An Interview with Atlassian CEO Mike Cannon-Brookes About Atlassian and AI
Good morning, This week’s Stratechery Interview is with Atlassian founder and CEO Mike Cannon-Brookes . Cannon-Brookes and Scott Farquhar — whom I interviewed in 2017 — founded Atlassian in 2002; their first product was Jira, a project and issue-tracking tool, followed by Confluence, a team collaboration platform. Atlassian, thanks in part to their location in Australia, pioneered several critical innovations, including downloadable software and a self-serve business model; over the ensuing two decades Atlassian has moved to the cloud and greatly expanded their offering, and is now leaning into AI. In this interview we discuss that entire journey, including Cannon-Brookes’ desire to not have a job, how the absence of venture capital shaped the company, and how the company’s go-to-market approach has evolved. We then dive into AI, including why Cannon-Brookes believes that there will be more developers doing more, and why Atlassian’s position in the enterprise lets them create compelling offerings. Finally we discuss Atlassian’s sponsorship of Williams, the F1 race team, and why Cannon-Brookes thinks they can both help Williams win and also accrue big benefits for Atlassian. To repeat a disclosure I have long made in my Ethics Statement , I did, in the earliest years of Stratechery, take on consulting work for a limited number of companies, including Atlassian. And, for what it’s worth, I’m also a huge F1 fan! Go Max. As a reminder, all Stratechery content, including interviews, is available as a podcast; click the link at the top of this email to add Stratechery to your podcast player. On to the Interview: This interview is lightly edited for content and clarity. Mike Cannon-Brooks, welcome to Stratechery. MCB: Thank you for having me, Ben. So this is admittedly a new experience for me, I’ve already interviewed the founder of Atlassian , but it wasn’t you. I’m of course referring to Scott [Farquhar] . That was eight years ago, actually, before I even had podcasts. It was very brief, but hey, like I said, new experiences. MCB: That’s true. That’s true. And you wrote a consulting paper for us in 2014! I was going to disclose, yes, in the very brief period where I did consulting work, you flew me down to Sydney for a week, I had a chance to learn a lot about Atlassian. And on a personal note, that consulting contract helped me a lot, that was when I was just starting. It’s funny how small the numbers seem in retrospect, but maybe that’s why I’ve shied away from writing about you too much over the years, because it meant a lot to me. So I appreciate it and there’s my disclosure for the interview. MCB: Thank you. It’s a good piece of work. Don’t forget, ironically, we started as a consulting and services business and then decided that software was a better business model, so I think you did the same thing. You went the scalability route instead of the consulting work via Sydney. Absolutely. I’m not doing anything that doesn’t scale anymore, but I did love visiting Sydney, so it was great. MCB: Still, we pulled out the old consulting paper you wrote for us in 2014. Why are we going to win, why are we going to lose, everything else, it was classic Ben work. Was it good? MCB: It’s pretty good! It’s interesting, I’d probably be embarrassed if I read it today. Anyhow, the good news is that since it’s the first time I’m interviewing you, I do get to do my favorite segment, which is learning more about you. Where did you grow up, but also, where were you born? I know they were different places. Then, how’d you get interested in technology and what’s your version of the Atlassian origin story? MCB: Sure, I feel like I’ve heard this question 1,000 times! Where to start? My dad was in banking, he joined the glorious institution that is Citibank today, from England. Parents are both from Cambridge and bounced around the world a lot as part of that job. Took the, “Hey, we need someone to go to this country”, and he was like, “I’ll take that”. So I was born in America, in a period I lived in New York. To be honest, lived there for three months before I moved to Taiwan. Really? Whoa. I didn’t know that. MCB: Yeah, in 1980 when it was very different than what it is today. Yeah. Were you saving that to drop that off me? I had no idea. I thought you went straight from America to Australia. MCB: I only just thought about it about 30 seconds ago, actually. No, I went to Taiwan for a few years, lived in Hong Kong for a few years, went to Australia for a few years. So how I got into technology is actually related because my parents were moving around so much, the logic was being English, that they would send us to English boarding schools and that would be a stable thing while they were moving once we got old enough. So at the mighty age of seven, I was put on Qantas and sent to England and back four times a year to go to boarding school in England for about five, six years. Because of that boarding school, I have one of the lowest frequent flyer numbers in Australia, they introduced the frequent flyer program and that was at the end of year one or end of year two. I get given this catalog by my parents and how you’ve earned all these points, “What do you want to buy?”, and it’s like, “I don’t know, trips, winery things, booze”, I’m flicking through this catalog and I’m like, “There’s literally nothing in this catalog”, of gear that you used to be able to get that I wanted and at the back is this computer, so I was like, “I guess I’ll get that”. The only thing that was potentially age appropriate. MCB: That was the only thing in the catalog, I didn’t want a toaster, I didn’t want wine, so that became my first computer, the mighty Amstrad PC20 . Four colors, no hard drive. Eventually, I bought an external floppy drive, so you could put in two and did buy magazines and type in programs and write games and stuff from magazines and play with it, played a lot of video games basically back in that era. I was into computers peripherally all through high school, came back to Australia at 12, my parents had settled here by then and weren’t moving, and so I came back here, did all high school and university here. In high school, I was always going to be an architect, that was my dream the entire way through, but come to the end of grade 12, applied for a bunch of scholarships, because university, applied for the scholarships, ended up getting one and so I thought, “Oh, well, maybe I’ll take that”, and it was in a course called BIT. Basically, half computer science, half finance and economics, but it was 15 grand a year, tax-free, so I was like, “Well, I’ll do that for a while and go back to the architecture thing”. Of course, famously in that scholarship, I met my first business partner of my first startup, met my second business partner of the second startup, they went in radically different directions in terms of outcome, but it was just 30 kids right at the right time, did the dot-com era thing. Now, ironically, as a part of that scholarship, you had to spend six months in three industrial placements, so the origin story of Atlassian comes from then a little bit, because those industrial placements were so boring. Scott spent six months installing Windows at a large corporate and he was crazy freaking smart and it was like, “Hey, go from computer to computer and upgrade to Windows 98”, or whatever it was. It was like, “Guys, this is our life, this is going to be horrible”. I worked for Nortel Bay Networks, which was a good, at the time, massive competitor, Cisco then completely disappeared and so a good tech lesson in and of itself, I basically cataloged the room full of networking gear and routers, it was mind-numbingly boring. So towards the end of the university course, I famously sent an email to a few people saying, “Look, I don’t really want to get a real job, why don’t we start a company and we’ll try some stuff?”