built a content management system, you know, sort of everyone uses WordPress today, but um we built our own version of that. You've got to remember, we're on the far side of the planet.

• 34:06Guy Raz?

  Right.

• 34:07Speaker 02

  Here, and we had done the evening thing, that wasn't any fun, working overnight, all night. We also didn't have any money, so we couldn't hire anybody. So the Atlassian business model came because we knew we needed to sell software somehow online, because we didn't have any salespeople, we couldn't afford to hire them, we didn't have any money, so it kind of had to sell itself. And that required us to do a lot of this tracking and modern things a long time ago.

• 34:34Guy Raz?

  I wanna I wanna sort of dive in a little bit to actually the ideation of the products that you started to build. Because people who listen to this show know that the vast majority of the things that we do on the show are like consumer-facing products, right? Like. Pita Chips or a cosmetics brand. And your products are mainly used by businesses and really used by software developers. Still a huge business and we'll get to that. But how did you begin to think about what pieces of software to build? Like, were you guys sitting in a room together saying, hey, let's build this because maybe businesses

• 35:15Guy Raz?

  will use, will use it and maybe we should use our time and energy building something like this? Or was it just more like, hey, you know, we need to solve this problem for ourselves. Let's build it. Like, what was the process?

• 35:29Speaker 01

  It's a lot easier to explain to your parents what you do if you're, you know, sell cookies. So that sounds like, that's great. But the, for us, it was building stuff that we needed ourselves and realizing that there's going to be a lot of other people out there that are going to need the same thing. And it really was a process of constraints. I really think if we had grown up in Silicon Valley and had venture capital around us, that we would have built a very different company that wouldn't have been as disruptive as ours has been because we didn't have venture capital. We didn't have people that had done it before to sort of drag us back to the mean. And we just grew up without anyone telling us the way, you know, it couldn't be done. And our experience of computers was, you know, downloading and using computer games.

• 36:13Speaker 01

  And that was a very different world to the way that enterprise software was sold back then, but not today. Like, you know, these days you download enterprise software in the same way you would download a computer game. And I just think we were at the forefront of how that happened. And almost the thing we built in that model is actually almost less important than the fact that we changed the business model of how people adopted software to be much more consumer like.

• 36:35Speaker 02

  To Scott's point, I think we built three applications in the early days.

• 36:40Guy Raz?

  Yeah.

• 36:40Speaker 02

  That we needed and we put them out to say, did anyone else need this? And we'd sort of do a little online promotion and this and that. And that Atlassian support system kind of became the guts of what is now Jira, which is still our biggest application.

• 36:53Guy Raz?

  And in simple terms, Jira is basically software that helps teams of people manage projects. And I guess initially, this is for software building projects, but now all types of projects, right?

• 37:06Speaker 02

  Sure. Yeah. Yeah, definitely. It started with software developers, right? Software developers were great audience because they went and found.

• 37:14Speaker 02

  Tools to solve their problems and they worked with a lot of other groups inside those companies. So we would watch people using our software and say, hey, why is your marketing department using this? And they would say, well, because we brought it in and they work with us and they like it. So they started using it. We were like, great. And it turns out there's way more non software developers in a company to sell to than there are software developers. But this is still a great sort of entry into the company, if you like.

• 37:38Guy Raz?

  So the two of you really just kind of hammering away at the keyboards, you built together what became Jira.

• 37:46Speaker 02

  Yes.

• 37:46Guy Raz?

  And how long did that take, that first version?

• 37:49Speaker 01

  I think that the first version probably took us three months or so, I think, before we put something on the website that was, I'm surprised anyone would have downloaded it. And I think it probably took us six months till we got to what we'd say is a 1.0 version. So something that we felt was, you know, good enough for people to use.

• 38:07Guy Raz?

  And was it, did it require a lot of resources or cash? Or was it just literally the two of you and you had to pay for an internet connection and you just started coding?

• 38:17Speaker 01

  If you look at our costs, we didn't pay ourselves for a long time. And even after that, I think we paid ourselves $300 a week for the first two years. So we were relatively inexpensive. And then it was the cost of, you know, broadband internet back then, cost of a website and, you know, bandwidth costs, which you had to pay for separately. So it was relatively cheap. We say that we put it on a credit card. What I really mean by that is we put it on Mike's credit card because I think I had about a $1,000 limit on my university credit card. I think Mike had, you know, 10 or 20 grand. And so we could, you know, afford to build our business on that.

• 38:49Speaker 02

  And it consumed our time too. You know, we didn't have anything else to do but work. And so when you have your own business, especially one that's 24 seven, you know, we didn't have a cafe that we had to open and close at certain hours. Right. And so, you know, if there was something else on, we'd go do it. If friends were going to the pub, you know, we'd go at six o'clock and we'd go have a couple of beers. And at 10 o'clock, we would go back to the office if we didn't want to go to sleep and keep working.

• 39:11Guy Raz?

  It sounds like you guys really had it together. I mean, I, and I guess I shouldn't be surprised, but it sounds like you really had this plan. And then, did you feel different from your peers? Did you feel like you guys were kind of oddballs in that way?

