How long can Atlassian stay Australian?


opinion I felt torn between two poles after interviewing Atlassian co-founder Mike Cannon-Brookes yesterday about the $60 million investment US-based venture capitalist firm Accel Partners has just made in his company.

On the one hand, I felt really happy and proud about what Cannon-Brookes and his co-founder Scott Farquhar have achieved with the company they founded in Sydney eight years ago.

It’s a rare Australian technology company — let alone a software specialist — that has had their level of success. With 220-odd employees, two international offices, revenues of $58 million and VCs knocking down their doors, the pair must feel on top of the world. And rightly so.

Atlassian is an amazing success story for a country which has had few home-grown technology companies grow to become global phenomenons. Australia doesn’t have its own Google, Facebook, Oracle or eBay. We do have a few large IT services firms and telcos, but in terms of pure technology development, in many ways, Atlassian is as close as we get to superstardom.

And yet as the interview wore on I grew more and more troubled by Atlassian’s future.

The reason for this is that I believe the company is already falling into a dangerous trap that has befallen many Australian technology companies before, and will continue to ensnare more in future and curse the development of our immature technology sector.

To be honest, I’m worried that over the next half-decade and beyond, Atlassian will lose much of its Australian heritage and become just another multinational software giant with its base primarily in the US and not much focus on investing in Australia’s technology sector.

To illustrate why I feel this way, let’s do some analysis of the company and what it’s next few years are likely to hold.

Farquhar and Cannon-Brookes could undoubtedly have sold their company several times over by now to bigger international players — I’m sure they’ve had offers to do so. It feels to me that the reason the pair haven’t done this is that they have a strong feeling of proprietorship over Atlassian. It’s their company, which they built from the ground up. They’re young and they want to continue to govern it through yet more success and see what an Australian-built firm will be able to do on the world stage.

Like many Australians, they’ve seen too many great local firms be acquired by international companies and have their Australian operations, culture and reinvestment in the local technology sector gutted by foreigners who are only interested in making money and not interested in the local industry.

With eight years of profitable growth behind it and the VC whizkids at Accel Partners on board, it is likely that Atlassian will continue to make valuable acquisitions and organically grow its revenues and profits over the next half-decade until it gets to the point where it can list on a US-based stock exchange such as the Nasdaq.

I’m sure that Farquhar and Cannon-Brookes are aware that if all of the company’s stock goes on sale in an IPO, then the stability of the company could potentially suffer. A bunch of cashed-up institutional investors such as US banks could grab a slice of Atlassian, and soon be demanding board seats and a say in how the company is run.

Also, if the whole of Atlassian went on sale, it would be easy for a much larger software rival such as Oracle or Microsoft to eventually make initial investors an offer at a share price premium that Atlassian’s management would be duty-bound to at least examine. Even if the company and most shareholders did reject such an offer, a hostile takeover effort could still be made — and could plague the future development of the company while it deals with it.

To avoid this fate, I’m sure that when Atlassian does eventually list, Farquhar and Cannon-Brookes will retain significant stakes in the company, to ensure they retain control and have the capacity to block any outside power plays.

We saw this situation when Australian fibre-optic player Pipe Networks listed on the Australian Stock Exchange, with founders Bevan Slattery and Steve Baxter at one point retaining some 36 percent of the company’s stock. Of course, Pipe was eventually bought by another telco, TPG, but that’s another story.

This sort of founder stock retention will steer off the first pothole that Australian technology companies face on the path to becoming global giants — being bought by other global giants.

However, there are already signs that even its founders retaining a significant stake in the company after its IPO would not be enough to maintain what I would describe as Atlassian’s core nature as an Australia-based company which has international offices and stop it becoming a primarily US-based company with a large Australian office.

I say this because if you closely examine the statements Cannon-Brookes made yesterday, you can glean insights into the way that Atlassian’s management is already thinking about the US market.

For starters, although Australia — and Sydney in particular — is one of the financial hubs of the Asia-Pacific region, Atlassian didn’t talk to any local investors about a placement in the company when it was looking for an equity injection, claiming that it would have been impossible for the size which Atlassian now is. Secondly, Cannon-Brookes claimed that VC firm Accel Partners had expertise that couldn’t be matched in the Australian finance community.

There is some truth to what Cannon-Brookes has said — the Australian VC community would have problems dealing with a company of Atlassian’s size. And Accel Partners obviously has a certain degree of expertise in dealing with fast-growing technology companies that would be hard to find in Australia.

However, I would like to call a certain amount of bullshit on the executive’s claims.

Why didn’t Cannon-Brookes and Farquhar try other sections of the Australian finance community if they needed funding — rather than just assuming the VC sector was the best place to go? I have no doubt — considering Atlassian’s $58 million in annual revenues — that it could have found quite a few local avenues for funding Atlassian’s future growth through either debt, equity, or a mixture of both.

How about, to begin with, hitting up the top end of Australia’s investment banking community to see what cash it could throw up? It’s not like the financial whizkids at companies like Macquarie Bank have ever been short of a few dollars. After all, a number of other Australian software giants — Technology One, for example, or e-health player iSOFT, or even companies like Mincom or MYOB appear to have grown large locally without the need for initial international investment.

Then there’s the claim that Atlassian needed expertise that it couldn’t get elsewhere than VC firms like Accel Partners.

Again, I would object to this idea. One of things that Australia does have in spades is a solid business community, with many high-end business advisors that have been educated in the world’s top institutions and have more than a few notches on their belt when it comes to experience.

Many of those advisors have experience with high-growth businesses in sectors like mining, finance and so on that could translate well to Atlassian’s story. After all, who do you think it was that advised dot com players like, Seek and REA Group ( when they were booming?

To think that Atlassian could only get advice on its future growth from a high-end VC firm in Silicon Valley — and only if that firm ponied up $60 million for the privilege of watching its money grow in between conference calls — is laughable.

Then there is the eventual plan to list in the US. The simple fact is that listing on a US stock exchange such as the Nasdaq will necessarily mean that much of Atlassian’s focus will switch to its US operations. Half-yearly investor briefings are a funny thing. When most of your company’s investors are in the US and you have to hold events every few months to update them on your company’s financial performance, your focus necessarily starts to sit in the US.

Other international companies and partners also start to see you as a primarily US-based organisation, because that’s where you’re listed. They will expect that they can conduct whatever business they need to conduct with you in the US. And that expectation will drive your company’s investment in its US operations, instead of in your Australian homeland.

We’re starting to see this approach already from Atlassian. The company already has some 60 staff located in its San Francisco office, and Cannon-Brookes and Farquhar look to have spent a fair chunk of time in the US over the past six months as they worked their way through their VC investment.

Atlassian is well-known for having only a small sales team, with the company’s software tools often being bought by customers through peer recommendation and word of mouth rather than direct sales efforts. Why then, does it need to have 60 staff based in the US? Quite a few of those must be developers working offshore.

The fact that Atlassian took the investment from Accel Partners reveals the extent to which a certain insidious mindset has already gained control over the thinking of the company’s founders. It’s the mindset which holds that Silicon Valley is the centre of the technology market’s universe and there is no way to change that. That the glossy Silicon Valley VC firms are the sole providers of wisdom and funding for early stage companies in that universe.

It’s a boost to the ego to be discussing — and eventually, taking funding — from these VC firms. The mindset that Australian entrepreneurs can play in the big boy’s sandpit — the same sandpit that spawned Larry Ellison’s Oracle, Sergey Brin and Larry Page’s Google, the two Steve’s Apple and so on.

It’s the same mindset that spurs Atlassian to want to achieve press coverage in the Wall St Journal, on TechCrunch, in BusinessWeek and so on. It’s the lustre of fame.

Cannon-Brookes said himself yesterday that he wanted Atlassian to be a model for Australian companies. “We need to get entrepreneurs over to the valley,” he said.

But I have a different vision from the Atlassian founder. I don’t want to get Australian companies over to Silicon Valley or for US investors like Accel to cash in on Australian success. Instead, I want more Australian technology companies listed on the Australian Stock Exchange. I want Australian companies to create Australian jobs that will help to build an Australian investment community.

I shudder every time I see a great Australian company ponying up with US investors like they have no other option, and setting up development offices in San Francisco because they believe it’s the only way to succeed. There’s nothing wrong with selling software or any other form of technology overseas. But the profits should be reinvested in Australia and in Australian jobs.

I have no doubt that Atlassian will continue to invest — to some extent — in Australia. But I will be watching closely to see how true the company stays to its roots and how many jobs and resources go offshore as it grows. The feverish reporting of the Accel investment this morning smacked of a “country boys win big in the city” ethos to Atlassian’s success in Silicon Valley. But that’s not the way I want Australia’s technology sector to be seen. We’re not the bumpkins Silicon Valley might think we are.

We’re not going to build a great Australian technology sector if we constantly have our eyes tuned towards the Silicon Valley stars and our hearts tuned towards the pages of the Wall St Journal and TechCrunch. That can only be done if we reinvest constantly in the Australian market, base our companies here, refuse to be acquired by US multinationals and maintain the Australian rage.

Image credit: Dane Munro, royalty free


  1. Did you pose these questions to Mike & Scott when you interviewed them (or after)? Good on you for having a position and publishing it, but writing the opinion piece without canvassing their responses to your opinion makes this piece feel a little like an ambush, and a little combative.


    • hi Cameron, I did question Mike about not looking for Australian investment and about listing on the ASX, although I could have questioned a fair bit harder, in hindsight. Most of this came to me this morning when I decided to do some analysis on the deal and work out what I really thought.

      I don’t think it’s OK that this deal is just universally applauded as an “Aussie success story” without looking into some of the real implications.

    • Yeah, it is probably a safe bet that the investment was made in some Delaware company. Really though, that doesn’t matter in my mind – even from a tax perspective, if they are generation revenue in the US and paying local taxes, then those offset any additional tax they’d pay in Australia.

      The key is the employment of the developers in my mind. If we can keep creating these companies, getting US capital to line their pockets in liquidity events and have those entrepreneurs and staff with shares doing well and starting more companies, then we’ll build up our own startup culture.

      • I agree with you to some extent, Sean. But I still think there is a great deal of ‘sell-out’ in terms of Australian companies selling their firms to US or multinational companies. I’d like to see some home-grown Australian companies get big, so we could have something to show as a country in the technology sector — I’m tired of reporting that this or that local company has been bought by a big US private equity firm or multinational.

        After five years of reporting on great Australian companies being bought by shitty US ones and running them into the ground, I’d like to see the trend turning around.

        • The thing is, you need a buyer as well as a seller and in Australia, Tech is just undervalued.

          Accel chipped in $60m for a minority stake. They will need to get a minimum of a 5x return and more likely would like to see a “ten bagger” or 10x return. So if they picked up, let’s say for the sake of argument 30% of the company, that would put a post-money valuation on Atlassian of $180m (we can’t do pre-money because some of it was taken off the table so we don’t know the dilution). What that basically means is that Atlassian will have to list or sell for a minimum of $1B at some point in the future.

          Let’s go one step further. Accel will open their considerable rolodex for Atlassian which will get them contacts and credibility to continue to grow their business. Accel will nurture them, use their network to make sure they get the BEST people possible to expand their business. Accel will keep their ear to the ground and have the inside contacts to ensure that if a buyer comes along, the company will get the maximum return. There isn’t a single strategic VC capable of doing that in Australia. That’s just a simple reality.

          I think one thing that is being oversimplified is the role VCs play and the experience and things they bring. You mention Mac Bank? Come on, that’s laughable. If I was Atlassian and had the choice of Jim Byers from Accel, Fred Wilson from Union Square Ventures or some banker from Mac Bank on my board as a key strategic investor, Mac Bank wouldn’t get a look in. There is MUCH more to the equation than just money.

