How Atlassian Built a $10 Billion Growth Engine
But their biggest—and most unusual—lever for growth has been to consistently acquire other products throughout the company’s history and integrate them into the existing product suite. This has helped Atlassian grow into a family of products that can spread organically through enterprise organizations.
How exactly has Atlassian created a growth engine:
- Developed a loyal market by building a best-in-class project management tool for engineering teams
- Strategically expanded their product offerings through acquisitions to broaden their customer base to teams around the dev teams
- Doubled down on freemium distribution and horizontal use-cases in their recent acquisitions to make the top of their funnel even wider across teams
2002-2010: Self-funded and freemium
Because of Jira’s comprehensiveness and complexity, the product came with a steep learning curve. But this was actually a blessing in Atlassian’s specific market.
2004…Confluence also integrated really well with Jira
The decision to build a second product after the initial success of Jira was risky because many early-stage companies focus all of their attention on a single product.
2005: Just three years after its founding, Atlassian was profitable without having taken any venture capital.
By 2008, The Crucible tools were listed alongside Atlassian’s other product offerings on Atlassian’s website as part of a cohesive product suite.
The freemium sales and distribution model, as well as the early acquisitions, created many revenue streams that lead to over $50M in ARR by 2010.
2010-2015: Integrating acquisitions and spreading to other teams
2010: Atlassian raised $60 million in secondary funding from Accel Partners, eight years after starting their company.
So in an effort to start doing “what Adobe does for designers, except for technical teams,” Atlassian looked at how they could help developers manage their projects at other stages in their pipeline. This lead them to acquire Bitbucket
2012: Atlassian acquired the hosted private chat service Hipchat, and announced a plan to integrate the chat feature into its suite of products. HipChat was growing quickly at the time and had over 1,200 customers of their own, including Groupon and HubSpot.
2013: Atlassian released a service desk offering on top of Jira that targeted the IT market.
Jay Simons said that this addition was an organic extension based on the needs of Jira customers. About 40% of Jira users had already extended Jira to service desk and help desk use cases and had asked Atlassian to build the service. The service desk helped extend Atlassian’s offerings to IT departments and continue growing bookings, which at this time were over $100 million a year.
This strategy was all about lock-in. With such tightly integrated solutions, the product superiority of one tool wasn’t necessarily the selling point. Instead, it was the comprehensive function of the whole suite of products.
Atlassian spent between 12 and 21% of their yearly revenue on CAC from 2012-2015, compared to the SaaS industry median of 50-100%.
2015-Present: Expanding to competitive and lucrative markets
They’ve grown into a giant, public, global company with a complex and integrated suite of products for many different verticals.
The goal is no longer to just build out a best-in-class suite of tools for developer teams. Rather, it’s getting an entire company—and all of the teams within it—using relevant products in the Atlassian suite.
2016: To build itself out into an even more ubiquitous tool provider and help companies maintain their software, Atlassian acquired Statuspage
2017: Recently, Atlassian took a big step to target smaller teams by acquiring the lightweight project management tool Trello. Atlassian needed a simple product that could fill the small-company gap in their distribution strategy as Jira moved upmarket and got more complex.