Flywheelin’: 10 Learnings from Atlassian’s CRO, Cameron Deatsch, on Its Unique GTM Model

Thank you for the introduction. Welcome everyone. Thanks for joining. I'll try and make this a useful use of your time in the next 45 minutes or so. I'm the CRO at a company called Atlassian. I'll talk about Atlassian a little bit more in a bit, but I feel incredibly lucky that I get the chance to speak here with all of you as well as I feel incredibly lucky to be part of this great company at Atlassian. Today I plan to share with you just a few things we've learned over the years at Atlassian on how we have built, maintain and continue to accelerate our flywheel. And hopefully you'll take a few along the way. But I want to kick off of what is the most important part of having a flywheel business and it is this sleep. This is my actual sleep tracking from my Garmin watch on the last week of our previous financial quarter. And as CRO most people I speak with, this is fairly abnormal that you would sleep so well on the last week of any quarter. And the reality is there's two reasons why this happened. One is I knew pretty much around the fifth or sixth week of the quarter whether we were going to hit our numbers or not. But more importantly, there's really nothing we can do in a flywheel business in the last week of quarter to really significantly affect the outcome of that quarter itself. Which means that in the end of the quarter we're quite relaxed and we're allowed to focus a little bit further down the road. Give a quick background on Atlassian. Many of you may know us from our products, Jira software Confluence, Trello, OpsGenie. We have over 16 products in our portfolio today. We've been in business since 2002. We're north of $2 billion in revenue and annual revenue. We're an Australian company where our founders and co CEOs are based out of Sydney, Australia. But we are a global organization. We have over 6,000 employees worldwide today and we've been public for about four years. One key element of the Atlassian model that really stands out, which is due to our flywheel model, but also supports our flywheel model, is this slide right here. One key element that makes Atlassian unique is that we spend more on R and D as a percentage of revenue and less on sales and marketing than any of our peers, largely in the enterprise software space. And the reason for that is quite simple. If we want a flywheel where we can keep sales and marketing constraints down and R and D up, we want to be able to build the best products at the lowest cost. And if we can do that, we can keep our transactional costs down and keep our volume up and thus progress the flywheel. Now, it's very nice to have this chart very much harder to actually make it happen in real life. And today I want to show a few slides about how we actually make that work. So let's get into the meat of this thing. I have 10 key learnings that I hope you could use to change your businesses. I also want to just preface all this is when I come through these sections it's going to seem like this is very simple, like, oh yeah, we should just go do this. And I tried to simplify these concepts down as much as possible, but please know that they are not simple. Every single thing in this deck was fraught with frustration and debate and execution issues and constant questioning within our teams. And we still question these tactics today. And we are far from perfect. The other thing I also want to call out is many of the things that I'm about to share really come from the nature of Atlassian's products and how they are adopted. We're a teamwork and team collaboration company, meaning that we can start bottoms up in a single team within a business. We do not actually require at the outset a top down mandate or a standardization of wall to wall. We can land in small pockets and expand over a long period of time. That's harder if you're say running an HR management system or you are trying to build a CRM where it has to be used wall to wall. So that's just a nature of Atlassian products. The last piece I want to call out here is that this model is all about driving steady, consistent growth over many, many years. So if you're expecting to try and turn a flywheel to all of a sudden drive triple digit growth over and over and over again, this model actually require a little bit more patience than that. But if you do it right, it does pay massive dividends. So let's jump in guidance number one, we'll call it rule number one here. Just let your customers buy your products. Like I am constantly amazed at how many software providers of technology that I'll go out, I'll visit their sites, I'll look around and how hard it actually seems to be or how hard we make it for people to actually buy your product. You know, on the Atlassian site you can see right atlassian.com, we have a nice buy now button at the top of our page that gets a ton of clicks there's just plenty of people that want to simply come to your site. They have money in hand, they know what they want from you and they want to buy. And for whatever reason, I'll go into a second, people will, you know, we bury that in our products. And I challenge each and every one of you to basically go to your own personal website with credit card in hand and see how long it actually takes before you can actually transact, before your company actually takes money and charges your credit card. Is it a couple minutes? Is it a couple of days? Is it stepped behind a trial? Do you have to talk to someone? I see there's two primary causes of why companies don't lead with just making it simple to buy. One is you may have started your early days reliant on a sales team. Part of nature is okay, we build our products, we sell our products, the sales team takes care of the selling. And, and you have humans who are manually quoting or processing orders and doing those transactions. And because you always have people there to engage in that part of the process, you never actually make the investment to automate it or make it a self serve experience. And that happens all the time. Challenge there of course is you want to double the amount of sales you're doing, you got to double the amount of salespeople you have. And that's not always the right answer. The second, and I