Category Archives: Management

A Different Kind of Software Company: What Matters: Three Lessons

Getting in touch with my Inner Jazz

Getting in touch with my Inner Jazz

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Vinnie Mirchandani, fellow Enterprise Irregular was gracious to invite me to guest blog reflecting on Atlassian hitting a new milestone: $100 million in all-time sales since inception. It’s not about the milestone, as reaching 14,706 customers as of today is more fulfilling. It’s about creating a different kind of software company.

Vinnie asked me what’s been fun about the journey, and truthfully I failed and wrote this more serious, reflective post. I was able to scrounge up this photo from our last Christmas party which has become a mini-tradition where our San Francisco team enjoys great live jazz, sushi, and a few too many martinis. `

At Atlassian, we talk about creating something different. Not for the sake of it. Because we’re never convinced norms should be accepted. Even our own could change. At the risk of simplification, these are my Three Deep Lessons I have internalized over 3.5 years in this company.

1. Open Up Your Company.

Why do software companies hide prices? Why must I call a sales person to get them? Why must I fill out an order form to get a goddamned PDF of half-baked content? Why don’t more companies treat customers with respect and develop trust through openness? Sounds straightforward, but this is the cat-and-mouse game that enterprise software companies persist in.

We think open pricing, open license terms, open bug and issue tracking of our products, and licensing our source code are what people, like us, want. We ask ourselves: would we buy this crap? How do you want to be treated? That’s a good test for how transparent you are.

2. Affordable Prices

Mike Cannon-Brookes pounds on the table regularly about the price of entry. He is always trying to figure out how to make it easy for the next developer, the next IT manager, the next knowledge worker to not hesitate. Once we have a product we would use, then we have a fist fight over keeping the prices low. The low price principle was more striking when I met these two guys…

Mike Cannon-Brookes and Scott Farquhar

Mike Cannon-Brookes and Scott Farquhar


… as they were, let’s say, frugal Aussies. They had that shining spirit from Down Under which is an authentic Aussie practicality that was refreshingly unconventional in Silicon Valley. Funny thing is: even though the founders are no longer quite so frugal, our prices have rarely changed. Keep your prices low, Mister Software Man.

3. Anal-Retentive Analytics and Metrics

Scott Farquhar is our Super Metrics Warrior. Scott got us measuring Net Promoter Score (still running around 52%). Scott pounds on the table for so much detail and facts about the business, people leave the room dizzy and frustrated because they are starting to realize what they don’t know.

We don’t have the systems and analytics yet to measure up to some great large companies, but for a $40 million/year business with 185 employees, we’ve pretty damn good. We analyze the shit out of everything. We are constantly writing queries and dashboards on our internal Confluence wiki. This is our form of Lighting Business Intelligence, without any traditional BI software overhead. It’s also one of the hidden gems in our wiki.

Every team has a dashboard, but more important, every team is pissed their dashboard isn’t better. Continually unhappy with the gaps in our data, and searching for that Last Shaker of Metrics, we are on a Forced March for more data. This is a Mission from God I am still learning.

I could rant on about what we think a different kind of software company should be, because we’re still not there. We’re trying though.

RELATED POSTS

Susan Scrupski, another of the Enterprise Irregular clan, covered this milestone and trumped everyone with a video of Mike and Scott from Sydney.

Tech Nation Australia also interviewed Mike on the milestone.

Lessons from the Obama Campaign for the Software Business

Yesterday at the 15th Annual Stanford University Accel Symposium, I heard an energizing talk with Chris Hughes, Facebook, and Architect of Obama’s Digital Campaign Strategies, and Matthew Barzun, National Finance Team for Obama and Former Chief Strategy Officer, CNET Networks, Inc. on “Technology Priorities: Lessons from the Campaign”.

Three powerful lessons leapt from the stage that certainly any software company trying to do something different should understand. These apply to any company who cares about their customer community and focuses on growing a large business.