• 39:26Speaker 01

  I felt different to our peers on a couple of different fronts. One is, you know, they've all taken safe jobs and there's a high pressure of, man, if we fuck this up, we're going to look like idiots, right? Like, you know, we're the ones that kind of are going to be working for these people when we kind of crawl back to corporate world and they'll be our bosses in a couple of years. And so I think there's a high level of kind of anxiety around, you know, proving that you've done something, especially when your peers have all taken a very different path. But also, I think in Australia, like the idea of an entrepreneur just didn't really exist. And so there wasn't even really a category for, you know, to even to be called that. Whereas today, I think people are, okay, you start your own company. That's a valid career path. Yeah.

• 40:09Speaker 01

  My girlfriend at the time, my now wife, she is an investment banker and was back then. And all her investment banking friends would tell her, like, why are you dating Scott? He doesn't really even have a job. And, you know, and so it was just such so unusual. And I think you have something to prove.

• 40:25Speaker 02

  And I think you had simple, I was gonna say it's simple existential goals. I mean, if we didn't make money, we were going to die, right? There was no big well of money behind this business. It was just us. So the fear of death was pretty clear.

• 40:40Guy Raz?

  When we come back in just a moment, how Mike and Scott started to market their software using some pretty clever guerrilla tactics, one of which involved several hundred bottles of fine Belgian beer. Stay with us. I'm Guy Raz and you're listening to How I Built This from NPR.

• 41:04Guy Raz?

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• 42:27Guy Raz?

  Hey, welcome back to How I Built This from NPR. I'm Guy Raz. So it's around 2002, and Mike Cannon-Brooks and Scott Farquhar have decided to turn Atlassian, their two-person tech support company, into Atlassian, a software development company. And their hopes hang on a set of development tools known as Jira.

• 42:51Speaker 02

  Jira used to sell for $800. Again, it was a terrible pricing scheme. It was $800 for everything. All you could, like, that was it. And we needed to sell one copy a week. And if we sold one copy, we would eat, pay rent, do all the things. That was $800. Split two ways and everything else, right? If we didn't sell one copy, we were gonna go bust. If we didn't sell one copy for too many, you know, some weeks we'd sell two copies. That was amazing, right? But then some weeks you'd sell zero. The motivation of such a simple goal. I remember, like, there's a reason you went back to work after the pub. It's like, it's Wednesday, we haven't sold anything this week. Like, we need to sell one thing. So you'd go home, back to the office, and you'd answer every customer service email as quickly as you could. Or you'd get back to someone, or you'd get on the phone and try to ring them. Can we help you?

• 43:36Speaker 02

  Like, what? Because you needed to sell just one thing a week for 800 bucks.

• 43:41Speaker 01

  And in the early days, our website would always make it seem like we were bigger than we were. You know, we'd say Atlassian has a number of international offices. That number just happened to be one. We'd have sales at Atlassian and accounts at Atlassian and support at Atlassian. And that would all go to Mike and myself both equally. And, you know, if people called up, it'd be like, oh, cool. Can I speak to, uh, to accounts? And be like, uh, sure, I'll get accounts on the line. And like, Mike, um, your accounts now, okay? And so you hand the phone over to Mike from accounts and

• 44:13Speaker 02

  Yeah, this is Mike from accounts. How can I help you?

• 44:16Speaker 01

  Um, so, you know, we just did every, every job that there was to do. And sometimes we put different hats on when we did them.

• 44:22Speaker 02

  And different voices.

• 44:24Guy Raz?

  So you have a website for your business at Lassien. And, and what, I mean, you just kind of hang a shingle out and say, hey, here's Jira. You can download it to, to try it or to buy it. But how did you even market it? I mean, how did you get anybody to even know what it was? Did you start calling people? Did you just kind of hope that people would land on the webpage by accident?

• 44:46Speaker 01

  I, I think there's a belief that if you put it up there, people will come. And totally not true.

• 44:51Guy Raz?

  No.

• 44:52Speaker 01

  Uh, I, I think that there's a couple of things that worked well for us. We were the very early days of internet marketing. And so we could buy, you know, Google AdWords, which were just new back then. And things that would now cost you $10 or $20 for a click would cost us 10 or 20 cents. And I always wished we had more money to spend on that. You know, we, our marketing budget might've been, you know, a hundred dollars a month or a hundred dollars a week. Like it was very small dollars back then. We would turn up to software events and obviously that's where, you know, the bulk of our customers would be. But we couldn't afford a booth at these software events. And so we would turn up as attendees and try and hand out business cards or try and, you know, corner people in the hallway to give them a demo.

• 45:34Speaker 02

  We did, we did plenty of guerrilla marketing. You remember we went to, was it in San Francisco somewhere? We printed out a whole bunch of flyers, basically, and then snuck them into the conference. And we just judiciously leave 20 on a random bar top table that was, you know, and kind of walk around the conference and just keep leaving flyers around for hopefully someone to pick them up.

• 45:53Guy Raz?

  You guys were going that early in your business? You were, you were going to the US to promote this product?

• 46:00Speaker 02

  The US and Europe, yeah.

• 46:01Speaker 01

  That's where our customers were.

• 46:02Speaker 02

  And, um, so we were at a conference in Belgium, which is one of the biggest technology conferences. And they had a session where they were going to do a live podcast at three o'clock in the afternoon in front of an audience, right? And so we thought, we asked them if we could provide beer for their session for the sort of five, 600 people that are watching them, you know, the three of them on this panel podcast. And of course they said, sure, yeah, whatever. That sounds great. We didn't ask the conference organizers, of course, because we would have gotten in trouble and it wouldn't have worked. So instead, we took our little rental car to a local bottle shop and bought as many cases of really good Belgian beer as we could. And then we stood at the front as people were going in. And every time someone walked in, we would put

• 46:44Speaker 02

  a sticker that said Atlassian on the front of the beer as if it was kind of our beer, and then give it to the attendees, right? And they thought this was fantastic. This was like the best session ever. And we had four of everyone on stage had one. And we would just do sort of stunt marketing like that to the right communities, which got our name kind of known.