          I also have to echo the sentiments of other people – who cares where the money comes from and why the need for “big” tech companies? Surely your sense of national pride can’t be so low that you need it propped up by trophy companies. Big companies are generally acquirers of technology and innovation, I’d rather be the one selling it to them.

          • My issue is based on the fact that building big companies and then selling them to US companies — or even, I expect, listing them in the US — will not be beneficial to the Australian technology sector in the long run.

            Sure, Accel will pull out their rolodex for a big buyer. Likely it will be a company like SAP or Oracle which needs to get some innovation energy and new generation software injected into its monolithic ass. Shortly after the acquisition (I’ve seen this quite a few times before), they will shift the company’s headquarters to the US, get rid of much of the Australian workforce and integrate the rest into their local corporate structure.

            And then once again, the dream of having a large Australian technology company will be dead and there will be zero investment in the local sector. This lesson has been played out so many times over the past decade that it’s completely laughable.

            What’s wrong with wanting to have a large Australia-headquartered technology giant a’la Google or Facebook?

            It would bring jobs to the region. It would boost the local community. It would bring prestige and impress the government into giving Australian technology companies tax benefits. It would allow us to have some smidgeon of national pride when it comes to technology and not simply “benefit” from a bunch of local offices of international companies that are basically sales extensions funnelling dollars offshore continuously.

            I’m sorry, but forgive me for not jumping up and down for joy when I see a company like Atlassian hand off a bunch of investment to a bunch of bigass American VCs who are going to make a fat load of profit off a company that has done all of its hard work in Australia.

            Atlassian took the easy option. But not necessarily the best long-term option. We need to examine this trend a little closer and not just jump and down congratulating them for what is, in the end game, just one year’s worth of revenue being invested in their company.

  2. Frankly, if they’re happy than I’m happy. It’s great to see two guys with the nerve to do something different come out on top, whether they’re Aussies or otherwise. It’s not their job to create a stronger Australian tech sector, though they’ve certainly helped that cause greatly already. The main question is what the $60m will mean to Atlassian and its customers, employees and investors — not what, if anything, it might mean to the rest of us.

    • Great, Steven — so to sum up, your attitude is that if Atlassian is doing well there’s nothing worth analysing here and we shoudl all go home. Maybe Sean and I should not have bothered writing about the situation then.

      And yes, it is partly Atlassian’s job to create a stronger Australian tech sector — because they have publicly stated that they want to do so. I am critiquing those public statements.

      • I’m very interested in any analysis of what the $60m will mean to Atlassian and its customers, employees and investors.

        (Feel free to delete my duplicate comment below, which I posted before I spotted the Reply option.)

    • First of all, the deal seems to be part liquidity event, part investment. So employees who own vested stock probably would have been able to cash out some of that – the founders certainly would have taken money off the table. So for some of them, they’ll be driving better cars, paying off mortgages and not having to worry about a crust for awhile. Other than that, it doesn’t appear strategically the company is going to change operationally.

      Customers probably won’t see a difference initially. Ultimately some of the money was investment capital for acquisitions so that means Atlassian may be extending their portfolio. This will be a test for them. Some companies buy and integrate well, others struggle. They could fill holes in their product set and their customers would be winners – OR – they could buy things that take them into slightly new areas, struggle to integrate, distract them from their core competency and everyone loses. This will play out over time.

      Investors is a bit vague. The company was bootstrapped so the only shareholders are the founders and some employees. Accel is now an investor. They obviously believe that Atlassian is a company that will be worth more than a billion dollars and in the next few years will top $100m in revenue. I say that because it is generally accepted now in the US that to IPO you need at least $100m per year in revenue and you need to be worth more than a billion in market cap. Also if you look at the post money valuation of somewhere between $150m-$180m (based on the assumption that Accel got between 30-40% of the company) then for Accel to get a 5x return, Atlassian would need to sell privately or list (and hold their market cap) between $750m and $1b. If they do that, the founders and employee shareholders hit the jackpot – AND BLOODY GOOD ON THEM!!!

      Those are my thoughts anyway.

      • I’m never going to applaud an Australian company being sold to an overseas company. You know what I do when that happens, as a journalist? I place a diary marker in my calendar for six months’ time. You know why? Because that’s the time when the international company will start to lay off Australian IT jobs.

        Seen it a thousand times.

        Mincom, anyone?

        • Not always the case. Look at the Citect acquisition by Schneider Electric. Aside from some consolidation on the admin and back office side, from a development, testing and product standpoint Schneider have invested in, and created, numerous new positions for Citect in Sydney, Brisbane and other offices in Australia. That’s one example of many. Domestic acquisitions/investments aren’t all roses: Commander & Volante ring any bells?

      • “Also if you look at the post money valuation of somewhere between $150m-$180m”

        You must be kidding. Try 400-500M. This is a company with 60M in revenue – they did not need to raise money at all. They have been courted by US VC’s for years and they finally gave in probably because they realized that to prep for an IPO they would need to fill out the board and the C-level positions with very solid and experienced people.

        Accel have taken many US companies public, and have helped them hire the right people for an IPO. Australian investment banks have zero experience in this area. VCs do not always anticipate a 10x return, especially when a company is at a later stage of development such as what Atlassian is. They need 10-50x at the seed stage because of the risks – but not here.

        Atlassian is treading a path very similar in that regard to Paypal, who raised a lot of money pre-IPO which gave its investors a 3x return. VC funds have a lot of money to invest, if they can shake out 60M at 3-4x they would certainly do that, rather than try to find 4-5 more investments at 10-15M each and cross-fingers for a 10-bagger.

        Paypal was a lot more cash-intensive, but the VCs involved did prepare the company for an IPO, and were also involved in the later buy-out. This investment for Atlassian is more to do with bringing expertise in. Those VCs would have required a minimal ownership stake, say 10-20%, and in this case that just happen to cost them $60M. This is in no way a ‘traditional’ VC deal with a 150-180 post, not even close.

        I would expect Atlassian to now hire a solid CFO, COO and possibly a CEO, as well as a bunch of VP roles – and then head to a NASDAQ IPO in 12-18 months, depending on market conditions. Valuation at IPO should be 1B+ (on revenue of 100M+). It will be the first big enterprise software IPO for a while, so there will be plenty of appetite for it.

  3. If Atlassian is to be successful then it has to be as a global company, because otherwise it will likely be beaten over time by someone who does achieve global scale in its markets.

    As a global company, its management should spend an appropriate proportion of its time on (and in) Australia.

    Population of Australia 22 million, population of the USA 310 million.

    The appropriate proportion isn’t very big.

    • Yeah sorry, I don’t buy this. Nintendo isn’t headquartered in the US, they’re headquartered in Japan and that’s fine. SAP is headquartered in Germany and they’re doing fine as a “global company”. Alcatel-Lucent is headquartered in Paris and they just won a billion-dollar deal with NBN Co in Australia.

      How about we have some more home-grown Australian technology companies headquartered in Australia for a change, with satellite offices around the globe. I’m tired of every goddamn Australian company heading overseas and taking the jobs and investment with them.

      • You’re comparing Nintendo and SAP, Japan and Germany to Atlassian and Australia? Nintendo is MASSIVE in Japan, the third largest economy in the world with over 100m people. SAP remains based in Germany (80m people) because it is a source of German nationalistic pride AND Germany has really obtuse takeover laws (something that SAP’s board likes and so does the German government).

        Australia is a small market, it is 65% the size of California. The economy here is resource based and moving towards services rapidly. The government SAYS it values innovation and inventiveness, but does not establish a tax regime to back that up. The governments are importers of technology and rather than encourage local providers, they actively pursue deals like the one the NSW Department of Education did with Google Mail. When the local governments DO operate locally it is usually with Telstra or big overseas vendors like IBM.

        Create a tax regime that makes it attractive to invest in software as a startup, make it attractive to invest your capital in technology startups and make it attractive to cash out without being raped on Capital Gains Tax. Once those things are in place, you’ll then see if the people of this country are smart enough and willing to do the work to be that successful.

      • Nintendo is in Japan, pop 100 mil, closer to the US.
        The others are in Europe, (germany 100 mil, france 60 mil), that is a very different playing field, since they are in the EU (pop 400 mil).
        Australia is too small to support this. As they grow overseas, they will need more offices overseas, with support staff. Then they will need developers in those offices, to support localization, dealing with clients in the correct timezone.
        They can still maintain a presence in Australia, but it will dwindle. No way around that.

  4. A successful exit that produces a PayPal-style ‘Atlassian Mafia’ will do more for the IT industry here at this stage of our development, than a company only taking AU money just for the sake of staying ‘Australian’ when there’s a better deal to be had in the US.

    Also, maybe some of the local investors might wake up after this and realise that there are opportunities to be had in our local IT market when US VCs start swooping in with this sort of cash to drop?

    • Sorry Warren — I don’t believe that. We’ve already seen a number of successful companies exit via acquisitions and private equity deals in Australia over the past few years. MYOB. Mincom. KAZ. The list goes on. None of these companies (with the potential exception of Ozemail) created a so-called PayPal-style mafia. Even a company like appears to have only made limited investments in startups (such as Wotnews) by its founders.

      I’ve seen this before so many times. Australian company makes it big on the global stage, goes on to broadly downsize its Australian operations and focus overseas. The thing is, I just don’t believe it vibes with Atlassian’s culture and idealistic vision to go down this path.

      To my mind, it’s not enough to want to take Australia’s entrepreneurs to Silicon Valley. I want to create our own version of Silicon Valley here. That would, ultimately, be much better for the Australian tech sector.

      • But Renai, one bigco like Atlassian doesn’t make a Silicon Valley, much like Alcatel doesn’t make a ‘Silicon Paris’, nor SAP a ‘Silicon Berlin’.

        I’d also wager that the kind of employees who would stand to gain ‘fsck you’ money in Atlassian’s Sydney office would be far more innovative and entrepreneurial than those involved in MYOB or KAZ, and hence more likely to kick off on the next generation of Aussie startups.

        I want to see the same thing you do, we just differ on how to get to there from here.

        • I would bet you any money that if a company like Alcatel-Lucent or SAP shifted their focus to the US and listed there that there would be an outcry from their local geographies. Those companies and governments see their home countries as key to their operations going forward and would do almost anything not to dilute that focus — they have a strong degree of national pride in their endeavours.

          I’d like to see the same sense of national pride in Australia.

          I take your point about Atlassian’s employees being likely to invest … but to be honest surely both Mike and Scott Farquhar have been millionaires for years — and I haven’t seen any angel investments by them yet. Maybe I’m just ill-informed. So far what I am seeing is a dev shop being set up in San Fran, US listing plans and VC money from a US-based firm.

          Sure, they’re talking the talk — but are they walking the walk?

          • From Mike’s blog at

            “Advising startups is something I’ve started doing in the last year. It’s a fascinating way to use one’s brain and experience to solve other people’s problems.

            I’m loving it.

            Besides the few I advise, I’ve invested in one, HomeThinking.”

            That was hardly investigative journalism on my part… :P

            As much as the founders angel investing though, it’s about smart people lower down on the tree who suddenly find themselves without rent to pay and space to work on their big idea…

          • There is a big difference between living comfortably and “F*ck You” money. The guys from Atlassian have probably been doing ok for awhile, sure – but their share of their company is now probably worth maybe $40m. They probably took $10m off the table each. That’s not a massive payday, but it means they no longer have to worry about money. Now if you assume they each own 27.5% and they sell for $1b, then that’s some serious dosh. That’s a liquidity event.

