September 27, 2017
Algolia’s 6 Steps To Content Contributions
In his DevGuild: Content Strategy talk Liam Boogar, Algolia’s Brand Director, outlined the 6 step process he built to source great content...
In episode 37 of EnterpriseReady, Grant speaks with Jay Simons of Bond. They unpack the many lessons Jay has learned from his long and celebrated software career, including growing Atlassian from a startup to the massive, publicly-traded behemoth it is today.
About the Guests
Grant Miller: All right, Jay, thank you so much for joining.
Jay Simons: Thanks for having me, Grant.
Grant: Cool. So to get started, I'd love to just kind of hear the story of your career and sort of your background in enterprise software.
Jay: How far back do you want to go?
Grant: I mean, you know, I noticed you've kind of been in enterprise software most of your career, right?
So let's start at the beginning. It sounds like you started kind of before the-- I would call it the first internet boom.
So it seems like you've been in this ecosystem for a long time.
Jay: Yeah, my first real job, I guess, you know, I worked at a law firm through college and then kind of took some gap time after college and did something, you know wildly different.
Then, you know, moved down to San Francisco to get into technology and, you know I'd sort of been interviewing around for, you know for sales jobs and inside sales jobs.
I felt like that was my kind of entry point into technology without kind of a comp-sci background or, you know, really a functional background in any other discipline.
I knew that I was interested in technology.
I knew that I could understand it and, you know translate that into some sales skill.
And so I was applying for, you know mostly entry level sales jobs.
And the first offer that I got was from Oracle and I was living in San Francisco with you know a bunch of friends from college and, you know, the job was, you know it was going to start like in three and a half weeks.
It was an offer with, you know start day kind of three and a half weeks into the future.
And I was dreading actually the commute down to Redwood city.
And I w as excited by Oracle in part because I felt like it was a place where--
It's sort of a university for technology sales and you know you could kind of ladder up really quickly if you wanted to start your career in technology selling.
But I had a kind of in the intervening period I'd gone out to visit a friend in Las Vegas and I was sort of bemoaning the commute and this idea that it was, you know, kind of a big company.
And he said, "So me and a friend of mine started a company in the city and an enterprise software company. If you're interested in enterprise software you should talk to him. It's just a startup."
So I kind of came back to San Francisco and connected with this friend, and that was a guy named Glenn Kelman.
Who's now the CEO of Redfin. And he was a co-founder of this enterprise software company.
Actually in San Francisco in you know, '97 that was really rare.
Everybody was basically down in the valley or outside of the city. And they were, you know maybe I don't know, 16 or 17 people.
And I went to meet with him and, you know he was like, yeah, we're just thinking about you know, adding, we've got like, you know, one field rep in Chicago and, you know, one field rep in New York.
And we were thinking about adding, you know an inside sales rep to kind of help almost like SDR help you know, qualified demand and kind of work with them to generate leads.
And so sure let's talk to you about that job.
And then kind of interviewed quickly went around the company and, you know, one funny detail as the Oracle offer, what I remember was like 28 grand.
It was like $28,500 or something which at the time, you know, I--
You know, my last job I think I was paid hourly as like a paralegal in a law firm.
And so it was sort of like a first salary job for me. And I remember thinking, yeah, it was like pretty decent.
That's sort of going to pay the bills and pay off a little debt.
And I got this offer from Plumtree.
And I remember I was like in-- Kind of in the conference room and, you know, the VP of sales at the time and said, we'd like to make you an offer as a sheet of paper on the table.
And, you know, they, they pushed it across the table and, you know, I lifted up and looked at it and it was like a starting salary of $45,000.
And I remember probably visibly gulping, but, you know I did the, you know I'm going to have to consider this deeply overnight or something just to kind of get back to you in the morning but you know, like inside my body was screaming, "Yes."
And, you know, I remember I kind of like grand back home to all the roommates and I was like, you know, this is going to be awesome.
Cause you know, I was really motivated by what the company was doing.
And I was motivated by being in the city and not having to rent a car, buy a car and kind of sit on the train and commute down Redwood city.
So that was my first job like in inside sales.
And the funny thing about that company is, you know that company basically grew from virtually $0 in revenue when I started up to $80 million, three years later.
And so it was just explosive growth.
Jay: And I wasn't in inside sales very long.
I remember in the office, there was like almost these little-- I don't even know what they were there.
Like maybe phone booths. Like it was probably like a phone booth maybe the office that we occupied used to be a law firm.
And it was sort of like, you know this is pre-- Kind of open office plans, but you know there was this quiet area where you could sort of like sit, it was tiny.
I mean, I could touch all four walls just by extending my arms. And that was my office.
And I sat in there and just started cranking and, you know calling into companies and, you know pitching Plumtree and trying to understand how to sell.
And you know, it-- Within the first couple of months, I actually-- Like I'd had this opportunity in Canada and it was with the ministry of tourism in British Columbia.
And it seemed like a reasonable opportunity. I was sort of talking to the team kind of all over the phone.
And I went to the VP of sales and we didn't have a rep in the west.
So I said, "Well, who should work this?" And she said, "Well, why don't you work it?"
You know, just see what you can do with it.
Anyway, I managed to close that deal and it was sort of one of the bigger deals for the company entirely over the phone.
And that was sort of within my first handful of months which was kind of a win. And then the company was growing so quickly that they were like, you know, we need you out in the field.
And it was like, you know it was a field traditional enterprise selling job where you know, the ASP was 150 grand and you know it was a big complex, you know, enterprise software sell.
And that was sort of the start of my career in sales and in Enterprise Software.
Grant: And just briefly talk a little bit about what Plumtree did. I read a bit about it.
People were comparing it to Yahoo portal at the time which I thought was funny, but you know kind of give me a modern context of what it was.
Jay: Yeah, Plumtree began as sort of a-- You know a knowledge management system for the enterprise and you know, like it always borrowed consumer concepts.
And so the earliest incarnation of the product was this, you know search and indexing software that organized content from this is all pre cloud.
And so, you know, it used to be in the enterprise that all word documents were like on an NT file share.
Like there were these physical servers where you-
Grant: The F drive.
NAME: Yeah, the F drive, it was like the company enterprise.
And there'll be lots of those. And so, you know first product was well, let's index all the places where content exists and organize it kind of into categories on the web where instead of sort of like mapping to an F drive and like only your computer can browse it.
And it's kind of willful to find it through search. We'll give you a web interface.
That's like, you know-- And again this sort of dates the time, like Yahoo differentiated from Google, you know, unsuccessfully in lots of ways.
But one thing that it did is it curated the web into categories. And Google just gave you a search box that, you know quickly became kind of good enough for you to find anything. You didn't actually need to see sports content and a sports folder. You weren't kind of browsing. You were just searching.
And Yahoo really was sort of like a browse first and kind of search second in a category.
And so you could narrow your search by saying I'm really interested in content about basketball.
And so I would drill into sports and then into basketball and then I would search and I'd sort of like, you know get a bunch of curated content or index content on the web and Plumtrees.
You know, first product was, let's do that for kind of all of the content that's scattered around F drives, you know and empty file shares inside of the enterprise.
And so it was a knowledge management system.
There's a big category enterprise software category around knowledge management.
And it quickly evolved from that to kind of augment the web experience in the same way that Yahoo did with consumer portals.
And so, you know, back in the '90s it was the thing to do where you would kind of create a front page to the internet on Yahoo and you'd be able to have your stock quotes and your sports scores for your favorite teams and whether in your city and you know, news firm, you know the new sources online that had them that you wanted to kind of pull together.
And it gave you kind of a simple digest of all the things that you cared about.
And Plumtrees' idea was well, companies should, you know offer the same thing to their employees where on your intranet, you know, which again was sort of like an early technology approach where companies kind of had webs inside of their firewalls, and began to have more web technologies that were accessible to their employees, that you would want kind of a curated front page to all that stuff.
And so you'd want, you know, a view of requisitions that you need to approve and kind of your HR system you'd need, you know POS that you'd need to click yes on from, you know, SAP you would need maybe a snapshot of your email inbox.
You'd have kind of a list of, you know, workflow items from the document management system like Documentum.
And if we could composite all that together into, you know a personalized web experience, you know, that portal, that front page would save people time and kind of increase productivity in it.
That's part of the reason why that sort of like, you know Plumtree created the corporate portal market the portal market for enterprises.
And you know, it was a concept that had a lot of merit. It sort of like that's why the company grew from zero to 80.
You know, the concept was heavily copied in sort of like the late '90s and '2000s.
And actually, you know, the product that probably most people remember from that era is a product called Microsoft SharePoint which effectively was that.
It was like, how do we aggregate and kind of access to content into kind of a personalized web experience for you know, people and teams. Yeah.
And you know, Plumtree had a great ride until you know, every enterprise software company at the time, Microsoft SAP, BEA Oracle, PeopleSoft you name it like every big enterprise incumbent said, well I'm going to have a portal on top of my thing.
I'm going to have, you know my PeopleSoft and it's not too hard to add, you know they were called portlets at the time but it's not too hard to kind of integrate some part of the web experience of, you know a sister product or some other thing in the enterprise.
So you know, you're my SAP or your my PeopleSoft becomes more valuable as a starting point for your day when you come to work.
