👑Takeoff #58: The Gojira of SaaS
Welcome to Takeoff, your weekly dose of product deep dives and new learning opportunities. Today, we're diving into the Atlassian story. Lessgo!
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🚀 Decoding Atlassian’s $3 Billion ARR
The narrative of two individuals harbouring a dream to build a tech company is almost a cliché, yet it rings true for the inception of numerous tech giants like Microsoft, Google, and Apple. Atlassian's story aligns with this familiar trajectory. It unfolded when Mike Cannon, in his final year of college, dispatched an email expressing his desire to establish a company and seeking a co-founder to share this venture. Scott Farquhar was the solitary responder to this mail, and the rest is history. Here’s a little nugget of trivia before we delve deeper: Did you know the name ‘Jira’ is derived from ‘Gojira,’ the Japanese word for Godzilla?
PLG Flywheel
Atlassian’s strategy is anchored in the belief that exceptional products, coupled with passionate user advocacy and integrated product-marketing approaches, can self-propel. This insight was foundational, focusing on creating “remarkable” products that generate organic word-of-mouth and drive customer acquisition. Jay Simons emphasizes that the metaphorical flywheel of sustained business momentum begins with products that solve meaningful problems and remove customer friction.
Atlassian’s adoption of the product-led growth (PLG) flywheel is a strategic response to the evolving buying cycle observed over the past decade, characterised by democratisation and increased accessibility of information on the internet. Studies, including notable ones cited in HBR articles, indicate that approximately 65% of the buying cycle is completed by prospective customers independently, emphasizing the importance of self-service in the purchasing journey.
Running Experiments
Experimentation at Atlassian is multifaceted, encompassing product discovery, pricing and packaging, onboarding, and cross-selling and upselling. A notable instance of experimentation involved the bundling of products. Initially, Atlassian hypothesised that bundling more products would be more convenient for users. However, experimentation revealed that bundling more than two products at a time confused users. This insight led to a strategic adjustment, with Atlassian now bundling no more than two products at a time, resulting in higher retention rates.
Another significant experiment revolved around gating free trials with credit card information. The hypothesis was that a gated credit card form would qualify users better. However, removing the credit card form led to increased traffic without degrading the quality of users, signifying substantial growth for Atlassian.
Launching their second product
Conventional wisdom in company-building suggests focusing intensely on the first breakout product, refining and developing it further before diverting focus and resources to a new venture. However, Atlassian challenged this norm, reflecting its intrinsic innovative spirit and willingness to take calculated risks. The introduction of Confluence was not merely about adding another product to the portfolio; it was a strategic move to build organisational capabilities around cross-merchandising, cross-selling, upselling, pricing, packaging, and managing multiple products simultaneously.
Atlassian’s approach to new product development and acquisitions is deeply rooted in market and customer listening, aligning internal needs and market needs, and assessing the scalability of the solutions to a wider customer base.
Conventional wisdom in company-building suggests focusing intensely on the first breakout product, refining and developing it further before diverting focus and resources to a new venture. However, Atlassian challenged this norm, reflecting its intrinsic innovative spirit and willingness to take calculated risks. The introduction of Confluence was not merely about adding another product to the portfolio; it was a strategic move to build organisational capabilities around cross-merchandising, cross-selling, upselling, pricing, packaging, and managing multiple products simultaneously.
Atlassian’s approach to new product development and acquisitions is deeply rooted in market and customer listening, aligning internal needs and market needs, and assessing the scalability of the solutions to a wider customer base.
4. Strategy Acquisitions & Partnership
Atlassian’s growth trajectory is marked by strategic acquisitions and partnerships, meticulously aimed at expanding its product range and strengthening its technological capabilities. The notable acquisition of Trello in 2017 for $425 million allowed Atlassian to diversify its product offerings by leveraging Trello’s intuitive interface and extensive user base, enhancing global team collaboration and productivity through effective project task visualisation. Another pivotal acquisition was Opsgenie in 2018 for $295 million, which endowed Atlassian with advanced alerting, on-call management, and incident response capabilities, reinforcing its incident management suite and ensuring operational seamlessness and heightened service reliability for IT teams.
In addition to acquisitions, Atlassian has forged strategic partnerships, such as its collaboration with Slack, a leading collaboration hub. This alliance has enabled the integration of Atlassian’s products with Slack, allowing users to receive notifications and execute actions directly, thereby improving user experience and fostering efficient collaboration. These integrations and partnerships underscore Atlassian’s commitment to innovation and continual enhancement, positioning it as a leader in team collaboration and productivity software and emphasizing its dedication to delivering unparalleled value to its customers.
Closing Thoughts
Atlassian’s rise to a $3 billion ARR epitomizes strategic innovation, astute risk-taking, and a strong focus on customer needs, providing rich insights for Product Managers. Its journey is highlighted by pioneering products like Jira and Confluence, and key acquisitions such as Trello and Opsgenie, each a meticulous response to market needs, enhancing user experience, and contributing to its impressive revenue milestone.
The company’s commitment to delivering unparalleled value is evident in its emphasis on cross-merchandising and continuous enhancements, showcased by partnerships like the one with Slack. Atlassian’s innovative and excellent approach within its scalable product ecosystem serves as an inspiring model for emerging tech enterprises and Product Managers aiming to meld technology and business in today's evolving digital arena.
🌐 India or Bharat?
That’s all for today, folks! We hope you enjoyed this week’s newsletter. 🤗
Until next week, keep learning and growing! 👋