see this more and more in, in the software world is to be perfectly honest, purchasing systems quote to cash systems. The integrations of your products with your provisioning, with your quoting and billing systems is not just hard, but it's really boring. And I've never really met an innovative tech founder or a product manager or a set of engineers that just get up in the morning and say like you know what, let's go automate and optimize our onboarding commerce systems. It just isn't really exciting work. And because it's not exciting, it doesn't get the energy, it's left to rot. Or you actually never invest in that automation of the purchasing experience. But I'm telling you like it will pay dividends the easier to make it to actually buy your products. So just get out of your users ways and just let them pay. Okay, next piece. Pricing. Price for volume and price for consistency. Any flywheel business model requires volume. If you're doing two to three transactions a month, you don't have a flywheel period. Atlassian acquired 17,000 new customers last quarter alone. That is what feeds the flywheel long term. Now there's two Pieces of the pricing piece here. First off, you need to price, especially in the early days of your products, your price where there is no question around the value you're delivering compared to the price you are charging. You want that price value ratio way off. Where the customers go, that is a bargain. No problem whatsoever. Atlassian started its business 2002 selling the licenses for $800. 2009 they released starter licenses where it was $10 for 10 users. 2012, when I started the company, you could buy an unlimited license of JIRA unlimited usage for $8,000 with a $4,000 renewal. Okay. And that was the company had been in business for 10 years. Even now we offer free usage for our products for up to 10 users and then we start charging at the 11th. What this has allowed us to do is over multiple years, seed the usage of our products across the market and still grow, but have high volume amount of that growth. The of course we could have charged earlier on, but we realize that that flywheel, that customer adoption is what would feed the business long term. And I'll tell you, if you hire external pricing firms or have a pricing specialist come in or just any sort of pricing expert, it's going to be the antithesis of what they will recommend. Any pricing firm is going to do some sort of price elasticity demand curve where you're optimizing revenue and volume based off of where that falls on that curve. Which is fine if your short term goals are about maximizing revenue. But if your goal is actually about building a flywheel business, you actually have to change that price value ratio and keep your costs down as low as you can, knowing that if you're patient for that revenue, you can grow that customer base over a long period of time. So that's about how you set your prices. The next part, equally important, is around being consistent. And when I mean being consistent, it means everyone gets the same price. There's two pieces to this. At Atlassian, we have no discount authority within our sales teams or customer facing functions. The reason for that is quite simple. When you take discount authority off of any individual's hands, you eliminate the time it takes to do a pricing negotiation. If you eliminate price negotiation timing, things will transact faster. Customers just know they're getting the best price. The bigger reason why this makes sense is that when everyone gets the same price, everyone gets the best price. And customers realize that so they don't have to work around, go look around and try and call around or see if they can get a better deal somewhere they can't it's always going to be the same price. I'll tell you right now. Procurement teams at your customers will hate this, you know what I mean? They're bonused and targeted about what type of discounts they get. But after a while, after you get through those first few transactions, they realize we're simply not going to get a discount or some sort of custom deal for our organization and the transactions become much quicker after that. It's a very hard thing to implement and requires a lot of diligence within your organization. But once again we'll pay you off in volume. Okay, third one treat human interaction as a bug, which is a very interesting thing to say and probably counter to the most advice that you would get for your organizations. Most advice is stay as close as you can to your customers, really understand your customers deeply, engage with them, ask questions, understand their pains so that you can build a better product or market your products more correctly. And I'm not discounting any of that. You have to understand your customers in order to build your products and take them to market correctly. What I'm calling out here is within the customer engagement across your go to market across your customer engagement when they're trying to try your products, purchase your products or what have you. What part of that process does it require someone to speak with someone or why are they asking questions? Are they not clear on your pricing? Well, what about your pricing on your website is unclear. Are they unclear about how to be successful with a onboarding into your product? Well, have you not set up onboarding your product correctly or is it more technical than that? Maybe they're trying to do some integrations? How do they build an integration with another provider of technology? Or how do your APIs work? Are you writing the correct documentation there? Or even take that to the next level at last seen as many of you know, we're very much we provide a lot of products around Agile project management and Agile collaboration and we could build the best products in the world to enable Agile, but that alone will actually not enable the team to become more agile. That's all about practices and culture and how you behave. What we try and do there is can we provide a ton of that information for free on our websites like our Agile Coach site that you see right here where we have tons of content completely free, not gated anyone can use it. That basically teaches regardless of what products you use, how to become more agile. Now someone