Grant: Yeah, that makes a lot of sense, actually. So your role there evolved.
So you went from inside sales to be kind of field sales and then sounds like you went a little bit more international?
Jay: Yeah. So, you know, part of what attracted me to plum tree and, you know away from Oracle is I felt like in a startup, you know, meritocracy thrives and it sort of kind of doesn't matter what you're doing or even what you're good at.
It sort of matters how quickly you could learn and be good at something that the company needs to do.
I was excited by that prospects where, you know there'd be more things for me to figure out-- To learn and figure out if I'm good at and figure out if I could do and more opportunity to test myself.
And so maybe, you know, the first example of that was when they said, "Well, hey you've never kind of sold in the field but we need somebody to do it, go out and do it."
And I became kind of the Western account manager for the west.
And what-- But at the time I thought, cause I grew up in Washington and I thought, you know, if I teleport into the future, it might be nice to be back home next to friends and family and, you know maybe live in Portland or Seattle again.
And that was sort of my long-term dream at the time was you know, eventually, maybe move back home from California.
But what had happened was I was the only sales rep at headquarters.
And so I kind of managed the sales at plumtree.com email address, inbound to the company.
And you know, somebody was one from Chicago. I was like, "Hey Jim, you know, here's Chicago."
If somebody was in New York, I was like, "Hey, Shelley here's New York," but kind of everything else we didn't have a rep for, I just managed.
And so we started to get all this inbound from Europe and from, you know like way more in Europe because like Europe, you know began to kind of awaken to the concept and, you know sort of a fast follower behind what enterprises were doing you know, in North America.
And so all of a sudden I had pipeline with really big companies, Shell and British petroleum and Nokia, and you know, all of these sort of like, you know, big European juggernauts.
And I went to the, you know, the VP of sales at the time.
And I just said, "Hey listen," you know, all of a sudden like there were real opportunities where the CIO of British petroleum or British telecom or Nokia wanted to meet with us because they were very serious about deploying our technology kind of broadly.
And so there was only so much you could do over the phone from San Francisco.
So I, you know, I went to the VP of sales. I'm like, look, I've got kind of all of this pipeline, you know, that's been built.
By the way, I've been closing deals, you know in the Pacific Northwest and in the west coast but what are we going to do about this stuff?
And he was like, well, le t's go over and do this CIO meeting with the British petroleum together.
See what else you can build up.
So I built up, you know, for him and I this kind of like, you know, incredible week of meeting with big companies all over Europe.
And within the week after that, like we closed British Petroleum or one of them that was one of the bigger deals in the company.
And, you know, he's like, man, we need a European operation right now.
And so he gave me a choice. He's like, yeah, I know you've been thinking about you know.
The Pacific Northwest was exploding for us cause it was pre Microsoft.
And so like in pipeline and the Pacific Northwest it was Boeing and Weyerhaeuser and pack car.
And I mean, you name it like it was every company in the Pacific Northwest and he said, this is 99 now.
And he said, do you want to go over to London and kind of like start your up and you know we'll hire a team around you.
You can sort of like, you know be the flag that we plant over there and kind of get things going, or do you want to--
We're going to have to carve up the west and we're going to have to add people in California and Oregon.
I mean, you know, the company is growing so you're probably going to have one of those opportunities.
And I was like, man, I would love to go to Europe. But you know, and this is sort of a funny story.
I was like, but I know somebody, you know there's a friend of mine that I think you should interview for the Pacific Northwest, you know, account manager the guy that that'll run that territory.
And so we were going back to Europe again like three weeks later to sort of like deal with his pipeline.
He was like, let me meet your friend.
And we were flying to London out of San Francisco and you know, this good friend of mine from college that, you know, is probably one of the most accomplished salespeople I'll ever meet but he was selling--
I think at the time he was working for like SC Johnson Wax as like a sales rep, you know selling like shaving cream into a grocery store like no technology experience, I think, but we flew him down and Jim and I were flying, the VP of sales were flying to London and Matt had flown down from Seattle and I introduced the two of them.
And, you know, we, we had like two and half hours before a flight or something.
And so Jim said, "Hey, Matt and I were going to talk you know, like go grab a cup of coffee."
And I went and grabbed a cup of coffee and kind of waited and sort of like watched them talk.
And then they kind of flagged me over and I kind of walked up and, you know, Jim the VP of sales says, so, "Hey Jay, why don't you say hello to the next area sales manager for the Pacific Northwest for Plumtree."
And so he'd like given kind of Matt, the job on the spot. And the funny addendum to that is that next year I'd moved to London.
And that next year the company did, we went from three to 30 million and Matt closed nine of the 30.
Jay: And so he, you know, I mean I knew it was going to be a good territory.
I didn't know it was going to be that good of a territory but you know, I think Testament to his skill.
And then, you know, I ended up in Europe and had a great time and sort of like built Europe up you know, we hired an MD and you know, I was both selling.
And then, you know, part of-- I guess, you know a culture carrier into the company that we were building an extension to the company that we're building there.
And then I had kind of another choice where they were like this has gone really well.
You know, Europe's sort of grown up and explode.
That was part of like our 30 to 80 it was at European expansion.
And I'll tell you one funny addendum about that.
There was a mistake I made, but then they said, well do you want to stay in Europe or, you know selling and kind of, do you want to run the Nordics or do you want to run, you know, like Eastern Europe or where you know--
What do you want to do or we're doing the same thing in Asia? Do you want to go there? And I said, I'll go to Asia.
And so, you know, we'd started the Asia operation in Australia, and then I ended up running Asia and spent a year and a half in Australia and then moved up to Singapore and spent a couple of years in Singapore, basically running the region.
And, you know, the one funny addendum, and then I'll pause is I'd seen what had happened in the Pacific Northwest, you know with pipeline that I'd started.
And so when I kind of negotiated the Europe thing I said, well, what about all this?
Like, I've got all this pipeline I've been working for awhile.
We're hiring reps that you want me to hand pipeline to, but you know, like, what's--
I want some kind of recognition for laying the groundwork here.
How do I participate in sort of the success of what Europe's become that I've, you know I've contributed with pipeline.
And we kind of worked out a deal where they would pay me in stock and the mistake there is like, you know, Plumtree at the time had sort of like a pretty high valuation and then had gone through the, you know, the.com crash kind of followed that.
And so of all this equity that was granted at like, you know 12 bucks a share, and when Plumtree went public it eventually went public at like 450 a share.
So it was sort of underwater on all this stuff that I had. I thought that was clever to negotiate for equity at the time.
And I learned a Cassius king lesson, at least in that case.
Grant: Yeah, that's funny. I mean, the crazy part is like that's such high growth at that rate at that time.
Like what slowed plum tree down, like because I think the ultimate acquisition by BEA was for like 200 and something million.
Jay: Yeah. It was mostly Microsoft.
Jay: And secondarily, you know, just all the noise in the enterprise space that I'd mentioned around you know, BEA, Oracle, SAP, you know every big enterprise software company came out with something that looked and smelled like what we had.
And it just was a headwind in terms of convincing customers that we were unique and different.
And then Microsoft, you know, it's interesting to look at what Microsoft does today when they decide to compete because at least back in the time it wasn't instantaneous, right?
Like even though they were a global company, you know they really kind of put a dent i n plum trees business in North America.
And by the way, I was in Europe at the time and it took them a long time to kind of enable--
Like I was leaving Europe by the time that Europe, you know began to have a little headwind and I was going to Asia.
And then when I got to Asia, you know the North American reps were kind of frantic and the North American business was slowing down or it slowed down significantly.
The European business was just starting to slow down you know, APAC was taken off.
It just felt like I was always sort of a little in front of Microsoft kind of switching on their global sales channel and kind of enabling both their indirect channel and their direct sales organization to really talk about SharePoint as a new, the product.
It took them a couple of years, but, you know and then the other thing was the.com crash happened you know, Plumtree was prime to go public at the end of 2000.
You know, we h ad the S one on file and, you know I think was a very hotly followed company.
And then the.com crash happened, we sat 2001 out and then went public in 2002 with just a very different kind of growth profile than we had in 2000.
You know, I stayed with that company.
I was basically with that company for 12 years through the acquisitions, I went public in 2002 and got acquired by BEA in 2005.
And then BEA you know, we got acquired by Oracle in 2008 and I was effectively with Plumtrees product line that entire time.
And that was also a really good learning experience because you know, I went through the journey of, you know Plumtree had a really generous lunch program you know, that, that, I think at the time in the city was probably maybe one of the only companies that did that.
Now that's sort of table stakes for a software company.
You've got, you know, meals provided and all that sort of stuff, but it was, you know one of the most popular portlets in our portal was the lunch portlet where we had kind of figured out a way to kind of web enable all the PDF menus at the time from restaurants around the city.
Some developer had sort of like, you know ingested them and sort of like, you know figured out a way to represent them on the web in a way that we could kind of order lunch through you know, a bunch of different places.
We would like pick a restaurant kind of per day but we would.
The whole company would basically order lunch online through this kind of portlet and then it'd get delivered and we'd all eat lunch together and the company would pay for it.
And that was at the time, felt like just this incredible benefit and also like, you know fostered all these social connections.
I remember like some of, you know, just sitting around the table and talking to engineers and just learning about all sorts of different things from those.