• 47:02Guy Raz?

  I love that. That's so great. So in the first sort of year after you released Jira, was it, I mean, I can't imagine it was a massive hit. I have to imagine it was like kind of, you know, you'd sell it here and there and people who bought it liked it. But it wasn't, I can't imagine it like flying off the shelf, so to speak.

• 47:21Speaker 02

  We started with the one copy a week. I don't know that's flying off the shelf. We didn't really have a shelf, but it wasn't, it certainly wasn't flying anywhere. But by the end of year one, it was doing all right. I think we made maybe a hundred grand in year one.

• 47:34Speaker 01

  Yeah. And in the early days, it was very much kind of hand to hand combat. Like every customer is someone that you have spent a long time handholding through to the sale. And a big milestone for us was, I still remember it when the fax came off the fax machine back then. And it was American Airlines. And American Airlines had basically faxed us, you know, a purchase order or a check for the $800. And I went to Mike and said, Mike, I haven't been dealing with American Airlines. Like, gee, thanks for doing all the work behind the scenes, getting them across the line. And Mike said, I haven't done any work in American Airlines either. And so we looked at each other and like, holy cow, like, American Airlines just sent us money over the internet for doing nothing?

• 48:19Speaker 01

  And obviously, they benefited from our software. But that was sort of the moment when we went from having a, almost like a corner store business to having a scaleable business.

• 48:28Guy Raz?

  And, and my God, American Airlines, geez, that's a bar. I mean, they just spent $800. That didn't even have to go through like anybody. That was just some random person, American Airlines, who authorized it. Because, you know, that's nothing. It's not even a rounding error for them. And was that, I mean, and that was it? It was like, you just buy it and then you own it?

• 48:49Speaker 02

  Yeah, you bought the $800, got you one year?

• 48:52Guy Raz?

  Right.

• 48:52Speaker 01

  Unlimited usage, but updates for one year. So we were improving the software every week or two weeks. And so our hope was they would buy a maintenance contract, which was $400 for the second year and the third year and the fourth year, and that maybe they would pass $400 a year, assuming we kept adding value to the software, right?

• 49:12Guy Raz?

  Was that common in 2002, 2003 to, you know, update software that regularly?

• 49:19Speaker 01

  No, it was very unusual. And it's almost like a, back then, it's like CDs, right? Every person, you'd buy your CD and once you bought it, that's, you know, the artist had to go out and produce more soft, you know, more, more music. And very early on, we said, well, that's not a great model because that means we're incentivized to hold back all the new features. It's like, you know, if Adele had a great album and she had great songs, she's like, well, actually I'll keep it half of them in the good album and I'll save half of the good songs for the next album because I only get paid by, you know, selling albums. Whereas we thought the model was, it was better if you were aligned by, hey, if you use our software and continue using it and being happy with it, you pay us to go. But that was incredibly unusual back then.

• 50:00Guy Raz?

  And, you know, it's interesting. A couple of weeks ago, we had the founders of Riot Games on the show and they, you may know their, their, their game, League of Legends, right? Very big game, one of the biggest PC games of all time. And what made that game really popular early on with gamers was how complex it was, actually. It's a very, very complex game. And, but that was actually an advantage that they had because people really got into it. The, the learning curve was really steep, but then once people got it, they were hooked. And from what I understand, it's kind of similar with Jira, that it was actually pretty complicated for people to figure out at first, but that actually is something that developers liked. Was that intentional? Did you make it complex?

• 50:45Speaker 01

  I think it's, I wouldn't say we intentionally made it complex. We were madly adding functionality to the application for, for many, many, many years. The good side about that is the people who got up.

• 50:58Speaker 02

  The curve of understanding the power of Jira became these huge fans and they became superstars at their company because they could solve all these problems for the company really, really cheaply. Again, hey, we've already spent the 800 bucks. You got another problem? I'll solve that with Jira. So the people who solved the complexity or understood it, they saw the matrix, if you like, right? And we ended up hiring a whole bunch of those super fans as well, like people who were like massive Jira fans. We'd say, hey, do you want to come work for us? Like you know so much about our application and they would then make it better. Now, over time, we've had to remove a lot of that complexity and we've tried to simplify it, but keep the power. But in the early days, we were just, yeah, we were certainly just adding, adding power and complexity at the same time.

• 51:39Guy Raz?

  I'm curious because there's, there's a concept and now it's of course taught in business schools and it's, you know, every venture capital firm looks for this called the network effect, basically. And, and it's this idea that, that if you can create a product that can sell itself, then you've hit the holy grail. So for example, Dropbox, we had Drew Houston on the show recently and, you know, he created a product that when you used it, when somebody sent you a file, you had to sign up for a Dropbox account and it was free, but that's how it grew. And then you had it and then if you wanted to send somebody a file, they, and, and so, you know, there's a chain and it's something that really happened with your product with Jira from the start, right? That it really

• 52:22Guy Raz?

  kind of became this self-perpetuating phenomenon.

