Achieving the First $100M in Revenue Without a Sales Team

Michael Grinich (00:02):

Welcome to Crossing the Enterprise Chasm, a podcast about software startups, and their journey moving upmarket to serving enterprise customers. I'm your host, Michael Grinich. I'm the founder of WorkOS, which is a platform that helps developers quickly ship common enterprise features, like Single Sign-On. On this podcast, you'll hear directly from founders, product leaders, and early-stage operators who have navigated building great products for enterprise customers. In every episode, you'll find strategies, tactics, and real-world advice for ways to make your app enterprise-ready and take your business to the next level.

Today, I'm joined by Cameron Deatsch, the Chief Revenue Officer of Atlassian. Cameron joined Atlassian a decade ago when it had $100 million of revenue and was still a private company. Since then, Atlassian has celebrated its 20th anniversary and grown to serve over 250,000 customers with $3 billion in revenue and many popular products you probably know, such as Jira, Confluence, and Trello. Along this journey, Atlassian had to figure out how to grow upmarket and become enterprise-ready. I'm excited to dig into this, and more, with Cameron. Welcome to the podcast.

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Cameron Deatsch (01:11):

Hey, thanks for having me.

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Michael Grinich (01:13):

So, take us back to when you joined Atlassian over 10 years ago. What did the company look like then? What were the problems you were trying to solve at that point?

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Cameron Deatsch (01:21):

Slightly over 100 million. I think we're more towards 150 million. Anyways, the company had been in business for 10 years already, so its flagship product like Jira was pretty well-established, Confluence as well. So things like product market fit were already effectively accomplished, but, overall, the ambitions of the company were much broader.

I was a 500th and change employee, but, literally, in the first hundred or 200 in the US. Atlassian being an Australian company, the bulk of the development and the bulk of the leadership was still down in Australia. So, we're off in this little San Francisco-based outpost trying to scale this thing. And my previous two companies were, I'd say, hardcore, top-down, traditional enterprise software companies, where if we did a million dollar deal, there'd be celebrations and parties and everyone patting each other on the back. And then, I came into Atlassian and we started doing million dollar days, and no one even noticed. Because it was such the flywheel bottoms-up, product-led business, all that mattered was our products being used. Dollars happened to be this byproduct of the usage, which was a completely new experience for me, having this flywheel-driven business, which, honestly, our last 10 years we've been scaling and having a lot of fun with.

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Michael Grinich (02:33):

Say more about that, how Atlassian got to that stage. When you joined, it was doing 150-ish million of revenue. Were they hiring salespeople at that time beforehand? How did they grow and scale over that first decade?

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Cameron Deatsch (02:44):

It's best to go back to the beginning of where the company was founded and what they were trying to do. And so, the two founders, co-CEOs, still the co-CEOs, Mike and Scott, largely graduated from uni, as they would say in Australia, and they basically had two choices. They had computer science degrees. Coming out of university in Australia, you go work for a bank or you work for a telco or you leave Australia. And they weren't too interested in working for a bank or a telco. Honestly, they had a mission of they just didn't want to wear suits to work. It was just something that didn't appeal to them. Mike had actually done some entrepreneurial stuff during college. He had built and sold a company. So, they largely put together a business which was IT outsourcing for this open source tool, and they were basically an IT support team that people could hire.

So, they started that as the business. They quickly realized, one, that's not a very good business, in that Scott has stories of 1:00 AM leaving a party to go jump on a call with a customer to do some support thing. But they also realized at the time that, actually, there wasn't any good technology that largely college grads with not a bunch of capital could go use to help them run their business. So, that's actually where Jira came out of. Jira helped them. They built it for themselves to help track work, basically track customer issues as they came up, and they realized that could be a business in and of itself. So, they started a business around that product, Jira. Also, you've got to realize this is 2002. We had come out of a major bust. They're raising capital for a technology company at that time. Even if you were in Palo Alto, it was going to be difficult, much less Sydney, Australia.

So, they really had to take a bootstrapped approach from the beginning, which largely said, "Okay, they can't raise capital so you can't hire expensive salespeople. We need to figure out a different way to do it." So, they actually put the products up online. They were largely selling to developers. They were developers themselves, so they knew where to hang out, put it online, and also you've got things like AdWords. I don't know if Google even called it AdWords at that time, but paid online search was just becoming a thing, and they started using that and actually started growing the business.

And largely still, that foundation of: put the products online, make them inexpensive to acquire, provide all the information that customers need to make a purchasing decision online, don't put people in the way, is still core to how all of our business runs today. Obviously, it's gotten much more sophisticated, but in that first 10 years, it was really all self-serve. And if people really needed hands-on help, we had built a fledgling channel network of technical consultants that we could push that experience to, at least when I started by 2012.

