July 15, 2010 – 6:45AM
An Australian company which started in a Sydney garage on a $10,000 credit card debt has just raised $US60 million after selling a minority stake to a large US venture capital firm.
Atlassian, which sells software used by many of the world’s largest companies, is now worth hundreds of millions of dollars and its young founders, Scott Farquhar and Mike Cannon-Brookes, are bathing in riches.
The pair formed the company in 2002 when they were both 22, after meeting at the University of New South Wales while studying science/IT degrees.
Both dropped out of university to join the start-up world, a risk that has clearly paid off as the company now has 225 employees based in Sydney, San Francisco and Amsterdam.
Last year its revenue was $US58 million and in 2006 Ernst & Young awarded Farquhar and Cannon-Brookes the Entrepreneur of the Year prize.
The $60 million investment from Accel Partners is significant because the firm has a history of picking winners. It was an early investor in Facebook and mobile advertising company AdMob, which last year sold to Google for $US750 million.
Amazingly, Atlassian has never had to raise any money since its initial $10,000 investment from the founders, as it has been profitable from day one. The amount raised from Accel is almost unheard of for an Australian ICT company.
“We built the first version of our product while working in the garage before we even had our first office,” said Farquar in a phone interview.
“We want to grow it to a billion dollars and be the first Australian software company to do that.”
The team are well on their way to that goal, with 20,000 business customers in 134 countries. Farquar said he would soon attempt to take the company public and planned to hire another 100 engineers within the next two years.
Atlassian’s products are aimed at streamlining product development, with various pieces of software allowing businesses to manage tasks and workflow, track bugs and collaborate on projects. It also makes a range of tools specifically for software developers.
All of the world’s top 10 software companies – including Microsoft and Oracle – use its products, as do seven of the 10 largest global companies, including Shell and Toyota. Other customers include major universities such as Harvard, Stanford, Yale and MIT; telco giants including Nokia Verizon and AT&T; and major online retailers like Amazon and BestBuy.
“Our original goal as founders for the company was just to earn as much money as our friends were earning working for soul destroying consulting companies like IBM or PriceWaterhouseCoopers – they all got great jobs earning $50,000 a year,” said Farquhar.
“[Now] our goal is to be known as an Australian success story, as a company that everyone in Australia knows and can point to and say, wow, those guys have done a really good job and we’re really proud of them.”
But it wasn’t an easy road – for the first three years Farquhar and Cannon-Brookes pumped all earnings into the business and were surviving off their university scholarship money of about $300 a week. Now, they can afford to devote 1 per cent of employee time and revenue to philanthropic activities.
Atlassian has learned from Google that keeping staff happy with a fun culture and perks is critical to a successful business. Each Friday the Sydney team knocks off at 1pm for a poker tournament, and with Accel’s investment, each employee will get a share of the wealth through stock options.
Every year, the company stages an elaborate Christmas party for staff. Past efforts include an “amazing race”-type event around Sydney, a circus day (staff learned how to trapeze, juggle, unicycle, etc) and a Robin Hood event where the team learned archery and rock climbing.
“We just want to make a place that’s great to come to work because people just spend so much time at work, we just wanted to make an awesome environment,” said Farquhar.
Ian Birks, chief executive of the AIIA, Australia’s peak ICT industry association, said Atlassian was a great case study of how an aspiring ICT company based in Australia could achieve global success.
“Despite the less favourable business ecosystem that exists in Australia for entrepreneurial software R&D compared to other parts of the world, it is great to see outstanding role models like Atlassian continuing to thrive,” he said.