• 52:25Speaker 02

  Yes. So what's important here is, is teams. So our viral effect is not like a Facebook or a Slack or a Calendly. They're all fantastic applications. Our viral effect is teams, right? Often we, we talk about the individual gets all the credit, but the team really did the work, right? Neil Armstrong landed on the moon, but there was a massive team of people at NASA that put that thing into the air and got it in the moon and everything else, right? And so teams are the people who really do the work and we believe that and it's, it's true.

• 52:51Speaker 02

  So we would have an early goal. We want to get one team to solve one problem with our application brilliantly. Because most people in companies don't work on one team. They actually work on three or four different teams and different projects, different things. They work with other teams, et cetera. So, you know, almost all our applications now are basically free for a team. Why? Because we want one team to download or sign up to, you know, online applications, use it and get value and think this is brilliant. Then we want them to go to the other team they work on and be like, man, working on this team stinks. We're so inefficient. Can we use the thing that we use on that other team? And so we'd find one team, two teams, five teams, 10 teams. You know, and you go to a big company, there are, there are hundreds of thousands of teams

• 53:36Speaker 02

  in these big companies.

• 53:38Guy Raz?

  I guess by like 2006, right? This is just insane to me. This is just three, four years in. I mean, you hit 14 and almost 15 million dollars in revenue. You've got 50 people. Okay. So let me, let me just back, I want to kind of back up from the product for a moment and just talk about the business side because, um, you know, yeah, I get Scott, you kind of have leadership tendencies and Mike, you know, you had a little startup, but, but really both of you were, were, were most of the time in those early years, it was the two of you just grinding away at a computer. What did you know about how to lead 50 people and run a business? Like, that must've been a pretty steep learning curve.

• 54:23Speaker 01

  I still am not sure that we know everything there is to know about leading people.

• 54:27Speaker 02

  I mean, I think we, you know, we had increasing confidence over time that we knew what we were doing. I think one of the most important things is we were always very first principle driven. I mean, you sort of said it in your question. We were both incredibly naive. The good thing is we knew that we didn't know what we were doing.

• 54:43Guy Raz?

  Yeah.

• 54:44Speaker 02

  We knew that we didn't know anything about business. And so we had to figure it all out from first principles. So for example, when it came to people, we both knew that we'd had terrible experiences working other places.

• 54:57Speaker 02

  And so we wanna build somewhere that we wanna come to work. And hopefully, other people will wanna come to work there, too.

• 55:04Speaker 01

  I have a strong memory when we were very early on it at last, you know, and our friends had just joined all these big companies. And we used to go and have lunch together. And I remember this distinctly, we were downstairs at a yum cha place. And one by one, people sort of bitched about their jobs. They complained about the people they worked for weren't smart, they complained that they weren't listened to. And I remember, you know, after that lunch, coming back to Mike and thinking, wow, I never wanna be or build a company where these incredibly talented, you know, these people many times smarter than me have gone to work and they don't feel empowered to get job done or, you know, and their only way to improve things is to bitch to their, you know, friends at lunch.

• 55:45Guy Raz?

  Yeah, I'm trying to understand how you, and I know you've sort of jokingly, probably there's some serious to this, but that, you know, when you say, well, we're still trying to figure out how to be leaders. But here you guys are at this point, you're in your late twenties, so you're still really young, right? And you've got a growing team at this point, like fifty, and then the next year a hundred. And that becomes tricky, right? That that starts to create potential points of friction. And I wonder whether you guys really understood how to manage people, right? Was it, was it pretty easy? Were people just kind of self-directed or did you know what you were doing?

• 56:25Speaker 02

  Look, I'd say we probably made every management mistake in the book in the first five to 10 years and probably some more in the last 10 years. But we were honest enough to know when we've made those mistakes.

• 56:37Guy Raz?

  Scott?

• 56:38Speaker 01

  In the early days, I remember distinctly, when you're a startup, you hire the first dozen people, you know, a few dozen people yourself. And at some stage, you transition hiring from you doing it to people that you've hired, hired the next people. And I would say the first fifty we hired ourselves and the next fifty, you know, were hired by other people. And we looked around one day and realized that second 50 people we'd hired really weren't fitting in. Like, they'd turned up because, you know, we were a cool place to work. We had beer in the fridge. We had a, we had a ping pong table back then. But they weren't aligned with how we wanted to work, our work ethic, or our mission as a company. And Mike and I sat down and said, well, obviously, that's not the fault of the people that, you know,

• 57:22Speaker 01

  have done the hiring. Like, we haven't told them what's important. And we did a exercise that Jim Collins actually created, where you effectively do a mission to Mars. And you say, if we were going to recreate Atlassian on Mars, which people would you want to transplant and make it feel like the same company? And in many cases, they're not the senior leadership. You know, it's that one person that embodies something about the company that is really important. And what you do is you identify those, you know, half dozen people. And then you back solve and say, well, what, what is it about those half dozen people that makes them Atlassian? And, you know, and, and as a result, we sort of on a bit of butcher paper at an offsite, we, we wrote up what has become Atlassian values.

• 58:03Speaker 01

  And they haven't changed in that sort of 14, 15 years since we created them. But that really came because we screwed up early on.

• 58:10Guy Raz?

  You screwed up by picking the wrong people.

