Recently, Atlassian made a very smart move by acquiring Trello. While $425 million implies a high multiple (given Trello’s revenue run rate was around $10 million last year), I believe it positions Atlassian to become the next big enterprise software company. I project it will reach a $50 billion market cap in 10 years by taking over software for teams. Here are four reasons why:
1. Product-driven culture
I am a long-time user of both Atlassian and Trello’s solutions, and one of the first things I noticed about these companies was that each of them took an entirely product-focused path to expansion. In particular, Atlassian’s rise over the past 15 years came on the strength of products like JIRA and Confluence, which won over developers by being good enough to sell themselves. In fact, the company prides itself on not having traditional sales reps, even though pretty much every other business software company employs an army of them. That’s incredibly impressive given Atlassian’s revenues and customer count. This company lives and dies on building products that work and sell themselves.
Its leadership reflects this product-centric view and is doing a great job building a long-lasting engineering and product culture. I’ve used LinkedIn data to run some numbers about Atlassian’s engineering retention, and computed how long it would take for the company to churn through all of its current software engineers (a “wipeout” period*). It’s currently at an impressive 29 years, which makes Atlassian’s development team more sustainable than those at buzzier companies like LinkedIn, Facebook, Twilio, and Dropbox.
This is probably a big part of the reason the company’s flagship product has become the industry standard, with tens of thousands of customers. With JIRA, Atlassian built a very extensible framework not just for product development but for prioritizing any project task or ticket and for creating automation via triggers and workflows. So much so that companies now use this platform for all types of use cases – at my company, we even use it to support our human resources and recruiting processes. Atlassian repurposed the platform as the foundation for JIRA Service Desk, a newer product that specializes JIRA for customer support and IT teams and is now its fastest growing product line.
Many people don’t realize that Trello has demonstrated the same product acumen as Atlassian. At first glance, some might think of a Trello board as just a “to do” list, but it’s much bigger than that (I’ll expand on this in a moment). The company nailed the details while not bloating the product, delivering key features like checklists, dates, assignments, power-ups (where you can link cards to pull in information from other SaaS systems), progress meters, labels, attachments, and new feeds, etc. With these capabilities, Trello has delivered a near-perfect agile/kanban experience while managing to make its core collaboration tools incredibly simple and intuitive.