            I reckon the breakdown is:

            The two founders own 27.5% each
            The staff option pool is probably down to about 15%
            Accel bought 30%

            I’d bet Accel bought 5% from vested employee shares, 5% from each of the founders and the rest is new shares. That would work out to about $30m taken off the table ($10m for each of the founders and $10m for the staff) with the other 15% being new shares.

            I think you have to look at it from a scale perspective, what the guys from PayPal and OpsWare got ($1.5b and $1.6b respectively) – that’s big money. Nothing in Australia is even close.

          • Yeah great — and what did PayPal do as soon as they could? They opened a global development centre in India. You can bet some American jobs went that way:


            This is what I am arguing against. Not the gurus who founded Atlassian making a motza — they already have made enough to live comfortably for the rest of their lives with a couple of ferraris each. What I am arguing for is how Australia’s technology sector could be developed. And ‘globalising’ Atlassian by centralising it in the US is not the answer.

          • I think Atlassian culturally aren’t going to go that way, but thus is life…

            What about all the software jobs the Big Banks push to India? These are companies who have a license by our government to CREATE MONEY and charge you for that privilege. These are the companies who when potentially some of their own bad investments could have come home to roost, our government jumped in front of the bullet and guaranteed their loans. If you want to lobby against offshoring software jobs, start with the banks.

            Companies like Atlassian and Aconex win awards for their company culture – that’s how they attract good people. If they destroy their culture then they’ll hurt their business.

          • I agree with you about the banks pushing Aussie IT jobs offshore, and I’ve written about that wherever I can as well — as well as when any Australian technology jobs are pushed offshore.

      • You’re arguing against a proven model.

        PayPal – Elon Musk, Max Levchin, Peter Thiel, Luke Nosak, Ken Howery, Reid Hoffman

        Elon Musk has started Tesla and Space X

        Max Levchin has started Slide and Yelp

        Peter Thiel was an initial investor in Facebook and with Howery and Nosak created Founders Fund

        Reid Hoffman started LinkedIn and has invested in Zynga, Flickr, Digg, IronPort and Facebook. He’s partner at Greylock and is considered by most as THE MOST influential person in the valley if you want to get funded – if Reid Hoffman gives you his blessing you’re in.

        Then you can move on to people like Chris Dixon, Katerina Fake, Dave McClure (also ex-Paypal), Jason Calacanis. All successful entrepreneurs who have sold their businesses and moved in seed/angel funding and starting new companies. VCs are now taking more people like Mark Suster and Jeff Bussbang who’ve started companies, raised money and exited. How about Marc Andreessen and Ben Horowitz?

        I think the evidence is pretty much overwhelming.

        • Sorry Sean, I’ll match that with a list of Aussie companies and entrepreneurs listed on the ASX.

          We have founder Graeme Wood — invested in Wotnews. was ASX-listed.
          MYOB founder Cragi Winkler — invested in Xero.
          Feedcorp — founded by Ben Barren — took a substantial funding round from an “Australian angel”.
          OzeMail — listed on ASX. Founders known to have been investors in WebCentral.
          iiNet — listed on the ASX. Michael Malone known to have provided an exit acquisition strategy for hundreds of smaller ISPs.
          KAZ — founder Peter Kazacos has invested now in another locak business, PK Business Advantage, which has provided an exit strategy for quite a few other local businesses.

          In short — the ‘proven model’ that you point out exists in the US already exists in Australia as well. There is absolutely nothing to stop Atlassian following that proven model, listing in Australia and reinvesting in the Australian technology sector as angel investors.

          • You’re arguing against your own point. Having people successfully start companies and reach a positive liquidity event leads to those people funding new businesses. Which is exactly what Warren was saying.

          • Yes, but what I’m arguing is that there is no reason that positive liquidity event couldn’t take place in Australia instead of in the US.

            Sure, it might be smaller. But what’s a few million here or there in these sorts of cases?

          • How about a public display of a lack of commerciality, and the risk of a lawsuit from other equity holders – fiduciary duty and all that.

            You can’t sit here in Australia with your MacBook and HTC phone and your gmail accounts and wordpress driven websites, and then blast Atlassian for operating with a global focus. Why are you allowed to seek vendors/suppliers/partners for setting up your business, and they are not?

            I understand your inital point, but fair suck of the sav.


          • Because at the end of the day for me, Cameron, it’s all about the Australian technology sector. I’ve thrown my personal weight behind Australia’s IT community — I exclusively report on what’s happening in the local arena and I employ — yes, employ!! — local staff to do so.

            It’s my job to critique something that I think will take Australian technology jobs offshore eventually and that has the potential to impact on Australia’s technology community eventually. And I do think that will happen here.

          • Atlassian routinely is rated as one of the best places to work in this country. The two founders have setup a cool and innovative workplace. They attract great talent and get good results. Why on earth would they change their approach now? Do you think Accel Partners are going to ride in and start tell them where to do development? Accel Partners would be begging them to keep on doing what they are doing, in fact do more of it!

            You’re drawing a long bow and it is a bit unfair considering the past behaviour of the individuals involved. The founders have been applauded for the company culture and work environment they’ve created – they are innovators in that area too. Its not fair to paint them with this brush of heartless money grubbing mercenaries because they took the best deal.

            Put it this way, if you owned your house and put it up for sale, would I have the right to criticize you for selling it to an overseas investor? Their shareholding (and many of their staff presumably) in Atlassian was their single biggest asset in their lives, they spent 8 years of risk and sweat equity building it, to suggest that they should have left money on the table to appease some amorphous ideal of the “Australian IT Community” is absurd.

          • You’ll find if you re-read the article that I did pay tribute to the founder’s efforts and their development of a great company. I also said I was “happy and proud” for them. And of course it’s great that they’re going to become well off and contribute back to the local community.

            But that does not change the fact that they have the option of doing a little more to support the Australian technology sector from a structural point of view. And their actions are part of what I see as an ongoing problem with Australia’s technology sector in that we are unable to build large companies. I want to critique that trend. The Atlassian investment is the avenue through which I am doing that.

            It’s not drawing a long bow to suggest that Atlassian may have wanted to consider looking around for Australian investors before assuming that there wasn’t any money here to ink a similar deal.

            Nor is it drawing a long boy to point out that a number of other companies — iSOFT, Technology One, Objective, MYOB,, REA Group and so on — have listed on the ASX and achieved profitable exits for founders.

            These are facts. The Atlassian guys are great. But I have a wider interest here — the development of the whole sector. And that is what I am arguing.

  5. We setup Cleartext in Sydney in 2005 with a view to staying here, but the real world has shown us that Australia really can’t handle new tech startups as well as the US and EU can (and I’ve been in senior management roles startups in both those markets).

    We launched our new platform on June 1st this year and our first leads and sales are from offshore deals, yes we have lot’s of interest from local business, but it’s USD and GBP that are flowing into our bank account.

    We plan to stay here but my first round of client visits, and some prospects visits are in London next week, not Sydney, Melbourne etc, that’s life in high tech.

      • He’d be a fool not to list on the Nasdaq if he had the chance. You list your company to make it easier to raise capital and have liquidity for your shareholders. Tech stocks on the ASX trade at lower multiples and capital is considerably tighter here in Australia.

        When you start talking about listing, it has absolutely nothing to do with nationalistic pride and ideals – it is all to do about access to the best value capital and where your shareholders will see the overall best returns.

        • You’re right — in terms of the money involved ;) That part of it is obvious.

          But I’m not purely arguing about the money here, and Atlassian’s statements have made it clear that neither are they. They want to grow the Australian technology sector — that has been a public mantra of theirs — through providing an example.

          I’m not arguing that the money side of things isn’t the right way to. What I am arguing is that there are ideals beyond money, and that Atlassian has a chance to build a really big Australia-headquartered technology company here, and that this is something that would be good for the entire industry and not the wallets of a select few ;)

          • Stand back, take a deep breath and give your head a shake.

            If I was an Atlassian staff member who had worked there for five years, had 25,000 shares vested and was making $80k/yr and the founders came to the staff and said, “We have been offered a motza deal by an American VC, each of your vested shares are worth $4, but instead, we decided to raise money locally, and your shares are worth half that.” They’d get sued, bottom line.

            As a director of a company you have a fiduciary responsibility to maximise the financial return for your shareholders, if not, you are breaking the law. Simple. The directors could have opened themselves up to personal liability if they would have acted in any other way.

            If you don’t like Corps Law, lobby Labour to change it, but as it is, as a director of a company, you don’t get the privilege of considering some higher nationalistic ideal.

          • Yes, but there are two facts you’re overlooking.

            1. Atlassian didn’t seek local investment so they don’t know that it would have been less.

            2. My impression is that there were very few (and when I say very few, it’s possible there were none) shares allocated to any employees apart from the two co-founders. So I doubt that the legal issues you have raised would have been an issue.

          • Can you name a single high quality venture capital firm with a solid track record of investing in technology startups in Australia? I can’t name a single one. Accel Partners are considered one of, if not the best VC company in the world along with Sequoia – why wouldn’t I want to partner with the absolute best player in the world if it were my company?

            As for shares, I personally know people who work there and work for them in the US and they certainly do offer staff options. It is unheard of for a VC firm to invest in a company that doesn’t set aside at least 15-20% of the shares POST money for staff. VC’s realise that you can keep salary down and drive alignment by having staff own part of the business. The 20% stock pool ALWAYS comes out of the founders end.

          • You’re right, I can’t — and certainly not at the scale that Atlassian was looking at. But I ask again — why does it have to be a VC firm that invested in the company? Atlassian’s not a startup — it’s ten years old and has 220 employees and revenues of $58 million. There are a stack of ways such a company can get funding for expansion or exit.

          • Renai

            I think that there’s a number of facts that you’re overlooking in your ‘wouldn’t it be nice…’ approach to finance, which include, but are not limited to:

            * Access to other Accel portfolio companies experience: An AU VC is unlikely to match that

            * Each of the global examples that you’ve listed have significant presence in AU as well. Google Maps and Wave were born here. It’s illogical to suggest that we’d prefer that to happen in Mountain View, in the same way that it’s illlogical to suggest that you don’t want Atlassian to grow big and strong and healthly so that they can blaze a trail to IPO for other AU companies. I see that another poster had already referenced the founders mentoring activities.

            * Access to experience with doing a US IPO: once again – limited experience (and market depth). As an ex-employee of a big four accounting firm, a majority of the leads and closed that I worked were those that wanted to work with me because of my client roster and experience, and because we had done the things that our clients had on their to do lists (our massive professional indemnity insurance helped as well!). I would take the same approach if I were in that position: these are the qualitative elements of a deal that are difficult for outsiders to reliably enumerate, and yet add significant value.

            Neither of us know the make up of their finance function, and the balance and split of internal staff to external advisors (although as a finance/technology type, I’d love to know). If they can bolster their skill base without adding headcount, that’s a significant advantage. They would be nuts to pass that up.

            We know that you’re passionate about the AUIT sector. I think your laser focus is commendable. But there’s a need to balance against commercial reality. Unless of course, you’re just trolling us ;-)

            (really – I just wanted to write “fair suck of the sav” in a blog – that’s all)

          • Hi Renai,

            Firstly, I am an Atlassian employee (+4 years) in Sydney but am commenting here not as an official spokeperson. Some of what I say may not be accurate as I am not privy to management level or board level discussions, but we have a reasonably open company (it’s a core value) so we probably know more than most employees in these situations.

            I do know that Mike and Scott have spoken to a shit load of VC types here and overseas, and have spent an awfully long time researching it. They ultimately made their decision on what they consider is best for the business. Only time will tell if they made a good decision and what the ramifications will be, but there are amazingly good business reasons for the choice they made (these have been canvassed elsewhere so I won’t repeat them, but its about a lot more than just the money). I can certainly say though that even the most cynical of the engineers here (who are a cynical bunch of bastards to begin with) are very excited by the way this has been played.

