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Atlassian is 20 years old and unprofitable

smartcompany.com.au

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Re: Atlassian is 20 years old and unprofitable

#401

Post by zeruch »

cptskippy wrote: post #397
dalbasal wrote: post #284

Earlier quoted context omitted.

The idea that growth is better than profits was in-built into Atlassian's proposition to shareholders, ultimately. The slow and steady mentality is fine, but we see over and over that it isn't what the market wants. A private company or a high risk growth company, those are the two options for a software company. Either that or they'll be taken over. They're revenue now is just a $2bn, so that "grow grow" mindset fro…

> but we see over and over that it isn't what the market wants. What the market wants is short term growth and I firmly believe that is what is destroying our economy and the market. Instead of building pillars and companies that outlive the founders, we have short term cash grabs. We have VC firms buying up our existing pillars, gutting them of any valuable assets, saddling them with debt, and then selling off the c…

"What the market wants is short term growth and I firmly believe that is what is destroying our economy and the market."

Agreed, and its now a pox on the overall system.

Re: Atlassian is 20 years old and unprofitable

#402

Post by mbesto »

upupandup wrote: post #345
ryanackley wrote: post #107

Worked there from 2008-2013. So early-ish employee here. I still have a chunk of shares from the original ESOP program. Saying that for full disclosure because I'm biased and this feels like a hit piece to me. When I worked there, they disclosed all financials in our internal Confluence site. There was a policy of full transparency with the employees. The owners (Mike and Scott) had impressive business discipline. Th…

> it's actually bad to be profitable when you're growing. I've seen this happen so many times: - profitable, down to earth founders generating net profits - VC approaches said outfit and tries to gather as much info - VC realizes said outfit is difficult to emulate and break into market - VC invests and starts demanding they run at a loss to grow quickly This works well when interest rates are low, and VC is not unde…

> The good times are over for VC backed SaaS

Disagree. These companies absolutely pump out cash on a free cash flow basis:

"It’s the absolute dollar free cash flow per share that you want to maximize, and if you can do that by lowering margins, we would do that. So if you could take the free cash flow, that’s something that investors can spend. Investors can’t spend percentage margins.” “What matters always is dollar margins: the actual dollar amount. Companies are valued not on their percentage margins, but on how many dollars they actually make, and a multiple of that.” “When forced to choose between optimizing the appearance of our GAAP accounting and maximizing the present value of future cash flows, we’ll take the cash flows.”"

https://25iq.com/2014/04/26/a-dozen-things-i-have-learned-fr...

Re: Atlassian is 20 years old and unprofitable

#403

Post by mbesto »

zerkten wrote: post #328
naravara wrote: post #305

Earlier quoted context omitted.

> But, you can't grow forever. At some point you hit things like the maximum market size and there's no longer any way to invest your profits back into growth. Atlassian is probably a fair bit away from that. Amazon is much closer to that mark today but they got there after following exactly this strategy since the 90s.

>> Atlassian is probably a fair bit away from that. How do you justify that? One way Atlassian's market size gets limited is by being viewed as a competitor to Microsoft (or other large incumbent's) products. Some customers can choose both, but not everyone can. The feature and experience differences don't matter much to the buyers (procurement), so if something is cheaper elsewhere, then it's a harder sell. It also…

> How do you justify that?

I don't think people, even here, understand how simply large and growing the market is for software development tools.

https://www.gartner.com/en/newsroom/press-releases/2022-04-0...

Re: Atlassian is 20 years old and unprofitable

#404

Post by JamesBarney »

theturtletalks wrote: post #371
dalbasal wrote: post #284

Earlier quoted context omitted.

The idea that growth is better than profits was in-built into Atlassian's proposition to shareholders, ultimately. The slow and steady mentality is fine, but we see over and over that it isn't what the market wants. A private company or a high risk growth company, those are the two options for a software company. Either that or they'll be taken over. They're revenue now is just a $2bn, so that "grow grow" mindset fro…

Fundamentally, why would someone buy a stock of a company that doesn’t eventually make a profit or offer some sort of dividend? Seems like Atlassian traded profit for staying power, but can they leverage that staying power to bring value to their investors?

The idea is they'll eventually get purchased, or have a profit and dividends. But if you're growing so fast it makes sense to focus on that over profitablity. Most investors would rather have a 1.40, next year than a dollar today.