. And this was after the dot-com era? This was the early 2000s? MCB: This was after the dot-com era, yeah. So I lived through the dot-com era actually as a journalist and writer, analyst and technology. I worked for a company called Internet.com, which became Jupiter Media and Jupiter Research and that was great, that was an amazing era for me. We ran events, newsletters, what would’ve been podcasts, didn’t have them back then. And we ran events on Mobile Monday, I think one of them was called and it was all about WAP and— Well, the real secret is you’re not the only one. There are some founders that are very successful, that they’re like, “Look, I just want to pontificate about technology”. MCB: A little bit like you, I remember getting in a lot of trouble from some of the startups, because some company would launch and I wrote basically 500 words on, “This thing’s never going to work, this is a disaster of an idea”, and they would ring up and yell at my boss and he was awesome, he’d be like, “Dude, just keep writing what you think”, and it didn’t make you very popular as a journalist type. Anyway, emailed some people, tried to start a business, we didn’t actually know what we were going to do. Atlassian has, I always tell people, a terrible origin story. You should not copy us. You just didn’t want to be installing Windows or upgrading software. MCB: We literally did not want to get a real job. And Scott replied and said, “Yeah, sure, I’m in for trying that”. He was one of the smartest kids in our class and his nickname is Skip, because he was the president of our student association and always a leader type and Eagle Scout and everything else, so we’re like, “Yeah, okay, let’s do that, we’re good mates” — and that started Atlassian. We picked the name in about five minutes, which if you consulted any branding company, would not have been chosen. Ironically, originally, we were going to do customer service and consulting, that was what the gig was. Hence the name, because Atlas was a Greek titan whose job was to stand on top of the Atlas Mountains and hold up the sky, that’s what he was supposed to be doing. He was a bad guy, so his punishment was to hold the sky up and we thought that was an act of legendary service, and so we were going to provide legendary service by holding up the sky for customers and as I said, did the service thing for about six months, decided that this is a terrible business. People paying us $350 US to answer their questions and didn’t scale and was at crazy hours of the morning and night and everything else. So in the meantime, we wrote the first version of what became Jira . We actually wrote three pieces of software, one was a knowledge basey type tool, one was a mail archiving tool for groups, so you could see each other’s email as a shared archiving. And were you seeing this and you were building tools for yourself, for your consulting business? MCB: Literally, yes, exactly. So all three were tools that we needed for ourselves. People would email us and I couldn’t see Scott’s email and he couldn’t see mine at the time and it was like this is silly, and we built Jira to handle questions and issues and problems that we were having ourselves that became a teeny bit popular. There was this glimmer that someone else cared, so we poured all the effort into that. What was that? What was the glimmer? Because this is when Agile is taking over software development and at least the legend is Jira and Agile go hand in hand, is that a correct characterization? MCB: A little bit, but this is actually pre-Agile. So Jira comes out before Agile is even a thing. I think it was about two or three years before we had any version of marketing or feature sets that involved Agile. This was just a web-based, at the time, a bug tracker. So the interesting evolution part of the company obviously is it started as a bug tracker for software developers, it became an issue tracker for technology teams and now it’s like a business workflow for tens of millions of people every day across the world, most of whom have nothing to do with technology, so it’s gone on its own evolution. Would anything have been different if this was the plan from the beginning, or did it have to be this organic, “We’re figuring it out as we go along as we’re running away from Windows installations”, sort of story? MCB: I think, look, obviously, if we could choose to follow in our own footsteps, the Back to the Future skeptic in me would say it’s gone pretty well, so I’d follow every single footstep I took. (laughing) Yep, totally. MCB: And that would’ve become the plan. But look, we had two hunches really, which both turned out to be radically correct. Now, I would say we were following waves or whatever else, but one was that the Internet would change software distribution, which sounds ridiculous now and when I talk to graduates nowadays, I have to put them in the right time and place and say, “Look, when we started, software was distributed on a CD”, BEA WebLogic was the bee’s knees and you used to have to get it on a CD if you were lucky. If not, someone would come and install it for you and that’s how software was distributed. We made that CD into a ZIP file and put it on the Internet for people to download. You didn’t access it like a SaaS application, you literally download it from our website. Right. It’s funny that when you first say that, it’s like, “Oh, it’s completely transformative”, well, but you were an on-premises software story. But actually, no, there’s several steps to getting to SaaS, one of which is just downloading software. MCB: And we had people call us before they would download to check that we were real and stuff and I’m like, “Why don’t you just download the damn ZIP file?”, and I also date them, because, well, maybe I’ll get to the business model part, but the second innovation was that we thought open source would change software costs. So we had this big hunch, we were both writing a bunch of open source code at the time. Open source was a massive movement, especially in the Java space. Embarrassingly, I actually wrote a book called Open Source Java Programming that you can find with some mates. It’s still on Amazon and we sold a few thousand copies, I think, but I swore I’d never write a book again, it was a very painful experience. Thank you, you’re validating my life decisions . MCB: Yeah. Open source did bring the cost of building software down radically. We were writing a very small layer, 5% of the code at best on top of masses of amazing open source libraries and we contributed to those libraries, but we could deliver an amazing experience for a very low cost. We learned a lot, pricing and packaging. So what was the implication of that hunch though? Just that the market for developers, that would subsequently mean there was more software? MCB: A little bit that was the implication of the hunch. Largely for us, it was that the cost was going down. Pre-open source, you had to write everything so if Jira was back then, I don’t know, a million lines of code, if you added all the open source libraries together, it was 25, 30, 40 million lines of code. It was so big that it was so expensive, because you had to write all of that. To think of Windows, they wrote everything, the networking stack, there were no libraries, there was no open source involved in the original versions, it was all written by Microsoft. So the cost of that was very high, then you had to charge a lot of money. So we thought, look, if we could take all these amazing open source libraries, contribute back to them — we were a great open source citizen — and build a piece of proprietary software on top of them that solved customer’s problems, we could deliver that really cheaply. In fact, we sold the original versions of Jira, they were $800, unlimited users, unlimited use with no lifespan. So it was just 800 bucks, one-time fee forever and we learned a lot about pricing and packaging firstly, but secondly, it was very simple. Our goal in the early days, we had to sell one copy a week to stay alive, that was it. Some weeks, we’d sell two copies. $1,600 US would roll in and we’d be like, “Cool, we got a week off to survive”, and then one copy a week became two and two became five and five became ten, and now it’s hundreds of thousands. Well, isn’t the thing you just didn’t want to have a job? So I love this part of the story, because when I started Stratechery, I had a job from Microsoft that made, I think, $104,000 or something like that. I’m like, “I just want to make that, because I don’t want to work for a corporation, so if I could just get to there, it’ll be great”. MCB: We had exactly the same sets of goals. We had a few things we wanted to make somewhere that we wanted to go to work. I wanted to get up every day and think, “I want to go to work”, and weirdly, almost 24 years later, I love coming to work, so a tick achieved. We wanted to make it so we didn’t have to wear a suit, neither of us really like wearing suits at all — in fact, it’s a bit of an allergic reaction often and so tick, don’t turn up to work in a suit every day. And thirdly, most of our friends, so this is right where IBM bought PwC ironically, so out of the 30-odd kids in our class, maybe 10 went to IBM as consultants and 10 went to PwC and then they all end up going to the same shop and their grad salary there was $47,600. So our goal for year one was to end the year making at least a grad salary and convince ourselves we’re not crazy kind of thing and we smashed that goal, so that was good, but that was there. The Internet, the distribution part is important, knowing your favorite topics. Tell me about that and along with the business model, because again, this goes back so far, I don’t think people appreciate the extent to this entire idea of self-serve or bottoms up selling. This is really where it all started. MCB: Yes. And look, a few things. Firstly, if you come from Australia, we’re an exporting nation. “We’re built on the sheep’s back”, is a phrase, Australia’s built on the sheep’s back. What that really means is because we were this colony originally, then country on the far side of the world, anything we did to make money largely had to leave the country and go somewhere else. Originally, that was a struggle to find a product that could do that. “Built on a