Duel of the fates: Atlassian and Omnidrive

One of these companies has gone on to become an international success story, while the other flamed out under obscure circumstances and bitter recriminations. Only a few years ago they were the flag carriers for Australia's Web 2.0 movement. But recent developments have shown just how different the outcomes for start-up companies and entrepreneurs can be.

Nik Cubrilovic
(Credit: Nik Cubrilovic)

On 19 July Omnidrive founder Nik Cubrilovic made a rare reappearance on TechCrunch with a lengthy post discussing the recent hacking attack on Twitter and subsequent decision by TechCrunch to republish information that was stolen during that attack.

Cubrilovic has kept a low profile since the collapse of Omnidrive, the online storage company he founded in late 2004. The company folded in 2008 with no clear explanation given for what had happened. It was the second online storage company founded by Cubrilovic to fail, following the earlier collapse of MyVirtualDrive, although Cubrilovic has claimed to have been forced out of that company.

The failure of Omnidrive left at least one investor, Vibe Capital co-founder Clay Cook, US$100,000 out of pocket. His subsequent attempts to recoup his investment (which was made in the form of a convertible note) were abandoned, with Cook writing it off as a "valuable life lesson".

In the meantime, Cubrilovic is living in California and working with TechCrunch. He is involved in the development of the CrunchPad, a prototype tablet-PC style device for surfing the web that is intended to retail for less than US$300. No decision has been made on whether the CrunchPad will go into full production.

It's an entirely different story to that told by Atlassian. Despite the relatively chilly climate for software companies, Atlassian is looking to hire an additional 35 developers to continue work on new products and features based around its core wiki software.

Founded in 2002 by Mike Cannon-Brookes and Scott Farquhar, Atlassian has already grown to employ more than 200 people with offices in Sydney, San Francisco, Amsterdam and Poland, and sales in over 74 countries. And it has grown without taking any significant external investment. According to Atlassian's director of engineering, Soren Harner, it makes sense to be investing while other companies are tightening their belts.

"We've got the sales to support more investment," Harner says. "The idea is that we can emerge from global recession in a good shape relative to any competitors. Obviously there is always risk involved, but at this point we can assume the bottom isn't going to totally fall out of the global economy."

The new engineers will work on features designed to entice customers away from rival open source products. Harner hopes to have the new positions filled by the end of the year, taking the number of developers Atlassian employs to close to 130.

Commentary
The tales of Atlassian and Omnidrive demonstrate just how varied the outcomes for entrepreneurs can be. In 2006, Cannon-Brookes and Farquhar were named by Ernst & Young as Australian Entrepreneurs of the Year, and are the strongest success story from Australia's crop of Web 2.0 businesses.

Cubrilovic meanwhile has been the subject of several flame postings (such as here, here, here and here) with claims of salary disputes and poor customer service. Cubrilovic has never publicly explained the reasons why Omnidrive failed. His personal blog at nik.com.au is unattended, while the Omnidrive domain name is redirecting to the document collaboration software maker NomaDesk. I'm still hopeful that he may agree to an interview to talk about Omnidrive and his current work.

Australia generally has a low tolerance for failure — certainly much lower than in Silicon Valley, where having failed in one or two businesses is seen as a learning experience rather than a sign of incompetence. This, coupled with the poor state of Australia's venture capital industry, means that any experience gained through a failure is generally lost, with entrepreneurs either leaving the country or moving into different industries where their reputation does not necessarily precede them.

Atlassian, meanwhile, has continued to show the way for other would-be software exporters, demonstrating that it is possible to build a successful international business without turning to the venture capital market.

Start-up companies are high-risk by nature, and the truth is that most will flame out before they come close to emulating the success of Atlassian.