Re: Atlassian is 20 years old and unprofitable

#405

Post by res0nat0r »

sien wrote: post #28

So with Slack there is Mattermost and Zulip. What are the equivalents for Jira ? Is there an openish source piece of similar software ? Jira cops a lot of hate on HN, but really to paraphrase Churchill on Democracy - "Jira is the worst issue tracking software, except for all the others". The comparison on Wikipedia has so many of them : https://en.wikipedia.org/wiki/Comparison_of_issue-tracking_s... Are any of them a…

There are lots of alternatives out there looking for marksetshare. I've not personally used ClickUp but it looks fantastic just from their screenshots: https://clickup.com/features

https://clickup.com/blog/jira-alternatives/

Re: Atlassian is 20 years old and unprofitable

#406

Post by dalbasal »

ASalazarMX wrote: post #382
dalbasal wrote: post #284

Earlier quoted context omitted.

The idea that growth is better than profits was in-built into Atlassian's proposition to shareholders, ultimately. The slow and steady mentality is fine, but we see over and over that it isn't what the market wants. A private company or a high risk growth company, those are the two options for a software company. Either that or they'll be taken over. They're revenue now is just a $2bn, so that "grow grow" mindset fro…

What's wrong with having a small or medium company? Why must a company sell its soul for the chance of becoming a money-printing behemoth in the future? I understand that being small leaves you vulnerable to the predatory tactics of big players, but I see that as a consequence of lax regulation. There are too many mono/duopolies already, and the bigger they get, the harder it will be to split them apart.

Nothing is wrong with it, I'm just predicting that this isn't a sustainable state for a publicly traded company. I don't think aggressive antitrust is likely and I don't think it would change the above regardless.

Markets pull towards potential, and the potential of Atlassian is valued higher than it's stable state.

Re: Atlassian is 20 years old and unprofitable

#407

Post by dalbasal »

mbesto wrote: post #400
dalbasal wrote: post #284

Earlier quoted context omitted.

The idea that growth is better than profits was in-built into Atlassian's proposition to shareholders, ultimately. The slow and steady mentality is fine, but we see over and over that it isn't what the market wants. A private company or a high risk growth company, those are the two options for a software company. Either that or they'll be taken over. They're revenue now is just a $2bn, so that "grow grow" mindset fro…

> They're revenue now is just a $2bn And has been growing 30% YoY for the last 3~4 years alone. This is unheard of in any other industry/market. Their FCF is also impressive.

True, but it is not unheard of for a software company. In fact, it's expected. Hence the valuations for software vendors compared to manufacturing, retail, etc.

Re: Atlassian is 20 years old and unprofitable

#408

Post by ilrwbwrkhv »

belter wrote: post #225

Based on data from 2021 and maybe I make a mistake on one or two...List of unprofitable companies. Unprofitable is the new black.... | Unprofitable Companies 2021-2022 | Airbnb | Dropbox | Uber | Lyft | Zillow | Peloton | Pinterest | Snap | Cloudflare | MongoDB | Slack | Spotify | Elastic | Okta | Fastly

Yet all of them have minted millionaires and billionaires. This is the new game. Nobody cares about profits. Money has been made.

Re: Atlassian is 20 years old and unprofitable

#409

Post by jpindar »

tacitusarc wrote: post #389
exyi wrote: post #329

Earlier quoted context omitted.

I know, but it was usable when I last used it. (and it was not designed by Atlassian AFAIK... and even if it would, I don't have anything against Atlassian except that they make really terrible software which I was quazi-forced to use)

Trello was founded by Joel Spolsky, the guy who made stackoverflow, and was sold to atlassian

He also made Fogbugz, which apparently still exists although I never hear anyone talk about it.

Re: Atlassian is 20 years old and unprofitable

#410

Post by mbesto »

dalbasal wrote: post #407
mbesto wrote: post #400

Earlier quoted context omitted.

> They're revenue now is just a $2bn And has been growing 30% YoY for the last 3~4 years alone. This is unheard of in any other industry/market. Their FCF is also impressive.

True, but it is not unheard of for a software company. In fact, it's expected. Hence the valuations for software vendors compared to manufacturing, retail, etc.

I think we're in agreement here then, the valuations follow the fact that these companies can operationally grow much quicker than others.
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