sheep’s back” is because wool was the first product that could do that, you could put it on a wooden boat, because it wasn’t very heavy and you could ship it a long distance, because it kept really well, so we could make sheep’s wool and make money as a country by shipping it back to Europe and it could survive the journey and so the country was built on the sheep’s back. We are a massive exporting nation. Trump brings in his tariffs, we’re the only country with a negative rate of return, we have a positive trade relationship with America and we’re like, “Wait a second, why did we get taxed?”, so obviously, it’s rocks, technology, we build and export everything as a country that we do. So our mentality was like, “Well, if we’re going to make money, it’s going to be overseas”, that was the first thing, is, “Okay, it’s going to be somewhere else, it’s not going to be Australians buying our software”, and so the Internet allowed us to do this. We put up a shopfront, early website and people could come to our website, download our software and then we just needed a way to get paid for it. The problem was in order to do that and the trust barriers of the Internet, we had to have a very low price and we had to have a fully installable offering. So we spent so much time on making it installable, documentation, “How would you get yourself up and running and try it?” — the software, as we put it, had to sell itself. Our software had to be bought, not sold. We didn’t have any salespeople, we couldn’t travel to your office in Sweden or London and help you out with it. For $800, we couldn’t have done that and secondly, it didn’t make any sense. So the evolution was, “Okay, this is the only possible path that we can go down is we have to figure out how to get people to do this”, now it turns out once you have figured out how to do that, it’s an incredibly powerful motor because you have lots of people coming, you have a very cheap piece of software for its relative performance, and you get people using it in all these big businesses all over the place. I would say 50% of the customers I go meet nowadays, probably meet a handful of customers, a couple a day on an average kind of thing, many of those have been a customer for 20 years, 22 years, 23 years. How many customers have been a customer 23 years? I’m like that’s crazy, we’re only 24 years old. That’s awesome. MCB: And so they downloaded very early, they didn’t download as all of , all of them are customers. Just one guy who’s like, “I need a way to track my issues”. MCB: Exactly. It was some guy in a backroom who needed to track it. I know the Cisco origin story, that was literally a guy, he’s still there, he’s been there 22, 23 years, he’s awesome. And they started with just, “I just needed a way to manage my issues for 10 people”, and now it’s hundreds of thousands of people, seats that we have there, it’s kind of grown over time. How did we know that business model was working? Again, it dates us a lot, this didn’t mean we didn’t answer questions, we were big on customer service and helping people, email was the way to do that. A bit of IRC back then, we had a channel you could log into and we’d help you. But the first customer, we used to walk into the office in the morning and we had a fax machine with literally rolls of paper. So if you wanted to pay for this distributed software, this says how old, there was no SSL keys, I heard you complaining about it the other day, totally agree with that era. You had to download a PDF off our website, which was pretty modern that it was a PDF, fill in your credit card details, and fax it to us, that is how you paid when we started. So we would walk in the morning and there’d be these rolls of paper on the ground, you be like, “Ah, sweet, someone bought something”, you know what I mean? It became a weird dopamine drug for us. The very first company was American Airlines… MCB: About six months in that we came in the morning and there was a fax on the ground with $800 and a credit card number written on it and we had never talked to American Airlines, they had never emailed us, they had never asked for customer service, they’d never gone on IRC, they had never talked to us in any way, shape or form. Man, this thing could work, we just made $800 out of the air. MCB: I mean, there was a lot of pre-work to get them there, but obviously that was kind of different. MCB: Then secondarily, as you wrote, I’m just trying to finish a very long answer here, we started Confluence in 2004, and those two became the jewel engines and both of those I think were probably major moments. I often say Confluence is a bigger moment, actually. The business model was kind of established, this is two years into the business. We made, I think, $800 grand in year one, $1.6 million in year two, maybe $5 million in year three, and $12 million in year four, if I remember the revenue numbers. So the thing was working really well. You’re the company that’s the Microsoft heir in some respects, which is the really just you took venture eventually, but didn’t really need to, just pure bottoms up. You and Scott, we’re able to keep a huge portion of the company because of that, it’s an amazing story that is, I think, under-told in some respects. MCB: Yeah, well, we actually did. I mean, we did and didn’t. So the venture story is one of my favorites because it describes how we think from first principles. Firstly, the first capital we put on the balance sheet, institutional capital to put on the balance sheet, I guess you could argue our initial, I don’t know, $10 grand each was some money, but was in the IPO . So in 2015, when we went public, that was the first capital that went into the business all time. We took two rounds of funding, one in 2010 and one in 2013, but both of which were to employees, the first was to the founders and the second was to large number of employees who bought in so both of those companies bought ordinary stock. Secondary shares basically, yeah. MCB: They bought ordinary stock, there were no preferences, there were no anything, that was kind of the way it is. And we love the Accel guys that invested, it’s kind of funny because their business model was wildly wrong, we now have their original spreadsheets and stuff. We’ve 15 years in, you know them really, really well, they wanted us to grow it. I think we had to grow at 30% for two years, 20% the year after and something like that to double or triple their money and at the time they put in $60 mil US , that was the largest investment I think Accel had ever made in anything software, digital kind of world and it was this massive bet. It was a one-page term sheet for ordinary stock, so credit to those two partners who took massive risk on us, had to fight, we know that GC, everybody else to do this unusual funding round and I think we did 50% growth the first year, and our CAGR since then is probably 40%. Yeah, it worked out pretty well. MCB: They did very well. I think their 2-3x was more like a 300x or something. You mentioned the Confluence moment. Why was that a big deal? Usually the story is you have one product and you need to focus and you’re two years old, you’re launching a completely new product. Is that the aspect you’re referring to? MCB: Yes, I think it comes down to being bootstrapped. Look, we spent nine years convinced we were going to die every day, there was just such a mentality that this thing was all going to fall over and we better work harder and keep going. The Confluence moment was important because I remember, I don’t know exactly, but sometime around then we understood venture capital. Firstly, on the venture capital side, because they do relate to each other, there was no VC available in 2001 and 2002 in Australia. We’re a nuclear winter, we’re two idiots with no credibility. Right. You could barely get funded in San Francisco, you’re not going to get funding in Sydney. MCB: No, because 2001, you weren’t even finding San Francisco funding because the whole dot-com boom had just happened, no one was getting funded anyway. We’re in Australia and we have no credibility, so we didn’t even bother. We literally, 2010 when we went to the Accel thing and we talked to five VCs, was the first time we’d ever pitched the business. It was just not a thing, people don’t understand, we used to say we were customer-funded when people would ask the also awkward question of, “Who’s your funding come from?”, we were like, “We’re customer-funded”, They go, “Oh, okay”. Lifestyle business! MCB: But we did understand venture capital, massive readers, I have an army full of technical books, books about technology and the industry and history and stuff from that magic era of airport bookstores. We read every episode of Red Herring and Industry Standard and Wired Magazine, I have just this huge library, so voracious readers. One thing you understood about venture capital is they put the portfolio theory on their side — and I’m a big fan of venture capital, I should say, I’m the chair of Australia’s biggest VC fund and that’s my other mate that I met in university, Niki Scevak . But we wanted portfolio theory on our