The man making collaboration tools for Fortune 500 companies

In 2002, when Mike Cannon-Brookes got together with Scott Farquhar to build Atlassian, they were 21-year-olds, fresh out of university, with no clear idea of what they wanted to build. They eventually decided on software applications, at a time that was considered a nuclear winter for tech since it was the post dotcom boom era. Today, their startup is one of the fastest-growing software companies in the world with a footprint in seven countries and over 200,000 customers. Some of India’s biggest tech companies, including Flipkart, use Atlassian tools.In this freewheeling conversation, Cannon-Brookes gets candid about what it took to build Atlassian, the key learnings along the way and why he’s happy being an entrepreneur.What is Atlassian’s origin story?When my co-founder Scott and I were just at the end of our university degrees, we decided that we didn't want to get “a real job”. We wanted to start our own company but we didn't know exactly what we wanted to do. That’s terrible advice actually and I would not recommend that to anybody. Nonetheless, we were game to try it because if we failed, we had good university degrees so we could go get a job somewhere else. Back then we had about $10,000 and a couple of credit cards between us. We started Atlassian on the back of that. It was the dotcom bust period and the venture capital market had just imploded, so we didn't even try to get funding. In the first few years we evolved quite a lot in what we were doing and eventually ended up building software applications. We are still doing that. Atlassian makes products and software to help teams in large organisations become more efficient in projects. Our mission is to unleash the potential of every team. We built the business on the back of great products and I like to say that we were revenue funded and not venture funded. Role modelsWhen it comes to companies, we tend to admire multi-product, multi-decade companies that have survived technology transitions, like from MS-DOS to Windows to the web to mobile. Every 10 years, the technology industry hits one of these massive changes and you have to build a business that's able to navigate across that gap.There wasn't a lot in the Australian tech industry to idolise at that point but in the US, Adobe and Intuit were good examples. Because they both competed heavily against Microsoft, which was always much bigger, and they survived. Forty years on they are still fantastic companies. Nowadays, you obviously would also talk about Amazon but back then it wasn’t really a thing as it is today. So we have always thought very long term, too, and we always wanted to survive for many decades. In fact, even now, both of us co-CEOs are just 41. So we're still young in terms of our potential future career. medium85923994Key lessons over two decadesThe biggest long-term learning, especially internally, is that technology is built by people. The ones and zeros don't create themselves, people create them, the products and software. As we've gotten wiser, we have realised that watching people's careers transform and putting teams together and having them succeed is where the fun and excitement lies. That's really what makes the best software.So the 20-year-old Mike wanted just to write software and create something but 40-year-old Mike would start with the people, hiring and setting up teams and then letting them go and create things. That’s been the biggest change. medium85923944Today, Atlassian offers five to 10 products, including the Jira line, Trello and Bitbucket, which is particularly large in India. But there was a point where we had just one product and we chose to expand the line-up. That was probably one of the most insightful decisions because that’s how we started Confluence, which made us a software product company, not a Jira company. And that's changed so much about our DNA over the years. We're now a business that thinks about creating software and solving problems for people rather than a single product. The challenges of going globalGoing global, I would say, is a big part of our world. In fact, we were born global. We started out in Australia, and we now have staff all over the world. I've always said that one of our advantages is having a foot in Silicon Valley and a foot outside it. We have offices in Mountain View and San Francisco and there's a lot of amazing things about being there. Magic is made in that part of the world — there's a desire to change the world — and we want to inherit some of that magic and learn from it. But there's a practicality that lives outside Silicon Valley. A world where it’s not all froth and bubbles, but about the problems that we need to solve today. The balance between these two things has been very powerful for us over time. We've added a lot of European flavor to that over time, and more recently — in the last three or four years — a lot of Indian flavour. We now have more than 800 staff in India, and we're hiring 300 or so R&D engineers in the next 12 months in the country. This is us taking a global perspective to