(creator of FogBugz, here)
FogBugz won and Jira won, but they were playing different games.
I wanted to make software development better for programmers. When I started creating Fog Creek Software in 2000 programmers were treated like typists. They were not paid very well (my starting salary was $33,000). There was almost no thought around how software should be developed. Companies that scored high on the Joel Test[1] were almost unheard of.
The LAST thing I wanted to do was make another tool of oppression for management to impose gantt charts and deadlines and strict rules about who has to sign off on things.
I set out to make software development better for programmers by blogging[2] and by building a company that would be a great place to work[3].
In 2000 the only way to do that was to bootstrap it. With a team of four people we couldn't build anything complicated. We started with bug tracking software because at least we could touch one aspect of programmers' lives with our philosophy.
FogBugz was designed for smaller collegial teams of people that wanted to work together effectively and needed a clean and simple way to track issues using the smart workflows that small, professional teams like to use.
It was remarkably successful and profitable from 2000 to today. We've never stopped working on improving it, but we also have never abandoned the market of small collegial teams of smart people.
By contrast, Jira was designed as "Enterprise Software" with features to help managers impose specific workflows on teams. Selling Enterprise software is a lovely, profitable business and Atlassian has great success selling to large organizations who ignore FogBugz, but it's the opposite of what I wanted to do. Anyway Atlassian is going public with this enterprise software, good for them, I'm sure they're going to enjoy their well-earned private jets.
But FogBugz was the means, not the ends, and at Fog Creek our ambition was not to be the world's greatest bug tracker software company, it was to fix things for developers. So we kept plugging away at other ideas. Some of them were kinda dumb. Some were moderate successes.
Two of them, Stack Overflow and Trello, were huge hits and spun off into separate companies. Stack Overflow, thanks to Jeff Atwood's inspired leadership, has had more impact on making software development better for programmers than any bug tracker ever will. Trello has grown as popular in three years as Jira grew in 15 years.[4]
Neither of them would have been possible if we didn't have the cash cow of steady FogBugz profits. That's what bootstrapping is, folks! You build one thing and use it to build a bigger thing.
In the meantime I think the world has figured out that programmers are writing the script for the future that everybody is going to live in, so conditions have gotten better. In big cities employers are falling over themselves to invent new ways to pamper and delight their programmer employees, with the massages and the sushis and the dog yoga. We programmers built ourselves hundreds of amazing tools, from github to npm to ci tools, build tools, IDEs, code refactorers, etc. etc. that make programming a million times better than it was in 2000, and bug tracking is just a slice of that pie and not a particularly important or interesting one.
But that said, FogBugz is still very popular and very profitable and thousands of teams use it every day, and we're still reinvesting those profits in making it better and in developing new products to make the world better for developers, and even though it doesn't support pointy-haired micro-managers and doesn't allow you to create a custom workflow requiring that a VP-or-higher sign off on bug reports, there are still small, collegial teams of smart developers who have figured out that this is how they want to work.
[1] http://www.joelonsoftware.com/articles/fog0000000043.html