Investors have been keen to buy into the most unusual of beasts, a fast-growing tech start-up, which has been turning in profits for more than a decade, despite never hiring sales staff. Keeping the momentum going post-IPO now becomes the defining mission for Cannon-Brookes and his long-time business partner Scott Farquhar.

Staffing issues

As the euphoria of the IPO disappears into the rear-view mirror, the pair will face plenty of new challenges in steering the company on the fast growth trajectory, while keeping its much broader array of backers happy.

Not least will be to retain the fabled culture within the firm, which has seen it labelled Australia's best place to work twice in a row, and the second-best workplace in the US for companies with fewer than 1000 employees – all while working at breakneck speed.

Aside from the founders' wealth, it has been estimated that following Atlassian's IPO, there are now more than 100 millionaires or multimillionaires working for the company. Retaining them, and keeping them motivated in the same way they were before, will be a fresh test for the founders.

Scott Farquhar and Mike Cannon-Brookes are flanked by Atlassian colleagues ahead of its Nasdaq debut. Supplied

Cannon-Brookes accepts that some staff will move on and says that hiring the right new staff in a hugely competitive talent market will be the company's biggest obstacle as it tries to ramp up research and development. He says many investors, during the company's exhaustive IPO roadshow, had raised its hiring strategy as the key concern. He also says that he and Farquhar recognise long-term growth is totally reliant on people and culture.

"[Wealthy staff] is one of the challenges we now face. We have got to build a sustainable business from a people side that can outlive and outgrow Scott and myself. This shouldn't be the Scott and Mike show," he says.


"People have their life journeys that intersect the company journey, and if they are with us for a year, two years, five years or 10 years, we have to celebrate and value their contribution to that journey, and find ways to remain an attractive place to work."

The Scott and Mike show

Indeed the Scott and Mike show has yet to raise its head as an issue of contention for investors, but the dual-CEO model remains relatively uncommon in big listed companies. It has undoubtedly worked well so far, and the founders are keen to keep it going for the foreseeable future.

UNSW graduates and Atlassian co founders Mike Cannon-Brookes (left, with scarf) and Scott Farquhar watch as shares open on the Nasdaq. Trevor Collens

Steve Baxter – Pipe Networks co-founder, founder of tech start-up hub River City Labs and judge on Network Ten TV show Shark Tank – says times have changed in investor circles and the pressure that would previously have existed for Atlassian to rethink its executive leadership, should no longer be present.

Whereas Google brought in Eric Schmidt as executive chairman to help run the company alongside its founders Sergey Brin and Larry Page before it went public, Baxter says Cannon-Brookes and Farquhar have earned the respect of investors as well as their employees.

"With Facebook and now Atlassian, there is no Eric Schmidt moment, where it was seen as necessary to have 'adult supervision' for the founders. To get a company to the position the founders have taken Atlassian, speaks to their capacity; to do it with not much more than bootstrapping and cash flow for most of its life, is even more incredible," Baxter says.

"I am sure the founders and managers not only want to keep the culture they have created, but actually need to keep it. Ensuring people stay with the plan and do not get carried away with the day-to-day public valuations of their net wealth will be important – a strong culture and focused plan will assist."


Well known start-up investor Steve Baxter says Atlassian's co-founders face a challenge to keep the company culture right. Supplied

Cannon-Brookes says he and Farquhar will not be dividing responsibilities to have one focused on investor management and the other on internal operations; instead they will continue to operate as interchangeable CEOs, across every issue.

"We have been doing it for 13 years and we are quite adept at handling it, and I think it is a big competitive advantage for the business, as it gives us double bandwidth in the top chair," Cannon-Brookes says.

"It is particularly helpful when it comes to meeting with investors, we have told them that sometimes they will see Scott and sometimes they will see Mike. In theory it means half as many trips to the US, so that is a really good thing, meaning we spend less time on external activities per person and more time on the business."

Cloudy future

In its IPO filing, Atlassian highlighted the threat to its ongoing revenue growth from the tech industry trend towards software products delivered via cloud subscriptions. Despite having roughly 50 per cent of its customers on cloud subscriptions, as opposed to on-premises software installations, it still makes most of its money from the larger on-premises clients.

Mark Carnegie says the success of Atlassian's IPO will have a big long-term impact on the Australian tech start-up ecosystem. Rob Homer

Not only are cloud subscriptions usually less profitable for tech companies in the short term, they are also less predictable in long-term revenue forecasting, as subscriptions can be terminated with much less fuss.


Cannon-Brookes says the risk is less pronounced at Atlassian than at other software companies, which would include the likes of Microsoft and IBM, that have found the cloud transition hugely problematic.

"The move to the cloud is probably easier for us than most other enterprise software companies because we don't have to change the sales force's compensation strategy or even the technology," he says.

"There are still big opportunities on both sides, the on-premises business is still growing very strongly, but if you look over the long term, then the cloud is the natural way to go. Customers will decide, and we will be ready for them whichever way they choose to do it."

Industry role models

Speaking after the open of trade at the Nasdaq, Farquhar told The Australian Financial Review the co-founders were comfortable in their ascendancy to the position of role models to a generation of fledgling Australian start-ups, at a time when the government's innovation agenda has placed tech at the forefront of the future economy.

"To the extent we can be a beacon or inspiration for other people to look up to, I think that's going to make a huge difference," Farquhar says.

High-profile venture capitalist Mark Carnegie is of no doubt that the success of Atlassian's IPO will have a big long-term impact on the Australian tech start-up ecosystem.

"It's the same reason why we like the medical devices space where Cochlear and CSL sit … they show that Australia can produce the black swans of investing," Carnegie says.


"Atlassian can be the black swan of the tech industry, proving that Australian companies can win very, very big".

Cannon-Brookes, meanwhile, says the company will simply hope to provide inspiration for others by continuing to set an example.

"You can't take this kind of talk personally or you are on a hiding to nothing, but at the same time we are pretty committed to improving the Australian economy," he says.

"The need to transition the economy to more of a creation of technology perspective is one of the most important issues facing the country. In terms of being a beacon we are just going to do what we do and keep making better products and improving the business, and other people can judge that."

With Yolanda Redrup