Scale and Focus

Traditional software counts on hunting down customers and finding those willing to pay the large price tag. Kind of like traditional political fund raising where fund raisers seek big-heeled donors for the $5,000/plate dinner.

The Obama campaign’s New School thinking concentrated on creating scale and community. Instead of only mining a list for the 1-in-5 donor with the big bucks, they started asking 25 people to go out and each find 25 more to pay $25 to show up at an event. The first time they tried this, they sold every ticket. So they tried it again, and next thing they knew: 1,800-person venue sold out.

Thinking how to scale from a smaller list of initial supporters (Obama challenge) was very different than thinking how to divide-and-conquer the large list of potential donors (Clinton early advantage). Matthew said it required concentrating on metrics that really matter – a mantra within the campaign, lowering the barriers to entry for donors and supporters, while having high expectations for the ultimate outcome. Aside from this concentration on large scale, they were relentlessly focused on immediate outcomes: they had to win Iowa; there was nothing after Iowa. Matthew represented this new thinking…
3-principles-obama-campaign

Farming vs. Hunting

The campaign compared their marketing strategy to Seth Goding’s Farming and Hunting analogy. The new school campaign focused on farming a community versus only game hunting (Yes, they did both: about half small donors; half large.). The idea was to spread word-of-mouth, build a bigger community using the existing base of early passionate supporters.

The trick was multiplying the base versus the traditional 1-in-5 division game of hunting. Build the community through networking. Get 25 supporters to rally another for a small entry fee. This is how Matthew illustrates some of the early results…

farming-vs-hunting

Once the Obama campaign got this farming working, the multiplier trumped any notion of relying on the traditional approach.

Values Matter

Communities thrive on trust and respect. If you are serious about building a community of supporters or customers, start with asking how to treat people. Here’s the Obama Campaign Code they handed out for the Iowa caucuses: three simple values:

    Respect
    Empower
    Include

At one caucus the Clinton people showed up with 13 supporters, which on a Cold Day in Hell in Iowa is a good showing. The Obama supporters on the other side of the room numbered 68. But the Clinton group was below the 15 count needed to participate. The doors to the caucus closed at a specific time, meaning no more participants. The Clinton team was potentially without a quorum.

Then after the rules allowed, in walk two more Clinton supporters, giving Clinton a quorum. This was against the rules. What did the Obama supporters say? Let them in. Include them. They deserve to be here. The spirit in the room was immediately more inclusive.

Software companies (all companies frankly) would do well to start by treating their customers with respect, treating them well, and concentrating on inclusion. A couple values we think apply to software companies is treating customers equally and fairly regardless of their company’s size or the size of their orders, and opening up information about your company (pricing, licensing, source code, bugs) so you build trust.

Applying new school marketing thinking and concentrating on scale, inclusion, and low barriers made a whopping 100% difference to what Obama raised. What would it do for your business, Mister Software Man?

Is Agile Development Only for Nerds?

Eskander Matta

Eskander Matta

This man says, “No.” So what? He may look a little nerdy but he is a Senior Vice President at Wells Fargo Bank and using agile development techniques, he has dramatically reduced the time to develop new products for Wells Fargo’s online business.

 
What’s the big deal? Eskander Matta is not a software developer, and he is not in the IT department. Eskander is a banking executive, with a Harvard MBA, who thinks traditional development methodologies are impediments to building new online products faster and better. Eskander believes, “There is so much innovation in Financial Services that speed to market is critical. A lengthy linear process inhibits one’s ability to compete.”

Eighteen months ago, Eskander got a group of bank employees together to take a meat cleaver to a development cycle that had 26 artifacts (think: pieces of documentation). His goal was to remove all artifacts that had no downstream consumer. “If no one is going to read it, then get rid of it”, he asked the team. The team whacked the process down to 5 artifacts. Then equally important, all this was enabled with a wiki.

As is most often the case, Eskander, the business guy, asked the IT dept what wiki to use. The IT guys told him to use Confluence.