could read all this and use one of our competitors products. That's perfectly fine. That's not what we're optimizing for. What we're optimizing for is getting out of our customers way and let them serve themselves. And that is another piece that drives the flywheel. The other great thing of this type of content is there's massive SEO benefits as well, where this becomes a natural brand extension as well as entry level to our overall funnel of our products. Okay, number four, call it making some friends. This is basically building a partner channel. When we talk about making friends, I and the channel itself, especially early days in the company where you're at, I just want to say is it sucks and like, and I love Atlassian solution partners. If any of you are in the Atlassian ecosystem, it's great. But what I'm telling you as a business decision maker, bringing in a channel is really, really hard. And that's for two reasons. One is when you delegate the authority of the or that customer relationship, that customer interaction to a partner, you are basically giving up control of how your products are represented to a third party. You are trusting them that they're going to stay aligned with how to represent your products, how to implement your products correctly, how to message your products and as much enablement and training and content and programs that you have in place. The reality is they're a third party, they're a partner. They don't work for you. So they can, you know, some they can do their own thing sometimes and it requires a lot of trust and reinforcement for those partners and you lose that direct relationship with the customer, which can introduce risk. And especially in the early days, man, that customer relationship is a very, very important thing that you want to maintain and own and grow over a period of time. The second part about introducing a channel is you'll make less money. You know, most partner programs that I'm aware of, you know, is largely when partners are reselling your products, they're taking a portion of that product sale as part of their own profit margin, reducing your overall ASP that you take home. So there is a real cost associated with the channel. However, what you get well outweighs that cost. One is if you do it right, you get massive scale. When I say massive scale, it took us many years, but atlassian has over 2000 certified individuals out there in market that can not only resell our products, but represent our products, are trained and have been certified. It gives us just feet on the street around the globe that yes, we invest in, but actually doesn't cost us from an operating budget perspective. It's a huge, huge accelerator of Our entire flywheel. The second piece and more important is it allows you to focus on your core competencies. At Atlassian, our core competency is building great software and bringing that to our customers. So deep things like lots of deep in person training or customizations or implementation or any sort of custom services work is outside of our core competency. We have this giant network of partners that can come in there and do that work for us. Of course this doesn't happen overnight. This took a long time before we got the hundreds of partners we have today. One thing I'd also like to just throw out there, especially if you're a smaller organization, is to be very cautious in the early days around spending too much time and energy on the global systems integrators. Now Atlassian has been in business for 20 years. We're very sizable now and we do have great relationships with those large firms. But, but I'll tell you that did not start that way. In fact, I would point you to the smaller types of firms, the organizations where they are making the significant commitment to your company's success that you are kind of tied at the hook. Your success is their success and you're dependent on one another is those situations where we have seen our best partners thrive over the years. And it's actually one of the things that we're most excited about Atlassian is that not only has Atlassian been successful, but we built this great ecosystem around our product lines where many different businesses have thrived in partnership with us. So really try and find those key partners that want to grow and honestly take a bet on you and you can take a bet on them in return. Okay, number five, grow more expansion levers. Now the lifeblood to any flywheel business is your new customers. Right? You need to get new customers in the door so you can land them. Now you'll land them pretty low cost if you keep your prices correctly, you know, but it and you to keep those coming in. So always look at your new customer numbers, but all of your revenue, especially your short term revenue, will come from expanding those customers. So the bulk of Atlassian's revenue has nothing to do with the customers we acquired this year. It's about all the customers that have been with us for 2, 3, 5, 10 years and how we continue to expand our footprint within those accounts. This the one thing that I see many times, especially with single product companies is the pretty standard, standard pricing mechanisms where you have a user, you know, some sort of consumption based pricing model, whether that's users or you know, whatever Just the more user product we're going to charge. And then you have an additions approach where you'll have like your Basic and your, you know, Premium and your enterprise editions that unlock more capabilities. And that's great. That's how many, many companies operate out there today. But if you look at all the biggest companies in the world, especially in software, they're all multi product companies. Atlassian is no different. Atlassian actually within the first couple years of existence built its second product. Jira was our first, Confluence was our second. And since then we have always expanded our product portfolio either through acquisition or through organic development. And like I said, atlassian has over 16 different products in our portfolio today. That has always allowed us another expansion vector to go not just up in our portfolio or up in usage and additions, but also out across more and more use cases. We've complemented that with our Marketplace. Atlassian