side, we’d done finance and economics, we had one product, this was highly risky if you’re bootstrapped. So there was a little bit of the thinking that actually if we have two products, our chances of total failure are less, one of them can fail and we’ll be okay and so we started a second product. Yes, arguably it was hard, but our first one was going all right, it was like making, I don’t know, five million bucks a year and we had a handful of really awesome backpacker programmers. And the early people, it’s like a whole total band of misfits that somehow made this thing work and we’re having a lot of fun, we’re working really hard and so we made another internal tool that became Confluence and being adjacent, but very different, selling to different audiences, but having a lot — if you bought one, there was a good reason to have the other one, no matter which way you started, became a really good symbiotic loop of these two engines that powered us for a very long time. So it was more a case of reducing our risk actually than anything else. Wasn’t it risky to be splitting your resources or did that not even occur to you? MCB: I don’t think it occurred to us, no. It was more about splitting our risk and we were doing pretty well, but it changed the business because we moved from being the Jira company to a software company, and I say that’s probably the most under-understood moment because we had to learn about not how to market Jira, but how to market software, not how to build Jira, but how to build software. So now we have 20, 25 apps in 5 different categories that sell to all sorts of different teams who own a business, but we had to become a software company. Microsoft, I don’t know the analogy’s really that fair to them, to be honest, or fair to us, it seems massively over-glamorizing what they’ve achieved, which is amazing, I’m huge fan of Microsoft. The need to understand how to sell, in their case, like Minecraft, SQL Server, Azure, AI, you have to understand the building, the creation of technology, the selling of technology, the marketing of technology at a generic level, it really helped us generify the business. I think if we’d gone too much longer, everybody would’ve been on the Jira team, it would’ve been too hard to start a second thing and instead, we’ve always been a multi-product company. You just mentioned selling a lot. When did you finally realize or transition away from just being self-serve to actually, “We’ve got to grow beyond this”? Was it almost like a pivot that came too late because your identity was so wrapped up into the, “We’re the self-serve company”? MCB: Look, it’s never been a pivot, I get asked this by investors all the time. I would say our go to-market model and our process has kept evolving pretty much every year or two for 20 years and I say evolving because we’re very aware of the strengths of the model that we came up with and we’re very aware of what it takes to power that and we’ve been very careful when we’ve evolved, changed, added to it, not to destroy the original one. So nowadays, we have two amazing business models where we call them high-touch and low-touch. So we have the low-touch model, which is literally the same thing as it’s always been, hundreds of thousands of people show up every week, they try our software, we want them to have a great experience trying the software, we want to spread it as widely as possible and as many enterprises as we can, and some of those will stick, some of those will get working and we measure aggressively the rates of return and dollars and flows and funnels and everything else. This whole team whose job is to make sure that that’s working at now massive scale, right. But at the same time, what happened is as customers got more and more Atlassian software deployed, they wanted a different relationship with us, they wanted a bigger relationship. Those days they used to be spending, as soon as we were spending $20 grand, we were like, “Oh man, maybe we should talk to these people”, nowadays it’s more like around $50 to $100 grand is when we’ll talk to you. So the lines kept moving for different reasons and we actually have online sales, inside sales in between actually, the sort of classical someone gets on an airplane and goes to travel to you. So it’s just kept evolving. We talk about the IPO a lot, it’s our 10-year anniversary coming up this month, I’m off to New York next week to ring the bell and celebrate 10 years. When we went public, as an example, we had less than 10 companies paying a million dollars a year, now we’re well north of 500 in 10 years. So that doesn’t come without an amazing enterprise sales team and teams that go out and help customers and customer success and all the trappings of a really top flight enterprise sales organization, because for most of those customers, again, I think it’s north of 85% of the Fortune 500 are deep Atlassian customers. We become a strategic partner to these businesses that if we go down, rockets don’t take off, banks shut down, it’s a real critical importance to most of these customers. How big is your business outside of directly working with developer teams? As I recall, this was part of the consulting thing was you were wanting to do Jira for sales or Jira for all these different sort of functions, where and how did that evolve? MCB: So it’s been a continuum for a long time. So nowadays, less than half of our users are in technology teams, and probably a third of those are developers, less than half of them. So a portion of our audience, it’s a very important point of words. When I talk about this, all the engineers are like, “Hey, you don’t care about us anymore”, I’m like, “No, that’s not true”, that business is a great business, it’s just the rest of our business has grown massively around it. There are not enough developers in the world for our business. Our fundamental value has always been actually, and it took us one of these things, it took a decade to realize, firstly, we don’t solve technology problems, we never have, we’ve never had anything that’s like, “I care what code you write, which language the code is in, what the code does”. We solve collaboration and people problems, we always have solved people problems, even Agile was a people problem. It’s not a technology problem, actually, it’s a people problem. It’s, “How do we organize a group of people to build a piece of technology that best meets the customer’s needs and goes off track as little as possible?”, that is a collaborative people problem, we’ve always solved people problems. Our value actually came because there’s a lot of tools for technology teams and we never wanted to be in the dev tools business, that’s a road of bones, it’s very hard to build sustainable competitive advantage and dev tools, the history shows this. There’s just a different company every few years, developers tastes are fickle, our developers taste are fickle, this is not me sledging developers at all, we have a massive R&D arm and that group changes languages every couple of years, they change how they build software every couple of years, they’re constantly moving on, they change our analytics tools and everything else because they are tool builders and toolmakers, that makes sense, but that’s a hard place to build a business. Interestingly topical today, so we’ll see. But the easier place to build a business in the long term was the level above that, which is the collaboration problems that came, which started as, “How do we get engineers, designers, product managers, business analysts to all be on the same page about what it is that they’re building and have a repeatable process for that?”. It turned out that as the world has become technology-driven, as we say, our customers are technology-driven organizations. If you’re a large organization for whom technology is your key distinct advantage, it doesn’t matter whether you’re making chips and databases or whether you’re making rockets or cars or whether you’re making financial services or insurance or healthcare, I would argue for most of the businesses that are great, technology is their key competitive advantage, then you should be our customer, that is it. And what we help you do is we help your technology teams and your business teams collaborate across that boundary because that’s actually the hardest boundary. Building great technology is one set of problems, making it work for your customers usually means in different industries, a different amount of working with all sorts of business people and that’s what Jira did from the very start. Now that’s what our whole portfolio in service management, in strategy and leadership teams is about doing that at different scales and different amounts in different places. Does it bug you when you get complaints on the Internet of, “Jira’s so complicated”, “Hard to use”, blah, blah, blah? And are you speaking to, the problem is that the problem space we’re working in is not the single developer trying to track an issue, it’s trying to herd a bunch of cats and get them the same direction and muddling through that is a lot more difficult than it seems. MCB: It bothers