But, you know, when the company hit harder times, we needed to pull back from some of those benefits.
And I went through kind of the arc of we're actually going to have to say goodbye to people, like went through a lay-off which was, you know super painful and hard.
And then we, you know began to kind of ratchet back, well, actually like we're not going to subsidize lunch anymore.
We're going to subsidize just half of lunch.
And then it was like, you know, we'll still bring lunch and kind of organize that, but, you know, you pay for it yourselves, but we've got kind of vending machines with snacks that, you know you don't have to put money until you just push a button.
And then it was like the vending machines cost a quarter and then the vending machines here, and it was this progression of you know, the company mostly just trying to make it work but it was really hard culturally.
And you know, the other thing that I learned through that is you know, there was a sense of, even though it was a great culture, there was a sort of like a little current of kind of entitlement.
And at the end, people were really rubbed the wrong way because, you know hang on a minute, where'd my free lunch go.
And I remember the CEO at the time you know just said, well, you know, i f you're in it for free lunch, like, you shouldn't be here cause like--
You need to be here to fight for the survival of this place. And that's going to be a lot of hard work. And it means that there is no more free lunch. We can't afford it because we're trying to keep people employed. And that's what this is about.
And I remember being really influenced by that and then being, you know, committed to the mission even through hard times, because it was hard and that kind of perseverance and, you know like stick it with it, ness, you know, the people that kind of like were in the foxhole saying like we're going to do everything we can, you know to fight for the survival of this place, you know had a huge impact on me.
Grant: Yeah. I mean, do you think that there's, you know sort of hindsight being 2020, like, are there things that Plumtree could have been doing differently from a product perspective, from a go-to-market perspective?
Like, is there anything you look back and you're like, oh I wish we had, you know, done X, Y or Z or maybe had we done it.
It would have increased our chance for success any of those sort of insights?
Jay: Well, I think now, you know, the lessons that I've taken away over the past handful of years, you know like pricing and packaging matters, you know, in kind of the market.
And it could have been that, you know, Microsoft always had the ability to either be more aggressive or more bold, but, you know, it was also--
It was hard for us to turn on a dime with the way that we were structured.
That would have been the thing that I would have done is I would have said, you know, there was a very expensive products because, you know this was the generation of really complex enterprise software, perpetually licensed all kind of on-prem client server.
Like, you know, Plumtree started as a client server.
I mean, I went through the evolution of client server to web, plungers first product, that kind of indexing thing was a client server technology.
We actually installed kind of the directory client on your windows machine.
Grant: As like a Java app?
Jay: No, I think it was like probably a C plus like native--
Grant: Oh yeah. Like Word was, yeah.
Jay: Yeah, like word was, exactly.
It was sort of like, it was a windows client app that connected with an NT server that did all indexing.
That was the first product. And then it evolved
Grant: That server was like installed in the customer's environment, right?
They would install it in their server closet, et cetera.
NAME: Yeah. And web technologies came around and it went to the web but it was still kind of, you know, the client-server web architecture where, you know, the client became the web browser, but everything was installed kind of on Prem to do sort of all the heavy lift for things that you wanted to browse.
And the web pages that got generated, where, you know by a server that was installed on the customer's structure.
Grant: And perpetually licensed, you said as well, the whole.
Jay: Perpetually licensed with maintenance support, you know, at 18% of the perpetual license.
The perpetual license fee was a thing that you were working hard to win.
And that was in the hundreds to millions of dollars, you know?
So that's a hardship to turn on a dime where you've got a big competitor that, you know is sort of priced comparably, but has, you know like Microsoft bigger distribution and, you know sort of a bunch of inherent advantages that are tough to overcome.
You know, I'd like to think that knowing what I've learned to kind of over the past decade or more with the last year and sort of like seeing how companies have evolved and how software enterprise software has evolved, you know it's like easy to say, man if we only could have done those things, back then it would have been different but the structure would have made those changes really hard.
You know, the thing that we did do, you know this was actually--
It's a funny story about my introduction to it last year, because, you know we had recognized that just staying the course, you know, it wasn't kind of a winning strategy and it would've been really difficult to sort of like retool the distribution model around that product.
We actually like-- And compete in the face of all of these big juggernauts that, you know claim to have the same thing that we did.
It was just like every customer opportunity was just sort of into the Thunderdome Deathmatch. Right?
And so the thing that we did do is we said, well we've got to reinvent our product strategy.
Like we've got to pivot here and try to salvage what we can from like really good customer and market and product oriented DNA.
And we've got a good sales organization.
If there's something else that we can fit into the market to sell, you know, that'll work.
And so we had kind of pulled the best product thinkers you know, from around the company.
And, you know, Plumtree had more than one product at that time.
It had kind of a content collaboration system that it was sort of a little bit like Documentum or a little bit like broad vision or, you know companies at the time where you could create web content you could upload a document and you could check it out.
And it had workflow around it on the web and stuff like that. And it had a reporting data, a bunch of different things.
And so we had pulled kind of the best product people from all of those various products and said, hey, we're going to form a new team.
And your mission is to basically come up with, you know with a new product strategy and so no pressure, but you know, kind of, you got to save the company.
And at that time I had moved back from APAC into marketing and so was running marketing and sort of aspects of product strategy.
And so I was connected to that team and I went to check on that team, and I don't know, three weeks in, a couple of weeks in, just to see what sort of--
What ideas that were floating around. And, you know, I walked in and w e'd given them kind of a part of the office where they had their own space.
And I remember it was like, they'd called themselves IDEO.
Jay: And, you know they had kind of comfy couches sort of like in the eminent kind of decked out there a little space.
And by the way, all those all those folks who have just gone on to incredible careers but all like just super smart and connected, you know engineers and product managers.
And I went to check on them and I said "Hey guys, you know, what have you guys come up with?"
And they were like, well nothing really yet they were excited about, but look at this product that we're using to riff on ideas together.
And they gave me a demo of a product called confluence from this little Australian company called Atlassian.
And you know, I'm like, man that's the irony here is thick, right?
Like we are a collaboration company effectively tasking you with coming up with new collaboration software that we can sell.
And you're using someone else's collaboration software. And that was my first introduction to Atlassian.
And like, I think in its maybe its second year, you know I went back to my office and you know, I was like, what is this little Australian company that I've never heard of, that these guys were excited about the products that they're building.
And I remember I looked and it was like, man their products are so cheap.
And yeah, I sort of had had this idea.
I was like, man, if we acquired this company we could add a couple of zeros to their product prices, give them to our, you know, very talented kind of well-equipped enterprise sales organization.
Jay: And maybe we could take some of our products that talked about kind of distributed over the web at the time.
Maybe we could take some of our products and have a version of our products that we could sell through that online channel.
Like maybe there's kind of a marrying of both of these approaches and products that actually would give us the boost we need.
So I went and pitched that to the CEO at the time and he's like, sounds interesting, go figure it out.
And this is like 2004 I managed to track down Mike Cannon Brookes the founder and co CEO over the last year I managed to track him down on the phone and had this kind of whirlwind conversation with him where, you know I was asking him a bunch of questions like what's your revenue?
And like how many customers do you have and what do you think revenue will be next year?
And you know, like what's the product strategy.
And we sort of like had this meandering conversation for about 40 minutes.
And then at the end, he kind of cut me off and he's like, "Mate, sounds like you're trying to figure out if you can buy us and we're not for sale."
And I said, "Well really at any price?" And he's like, "Probably not at any price, but you know it would at least have to be 30 million."
I remember this vividly. And at the time they had just done a million in revenue.
It was like, you know, his version of no like there is no price. Cause 30 times, you know, it was just crazy at the time.
Not crazy now. So it was sort of like just book closed but that was sort of like, it was funny how, how life works.
That was sort of like my serendipitous connection to this company.
Grant: I love that in so many ways.
Jay: And then went back to kind of, you know, figuring out pumping.
And by the way that that team, that IDEO team came up with things that we ended up building.
And then we got acquired by BEA and so the products like didn't really fit into BEA strategy, but they were incredible things like that--
I think like now, now you see more of like, they were basically sort of a version of sort of the social web for the enterprise, like pre Yammer, pre Jive.
Like we built that. We had built kind of an enterprise version of like a social bookmarking service, like delicious that I still think would be a useful product in the enterprise.
We'd sort of built that, it was a different way for people to signal that content is valuable and to build kind of an expert network on top of that signaling.
We built a product that predated low code, no code, but it was basically like an application builder for, you know internal apps inside of a business where you could do a whole bunch of stuff with kind of drag and drop elements on a page.
You know, it was sort of inspired by how the enterprise at the time was littered with, you know, access databases and Lotus notes apps and FileMaker pro you know, app like there wasn't anything kind of in the modern client server kind of web architecture for the enterprise that was giving people the ability to kind of pull data into a web experience.
And so we'd built that, you know, kudos to, you know that IDEO team cause they came up with things that now I think there's, you know, big businesses have been built around.
Grant: Yeah, I was actually thinking sort of a similar thought as you talked about the challenges of growing Plumtree kind of ask the question, just to see what you thought.
Like, could you have done anything but I think there's this kind of it's funny because Palmtrees origins, you know sort of being compared to consumer taking so much consumer but there's a very common sort of concept and narrative around consumer startups during the .com boom slash bust that like those--
Many of those ideas became companies later, right?