            Absolutely core to this whole thing is the promise that nothing much changes. Yes we have cash, but that cash comes for a _small, minority stake_! With it comes some board-level guidance, but no control. We remain an Australian headquartered company with offices around the world allowing us to provide 24×5 support, and tap into engineering talent where it is. We have to do that because we simply cannot find enough quality engineers in Australia fast enough (which doesn’t mean they aren’t here but we can’t hire every single one of them, and yes we are always looking).

            Now, I am no soothsayer and can’t predict what will happen tomorrow. We’ll probably buy something, we’ll probably do a bit more R&D, we’ll hopefully find a kick arse head of engineering via our new partners that we might not have found otherwise (who will have to come to Australia if they aren’t already here). If the latter happens that will already be a big win for us. If in a few years we list on the NASDAQ or get sold to someone, will that be the end of the world? Personally of course, I don’t think so :-) It would probably bring some liquidity to more than a few Australians that’s for sure!

            So, I think perhaps you maybe protest too much. If the company changes much then people leave. If people leave then the ability to innovate disappears. And without innovation, a software company doesn’t have much growth potential – and nobody wants that.

          • Hi Jed,

            I appreciate all of your points. I just want to raise one in particular.

            Yes, for me personally, if a great little Australian company like Atlassian was sold to a company like Oracle, it would be the end of the world.

            The reason for this is that I have been reporting on the Australian technology sector for more than half a decade now, and there is a pattern that I have witnessed. One or more great Australian entrepreneurs start a company and grow it to a certain size. That company attracts international attention. It is then bought up by a multinational.

            After six months the company’s Australian operations are gutted as the management changes and jobs are moved offshore, sometimes to the US but more often to a low-cost development centre like India. The Australian developers and tech-heads lose their jobs, curse the world and then pick up jobs at another new and upcoming company.

            The owners of these companies all think their story is special. They cash out, buy an island if that’s their thing, and then they make make an angel investment or two before sinking into wealthy obscurity. Meanwhile, after a handful of years everybody forgets that the company was ever Australian and it’s just subsumed into a bigger company’s business.

            I’ve written this same story so many times now.

            So yes, it would break my heart if a company like Atlassian — a company I believe in, a company that I want to see go on to do great things — was to sink into this trap.

            I’m sure everyone today at Atlassian believes that Renai LeMay is the great Satan who rained on their parade. But the truth is I love Australia and I love its technology scene and every time a little bit of it heads over the to US to be lost forever, my heart breaks a little more.

            Call bullshit on that one if you like. But come back in a couple of years. I’ll still be writing about Australia’s technology industry — pretty much until they pry the keyboard from my cold dead fingers.

          • Hi Renai,

            I’m at Atlassian and I don’t think you’re the great Satan :)

            As someone who didn’t even know what stock options were until someone put some in my lap, it’s refreshing to read an opinion that is contrary to what everyone has been singing about here over the past few days. I’ll reserve sharing my opinion until I’ve got a better understanding of the whole picture, but thank you for balancing out the information I have to base my opinion on.

      • We won’t be listing anywhere. We took the decision at startup to build a real world business, with real products, real revenue and real customers and stay with it for the long haul for all involved, clients included.

        I think this has really helped build a loyal client base with almost zero churn and rock solid financials which carried us through the downturn. In fact the downturn helped us out because slowing sales demand allowed us to focus on new product development.

        I think too many IT startups focus on VC or Angel money then an IPO – There are other ways to build a successful business that’s fun to work in. This doesn’t preclude a trade sale later on as an ‘exit’, but it does remove the pressure that outside investment brings with it.

        Atlassian are a really good example of how you can build a great business without someone else’s cash up front, we’re trying to do the same and I encourage younger people to do the same, think longer than 2-3 years, think 3-5 at least. We’re now moving to our 5-10 year plan have hit most milestones on the initial 3-5 year plan.

  6. Renai, this is not Atlassian’s problem. Countries all over the world have been trying to recreate Silicon Vallye for a long time, without much success.

    The Atlassian guys have done well and deserve their success.

    As to your claims about Australian investors, I realise you’re trying to promote something you believe in, which is good, but our investors are weak in understanding technology stocks. They even passed up on Radiata, a genuinely innovative technology company that was light years ahead of software like Atlassian.

    In my experience, US technology executives are qualitatively different. If you show them something innovative, they immediately see the potential and start planning for execution. That’s because they come from an environment where stuff happens. Quite often they’ve followed that track themselves.

    By comparison, Australian technology executives tend to be guys who’ve risen through the sales ranks in a multinational, and all their being looks to head office for the OK. This pattern is worse for coms/law/MBA guys in the banks, who never understood technology in the first place.

    Also, you’re over-rating Atlassian. Their technology is not innovative and the company doesn’t offer that much to Australia. Atlassian is a company that has executed well in a business sense, on pretty standard software.

    • That is right Tony. You can’t blame Atlassian for following the market and for following the money. Blame decades of government neglect in Australia. The government doesn’t actually have to do a lot – they just need to get out of the way of startups and not treat them like any other small business and burden them with income tax, payroll tax, tough employment regulation, an uncompetitive banking system, a lack of small-scale credit, tight listing regulations, foreign ownership constraints (the list goes on). Atlassian shifting to the US is a symptom of poor government in Australia and no fault of Atlassian or any other startups here.

      Most of the examples of good Australian startups (ozemail,, wotif etc.) are those who have simply taken a model that has worked in the US, and localized the product (be it search, business listings or whatever). They are *Australian* companies. Atlassian has had a global user base since day 1 and is unlike those other companies cited as it isn’t simply just a localized play of a proven model from overseas.

  7. Its a noble thought, but unsurprising that the first decent press they get is by getting an offshore investment.

    Most investors here just look at P/E multiples and rarely at the potential – clearly the VC’s paying 1 x revenue for a minority share are looking to a bigger picture – not the current profit no matter how good. I agree that the team buying in think its a $100m revenue plus business, and they should – its fantastic software – we use many of their systems here including JIRA, Confluence, Bamboo, Crucible etc and if this money gives them the ability to invest more and make the products even better we are overjoyed.

    VCs in the US dream big, here it is hard to see bankers with vision to do so. In the US there is a separate board for the IT sector – here it barely gets an industry classification.

    Before getting too concerned that another potential ASX listed company has to go offshore – perhaps the question is – how much are the listed Australian IT companies valued at – and how often do you cover their efforts….

  8. It strikes me that I have seen these kind of arguments play out before… bear with me here while I try to stretch an analogy:

    I’ve lately become a bit of a football (as in soccer) fan, and a common argument that is played out among fan forums is what role the Australian A-League should play in developing our local talent. One school of thought suggests that clubs should try to hold onto young local talents as they mature, and begrudges them the opportunity to go overseas where they can make far more and play at a much higher level in competition. After all, the club’s interest is in maximising its own success, not that of its individual players.

    The opposing view is that players should be brought up through the ranks and fed into the big leagues when they’ve learned their craft, earning their initial clubs a decent chunk of change in transfer and on-sell fees, which can then be reinvested into further development of promising young players. The club may lose some competitive edge in the short term, but in the longer term, they attract talented local players and hold on to those who are not quite good enough to make the jump.

    Of course some players go to the big leagues and end up sitting on the sidelines, unhappy, and eventually return to Australia as a less valuable player than they would be if they had stayed here. On the other hand, you have professionals who make a good career internationally, before coming home and investing in the game here, which becomes a win/win.

    So in this analogy, (in case it’s not entirely clear), the ‘club’ is the Aus IT industry, and the promising young players are companies like Atlassian – there is of course a chance that they will ‘fail’, with a net negative impact on the Australian ICT sector compared with if they stayed locally, but there is also the chance that their success will catalyse further investments and successes in the local industry.

    As much as people would like to see the A-League on a par with the big European leagues, it’s naive to think that can be the case in the short term. In the same vein, I think it’s naive to expect our most promising companies to view an ASX and a NASDAQ listing as being equivalent levels of success.

    (End stretched analogy!)

    PS: When was the last time an AU company listed on NASDAQ, if ever? Not being snide, genuinely curious, and yes, I know it’s a long way to there from here, but it does very much seem to be where the company is orienting itself.

  9. Silicon Valley is where it is mate. End of story. Your article is like telling Nicole Kidman or Hugh Jackman not to make it on the world stage. It’s where innovation happens, just like Hollywood for the movie industry. Sure – you can wish it was somewhere else, and there are edge cases but you need to deal with reality. If you’ve spent any real time over here you’d understand. As CEO of an Australian IT firm, I packed up and moved over to the US to launch our US operations here last year and only wished that I did it 5 years ago.

    Scott and Mike have kicked-ass as Aussies. They remain Australians and employ a great bunch of people in Sydney and worldwide. They have done us all proud and paved the way. Who cares where the books are submitted, or who invests – that’s up to them, they own the company.

    The one thing that Silicon Valley doesn’t have that we have in Australia is the need to cut down those that are successful. How many Australian jobs have you created?

  10. Renai – mate – seriously? You’re kidding me.

    Fair suck of the sav is right indeed – and you know only an Australian is going to understand that reference.

    1. Australian VC community – where is it? Seriously. Give me the investments. Name ’em. I don’t want VCs, I want results… or at the least, invested capital.

    2. Why tear down a good thing? I just don’t get it. International venture money invested into Australia is a f**king good thing mate. It’s beyond awesome. It’s incredible. It builds local skills and experience, taps us into global networks. It lets us hire the best and bring them to Australia. It lets us send Australian staff overseas to train and some of them will come back! Bonza mate! Bonza! That’s what we want! Universities (as good as they are and as hard as they try) can’t train those skills. They just can’t. You think you can get that from Macquarie Bank? Dream on. Some of my smartest friends work there – but they buy toll roads and airports (and recently take the government’s line of credit to buy up bad debt from elsewhere in the world). They are geniuses at making money. But they don’t invest in technology. (as they shouldn’t – they don’t understand it)

    3. “We should have looked locally” – are you kidding? See point 2! We want to build an Australian industry and that requires partnering with the best. Globally. We have nothing to come close to compete with the skills that exist in the US. So let’s meet them. Let’s talk to them. Let’s hire them. Let’s learn from them. Let’s import them. That’s how we grow as an industry. Looking locally for capital? Not going to happen. We’ve done it – it’s not there. Don’t say we didn’t look. It would have been 10x less. Seriously. 10x.

    4. Money is not money. We don’t want more dumb money in Australia. If we just wanted cash, we could have gone to Westpac. Is that useful? No. It’s money! It’s as useful as an angel investment from a big-4 accounting partner. They have cash, but they don’t understand your strategy and your technology. That’s useless to you. Go to a bank. Mortgage your house. Don’t waste your equity on them. We want experience. Accel are a top class firm that can do so much more than just write a cheque. In fact, the cheque is almost irrelevant. Why is that not immediately visible?

    5. REA? Seek? Wotif? CarSales? Those are _local_ businesses. They’re great businesses, don’t get me wrong – but they all have a geographic, local advantage. MYOB? Huge in Australia. Elsewhere? Also-ran. Seek? REA? CarSales? Dominate the local sector. Awesome achievement and they’ve nailed it – but they have local advantages. Buyers + sellers = marketplace, and that’s geographically limited. Now – go find me 5 global companies that sell any IT solutions in the global marketplace, that’s ASX listed. 80% exports – companies that bring money, cash and expertise _into_ the Australian industry. Even make it 50%. Even make it 3 companies. Or 1?