me anytime people don’t like our software, sure. We’ve worked for the last 20 years to make it better every day. We’ll probably work for the next 20 years to make it better every day and people will still probably be dissatisfied and that is our fundamental core design challenge. There’s a few reasons they say that. Firstly, the on-premise business model and the cloud shift is really important because with the cloud shift, we update the software, with the on-premise business model, we don’t, so you would often be on older data versions, customers would upgrade once a year or every two years or something, and so we can’t control that. Secondly, the challenge of Jira is at our core, we solve a whole lot of what we say is structured and unstructured workflows. Confluence is an unstructured workflow, Jira’s a very structured workflow. You have a set of steps, you have permissioning and restrictions, you have fields, you have what’s happening in this process. The auditor will do something and pass it to the internal accounting team, the accounting team will do this and pass it to legal, legal will do this and pass it to these people. You’re defining a workflow and you’re having information flow back and forth and a Jira work item is, as we call it, it’s a human reference to work. That’s the best description of what Jira is work in the knowledge work era is this very ephemeral concept. Back to your development example, is the code the software? Is the idea the software? Is the designs in Figma — these are all parts of what it is, this thing that’s called this virtual thing that we’ve built. What we track is with a human reference to that, so someone can say it’s a new admin console. Cool, here’s the design for the admin console, there’s the spec for the admin console, there’s the code for the admin console, here’s where it’s been tested, here’s where it’s deployed. Did customers like it? We need a reference to this thing that is otherwise spread across hundreds of systems and virtualized. Once you’re building a workflow system, companies, ours included, love process, we love workflows, we love control, and that control usually comes with more data. “Hey, don’t fill in these three fields, fill in these 50 fields”, and they’re all required for some reason and our job to customers is to say, “Do you really need 50 fields?”, because you’re creating a user experience- You’re ruining it for us! MCB: Your users are going to have to fill in all 50 fields, and it feels like that’s going to take you a while. We have customers — I went back and checked, I think almost every single person you’ve interviewed on your podcast is a customer of ours. I don’t know if it’s 100%, but it’s definitely north of 95% out of the last 20 guests. Stratechery is a customer of yours, so there you go. MCB: Oh, really? Well, there you go. Thank you. One of my engineers adores Jira, so I get the opposite angle from what I asked about. MCB: That’s right. So look, it’s a challenge for sure, but at the same time, man, the value we’ve created, the business value, the number of customers that run on it, it’s ironic, we talk about the AI era and all these other things. Literally, no chips go out of any of the chip companies you love talking about, every single one of them, soup to nuts. So at what point did you realize that AI was going to impact you in a major way? Was there an “aha” moment or it’s just been in the air? Or is it a specific time you realized, “Look, this is going to completely change what we do?” MCB: Again, I’m one of these — I’ve realized I’ve become the old man in the room. We’ve done machine learning for a long time in lots of ways because of our online business model, so I’d say we’ve done AI for a long time. Obviously, LLMs are what people refer to nowadays by AI and agents and these words that have corrupted the entire thing, the meaning changes in technology when it means something else. The launch of various versions of ChatGPT were very instructive obviously, they were a moment for everybody. The optimism, and I would say we’re massive AI optimists, it is the best thing that’s happened to our business in 25 years. Why? Because people might look at you from the outside and say you’re still characterized as — even though your business expanded far beyond developers — “Oh, you have a lot of developers”, I’m skipping over the transition to the cloud just because we’re running out of time, but it’s an interesting story. You did announce you are finally ending the on-premises software, which I’m curious, it is a sentimental moment to come to that decision, but people might look at you from the outside and say, “Oh, there’s a company that’s going to have a problem with AI, AI is going to replace developers, it’s the decreased seats . What are they going to do?” MCB: There’s a few ways to take that. I’m trying to put it on a tee for you. I think I know what you want to say. MCB: There’s a few ways to look at it. Firstly, I think AI is a good example where people are very concrete about the negatives and the positives are upside. I think it’s a huge force multiplier personally for human creativity, problem solving, all sorts of things, it’s a massive positive for society. That doesn’t mean there aren’t any negatives, but the net effect is really high. And we spend a lot of time, you hear it in the media talking about the job loss, the efficiency gains, whichever way you want to put it, that’s the thing. Well, that’s because it’s really concrete in a spreadsheet, “I can do this process with half as many people”, “Wow, look at that, that’s great”, what’s never written in the spreadsheet is all the new processes that get created, all the new ways of doing things, the quality of the output is going to be twice as high. If software costs half as much to write, I can either do it with half as many people, but core competitive forces, I would argue, in the economy mean I will need the same number of people, I would just need to do a better job of making higher quality technology. So our view on AI overall is an accelerant, not a replacement to everything we do, and just the next era of technology change is really positive. We’ve loved technology, we love the cloud, we love all the tech changes we’ve been through, mobile. Look, us as a business, we are in the game of knowledge work. We solve human problems, workflows, business processes, this is what we do. These largely revolve around text, or if it’s video nowadays, that can be reduced to text in various ways. LLMs allow us to understand that text in a massively deeper way than we ever have been, and the problems we solve aren’t going away. 20 years time, there’ll be groups of people trying to solve some sort of problem as a team and working on a project, and so these things aren’t going to go. They’re going to need to talk to each other and collaborate of what work’s going on and how it’s working, so the textual aspect of it has been amazing. The features we’ve been able to ship, we never could have built five years ago, it was literally impossible, so the ability to solve customer problems is so much higher than it ever has been. Secondly, our software is incredibly valuable at the core of these workflows, but it’s also incredibly promiscuous. What I mean by that is we have always been very highly interlinked with everything else. If it’s a sales team, there are links to Salesforce and customer records, there are links to internal systems, there are links to maybe features that need to be built, there are links to some content and document. So any Jira, Confluence, or Loom , you don’t record a Loom unless you’re talking about something, you don’t have a Jira issue without pointing to all sorts of different resources, whether that’s a GitHub or Figma, whether it’s Salesforce or Workday. That gives us a really unique knowledge, which we’ve turned into the teamwork graph, that actually started pre-AI, so the irony is the Teamwork Graph is about 6 years old. Well, it started with Confluence. This is the whole thing where you look backwards, and to your point, if you had just been the Jira company, but because from the very beginning, you mentioned Confluence was different but it was adjacent and you had to build the links and stuff together, and as you build all these different tools, because everyone wants to be this point of integration. And I wanted you to tell me about Rovo and this idea of being able to search across all your documents. Who gets permission to do that? It’s someone that’s already there, and you made the critical decision to be there back in 2004 or whatever it was. MCB: That’s true. Certainly back in 2004, and then in I think 2019, the Teamwork Graph starts, which is trying to take all of those links and turn them into a graph. The connectivity, two things linked to this Figma thing, five things linked to this customer record — okay, cool, that means something, so we built this Graph. To be honest, it was a bit of a technology lark. We have a lot of these projects that are really cool and we’re like, “We’ll be able to use this somehow and it’s going to grown”, and now it’s a hundred billion objects and