How Atlassian bootstrapped from $0 to $50m ARR with over 20,000 customers (including Facebook & Adobe) in 8 years.
Founded by Mike Cannon-Brookes (@mcannonbrookes) and Scott Farquhar (@scottfarkas) in 2002, Atlassian is an Australian software company that develops products for software developers and project managers.
Scott & Mike met while studying computer science at University of New South Wales in Sydney, Australia. They knew they wanted to start a company. Scott turned down a job at PwC paying $48,500 and their goal was born. Earn more than $48,500 and not to have to wear a suit to work.
While running a support service, they built an issue tracker on the side to track their dev work. It didn't take long to see the potential of this tool. In 2002, they doubled down and took out $10k in credit card debt to start Atlassian and launch their first product, Jira.
They started bringing in revenue with Jira, which is a product that allows bug tracking and agile project management. Revenues grew to $1million by the end of 2002, distributing solely through the Internet and relying on Google AdWords to get the word out.
By 2004, they had 2,000 paying customers and Atlassian was already hunting for other revenue streams. They launched their next flagship product, Confluence, a web-based corporate wiki (collaboration software).
This decision to build a second product and not focus on Jira was risky, but it paid off. By '05-06 revenues soared to $14.9 million and Atlassian was profitable without any venture capital. As @mcannonbrookes said: “We had two rocket engines driving us along, not just one.”
By 2007, Jira and Confluence sales were growing rapidly and the developer market was ripe with opportunity. This prompted Atlassian to make another bold, unique bet. Rather than build their own products to expand, they decided to buy software that was already successful.
By having the capital and being profitable, Atlassian was able to acquire Cenqua, maker of dev tools Fisheye, Crucible, and Clover in 2007. By 2008, these tools were integrated into a cohesive product suite and their revenue growth continued.
The strategy of a freemium sales model helped them generate a lot of revenue quickly. This freemium sales and distribution model, combined with early acquisitions created many revenue streams that lead to over $50M in ARR by 2010.
The company was 8 years old and had already been profitable for 5 years. Atlassian had built a business that could survive on its own, but ultimately decided in 2010 to raise $160 million in venture capital led by Accel Partners to further fuel acquisitions and growth.
By this point, Atlassian had over 20,000 customers worldwide, including Facebook and Adobe, and were feeling the need to offer a more robust set of developer tools. Atlassian had a compound annual growth rate of 43% for the five years prior to taking on venture capital.
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