    6. “A little more to support the (local) sector” Mate. Seriously? That hurts. I bleed green and gold. I love a sunburnt country – whether those sweeping planes are in WA or on Facebook. We freely give of our office space – for SJUG, SLUG, SyXPaC and many, many more commuinty technology groups. We sponsor university scholarships for _literally_ hundreds of thousands of dollars in cold hard cash. We support the National Computer Science Summer School with mentors, site tours and cash. We speak at the drop of a hat – to university students, industry events, other entrepreneurs. We try to use our PR where possible to promote Australia overseas. We suffer the Rudd Govt’s ridiculous R&D tax concession changes (without moving our engineers overseas) and spend hundreds of thousands to create a workable ESOP program after they made it nearly impossible. I served on the NSW Govt IT Task Force on jobs creation – trying to find solutions to bring IT jobs to our city and state. I’ve drunk hundreds of cappuccinos with individual entrepreneurs. We want this city to succeed. We have smart entrepreneurs and great technology, but we need a break. We need support – and we need to support each other. We need to understand how to work _with_ Silicon Valley, not beat it.

    Tell us what else to do?

    To misquote a great movie in a way perfectly befitting this post:

    “We use words like capital, source code, entrepreneur. We use these words as the backbone of a life spent creating something. You use them as a punchline. I have neither the time nor the inclination to explain myself to a journalist who rises and sleeps under the blanket of the very innovation that I provide, and then questions the manner in which I provide it. I would rather you just said thank you, and went on your way, Otherwise, I suggest you pick up a text editor, and create some technology.”


    • Excellent reply mate.

      While you do need to work with the Valley, and you are seeking US stock listing, can that be done by a company based and under Australian laws?

      The listing should not be an issue, but the US do not follow international accounting standards, and the parochial nature of US legislation could be an issue as well.

      BTW, great work on the funding!

      • Darryl

        The US have been preparing for a harmonisation of US GAAP and IFRS for some time. Yes it will take them some time to get there, but it’s nothing that will hold up a deal. Whilst the US do not currently follow IFRS (and technically, AU doesn’t either, having tailored A-IFRS for local), there is familiarity with preparing accounts under multiple accounting standards, and reconciling the differences between them. It’s been going on for years and is nothing new. I had one client that was required to prepare accounts under three sets of GAAP (US, AU, & German: lordy!) As to dealing with foreign listings and listing rules – this has been done before as well. News Corp have been dual listed in the US and AU, and both Rio and BHP dual list in AU and the UK. I’m sure there are many other examples as well.


    • Hi Mike,

      epic reply! :)

      Mate, you know I only have the highest regard for Atlassian. My post today was spurred by one thing, and one thing only. I have been a technology journalist focused exclusively on Australia for the past 7 years and I am tired – dog tired – of international companies investing in and buying Australian companies and then not investing their profits later on down under.

      I’m not saying that this will happen in Atlassian’s case. But I consider that there is a danger that it might – particularly in view of the company ramp-up of international operations and focus on the US listing opportunity, as I outlined in the piece.

      Let me address your points individually.

      1. In fact I never said that Atlassian should take funding from the Australian VC community. I know that community – and you also know that community — and the funding isn’t there for a company of Atlassian’s size. However, Atlassian is not a startup and didn’t need to go to a VC for funding. In Australian terms it is a relatively large medium-sized company and has a variety of other funding options.

      2. I think there is one thing that you are overlooking in terms of Accel Partners’ investment in Australia. It is an investment – and like any other, it will pay a return. And a VC will expect a fairly substantial return. Yes, the company has invested in an Australian company, but they will be expecting to take far more money out than they put in. That money will head back to the US and be reinvested where they see fit.

      If you compare that situation to an investment from an Australian company, those profits would be reinvested in Australia. This is one of my main points – that Atlassian is handing a US company an opportunity to profit from Australian innovation.

      And yes, Macquarie Bank is not the only option, and probably not a good one – it was but an example ;)

      3 & 4: I would appreciate it if you could qualify exactly what skills Accel Partners has that you wouldn’t be able to find in Australia. As I mentioned, I have had some experience with the business community here, and I feel that we do have a strong degree of expertise. There are many, many companies – including technology companies – which rely on Australian business advisors.

      So what does Accel Partners have (specifically) that you couldn’t get locally?

      5. Alright, I’ll take your challenge. I’ll list an Australian software company that is listed on the ASX that sells solutions to the global marketplace. ISOFT. ISOFT has quite a few global e-health software contracts globally and has offices internationally. In particular, iSOFT has the contract to deliver the key software for the British National Health Services’ IT upgrade that is currently going on.

      But I also appreciate your wider point. It’s true that we don’t have many software companies (exporters) that are listed on the ASX. This is also my point. I would like to see more, and I would like to see companies list on the ASX and help Australia to become known as a global powerhouse in terms of listed software companies.

      I think it will be hard for you to deny that if you list on the Nasdaq, Atlassian will necessarily take on somewhat of a US focus. That’s where your investors, customers, and increasingly your staff, will be. And this is what I am worried about, as I outlined.

      6. I cede your point :) But I am talking about structural industry dynamics here. As mentioned, I have seen many many great Aussie companies head overseas and then … kaput. I don’t want to see this happen to Atlassian as I have a great fondness for the company.

      And lastly … as for your quote about entrepreneurship. You might not be aware that I, too, am an entrepreneur ;)

      Like you did 8 years ago, I put my money where my mouth was in January this year and created a little company called LeMay & Galt Media.

      In fact, I am not sleeping under the blanket of the innovation that you provide. I am sleeping with the smell of my own blood, sweat and tears and with exhausted hands which have worked for 12-16 hours a day for most days over the past 6 months to create my company.

      The first product of that company is a publication called ‘Delimiter’. It was born to better tell the stories of Australia’s IT industry.

      I should point out at this point that I was probably the only journalist working in Australia who went into detail to analyse the Atlassian deal with Accel Partners today. Others broke the news, but I was the only one I saw to do some analysis and consider the broad sweep of what is going on here. I personally take some pride in that, and that my commentary was interesting enough to spur many dozens of comments discussing the issue.

      I would suggest that a commitment to Australia’s IT industry and a commitment to entrepreneurship are things that we both share.

        • You mean win sales? I thought Atlassian’s solution’s sold themselves ;)

          I hardly think SAP, for example, needed to take on Australian VC money to gain ‘deep corporate connections’ before winning that contract worth hundreds of millions of dollars to rebuild the Commonwealth Bank’s core banking system several years ago.

          You don’t need VC money to operate in a market. You need a local office, sales and marketing, some product manager types and so on. This is how most international software houses operate in Australia — why does everyone consider that Atlassian operating in the US needs some form of mystical deep connection to the country’s corporate soul? ;)

          • You’re right, you don’t need VC money to operate in a market but US VC will help to accelerate Atlassian’s growth in the biggest market in the world.

            What better option is there?

          • If I was Atlassian I’d be looking to build sales partnerships, not sales.

            I’d want HP and IBM and Accenture and Oracle embedding Confluence into the “solutions” they sell to companies.

            I’d want Google promoting the Atlassian tools as an implicit part of Google Apps, and I’d want a similar relationship with Salesforce.

            I’d want every single Silicon Valley startup using my tools by default.

            Atlassian are already working on a lot of those things themselves. But Accel Partners do bring relationships at a level that Atlassian don’t have, and no one in Australia has either.

    • Congratulations Mike, well deserved… any business that gets a mention @TED has got something special going on. This is way more than a $$ issue, the open business approach you’ve adopted has for sure contributed to international interest, interested enough to show you the money. So go forth and multiply, spread the open source spirit into corporations and have the work environment be a healthier place. PS… if anyone from Atlassian is available for Software Freedom Day in Melbourne September 18, you’ve got a spot for a 45min talk on open business! YES, we want that spirit in the workplace, come on down and share your secrets!!

  11. Renai, this is a disappointing post. You raise a serious question around the brain drain to the US but you’ve picked exactly the wrong target to do it to and your points seem laboured or intentionally controversial.

    Mike and Scott have been real and in the trenches supporters of the Australian tech community from day one. They’ve sponsored nearly every single event and never asked for anything in return.

    They’ve also advised a lot of startups. Whether that’s a cup of coffee, their brutal thoughts on a new product and in multiple cases, given up serious time to be on the advisory boards, including for Pollenizer of which I can vouch for Mikes serious love and care for the Australian industry.

    And more importantly, from my perspective, they actually come to the community events. Frankly, despite many invites from me, I’ve never seen you at one event nor had a dollar of support from ZD Net or Delimeter.

    This is also disappointing since Mike invited you to a meeting on Monday morning to talk specifically about how we can make the most of this news to give more attention to the growing Australian industry. I actually did turn up to that meeting and in a massive week for Mike, he gave an hour and a half, and a bunch of great ideas.

    In terms of the focus of tech companies going to the USA, there is a lot of great people getting out there and really helping to move us forward. I don’t think your comments above help in any way.

    Despite your comment about being an entrepreneur, this really feels like a shot from the cheap seats.

    Scott and Mike (love the Few Good Men reference. Summed up how I felt too.) Thanks for all your great support over the last 5 years. I’m proud of what you guys have done and believe it’s great for the community. Today I gave a talk to 10 entrepreneurial students from Melbourne universities who came to Sydney to talk to people starting businesses and working in Startups. They had fire in their bellies and worthy ambitions. Here’s hoping they set crazy big goals and drive like nuts for them.

    • hey Mick,

      I hope you’re well.

      I’m sorry, it’s not my job to “make the most of the news” that is produced by companies like Atlassian and help you guys in the PR effort. That’s what a PR agency is for.

      What did you expect me to do, rock up to the meeting and discuss ways in which you could promote Atlassian’s investment? That’s not my job, and after years of dealing with journalists, you should know that.

      Is Atlassian a great company doing a great job? Of course. As I acknowledged in the article. I believe I mentioned that I was “really happy and proud” of what they had achieved.

      Does this mean they above criticism and analysis? Of course not. What do you think would be the reaction of Michael Arrington at TechCrunch if you said you were disappointed in him for critiquing a company’s actions? I think he’d laugh and then write an even heavier critique.

      I’m discussing the issues, not attacking the people.

      As I mentioned, I don’t really see the constant brain drain the Australian technology industry to the US as a good thing. I think we should be reinvesting in the local market, not sending Australian entrepreneurs overseas to get experience there. I think we should be building a stronger technology sector in Australia, not always looking for the overseas dollar.

      It particularly irks me when I see Australian development work go to countries like India or to Silicon Valley because those are Australian jobs that are leaving our shores. I have worked in the IT industry myself, been laid off, and I want those jobs to stay here. I want our finance to be reinvested here.

      You can question my argument, but you can’t question my commitment to Australia’s IT industry – or the fact that I have put my balls on the line as an entrepreneur myself.

  12. Renai, colour me another one whose opinion of you (which was high) has plummeted dramatically.

    Your criticising what *might* happen and what Atlassian *might* become in a moment where they deservedly should take a step back and celebrate what they have created is just unfortunate.

    Atlassian have never done anything traditionally and for you to conclude that they will and then get all fired up assuming they will complete your low opinion \just shows a misguidedness.

    When you say they should have sold a stake to an Australian VC, private equity firm or listed on the ASX you just come off as either naive or clueless.

    Macquare Bank did have a venture fund (MTIB) and it failed. Private equity firms like CHAMP actually started life as venture funds (AMWIN) and changed because they failed. To list on the ASX would be to invite a life of hell of explaining to misinformed retail investors about a software company that is genuinely different. Oh yeah, and for their trouble they’d get a lower valuation.

    Why should they waste their time with this mediocrity when the world’s best VC is eager and keen to invest at a rich valuation that still leaves Mike and Scott in complete control of their own destiny.

    Accel expecting a large return? Any investor expects a large return!