connections connecting all of the company’s knowledge. It becomes the organizational memory nowadays and context and all these things nobody knew in 2019 that’s what it was going to be, it just seemed we needed it for various process connections. That turns out to be because it’s got permissions and compliance and all of the enterprise stuff built in, which is incredibly difficult, the best resource to point AI at in various forms. You still have to be good at the AI parts to get the knowledge, the context for any area, so the Teamwork Graph is our data layer. It’s not only the best kind of enterprise search engine for your content from a 10 Blue Links kind of way of thinking. If you’re chatting through your content, you still need all your organizational knowledge. I actually obviously found your Article, I was like, “Hey, what has Ben Thompson written about us last year?”, and I asked Rovo in chat and it comes back to me with he wrote this, that and the other and pulls out some snippets. I’m like, “Tell me more, do you think we’ve hit that?”, I literally got a report written by Rovo on your report as to whether it had been accurate. “Go look at the last 10 years with deep research and web search and come back and tell me, was he right or wrong?”, and it gave me a really interesting analysis of whether you were right and wrong. It’s like most AI things, it’s like 90% correct, it’s pretty good. It solved a lot of the first problem and I would not have done that work otherwise. I would have read it quickly and so I wasn’t going to put an analyst on it internally to do this work, but I could send something to do work I never would’ve done. Who’s your competitor for this spot, for this Rovo position where you have all this context, you can actually search your company in a way that just wasn’t possible previously? MCB: Who are the competitors you say? Yeah, because everyone is claiming they’re in this spot, “We can be the central place that you go and we have visibility everywhere”, why is Atlassian the one that’s going to win that space? MCB: A few reasons why we will. I think we have a great chance to be a great player is maybe the easiest way to say it. I think everybody loves this absolute win position, we don’t believe in enterprise technology, you usually get these absolute wins, it’s not quite the same as in the consumer world. We have a lot of business processes and workflows, millions every day that run through us, those are human collaboration workflows, so they are cool. The auditing team hands off to the accounting team, hands off to the tax team, whatever it is, sales workflows, marketing workflows, and they span lots of our applications and many others. If you’re going to go and introduce agents, these autonomous AI-driven software programs, whatever you want to call an agent, you’re going to put them into existing processes to make those processes either more efficient, more accurate. When the human picks up a task, it’s got all the information they need because something’s gone out to find it, that is an incredibly powerful position, which is why we support our agents and everybody else’s. You can assign a Jira work item to a Cursor agent in terms of code, you can assign it to a Salesforce agent. If you have your agent technology choice, I don’t think you’re going to have one agent platform, I think you’re probably going to have multiples, there are going to be a handful of organizational knowledge graphs that are powerful enough to solve these problems across multiple tools, but we have access to all those tools. We already know the information to some level, and that becomes a very unique advantage. Do you see this as a way to expand even further how much of a company you cover? You started with developers, then you expand to adjacent teams, and you talk about it’s now just a fraction of your user base. Do you own entire companies or could you get there? It’s like, “Okay, we still have these teams over here that are not on Jira, but Rovo’s so good that we need to bring everyone in”? MCB: Look, again, it would be great. I think it is unrealistic, and we should say “Absolutely”, right? MCB: If [Salesforce CEO Marc] Benioff was here, he’d be like, “Absolutely, we’ll own the world”, we love him, that’s the way he is, I don’t think about it as owning a customer. Our mentality has always been — I always use the subway analogy versus we have some competitors, for example, that want to be the control tower, their whole thing is we’ll be the control tower, just give us control and we’ll go and control everybody else, we’ll move the planes around. I think in enterprise IT, that’s an unrealistic view. Every CIO has been sold this for decades, it doesn’t happen because the world changes too quickly. Our philosophy and our commitment to customers has always been we will be a great citizen on all sides, we will interact with all of the applications you need, the old ones and the new ones, and we will be a valuable point of exchange in your business workflows and processes, whether those are structured like in Jira, whether unstructured like in Loom or Talent or something else. The reason for that is you have lots of systems. We want to be a valuable station on your subway network, we don’t want to be at the end of one of the lines, we want to be one of the handful of hub stations that are about moving trains around, and that is the best way to get your knowledge moving in your organization, it’s the best way to deal with your processes. Therefore, we need to have amazing AI capabilities. We have a massive investment in R&D, we have thousands of people working on AI tooling at the moment, and we have a huge creation bent, which is one of the reasons I think — we’ve talked a bit about the data advantage we have, I think we have a huge design advantage, and I actually think design is one of the hardest parts of building great AI experiences because it’s real fundamental design for the first time. You had a great line, you did a podcast a couple of weeks ago that I’ll put a link to, but you mentioned basically, the customer should not need to understand the difference between deterministic and probabilistic in the context of design, that’s what you’re driving at here. MCB: They should not need to understand that, they should need to understand when outcomes, outputs may be wrong or may be creative. Again, you talk a lot about the fact that hallucination is the other side of creativity, right, you can’t have one without the other. Hallucinations are a miracle. We have computers making stuff up! MCB: Our job is to explain to a customer when that happens, so it’s like this might be something you want to do, and that requires a lot of design. We have a feature in Jira called Work Breakdown which is super popular, where I can take a Jira issue and say, “Make me a bunch of sub-issues, this task has to be broken into a set of steps”. I don’t believe in the magic button theory of AI, that I’ll just hit a button and it’ll do all the things, I believe deeply in the value from AI will come from human-AI collaboration in a loop. It’s me and the AI working back and forth. You talk about yourself and Daman quite a lot , and it’s you, Daman and ChatGPT working together, but it’s not like you ask one thing and it’s done. It’s an interaction, it’s a collaboration back and forth, and that’s going to happen everywhere. In Work Breakdown, what it does is it says, “Hey, based on these types of documents I’ve gone to find from your whole graph in Google Docs and Confluence, whatever, I think this piece breaks down into these, is that correct?”, and it goes, “No, actually, that one doesn’t make any difference, these two are really good, you forgot about this document”, “Cool, let me go do that for you again”, and come back and say, “Is it these?”, “That’s closer”, and then you’re like, “That’s good enough, it’s 90% of what I need”, and then I go add the two that I need myself. That is a huge productivity boost but it’s not magically correct, and it requires a lot of design to tell people, “These are not the answers, these are possible answers, help us refine them and get better at it so that you get the 90% upside and the 10% downside is managed”. Are all these people pursuing these full agents that act on their own, are they just totally misguided? MCB: No, because I think, well, agents will take — there’s a snake oil sales thing going on as there always is in any bubble, and the snake oil sales is not wrong, it’s just chronologically challenged. (laughing) That’s so good. MCB: Well, customers are struggling. When I talk to customers every day, they’re like, “Is everyone else using these things to just magically transform their business with this simple, it took them five minutes and it’s replaced entire armies of people?”, and I’m like, “No, nobody’s doing that”. What they’re actually doing is taking business processes that are really important to their business and saying, “Okay, can I make this step better? This is highly error-prone. It’s compliance in a large organization, how do I make this part of the process better?”, and we’re like, “Oh, we can totally do that”, and