hiring. Atlassian collectively has north of 7,000 employees in different countries.We have always been big believers in diversity because at the core level, that is diversity of thought. We have 100 million monthly active users, so if I'm going to build applications for them, I need voices, views, brains and experiences from all parts of the world to build it properly. medium85923962Co-founders who are friendsI think we were both lucky enough to find someone smart and hard working and continuing with personal growth throughout the journey. We've kind of grown up together at this point. This, along with an even split of responsibilities and rewards, is a very powerful combination. We don't claim to be the most experienced CEOs and managers of companies but as co-CEOs we have double the CEO bandwidth. So we can learn twice as fast and catch up to anybody. Yes, there have been disagreements but we are largely on the same page about stuff.Founding companies is often a very lonely business, and having someone there on the different parts of the journey makes it quite a bit more fulfilling, I would say.Tough timesThere’s a long list of things that didn't work out for us. For instance, culturally, we had a few lessons early on with hiring and we've handled our fair share of brilliant jerk problems — people who are technically incredibly talented but would rub people the wrong way. So we learnt early on to avoid people who couldn't be team players as that was not a sustainable path for the business. This has made our culture much stronger.Another tough call was to exit the workplace chat wars. Back then we had a product called HipChat that was doing very well, which we reinvented as Stride. But then we had Slack on one side of us, Microsoft Teams on the other, and then Facebook workplace joined the party. It was getting very crowded so we made a clear calculation to move out of that space. We sold Stride to Slack and made a big partnership with them. It was a pragmatic decision but, internally, it was very painful. That was a growing up moment for the company.In both these instances, we've made practical, long-term focus choices that put culture and our team first and we've largely been rewarded for that.On bootstrapping and its impactThe first five or six years were hugely formative to our business model. In a way, we were lucky that we started at a time when there wasn't capital available. So we had to figure out how to get by without it. We’ve always been big believers in sustainability. If your business does not learn to be sustainable in capital — at the simplest level that’s generating more cash than you spend — it's going to be very hard to get that discipline back. And we've always had that discipline. We are highly capital efficient as a software company and we've been largely profitable to some extent, generating cash for almost every quarter of our entire lifetime of 20 years. But profitability is one thing, and continuing to invest in the business is another. Right from the early days, when we started to make some revenues, we invested it right back, re-gambling it on the next phase of growth. We had to do that because that was the only way we could grow. Now we are used to doing that and continue to maintain that discipline, which has proved a competitive advantage for us. We currently spend over 35% of our revenue on R&D, which is among the highest on NASDAQ or pretty much any public company exchange.Learning from mistakesObviously, any mistakes we've made, I wouldn't have made if I got a chance to do it all over again. But then again, I wouldn't have learned from them either. So I don't know if we would have ended up in a better spot in some sci-fi parallel world had I never made those mistakes. But I think I would have continued to back my own judgment and Scott's judgment. Had we trusted our guts and abilities even more than we did, we might have been able to move a little bit quicker at different stages. In the last few years, we've been making bigger and bigger swings as a business, and maybe we could have done that in year five instead of year 15. Or we might have just crashed had we done that.The entrepreneur as creatorMore than an entrepreneur, I would characterise myself as a creator. I like building things. And I think there's much scope to build things inside Atlassian because we are not a static company. In fact, we are quite dynamic in the boundaries of the company, and our ambitions, and that's what keeps me excited.Moreover, a lot of our existing applications and software are changing very rapidly and finding new markets and new customers, who in turn give us new ideas that we continue to build on. We're making a big business with over 200,000 customers and tens of millions of people use our software on a monthly basis. But I still feel incredibly bullish that we can have a bigger impact in the future. That’s what gets me to turn up for work every day.Listen to Outliers Episode 13 here.You can listen to previous episodes of Outliers here. Outliers is also available on most podcast platforms.Outliers is presented by Pankaj Mishra and produced by Anand Murali