By underpinning everything with the wiki, communication and interaction between people was enabled. “If the wiki was a static word document, it wouldn’t have worked”, Eskander points out. The wiki enabled collaboration in a more formal sense.

What’s so interesting is…

  • A business executive took the leadership to streamline development using Agile Development concepts.
  • The outcome was fantastic: 26 development artifacts reduced to 5.
  • The result ended up on one collaborative work space on a wiki.
  • All this was in service of a major bank producing new online products faster.

Granted, Financial Services is largely an information business, this sector is the biggest spender on IT, and in this instance, the product was the Internet. Yet, this story is compelling evidence that there are other executives out there who understand what technology can do, who seek best practices like Agile Development, and who seek out the newest collaborative technologies.

Tips on Recruiting Executives Part II [On Atlassian]

Daniel Freeman who runs product marketing and Jay Simons, new head of marketing, chatting with Mike Cannon-Brookes (back) in our new SF office. That’s Jay’s weimaraner named Sydney, also a great API developer.

In May, we completed the search for a vice president marketing which I wrote about last year. I promised to blog about the search when it was done, so here’s Part II on tips for recruiting executives and senior people.

1. The best candidates are referred by friends.

Our new head of marketing Jay Simons was referred by Kathleen Reidy of the 451 Group, a really bright industry analyst I had the pleasure of meeting last year. Analysts can be a great source of information because they frequently get briefed. James Governor of Red Monk gave me advice more than once.

VC’s are another good source. Some are protective of their network, so it helps to have good relationships. A VC we trust referred our director of product marketing Daniel.

All but one of our best candidates came from referrals. One came through Linkedin. Your network matters, but it requires more than blasting referral emails out to hundreds of people.

2. Use Linkedin as chum.

Think of Linkedin as a big bucket of fish heads, or chum. Chumming is when you throw a big bucket of fish heads and guts in the water to attract fish to your boat. You probably won’t find the candidate through Linkedin, but it’s a great way to announce your intentions. Kathleen Reidy learned of our intentions through my Linkedin email blast.

We received 50-75 resumes for each ad. The problem is filtering these is rough: marketing people are Pro Bullshit Throwers, and their resumes look very professional. Reading these resumes requires a healthy dose of Mike Cannon-Brookes-style skepticism.

I targeted a few candidates by doing People Searches on Linkedin and sending blind emails. I targeted some companies that were in transition. Always be thinking of companies who might be going through a transition. Coincidentally Jay came from BEA/Plumtree, which was being eaten by Oracle. Munch Munch.

3. Best athlete trumps best functional fit.

It’s easy to get wrapped around the axle about candidates meeting all the tick boxes on your list. Silicon Valley executive headhunters can be obsessed with candidates meeting every functional requirement, and to a fault. One problem with executive search is that because they get paid so much, they have to do this to earn their pay. Within reason, of course, you don’t.

The best candidates were not necessarily the best on paper, and did not meet every wish we had. For example, at Atlassian finding business people who have experience with highly technical products like our developer tools is tough.

An analogy is when an American football team goes into a draft looking for a Tight End [Tall guy that can catch passes and run short routes]. If presented with a top athlete in another position and who could be a game-changer, it may be foolhardy to pass. Coincidentally we ended up hiring the youngest of all the best candidates.

4. Interview intensely and spend considerable time.

You can’t spend too much time interviewing key hires. I sat down with the best candidates three times or more. Once I interviewed for a CEO job in a six-on-one interview format that lasted over two and a half hours; CEOs should be able to handle this. Any critical hire should. We interviewed one candidate three-on-one in Sydney.

In another case, Daniel who now runs our product marketing took three of us through a case study of another company to determine any lessons for Atlassian. Not a typical interview format, yet a great way to learn how someone thinks.

5. Source your own references, and get the most senior ones.

Find out who were the VCs on the person’s board at his or her last company. Always ask to talk to the CEO. Board members and CEOs tend not to suffer fools. Start checking as soon as you start to like a candidate, while carefully observing the person’s confidentiality. This may mean checking former execs at the company, or someone you know and trust. If the person is in a senior business role, find out what the senior engineers thought of the person. Good business people should command the respect of technical staff.