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Michael Grinich (05:16):

Tell me more about that early sales culture. I'm curious about why it was the right time to bring sales in, what the culture was there in the company and maybe what attracted you to join this company? I've heard Atlassian described as having no sales team for a long time or being anti-sales in a way. How did you see that? What brought you in?

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Cameron Deatsch (05:34):

When I started in Atlassian, there was no sales culture. There were no commissioned salespeople. And like I said, besides myself - and I was not the CRO, I can actually walk through how I started at the business - but there were only probably three or four people that actually looked at daily bookings that came in. Everything was so product focused and still is, to this date. When I joined, the things that attracted me, one was actually the president of the business at that time, a guy named Jay Simons. Largely, I had worked with him before, love him to death. I said that I was looking for a job. He offered me, effectively, to run our advocates team. And you could say we answered sales related questions. It's, I think, about 20 people worldwide, and if people came to our website, and they couldn't figure out how to purchase online or they had a question, they could raise a ticket and ask a question to us, and they were sales related questions. What's the price of this?

Why should I buy this versus that? Can you help me with the quote? And so on. But we really treated it as customer service, and we called this the advocates' organization. So, we had customer advocates, product advocates, but there was no commission, there was no pipeline. The idea was: could we answer those customers' questions as quickly as possible and with as high satisfaction as possible. And you start getting all these customer interactions, and you just start realizing two things at that time. One is, “man, these customers are coming in droves”. I mean, just the ability for us to land hundreds if not thousands of new customers without any sales interaction is something I learned really early. I'm like, "Wow, actually, people are more than willing to just put their credit card in and start buying software." And the second was the mission criticality of our products. Because basically, we didn't negotiate, we didn't do custom contracts, any of that type of stuff.

People would say, "Hey, well, we're not going to use your software if you don't negotiate a contract with us. And we're like, "Well, it's $3,400 for the license. We'd love to help you. Tell us what's wrong on our contract. We can maybe improve it over the next year." But we weren't doing one-off negotiations. And every time, customers would threaten because we weren't negotiating, every time they would continue to use the software because it was mission-critical and priced just at a fraction of any of our competitors. What happened, at least over the last 10 years, is the bigger customers started standardizing on our products across the enterprise. So, companies like Adobe and companies like Autodesk. You name it. Most of the Fortune 500 use Atlassian in some way or another. But the reality is in 2012, 2013, people would standardize on our tools trying to consolidate and roll it out to 30,000 developers.

Largely, we never built the product to handle that type of scale. Just technically, architecturally, and the products would just largely fall over. So, I went to Atlassian, and I was like, "Well, we should add salespeople." No, we didn't add salespeople. We just built a more enterprise grade version of our products. Okay, this is a real problem. Let's solve the problem for the customers. And of course that premium version, we called it Data Center at the time, came at a significant step-up in cost. That increase in cost, the ASP (Average Sales Price), went from $4,000 to $48,000. It was worth calling a customer back.

And that's where we started an enterprise advocate team. So, the first commissioned salesperson, Atlassian started in 2014. So, we're really only nine years into sales, and you've got to think that was a small group, 5 to 10 people. And that's, largely, how we've added sales to the company today, is we always start small, we start at the team level, we start very inexpensively, and then as enterprise customers start to standardize on our products and ask for enterprise things, we build those enterprise capabilities, put them in packages that can maintain a higher ASP, and then we'll have the sales team go in and represent those products.

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Michael Grinich (09:00):

Can you talk more about specifically what those features are? If anybody listening to this is maybe at the same era that Atlassian was at in terms of their product development, and they're getting pulled up market, what should they look towards in terms of building those features? Or maybe what questions should they be asking themself around how to discover those things to build?

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Cameron Deatsch (09:19):

