The Australian company posted $320 million in sales last year, using sophisticated online advertising and positive word-of-mouth but no sales staff.
With $320 million in sales last year, you would think the Australian software developer Atlassian would have a large global sales staff.
Think again
Instead, the company that makes the popular chat and project-management apps HipChat and JIRA relies on sophisticated online advertising and positive word-of-mouth sell its products.
“Customers don’t want to call a sales person if they don’t have to. They would much rather be able to find answers on the website,” Scott Farquhar, co-chief executive officer of Atlassian, said.
Atlassian, valued at more than $5 billion when it went public last year, is leading the way in new software sales practices that emphasize offering free trials or free basic versions of software that the companies promote online.
To attract smaller clients
Even companies with large sales staffs – IBM, Oracle and Hewlett Packard, for example – are acquiring cloud or open source companies that sell differently, according to Laurie Wurster, an analyst at Gartner.
Meanwhile, newcomers such as GitHub, Dropbox and Slack try to attract smaller clients whose positive reviews will build interest among larger ones.
While sales and marketing account for only one-fifth of Atlassian’s budget (compared to 60% at Marketo and 80% at Box), more than 80 Fortune 100 companies now use its products.
Its 51,000 customers include Verizon, Cisco and NASA, which used Atlassian products on the Mars Rover.
Founded in 2002 by Faquhar and Mike Cannon-Brookes, Sydney-based Atlassian now has 1,400 employees in six locations.
To build great things
The company’s first product, JIRA, “proved that if you make a great piece of software, price it right, and make it available to anyone to download from the internet, teams will come. And they’ll build great things with it. And they’ll tell two friends, and so on, and so on,” the founders said.
The novel sales model grew from the fact that Farquhar and Cannon-Brookes didn’t know anything about selling business software when they started the company while completing IT degrees at the University of New South Wales.
A turning point came a few months after they launched when an $800 order from a major airline came in. An airline IT worker had downloaded and configured the Atlassian software without the company’s help. That gave them confidence that they didn’t need a dedicated sales staff.
Now, the company, which is expected to earn $450 million in revenue this year, can turn the savings on sales into lower prices and more investment in research and development as it seeks to make its products easier to try and purchase.
Farquhar said he is satisfied with steady growth, rather than a boost the company might get with more aggressive sales tactics.
No conventional wisdom
Not everyone agrees. Peter Levine, a partner in the venture firm Andreessen Horowitz, said with a sales organization, revenue grows much faster than costs.
But the Atlassian founders have chosen not to accept the conventional wisdom. Started with their credit cards, the founders did not have investors to answer to until it went public last fall, raising nearly $500 million.
Until recently, the company focused on building applications for desktops because it saw web developers as its prime customers. JIRA, for example, can be used to flag software bugs that members of a development team need to work on.
A more expansive view of potential customers emerged last fall after the actress Jessica Alba, speaking at Salesforce’s Dreamforce conference, said: “I don’t know how to code. But I can open a ticket on JIRA.”
A potentially large opportunity for JIRA
The company launched three different versions of JIRA aimed at three different audiences, all with about the same technology but using different language and fields to reflect whether users are developers, IT help desks, or users like Alba who want to use the software for non-programming tasks.
Next up? The legal department represents a potentially large opportunity for JIRA as an effective way for attorneys to track details and issues in their cases. Many legal departments use email, according to company president Jay Simons, meaning it is often unclear who is working on what and how long it is taking.
Atlassian also developed a JIRA app for mobile.
“If Jessica Alba is submitting a ticket, I assume she wants to do it on mobile,” Cameron Deatsch, the company’s head of growth, said.