has a massive ecosystem of Marketplace apps. We have over 3,000 apps in our marketplace and we've done over a billion dollars in transactions through that marketplace. Now once again, that marketplace wouldn't exist if we didn't have the massive customer base and the product strategy to support it. But it is another incredible expansion vector for us in that we can sell them more of our products, but also we have these thousands of other incremental products that add even more value to our customer base and we get a percentage of that overall sale. In addition to that we built new platform capabilities. These are new products that we charge for that provide cross product value. Like enterprise identity management where we can manage all of your Atlassian products through a single interface. We call that product Microsoft, call that access. And then of course we have things like technical account managers, deep dive training sessions and other service related items. I'll tell you like as the CRO at Atlassian, all these different expansion vectors is actually one of the most difficult parts of my job because we have so many different things, so many different directions. We can take any customer down, down as their next step, add users, upgrade additions, buy a different product, check out these Marketplace apps. Balancing all of that while providing a clear message to our customers is really, really hard. The benefit on the other hand is we are never short of ideas about how to drive more promotions and more growth with our existing customers. And in fact the biggest challenge is we have too many things that we want to continue to get our customers to go do. So a lot of the exercises, ensuring that we are using math and strategy and the campaigns correctly to offer the next correct solution at the right time. To our customers. So please, as you think about growing out your portfolio, think about growing up just your business in general and your flywheel. Think, think about your expansion levers and what other expansion levers you can build into your business. Okay, number six, build a community. And I have to show my friend here, Jeff Tillett. Jeff here is wearing a JIRA T shirt, an Atlassian certified fleece, and behind him in his office are not his diplomas. Those are framed certifications of Atlassian products that Jeff has gone through. Okay, yeah, this is, you know, and guess what? Jeff doesn't work for Atlassian. Jeff is actually one of our customers. He's a very, very vocal customer. He's an active member of our community. As you can tell you, he's a big part of his career was what part of his success was adopting and bringing in Atlassian products into his organization. And believe me, Jeff is as much a champion to our company as he is an honest feedback. And Jeff has given me plenty of honest feedback over the last few months and years. And it's something like all that feedback means even more because you can tell how committed someone like Jeff is to Atlassian. And it's a gift to get that feedback from someone like Jeff. Because when we have someone like Jeff and the thousands of other community members like Jeff out there in the industry, they are our best brand ambassadors, they are our best salespeople. They are what our business thrives on. And I cannot tell you how valuable it is to have people like Jeff and the rest of the Atlassian community supporting Atlassian. Also, I'll tell you this, there's nothing better than jumping on a call with a customer, even if they're not happy and that customer's wearing your company swag, it's just a great experience. Now, I'm not here to tell you how to build a community. That would be a whole separate 45 minute session in of itself. What I can tell you is two things. One, you'll never be able to sit down and build a business case with a strong ROI that justifies your community. It's not that simple. It's not like paying for performance marketing budget or hiring more salespeople, or investing in a channel where you can start doing math and estimations and assumptions. It doesn't work that way with your community in it. You have to basically have faith that if we invest in our users and our customers and we allow them to have a voice, to connect with one another, to take care of them, to listen to them, to give them a voice within your broader organization that that will pay dividends in network effects and communication with other people in channel and brand and so on. But that's faith. It requires trust as part and you have to figure out with your companies how much time and energy you want to carve off to make your community successful. The second part of the being community successful is don't just think you can hire a community person on your marketing team and the community will happen. That is like the last thing will happen. Community really acquires a culture, a culture within your organization that truly trusts and engages and supports the community as a whole. Access to your product teams, access to your leaders. Ensure that those community members have. You'll feel like their voice is heard within your organization and that they're seeing engagement. If you try and delegate that off to just a single individual in your company, you will fail. And thank you, Jeff, if you're listening to this for your great photo here, I really appreciate it. Okay, number seven, probably my favorite out of all this, don't fall for the enterprise trap. And if you give me a second, I'd like to tell a story and maybe this will resonate with many of you out there. So imagine it's earliest days for your business. You're not full startup mode, but you have a product, you have a repeatable sales process, you might have raised a little money, you're starting to scale out your overall go to market. You have some salespeople, you have some marketing. Let's just say you're getting a good amount of transactions and business is good and you're looking across and you have an asp of say $10,000. And your nice, robust, unique inside sales organization, your marketing teams, they're just humming. And these $10,000 transactions are coming in pretty consistently. Then out of nowhere, one of your reps does a $300,000 deal with Giant banco name or giant telco. Right? Huge deep pocketed enterprise