    The Australian technology industry wouldn’t be helped by them choosing Australian investors who simply wouldn’t appreciate the company as much as smarter US investors. Accel’s finest have put Sydney on the radar and they’ll be making trips to Australia a lot more regularly and maybe they’ll stumble upon further investments here.

    To me, why wouldn’t you blame the fact that Australia doesn’t have any successful venture investors or a vibrant stock market on the investors. Why not get pissed about them?

    Atlassian has only helped the local technology community and it is a crying shame that there aren’t more of them. Ironically, this type of article only hurts the community you profess to want to champion. You criticised people for future choices they haven’t even made yet!

    Why don’t you confine criticism to events that have happened? Why Sean Howard left the Internet industry to invest in Byron Bay real estate or why others haven’t done more? You picked the wrong target and with your comments around the venture market in Australia and the ASX you just lost a lot of credibility.

    To continue with the movie references, from an Aussie classic, “Get a dog up ya”

    • Hey Niki,

      I hope you’re well.

      I’m sorry if I come off as clueless or naïve. But I feel that I am neither. I’ve got a fair amount of background in reporting on Australia’s startup sector and a solid grounding in finance courtesy of a stint at the Financial Review.

      Over time I and other journalists have handed Australia’s VC and investment community a fair degree of criticism for not paying enough attention to the technology sector. It’s true to say that Australian investors don’t understand the technology sector.

      Mike’s right when he said that a company of Atlassian’s size would have found it hard to win Australian VC money. There is VC money in Australia for smaller investments, however – I’ve reported on some of these deals over the years myself.

      However I still feel that his argument that the sort of expertise and investment that he needed could only be found in Silicon Valley is exaggerated.

      As I’ve argued, we have solid business advisors in Australia – even for fast-growing companies like Atlassian – and a company with $58m in annual revenues has a wealth of options when it comes to getting backing finance for expansion. I should know. In my time at the AFR I reported on quite a few shufflings of money around that resulted in this sort of activity, from many different sources.

      I agree that Atlassian has done a lot to help Australia’s technology sector – more so than most other companies, to be sure. And, as I noted straight up front, I feel happy and proud about what the company has achieved.

      But this doesn’t mean the company is immune from criticism or analysis.

      To be honest, I don’t want to see Atlassian list on the Nasdaq and start to focus heavily on the US. I want it to remain headquartered in Australia and keep most of its development community here, while expanding outwards across the world and serving customers globally.

      I would like the ASX to become a known home for technology companies and for Australia to be known as a great place for technology venture capital and IT companies.

      I don’t know why that is such a controversial viewpoint.

      I feel that you and others believe that I’m raining on Atlassian’s parade.

      The truth is I’m not. I don’t have any fear or favour in my writing. I write what I think regardless of who it is that I’m writing about. I think you can see that in my articles about a whole heap of other organisations. I approached writing about Atlassian the same way as I would any other company. I interviewed, reported the news, then analysed, formed my opinion and wrote it.

      You may believe that my opinion is wrong, and I’m happy to you to believe so – many people tell me I’m wrong often – and more so than usual on this article. But then there have been other articles where more people than usual have told me that I am right ;)

      If this sort of approach – which is my standard one – is the wrong one, then it’s probably a bit late to change it. I’ll just continue reporting the news and then commenting on it as I usually do.

      I guess that means I’ll probably need to get a dog up me most every day ;)

      • And this is part of why I think you got the reaction:

        “To be honest, I don’t want to see Atlassian list on the Nasdaq and start to focus heavily on the US. I want it to remain headquartered in Australia and keep most of its development community here, while expanding outwards across the world and serving customers globally.”

        You don’t want to see them focus heavily on the US: There was nothing in the original article or Mike’s follow up that suggested a change in focus.

        You want Atlassian to remain headquartered in Australia: there was nothing in the original article or Mike’s follow up that suggested a change was likely or being discussed.

        “keep most of it’s development community here” : Once again – nothing in the original articles that suggested that this wasn’t likely to be the case.

        If there was a hint of any of these three things in your exchanges during your interview – you didn’t report on them. These are phrases and concepts and ‘risks’ that you have introduced into the story through your opinion piece. For mine, the what if’s are only valid to the extent that you ask the question about the what-if’s, and balance the article with the responses.

        Atlassian’s hiring campaign looking for 32 engineers in Sydney: At best, this is a fact pattern which substantially negates your suggestion that development is going overseas. At worst, it reduces your comments to sensationalism. At a total loaded cost (salary, super, workers comp and payroll tax etc – lets say $100k per head for a nice round number), there’s what, $3.2 million dollars worth of growth, per annum to the Sydney technology sector. 32 families, 32 houses, 32 cars, 32 iPads, and 64 ThinkGeek Bazinga tshirts (when is one ever enough?).

        Now – I’m not a journalist. But I read a lot of journalism. Don’t be disappointed that I want to hold you to a higher standard, because you’re writing on a market segment that I, and a majority of the other respondents to this thread, hold as dearly as you do.


        • Hi CPK,

          actually there was stuff in the original article which suggested all these things.

          1. Atlassian’s management’s stated five-year goal is to list on a US stock exchange. It has just taken funding from a US VC, and its San Francisco office is growing – and hiring dev staff, as well as sales and marketing. I would describe this as an increasing focus on the US.

          2. If a company becomes listed on a US stock exchange, that is where the company’s headquarters will end up. Because it’s in that geography that the company’s management will necessarily spend most of their time. It just makes sense.

          3. I agree with you that Atlassian still has a focus on development work in Australia, and it will continue to do so – that is obvious. But it is also obvious that the company is hiring US developers as well – those jobs are on its careers website alongside other sales and marketing jobs etc.

          Yes, much of what I wrote is extrapolated into the long term. But if you read the article, I noted that my opinion was based on what could happen to Atlassian “I’m worried that over the next half-decade and beyond” – not next Tuesday ;)

          This piece was analysis and commentary – not hard news reporting on what is happening right now.

      • Hi Renai,

        In my opinion this is a recipe for failure:
        “To be honest, I don’t want to see Atlassian list on the Nasdaq and start to focus heavily on the US. I want it to remain headquartered in Australia and keep most of its development community here, while expanding outwards across the world and serving customers globally.”

        It’s so important that, as the company expands, Atlassian is close to its customer base. It’s not possible without committing itself an expansion in the US.

        How are they supposed to compete to the best of their potential inside corporate America while staying in Australia?

        • Hi David, nothing wrong with having sales teams in the US while having dev teams back home. God knows it’s the model most software companies take to Australia. Microsoft doesn’t develop Windows 7 in Sydney — yet customers still buy the software that is developed in Redmond.

          • Taking quality US VC will give Atlassian much deeper connections to corporate America. The ASX would only provide cash.

            It’s not just about the money, its about being a real part of your target market.

          • Sure. Yet SAP inked a massive deal with the CommBank a couple of years ago that is worth hundreds of millions of dollars. And SAP isn’t listed on the ASX — I assume it’s listed in Germany. You don’t need have as close ties with countries as you might think to do business there.

            Software companies have had international offices forever, while still basing their operations out of their home country. In fact, this is the model that most software companies use to operate in Australia. It’s why I know it so well ;)

          • Hi Renai, that’s true, and Atlassian could stay in Australia and continue to be successful but taking on US VC is the best move for them right now. It gives them the maximum chance of greatest success.

          • Greatest success of what? How do you measure success?

            Of course monetary success is one measure, and there is no doubt that Atlassian will do better financially by listing in the US. But that’s certainly not what I was arguing in my article. I was arguing that it might lose its Australian identity and become just another multinational.

            Is that success?


          • It depends.

            If you define success as having the most positive impact on the most people, taking on US VC will help accelerate Atlassian’s growth in the biggest market in the world, and in turn in the rest of the world, increasing the positive impact they have on the world.

            If you define success as creating wealth, taking on US VC will help accelerate Atlassian’s growth in the biggest market in the world, and in turn in the rest of the world, increasing the wealth they create for themselves and others.

            If you define success as happiness, taking on US VC will help accelerate Atlassian’s growth in the biggest market in the world, and in turn in the rest of the world, increasing the happiness of the founders ;)

      • “As I’ve argued, we have solid business advisors in Australia – even for fast-growing companies like Atlassian”

        The evidence doesn’t support this., Seek and REA Group are of a different era and are very different types of companies to Atlassian. Atlassian is a type of company of which there are no close predecessors in Australia and few in the world. No Australian advisor can possibly have the experience and expertise Atlassian now requires, as there is no previous comparable company from which they could have derived the necessary insights. That’s not to say there have been Australian advisors along the way who have been invaluable in helping Atlassian get to where they are, and who could offer much to other up-and-coming startups. That Atlassian has now outgrown the local scene and is now taking another step into the big league, should be celebrated unequivocally.

        “To be honest, I don’t want to see Atlassian list on the Nasdaq and start to focus heavily on the US”

        It’s not about focusing on the US, it’s about playing on the world stage. Your argument is the equivalent of saying Andrew Bogut should’t play in the NBA and Tim Cahill shouldn’t play in the Premier League, because to do so would be a loss to their local leagues and teammates.

        Assuming they do scale up their operations in the US, they would do so because it’s the best place from which to address the global market. The fact is that Silicon Valley is where the biggest companies, investors and employees in the tech world converge. You can argue all day that Australia is just as good a base, but the people who make big decisions with real dollars disagree. For you to claim Atlassian is wrong is to claim that you could do a better job running their company than they can do themselves.

        “I would like the ASX to become a known home for technology companies and for Australia to be known as a great place for technology venture capital and IT companies. I don’t know why that is such a controversial viewpoint.”

        It’s not that it’s controversial, it’s just misguided. Just as LA is the place for movies and Wall Street is the global hotspot for financial fraud, the place in the world where the leading players technology converge is SIlicon Valley.

        That doesn’t mean Australia can’t have a thriving film industry and hopefully more honest and robust – if still much smaller – banking & finance sector than the larger centers abroad. But when a high-achieving player excels to the point that they outgrow the nest, it’s no cause for lament.

        As Niki said, this shows the tech world that great things are happening in Australia and that investors – whether local or foreign, should pay attention.

        Atlassian alone can’t solve problems like the lack of good jobs and investment opportunities – and they especially can’t solve them if they’re expected to constrain their progress for the sake of parochialism.

        These problems can only be rectified through more determined young entrepreneurs building great companies of their own. And for that to happen they need great role models like Atlassian, demonstrating to all of us what is possible.

        • Hi Tom,

          thanks for your comments.

          I take issue with this one:

          “Atlassian is a type of company of which there are no close predecessors in Australia and few in the world. No Australian advisor can possibly have the experience and expertise Atlassian now requires, as there is no previous comparable company from which they could have derived the necessary insights.”

          What, are you kidding me? Are you seriously saying that Atlassian is so fundamentally different in nature that nobody in Australia could possibly advise it? We’re talking about a company which produces software which is not fundamentally different in nature to many other software companies.

          There are plenty of other companies in Australia and in the region generally which produce software – traditional install software and cloud software, collaborative software and software with a bunch of different licensing models.

          The software market and the business models for companies which produce software is quite well understood and is certainly not fundamentally that different from a business perspective from many other verticals.

          You don’t have to have been an advisor to Google during its startup days to be able to advise Atlassian on what it should do next. There would be a bunch of people in Sydney’s business community that would be more than capable of that. Atlassian’s not some special form of company which nobody has experienced before.

          Of course I celebrate Atlassian taking a step onto the world stage. But what I am arguing is that I don’t want the company’s Australian identity and support for the local technology sector to get lost along the way. I am hardly the first person to express this wish about a company in Australia’s technology sector, and I can assure you I have written many, many articles about Australian companies being acquired by international giants and forgetting all about our fair land.