• 58:12Speaker 01

  Yeah. And one thing we've always believed is, you know, if our business is going to double every two years, as individuals and as leaders, we can only justify our positions if we are more than doubling our capabilities every two years. Because logically, otherwise, you end up with a kind of constraint at the top, right, in us? And that's sort of been our, I guess, mantra for self-development, right? You can't read this stuff in a book. You, you can go and talk to other people. You can learn however you learn yourself. But we knew that we needed to grow faster than the company. Otherwise, you know, it wasn't going to fulfill its mission.

• 58:48Guy Raz?

  When we come back in just a moment, Mike and Scott explain how you can have a meeting about possibly being acquired without knowing you are having a meeting about possibly being acquired. Stay with us. I'm Guy Raz, and you're listening to How I Built This from NPR.

• 59:15Guy Raz?

  Hey, welcome back to How I Built This from NPR. So it's around 2006, 2007. Atlassian is about five years old. And at this point, its revenue is like $20 to $30 million a year. And it's safe to say the company is starting to get noticed. So I'm guessing that you guys already had people coming to you, looking to acquire you when you were like doing, you know, $10, $15, $20 million. Did that happen? I mean, did you, did you have companies coming to see if you guys would sell?

• 59:51Speaker 02

  We didn't have a lot of explicit offers in the early days for acquisitions. Because we were on the far side of the world and everyone assumed we were far smaller than we were.

• 59:59Guy Raz?

  And Australia wasn't really, it wasn't on the tech map.

• 1:00:02Speaker 02

  No, no, that's true. And by the time anyone did show up, I think we were even more confident in our own abilities and the business, which made it very easy to say no to any sort of offers along the way, right? We were always looking at it and saying, well, we know how big we're going to be three years from now. We're really confident in that now. Why would we do this? It just, it just never made any sense. So it was, it was always a pretty relatively easy decision for us along the way.

• 1:00:28Speaker 01

  Do you want to tell the story about the meeting that ended up, in retrospect, an acquisition meeting, but we didn't realize it?

• 1:00:34Speaker 02

  Yeah, I did have one relatively famous, what I now know was an acquisition meeting. I was with our then president and we were in, you know, some Silicon Valley office park at this big firm, famous guy running it, I won't say who it was, and everything was going on. And they were kind of a competitor, I guess you might say, but we worked together in some ways and, you know, this and that. And then we were just getting through the pleasantries of the meeting, sort of discussing roadmaps and various other bits and pieces. And then a fire alarm went off. I kid you not, the fire alarm goes off and they're like, oh, we got to get out of here. So we all pile into the fire stairs and go down this Silicon Valley office park, three floors, and we're all standing out in the car park. It's almost like it's, I remember in the car park thinking, wow, I'm literally in office space here. Like, I'm looking at this big, boring building.

• 1:01:19Speaker 02

  Like, we're all in the car park. And, you know, we must have shared some numbers and back and forth and they're kind of confused and we must have been having two or three different conversations. Fire alarm's over. We all go back upstairs in the conference room. Two or three pleasantries, meeting over, we all go. We get out of here thinking, I'm like, what, what happened? I said to our president, what, what, what, what just happened there? Like, we were having a good meeting and then the fire alarm went off and it seemed like they just kicked us out. He's like, oh yeah, they realized that we're bigger than they are and they were trying to buy us. And in the, in the fire alarm car park, they had realized that based on revenue, we were actually larger than they were.

• 1:01:53Guy Raz?

  Wow.

• 1:01:54Speaker 02

  And so this, it wasn't gonna happen. So they just kicked us out of the room. And I was like, wow, that totally didn't understand that.

• 1:01:59Guy Raz?

  You knew that you had, I mean, you were looking at the trajectory and you knew that you were, you were gonna get bigger and bigger and bigger. You could just see that from, from the growth and the sales.

• 1:02:10Speaker 02

  We were very confident in our business model.

• 1:02:13Guy Raz?

  Yeah.

• 1:02:14Speaker 02

  And its ability to deliver growth into the future, yes. Patiently, right?

• 1:02:18Guy Raz?

  Right.

• 1:02:19Speaker 02

  I mean, what's really important about the Alaskan business journey has been patience. Patience for revenue to come later, but with a more solid model behind it, if, if you like. And part of that was, we're very patient people, we're very long-term thinking. We've always had these super long-term goals for the business. The second part of that is Australia, we're a very resourceful sort of survivor nation, right? It's a pretty rough country. It's, it's super hot, it's super dry. You know, we've had to figure out how to farm the land. We've had to figure out how to, what products can we make down here and ship to the rest of the world? Because we're a million miles from anywhere, we had to be patient because we couldn't afford to hire any salespeople. And we had to figure out how to sell things online.

• 1:03:05Speaker 02

  And once we had done that and saw the effect of that patience, all we did is kind of continue to double down on that model every year, right? We would hire more engineers. Instead of, once we could afford to hire salespeople, we were saying, well, hang on a second. If we make the product better, we're not only gonna sell a dollar this year. We know we'll sell two dollars next year and three dollars a year afterwards. That's a way better equation for us over a three to five year period. So let's go hire that extra engineer. If you can demonstrate value to someone, you don't need a salesperson. They've already using your product. They already got the value. They get it.

• 1:03:35Guy Raz?