I'll put this in two camps, and this has evolved over time at Atlassian. So, I'll just say, first and foremost, back when we went from server to the data center enterprise edition, it was largely providing the ability to.. this is all on prem before we went full cloud… but largely do a cluster deployment across multiple servers with a load balancer. Super sexy. No, just we needed to scale better. And then, we built in things like backup, audit logging, single sign-on, and I basically put all that stuff into the table stakes enterprise requirements that, if you went and talked to any customer with more than a thousand employees in a dedicated IT team, they're going to give you just requirements. We need that single sign-on, and is it Okta or is it Sentinel? Whatever your SSO SAML thing is, they're going to need some sort of SOC 2 compliant, they're going to have a set of data privacy requirements. So, I put all that into the table stake stuff. What we've evolved from there is, “okay, beyond the table stakes things that enterprise IT departments require, what is unique to our largest customers from an end user capability or administration capability that we can actually differentiate our offerings against other offerings?” So, things like Atlassian Data Lake and Atlassian Analytics. We have a bunch of great reporting natively in our products that handle most people's reporting needs, but we found that big enterprise customers have these dedicated analytics and data science teams, and what they were doing is dumping the database, putting in their own data lake, doing a ton of ETL, and then coming up with these and then shoving it in Tableau. We're like, wow, that is (1) a lot of overhead (2) you're probably not getting the right result of data you want.

We can make this way easier. So we built Atlassian analytics in our enterprise edition of our cloud products. You get your own data lake, you get Atlassian visualization tools, and all the APIs are wired up with anything else in the enterprise. Automation's another big one. We found that the big enterprise customers, they were building these sophisticated workflows across our products and other products in their software development tool chain. So, we basically built native automation into our platform, and you can get a certain amount of automation rules and so on at our standard tier. And then, as you go up to premium enterprise, basically you use more usage, you get more and more automation capabilities, but also more automation rules. So, we really start taking a packaging lens to our enterprise customer needs that I think just well beyond what I would say is the standard IT requirements.

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Michael Grinich (11:42):

I want to go back to when you joined Atlassian a little bit more. You came from that traditional top-down enterprise sales world into something that was not that. Probably it's hard to imagine an organization that's more different with that bottom up motion and not even commissioned, advocating for the product. What was that transition like? Can you think back to some of the things that were the most surprising, or the things that you learned during that transition?

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Cameron Deatsch (12:06):

So, my previous company had just gone public, but it was like every single quarter was made in the last four hours of the night by some heroic efforts of an enterprise sales rep, his manager, the CEO calling the CIO, and legal negotiations. And just so you know, I had a marketing background. I was, at that time at my previous company, running product marketing, demand gen, field marketing, and sales enablement for the sales team. But I watched that, and oh yeah, everything, the entire quarter depended on this last week push at work. I'm looking at this and I'm like, "Okay, that's just how enterprise software works." Then I came into Atlassian. First, what was so surprising to me was how little we talked about dollars. Right now, as a public company, and it's much more sophisticated now. But then, the dollars, once again, as I said, were the outcome of all the other, what we consider, input metrics today.

It was basically how many signups did we get? How many downloads? How many trials? What's customer sat? Customer feedback across this? Are we getting good cross-sell? Are people using marketplace apps? It was all usage based, and we realized, “okay, if we just get the usage up across the board, the dollars will eventually come.” So, that was a mind shift. It wasn't all about focus about what are we going to do in the last week to make sure the big deal at Intel closes. It was all about, “hey, this high volume, very much like a consumer business looking at consumer metrics.” That was amazing to me, and you really started thinking about it of less of, “okay, we'll just generate more leads to the sales team and hope one of those turns into a whale deal.” It was, actually, this is a system that intricately works together, and how do we improve each stage of the system all the way from the first ad, to the first signup, to the onboarding experience, to provisioning a license, to dot, dot, dot.

And as soon as you do that, you're like, oh, you can actually start applying, what I think, is just a much more rigorous mathematical, strategic approach, experimental approach to growing the business incrementally over time versus “let's just go get the big deals”. That, and, like I said, it would be the third week of the quarter, and we'd have a million dollar day and no one would notice. Just the linearity of our business from a revenue perspective was crazy because we didn't have a compelling event at the end. There was no compelling events throughout the quarters. The fact that we had quarters layered on was just, actually, artificial. The business didn't run on that. It was running on daily activity.

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Michael Grinich (14:28):

That seems pretty philosophically different than, pretty much, all software sales in the world. Sales teams I've talked to, sales books I've read, just the methodology that people have out there. And also, how investors look at companies. When you talk to most investors or even public markets, it's all revenue, ARR, what's your multiple and valuation on ARR? It's not usage and signups and engagement and things like that in the enterprise world. How did you square those two things together internally as a company culturally as you were growing? And I'm really curious about how the sales organization evolved around that because it doesn't sound like you just came in and dropped that top down motion on at all. You probably built up something new and pretty novel, it seems like.