          Why is it misguided to hope that the ASX could become a known home for technology companies? Silicon Valley wasn’t always the best place for technology companies in the world. And there are rivals to its throne – Israel for one. I don’t see this as an impossible dream, and the truth is that there are already technology companies – even software companies – listed on the ASX and achieving their dreams globally.

          ISOFT is one, for example.

          Sure, Atlassian is a role model, to address your last point. Scott and Mike are even role models for me personally. But that doesn’t mean as a journalist I don’t critique their decisions and comment on what I think the right or wrong path is or isn’t.

          The minute we stop asking questions, thinking criticially and challenging people’s decisions – the minute we assume Atlassian knows all and is beyond being questioned – is the minute that I stop being a journalist and a writer and die a brain death ;)

          • “What, are you kidding me? Are you seriously saying that Atlassian is so fundamentally different in nature that nobody in Australia could possibly advise it?”

            Not at all, just that it’s probable that all the people in Australia who can offer value in advising Atlassian have already done so. By probable, I mean, judging by the demonstrated commercial competence of the founders, you’d expect they’ve done all they can over their 8 year journey to seek out the best advice the country had to offer.

            What you’re saying is that when seeking out the best advisors, they should take a parochial approach and confine themselves to Australia rather than seeking the best in the world, wherever it happens to be.

            “The software market and the business models for companies which produce software is quite well understood and is certainly not fundamentally that different from a business perspective from many other verticals.”

            Once you get to the level that Atlassian’s level the small differences make all the difference. From what I can understand of your logic, you seem to be suggesting that someone who had experience as an exec for Pegasus Mail in 1992 would necessarily have made a great advisor to the Gmail team in 2002.

            Sure, there are common principles to business, and indeed the software business, that have been around for decades that anyone with a strong background can advise on. But I think we can all agree Atlassian has got the basics right. But they are outstandingly successful now to the extent that they are different in crucial ways from the companies that have gone before them. The more successful you become, the fewer people there are who can help you onto further success. It wouldn’t be surprising to me if there were now only a few dozen people in the world who could offer substantial high-level advisory value to Atlassian, and it would be particularly unlikely that they’re in Australia and as yet untapped.

            “You don’t have to have been an advisor to Google during its startup days to be able to advise Atlassian on what it should do next.”

            Well, no-one’s saying you do. What you’re really saying is that such a person definitely isn’t going to have more valuable insights than one of a “bunch” of unnamed people in Sydney. (I mean really, who are these people?)

            “Atlassian’s not some special form of company which nobody has experienced before.”

            Er, yes Renai, it really is, particularly in Australia.

            “Why is it misguided to hope that the ASX could become a known home for technology companies?”

            What’s misguided is to think that Atlassian will help bring it about by constraining its progress for the sake of parochialism.

            “Silicon Valley wasn’t always the best place for technology companies in the world.”

            Well, since the commercialisation of the microprocessor, it has been.

            “I don’t see this as an impossible dream, and the truth is that there are already technology companies – even software companies – listed on the ASX and achieving their dreams globally.”

            Sure, it’s not an impossible dream to think the ASX can host more tech companies. Indeed, the number is quite possibly growing – why don’t you check it out and do a story on it.

            But the reality is that Australia isn’t the big-league right now. You’re arguing that Atlassian should just accept that and confine themselves to Australian investors, even if it diminishes their valuation, impedes their growth, and reduces the flow-on effect to their employees and previous investors – which indeed would be in breach of their fiduciary duty to the company. You seem to think it’s Atlassian’s duty to make the Australian market seem like a bigger, more important market than it really is right now, limiting their horizons for the sake of some nationalistic fantasy.

            “ISOFT is one, for example.”

            Well that’s great for ISOFT, it really is. And let’s hope that there are many more ISOFTs who get to a level where their best source of capital is investors who are willing to purchase stock via the ASX. If there are more ISOFT-level successes, we’ll all be doing very well.

            But you’d better brace yourself Renai, as the Australian scene becomes more successful, and as the number of ISOFT-like companies on the ASX increases, there might just be the odd one or two more who get a little bit too big for their boots and decide to take flight across the Pacific. Oh horror of horrors!

            “The minute we stop asking questions, thinking criticially and challenging people’s decisions – the minute we assume Atlassian knows all and is beyond being questioned – is the minute that I stop being a journalist and a writer and die a brain death ;)”

            Thinking critically might be a good idea here. Challenging people’s decisions is all good and well, but for al your experience, your commentary seems to be rather light-on for real understanding of how the tech startup world really works.

            The Australian startup community genuinely needs honest and insightful commentary. I look forward to seeing more of it from you :)

      • “As I’ve argued, we have solid business advisors in Australia – even for fast-growing companies like Atlassian – and a company with $58m in annual revenues has a wealth of options when it comes to getting backing finance for expansion. I should know. In my time at the AFR I reported on quite a few shufflings of money around that resulted in this sort of activity, from many different sources.”

        OK so as Tom said, name the sources of capital and advice that you are talking about? Name exact names, no alluding to, innuendo, “they must bet out there”, name names.

        Mike and Scott had to make two choices: One to take institutional money and stay private or alternatively go public and then once making that decision who they should take it from.

        If they are to go public it would be colossally stupid to list on the ASX vs the NASDAQ. Would they be able to list? Absolutely. But they’d get a lower valuation and access to a more disinterested and uninformed set of investors. How that sacrifice would help the Australian tech community is beyond me.

        I say you’re naive because if they listed on the ASX then any investor around the world is entitled to invest in them (it doesn’t have to be Australians) and vice versa on the NASDAQ: there is nothing stopping Australians buying shares in NASDAQ listed firms.

        The problem is that there are simply not investors interested. Since you’ve worked at the Fin Review and are a journalist covering the industry, who are they are? If you don’t know who they are, could it possibly be that they aren’t there? Why aren’t you whining about that?

        Lastly, in terms of conducting yourself in the comment thread and charging headlong into every comment with an impassioned defence maybe you’d like to step back and conduct an ‘analysis’ on the comments. Not one person has agreed with the style or substance of your article. That’s 100% as a percentage. Could it be that everybody has a point?

        Now before you hit reply and say you’re entitled to your opinion (you certainly are) and that the world needs an independent voice and blah blah stop and think: What can you learn from all the comments and perspectives? Have you changed your view one bit? Would you write the article the same again? (you’re probably too deeply ingrained and wedded to your stance now but come back to this in a few months).

  13. Let’s not get too parochial. Atlassian plays in a global market. Their success reflects that and reflects on Australia. As individuals they react to the local environment over which, at their age, they have had no control. It is only by their success and many others, that we all will see economic environmental changes occur in our great democracy over a very long time. We know what changes we need to see but we collectively are not holding our breath….right? For the forseeable future, ICT entrepreneurs focussed on the international marketplace will obtain the best ROI by focussing on the US market – being sentimental about what might be ‘down under’ is just that. These guys have made the right and obvious call and we should all be very proud that they have pulled it off. I know no politician in Australia that even remotely comprehends what this is all about….maybe Malcolm Turnbull does but his is the MYOB style of story not the true pioneering entrepreneurial give-it-a-go internationally one that Atalssian have pulled off. No caveats please, no what if’s…they did it and did it well. All hands to them and may they be an excellent example to rest of the Australian ICT community. This is not a straight road!

    • hi Wayne,

      SAP, Nintendo, Alcatel-Lucent, even Chinese firms like Huawei are all companies which also play in a global market. And yet they’re not US-based, and each has the vast majority of their development team based in their home country.

      Is there something special about Australian firms that makes it impossible for them to have that same situation?

  14. Renai, I found your article disappointing.

    I know how the big firms think about the tech scene in Australia (having worked at PricewaterhouseCoopers); I know the frustrations of the Aussie tech scene (having created the Silicon Beach community); and I get what impact being in America and the Valley can have on a business (I’ve been living here for a year, working for a startup that’s also aiming to become a billion dollar company). And my short reaction to your point is that the guys made the smartest decision possible, given the broader picture.

    Your assertion they are selling themselves and Australia out, is backed by nationalistic fervour without an acute awareness of the commercial reality affecting tech entrepreneurs. Atlassian’s gotten too big for Australia now – so of course they are going overseas. But they still *remain* in Sydney – isn’t that enough to prove to you how out of their way they are going to keep Australia relevant?

    I absolutely agree with Mike’s statement that “We need to get entrepreneurs over to the valley” – the Aussie community in the Valley constantly talk about this (even brainstorming excuses to get Aussies here just for a few months), despite the fact we all universally agree we want to return home one day. So arguably, us moving to the Valley makes us sell-outs as well, right? In a similar vein, to build Australian capability we need people and companies to go overseas – because whilst some of the value remains overseas, a lot of new value will stream into Australia one day, that previously could not be realised. It’s the same thing I told the Australian government last year:

    Atlassian’s impact on the Australian industry will last a whole generation: through the experience and capital that the founders (and staff) will reinvest in the Australian scene (which might I add, they’ve already done so); not to mention the brilliant alumni community they have developed. Both are key ingredients to what has made Silicon Valley what it is. Mike and Scott really do have a passion to put Australia on the map – but you can’t put a country on the map if you stay in your 10×10 cell talking to the same people that pull you down from climbing the wall.

    • I’ll live with the disappointment Elias – you’re not my father ;)

      To be honest, what I find disappointing is the belief that you can’t build big companies in Australia without resorting to foreign capital and heading to Silicon Valley to live the startup life for a few years.

      I’ve been encouraged by the strength of the Silicon Beach community that has grown up, and I’m a little surprised to see that so many people view shifting to Silicon Valley and the US as a great dream to have. I thought the whole ambition of the Silicon Beach community was to grow a great technology community in Australia. I don’t see how that will happen with the ‘brain drain’ to the US that everyone acknowledges is going on.

      For myself, I’d vastly prefer to remain in Australia with the community and people that I love, than shift to the US and leave my culture, connections and life behind.

      I reject your assertion that I don’t have an acute awareness of the commercial reality affecting tech entrepreneurs. I’ve been reporting on Australia’s tech startup community and the larger IT industry for more than half a decade now, and I’m an entrepreneur myself. How much closer do you need to get? I’ve been to a stack of events in the sector and interviewed dozens of startups myself.

      To be honest, I’ve asked several questions today that haven’t really been answered so far. If you can answer me those questions, then I’ll shut up and pipe down. Until someone can, then I’ll keep asking.

      The questions are:

      1. What special skills do Accel Partners have that couldn’t be found in Australia’s business community?
      2. Isn’t it true that a business with recurring revenues of $58 million annually would be able to attract investment in Australia of various forms?

      • Again – It’s not about the money – it’s the combination of network, connections, track record, timing, X factor, etc and whatever the entrepreneurs to decide what they look for and what they need as a fit for their shareholders, employees and customers. Not to be judged from the sidelines.

        You come across as wanting this to be an equal-opportunity-crowd-decided-pathway for a couple of entrepreneurs to run their business.

        • I’m sorry, did you say I can’t judge people from the sidelines? I’m a journalist, Robert, that’s what I do. I write news reports and then analyse and critique things. If I wrote this same commentary about Telstra I wouldn’t have gotten half the reaction. There is a certain sensitivity around Atlassian, it appears ;)

          If I’m not mistaken, Michael Arrington at TechCrunch has built a whole business around critiquing startups.

          And you still haven’t explained what exactly it is that Accel Partners brings to the table. What sort of connections do they bring to the table? How will that network be used? What for? Timing for what? What is this “X factor” that you refer to?

          Please explain ;)

          • You’re missing the point – it’s not up to you (or me) to determine what is best for another entrepreneurs’ business. Whatever aspects they looked for, they found and made a choice. The combinations of things they look for is up to them, what works for them, may not work for others etc. From their track record, they have a good record at making good decisions and when they make bad ones, they correct them quickly.