company. And everyone goes, whoa. Your exec team just gets all really excited. Oh wow, like we're really going into the enterprise hard here. Your board comes in and says, well, you do 300k deals and naturally everyone immediately stops and says, well wait a minute, that took us about the same time amount of energy to get that $300,000 deal as it takes for us to get those $10,000 deals. How do we do more of that? Which makes sense like we should. Those are big deals. Like we do the same amount of work, make more money. Pretty simple. So the first thing you do, ooh, we gotta go hire an enterprise sales leader, okay, or you promote someone to, hey, you're the enterprise sales leader. And that person goes, talks and does research and learns a whole bunch. And that enterprise sales leader comes in and says, you know what? Based off of my knowledge and my experience looking across, you know, the market and talking to customers, I don't think we have our pricing completely figured out. So let's take the pricing off the website and, you know, put in a nice contact us button or at least in the enterprise edition, like let's, let's have a conversation with our customers without having all of the pricing up on the website. Also, in addition to that, now that we've got the pricing up the website, so we can have more control of that conversation. These big enterprise customers, they don't just go try and buy software. That's not how enterprise companies work. What they want is they have RFP processes and business process analysts and CIOs need to sign off. And again, they have procurement departments. What we really need to start doing is building content that, you know, that really goes after, you know, makes those people comfortable with our companies. So now your marketing team starts taking people off of optimizing your website experience and your trial experience and your personal experience. And you start writing white papers and you start writing content for those big enterprise customers. In fact, they start spending time on like lead scoring machines and enterprise demand gen. And all of a sudden your marketing organization has gone from, you know, a team that does nothing but get people in the door into your product as quickly as possible to a team that generates leads. And those are two very different things. Now what has happened, all of a sudden you turn around and 80% of your revenue is coming in the last week of the quarter. You have the giant hockey stick, you're up late at night, and that one deal that slips to the next quarter means you missed your entire quarter. Now, I probably just kind of laid out the worst case scenario, but it's so easy to happen just through a logical set of steps. Now, I'm not saying you shouldn't focus on your enterprise customers. You absolutely should. And so does Atlassian. Yep. And we do many of those things that I just spoke about. But if you want to have a flywheel business, you have to have balance here. You cannot completely go all the way down that enterprise, you know, that enterprise path at the expense of your flywheel business. Always make sure your fly flywheel business is funded first, is focused first, that your metrics are there first, and then you will have more and more chances to increase your overall enterprise adoption and drive balance across both. Okay. But it's very, very easy to go all enterprise. And believe me, once you go down that path, where your entire revenue model is based around large enterprise transactions, it's nearly impossible to go the other way and to build a flywheel again. Okay, number eight, think global. Think, but beware of local. So you might see a consistent theme in everything I'm saying here today. And this theme is with flywheel, everything is about scale. It's everything about volume and velocity and everything you do. And going international, going global won't get any more scale than that. Right. That's what audience are we going after? We're going after the world. Okay. There's no more scale than that. But just like my previous enterprise example, you have to approach this with balance. Let me just go through another story here. Let's say you want to go into a new market. I will use, let's say you're just really North America based and you want us to go into Europe and you're like, you're looking across Europe. We really need, we don't have any real customers in Germany. Let's attack the German market. Okay, now I'm using Germany as an example here. Like, but it could largely be used for anything. Right. So what do you do? You hire someone who's an expert in that market. This might be a channel person, a biz dev person, a salesperson, maybe a marketing person. Right. You're just, you're just figuring out what an international marketing team would look like. And that person comes back and has some conversations and they, first thing, they come back and you're like, you know what, that content up on our website that was written by that 24 year old product marketer that lives in San Francisco. Yeah. Like that's not resonating with the very serious German buyer. What we need to do is have some new content that will resonate better with this market because it's a little too loosey goosey. That doesn't seem very professional. Let's create a different set of web pages and content for the German buyer within this market. Also, by the way, no one in Germany reads TechCrunch, so we gotta have our own local press and PR. So let's go hire a PR firm just for the German market. Yeah. And actually, you know what, the German market is very conservative. And honestly, where our products are, the market category is it's at a different level of maturity than out in the Americas. So that means our pricing needs to be thought of differently. So you know, let's come up with some unique pricing. If not pricing, at least promotions or discounts for the German market just so we can get this wheel the ball rolling in this market and then customer engagement. Yeah, I know that self service try and buy experience you're trying to build in the company. That stuff's great, that stuff looks great. But you know, the German market is different. That's not how it works. Everyone wants to kind of look you in the eye and shake your hand before they really try your software.