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Cameron Deatsch (15:11):

Yeah, and it wasn't like the flywheel was slowing down or broken, and then we had to throw sales at it. It was, no, we had a new offering, an enterprise version of our products at a significantly higher ASP. The reality was we knew if we called the customers back and ran pipeline and paid commission on that, we would get a higher conversion rate for that particular offering. We also knew that we would only offer that to existing customers as largely an upgrade motion. We also knew exactly who those customers were because we knew exactly what they used and how much usage and so on. So, we knew, from a targeting perspective, with 99.8% accuracy, exactly who to target, why they would need this solution, and when to call them. Now, I'm not saying it's the easiest thing in the world, but that's a whole lot easier than having to go in and convince a new business on the value of Jira.

We never had to do that. Most of the people, we'd walk in, and they're wearing an Atlassian t-shirt. Someone from Atlassian's talking to me, this is amazing. So, that was a big part of the evolution. When I talk to CEOs or CROs of startups, about funding and so on, it really comes down to your business model, your strategy, and how you do operational planning. And the first question I'll ask any CEO or CRO, if you listen on this, is when you do an annual plan, is the first thing you basically build some triple digit or double-digit growth number? We need to do 80% year-over-year growth next year, because we did 110 last year and that makes sense. So, 80% seems like a good number, a little more of a finger in the air. But based off pipeline and revenue I got, 80 percent's what we're going to do.

Then, I'm like, great. Is the next thing you basically do is how many salespeople do we need to hire? How much quota do we need to hand out? And how much attainment against that quota to hit that sales? Is that the next thing you do in your business to hit that revenue number? And for better or worse, most people won't admit it, but it is the first thing. So, we need 40 more salespeople. Great. Do they have enablement? Onboarding? Can we all get them on in six months site onboarding time, productivity time, all that? Then, it's like lead flow, MQLs, account coverage model. Before you even notice, a big chunk of your finance, a big chunk of your operations teams are simply reinforcing a pretty simple decision really early on, which is, "I need to tie all my revenue growth to hiring salespeople."

There are some customers out there like, "Oh, we have a self-serve business that lives over here, and we have a sales business that lives over here." And I'm like, great. Does that sales business continually erode your self-serve business because they want more and more leads? And they're like, "Yeah." I'm like, where do you set the line? They're like, "Ooh, actually it's a constant debate." I'm like, you don't have a line, do you? And they're like, "Not really." I'm like, yeah. And it's nice because you're like, "Oh, if I hire 40 sales reps, and they hold 800K quotas, and they're going to do 90% attainment, I know exactly the dollars that are going to come in, and that head of sales, I can hold them accountable to that." Everyone understands that. Everyone from investors to the board. No one will understand the, "You know what we're going to go do, is I need to get 30 million more in growth next year. I'm going to take 20 million of that and give it to the salespeople and do quota attainment and so on.”

“But 10 million of that I'm going to do through a self-serve online purchasing experience, and what do I do next?” And either they need a store to have a DNA there, and my next person's like, "Great, can you buy online? Can I try online? What are your ASPs? What's your flow? What's your deal flow? Who owns all that?" And they realize you don't turn to a sales leader, in my mind, to do all that. You have to turn to a marketer, a growth person. There's a new type of DNA in the business. And more importantly, it's not ever a single person. It's usually a collection of product people, growth people, marketing people working together across the system to make that work. And the reality is, that's harder. But if you do it right, you can get linear growth or compound growth out of that business without having to hire one more single person. You're not tying your revenue growth to how many people you can hire.

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Michael Grinich (19:10):

I talk to a lot of folks that only want to do that second part. You know, people that are building the self-serve product experience, and they're like, "We don't want salespeople. We want to self-serve our way to the moon," which Atlassian did for quite a while. I mean, getting to over a hundred million in revenue with such a small sales organization, if you can call it that, advocate team. When is the right time to start adding in those sales folks and layering it in? And talk about the interface between those two teams?

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Cameron Deatsch (19:38):

So, there's two of the things I would say about that. One is you will grow faster. So, another advantage here is that Mike and Scott didn't take any venture capital for the first seven years of their business, all bootstrapped, and they were perfectly fine being patient and profitable. They were not in a "let's go build this thing quickly." They were patient and profitable. So, Atlassian never did 200% growth years. Atlassian just did like 35% growth for 20 years. So, what I always have to say is, you have to, as a founder, if you want to go self-serve, realize you are going to grow your business more slowly. Hopefully, more consistently, more linearly, but more slowly and more profitably than if you added a bunch of added sales teams. And that's a decision you and you better be all right with your investors of, "Okay, I'm going to have a slower return on this."