they will replace small bits of lots of processes so that in Ship of Theseus style, five years from now, the process will look radically different. Occasionally, they are replacing entire processes, but this is the 1% case, what they’re actually doing is they have whole machines that are running and they’re trying to fix this cog and fix that cog, and that’s super valuable for them. That’s not a downside, that’s really, really valuable. And often, it’s work they didn’t want to do, work that wasn’t getting done, it wasn’t done at a high quality, so we got to remember that, I say this quite a lot, people shouldn’t be afraid of AI taking their job, I fundamentally believe this, they should be afraid of someone who’s really good at AI taking their job. That’s actually what’s going to happen, is someone is going to come along, in a sales sense, they’re really good at using all these AI tools to give better customer outcomes or handle more customers at one time. Is this why you’re hiring so many young people? MCB: Yes, I guess so. Yes, they’re more AI-native, they come out understanding these tools and technologies. I find the biggest irony in universities is all these people who “cheat” their way through every assignment, I use cheat in quote marks, using ChatGPT to handle these assignments, and then they’re worried AI is going to take all these jobs. I’m like, “Wait, you literally took your own job of writing the assignment, but you’ve also trained yourself on how to use these tools to get the outcome required” — now one might argue the university degree should be different, but just like when Google came along and you could look up any fact, knowing facts became far less important than the ability to look it up. I still think AI, it doesn’t create anything, maybe slightly controversial, but I argue it synthesizes information, it’s really good at processing huge amounts of information, giving it back to you, changing its form, bringing it back. Humans are still the only source of fundamental knowledge creation. I point out one of the flaws in the one person billion dollar company argument, and this will happen but it’ll be an anomaly. That company doesn’t get created without that one person, so there’s not AI creating companies magically. It’s like can a company eternally buy back its stock? No, because at some point, someone is going to own the final share? MCB: That’s right and I think this is missed, right? This is where we say it’s about unlocking creativity and what we do for our customers is put Rovo and these amazing data capabilities that we have alongside all the enterprise compliance and data residency, and there’s a massive amount of making this work in the enterprise with trust and probity and security. It’s very difficult. And great design to say, “What do you hire us to do? How do you get these technology and business teams to work together? What workflows do you have in your projects and your service teams, and how can we make those workflows better with more data and make your teams more informed?” That will end up with us having more share of employees in a business that use our stuff every day. Awesome. You made two big acquisitions recently, the DX acquisition , I think, makes a ton of sense to me measuring engineering productivity, particularly in the area of AI. What actual ROI are we getting on this? MCB: And how much money am I spending? Because I’m spending suddenly a lot of money, right? This is not cheap at all, I have huge bills. Internally, we use Rovo Dev , we use Claude Code, we use GitHub Copilot, we use Cursor, we have them available to all. We have a huge R&D — again, I think we’re still number one on the NASDAQ for R&D spending as proportion of revenue. You can take that as a good thing in the AI era or a bad thing, everyone gets to choose their own view on that, but we’ve always been incredibly high on R&D spending since day one. The bills that we pay though are very high, so DX is simply saying, “Okay, cool, how do I measure what I’m getting for that? Should I pay twice as much money because these bills are worthwhile, or is there a lot of it that’s actually just it’s really fun and it’s not actually leading to productivity gains?”. This is going to be a hard problem because there’s a lot of money on the line at the moment that people are paying for these tools, which is not without value, but measuring exactly what the value is is really, really hard, and that team’s done a phenomenal job. And we now have an Atlassian office in Salt Lake City, Utah, where I already spend a lot of time. Totally by coincidence, but it’s really nice. So that purchase, love it, makes a ton of sense. In perfect alignment with you. How does The Browser Company fit in? MCB: A lot of ways. So I have believed for a long time that browsers are broken. We’ve built browsers for an era of software that we don’t live in today. And I don’t, in my browser, have a bunch of tabs that represent webpages, I don’t have that. I have a bunch of tasks, I have a bunch of applications, I have a bunch of documents, and the browser was fundamentally never built to do that. That’s what Arc, first product from The Browser Company — if you don’t use Arc every single day, you should be, it’ll increase your productivity instantly because it’s built for knowledge workers and the way that they have to actually work every day and how they manage all of these tabs and tasks and flows versus serving the New York Times or whatever. That is a browser built for knowledge workers, and there’s a lot more we can do in that era as software changes. Secondly, obviously AI has come along, and we now have chats and applications as a extra part of the browser experience, so I think we can change how enterprises use browsers, security being a big issue. I think AI in the browser is a really important thing, but I suspect it’s not in the basic way of just combining Chrome and ChatGPT, that’s not how it’s going to play out. I suspect it requires a massive amount of design, which The Browser Company is phenomenal at, and it requires changing how people use their day-to-day applications. From our point of view, and I’ve been an Arc fan since day one, [The Browser Company CEO] Josh [Miller] and I have known each other a long time, there’s a knowledge worker angle and there’s obviously a business angle to it in a huge way that our customers are knowledge workers. We can change the way they do their work in a meaningful way of productivity, that is exactly what we have been trying to do in a lot of different ways. The browser itself, being chromium-based, Edge being chromium-based, Chrome being chromium-based, the rendering of webpages is not the problem, it is the fundamental user experience of, “How do I take all of my SaaS applications, my agents, my chats, my tabs, my knowledge, and put it all together in ways that make my day quicker?” — that is what we are trying to do fundamentally at the start. The context that we have is incredibly important for that. And the browser has, if you think about it, my personal memory. We used to call it the browser history. Great, it shows what I’ve seen, it does not have my organizational memory, which we have a great example of in the Teamwork Graph. So if I can put these things together, I can make a much more productive browsing experience for customers fundamentally in that world. I think we have an amazing shot of doing that and of changing how knowledge workers use SaaS. We’re not trying to make a browser, as I’ve said, for my kids, we’re not trying to make a browser for my parents, we’re not trying to make a browser for shopping or for anything else. We’re trying to make a browser for people who spend all day living in Salesforce and Jira and Google Docs and Confluence and Figma and GitHub, and that is their life. The laptop warrior that sits in that experience, I believe we can use AI and design to make that a far better experience and build an amazing product. They’re well on the way to doing that, we can supercharge doing it. You look skeptical. No, I’m looking at the clock, I skipped over a huge section. Your whole shift to the cloud, all those sorts of things. However, there is one thing I wanted to get to: you are wearing an Atlassian Williams Racing hat , I am a big F1 fan, I was very excited about you doing this . How did that come about? How was the first year? Was this another hunch this is going to work out? I mean, Williams is looking like a pretty good bet. MCB: Yes, our world’s largest sports bet. Look, how did it come about? So how do I make a short answer? F1 is changing, I think, in a massive way. I know now being incredibly deep in the business of it, the fundamental change is that hardware is becoming less important and software is becoming more important, this is a trend that we are used to. JV, James Vowles , the Team Principal, was the first person that approached us a long while ago now to help them, and for a teeny, teeny sticker in the corner, to help them get more productive as a team. What people don’t realize about F1 is these are large organizations, right? There’s 1100 people that work for Atlassian