  I guess in 2009, so this is like almost 10 years in, nine, eight years in, both of you got married that year. You turned 30. And each of you separately took a three-month sabbatical. Like you traveled with your partner and the other person around the company for that time. When you did that, was there any thought among either of you? That maybe you should just, you know, you did well, you could probably sell it, cash in, and move on? Was that ever a thought that, or ever a conversation the two of you had? Kind of probably walked away with, you know, 25, 30 million bucks each, maybe?

• 1:04:13Speaker 02

  Yeah, so we had a, it's actually a good story because I think you have those moments where you have to stop and think. And it was around 2009, maybe early 2010. We had spent eight years at the time building the business, you know what I mean? And I often describe it as we were heads down, like we were looking at our feet, just trying to run and not fall over for many, many, many years. And for some reason, maybe it was turning 30, maybe it was getting married, maybe it was whatever. We both had a bit of a life inhalation, a bit of a pause, right? And the business was probably on its own feet by then. I mean, it sounds ironic. I think we had like 50 million bucks in the bank and probably 50 million dollars in revenue kind of scale and profitable, but we felt like, okay, it's not going to die.

• 1:04:58Speaker 02

  Now, we didn't really intend to get here. What do we want to do? What do we really want to do? Like, what's, what's next? And you sort of had, it was almost a look back, look forward kind of moment. You know, it was eight years in and we sort of realized, hey, wow, we could, we could probably sell this thing to someone. We had taken no, no, no capital, no investment. We still owned 100% of the company. You know, we could probably sell this thing and be pretty set, right? And it sounds naive now what we actually thought we were going to get for it. And we kind of, you know, we did a lot of really good talking and thinking and realized that we weren't done, you know what I mean? We both believed that the next decade was going to be better than the last decade for the company. And that was really, a really powerful moment.

• 1:05:42Speaker 02

  So that's when we, as you said, said, well, okay, well, we got to take a sabbatical.

• 1:05:47Guy Raz?

  And Scott, what was, what was that time like for you?

• 1:05:50Speaker 01

  It's weird. I, um, I remember being quite an emotional time, sort of just even opening up that door and saying, well, hang on, that's even something we should consider.

• 1:05:57Guy Raz?

  Hmm.

• 1:05:58Speaker 01

  It's kind of a tough conversation to have to sort of, you know, even to throw that on the table and say, hey, there's an option here that we should talk about. Um, and that's, that's pretty emotional. And also I feel that, you know, when you're grinding away for eight years, it's tough because your, um, your identity is the company.

• 1:06:15Guy Raz?

  Yeah.

• 1:06:15Speaker 01

  You know, and I, I remember for a while, I, you know, talked with my wife about this is that when, when you first meet your partner in life, it's like, well, what's more important, the company or my wife partner? You know, and, you know, in the early days, it's the company, right? Like, you know, girlfriends come and go. Um, and at some stage you go, actually, my wife partner is more important than the company.

• 1:06:33Guy Raz?

  Yeah.

• 1:06:34Speaker 01

  And I think over time you start extracting your emotional state, you know, your kind of identity from the company. Um, but it was, it was a pretty emotional time to sort of even just consider it.

• 1:06:44Guy Raz?

  You know, out of all the founders of, co-founders I've ever interviewed, I think the two of you are most similar. I, I, I know that you've got differences, obviously, but most similar in temperament. And I wonder, I'm just, I just wonder whether you were always aligned. I mean, you now had employees, you had a growing company, you were, you know, the leaders of this company. I'm trying to figure out how you were always able to see eye to eye and not have conflicts. Cause I, I've never, ever seen that with co-founders, ever.

• 1:07:16Speaker 01

  We had, we had the scissors, paper, rock solution ready at any time. And so when you know that that's the end solution, you're like, ah, we better work this out. Because if it gets to that, man, shit, we might just lose. Um, I, I think it's always helped us as well, well, been more helpful than less helpful, that we're in exactly the same life phases at each stage.

• 1:07:36Guy Raz?

  Yeah.

• 1:07:37Speaker 01

  So when we started getting paid nothing and drinking the cheapest beer we could find, we were both doing that. So that felt fine and we didn't really know any different. Around that time you're talking, two thousand nine, two thousand ten, we were both. Getting married, we got engaged within a year of each other. And so it was a similar view on life, right? I often think if one of us at that stage had been 50 and looking to retire and, you know, the kids were going to college or something, we had built like, it might have been a different view on the world, but because we were kind of had similar views on where we were at. And then as, you know, as family started to come along, we had kids, you know, it's, it's a super brutal time for sleeping and trying to run a business and everything else. But because, you know, we're kind of through that time, this that you'd give

• 1:08:20Speaker 01

  the other person a lot more slack because you're like, oh, man, I understand, man. I've been there. That, that sucks. That's a really hard period.

• 1:08:27Guy Raz?

  As you grew and eventually you, you, you know, became, you decided to go public. At a certain point, I mean, you became, I think you were the first so-called Australian unicorn. Billion dollar plus company today, your market cap, I think last time I checked 50 billion US dollars. As you really started to grow and become huge, you also started to become visible people in Australia. And Australia is a, it's a big country, but it's also a small country in a sense, right?

• 1:08:56Speaker 01

  Yeah, we have, Australia's about 25 million people.

• 1:08:59Guy Raz?

  Do you, how have you dealt with that visibility of being visible? Australia, I mean, you're now you're no, let's just put it out there. You're two of the richest people in the country, multi billionaires. When you think about wealth, does it, does it mean anything? Or is it just like a number on a piece of paper from a bank statement? That's not, doesn't really mean anything.

