Atlassian announced today it has added a new chairman with public company experience, a sign the maker of software development tools for businesses is considering an initial share sale.
Doug Burgum, the former chief executive of Great Plains Software, a business software company acquired by Microsoft in 2001, will become chairman of Sydney-based Atlassian.
The company has emerged as a star in the fast-growing field of collaboration tools for developers. With more than 20,000 businesses using its programs to coordinate internal development efforts, Atlassian amassed bookings of more than $100 million in 2011, up 35 percent from the previous year.
Its customers include technology mainstays such as EBay and Cisco Systems, as well as a growing number of businesses outside of technology, including Nike and Ford Motor.
Burgum said that when he met to discuss a board role earlier this year with Atlassian’s co-founders, Mike Cannon-Brookes and Scott Farquhar, they talked about a potential initial public offering and what it would mean for the company.
“Some companies think about that transition as some kind of end point, as opposed to a means to an end,” Burgum said in an interview. “I was impressed by the thoughtful approach they were taking to building a board with the idea in mind that they were going to build something for the long term.”
Burgum joins a board that includes Murray Demo, a former chief financial officer at Adobe Systems, and Kirk Bowman, a former executive at VMWare, who became directors earlier this year.
“Every step we’ve taken has been to grow a more mature, bigger, more professional business,” Cannon-Brookes said in an interview. “Now we have a world class board to complement that and hopefully keep us on the trajectory we’re on.”
Burgum’s experience at Microsoft, where he was an executive for six years after the acquisition of Great Plains, will help Atlassian as it competes with rival offerings from Redmond as well as International Business Machines. Those three companies are the leading players in application life cycle management, a market that Gartner estimated to be worth $1.5 billion last year.
He may also help Atlassian wade into the public markets, which have been kind lately to young startups that sell software to businesses. The stocks of Splunk, ServiceNow and Jive Software have all increased since holding IPOs in the past seven months. Both Burgum and Cannon-Brookes declined to comment on whether Atlassian is planning an IPO.
Aside from housing most of its 500 employees outside of Silicon Valley, Atlassian differs from many tech companies because of its disproportionate investment in research and development, Burgum said. The startup puts 30 percent of its sales into R&D, about twice as much as it spends on marketing, he said.
“They’ve flipped the business model,” said Burgum, adding that Great Plains spent about half as much on R&D as it did on marketing. “This was impossible 30 years ago because you didn’t have everybody connected to the Internet and you didn’t have people who were accustomed to buying IT products over the Internet.”
Atlassian also attempts to set itself apart from rivals by focusing on the needs of the actual software developers who use its product, said Rich Wong of Accel Partners, who joined Atlassian’s board in 2010 when the venture firm invested $60 million into the startup — its only outside investment.
“The developer is increasingly becoming the decision maker,” said Wong. Atlassian “grew not by thinking about the CIO or the vice president of development but by thinking about the individual developers and teams of developers and what would make their life better.”