Like the classic is like web van became, you know Instacart and like Amazon Fresh and all these things.
But from what you're saying, it actually feels like the same things probably happened in enterprise, right?
Where these companies, it was just kind of more of a timing challenge in that timing can sometimes be around market, size, and opportunity in technologies that are available to make it happen.
But you know, it's probably worth revisiting a lot of those sort of like older concepts because, you know oftentimes we've seen in the web, the consumer web is like that the time has come for many of them.
Jay: Totally. Yeah. Timing is everything.
So, you know, there's sort of great solutions to problems that are just a little bit early.
Grant: Yeah, that's interesting. Okay.
So before we dive too much deeper in last name, which I really want to spend a bunch of time on, just like talk about your transition from sales and sort of running these international orgs into product marketing and marketing because I think that's an interesting part of your career
Jay: In the context of Plumtree it was a relatively easy transition because I had, you know, spent, you know at that time, I guess it would have been like six or seven years selling and then running a region.
So running a sales team.
So I'd sort of like grown up into sales management, but had, you know, deep experience and appreciation for the customer, the market the problem we were solving, you know deep connection to the product.
Like I understood the product like the back of my hand having sold it for so long.
And I was, you know, it was in Singapore we'd open Japan and Korea and China and, you know, APAC was going really well.
But I was worried about getting stuck in Asia Pacific as head of sales for Asia Pacific or you know, head of APAC.
And I'd gotten married at the time and you know my wife and I, you know, we're thinking about starting a family and you know, in my late twenties I guess at the time and wanted to get back to the US and it was hard because the US was, you know--
As I'd mentioned the US growth had slowed, you know, because of Microsoft.
And it was in, you know, sort of like the thick of like of all of the competition in the landscape.
And so there wasn't really an opportunity to kind of go back into a sales role or a sales leadership role.
And so I was just kind of, you know, trying to find out if there's something that I could do, that was interesting.
Cause I wanted to stay with a company.
And if there were things that I could do and actually like the first thing that I came back to was and this was also sort of like, they kind of created a role for me in like you know, business development, where there was an idea around what could we OEM our technology into all of the enterprise companies that don't yet have a portal but may want one, like, is that sort of a growth strategy?
And so could we go to kind of Documentum and you know all of the business intelligence vendors, like, you know business objects and micro strategy and companies that probably, you know most listeners won't remember, but could we go to them and convince them that, hey, actually you need a portal too because the world of enterprise software is becoming portalized and rather than building your own, you actually get one that's built that understands, you know like we can ingest all of the open kind of portlet concepts.
There were like standards around how portlets got built and all that sort of stuff.
And we have kind of portlet building engines and a bunch of things that might matter to you.
So I came back to try to figure out if that was a business and quickly discovered that it wasn't it was just too heavy of a lift for all these companies to kind of ingest our technology.
And, you know, it was like it would have taken them a year, you know, I think to really engineer it in a way that you know they would effectively be white labeling but engineering our technology into theirs and the economics on the other end of that weren't meaningful enough.
And so I sort of did that for six months and realized that, you know kind of came back to the business and it was like I just don't think, you know, this is going to work.
Like, I think we've proven that it won't.
And then there was an opportunity to take over product marketing.
And I was interested in that because, you know it was an easy transition, you know when you've selling, first of all, you work really closely with product marketing because product marketing, you know is creating the collateral and the positioning and you know, the competitive kill sheets and all of the stuff that's enabling the sales organization to represent the products in the right way.
And I had kind of been doing my own product marketing before we had product marketing but I also like, you know, understood selling like I had a pretty well-informed perspective on what's successful.
And so it felt like it was an easy transition you know, because product marketing is in traditional enterprise software, the most closely connected marketing function into the field, right?
Like product marketing goes to the sales kickoffs and is the first the pitch, the new deck or the first to give the new demo or the first two to rip apart a competitor and analyze it and you know talk about the ways to differentiate around it.
It was a chance to learn something new again. And you know, they gave me that opportunity and it was a relatively easy fit because of the things that I mentioned.
And then, you know, shortly after that, like, you know, the person that was running marketing left and they said do you want to, you know it was sort of battlefield promotions, right?
Like, you know, they were like, all right, you know this company is still struggling and, you know we need somebody to run marketing, will you do it?
And I was like, yeah, I'll do it.
You know, I always say I benefited a lot in my career from staying with a company that struggled when, you know when other people were leaving and they're like this is getting hard and I'm going to go where it's easier staying kind of in the hard opened up a bunch of opportunity for me professionally to sort of like, you know grow my career and kind of learn new skills, but also just ladder up and put me in a position by the way to get my--
When I finally put my head up and wanted to look for something new and, and just coincidentally, you know saw it last year and was looking for, for an executive I was an executive because I'd sort of like stuck through at least in plum tree stuck through kind of the thick and thin to earn it along the way.
Grant: Yeah, I love that. And I'm guessing that you also probably, you know you developed a lot of long-term relationships at plum tree and BEA I'm guessing from folks that you worked with that I have no idea, but I'm guessing that you've worked with some of them again and let it rolls, but--
Jay: Yeah, for sure.
My group of actual, you know, lifelong best friends, the intersection of all of them there, there's, you know there's some people that I went to college with and ended up working at Plumtree and you know, giggle people.
I just met there, but, you know, there's 10 of us. And the one thread that kind of weaves through us is that experience, you know in our 20s at Plumtree.
And, you know, I think almost all of us were there a long time.
Grant: I love that. Cool.
So let's talk about the transition to it last year because I think, you know, obviously it last and it's just such an interesting story been around for a long time.
It sounds like, you know you had this interesting experience there with them and then four years you joined, right?
So they were around for two years you had this experience trying to, you know poke around to acquire them and then sounds like they stayed on your radar.
And then you saw a role, but tell us about how you kind of joined in and let's get into some of the things you learned in the last year.
Jay: So yeah, subsequent to that first interaction with Mike, you know, BEA had acquired Plumtree, they offered me a good job and I was interested you know, BEA was, I think the fastest--
At the time, the fastest company to get to a billion in revenue.
Jay: At least in enterprise software, it was.
And so, you know, it was a company that sort of exploded, you know, up in the late '90s and early '2000s.
And Plumtree at the time I think had 550 employees when it got acquired and BEA, you know, probably had 5,000.
And so I was interested in like what does a 5,000 person company look like?
Like I've been part of this startup that grew to 500 people.
And we went public and had lots of ups and downs but what does a big company look like?
And I have a chance to kind of be an executive inside of a big company.
And by the way, they'd acquired Plumtree and held it as a business unit and then acquired, you know another company and put into that business unit.
It was a business process management company, you know, so on one dimension, you know, I had kind of the air cover of this big company and it was sort of like, I got to go back to school and kind of learn like, how does a big company do annual planning and you know, how does it in head count planning and budgeting and all the things that, you know would be different and bigger, but still have kind of the context of the products that I knew and loved and cared about kind of in the market.
So that's why I was sort of thrilled by that opportunity.
I learned a lot, it was a great two and a half years and you know, learn some things that I liked about a big companies worked and some things that I didn't like, but all sort of like in pursuit of you know, just learning.
And then when Oracle bought BEA in 2008, I just I've been there for 12 years. And I felt like, okay it's time to kind of poke your head up and look around. I--
Grant: You didn't want to accept that $24,000 salary with Oracle when they acquired you?
Grant: Again, yeah.
And it's funny to come full circle where I was thinking of my professional career kind of started or could have started with Oracle, you know and then I was like, yeah, I don't really want to work for Oracle.
I've sort of seen 5,000. I don't need to see whatever they were at the time, you know, like 30,000 or 40,000.
And so an analyst at Gartner that I knew sent me the job description for you know, the Atlassian was looking for a VP of marketing and you know, she was like, I love this company.
And I know that you're not going to go to Oracle.
And, you know, you should look at this company. I'm like, oh man, here's the last one.
And you know, I hadn't really paid close attention to them, but, but over the intervening four years, you know whenever I'd visit a customer, I used to, you know like take stock of what--
Because we were still selling portal technology.
And so like part of the value proposition we're going to integrate a bunch of things kind of into this, you know, modern web experience.
What are the things that in the business that you like and what are the things that you loath and like give me that list.
And the last thing was always on the list of we love this this product JIRA and confluence and like our users love it.
And so it always just kind of blipped on my radar around, yeah we've got this Atlassian stuff that everybody's super excited about.
That's kind of grown in the business and that was kind of like over the intervening years.
They always just kind of like bubbled up in customer conversations.
And then I kind of like did a little homework and they you know, come a long way since I saw them in 2004, but had all the properties of just a great company.
They had a great culture, you know, I think Mike and Scott talked a lot about the culture that they're building a Plumtree had a great culture and that mattered to me because I'd come from one.
And I knew how important it was. They had great products that customers were fanatical about.
I was super intrigued by the early formation of the business module because, you know, having gone from selling where you're really focused on conversion and closing, but really one-to-one to marketing where really marketing is about one to many.
It's about like what are the things that I do that generate demand broadly?
And what are the assets I can create that can influence conversion broadly, even if in the hands of a sales person, like I'm working on kind of the one thing that's going to matter to every customer that we're trying to close.
