At a recent Business of Software conference, our CEO Scott Farquhar told “The Atlassian Story” (slides). After the presentation, he was constantly approached by people asking for more information about the unique way Atlassian does business. In line with Atlassian’s “Open Company, No Bullshit” value, we’ll be sharing some of this information in these blog posts.

Let’s start with a very interesting question… How does Atlassian count customers?

As a member of Atlassian’s ‘Internal Systems’ team, this is a topic very close to my heart. The team maintains customer-facing systems and databases of customer information, so I’m always delighted to discuss this topic, which can often get quite controversial!

Hey, there’s an update to this story! See the 2012 version.

 

Put simply, the figure that we quote on our website, which currently stands at “20,638 customers in 135 countries” is calculated as:

  • The number of different companies
  • That have a license for at least one of our products
  • Excluding free licenses and “Starter Licenses”

Each of these factors is deceptively complex. Let’s look at each of these topics in turn.

The number of different companies
Atlassian, you might have come to realise, isn’t like a normal Enterprise Software company. We don’t have any sales people, account managers or sales managers. We don’t divide up the world into industry groups to target, we don’t write strategic sales documents and we don’t take customers out to expensive lunches. Instead, we produce products that generate a lot of positive word-of-mouth that we sell for a low price. And we sell a lot of it. (In fact, the most popular link on our website is the “Pricing’ link — if a company isn’t willing to show their pricing online, then you’ve got to be suspicious!)

Our online order form processes sales at all hours of the day, without requiring staff involvement from our side. This again lets us sell high volumes of software for a low price. (Did you know that the “cost of sales” makes up the majority of the price for many Enterprise Software companies?)

Okay, so where am I going with all this? Well, this business model has the unfortunate side-effect that we cannot easily identify ‘customers’. For example, should we treat a large company (eg IBM) as one customer, or would each global entity or department be a different customer? Should we trust what people type in as a Company Name? What about misspellings or variations (eg Acme, Acme Inc, Acme USA)?

In the end, we decided to use email domain names as a customer identifier. So, all people at “acme.com” are treated as one customer, which is different to “acme.com.au” and “sydney.acme.com”.

However, we then noticed that our biggest customer was “gmail.com”, so we now exclude email domains that are ‘generic’ in nature, such as web-based email services, ISPs, associations and anonymous emailers. In such cases, we treat the unique email address as a customer rather than just the domain. So, “joe@gmail.com” and “josh@gmail.com” would be treated as two separate customers. Fortunately, while many people evaluate our software with gmail-like email addresses, only about 2% of our products are purchased via gmail-like email addresses, so it doesn’t have a big impact.

Summary: A customer is a single email domain (excluding gmail-like domains).

That have a license for at least one of our products

So, which companies do we include in our Customer Count?

We start by including any customer that has paid for our products. After all, they’re a customer, right?

Well, not really. Back in April 2009, we introduced a “Starter License” costing $5 for 5 users (it’s now $10 for 10 users), with all money being given to the Atlassian Foundation to donate to Room to Read. We have sold over 60,000 of these licenses. While it would be really great to count all of these people as customers, it wouldn’t be honest to include them in our Customer Count. So, we do not include Starter Licenses when we count customers. (Of course, if somebody who owns a Starter License also owns a ‘full’ license, they do get counted.)

We also exclude organisations that have successfully applied for our free Open Source and Community licenses. Now, you could argue that they are legitimate customers because they own and use our software. However, it could be misleading for us to claim that “free” users of our software were “customers” because some people might assume that the Customer Count includes only paying customers. So, we leave them out of the count. (There’s 1660 of them to date!)

Summary: We count the number of customers who have ever bought an Atlassian product, excluding any “free” products and Starter Licenses.

The Bottom Line

So, in reality our Customer Count is actually “the distinct number of email domains (excluding gmail-like domains) that have ever purchased a product or subscribed to a hosted service, excluding free and Starter licenses“.

Feel free to meet some of our customers, too!

Hey, there’s an update to this story! See the 2012 version.

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