One of the big challenges that entrepreneurs will have with that is, even if they say, "Okay, I can go slow," there's usually a competitor out there or competitors out there, and they're like, "Oh, we need to go capture market share as quickly as possible, and we can do that unprofitably because, as long as we get enough market share, we can own the market and then raise prices." My view on that is Atlassian had that same approach. They just took it as a different angle. "We're going to go get market share by not adding salespeople and keeping our prices really low. Actually, we're going to lower our prices, and make it even easier for people to use our products through online distribution." So, they took the same problem statement but didn't tie user growth to huge revenue growth in the short term. So, I always have to talk to the founders like that's a decision you need to make.

And it's not easy, especially if you have outside institutional investors. When to add salespeople, treat it as a math problem. If you add a salesperson to an account, you will sell more to that account, period, end of story. You'll get higher conversion rates, you'll probably get higher ASPs, and the customer, if they do it right, will use more of your products. Now the question is, how much does that sales rep cost? And not just the sales rep, but everyone else you need to hire in that business to support that sales rep. The sales manager, the SDR or EDR, the demand gen person, the sales enablement person, the sales operations person. For every sales rep, there's usually two or three other people in a business to make sure that sales rep's productive. And then, how much do you want that sales line item to be on your overall organization?

Once you have that in mind, then I kind of work backwards. Okay, that costs this much. I need this type of return profile from these reps. Okay, if I need this type of return profile, then I need to have quotas of X. What can I sell in my portfolio that gives me a quota of X based off of four to six transactions a quarter? I run that math problem backwards. Now, Atlassian is, "We want that sales investment to be quite small compared to our peers. So, we have huge quotas. But by those huge quotas, it forces us to be really focused. Of our 20 products, we really focus sales on three of them because we know we can have those high ASPs."

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Michael Grinich (22:36):

Cameron, last question for you before we wrap up. What advice would you give the next era of founders starting right now from your experience at Atlassian, how have you seen this grow and evolve? People starting these businesses now are building these type of PLG products or looking to grow an enterprise. What advice would you give, or what maybe advice would you give your past self, if you were starting a company today?

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Cameron Deatsch (22:59):

Oh, my past self. Yeah, that would be a much longer conversation, though. My best would be if you're a founder and you're sub 50 million in revenue, you just have to ask these questions to yourself. What type of business am I building? And the first question I always ask is do you want to make a lot of money from a small set of customers? Or do you want to make a little bit of money from a lot of customers, at least for the next 10 years? And if the answer is, "Well, we want to do both." I'm like, no, you don't. As soon as you say you do both, the big amount of money from a small set of customers will eat you alive guaranteed because a sales rep, an enterprise machine, and an enterprise customer will always be able to steer the ship and go over your business more than a self-serve business that effectively doesn't have a voice.

And that, alone, helps you drive a bunch of decisions early on. Keep the prices low, think online distribution, think sales only when necessary, not a report or a whole bunch of crap. That's first. The second is you're probably early on less than 50 million in revenue. You probably only have a single product. What is your multi-product strategy? Now, you can go public, and you can be a successful business on a single product with some different additions. Look at all the biggest enterprise software companies in the world. Every single one of them was multi-product. I will go even further to say the ones that became multi-product as part of their DNA earlier on in the world became even more successful. Build that multi-product DNA early because it can give you more growth levers down the road. My last is people, people, people, people, people. And I have this every single day where it's hard, especially when you grow with people early on and so on, and then you bring in your team and so on.

It's hard to be ruthless and acknowledge that, actually, you know what? I don't have the right person in the spot across the organization because people just get attached to the people that they start businesses with or grow with at any stage, and the reality is 90% of the problems that you find if you're having in a business, any stage here, the question to that is, “God, do we have the right leader in place to go solve that problem or not?” And I hate to be that simple, but I'd say every time you have that hard conversation and you solve it, everyone always feels better afterward. Always. Every time. But it's rough. Very rough.

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Michael Grinich (25:17):

Cameron, we could talk about this stuff for hours. I'm going to cut us off there. Thanks so much for joining me and sharing a bit about your journey at Atlassian.

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Cameron Deatsch (25:24):

It was a pleasure. Thanks for the chat.

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Michael Grinich (25:25):

You just listened to Crossing the Enterprise Chasm, a podcast about software startups, and their journey moving up market to serving enterprise customers. Want to learn more about becoming enterprise ready? The WorkOS blog is full of tons of articles and guides outlining best practices for adding features like Single Sign-On, SCIM provisioning, and more to your app. Also, make sure to subscribe to this podcast so you're first to hear about new episodes with more founders and product leads of fast-growing startups. I'm Michael Grinich, founder of WorkOs. Thanks so much for listening, and see you next time.

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