And so the latter part of my career kind of switched on this one to many synapse where I became really interested in that sort of like leverage and scale that you can get from activity and here Atlassian was a company that was focused on kind of a one to many selling in effect, right?
Like where you use the internet to distribute and acquire a customer.
And you're constantly focused on removing friction to acquire thousands of customers you know, a month or thousands of customers a week, you still have to have the same instincts around how am I going to get them to close?
Like, what are the problems that I'm solving?
What are the obstacles in the way those are all sales problems but in the context of, you know marketing where you can solve them at scale and you can solve them, you know, for loads of customers, so I was just super intrigued by all of those things.
And then I was like, I just, you know I hope for whatever reason that, you know, my little interaction with them in 2004, where, you know he was like, "Hey, this is a butt sniffing exercise and we're not interested for whatever reason they wouldn't hold it against me."
And then Mike and Scott and kind of met various people on the team.
And, you know, unfortunate that there were things in me that they wanted and needed.
And there were definitely things in it.
And the last thing that I was excited about contributing to and by the way, it was also a chance to kind of like go back and I hadn't had a chance to do this too often in my career but the thrilling part of being in a in a startup and kind of growing is your you're forever--
You know, I describe it as you're forever breaking new ice in front of you, right?
Like, you're one of those, you know sort of like ships cruise through the Arctic and it's just you're plowing through new ice and you never really get to go back and say, well, like this is smooth sailing because I've already broken this ice before and I know how to do it.
And I drive a lot of energy from that. But then when I went to Alaska and all of a sudden like it was, you know, there were things that I had built before that I knew how to build again.
And that was also like another part of thrill, which is like, oh, okay there-- I've been in this situation before.
It's kind of different, but I actually know what to do here.
I'm not kind of feeling my way in the dark or guessing, I know what to do.
And when it lasts, it kind of added to that was just this deep orientation around first principles where, you know Mike and Scott valued experience but didn't overvalue that, you know, compared to just thinking about how you'd solve a problem just faced with it for the first time.
And they didn't want kind of the, you know, oh I know how to do this.
I'll just do it the same way I did to override your curiosity about how you would do it differently or how you may do it kind of in a in a situation with some different ingredients.
And I learned that really quickly there because it was a company just angled around kind of we don't care how things have been done.
We care about how we think they should be done.
I had kind of had the best of both worlds because like I had an opportunity to kind of lean on things that I'd done before.
And so be a little confident in some situations but I also had sort of like this canvas in culture of invention in wanting to like take prior art as just a data point, not as, you know, the recommended path forward.
Grant: I love that. Talk about how that was sort of nurtured and like came to life in Atlassian.
Jay: It was, I mean, like, I think you see it most prominently in the business model, right?
Like you see, you know, Atlassian, you know, somewhat famously, you know, it was always described as the company without salespeople and, you know, largely that's true.
We can talk about kind of the nuances there, but I think last was always told, "Hey, listen like this model's cute. Maybe it'll get you to a million or 10 million."
Or you know, there was always sort of a different yardstick.
People would say like the model will work past this point, just so you know, right?
Like we've never seen a company that has done what you're trying to do north of 10 million or north of 50 million or north of a hundred million.
And every time like we got through whatever what the high watermark that people told us we couldn't break through, it just became a higher watermark.
It was all, you know, always, just people said, ah, well you won't okay, you did it, but you know you won't get here.
And I think it was, you know, we weren't dogmatic about it.
I think we were always really thoughtful about what's the right way to grow.
And what's the smart way to grow given all of the factors, right?
Like market, competition, customer, competitive, landscape, expense, and costs growth rate of revenue.
Like all of those things sort of are a careful chemistry that kind of went into how we thought about the business model.
But I think it would have been easy to, you know to just say, yeah, yeah, you're right. Maybe you're right.
Like we need to de-risk everybody's telling us we can't.
So we need to de-risk this by doing it the way that people say we should.
You know, another example is that I think features probably in how the company is constructed is like, you know they ship their second product in very different products by the way in effectively, their second year.
And so at the moment when JIRA their first product has taken off they sort of like divide their focus and they begin to build a product called confluence which is very different product.
Like, I mean it, yes, it's compliments, you know sort of what, what development teams, you know needed to do in that workflow.
But it's a very different thing.
I mean, you could have said like, Hey and it was like, confluence is, you know first incarnation was sort of like purely as an enterprise Wiki.
There were lots of wikis around.
And so they could have just said, yeah we're not actually not going to try to build a better Wiki.
We're just going to use the ones that, that exist.
And they, they built a better one and everybody would have said, don't do that. Right?
Like, don't divide your focus like focus on the thing that's winning right now put all your energy there.
But when I think about, you know, what we benefited from we benefited at a really early age from having to think about priorities and having to think about cross selling and having to think about like pricing and packaging, you know, with a portfolio everything is dimensionally a little bit harder but you know, we build those muscles really early.
And by the way, Conferences was a successful business. I mean, it helped. And so--
But you know, it all--
It also added kind of some complexity to the business at a really early age that I think was a strength, you know and it's always tough to play the counterfactual which is like, well, how much bigger could JIRA have been if you hadn't taken, you know, a third of engineering and began to build a second product.
But when I look at how we operated, you know 10 years later, like a lot of it is just muscle building.
We built muscles at a really early age that most companies you know, when we were 10 years old most companies were just beginning to think about they're like, oh man, we have to have a second product because ax one only is only going to get us so far.
Like now we've got to come up with act two. And by the way, then we have to infuse different DNA into who we are and how we work.
And when you do that at 20 people it's easier than when you do it at 200.
Grant: Yeah, that's really interesting.
I mean, there's so many different angles here, I think to be able to successfully market multiple products.
I mean, it is hard, right?
Like that's not-- It's not easy, but I think what you're saying is that if you pull it off, you are set up for more success, longer term.
It's like, you've kind of built the foundations earlier.
Jay: Yeah, because you know how to do it you've figured out how to do it.
And then, you know, new people that you hire into the company, it's easier for them to get acclimated into how it works in your context, right?
Because you know how it works and you know the things that you're working on to make it better and improve.
And I just think there's lots of ways to build great companies.
Jay: But, you know I think we built a great company differently than as you know, than a lot of great companies are built.
And I think that was an early example where I think that that second product and by the way, you know like Atlassan I think acquired companies that are added to the portfolio in maybe like its fifth year or fourth year.
Grant: Oh, so even before you got there.
Jay: Yeah. Even before I got there, they acquired--
There was a little company called Sancoa and it was Australia was a little opportunistic.
It was, you know, I think people that they knew and they built you know some tools for developers that you know were integrated with JIRA kind of on the periphery of JIRA.
But if I think about it, I think, you know like what gave them the confidence probably at the time to acquire.
And it was like, there were like three products in there.
I think like a product called fisheye and a product called crucible and a product called Clover.
So they effectively, you know, more than doubled the product portfolio with these things.
But I think that what gave them the confidence to do that is they'd already expanded in, right?
Like they already had two and they'd had a couple of years of understanding like how do we manage both of these things?
How do we price both of these things? How do we sell both of these things?
Like they had confidence to say like, oh we've done it with two. I think we can do it with five.
Then I think we can do it with six.
And, you know, Atlassian has got 15 or 16 products in its portfolio today and kind of a long history of both organic product development, new things that adds to the portfolio that it builds and things that it acquires.
But I think all of that's come from, you know you could say, well, it would have come 10 years later but I think it would have been different and it would have been-- I think it would have been harder.
Grant: Yeah. So I want to definitely dive into some of these acquisitions and much other things but just for quick context, you know we talked a little bit about like, okay how many products they had at the time?
Like, you know, how big was Atlassian when you joined?
Who were you reporting to?
Was it all based in Australia is still, you know how many customers they have or revenues like any context around when you joined.
So that way we can kind of build up from there.
Jay: I think you know, when I joined it was about a hundred people, you know, there were about, I don't know, maybe 15 or 20 people in San Francisco and everybody else in Sydney, there was a guy named Jeffrey Walker who was Atlassian's first president.
And I think that, you know, he had joined maybe in 2006. So I joined in 2008.
So he'd been there for a couple of years and he was a cancer survivor, just super incredible guy.
Also another reason that I was excited to join the company.
And so he was effectively running, you know everything customer facing, you know was running, you know sales and marketing and support and customer service and all that sort of stuff.
And I joined to be VP of marketing and reported to him and he was a cancer survivor.
And, you know, I think like maybe, I don't know like nine months after I joined his cancer came back and he got super sick and I think it was like maybe five months after that he passed away, which was pretty traumatic.
Grant: Yeah, that's terrible.
You know, he was beloved by the company and you know he just had a huge, bright, energizing personality.
And so that wa s kind of a hard moment, definitely for the company and his blog handle was radio Walker and there's still radio Walker conference rooms inside of Atlassian with, you know, a little kind of recognition of who he was kind of in the earliest days.
And so that was sort of size and shape. And, you know--
And then I was sort of had the experience to take over, you know what he was managing.
And so kind of took over sales and support and tried to, you know, step into his shoes as, you know, kind of the, you know an extension of Mike and Scott and, you know the management team in the US and, you know began to grow kind of the business operation in the US and effectively took over as president shortly after that.
And did effectively the same job the entire time that I was I was at Atlassian.