Williams Racing. And Williams was really pared down and skinny, he was brought back in with new owners to actually rebuild the entire thing? MCB: Yes, they were in deep trouble. But in rebuilding it, he is a software engineer, software developer by trade, by history kind of thing. He’s a technically-minded person. He downloaded Jira himself in 2004 to install it, so he knows us quite well. So we were brought on for our ability to help them with their teamwork and their collaboration, they really needed a technical upgrade to a whole lot of their systems. Turns out they need us in almost every part of their business because the service workflow’s important. We’re now in the garage, we’re using tons of AI to try to make them better, so there’s a lot of things we can do to build to hopefully help them win, and it’s a mission you can fall in love with. Here is one of the most storied brands in Formula 1 that’s fallen on tough times, every sportsperson loves a recovery story. And I was sold early on the recovery story, I’m like, “Fuck it, let’s go help, let’s make this happen. Let’s get back to being a championship team”. So we fell in love with the mission, and JV is super compelling, he’s got a one-decade goal, and they’re very goal-driven, and we love that, but they needed a lot of help, so that’s what they asked us for help with is initially. The more we looked at it, the more we learned about Formula 1, yes, it’s becoming a software-driven sport. So as an example, Atlassian Williams, I believe have twice as many software developers as the next team on the grid. Because it’s cost-capped, you got to choose, “Do I hire a software developer or an aerodynamicist?” — it’s a very clear cost cap, you’re choosing where to put your resources. As virtualization and everything get better, it’s less, “How well can I draw a curve?” and, “How much can I help 1100 people work together, and how can we build great software”, which really is the core of the car, right? So that then comes to us, tiny sticker, probably a founder-ish moment where I’m like, “How much is the sticker on the top?”, and they didn’t have a sticker on the top and I’m like, well, “What would that get us?” So we ran the numbers on that and the reason is twofold. You talked about our GTM, our go-to-market transformation, we have an ability to build various things. Firstly, branding is obviously massive, top three teams get 10 times the branding as the bottom three teams. So if you’re going to make a sports bet, you pay for a long period of time with the bottom three team, you help make them a top three team, and your sport bet pays out really well just on a sheer TV time and etc — the number of staff, parents, and other things, have said to staff members, “Hey, that company you work for, it’s really great, I saw them on the TV on the weekend”, and the staff member will say, “Dude, I’ve worked there for 12 years, why do you suddenly know about it?”, “Oh, I saw them driving. Carlos [Sainz Jr.] is great”, or something. And he is! So obviously, there’s a huge marketing and branding angle that’s about their position being better. The really interesting part of what we’re doing there is we have customers all around the world, we have customers in 200-odd countries, and we can’t go and visit all of our biggest customers in a meaningful way. We certainly can’t take them to some of our best and most exciting customers, right? There are electric car companies that use our stuff that we’d love to take many customers to a factory, or rockets, or whoever, I can’t take many customers into some of your favorite chip companies and say, “Look how they use our stuff”, I can maybe get one or two customers a year into that customer and show them how they use our things. With Formula 1, what we’re building is a mobile EBC, so an executive briefing center. Formula 1 goes around the world. It goes to Melbourne, it goes to Singapore, it goes to Japan, it goes to England, it goes to various parts of Northern Europe, it goes to various parts of America and you’re like, “Hey, where are our customers?” — roughly distributed like that. It comes to town, we can invite a whole lot of customers into a great experience, we can tell them a lot about Atlassian software, we can also invite them into one of our best customers. They can sit in the garage, and I can tell them how our service collection is helping power the assets, that when that wing’s broken, it gets known here, and they start making a new one back in the factory in Oxford, and this one gets shipped around the world and another one will get moved. And, “Here, I can show you the asset management and the service that goes along with it, I can show you how the garage is getting more efficient because of us, I can show you how we’re helping them win races”. We don’t drive cars, we help them be more productive as a team and I can do that in an environment of it’s an exciting environment. They can drink a great latte or a champagne or whatever they want, and I can explain to them how we are transforming this business in a meaningful way with our tools no matter which way they want to look at it, which is the most powerful customer story that you can go and tell a couple-hundred customers a year in their city. We come to their city, right? I was in Montreal, I took a whole bunch of Canadian customers over the three days, they were like, “This changes my view of Atlassian”, and I’m like, “That’s exactly our goal”, that is at the enterprise end of enterprise sales though, right? But that’s the ironic thing, it’s as far away from where you started as you could be. MCB: Well, they didn’t get there. I met two Canadian banks we had in Montreal as an example, both of whom had been customers for over 20 years, they started spending $800 bucks or maybe $4800 as we moved our pricing to around five grand — now they spend a million, two million dollars a year, and they could be spending ten. We have the ability to give the massive business value across a far larger swath of their business. And I can say, “What do you use from our system of work today? What could you use? Let me show you how Williams uses that piece of the system of work”, which is just a very visceral and exciting customer example to show them how they’re winning. And it helps, again, culturally, super aligned. They’re an awesome group of people trying really hard to win in the most ridiculously competitive sport and the highs are highs, the lows are low. Any sporting fan, you’re well familiar with various different sports that we have in common, but this is technology built by a large business team that has to win a sport. That doesn’t happen anywhere else in the sporting world, I would claim. Giannis [Antetokounmpo] doesn’t make his own shoes and have a team of people making better shoes and a better basketball so he can win, that doesn’t happen in other sports. It’s all about the people on the floor in an NBA game as to who wins, and that’s great, don’t get me wrong, I love basketball. The work in Formula 1 is done by 1000 people back in Oxford. It’s a Constructor Championship . MCB: The constructor championship I do think should be more important, especially given the current exact week we’re in, which is an amazing week for Atlassian Williams Racing, second podium . You talk about that bet, I told JV at the start of the year, I thought that he’s like, “What do you think our five-year future is?”, and I said, “Look, I think, number one, we’ll get one podium this year, 2025; 2026, we’ll win a race; and by 2030, we will have won a championship, that is my OKRs [Objectives and Key Results]”, and he said, “Oh, wow, okay, yeah I think so”. It lines up, I know the team OKRs and other things. And we won two podiums this year, so I was wrong, and I think we have a great chance for 2026, and we are working hard to make the team better and the single-best customer example we have of every piece of software that we sell. Mike, I’d love to talk again. It was great talking to you again. And, hey, good luck. And I’m a Williams fan, so I’ll be cheering for you this weekend. MCB: Oh, yeah. Well, I’m not sure this weekend, but 2026, 2027- Okay. I’m kind of kissing up, I am dying for Max [Verstappen] to win is the honest truth. I need the McLarens to run into each other . But other than that, Williams is my second love. MCB: Do you think McLaren will issue team orders to switch them if Oscar is in second and Lando’s in fourth? Yes. And I don’t know what’s going to happen if that happens, and this will be fascinating. MCB: We will have to see. It’s going to be a huge week. But that’s what makes the sport exciting, right? The whole thing is amazing. Talk to you later. MCB: All right. Thanks, man. This Daily Update Interview is also available as a podcast. To receive it in your podcast player, visit Stratechery . The Daily Update is intended for a single recipient, but occasional forwarding is totally fine! If you would like to order multiple subscriptions for your team with a group discount (minimum 5), please contact me directly. Thanks for being a supporter, and have a great day!
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