            If you haven’t already, perhaps a more constructive approach might be to fly over here and meet some people in the community and make up your own mind on what you think they would bring to the table. Like Mike says, we need to work out a way to work “with” not “compete against” what the valley is. That might provide some more value to your readers and help boost the community in the long run.

          • Sorry Robert — I only cover the Australian technology sector — I’m not going to fly over to the US in an attempt to better understand the VC community ;)

      • “1. What special skills do Accel Partners have that couldn’t be found in Australia’s business community?”

        They have been in business for nearly 30 years and have invested in hundreds of the world’s leading tech companies, including Facebook, Kayak, Comscore, Etsy, Admob, Dropbox, BitTorrent, Macromedia, Polycom, Real Networks, Verias and UUNet to name just the few most prominent or profitable.

        So the skills & benefits they have to offer are:
        – experience investing in and guiding the growth of a huge variety of tech companies, most of which are larger than any Australian-built tech company
        – connections to the highest levels of other leading companies in the tech world
        – credibility and global prestige (yes this counts, even in sales promotion, particularly to big corporates)
        – increased perceived corporate stability, which is valuable in attracting the best talent and giving confidence to prospective clients and partners

        “2. Isn’t it true that a business with recurring revenues of $58 million annually would be able to attract investment in Australia of various forms?”

        No, it isn’t true. Not at the same valuation and not with the same terms, and not at the benefits listed above.

        You need to do better than “I have no doubt” and “I would object to this idea” Renai. As the one who claims to know better than the founders of such a successful company, the burden of proof is really on you to NAME the Australians who can offer equivalent funding and expertise.

        Another way to look at it is this: would you consider it valid for a British or German or Japanese tech company to bypass the rest of the world and choose Australia as the best place to come for funding? Or more to the point, do you see any of them doing it? I’ll take that as a no.

        Yet you’re expecting Atlassian to go to extra effort to attract sub-standard funding, and advice that only in your opinion might be “just as good” rather than choosing the market that tech companies the world over all agree is the most attractive.

      • Renai – my perspective to your two questions:

        1. What special skills do Accel Partners have that couldn’t be found in Australia’s business community?
        Relationships – it’s how the world works. Geography is what allows some people to have better relationships than others, not skill.
        VC’s have relationships with companies that you can form partnerships with or bankers. Both are relevant for Atlassian: they’ve done partnerships with Microsoft’s sharepoint and Google apps, by having their JIRA studio flagship product integrated into their technology suite. Further, if a company wants to list on the US market, an American based VC makes a lot more sense as they have better relationships with bankers there. Not all bankers are the same and it pays to have a good one.

        2. Isn’t it true that a business with recurring revenues of $58 million annually would be able to attract investment in Australia of various forms?
        Of course it could, but when raising money you care about
        a) the terms and
        b) whether you can work with your new (investment) partners.

        Silicon Valley has a unique culture, and the VC’s give much better terms whilst giving more free reign to their portfolio’s management team. (At all stages of Australia’s investment classes, they are more intrusive and less educated – which is a frustrating for a management team as they have to work with people that don’t get it.)

        Meanwhile, given Atlassian’s stated goal is to IPO – relationships with a US firm makes a lot more sense. (Not to mention one that can help it find new partners in the biggest market opportunity for their product suite.) Listing in the US means Atlassian can IPO at a much higher valuation. Its got nothing to do with national pride but pure economics. Not only wil Atlassian float at a higher valuation, but when it seeks to do equity raises to further grow their business, the liquidity of the US market just makes it so much easier. This is the same reason why the proud Australian Rupert Murdoch moved his HQ – it gutted him to do so (and he spent over 30 years living overseas), but to reach the potential of his company, he had to go down this path.

  15. 100% behind Atlassian and well done for the investment. Mike and Scott were helpful to us building our business and have provided so much support to the Australian tech community that this post is laughable.

    Even if they were to sell out and move away from Australia, the impact they’ve already had is laudable and we should be thankful. And by “we” I mean the tech entrepreneurs, the engineers, the programmers, the people in the trenches. As opposed to the people watching and writing and commenting on what we do.

    There’s been so many points made here but it really, hey – there’s idealism and there’s reality. It’s all well and good to tout the ideals, but the world is the way it is and we have to work with it, not fight against it.

    And rather than railing against the “brain drain”, try asking why it’s happening. Distance, mindset, culture, legislation…. so many of these things should play into it before you even start trying to lay that kind of thing at Atlassian’s door.

  16. Hi Renai,

    I was very disappointed by this article, but even more so by your handling of the fall-out.

    I can understand that you don’t like Australian companies that move to the US, but linking this sentiment with the funding round that Atlassian just received seems fabricated and makes no sense. Anyone that knows Mike can tell you that his commitment to keeping Atlassian Australian has been beyond sensible. I’m sure that keeping operations in Australia costs Atlassian millions each year.

    On top of that I disagree with most of your arguments even if they were applied to a better example. Of course people that run companies are going to do what is good for the company. So of course you’d get funding from the US and list in the US if you can. And what’s wrong with moving to the US? Probably a fair number of employees will come along, work for a while in the US and then come back to Australia bringing back valuable new skills (there is no substitute for spending some time in the Valley yet).

    You’re of the opinion that we need to “build a great Australian technology sector”. But what have you done lately to help build a great Australian technology sector?


  17. Like many of my fellow commenters I think it’s disappointing to see an article like this directed towards two guys who have done more for the Australian technology industry than most. In my opinion it also shows a lack of understanding of the landscape in which technology companies compete today. If you are a software or internet-based company, you are global from day one. In the same way you seek customers from all around the globe, it is natural to seek advisors, investors and team members from all around the globe. National borders are irrelevant when you are trying to obtain the best of the best for your company. Lets not forget that building a successful company is very very hard, so why impose arbitrary obstacles (i.e. “you must only take investment from Australia”)? If you give the company the best chance of success, that success will benefit Australia in many ways – direct ways such as those outlined by Mike, and indirect ways such as inspiring other budding Aussie entrepreneurs to get out there, start a company and make it big.


  18. Great comments Bart, Mick and Ryan. Mike’s been a constant (from day one) supporter of our Innovationbay Angel dinners, he’s one of a handful a guys that are continuously giving up their time to support and drive innovation and entrepreneurship in Australia. Atlassian’s ability to raise such a first round, with such a venture firm should be congratulated and promoted as an achievement of what can be done from Australia. We need more shining lights. Their future is not yet decided, but if we look at what they have achieved and the style in which they have achieved it, then your comments see to have little foundation, relevance or meaning. It’s greatly disappointing to read such comments, but fantastic to see so many people tell it as it is. Well done Mike and Scott !

  19. Hi Renai

    First time caller….

    I see two issues here;
    1. Demand …. as Mick (and you) say, we need more people in IT, and
    2. Supply…..we need resources, environment, culture to invest to build these businesses

    I could talk about the supply side and its issues at some length (and some people here have done that already), but given the movie analogy previously provided I’d much rather talk about golf….much more interesting;

    Cadyshack is a great golf movie, full of classic quotes, like;

    “Cinderella story. Outta nowhere. A former greenskeeper, now, about to become the Masters champion. It looks like a mirac…It’s in the hole! It’s in the hole! It’s in the hole!”

    …….think about what happens to golf or tennis in Australia when an Australia wins a Major?

    Participation immediately goes up! Why?

    Because everyone ‘wants to be like Mike’ (couldn’t resist ;) ) …..I’ve seen it happen, many immediate friends/colleagues soon after started businesses following my exit ……this motivation is leveraged in media ads every day because it works! We should all be yelling this success from the rooftops, in the hope that all budding entrepreneur hear our calls, and have go.

    I can only judge Mike, Scott and Atlassian by what they have done, and so far this has been significant for the AU IT industry.

    Actions really do speak louder than words….Congratulations Mike, Scott and team – there are many other Majors to win, and we are all looking forward to watching you continue to fill up your trophy cabinet!

    Gunga Galunga


    • Good point about the ‘participation factor’, daring to dream, etc.

      The problem I can see though is news like this, which is fantastic, just doesn’t have the cut through factor in the mainstream, which means a big opportunity to influence the next generation of entrepreneurs outside of the part of ICT that has heard of Atlassian is being lost.

      Sure it may add some extra motivation for those already busting their guts to make something, but I can’t see it greatly increasing the number of new startups on inspiration alone. :( Maybe a $1bn+ listing (regardless of the location) will make some people sit up and take notice.

  20. Hi everyone,

    just an update. I think that this thread was getting a bit poisonous. I’m happy for people to rag on me and so on, but I thought it would be more productive if we moved the discussion forward a bit. So I’m not going to continue to respond to the comments here.

    I’ve posted a new piece this morning, apologising for the timing and target of my analysis yesterday, and trying to move the discussion onto how we could fix the problem rather than apportioning blame.

    To be honest, I’ve been fairly hurt by some of the comments here. My intent was not to rag on Atlassian, but to analyse it as I would any other company. Examining the company’s actions does not constitute slamming the company’s founders.

    But (as usual) I stuck my neck out and put my fingers into the fire and got burnt.

    I’ve dealt with many of the people here at various times in my career and I have nothing but respect for you. If possible, I’d like to put the poison behind us and focus on what the issues are, rather than saying that we’re disappointed with each other and so on.

    Either way, I’m not going anywhere. I will be continuing to report and comment on this sector, and I hope that we can work together to develop it further.

    This is not the start, or the end, of the conversation that needs to happen about this sector. But if this thread has taught us anything, it is that this conversation needs to happen and it will continue to happen.



  21. Why not just end with “only time will tell” to buy yourself even more null zone in which to absolve yourself from having put up a peurile argument.

  22. Hey Renai,

    re: your comment on development roles being migrated to the US by Atlassian, a quick look on Linkedin about the roles the US based staff are performing shows that pretty much everyone in the States is involved in either Sales, Marketing, Customer Support and HR

  23. this sounds like hand-wringing German journalists started to do 2 decades ago about what success would do to “their vendor”m SAP. Just enjoy the fact that you have a successful vendor from Australia that has done well in the very competitive global software industry…

  24. Hi Renai,

    I understand your sentiment behind your comments but I can’t help but feel that you may be coming accross a tad biased – obviously you have a vested interest in the tech industries in Australia.

    It’s just common sense for Atlassian to go to their biggest markets, ie USA and Europe. Despite the ovious fact that the tech market is astronomically bigger in the States, I think you might find that VC dollars over there, provided they’re sourced from the right avenues, are worth far more than the sum of thier parts.

    Could we be so naieve to believe that the ‘big’ deals in business systems get made through a shop front? I doubt it. Big VC’s with Big CEO mates have BIG vested interests. I’m sure Atlassian know this.

    In my opinon, of which I may have one because I’m not an unbiased ‘jounalist’, they’re a great aussie success story. Good on them.

    They’ve kicked far more goals than most other aussie tech companies and I can’t blame them for looking for the majority of thier business OS. If the Australian Tech Community haven’t given them the pick up they need then who can say otherwise. It would have been far easier for them to make their 58m revenue at home if they were given the chance.

  25. I have never read a more delusional account about tech investing.

    Here is the silver bullet for you. If you we’re an atlassian shareholder, where would you rather them list?

    This whole argument about Aussie founders have a obligation to get the tech scene flourishing has to start from both the funding community and companies.

    Instead of the investor community only having hard ons for mining, why not take some fucking risks. They miss the word “venture” in venture capital.

    And let’s not mention the government with their archaic tax upfront for employee options making it almost impossible to do something huge in this wasteland.

    Get off your asses guys.

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