Grant: Yeah, I'm sure he's looking down and really proud of what you and the whole last scene team accomplished over those years though.
I mean, it's come a long, long way since then obviously from now near a $50 billion market cap, right?
Jay: Yeah, I think he would be and it's like every brick that you lay into a building matters to the building.
And, you know, he laid some important bricks and so, you know, people are still in bricks the next Atlassian, you know, taller and stronger, but man those foundational bricks matter.
Grant: Yeah. There's cornerstones. Cool.
And so, you know, you kind of mentioned that you were... you did "Kind of the same role," you know after you became president, like what was in your purview?
Like what were your responsibilities, what org kind of did you manage?
Jay: Always, I managed everything customer facing.
And so, you know, marketing sales, support customer service, you know, I managed lots of odds and ends kind of over the years.
So I managed, you know, corporate development and M&A I managed it, you know, managed biz ops and strategy various points responsible for, you know, our strategy and annual planning cadence.
The last four years, I managed all of our on-prem product development.
And so, you know, t hen there's lots of different things.
You know, when the business, you know needed me to manage something and kind of either be a custodian of it or grow it.
And some cases, it made sense for those things to kind of move into different functions.
When we had leaders that, you know, that that had kind of the latitude and experience and capability to manage them, you know but the common thread, you know, for me, it was all of go to market, was, you know the thing I was most passionate about and, you know kind of where my experience has anchored and kind of always ran that.
Grant: Perfect. That's super helpful.
And so, you know, when you joined, you know how like "Enterprise ready" was Atlassian and were the products?
You know, obviously there's probably lots of teams inside of companies using it, but would you say the software and like the different products for generally, like, you know enterprised, hardened and had all the features that enterprises needed to roll this out company-wide?
Jay: No. And it's interesting.
Another unconventional thing that Atlassian did, we were selling into the enterprise, but because, you know it was software that largely targeted teams and you know teams could expand into other teams and then into organizations.
And then company-wide, we were still selling into the biggest companies in the world.
We just, weren't kind of going wall to wall. And we were okay with that.
But, you know, like there were things in the product like that I think, you know had some rough edges around, you know, scale like some of it would be performance.
Some of it would be simple things like, you know if you were going to add a user to an access control list on a page, you know there'd be kind of a user picker that didn't have search.
So, you know, if you had a thousand people you'd have to scroll down a list of a thousand people to pick the user, you know like we discovered kind of with time that eventually somebody would say like, hey I've got a thousand people in the access control list at a search box, please.
But at the end of their like, you know little kind of rough edges like that in the products.
And we were constantly making sure that it would support, you know bigger and bigger populations of users.
The thing that we did a little unconventionally is you know, we would have begin to have some strong signal from bigger customers that wanted to kind of expand usage and that wanted additional capability from us.
And we sort of differed attention around that for a while.
I mean, it wasn't acute, right? It was like, hey, listen you need to improve performance in this.
Or we want to be able to run this across kind of multiple physical machines or, you know we want kind of different admin controls where for the on-prem stuff, you know we can actually like cycle through an upgrade without bringing the system down like that sort of stuff.
Because it wasn't really a cute, it was like, Hey we really need these things but it's not like we're not moving off you.
We kind of differed there were other things that we were focused on with that we felt were more critical, like building, you know the cloud platform and the cloud infrastructure for scale.
And so we couldn't do both of those things at the same time.
So we chose because it wasn't a cute, we're going to actually like park the enterprise focus for a couple of years and, you know make sure that we're attending to those customers.
And we're honest with sort of the roadmap but it's not an urgent priority right now.
And they should hear that from us. And we sort of deferred until the point that it actually became a little acute.
And by that point we had probably, you know thousands of customers with more than a thousand users.
And, you know, we were in 80% of the fortune 500 and, you know, 60% of the G2 cat.
I mean, like if you looked at kind of penetration in the enterprise, we were already there but a lot of the things that they needed we hadn't yet built for them.
And so we finally focused on it and basically built an enterprise grade version of the on-prem products that is called now data center, the data center product line.
And that was effectively, you know, an upgrade or an upsell to the existing kind of enterprise base.
If you had more than 500 or a 1000 users there was a version of the product that you know we built for that kind of scale and added a whole bunch of like really important capabilities for admins and you know, and for these big enterprise businesses.
And we did that, you know, in 2013 about, and, you know so we were already over 10 years old and again had lots of enterprise logos, but we came out with this enterprise grade product that we actually priced you know, significantly higher than just the standard version that they were using.
And that's actually where we introduced a direct selling organization because we weren't sure whether or not we could convince customers to, you know in some cases spend five or 10 times as much as they were spending on the standard version by taking that upgrade.
And so w e added basically, we call them enterprise advocates.
We added, you know a very small kind of like surgical, you know strike force to go to these customers and understand whether or not we could convince them to upgrade a data center.
And, you know, when we did, when we realized that we could the way that we scaled that business was both through our indirect sales channel and then making the product available for customers to buy and upgrade online.
And then those three dimensions of converting customers like all kick in and that's sort of what made our enterprise business accelerate as fast as it did.
Grant: That's really interesting. And so, a couple of pieces in there to pick apart.
Do you think that, like, one of the reasons you were able to sort of push off some of these features and pains for these enterprise teams was because you were realistically pretty low priced at that point and then maybe they were just like, okay, fine.
Like you know, at this price. Okay. So that's part of your thesis there.
Jay: It was a combination of like the products were important. Users love them.
And so like, even if there were some things that they wanted us to do, we were pretty sticky and you know we were very affordable.
And so, you know if there were things that they wanted us to fix and you know, they were going to consider moving away from us, the thing that they would move to, there'd be an economical deterrent.
And so there was probably a little bit of frustration where it's like, why don't you do these things that we're asking you to do, but, you know they still had incredibly important software and an incredible value.
Grant: And it's not user frustration. It's like administrative frustration.
Jay: Yeah. Probably some end user frustration too kind of around performance, but-
Jay: You know, I think in hindsight we chose those priorities really carefully and I think they were the right ones. Right?
Because it allowed us to build a really robust platform for all of the customer segments that we serve.
And remember, I think, you know, Atlassian, you know serves everybody from, you know, a five user company or a five user team up to hundreds of thousands of users.
And that's by the way really hard to do.
Jay: You have to make really careful choices.
If you've got the opportunity to support that broader customer base, do you have to pick and choose what you do because it's difficult to do everything all at once.
And so I think that we were really methodical and careful about that choice.
Grant: Yeah, so one of the things that I always like thought about Atlassian and I think maybe part of the reason why the, you know, as a public company has done so well.
And, you know, obviously I'm putting out this thesis for you to respond to, but was that like that low price there was just always so much sort of room for you to increase prices with customers, you know by adding new features or adding new, you know capabilities, or just even just raising the price as they used it more larger tiers, you know and you compare it to something like Oracle, where it was like they were already maxed out on price, you know when people felt like they were getting raked over the coals, when they were buying Oracle stuff, like with the Atlassian stuff, it was like, oh yeah this is all still pretty inexpensive.
And so the ability to expand your ability to charge more I think is what? To me that's been a key part of what fueled your growth
Jay: It is.
Jay: It is and it also adds to the equation of, you know customer love and stickiness.
And there's a whole bunch of other things that I do but it, you know, it was a core part.
I mean, you know, we focused on this idea of ubiquity, you know, really early, where we just believed that every company should use one or more Atlassian products.
That was the trophy we were chasing. We we ren't excited just to get the 500 biggest companies to users and spend a lot of money or the 2000 biggest that wasn't what we were after we were after everybody.
And we felt like we could serve all those customer segments the right way over time.
And then it just becomes about, you know sort of like trade-offs and prioritization.
Like you could say, "Hey, listen, if you would have focused on the enterprise business earlier you would have influenced growth earlier."
That's probably true but it may have distracted us too long the way from building the type of cloud platform that we needed to build that actually is like the future of the company.
And it would have deferred that by years. And there's a cost to that.
Like there's an opportunity cost and there's potentially a competitive cost. There's a whole bunch of things. It's always hard to say, like, you know, again like if you move the chess pieces around like what does the game look like? Cause it's all hypothetical.
But to your point, I think like, you know price was always an advantage and, you know interesting if you think about it when we were even like pre enterprise like part of the thing that gave us anxiety is sort of there were companies that were dedicated and focused on the enterprise that were growing faster than we were by the way.
So Rally is a good one.
Rally went public and I should-- I can't remember exactly sort of revenue trajectory but you know, it was a company that was directly taking on it last season with a pure enterprise focus and approach.
So top-down selling kind of out in the field, you know pretty expensive go after the GTBK went public and you know, the move that we did actually that we sort of let, let all of the companies that angled just the GTBK that were competing we just sort of just let them go there.
And we lowered price and we lowered price at the bottom end and the entry point like we went from a thousand dollars, 10 user license to a $10, 10 user license, which is virtually free. Oh my gosh. Wow.
And none of them, none of them copied that move they all, they all sort of said, well, you know I guess we'll leave it lasting until the low end.
And you know, what they missed there is that entry point meant that we permeated even the biggest companies with, you know dozens and dozens of 10 user teams.
And we just entered bottoms up and became kind of the user choice.
And even if a CIO is negotiating with, you know the sales team of a competitor, if they just pulse their users.
