Software is eating the world and Atlassian is getting fat

Software, Marc Andreessen declared last summer, is eating the world. In the pages of the WSJ, the Netscape co-founder reeled off a list of industries that were once about something else and are now are dominated by software, from Amazon in the bookselling space to Skype in telecoms and Netflix in video. That’s good news for the American economy, he argued, but it also seems to be really good news for Atlassian.

The Australian software company offers tools to help teams build software and it’s had a phenomenal run of 40 straight quarters of profitability, pulling in more than $100 million in revenue last year (with exactly zero salespeople). Entirely bootstrapped for the first six years of its existence, the company is now rumored to be pondering an IPO. And president Jay Simons feels they’re just getting started. Why? Well, because software is eating the world.

“We chose early on to really focus on what we think is a strategic problem for all companies, which is how do you build software better?” Simons explained to GigaOM in an interview, “and one of the reasons that we’ve exploded is that we’re at the beginning of this digital revolution. Entire industries are being upended by software companies.”

Like Andreessen, Simons cites the usual suspects of Netflix, Amazon and Skype, but he feels that these well chronicled cases are only the tip of the iceberg, and that’s only good news for his company. “Brick and mortar companies in almost every industry are now having to differentiate their own products through software,” he says, offering the automobile industry as an example.

“If you watched the Super Bowl, it was oversubscribed with automotive commercials and each of those automotive commercials was actually advertising software. The car itself isn’t going to evolve much mechanically. What has totally changed is that software is now driving fuel-efficiency systems, safety systems, on-board entertainment and navigation systems. Google famously, and I’m sure the auto industry itself, is trying to figure out how the car is going to drive itself,” he says. “Your television set, your alarm clock, your garage door opener, your thermostat, you don’t think about those things as software products but they are or they soon will be,” Simons concludes.

This change, he argues, is literally and figuratively bringing software development out of the basement of companies and making it central to what they do, reconfiguring the workflow of everyone from customer service folks to marketing pros in the process, as they too find themselves involved in producing software. “Some of the creativity, business requirements and customer requirements are all going to come from non-engineers. They need to be communicated and shared and iterated with the engineers that are going to transform those into code. That’s a big difference today than it was five years ago,” Simons says.

Despite these promising trends, the growth of the company may not be without friction, as PandoDaily’s Sarah Lacy points out. “Right now there’s a feel-good API stew of these up-and-coming social enterprise players all wanting to support one another, ” she recently wrote. “That’s in keeping with the consumer Internet world, where people generally believe it’s not a zero-sum game and there is room for multiple players. But in the enterprise world, where people pay for software, a land-war might develop between who wants to be the knowledge worker portal and who wants to be a mere API partner integrating into it.”

These lurking potential problems aside, Atlassian’s ten-year-old bet on helping engineers and non-techies build software together seems to be paying off for the time being. “What developers and what people create with code is in some ways limitless,” Simons says before mentioning the speculation about an impending IPO. “I’m personally excited about it,” he says. No wonder lots of other people are chattering about this potential IPO in the usually less than sexy world of development tools too.

Image courtesy of Flickr user ianmyles.