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How Atlassian’s Scott Farquhar and Mike Cannon-Brookes became software titans


Caitlin Fitzsimmons

Atlassian is the tech industry’s poster child, its founders Mike Cannon-Brookes and Scott Farquhar are proof that you don’t need to move to Silicon Valley to become billionaires.

Atlassian founders Scott Farquhar and Mike Cannon-Brookes met at university and have gone on to become one of Australia’s most successful business double-acts.

Atlassian founders Scott Farquhar and Mike Cannon-Brookes met at university and have gone on to become one of Australia’s most successful business double-acts. Photo: Nic Walker

Scott Farquhar remembers desperately wanting a computer. He was about 11 years old, the eldest of four children in a working-class family in western Sydney, and the early 1990s recession was biting hard.

“I wanted a computer really badly because my friend had one and I knew you could play games on it,” Farquhar recalls. “I remember emotionally blackmailing my parents and at one stage crying to get a computer – I feel horrible now, because my parents couldn’t really afford one.”

A year or two later, his father managed to buy an old Wang computer through his work. It was so outdated that it wouldn’t even run Microsoft DOS, but he spent nearly a year trying to get it to play games, without success. Farquhar’s primary school taught some basic computing and he won the technology prize in Year 6, but he describes the computing education at his selective public high school as terrible to the point of non-existent. His next exposure to computers was not until university.

Farquhar, left, at Cannon-Brookes’ wedding in 2010. They were Best Man at each other’s weddings.

Farquhar, left, at Cannon-Brookes’ wedding in 2010. They were Best Man at each other’s weddings. Photo: Cameron Bloom Photography

On the other side of Sydney, the Cannon-Brookes family was settling into life in the eastern suburbs. Mike’s father is Michael Cannon-Brookes, who, until recently, was better known in business circles than his son. He arrived in Australia in 1984 to set up Citibank and served as managing director. The family was English but Mike, the youngest of three, was born in the US, moved to Taiwan when he was six months old, Hong Kong when he was three and was then sent to school in England. For a few years, until the family decided to settle in Sydney, Mike remained at boarding school and made the long-haul flight to visit his family in Australia four times a year. He was still in primary school when he bought his first computer with Qantas Frequent Flyer points.

“Because of the flying, I had tons of Frequent Flyer points and back then points were worth something so I got the catalogue every year and got some shit,” Cannon-Brookes says. “My parents were Apple fans and had Macintoshes but I got my own computer, not the one in the lounge room, when I was eight or nine. It was an Amstrad PC20 and a real hunk of junk to be honest but . . . it sparked my interest in computers. It was a big, big deal.”

His schools also had well-equipped computer labs and Mike later persuaded his parents to install the internet at home – in 1991, before the world wide web. He finished school at Cranbrook, one of Sydney’s most exclusive boys’ schools.

In 1998, Cannon-Brookes and Farquhar, both aged 18, landed in the same scholarship course in business information technology at the University of New South Wales. They met on the first day of university but did not click straight away. As Farquhar puts it, “People from Cranbrook had a bit of a swagger about them before they started university.”

But first impressions gave way to friendship and a strong camaraderie developed among the 40-odd scholarship students.

Cannon-Brookes and Farquhar, now co-founders and co-chief executives of software company Atlassian, were conservatively valued at $1.1 billion each on the 2014 BRW Rich 200 list. Indeed, 16 years after they met, the pair have plenty in common beyond their age – both 34 – wealth and shared work history. They served as best man at each other’s wedding and both live within a few kilometres of the Sydney CBD.

Success does not appear to have changed their lives too much. Cannon-Brookes still wears his trademark T-shirt and baseball cap, but has started to accrue a few trappings of wealth, with a weekend house in Sydney’s Palm Beach and a Tesla electric car on pre-order. Farquhar still drives a beat-up old Subaru but has “splurged on a personal trainer . . . to keep up with the kids”.

Farquhar still has a copy of the email that Cannon-Brookes sent to him in June 2001, inviting him to co-found a company. “Bored of studying, Atlassian is far more interesting,” the email said. It went to a few of their classmates, but Farquhar was the only one to say yes. He had found his internships in the corporate sector unsatisfying and was willing to take a punt on something different.

“The original goal was $48,500, which was the PwC graduate salary at the time,” he recalls. “Mike and I thought that if we could earn that and not have to wear a suit and not have to put up with big company bullshit then we’d be ahead.” As it turned out, they could only afford to pay themselves $15,000 each for the first two years. “It was basically survival mode,” Farquhar says.

The lean start-up years are the basis of their wealth now – the fact they were cash-flow positive from day one and had no outside investment for the first eight years is the reason they still own two-thirds of the business between them. The company has never had funding, but there have been two big secondary investments.

In a reversal of the usual courtship, about 80 funds had contacted Atlassian wanting to invest over the years and the founders had kept track on a spreadsheet. They whittled it down to a shortlist of six, flew over to San Francisco for three days of presentations, and said the highest bid would win.

Four years later, an initial public offering for Atlassian is widely anticipated. The founders acknowledge this is the “logical next step for the business” but insist it is not imminent. They confirm that the listing, when it happens, will be on a US exchange such as Nasdaq, not the Australian Securities Exchange.

A public company structure suits the founders’ long-term vision of a firm that will endure long after they have gone. Neither they nor the company need the money. They can go at their own pace because they own most of the business, other investors are not pushing for an exit and the company is profitable. “We have the luxury of being able to do things properly so that we set up the business for the next 10 years, not to get through some event,” Cannon-Brookes says. “We’re certainly preparing, but that preparation could take years.”

AFR Magazine

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