And if they did a side-by-side comparison of product because we're also investing more in R&D like they would hear, oh, geez, this is both cheaper.
And our users want it more. And so we would win without having to compliment it with the similar sales strategy.
Jay: And what, you know, if you look at all the companies that we sort of competed with at the time, I'm in a lot of them aren't around anymore.
And they had built kind of like jive was a competitor and rally was a competitor both as companies went public and had built reasonable businesses in the enterprise segment.
And then eventually got gaps, like just ran out of the ability to kind of grow in that market.
And, you know, you know this too but I think it's like once you're in the enterprise market there's lots of examples of this.
Salesforce is, you know, it's hard for Salesforce to like really go mid-market, you know service now had a mid-market product that they killed them.
And there's examples of incredible businesses, incredible enterprise software businesses that then when they say, well, actually we also want to sort of reach into the mid market and kind of grow business there.
It's tough. It's tough because of the way the products built and oriented. It's tough because of how it's priced. It's tough because of how it's sold.
There's just a lot of things that are hard to kind of reconfigure.
In many ways, it's sort of similar to how difficult it was for, you know, for on-prem companies to kind of make the transition to cloud because everything's different and you can't just say, well now we're also going to have a cloud business, you know like history sort of littered with companies kind of like failing to make that transition successfully or at least swiftly.
Grant: Yeah, I'd actually love to jump into that.
Obviously I'm super interested in sort of how Atlassian made that transition.
I think you took a somewhat different approach than a lot of other companies to sort of talk about.
I mean, obviously I think probably when you joined I'm going to guess like 90 plus percent of the revenue was from your on-prem.
I think when you went public, it was like 70 or 80% was from your on-prem business.
And so let's talk about sort of the strategy around making that transition but sort of managing both in keeping both along the way.
Jay: Yeah, It's been, and you know we've always celebrated just the customer's choice and you know, we started as an on-prem business.
We actually started the cloud business really early, right?
Like, you know, and I think first incarnation of it was sort of like we'll host our products for you, you know, sort of like the application service provider approach maybe in like 2006 and then came out with sort of the first incarnation of the cloud platform in like, you know 809 and then have just been, continuing to modernize that and make sure that it's built for hundreds of thousands of customers that are on it today, and the future hundreds of thousands, you know I think we were really early in recognizing that there's a material benefit to customers in the cloud.
And there's a benefit to us because you know the velocity through which you can acquire customers and kind of the additional telemetry that you get around how your products are being used that help you both shape the product, but also help you engage and activate users and customers faster.
And then just, you know, broadly, you know, the trend, like you could see it coming but there's still going to be, you know, industries and customers that are slower to make that transition or have reasons that they're not ready to make that transition.
And so we've, you know, maintained on prem for them and 95% of customers today, you know, start in the cloud.
And, you know, the rate of migration for existing customers to the cloud has been, you know accelerating over the past five years.
And so I think that the, you know the destination is sort of clear and, you know I think we've done, you know a really incredible job of managing both platforms.
And by the way also modernizing both platforms, which is hard, you know oftentimes you see the enterprise software company kind of incumbency in on-prem getting displaced by somebody else in the cloud.
Jay: You know, and on one level we had to displace ourselves.
You know, we had to, you know kind of compete with our on-prem business, you know in a way to make it even more desirable, but not, you know intentionally handicapping kind of the on-prem product for customers, you know, for whom it's still important.
That's a hard thing to do. Right.
I think you've history is sort of littered with examples of companies that just couldn't do that and they're replaced by the cloud version of them. Right?
And, you know, I'm super proud of like hard work but I'm super proud of how, you know, Atlassian has managed that over the years.
And I think customers are too, like, you know we've celebrated that choice while still, you know trying to kind of highlight the benefits of cloud and can, you know, there's things that you can do in the cloud that you can't do in on-prem without tremendous effort.
I'll give you an example of one of those, you know, we confluence is a collaborative content writing system.
You know, it started out as a Wiki and now it's sort of a full fledged collaborative content system you know, for businesses.
And we came out with, you know a real time synchronous editing experience, you know in the cloud, which is pretty easy to do in the cloud or like not easy but easier to do in the cloud and very difficult to do on prem, but we did it.
And that's an example where, you know I think we've been true to saying like a lot of this innovation, a lot of the differences that you'll see in sort of like a modern cloud product we're going to try to bring to the on-prem product.
And eventually, like, you know I think it lasting probably has to make some choices around when are those things too difficult, you know for kind of a smaller customer base that's remaining on prem to do.
Grant: Yeah. The crazy part is, you know, your server business which was sort of these one node licenses where you would install JIRA or confluence onto a single server.
And they were-- It was the same price. It was like, yeah, $10 for 10 users that business had massive consumption.
And I think you used a lot of partners.
And so there's probably a lot of MSPs that were deploying there for customers.
And I think, you know just recently the team Atlassian actually end of life that specific server offering it didn't end of life, you know all of the on-prem offerings because they still have that data center product that you're talking about.
But sort of this idea that smaller companies with 10 users should be deploying and managing on-prem software.
That's the narrative that I think was moving away from the last scene. Is that right?
Jay: Yeah, that's right.
I mean, I think if you look, the, there were two versions of on-prem kind of the standard one and the data center one and the data center one was always priced comparably.
It was actually priced identically to the standard one beginning at like 500 users.
And so it was a better products at 500 users for the same price as sort of the non enterprise one.
And then I think, you know if you looked at below 500 users, like, you know there may be particular reasons for a 200 person company to say I want this behind the firewall, but you know we worked really hard to remove them.
And then there were, you know in some cases like the on-prem was, you know still just like super, super cheap.
And so somebody could say, well, it's a little bit cheaper so I'm actually going to download it and kind of install it and not recognizing that, you know there's additional costs that make it a lot more expensive for them over the long run.
And, you know, there's a belief that the cloud is ready for all those users.
It is, you know, it's ready for all those users. It's where should we go?
And kind of maintaining on-prem products for smaller companies and smaller teams doesn't make sense where we've got one actually that, you know, for five--
Maybe if you've got a hundred users you have to buy the 500 user license the data centers it's a little bit more expensive than you would have for the a hundred user but that that's actually the price that you should be willing to pay if is a hard requirement for you.
Grant: Yeah, exactly.
And kind of realizing, you know, so listen to a podcast with one of your architects, maybe a couple of years ago talking about the latest cloud platform and all the choices that were made.
And one thing that struck me is that, you know they were basically completely separate products like the--
you know, JIRA on-prem offerings and JIRA cloud like had two different engineering teams product teams, support teams like they were run almost like separate, you know organizations, correct?
Jay: Yeah. It wasn't always that way. It used to be like the cloud was effectively the on-prem code base.
Jay: That would then shift to the cloud.
And when we really chose to kind of modernize the cloud and you know, build it for, you know, multitenancy and kind of rearchitected to run workloads on AWS we effectively forked the code base.
And, you know, actually that's when I took over the on-prem products and began to kind of rebuild the Cloud for Cloud native, which, you know, we needed to do.
And you know that division happened probably like six years ago five years ago or something like that.
Grant: Yeah, I mean, you know, obviously our thesis is that eventually your on-prem product will merge back again with that cognitive architecture and, you know you'll be able to serve sort of those customers from at least a more shared code base, but you know those things take time.
Grant: Okay. That's super helpful. I really appreciate all that context.
And I guess just for, I don't know, I mean, do you are there any, there's probably some amount of public numbers that you--
That were shared throughout your tenure there in terms of how big that on-prem business was versus the cloud, assume?
I think, like I said, during the IPO it was like 70%, I'm sure.
Over time it's diminished in terms of revenue percentages instead of customer count.
Jay: Yeah, I mean, you know, I think Atlassian's you know they probably even talked about it in the last earnings call, but you know, it's diminishing as a percentage of total and Cloud is where, you know, a lot of the growth is, I mean, there's still growth in on-prem because it's a big business in the enterprise, but it's a rising tide.
Grant: Cool. Okay.
So let's hop into a couple little bit more about these acquisitions that you made because I think that's one of the really interesting things is, you know you mentioned 15 products a lot of those through acquisitions, you know some of those like Bitbucket seemed to go pretty well but maybe HipChat, not as well.
Like how do you think about, you know, the acquisitions? I mean, obviously Trello, I think has gone really well but like talk about some of those and sort of how you think about them.
Jay: Yeah. I mean, they're all different.
I think the one kind of common signal in all of them is that we were early in identifying kind of the market opportunity for those products and you know, kind of the great technology.
And then they're all sort of like logical compliments or adjacencies to where we are.
And so I think we did a good job of sticking to our knitting and you know, the dynamics in kind of all those markets are different, you know HipChat.
HipChat was, you know, I think example of, you know maybe being a little bit too early and also not if I'm really self critical not recognizing like how big that market could be and how quickly the market could open up.
You know, it's hard like sometimes like I am--
And I think even, you know Stewart at slack would say it was, you know like he didn't anticipate that.
And it was sort of like this combination of timing, you know, also in concert with, you know, social media as sort of like a word of mouth channel at the time that hip chat and slack, you know, and especially slack were just kind of emerging, you know, really Twitter as a way for people to share what they were really excited about was just emerging.
