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🍿 Atlassian acquires Loom: We break down the how and why.
🐣 A few extra Loom related tweets: Some good news, some bad.
🌏 And a resource around global hiring: How to and how not to.

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BUSINESS STORY 🗞️

Atlassian acquires Loom

Australian tech behemoth, Atlassian (/ətˈlæsiən/) announced two days ago that it will be acquiring everyones favourite video sharing app, and used-to-be-unicorn, Loom, for a cool $975 millions in cash.

Every love story in life or in business has an origin. And just like Harry Burns (Harry) and Sally Albright (Sally) this story started long ago and shares many similarities to the famous cinematic duo.

Today we’ll explore those similarities, in our 2023 techno-love-story: When Loomy met Lassy.

Ok, look, to set proper expectation - there won’t be that much more of the When Harry Met Sally analogy. But it was fun while it lasted right? Anyway - let’s dive in.

Early Atlassian

Atlassian was born in 2002. Only a handful of years after peak hysteria in tech, followed abruptly by peak nuclear meltdown in the dot com crash. Australia, at the time was no tech hub. Far from it. We hadn’t had yet come to be known for the home of Atlassian. Or the ecosystem that bore the mighty Canva.

Tech in 2002 in Australia was dead. There was no celebrity in entrepreneurship. It wasn’t cool to finish school and join a VC fund, hell Shark Tank (Dragons Den if you’re from the UK) hadn’t even graced our screens yet.

But these facts didn’t at all deter a couple of young school mates, Mike Cannon-Brookes and Scott Farquhar from getting out and trying their luck.

The pair met while studying at the University of New South Wales in Sydney. Both Mike and Scott were enrolled in the same scholarship program and became fast friends, with people that knew them saying they hit it off because they were both equal parts ambitious and intelligent.

At the completion of a scholarship program, in Australia, it’s typical to go straight into a local company who took on recent graduates.

But that was not the destiny for the two budding founders.

Mike had already dropped out of the program to build his first venture, Bookmark Box, with now Blackbird founder, Niki Scevak. Niki and Mike would go on to a small exit with this venture and shortly after Mike received an email from Scott that would alter the direction of his life.

“Before you take grad jobs, does anyone want to do something crazy and do our own thing?” To which Mike would answer a resounding: yes!

That decision would lay the foundation for one of the largest technology companies on earth: Atlassian.

Every product starts somewhere, and for Atlassian, that product was Jira. A product, born from the desire to create better internal tooling to use while running the service side of their business. A tool for supporting other peoples support teams.

FUN FACT: Jira is a play on “Gojira,” or “Godzilla” - a shot at the market leading tool at the time, Bugzilla.

It didn’t take long though before Jira was a hit. So much so, that the team moved very quickly on to their next launch. If Jira was a project and issue tracker, then the next project needs to be for collaboration.

Enter Confluence, a team platform that lets users work together on projects, co-create content, and share documents and other media assets. Confluence was wildly popular right from the moment of it’s release.

With the two products running side by side and opportunities beginning to present themselves more often, the team had to decide how to prepare for their next stage of growth. But they did something very unique, they leaned into product lead growth.

The rhetoric at the time was that you needed to build a large, bloated sales team to sell into the US and into enterprise. Mike and Scott chose to go in a different direction, they chose to build a ‘self-service purchase experience’.

They knew this self-service (the term PLG was yet to be coined) thing was working when they had their ‘holy shit moment’ - American Airlines signing up to Jira right from the web. It was working.

It was around this point in time in 2007 that Atlassian decided it needed a new foundation to build upon, and the Atlassian Core Values that still stand to this day were set. Those values are as follows.

• Open company, no bullshit

• Build everything with heart and balance

• Don’t fuck the customer

• Play as a team

• Be the change you seek

As the years went by from 2007-2008-2009 the knocks on the door from venture capital became louder and louder. So much so, that the team decided it was time to bring in a new investor in the business: Accel Partners.

Accel are a multi-stage VC firm, based out of Palo Alto that up until time of writing had invested into just under 2,000 companies - 1,952 to precise.

They are also a fund with an impeccable track record. At the time, having already invested in Meta, leading their Series A, as well as up and comers like Squarespace, Slack, Groupon, KAYAK and more.

The Accel investment beat out stiff competition from Silicon Valley’s fines. And had them investing $60 million into Atlassian, setting a valuation of a cool $400 million.

Growth Atlassian

With Accel joining the team and a history of rapid growth and exciting product innovation, the team set their sights on their next stage of growth and prepared themselves for the eventually goal - an IPO on the NASDAQ stock exchange.

