In a country better known for digging up minerals to ship to Asia than for innovation, Australian enterprise software developer Atlassian stands out among a handful of homegrown companies seeking to transform the nation’s industrial base.
It is spearheading a plan to create a A$500m ($343m) technology cluster in Sydney alongside local government, in a bid to create a start-up ecosystem capable of rivalling other global centres such as New York and London.
But the co-founders of Australia’s most successful tech group warn the country risks missing an opportunity to become a technology and green energy hub unless the government reverses key regulatory and climate policies.
“Both sectors are linked,” said Mike Cannon-Brookes, a 39-year-old entrepreneur who sports an unruly beard, long hair and a baseball cap. “They could be our two biggest job creation areas over the next decade or two and as a country we should be disappointed if we don’t capitalise on that,” he told the Financial Times in an interview.
Atlassian was founded in 2002 with A$10,000 in credit card debt by Mr Cannon-Brookes and Scott Farquhar, who became friends at university. During the past 12 months the company notched up $1bn in annual revenues and doubled its market capitalisation to $30bn as customer growth hit a record.
The success of the company, which floated on Nasdaq in 2015, has propelled its co-founders into Australia’s top 10 rich list, where they rank fifth and sixth with personal fortunes of almost A$10bn each, according to the Financial Review Rich List 2019.
That public profile has given Mr Cannon-Brookes and Mr Farquhar a platform from which to speak out against government policies in a nation where business tends to lobby behind the scenes rather than campaign publicly.
“We’ve certainly been trying to scream loudly on a whole bunch of issues,” said Mr Cannon-Brookes, who last week appeared on Australia’s most popular current affairs show to talk about technology, energy and climate policy.
Over the past few years since Atlassian listed and as its profile has risen, both founders have begun to speak out publicly as passionate advocates for Australia’s tech industry.
They are backing the creation of a new Tech Central digital precinct in Sydney and have invested hundreds of millions of dollars in technology and energy start-ups in a bid to nurture local talent, as well as attract foreign investment and technology skills.
They also have had a hand in marketing the country to global tech gurus, such as Tesla’s Elon Musk, who accepted a challenge extended via Twitter in 2017 by Mr Cannon-Brookes to build the world’s biggest battery in Australia to solve an energy crisis.
“Having a massively scaled, global, deep product company run by two relatively young people is enormously important” for other would-be entrepreneurs in Australia, said Daniel Petre, co-founder of Airtree, an Australian venture capital fund. “[They] are incredibly smart and exhibit all the drive and pursuit of product perfection that you want to see.”
While its founders are becoming household names in Australia, Atlassian itself orbits in the less glamorous part of the tech universe. Its software products help developers and information technology teams collaborate, manage and share content, and it relies on word-of-mouth customer recommendations and cheap pricing rather than a dedicated sales team.
Atlassian’s success story has yet to be replicated across Australia’s tech industry, which suffers from a lack of scale and where entrepreneurs complain that tight regulation stifles innovation. Technology stocks make up just 3 per cent of the ASX, compared with about a fifth of the S&P 500 index in the US.
Mr Cannon-Brookes has criticised Australia’s centre-right Liberal-National coalition government for its restrictive immigration policies, failure to tackle climate change and promotion of laws aimed at cracking encryption and regulating social media risk, arguing that these policies discourage innovation. “I think we should stop shooting ourselves in the foot,” he said.
He was particularly scathing about a bill, rushed through parliament in December, that gives law enforcement the power to order tech companies to embed software on people’s mobile devices, without their knowledge, to bypass encryption.
In March, Microsoft warned that foreign companies and governments were as a result “no longer comfortable” storing customer data in Australia, due to privacy concerns.
Canberra followed up in April with another world-first piece of legislation making it a criminal offence for executives of social media companies to fail to remove abhorrent violent material from their platforms — a response to a terrorist attack in the New Zealand city of Christchurch that was live-streamed on Facebook.
The potential for the government to spy on anything in the country “sends a signal to the world that Australia is not tech friendly,” Mr Farquhar.
As well as lobbying for more “tech-friendly” regulation, Atlassian is investing directly to promote the industry.
In February, the company signed on to be an anchor tenant for Sydney’s Tech Central, which aims to attract 100 companies employing 25,000 people to a dedicated digital cluster. The project’s backers estimate it will cost A$500m in public and private funding over the next 15 years.
“London has proved this concept,” said Mr Cannon-Brookes. “People move towards the gravity. It kind of becomes self-reinforcing.”
There is still a shortage of people with 10 or more years of experience and a background at high-profile global companies such as Amazon or Microsoft — something Atlassian has lobbied hard for the government to address by easing strict immigration rules.
“This is the challenge for every small tech ecosystem in the world — otherwise the gravity ends up in Silicon Valley,” said Mr Cannon-Brookes. About half of Atlassian’s 3,000-strong workforce is already based in Silicon Valley, where both founders spend a week each month.
Long-term, Atlassian’s founders are looking to emulate the likes of Amazon’s Jeff Bezos, Adobe’s John Warnock and Charles Geschke, and Intuit’s Scott Cook and Tom Proulx, said Mr Cannon-Brookes.
Adobe and Intuit “have gone through these transitions, which are disruption points in the industry where huge categories of companies get flushed out . . . and came out as winners in their category”, he noted.
“I don’t think we’ll unseat Silicon Valley any time soon,” added Mr Farquhar. “But in terms of the next level down — London or New York — I think we have a fighting chance.”
Dissimilarities breed success
The close relationship between Atlassian’s co-founders — who come from contrasting social backgrounds — has been central to their success. Mike Cannon-Brookes went to private school and is the son of a Citigroup banker; Scott Farquhar’s dad worked in a petrol station.
They were best men at each other’s weddings and generated front-page headlines when they snapped up Australia’s two most expensive homes — waterfront mansions in Sydney costing A$100m and A$70m.
“We don’t go next door to borrow sugar but our kids enjoy playing together and we enjoy hanging out at each other’s places,” said Mr Farquhar.
He said Mr Cannon-Brookes is the person who tries lots of new things while he makes sure things get done. “You see a lot of founders break up because they don’t have much in common whereas we seem to have the right amount of overlap,” Mr Farquhar said.
Mr Cannon-Brookes is the flamboyant frontman for Atlassian, evangelising on tech trends, climate change and green energy. His investments reflect his eclectic interests with stakes in satellite company Fleet Space Technologies, a pension fund named Spaceship and San Francisco-based self-driving car company Zoox.
Mr Farquhar, who admits to being more process driven, is interested in the intersection of data and healthcare and recently backed MetaOptima, a skin cancer detection start-up.