And I think that was a pretty important accelerant around kind of market awareness for, you know chat and real-time communication.
I mean, certainly there's been, you know, analogs that kind of predate it, but like the modern approach to that sort of like took off as people began to use it and you know, we're excited about it.
And, you know, I think that it's sort of a it's hard to transport yourself back in time knowing what you know now, right?
Like it's hard to sort of like take all that and be like, oh, like here's what it looked like.
And I just remember we were looking at HipChat and it was sort of growing faster than any other Atlassian product.
And you're like, man, that's just look at that growth. It's just great.
Not recognizing that it could be going three or four or five times faster than that.
And we need to build a product for that.
Like we need to build a product for that kind of scale and that kind of growth, which is, you know probably the thing that we should have done earlier.
Grant: Yeah. But I mean, there's like the one side is you saw the opportunity to acquire this company for probably like, you know realistically pennies on the dollar in terms of opportunity.
And it was growing. You're like, oh, this is great.
But like, you know I guess the insight there just being like, okay we should have invested more in gone out of it even harder in order to capture the full opportunity.
Jay: Yeah. And sometimes it is about like timing matters, right?
Timing and, and sort of these things that, you know that are amplifiers in the moment or amplifiers around this space, you know, it's like chatter, you know like by the way, the product matters a lot too but you know, like chatter kind of predated, you know both HipChat and slack, I think, and you know very different product and approach to both of those, but also, you know maybe didn't live up to its potential, its full potential.
When you think about like what it could have been.
And you know, I think when I, when I think about, you know slack did a masterful job of, you know building kind of a great product and then also capturing the Zeitgeist, capturing the moment, you know by being an authentic company and listening to their customers and continuing to just like not falling over and continuing to sort of like ride kind of the energy of what is this thing.
And I want it and my friends are using it and they're excited about it and that's a really hard thing to create.
Right? Like you can't manufacture that.
Like it, it sort of like in the moment you are you're sort of paddling with it, you know what I mean?
And you, you have like paddle with it and be really good.
That takes a lot of work too and skill and doing all the right things.
But it's really hard to create the current.
Grant: Yeah. I mean, when you talked about, you know, chatter your Yammer, these other things that I don't think that they were even really close to what slack ended up becoming, you know, because ultimately the integrations were so valuable but I mean this--
I mean this is like actually intended as a compliment like HipChat was definitely the closest, right?
It was like, it had the makings for what could have happened there. And I think that you're right.
When you say that, it's sort of, sometimes it's just about timing, it's about market, you know, sort of how they perceive it and then eventually, you know, that that ends up being the multiplier.
Jay: Yeah, I mean, it's, you know, HipChat predated slack by a couple of years and it's, you know for whatever reason Slack didn't use it.
I've never asked Stewart why, but maybe they did. And they just were, they were like, ah
Grant: Like IRC people, I think. Yeah.
Grant: But you know, it's funny, it's always sort of like a what could have benefited used, you know it just used HipChat. Yeah.
Grant: That's funny.
They, when they were at tiny spec we're building a game, right. If they had used HipChat instead of trying to build their own thing, one of the piece that I don't think many people talk about and I don't know if you have much insight into, but I know that within Atlassian you've always had a really strong both like partner ecosystem, but also third party sort of application marketplace ecosystem, you know, hundreds of millions of dollars spent through your systems with these applications in your marketplace.
Was that always a kind of a key part of the growth and the strategy?
Like how did you nurture t hat marketplace?
Jay: It's a really interesting case study, you know cause marketplaces are also really hard to build and the way we built ours I think was also a little unconventionally.
We started with extensibility just as sort of like a core principle of the product like their APIs, you know, we're going to use them to build a product we're going to let you use them to build extensions and ad-ons and plug into the product in a way that feels native.
We started there and that kind of existed for a handful of years and customers used it.
Third-party developers began to build around it. ISB has began to kind of integrate with it. And then we needed--
We had sort of like a volume of these things that existed, you know like developers that were building.
So we did the, you know, all the kind of right moves around creating developer docs and you know, a little bit of a community where developers could find each other and created an event called Atlas camp where we brought in a developers in the ecosystem together physically, you know for three days to sort of like work with us on APIs that they wanted to improve or add did all that.
And then, you know, for the customer we wanted a coordination point to point them at these things.
And so the first incarnation of the marketplace was just a directory.
It was like, okay we're going to work on curating where they all are.
So you don't have to hunt and pack and we'll be in a sort of a central kind of pointer to where these things exist.
You know, then we just recognized that a lot of these small developers in ASVs had to do a heavy lift on like I've built something that people want but now I've gotten, by the way, this is like, again all sort of pre Stripe and pre maybe easier ways to sort of like build kind of like a simple commerce front end on something.
But you know, it was hard for them to kind of create that and then manage the selling relationship with the customer.
And from the customer's perspective, it was hard for them to basically buy 10 things from-- In 10 different places and have that be scattered.
And so, you know, it was pretty easy to say, well we've already got this directory.
Like we're, we're pointing kind of everybody at all of these things we can add sort of like commercial store to this and make it easier for both the customer and the developer.
And that should encourage more volume and should encourage, you know, more customer demand.
And that in turn should encourage more supply it's sort of like that virtuous cycle.
And that's what happened.
And, you know, we've always seen, you know the marketplace thing still lasting would echo this seeing the marketplace is not, you know even though it is a big source of revenue like not a source of revenue, but a source of this pretty potent kind of ecosystem partner ecosystem and kind of network around the company where, you know businesses are being built on top of it last year.
And that matters more to us than, you know the money that that we're making.
And, you know, the money that we're making really is I think just supporting kind of like all the things that we're doing to make it better.
Some more people can build businesses. That's where it works.
And you know, the other benefit to us is, you know where A, customer gets more value from the platform because there's more things that give them value and that value in turn increases our stickiness, right?
It there's more things that they're using.
And so it becomes more compelling. It's not an easy thing to build.
There's lots of examples, you know in history where companies have tried to do it.
And I think one thing that they do is they say, well, Hey here's a store.
You know, now start building for it. You know, I think that's hard.
Like we tried to do an in plum tree tried to do that with portlets, you know where we tried to build a marketplace of kind of portlets that you would build and it just didn't work.
And I think the fact that we had critical mass of developers and there was so much surface area that we allowed them to build on that was actually mature meant that that when we did begin to commercialize they were already had businesses that were being built.
And that was a signal to other developers that, hey, actually, like I could I could build something to make money from it. I'm going to do that.
Grant: I'm going to kind of also guess that potentially some of these, you know these tools added functionality that maybe fill gaps and you know, we talked about some of those enterprise features and requests, you know, maybe some of those gaps were filled and made those problems less acute because the marketplace existed.
Jay: Yeah, that's right. It's not like we could focus on sort of the pieces of the platform that we need to build and kind of the long tangle of different things that, you know various parts of our customer base needed could be provided by third parties.
Grant: And some of those could be like, hey, there's a demand for it.
And you're like, well, you could build that.
And you know, we have a system of SIS or other partners that could even build it for you and manage it and they could sell it again in the marketplace.
That's right. Oh man. Yeah, that's beautiful. That's really nice.
Let's take a quick jump into what you're doing now because you know you've left it last season and joined bond.
So tell me about what you're doing there.
Jay: So bond is a growth stage investment firm and I'm an investor now.
I mean, the main reason that I did this is after, you know being a builder for, you know, 25 years kind of focused on just building kind of one thing in one company it's thrilling to get to work with lots of different companies and lots of different markets.
And that sort of 0.1, and you know, the growth stage of what companies are trying to kind of grow through and where they're getting to, I've just got a lot of you know, scar tissue and experience around and you know, the chance to be helpful and useful you know to founders and entrepreneurs that are thinking through how their business model gets architected and all the different dimensions of what the--
What you could do when you build your business model is exciting.
Or, you know, even like how the culture is going to change as you go through these inflection points of a hundred employees to 500 employees to, you know--
To 5,000 employees or how your strategy planning, cadence and operating rhythms need to evolve.
Like all that stuff is-- I've just got a lot of.
And so part of what drew me to investing is the chance to be useful to companies that are going through the phases that I've been through because it's not easy.
And then the thrill of learning about their businesses learning about their markets and, you know that's sort of the really exciting part of the job
Grant: With maybe a little less stress and the pressure?
Jay: Well, I'll feel their stress. Yeah. Yeah.
You'll kind of miss those that those moments are I mean, you know, you're in it right now.
I mean, those moments are, even though it's stressful and you know, there's anxiety with it it's also at the other side of it, you know it doesn't kill you makes you stronger.
Grant: Yeah, and just what stage are you looking to invest in primarily?
Jay: We are a growth stage.
And so I, you know-- I would say it's like past product market fit, you know you've trained on tracks and kind of you've got a repeatable revenue and you understand how to find your market and the customers that you're going after but there's still a lot of building and execution to do.
Grant: And your first investment, was it Zapier?
Jay: No, my first investment was-- I'm on the board of Zapier, the predated bond.
Grant: Okay. Predated bond, got it. But I might know my first investment was a company called Century.
Grant: Oh amazing open source company.
Jay: Yeah. Fantastic company.
Grant: Okay, Jay, I know you've got to run.
This was so great. I really, really appreciate all your time.
Jay: Thanks Grant. It was fun.