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How to make $3.5 billion in 12 years

April 10th, 2014

I’m often amazed at how frequently a series of events intersect. A couple of days ago I was presenting a webinar in which I talked about how important it is to empower your team members by creating an environment of trust …. a mantra we hear every day.  As always, I mentioned the work of Pat Lencioni author of The 5 Dysfunctions of a Team and Dan Pink’s thought-provoking book Drive: The Surprising Truth About What Motivates Us.

The first time I heard about an Australian company called Atlassian was in Pink’s book. He related the story of how the founders Scott Farquhar and Mike Cannon-Brookes borrowed $10,000 on their credit cards just after graduating from University in 2002 and started the software company that they named Atlassian.

The point of Pink’s story was to explain how Mike wanted to “spark greater creativity among his team, and to make sure Atlassian’s programmers were having fun at work”. He came up with an initiative he calls FedEx Days – these are days the programmers work on anything they like.

FedEx Days start at 2pm on a Thursday then at 4pm on Friday the engineers must present the result of their work to the rest of the company while consuming “ample quantities of cold beer and chocolate cake.’ That BTW is a typical Australian meal.

This initiative is much the same as Google’s policy of allowing people to work on their personal projects 20% of the time so it’s not novel in that sense which illustrates that you don’t need to come up with totally new ideas to be innovative. However, it does have some interesting twists: first, they must report on their results within 26 hours and they turn that into a fun event, second it is a quarterly event which is much less than 20% of their time, and third, it must be something that’s not part of their regular job.

Pink reports that they have created several ideas for new products and lots of fixes to existing ones. Some of the “coolest stuff we have in our product today has come from FedEx Days” reports one of their software engineers.

Pink’s thesis is that knowledge workers are motivated by a need for autonomy, an opportunity to achieve mastery and a sense purpose in what they are working on NOT by the carrot and stick processes that tend to be part of the command and control management styles of the last century.

It seems that this strategy has paid off for Atlassian. Today I opened my email and was greeted with a report from an Australian news feed called SmartCompany that reported Atlassian had just raised some capital that valued the company at $3.5 billion. Farquhar and Cannon-Brookes still own 40% of the business. Not a bad financial outcome for 12 years work.

But, in my opinion, the big take-away-from this story is the value these guys have realized has not come from software – their product – it has come from the design of their business model and their management philosophy.

 

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