6. Always have an executive search backup.

There’s a reason why VC firms use executive recruiters. They don’t want to waste time. If you find yourself wasting time, be ready to hire a strong executive recruiter. I had one on alert from the start.

The Goal: Our Most Important Metric?

word-of-mouth.jpg
We’re debating at Atlassian what’s the most important metric. Our Chief Metric God and CEO Scott Farquhar thinks Net Promoter score might be it. He has threatened to take a few months off to think about it. While we mere weak-minded mortals spend far less time on metrics, Serious Metric People such as Scotty devote lifetimes of thinking to what to measure and why.

Atlassian’s culture is fun, but it’s also about metrics. So, we decided to start measuring our Net Promoter score. Experts such as Fred Reichheld, a fellow with consultancy Bain & Company claim that companies with high Net Promoter scores far out-perform in growth and have far lower costs of sales. It’s seems intuitive given Net Promoter is all about word of mouth, a subject dear to my heart.

What is a Net Promoter score? Customers are asked “How likely would you be to recommend our product(s) to other people” on a scale of 0 [Never] to 10 [Definitely]? Then you divide the responses:

  • Scores of 9 or 10 are promoters; divide the total number by the total surveyed to get a percentage or score.
  • Scores of 7 or 8 are not promoters; ignore these responses.
  • Scores of 6 or less are detractors; divide the total number by the total surveyed to get a percentage or score.
  • Subtract your detractor score from your promoter score to get Net Promoter Score.

How We Stacked Up

We surveyed 500 customers, chosen at random, and our Net Promoter score was: 52%. Although this puts us in great company with the likes of…

nps-stars.jpg

… we’re now obsessed with the comments we got back on what we need to fix. Imagine the kind of customer loyalty Harley Davidson has! How does one achieve that?

How We Surveyed Customers

We learned something simply about how to survey. We made it clear we only required answering one question to participate in the survey. The other three questions were entirely optional:

  • “If you wish to elaborate on your response, do so here…”
  • “Is it OK for us to contact you?”
  • “If so, what’s your contact information?”

I felt it important that we reduce the survey to the smallest possible, even to the point of editing out superfluous words so each sentence was concise. I hate surveys that say “This will take 10 minutes” instead of “This survey has 10 questions”. I absolutely hate surveys where I never know when the end is coming. Always state how many questions!

Other Lessons from the Net Promoter Survey

The survey had a 40% response rate, and 20% of the customers said it was OK to contact them. Given how busy people are, we were pretty happy with these statistics, but while these stats compare well in marketing circles, that’s not our goal. Our goal now is understanding what we have to do to get better.

What Are We Doing About it?

First priority is personally calling every single detractor [who agreed to be contacted]. I am again obsessed on this process: one person needs to conduct these calls so the information is properly assimilated and understood. Passing support problems to support and product problems to development loses this vital analysis.

Second we are thanking everyone who participated and is willing to contacted.

Third, we are working out a process for contacting the promoters and the “middle” scores. As this is our first time, we have much to learn, and most important, apply what we hear.

The Pizza Strategy: 5 Tips for a Successful Business

coffeebar.jpg

A Coffee shop opened on the corner near our office. What they are doing to launch their new business amazingly applies to most companies. It’s brilliant and common sense. The Coffee shop illustrated to me lots of attributes of how to think about starting a new business, and how not to do it…

1. The New, New Thing vs. the Pizza Strategy

Mistake #1 in Silicon Valley is the obsession with the New, New Thing. The opposite is the Pizza Strategy. It’s practical, you could eat it every day (if you work with engineers), it’s both lunch and dinner food. It serves a lot of purpose, but it’s common and a bit boring. Innovation is wonderful, yet not enough technology companies go after crowded industries where an unmet need still lies.

