With Australian start-ups beginning to create some noise, success story Atlassian shares some of its lessons on how the industry can carve a niche for itself to become the next big thing.
The strategy is often used by start-ups — find a niche, or sub-niche, which needs aren't being adequately met and use that to become the market leader. According to Atlassian vice president of engineering, Jean-Michel Lemieux, if the Australian start-up community wants to get noticed and succeed, it needs to do just that, but as an industry.
Lemieux watched Canada's "Silicon Valley of the North" grow during his time in Ottawa working for IBM. He said that Ottawa's case was the same as Australia's Silicon Beach movement, but what made the Canadian counterpart successful was how it specialised in an industry.
"People had great ideas and they built them out. That was mostly in the telecom business. Nortel was in Ottawa. Newbridge Networks got acquired by Alcatel when they were there. There were a bunch of companies in the mobile telecom industry that were built out of that."
He said that the Australian start-up industry needed to collectively take a moment to think about what it wanted to be known as, or in what direction it wanted to go in, so it needed to address three critical things.
"You need talent, you need great ideas and you need people that believe in the community — that they want to stay in Australia and that that's something that's important," he said.
He also said Australia could do well to make itself more attractive to Silicon Valley veterans. Co-founder of Google Maps and Wave, Lars Rasmussen, has previously said that what would drive him to return would be a local start-up, even though he now has a secure gig as a Facebook developer.
"What's going to be our critical edge? In some cases a competitive edge is critical mass. In Ottawa, I think that critical mass was that between three to six telecom companies [were] established together and it created a kind of place where people wanted to move to," Lemieux said.
"So what can we do in Australia? Should we bring more into Sydney or more into Melbourne so people can say, 'Hey, I can move to Sydney and I can go from company to company' or 'I can see myself living there for 10 years'? I think all those things are building blocks [that] are going to be the key for us doing this in Australia."
Believing in Silicon Beach
A common belief in the start-up industry is that if you really want to get ahead, you need to pack your bags and move to Silicon Valley because there are few opportunities in Australia. But Lemieux said that things were beginning to change and that if the Silicon Beach movement was to succeed, Australia needed people that believed in the local community.
While he acknowledged that it was great that Australia was beginning to see more financial investment from Silicon Valley venture capitalists, as the market there was becoming saturated, he said Australian start-ups still weren't receiving the funding they needed. He said that those investing were making very safe bets and not yet providing the early seed funding that was needed to get ideas off the ground.
He said that people needed to be committed to their ideas and believe they could be feasible in the Australian market instead of trying to make a quick buck by flipping their start-up at the first opportunity to be acquired. According to Lemieux, those sorts of companies weren't likely to be invested in.
"The examples of companies that have received funding are definitely not in that nature at all. They're solid businesses. Skitch, 99Designs, Atlassian, there's a couple of others, these are real businesses. They weren't a quick flipping of start-ups after doing a huge user acquisition or showing $10,000 revenue in a month."
He thought that Australian start-ups had begun to realise this and while the temptation to flip their idea and short-change themselves was strong, many were maintaining faith that Australia could be the next big thing.
"It's an awesome challenge to get your ideas out, succeed with them and prove to yourself that you can keep doing that. As a person as an individual or as a business, it's an awesome thing to do. What's great about the examples in Australia now is that there are a bunch of other companies doing the same thing and even after being acquired, they're not flipping — they're really being acquired so that they can grow their business as well. The founders are staying around. It's a good sign."
Finding great ideas
Apart from being an Aussie start-up success story, Atlassian has become well known for an unorthodox initiative where once a quarter, its employees are given free reign to work on anything that relates to its products, without any rules, for 24 hours.
It was popularised in part due to career analyst Dan Pink's talk at TED in August 2009.
"They call them FedEx Days. Why? Because you have to deliver something overnight," he said.
In January 2012, Atlassian will hold its 20th FedEx day, but to the company it's more than a single day, four days a year, it's how the company brings together its employees' ideas.
"You spend 70 per cent of your energy on the core products, 20 per cent on the stuff around it and 10 per cent should be on unrelated stuff. FedEx remains a way of structuring that 30 per cent."
"It's easy to get distracted with building features or customers. This is really a way for us to get some buzz back and say, 'Let's stay at the office for 24 hours and get something useful out'."
While Lemieux didn't discount the need for skills like being able to pitch and market, he said that companies needed greater focus on building a product that almost didn't need to be sold.
"They have to build the products that speak for themselves. If you look at the R&D investment verses marketing and sales, I find a lot of tech companies get skewed as they grow. It's that pattern you get into of, 'OK, we're going to have to grow quicker, we're going to have to get those big, big bookings', but that's not sustainable.
"If you stop investing in R&D and coming out with new products and improving the ones that you have ... at that point, you're in a slow decay of technology. A lot of companies have shown that."
He also said focusing on R&D brings not only new products, but it helps the company improve its workflow, learn new lessons and speed up how fast it can bring a feature to the market.
"One thing that's really important when you're building new stuff is that you're not just building it, but it's about learning and adjusting based on that. FedEx is kind of the start of that learning process — getting the thumbs up from everybody going, 'I think that's an awesome demo, we're going to use it'. What we're keen on now is how do we accelerate that learning so we actually get customer validation really quickly, we get employee usage really quickly and we get it out."
"It's better for us because if we can stop stuff quicker that wasn't going well ... we can can it, but the stuff that does have a lot of potential, we can actually accelerate at getting it out. For me, that's the nirvana of what we're trying to do in engineering as a whole."
How fast does Lemieux mean when he says quickly? Just one week.
The company recently created a new feature for its Confluence project to add effects and borders to images, which was born out of a FedEx day. The feature was widely demonstrated, tested to see if it would be accepted by its customers and Atlassian employees all in a short period of time. Of course, there were limitations.
"It depends on the size of the feature. I'm not going to bull***t you here," Lemieux said, keeping with the company's "no BS" policy. "If you look at Facebook with their timeline feature, how long has that taken to go out?"
What Lemieux emphasised, though, was putting the processes into place to push features and products out — a form of agility that companies only gain by doing it regularly.
"What we wanted was the pipeline to say that if that feature is awesome, it's self-contained, imagined that there's low risk, and it's a pointed feature, that we have the infrastructure in place to push that out in a week. Ideally, that would be in a day, but we can make that decision in a week."
The company is now schooling others on how to hold their own FedEx days, planning to hold a competition with the prize being three of its FedEx veterans paying a visit to a company located in almost any part of the world to show them how to run their own FedEx days.
Finding great talent
When it came to finding the people behind great start-ups, Lemieux said there were some challenges ahead.
"I don't just want 100 per cent computer science grads who do back-end work, I need some generalists. Where do you hire for those people? Where do you find those, exactly?"
He said that while an understanding of coding concepts was important, organisations, including Atlassian, should avoid siloing themselves with specialists.
"I think we're adjusting how we hire people. We're a bit, probably, on the specialist side ... but now we're definitely appreciating the value of a couple of key pearls in the company who can take those ideas and make them happen and to me that's worth gold."
Lemieux wasn't frightened of hiring grads, as long as they were ready to hit the ground running.
"We have some pretty rockstar grads and I think for us it's about being a bit more explicit [and saying,] 'Hey, don't be shy. We're going to give you a lot of responsibility, but think about getting your idea and getting it to a customer and that you own that' — there's no hand off."