Right.

Like that's not going to be a self serve experience. So let's make sure that every single person that comes to our website, the first thing we're doing is trying to offer a sales engagement or someone to talk to. You keep going down that path over a period of months or even years and what will have happened is you have recreated your entire go to market organization as a bespoke organization in every market you're trying to compete in, which sometimes works. But what happens is you've lost all scale, synergy and efficiency in your go to market organization that a central organization provides. Now this can happen and you can make this work, but there's a ton of overhead involved keeping all of these teams aligned to the broader message and strategy as each individual local region is trying to do effectively their own thing to maximize in those individual regions. Now once again, Atlassian does plenty of localized marketing, we do plenty of it and we have plenty of people spread across the world. But what we try and do is to have global campaigns and global programs as the rule and local separate things as the exception.

Right.

And we have a high bar for what we do unique within markets and it better prove that it actually is accelerating business in that local market. In addition to this backup to our channel, we lean heavily on our local solution partners to do a lot of the heavy lifting for what is happening required in those local markets, allowing us to worry about scale and velocity at the corporate level. Okay, two more Number nine, usage trumps all other metrics in your business. Now, Atlassian's big hairy, audacious goal is to get to 100 million monthly active users. Our goal is that every single person that works on a team across the globe, when they wake up in the morning, they're using a Atlassian product or multiple Atlassian products to get work done with their team. And all of our top level metrics, the things that Mike and Scott look at our CEOs, the rest of our exec team always consistently look at before we look at bookings before we look at customer numbers. Any of those is we're looking at usage and adoption metrics because we know if people are using our products and growing their usage of our products, we're delivering value to those users. And if we're delivering value, then we have the right to ask for money, which allows us to grow our business. Now, it's very easy to get this balance wrong. And you have to have some sort of gate on the usage of your products there where people need to start paying. And that's different for every company. But the reality is if you don't have some sort of paywall on your products, then you won't be able to invest in your company very long. Thus you won't be able to make your products better. Thus people won't use your products anymore. I think everyone understands that. But where you set that, you know, is always a balancing act because anytime you start needing to charge for the usage of your products, you're going to slow down the adoption of your products. And that's a balancing act across all of your products that's unique to your market, unique to your buyer, unique to the category of software that you're in. But there's plenty of great models out there. Whether you're trial based, freemium based, usage based, there's a million different ways. And I would ask each and every one of you to try and be as flexible as possible as you're trying to figure out your usage and paywalls across your organization. The more flexible you are and the more open you are to new ideas, the more things will pay off. The other part here is when it comes to packaging and pricing and even delivering new features and why usage is the North Stars, you got to be really afraid of things like shelfware or bloated feature sets, right? If things, if you're selling and charging customers for features, capabilities, or products that they are not using, that will come and pay, you will pay for that eventually in the next renewal and the next pricing negotiation, whatever discussion. So always look to those use and metrics first and foremost, okay? And last, last, not least, reinforce everything you do with your company values. And I'm sure you're like, what? Like, this is a, you know, this is a sales and marketing presentation about go to market and flywheels. What does this have to do with your company values? And I want to go back to where I started here. Whereas, like everything I just mentioned across these 10 are very hard, like, not none of what I just said is easy to do. To, to fund, to prioritize and to execute. And there will be hard trade offs with imperfect data, no perfect answers, tons of ambiguity, and lots and lots of judgment calls. And as you grow, that just gets harder and harder as you try and scale your organization. The only way you survive as a company and continue to push that ball down the court to continue to reconcile these differences and this ambiguity in your organization is if you have a strong set of principles or values that help guide those decisions. And Atlassian, this is something that we live by all the time when it comes to these hard trade offs that we need to make or these places where we have imperfect data and we need to make a judgment call. Our values provide not only a framework to help us make those decisions, but more importantly a framework for how we work together and what we hold most important. With the right values in place, you know a flywheel business is possible for your organization and hopefully you too can sleep as well as I do one day. So with that, I really appreciate that you sat and listened to me for the last 35 minutes. I will stop sharing and we can open up for questions.

Wonderful. Cameron, that was amazing. Loved all the examples and the stories that you shared. It was really great to kind of get a peek into Atlassian and how you guys do it and hear some of your tips and tricks. So happy to open it up to questions. Please drop your questions in the chat. We've got about 20 minutes to get to questions, so we should be able to get through plenty. Kristin, if you want to kick things off raising your hand, please feel free. Yeah, I'm not shy. Thank you so much. This was really, really interesting to hear your story and I think one of the things that you talked about that resonated a lot with me and things that we're working on at fullstory is sort of that challenging balance between the enterprise motion and the sort of flywheel motion that yes, my team, I lead marketing and my team definitely is trying to span. I'm curious as to any specific tactics you use to either protect your flywheel motion from the enterprise structure. Teams, incentives. What are some of the things that you did to say, hey, here's how we're going to work on that very tough balance.

Yeah. And one good part of it is when I started the company, the company was 10 years old, 2012. It was an Atlassian's DNA that we simply in the business model 10 years in is that we never really had built a big enterprise muscle and had kept go to market financially constrained where we really couldn't even afford salespeople to go after it. And Mike and Scott being, we were able to grow and so it was in our DNA to actually not even really worry about that that much. The tricky part that brought us into enterprises, these large companies started standardizing on our products without us really even knowing it. And it became a big set of technical needs that we had to go solve and then we built that muscle. Now today, let me tell you, like nine years later, it's much different. And what I and what I try and do is show this is I have to balance our SMB flywheel motion with our enterprise motion. And I put that very clearly in that I have two leaders in my so I have sales, marketing, customer success and support. But I have a head of enterprise and I have a head of SMB and these people are peers in the organization. In addition to that, my CMO owns the new customer number and that's priority number one. The new customer number gets resourcing funding focus before anyone else. Which always puts that, like I said, to feed that flywheel you need the new customers coming in. If that starts slowing down, yeah, it's not going to hurt us this year, but maybe the year after definitely three years from now. So always making sure that's the first priority and then the next piece is what I try to do is expose to everyone and once again it's hard is how much funding from a headcount program budget and just like kind of okrs and structure how much we are actually putting against each of these and being very clear with everyone of my total budget across these things. Here's how much that I consciously think in enterprise here how much I'm thinking in SMB and or in the flywheel in general. We shouldn't say flywheels SMB. There's plenty of flywheel motion that drives enterprise customer behavior. So like it's hard but to be very clear that we keep that funding balanced and if we balance the funding it will balance our outcomes.