Coffee Bar, which opened last month in our neighborhood is an excellent example of my kind of entrepreneurialism. They opened one block away from Starbucks. People asked why they would do that? Dumb question. Starbucks is an Unholy Blasphemous Sacrilege to those of us religiously devoted to the Sacrament of Coffee.

I call JIRA our Pizza business. It’s the sincerest form of flattery because Mike and Scott chose a software product with tons of competitors yet found an unserved need: a useful, practical issue tracker for $1200 – $4800. Five years later, it still sells like hotcakes. There were lots of pizza shops, but JIRA pizza has a strong following.

2. Marketing vs. Product

It’s not that marketing is bad. Hell, I’m recruiting for a VP Marketing. The question is: what do you lead with? If you can’t win folks with the product first, pack it up.

Coffee Bar has sitting next to their menu a ranking of all the best, generally boutique coffee shops in San Francicso. This takes cojones because San Francisco has some great coffee shops in the North End that are historic with the Beat Generation. Coffee Bar ranks #1. The point is: they are proud of their product and determined to be the best. They lead with Great Product.

Coffee Bar does something else we try to do at Atlassian which is give customers fewer choices, but give them good ones. We apply this rule to pricing to keep things simple. The first time I heard about Coffee Bar’s food, Jonathan Nolen said “The menu is limited but everything is great.” Bullseye. Apple figured this out a long time ago: compare the number of add-on options available on a Mac to those on a Dell. With Dell, the choices are agonizing and confusing.

Lead with product and keep things simple.

3. Free Trials vs. Hassle

What’s the biggest problem with test driving a new car? The hassle from an annoying salesman. Why do software companies do this when all you want is a whitepaper…

windriver.jpg

Why don’t more companies just let you try their products with the least intrusion and hassle? During lunch when I normally don’t have coffee, Lindsay at Coffee Bar asked me if I wanted to try the coffee for free. Just the act of offering me a free coffee warmed me to the place. When I asked for a double espresso, she said, “Perfect”, because she wanted me to taste the undiluted essence of the core product: coffee. She handed me the espresso with a pride and belief in her product. She expected nothing in return.

The more questions you get asked when you evaluate a product, the more you ought to run for the hills. Businesses need to be willing to trade bad customer information for engendering trust.

4. Marketing vs. Word of Mouth

When I told Lindsay at Coffee Bar lunch was excellent, she asked if I could tell my co-workers. I was more than happy to oblige. Lindsay led with great product, she has visible pride in her restaurant and product, she is happy to be a few feet away from the Starbucks, and she understands my recommendation is much more important than an advertisement.

Ask yourself what can you do to promote word of mouth? Advertising is no longer what it once was.

5. Branding only matters so much

Too many tech and Internet companies obsess over names. Granted, consumer companies have a greater challenge. If you are taking on, say Coca-Cola or Cheerios, I would support an intense effort on naming.

What I like about Coffee Bar is that it is imperfect but it works. It stands for Coffee in the daytime, Bar at night. “Oh, that’s cool”, was my first thought. I’ll remember that. Is it a boring, generic name? Sort of. But so what if the product is excellent, and they concentrate on what customers really want?

There are a few common, useful rules for naming from Rob Gemmell, a friend and Marketing God:

  1. Own-able — The name is unique and you can own it. “Accenture is ow-nable; “Pacific Lumber” is not. Any name becomes own-able over time if you either spend a lot of money on marketing, or you establish a large market of customers who know you.
  2. Spell-able — The one weakness of the “Atlassian” name. Sometimes related is Pronounceable, which is another Atlassian imperfection.
  3. Memorable — Related to uniqueness, but very different: will people remember the name?
  4. Relevant — “Reliable Roofing” is highly relevant: it includes the benefit. It is relevant to the customer. “Apple”, on the other hand is completely arbitrary and not relevant. It’s cute, but it’s not relevant to the customer. “International Business Machines” was extremely relevant at the time.

The other two useful, secondary rules are: 1) Start with a letter high in the alphabet, a strength of Atlassian or Apple, and 2) Try to keep it as short as possible.