But in the meantime, they had to put their new money to good use. Considering they had run relatively profitable for most of their journey, the team claimed the capital would go towards M&A and other enterprise tools.

Their first acquisition coming in 2010, by way of code management and collaboration platform Bitbucket. This was just the beginning. What do Bitbucket, SourceTree, HipChat, Wikidocs, doctape, BlueJimp, Hall, StatusPage, Trello and 10 other companies have in common?

They were all acquired by Atlassian.

Come 2011, Atlassian was purring along quite nicely, ticking over the $100M revenue mark for the first time, doing $102M for the year.

Fast forward a few years, and in November 2015, Atlassian announced sales of $320 million - paving the way for their December 2015 IPO, under the ticker TEAM, putting the market cap of Atlassian at a whopping $4.37 billion.

Former Atlassian employees say more than 100 staff are now either millionaires or multi-millionaires after the successful IPO of Atlassian.

This is all well and good. And only part of the story. But let us for a moment ask - how did Atlassian, a small scrappy startup born in a tech downturn becomes so bloody (yes I am Australian also, this is how we talk) successful?

Playbook (Atlassian)

• Vision setting. The strongest organisations have the strongest leaders. People will run into the fire with a strong leader with a powerful vision. Mike is also one of the most vocal leaders on sustainability in the tech and political sphere in Australia.

• User-centric design. Atlassian’s tools are intuitively designed, prioritising user experience. Winning the hearts and minds of software teams around the world.

• Product led growth. Focussing on a self-serve model lowered the barriers to adoption and allowed for organic growth. It also allows for much more investment intro R&D. When you don’t need to pour money into sales, you pour it into product. Further strengthening your advantages.

• Growth via acquisition. Bringing other products under the Atlassian banner has not only grown the product suite and user base but also strengthened the ability to execute on their PLG playbook. Trello is an example. 19M people across the globe used Trello at the time of acquisition. The majority were free users.

• Community and Ecosystem Building: The Atlassian Marketplace and developer community enhanced the utility of Atlassian products. By allowing third-party developers to create plugins and extensions, Atlassian further strengthened both community and product at the same time.

Birth of Loom (and the loom)

The word "loom" derives from the Old English geloma, formed from ge- (perfective prefix) and loma, a root of unknown origin; the whole word geloma meant a utensil, tool, or machine of any kind. In 1404 "lome" was used to mean a machine to enable weaving thread into cloth. 

By 1838 "loom" had gained the additional meaning of a machine for interlacing thread. But none of that is relevant here.

We are here to talk about Loom, not the loom. And the Loom we are here to celebrate was founded in 2016 by three friends: Joe Thomas Jr. (CEO), Vinay Hiremath (CTO), and Shahed Khan (former President).

The original idea for Loom was not Loom at all but OpenTest, an app for making video usability feedback. This never gained traction, but sharing quick, friction-less video did.

Just in time before running out of runway, the team launched a standalone video recording Chrome extension on Product Hunt and had 3,000 people sign up on the first day. It was an instant success.

Over time, Loom became a go to for entire organisations internal collaboration but it also had strong uses cases along many different areas:

• Sales used it for outreach, onboarding and training, and sharpening sales cycles.

• Design was delivering feedback, sharing knowledge and improving the hand off process.

• Engineering loved Loom because it meant a better way to centralise knowledge, work together async and improve reviewing of code.

The list goes on. Quite literally, every team inside of an organisation can and did find a strong use case for Loom as as tool to improve their workflow.

And it began to click. For the team, for the users and for investors alike.

COVID boom for Loom

With a phenomenal amount traction and the wind in their sales, the three founders were given the gift of a worldwide global catastrophe: COVID-19.

For most startups in the early stages, the early months of COVID meant the grim reaper had come for them. Either that or it was 50 metres down the street. Although, there were a few select companies solving a few select problems that benefited greatly.

Zoom, Deel, Loom and a number of other four letter words were serving the remote work and team collaboration market right at the time that the entire world was forced to work from home.

Loom rode this wave as successful as anyone, completing a Series C raise at a $1.53 billion valuation in May 2021.

Peak hysteria. Peak tech bubble. Peak COVID.

EDITORS NOTE: The chart above is wildly misleading. In 2022 Google changed the way it reported certain searches. The spike you see is from that change. I couldn’t help but use the image to help with the narrative.

In a few short years, these three upstarts had carved off a real niche for themselves and were also well on their way to becoming their own verb.

“Send me a quick Loom” was being heard in organisations from San Francisco to San Jose. And it was only still the beginning.

