When two suburban Australians set out to create a new tech company, they didn’t even bother trying to get any outside funding.
As Atlassian co-founder Mike Cannon-Brookes told Kara Swisher on the Recode Decode podcast, it was 2002 and the idea of secure funding for a startup in Australia was virtually unheard of.
“In 2002 it was nuclear winter for tech, we were two knuckleheads with no experience and we were in Australia,” Cannon-Brookes says on the podcast.
“We didn’t even bother trying to get funding in the early days.”
And this proved to be a strategic advantage for Atlassian, with the founders forced to focus on generating revenue from day one.
“That’s where our disruptive model came from – we had to be profitable. We didn’t really have a choice,” he says.
“It was become profitable and grow or die. If you made it through that gauntlet then you become really successful.”
He says that three years into building the workplace collaboration software company investors started to become interested, but with the startup proving sustainable already, there wasn’t any reason for the pair to take outside funding.
“We always asked them, ‘why would we take money? We’re growing and we’re profitable’,” Cannon-Brookes says.
“They would have a whole bunch of reasons and we wouldn’t believe them so we’d move on.”
Cannon-Brookes says that the typical Silicon Valley mentality of seeking huge funding rounds from the get-go is flawed, and founders should be more careful when toying with venture capital.
“It’s a mistake to have it as the default choice,” he says.
“It’s a mistake to not think about why you’re doing it and what changes it’ll make to your business.”
Eventually, with an IPO on the horizon, Atlassian closed a $60 million funding round from Accel in 2010.
But Cannon-Brookes says this was all about a strategic partner and not the money.
“It was seven years in and we had our heads down for all that time,” he says.
“When we looked up we had built something really special, we had a lot of runway ahead of us and we needed some help.
“They originally wanted to put in more and we wanted them to put in less. We would’ve taken $5 million. It was like a negotiation in reverse – the whole process was quite unusual.”
Atlassian has now grown into a figurehead of the Australian tech sector, and recently completed a public listing in the US that valued the company at more than $8 billion.
But the core values of the company remain the same, the founder says.
“Our DNA as a company has always been to be profitable, to make money by selling things,” Cannon-Brookes says.
“We had gotten away from some of the bad habits you develop if you can always just go and get money.
“The DNA of the company has always been about driving customer value, selling software with a disruptive model and being quite lean about the way we do it.”
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Denham Sadler is a former editor of StartupSmart. He was previously a journalist at the publication and has worked as a freelancer for the Guardian, the Saturday Paper and the ABC. In his spare time he likes puns and jaffles.
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