Super. So it's in the mix. Cameron, thank you so much. I really appreciate it.

My pleasure. Thank you.

Kristen, a couple more questions coming through so I'm just going to fire away. Cameron, you have a land and expand model for customer acquisition and product development. Atlassian. What does that mean?

As I said, the whole basic goal here is to get as many customers to try our products, to automate that first purchase or to basically get that try experience into a small transaction as small as possible. Our view is can we eliminate any barrier between a Potential new customer and them seeing value in our products, can we make that as quick as possible at the least amount of commitment on their end and can we be very, very patient about extracting value or revenue from those customer interactions? Meaning that even let's say just a very, very large company that doesn't use Atlassian, let's say just giant bank that might not be using Atlassian products today, they come in, knock on our door, start trying our products. We don't immediately throw a big sales team at them or even to our channel like we, our goal is to start with a $10 transaction with them or a $20 transaction and only after a certain amount of years in growth organically that we'll add more and more expensive resources to go grow that account. So as I said, that's, that's what this whole system runs off of the expand piece I also covered, which is basically really understanding once I've landed a customer in a small transaction, what are the different tactics, strategies I can implement to grow that customer over a long period of time beyond just usage of that product itself.

Awesome.

Thank you. And I keep going down the list here, lots coming through. Last year you announced your eol, your server products. Can you share more about this decision and why you chose to invest in the cloud?

Sweet. Someone got someone's in the Atlassian world here. Okay. Atlassian has been in business for 20 years. We started our business, you know, ship in bits, we sent, we called it our server product lines where our customers took our software, managed it on their own hardware. Of course. Over the last 20 years much has changed in our industry where the reality is cloud or as Atlassian software as a service has largely become the standard deployment across the industry. It's where all the new competitors are, it's all where the new capability innovation is being delivered in the market. And we learned, you know, we knew even a decade ago that cloud is what is going to be maintain where we're going to be able deliver the best experience for our customers and maintain our competitive differentiation long term. Now of course we had a large portion of on premise customers, and we still do today, that we need to basically get to adopt our cloud over a period of time. Now this decision that was just mentioned here is that last October we announced to all of our customers that we would cease new sales of our server products and that we would continue to allow them to renew their support of those products for the next three and a half years, which we believe is plenty of time for those customers to realize and hopefully Understand that our cloud is the right solution for them and that they can migrate there or alternatively just everyone needs to be clear is that we do have another on premises version of our products that we call Data center, largely built for our larger enterprise customers. But if that, if our cloud is still not available three years from now, there is an on premises option for those customers to move to if they like. I'll tell you now that we're about, you know, seven, eight months this message. Well, it's hard. Like I don't underestimate, like whenever you take away the option of a customer, you know, and force them to make a decision, it's rough. But we're there for those customers. We meet with them every, you know, if you're willing to. I'm happy to talk to any customer who's going through this decision and we provided plenty of time, plenty of options and lots of financial subsidies for them to make this decision if they decide to move to Atlassian Cloud. And I'll tell you, most of those customers when they move to the cloud are happier that they did. Love it.

You've got a lot of comments here in the chat. We have people from North Carolina, from Scotland, from India, anyone brave enough to.

Come on video and ask a question.

South Africa, Brazil. We'd love to see you guys if you have any questions. Seattle, Austin, San Francisco, Wisconsin, Miami. Oh my gosh. Big full story. Fans love it. Improving time to value. So key One of the things I struggle about Flywheel model has to do with identifying what to pull off or adjust in your product to create something that can be sold via Flywheel. This is not a question, more just a comment. Brian. Here we go.

Brian. Brian's I would be shy.

Hey, I haven't really formulated the question, but maybe I can talk through the use case. So I've run finance and ops for half a dozen startups over the years. Ansible Ankor Code climate at tidelift. A lot of these are tools targeted at software engineering teams, often larger software engineering teams and helping them manage deployments, orchestrations, code quality, things of that nature. I've seen a lot of these businesses struggle when it comes to, okay, we have this enterprise thing, we can sell it in 200,000 or $300,000 ARR quantities. How do we take this and create a Flywheel version, something that we can sell on a single user basis that's not totally like an open source version but like a single user where you can sign up with a credit card. And I've seen a lot of wasted Engineering time trying to make that transition. So I don't really have a question. It's just like something that I've seen product and engineering teams struggle with.

