Atlassian has blown Australia’s technology sector wide open
Atlassian has practically written the book for tech companies hailing from Down Under which want to reach the global market.
After years of speculation and build up, Atlassian co-founders Mike Cannon-Brookes and Scott Farquhar took the company, which they launched out of university using a credit card to get them rolling, public. In early trade Atlassian stock was up over 30% to $27 a share, after listing at $21. At that level, the company is valued at around $US5.6 billion.
In the words of Cannon-Brookes himself, it’s been a “f**king busy” time. No sh*t. The co-founders have been zig-zagging the globe, embarking on a mammoth investor roadshow to boost the profile of the 13-year-old Australian company that’s incorporated in the UK.
Atlassian’s IPO has been one of the most highly anticipated floats of an Australian tech company, ever. Not just because it’s an awesome notch in the belt for Australian technology but because of the ripple effect big deals like this have in the market.
While Cannon-Brookes and Farquhar have undeservingly copped a little heat from several Australian tech execs for choosing to list outside Australia, the US remains the preferable option: it’s larger and more liquid.
Listing in the US opens up a whole new chapter for Atlassian’s growth. It also opens a raft of opportunity for all the baby Atlassians growing up Down Under.
The Atlassian IPO has sparked discussion around just how mature Australia’s investment market and technology sector actually is. And while the market has a fair amount of growing up to do, Cannon-Brookes and Farquhar can safely say they’ve played a huge part in dragging Australia out of the mine pits by showing them just how profitable technology can be.
The boys have also proven to many US investors that solid technology companies aren’t just established in the Valley. Hailing from remote parts of the world, like Australia or New Zealand, means these companies are forced to solve global problems from day one. If they don’t, they risk limiting their serviceable market from the outset. So you see, it ain’t that bad starting in little ol’ Australia, it can drive you to build a better solution which works in a larger market.
This isn’t blue sky thinking either. New Zealand’s Xero (disclosure: the cloud accounting company employs me) has more than half-a-million subscribers around the world, Campaign Monitor has more than 150,000 companies using its email platform and Atlassian has over 50,000.
Those customer numbers compare well to the next generation of US based cloud leaders such as customer service company Zendesk which has just over 64,000 users, or to MindBody which has 50,000 and Hubspot which has over 15,000.
The Australian tech jewels are just getting started in the US, they’re small fish with a bunch of big potential. It shows starting outside the Valley, where you can iron out those early-day problems without facing as heavy scrutiny, can be an advantage. Being a tech savvy, English speaking country makes Australia a great testing ground — a point being supported by many of the global tech companies, including Google, Apple, Square, Hubspot and Dropbox, setting up beach heads Down Under.
The issue is, for Australia to rise up out of its commodity-heavy rut, it needs hundreds of Atlassians. Prime Minister Malcolm Turnbull’s recent $1.1 billion innovation package lays some of the ground work to promote the development of early-stage startups but there’s much more to do. What’s still missing is an incentive structure to increase later stage funding so the later stage Atlassians can find a home in Australia.
Good ideas will get funding. You can’t stress that point too much. We’re seeing more Valley money finding its way to all corners of the globe. It’s an opportunity that’s seen companies like Atlassian, Campaign Monitor, Nitro, Invoice2Go and Xero, which is already public, have all managed to seize.
By having access to that capital, these companies have been able to enter hyper-growth, invest in product development, customer acquisition and hustle for leadership position in their markets, right around the world.
Atlassian’s US success has opened Australia up to more sophisticated global technology investors and paved the way for other technology companies to expand globally.
A rising tide raises all boats.