Unicorn’s are start-up companies whose valuation has exceeded $1 billion dollars. We’ve seen a number of recent Enterprise software companies fall into this category (most of them now public) including Box, New Relic, Hortonworks, Dropbox, Cloudera, MongoDB and more… Besides the $1 billion valuation the one other thing these players have in common is that they burnt a huge pile of cash to sustain growth and earn unicorn status. In some cases, the more revenue they brought in the more they burnt. As long as we continue to be in the current funding environment these kind of unicorns can get to the promised land if they can sustain high growth to the point where at some point they are able to converge their revenue and spending. Needless to say this is a high risk endeavor. Silicon valley loves these kind of growth stories because they are exciting and needless to say we don’t hear as much about the companies who burnt themselves into the ground early on but rather we focus on the big success stories.
I don’t want to call Atlassian a unicorn because that term has too much association with companies like the above that burn themselves to their IPO. No, Atlassian is a very unique company with an amazing story. A company that has built an incredible business model which is high growth, profitable and who are doing that in a very crowded market with many free and very low cost alternatives. The company has defined its values in a very unique way which I think represents how different they are vs. most other Enterprise software unicorns:
The tools space is difficult. There are many free and lower cost alternatives to Atlassian’s flag ship product JIRA (Disclaimer: I am a happy customer). In the tools space developer sentiment changes daily. Regardless, Atlassian pursued a very unique path of focusing the majority of their budget on R&D, building an operation that only “sells” in a low to no friction manner (w/o salespeople), and doing that with a reasonably priced but not ultra-low cost product. While their model may not be the right one for every space I am sure their model will be studied for years to come. Atlassian clearly still benefits from JIRA having become a household name among development leaders but having been in the tools space for many years I have learnt to appreciate the effort it takes to continue to sustain market leadership. This is especially true in a world of free and low-cost competition and competing on awareness with the hyped product du jour.
Actually I was wrong. I think Atlassian is the only true unicorn here and the others are successful behemoths.