Yeah. And I sort of COVID this and I've talked to plenty of customers too. They're like hey, there are plenty of other software vendors who are like hey, you should go talk to those Atlassian people because they really got this flywheel and that kind of start picking it apart. I'm like it sounds like your entire business model is around selling $200,000 things. And it's really hard to change a $200,000 and business model product strategy into, you know, $1,000 thing. My without having all the answers. The first part is probably that $200,000 thing is a fairly complex offering, complex solution, multi month deployment, what have you. And I would look to what is the most crisp, you know, concept, the smallest set of features within that that can be compartmentalized, that can deliver some value for a dev team. Now I've never met a dev team that is afraid of new tools and generally every dev team wants the net like the next 10,000 new tools and they want to try as much and they're willing to use cool stuff. If you got good documentation, you're cheap. But it's hard without understanding the feature sets involved. But I'd strip down as many features as you can to something that can be easily consumed and drive a little bit of value. That easier said than done. I know. But also once again dev teams are always willing to try out new stuff. And you get a team of 10, you can get that next team of 10, you know, and all of a sudden they've standardize on your products.

That's kind of like what we've, I've seen businesses do. That's what we do a little bit at Tide Lift is like say you're talking to someone that has a 2,000 person engineering team. Maybe you can identify the front end devs or the mobile app team or some feature oriented team and you sell a small 10,000, 10 person or 20 person subscription to them. It's still not single user, not credit card but yeah.

And then that's where do you set that gate as I mentioned which is like that usage gate. Like really all you want is some sort of activity and that promise that a dollars will come down the road doesn't mean you need to monetize an individual user. Maybe it is a team or maybe it is a department. So like I said, no perfect answers but it is worth the Energy. The tricky part is, oh man, we're going to spend a whole lot of time and energy both in R and D and go to market to get a $20 deal. It's like, when does this start paying for itself? Back to that. Once you're addicted to those $200,000 deals, it's hard to get off that addiction.

It's hard. And then sometimes they don't intersect either. Sometimes they're two completely different products.

Totally.

Stephanie, question. Hi. I have a question regarding. You mentioned partners and we have been selling products through the channel for 20 years across the globe. Also an Australian company started there and one of the things that we've done is historically we've sold hardware and we've just recently entered into this software arena as well. So selling a hardware plus software combo. And one of the things that we kind of struggled with or tried to figure out a best process to make that sales process easy is how to do that through the channel when we need to authenticate the software. And then how do you go through renewals when you have both a direct sales group and then you've got this channel group trying to sell your product? So I was curious if you could give us a little context about how you do that process with your partners.

Yeah, once again, historically it was because we were throwing bits over the wall. We basically had licenses the partner would create a quote with. Basically, you know, they create quotes in our system. If they paid the quote, they would release the licenses, they would send those license keys to our customers. So very traditional. And that was all a self serve portal for our partners. And you'd be amazed like. And we didn't have any sellers tied to it. So that's the other pieces. We weren't trying to co sell with those partners, we were really trying to resell through those partners. That gets much harder when you have a sales team out there that gets commission on every single deal that comes through. Because then it's like, okay, who's really moving the ball down the road? Is it the partners of the direct seller? You know, in channel conflict and all that fun. So we really say here you go, we're going to stay out of your way. As we've adopted our cloud tech, that's changed a little bit because it's more than just selling licenses, it's actually us providing a service model. But it's very much the same way is that we have the ability with our cloud environments to basically have a partner set them up for our customers. We understand the partner involved and the customer involved and we make it sure that all billing of that goes through that partner. Then it's on the partner to effectively resell according to their own quoting process. But we don't release the software until the partner has effectively paid us or for our larger partners, we basically take them on credit.

Thank you.

You're welcome. Not easy. Everything I just said there is hard. Need to talk to many of Atlassian partners, they might say like, actually, Atlassian's experience is misery. We've been asking for these 20 features they haven't built like, but it's one of those where I treat it almost like selling to a customer is like, can you make it so people that your partners can buy or sell your software to a customer without ever talking to anyone in your company? Like, that's the bar you want to set for yourself. And then have faith that it actually will work.

Love it. Thank you everyone for jumping on camera and asking questions live. We are out of time. But Cameron, this was amazing. So thank you so much again for sharing your insights. The recording will be available on Saster YouTube's channel later this afternoon and slides will also be available on SlideShare if you'd like to check them out.