• 1:09:21Speaker 01

  It's been hard coming from a, a background where, you know, I always viewed time and money as a sort of almost the same scale. Like you can generally spend money to save time. And in many cases, you can do many of the same things if you have enough time without the money. And I went for a drive around Tasmania over the weekend. Lucky we've opened up in Australia. And I remember thinking, wow, I really need to fill up the petrol tank before I return the car. Like that'll, you know, that was going to screw me on the petrol.

• 1:09:49Guy Raz?

  They will screw you on the petrol, yeah.

• 1:09:51Speaker 01

  And, and I was thinking, but hang on, like, is that really worth sort of 15 minutes out of my way? You know, to save probably eight dollars on petrol. And you know, in a different life, like I would have done that.

• 1:10:03Guy Raz?

  Yeah.

• 1:10:03Speaker 01

  And it was really hard, I think, to sort of go, actually, no, I value my time at more than, you know, the eight dollars it would have saved. And so I think it's just a thousand things like that that change. And, you know, to try and make the right choice, which may be different now than it was growing up in that sort of time value, time money trade off.

• 1:10:20Guy Raz?

  Yeah. You know, possibly the only, one of the few places more obscure to start a tech company.

• 1:10:28Guy Raz?

  And then in Sydney at the time was Ottawa, Canada, which is where Toby Ledkey started Shopify. Toby was on the show a year or so ago. And he said that if he, that Ottawa actually is why Shopify became successful. That he really resisted starting that company or scaling that company in Silicon Valley, even though investors really tried to push him to do that. That Ottawa was the secret weapon, you know, finding really talented, committed people in this freezing cold place. That enabled him to build this hugely successful business. There were a lot of challenges to starting this company in Australia, certainly when you did it, because there was no, there's no community. But do you think that starting in Australia actually turned out to be what made it successful?

• 1:11:13Guy Raz?

  But had you done this elsewhere, it may not have worked.

• 1:11:17Speaker 01

  Totally. Starting Alaskan in Australia is the only reason we're successful. We had venture capitalists telling us that we couldn't build the company, you know, we were a bit of a million dollars of revenue. I said, oh, that's really nice. You've, you've built a tiny little, tiny company. You can never build it to $10 million of revenue. And we went back on $10 million revenue and they're like, yeah, well, you never get to 100. And we sort of stopped going back after that. And I think just the fact that we, you know, didn't have people, you know, that was the only person telling us the way we couldn't do it. Allowed us to do things totally differently. And, you know, at the right time, when the internet's coming out, that's what was needed, was totally different thinking. And our tenure is better, like we've got, you know, employees that stick around for a very long time.

• 1:11:57Speaker 01

  And it's been totally critical to our success, but we also have one foot in, you know, in Silicon Valley. Like if you started a company in Australia in the seventies, you wouldn't be able to tap into the podcasts and the blogs and the email newsletters. And all the information that flows around. And so the world is flatter in some ways than it's ever been before. And so I think that combination has made us successful.

• 1:12:18Guy Raz?

  How has, I know Australia is in a different place than the United States and many countries around the world when it comes to COVID. You're in a much better situation and have handled it infinitely better than the United States has, although everybody has. How has COVID changed your business? And has it changed it forever?

• 1:12:36Speaker 02

  I would say we've separated two things in that that are really, really important. First is the ability for people to choose where they work. We're not saying we're going to close our offices. We're saying if you want to come to an office, you can. If you don't want to come to an office, you can do that, too. That's led us to separate how we work as a company from where we work. We were a long way down that path before COVID hit. You know, we had, I don't know, maybe 500 or 600 people working from home on a given day and a bunch of remote employees. And then we sent 5,000 people home in one day. And, you know, the world's largest telecommunications experiment has taught us all how to do that, the goods, the bads.

• 1:13:14Guy Raz?

  Yeah.

• 1:13:14Speaker 02

  But that's really forced us to solve those problems in a really rapid fashion.

• 1:13:18Guy Raz?

  Yeah. Has it also changed, do you think, the way, I mean, companies used to say, well, you got to be here, right? Atlassian, you got to play ping pong, you got to have the, you got to go to the meet people, walk around. That's the campus. There's the cafeteria. But now it seems like that idea has completely evaporated, that everyone is saying, you know, actually distributed, the distributed model works. You can, you can actually have executives who live in a different time zone, a different country. What do you think? I mean, do you think that the office culture is crucial to maintaining a company's culture?

• 1:13:53Speaker 02

  It suits Australia, I would say. We've always been, you know, colloquially on the ass end of the world. And so, traveling and moving around and other things have been a part of the Australian existence in business for a long time.

• 1:14:05Guy Raz?

  Yeah.

• 1:14:05Speaker 02

  And hence, we use a lot of virtual technologies. We're very early technology adopters, I believe, because of that, right? It's a lot easier to get on a Zoom call than to fly to San Francisco and back. Trust me, I've done it.

• 1:14:14Guy Raz?

  Yeah.

• 1:14:15Speaker 02

  I don't know, a thousand times in the last decade and a half, probably more. But we're still going to need to meet each other, right? One of the things we value is human connection. The question is, do we meet each other to work, or do we meet each other to connect? So we're increasingly having meetings, you know, if you're going to fly to meet your team or your group, you're going to do that. But when you do that, don't work, right? Do the work at home when you're remote from each other. And when you're meeting, build the social bonds, go out to dinner, like run exercises, whatever you're going to do, but don't meet to do work.