Early partnership

Like a lot of great partnerships, Atlassian began as one of the first true believers in Loom, becoming not only early adopters but also their first ever enterprise account.

And it made sense that it may turn into something more. Atlassian believe in team. They believe in collaboration. And Loom was building the premier tool to not only enhance but upgrade workflows between teams at all levels of an organisation.

Playbook (Loom)

Before we talk about how this acquisition went down, we should probably talk about how and why Loom have been able to do what they have done in their short history.

• Bottom-up customer acquisition. Individuals inside the world’s biggest orgs were using Loom to make their life easier. This meant eventually filtering things further up to the organisation.

• Viral loops. Loom is the perfect viral product. Your colleague or friend send you a Loom. You see the the value, you sign up, you send a Loom to a friend. The virality cycle continues.

• Borrowing from those who’ve come before. Loom used, or mirrored proven growth hacks from other platforms. The ‘Who has viewed your video’ for example is straight out of LinkedIn’s playbook.

• Product simplicity. The moment you sign up to Loom, you know how to use it. It’s a pleasant experience and has an incredibly short time-to-value cycle.

• Luck. I take nothing away from Loom. It’s a phenomenal product with a (relatively) flawless execution. But sometimes there is also an element of right place, right time. I believe this is one of those cases.

Acquisition

And now it brings us to today, and a corporate love story between these five founders. In the world at large a union between these five would technically be called polygamy - in the technology sector we call this acquisition.

Loom, after a few short years, joined one of the worlds premier tech platforms, and Atlassian continues on it’s messy way, picking up and tucking in incredible partners to flesh out their product suite.

Personally, I think this is an unequivocal win-win for both parties. But there are others, such as Ron Miller from TechCrunch who don’t share my enthusiasm.

Apparently selling a 7-year business for $975 million dollars needs a bit of PR and spin doctoring. Let’s take a moment to play devils advocate to Ron here. So with some back of the napkin math (with support from Phil Haslett) we can breakdown the acquisition as the following.

• Seed 1: 64x ($40M on $622K)

• Seed 2: 25x ($78M on $3.1M)

• Series A: 12.5x ($134M on $10.7M)

• Series B: 4.5x ($125M on $28.1M)

• Series B+: 2.3x ($55M on $23.5M)

• Series C: 1.0x* ($130M on $130M)

What Loom were guilty of, and negatively hit by, was the late 2020-2021 tech boom. Yes, they raised at ~$1.5B in 2021 and sold for a lower figure, but if can build a company and exit in 7 years for a billy in cash … you take it.

Ron and his Cheeto fingers can bash away at the keyboard all he likes but no matter how many characters come out, the fact is the fact. This is a dream exit for the founders of Loom.

Integration

Just as Harry Burns found his match in Sally Albright, Atlassian has found its match in Loom. The two combined are the power couple the tech world didn't know it needed until now.

Let’s look at some of the Atlassian brass and how they look at integrations into their ecosystem.

Future

The future is bright for Atlassian. They continue to provide the best tools for developers and teams at large around the world. It’s wouldn’t be crazy to assume their market cap will grow side by side with the growth of their products affinity within their communities.

I will certainly be cheering them on from the sidelines as we all watch it play out.

Extra reading

• How Atlassian built a $20 billion company with a unique sales model - March, 2019

• 20 years of Atlassian, 20 lessons learned - June, 2022

• Loom Memo by Contrary Research - August, 2023

And that's it! You can find out more about Atlassian, Trello and Loom at these links.

TWEETS OF THE WEEK 🐣 

Sequoia partner Andrew Reed had a funny thread here. Sequoia led Series B for Loom and did well out of this acquisition.

Greg was one person, not so pleased to hear the news.

TOOLS & RESOURCES 🔥

Global HR, payroll, & EOR provider Deel recently release a a top-notch resource: A founder’s guide to building and scaling a global, remote-first company. Here is a few of the things you can find inside the guide.

Building a global team is tough. There are a quagmire of issues you will face. If you want to find talent you have places like Athyna. For HR, payroll and EOR - Deel, Oyster and Papaya are the best in the business.

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HOW I CAN HELP 🥳

Here are the options I have for us to work together. If any of them are interesting to you - hit me up!

🌏 Hiring global talent: Check out my startup Athyna.
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👀 Reach thousands of tech leaders: Advertise with us here.

And that’s it! Feel free to reply to this email and spill your thoughts in a deeper more personal way as I'd love to hear what you thought of this edition.

That’s it from me. 🫡