“Coffee Bar” is imperfect. Once you understand it, it might be memorable. But it is too generic to be own-able, without a lot of marketing money behind it. It doesn’t matter as much as the product, the customer service, the ambiance, and of course, a motivated, smart owner like Lindsay.

Tips on Recruiting Executives Part I [On Atlassian]

grateful-dead-cartoon.jpg
We are in the midst of recruiting for a vice president of marketing. Even though we are still working on it, I thought I would share some of what we do during the initial stages of recruiting. Here I am concentrating on attracting candidates, finding candidates, and filtering resumes.

Here are eight key elements to how we start the recruiting process:

  1. Write a great ad – Why do companies continually forget how important this is? Be specific about why your company would be a great place to work at, what’s so interesting about the job, or what is it about the scope of responsibilities that will challenge someone. Make it compelling. I believe this job we’re recruiting for is a great job, so I tried to make it sound like it. I wrote our ad on Linkedin which will expire soon, so it’s here.
  2. Remember Karma – How do you like to be treated when you look for a job? Well, that’s how you should treat applicants. Answer every single email application. Even if you get swamped, do it; if you’re late, apologize but do it eventually. You should treat any candidate at any level with respect. Because industries are small, you are more likely to run into senior people again in your career, so act accordingly. Three of the applicants for our VP job included: a well know Silicon Valley blogger who is a good friend, a local industry analyst who knows our space well, and a founder of a software company where I once interviewed to be CEO. Tables turn. Don’t forget Karma.
  3. Don’t rely on ads; leverage your best networks – We have had 75 applicants, many very good on paper, through Linkedin. But our best candidates came through referrals from Mike’s network, and Anthony’s.
  4. Filter, filter, filter – The higher the expectations and the greater the responsibility for the job, the more important it is to be exacting about filtering resumes and not wasting candidates’ or your time. I do believe in the Best Athelete theory which says the best person may not be the one with the perfect functional experience, but instead the brightest, sharpest, highest potential one. With senior people, however, you are hiring experience, so this needs to dominate your initial filtering.

    Occasionally I let a left-of-center candidate through because there is something compelling in her/his background. But experience dominates the first filtering. Executive search people say, “the best indicator of future performance is past performance”.

  5. Bad resumes tell a lot – I hate bad resumes, and that generally means most of them. My three biggest annoyances on resumes are:
    • Lists of skills, strengths, accomplishment, and capabilities, instead of background by job. Experience matters, and not a candidate’s interpretation.
    • Vague chronology. I like seeing jobs by month and year. If you have ever been interviewed by executive search recruiters from firms like Heidrick & Struggles or Korn Ferry, they get precise chronology.
    • Long resumes. This is partially a US thing because in other countries long resumes are common, but I hate them. One of our applicants is a SVP from a Top 10 tech company, and his resume is two pages. Most mortals fit on two pages.

    Cover letters are where it’s OK for candidates to sell themselves, although the degree to which someone reveals some understanding of us matters a lot. Bad cover letters say a lot. If a candidate does not take the time to write a good cover letter, then how much do they really want this job?

  6. Filter with email questions – If you just received 20 resumes, and aside from the one really good resume, and the eighteen that don’t fit, what do you do with the one that’s interesting but borderline? Send them an email asking three tough questions. My favorite question is: what challenges do you think Atlassian faces? This forces some thinking, and is a great question in a first interview as well.
  7. Network with some candidates – I generally make a few Linkedin connections during a search because the person has some interesting skills but we do don’t need them now, or I may know someone who could use these skills. This relates to the Karma Rule above.
  8. Have a backup plan (if you can afford it) – Before starting the search I lined up a great executive recruiter who I have trusted as an employer and as a candidate. I gave us 45 days to succeed on our own. So far, so good. Executive recruiters are painfully expensive, and most of them are not worth it. But at some point, if you have a critical hire, such as this one is for us, you cannot screw around.

I’ll blog Part II when we complete the search.