• 1:14:48Guy Raz?

  Both of you are 40, I think, right now?

• 1:14:51Speaker 02

  Forty one.

• 1:14:52Guy Raz?

  Forty one?

• 1:14:53Speaker 02

  As of two days ago.

• 1:14:54Guy Raz?

  And you've got a lot of life ahead of you. You're really rich. You can just stop working right now and have a, you know, foundation and give away a bunch of money and, you know, whatever, whatever you want to do, you do whatever you want to do. What's stopping you from doing that? Why? Why wouldn't you just kind of walk away now?

• 1:15:13Speaker 01

  I think that, you know, with everyone's life, you try and work out, how do you have the biggest impact in the world? Or at least for Mike and my life, that's been a big part. And like our mission at Alaskan is to unleash the potential of every team. And I keep thinking, okay, well, if I, if I left Alaskan, where would I go? Or what would I do to have a bigger impact? You know, the teams that use our products put people in space, like they create electric cars, they, you know, decarbonize the planet there, you know, the American Red Cross, like our customers, and we get to help them do their, their work better. And I don't know, I feel if there was something better out there, you know, I'd be tempted. But like the, it just doesn't seem a better opportunity to have a big impact in the world.

• 1:15:52Guy Raz?

  Mike?

• 1:15:53Speaker 02

  I think it's not in our DNA, because you got to start out by trying to build a product and solve a problem, not start. People start a business, say, I want to make money. You're like, okay, well, that, what are you going to do to do that? Right? You've got to provide some value to a customer. But secondly, if they were lucky enough to provide some value to a customer, they would have left long ago. Once a business passed, I don't know, $5 million in revenue or $10 million in revenue, that Mike and Scott would have sold back then. They would have, they would have been gone. So they wouldn't be here. So then you're asked the question, well, hang on, if I didn't sell yesterday, and I don't want to go and, you know, sit on a beach or whatever, why would I sell tomorrow? And the answer is the same reason I've been here every day for the last 20 years.

• 1:16:30Guy Raz?

  Before I let you go, last question for both of you, and I'm going to ask you the same question. How much of your success do you attribute to your hard work and your, your intelligence and grinding away? And how much do you think it happened because you got lucky? Scott, first to you.

• 1:16:46Speaker 01

  I think you need both. Like, I, I really believe that you make your own luck to some extent. And so you need to work really hard and teach yourself and so forth. But there's been a lot of things that, you know, worked out in retrospect were lucky. You know, we live in an era and time when Australians can operate on a world stage. If I were born 50 years earlier, they'd be what harder, or, you know, the internet came around. So there's a lot of things that were the right timing and we just managed to take advantage of them because of who we were and, and what we, our skills were.

• 1:17:17Guy Raz?

  Mike?

• 1:17:19Speaker 02

  I would say 50% luck, 50% Scott's hard work, smarts and ingenuity.

• 1:17:25Guy Raz?

  So you just sat around and ate bonbons?

• 1:17:27Speaker 02

  Yeah, I, I guess I did.

• 1:17:33Guy Raz?

  That's Mike Cannon-Brooks and Scott Farquhar, co-founders of Atlassian. And just remember, the secret to their successful relationship? Three words: rock, paper, scissors.

• 1:17:48Speaker 02

  Guy, there's, there's an easy way to win rock, paper, scissors, or rather not, not lose.

• 1:17:52Guy Raz?

  Oh, yeah, what is it?

• 1:17:52Speaker 02

  So what you do is you, you have to control the timing.

• 1:17:55Guy Raz?

  Yep.

• 1:17:56Speaker 02

  So when you're going scissors, paper, rock, whatever, do it, start to slow it down and go really, really slowly. And then just watch their hand. And if their hand stays together or starts moving, as soon as their hand starts moving,

• 1:18:07Guy Raz?

  You go for scissors.

• 1:18:07Speaker 02

  You go scissors.

• 1:18:08Guy Raz?

  Yep.

• 1:18:09Speaker 02

  Because you're gonna know they're either paper or scissors.

• 1:18:11Guy Raz?

  Yep.

• 1:18:11Speaker 02

  And if their hand doesn't move, right? You go for paper. And so you know you're gonna get a draw or not. And so if you can do that, you can usually statistically well more than 50%.

• 1:18:23Guy Raz?

  But if you tell somebody that statistically rock works the most, wins the most, then you can always play paper against them.

• 1:18:29Speaker 02

  Ah, you see, you've got the game theory going on, Guy.

• 1:18:32Guy Raz?

  Yep. Yeah, I got two kids, so I always win rock, paper, scissors.

• 1:18:38Guy Raz?

  Hey, thanks so much for listening to the show this week. If you're not a subscriber to our podcast, please do so wherever you get your podcasts. If you want to write to us, our email address is [email protected]. If you want to follow us on Twitter, we're at How I Built This, or mine, at Guy Raz. And if you want to follow me on Instagram, I'm at Guy dot Raz. This episode was produced by James Delahoussaye with music composed by Ramtin Arablouei. Thanks also to Liz Metzger, Farah Safari, Derek Gales, J.C. Howard, Julia Carney, Neva Grant, and Jeff Rogers. Our intern is Janet Wu-Jung Lee. I'm Guy Raz, and you've been listening to How I Built This. This is NPR.