Atlassian, Starting With Nothing: My Best Mistake

Success on a shoestring

By Michelle Hammond
Friday, 06 May 2011

Australian software company Atlassian is frequently held up as a success story for the local tech start-up sector, partly because its founders were barely out of uni when they started the business.


Mike Cannon-Brookes and Scott Farquhar were 22-year-old university graduates when they started the company in 2002 with US$10,000 on a credit card.


However, the company was profitable from the outset, with its flagship product generating sales of around US$1.3 million in 2003. With growth rates above 30% in 2010, Atlassian is on track to exceed sales of US$100 million in 2010-2011.


Atlassian makes software collaboration and development tools to help teams deliver products faster and cleaner.


With offices in Sydney, San Francisco and Amsterdam, Atlassian now has more than 273 employees, along with an impressive product lineup of seven collaboration and development software tools.


Although Atlassian has been profitable from day one, that’s not to say the company hasn’t learnt any lessons. In the early days, Farquhar says a lack of mentorship proved to be a major hurdle for the business.


“In the early days, everybody giving advice focused on the pricing model and the business model. We said, ‘No, that’s never going to work’,” he says.


“So you just begin to ignore them… I guess we were so burned by people saying we couldn’t do it or that we had to do it the traditonal way.”


The founders’ lack of experience meant they had only a slim chance of raising venture capital, which proved to be a blessing in disguise.


“Sometimes being able to raise venture money too early is a dangerous thing… I saw a lot of good venture money go into really spurious investments that quickly evaporated,” Cannon-Brookes says.


“I was jaded about the value of venture money at that time. Also, we were lucky enough not to have a snowball’s chance in hell of attracting venture money.”


“We were two 21- to 22-year-olds who would have pitched to VCs and said, ‘Look, we think we can figure this out along the way.”


Farquhar says Atlassian couldn’t afford to spend too long honing its offering, which meant it went to the market with a relatively simple product, which resonated with consumers.


“We weren’t venture-backed, so we couldn’t spend two years developing the software. We had to sell something quickly. We produced a simple-to-use product when there was nothing simple to use,” he says.


That’s not to say it was an easy road. For the first three years, Farquhar and Cannon-Brookes pumped all their earnings into the business, surviving off their university scholarship money of about $300 a week.


According to Farquhar, surviving on a shoestring budget – with no major overheads – can often prove to be an ideal way to start-up.


“The biggest thing preventing people from starting their own thing is, ‘I need to get some more money behind me, or I need to flesh out my idea more’,” he says.


“No, no, no. Just go and do it, because when I was at university, the biggest downside risk for me was I’d have to go back and live with my parents for a few months. The downside risk is so much lower when you’re young.”

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