Atlassian Scoops Up Trello for $425 Million

Atlassian, the parent company behind the Jira enterprise tracking and HipChat communication apps, on Monday announced a deal to acquire Trello, the developer of a cloud-based collaboration app for enterprise teams and personal use. Atlassian will fork over US$425 million– $360 million in cash and the rest in stock.

Founded five years ago at the TechCrunch Disrupt conference in San Francisco, Trello provides software that includes digital whiteboards and virtual sticky notes to help customers collaborate on a wide range of projects. It has attracted a broad range of customers, from the United Nations to Google, John Deere and National Geographic.

Trello is one of the fastest-growing developers in the industry, attracting more than 19 million users in the past five years.

Its acquisition is the latest in a string of deals for the company. Most recently, it acquired StatusPage last summer, building on its total of 18 firms acquired over the years. Atlassian reported $457 million in revenue in fiscal 2016, which ended in June.

Customer Jitters

“Trello’s pioneering use of an intuitive visual system has been embraced by all kinds of teams to do everything from managing marketing campaigns to tracking action items from team meetings,” noted Mike Cannon-Brookes, co-chief executive officer of Atlassian.

The acquisition will allow Trello to leverage investments in research and development to enhance the product, according to Trello CEO Michael Pryor.

Trello will be integrating its software with some of Atlassian’s core products, including HipChat, Jira and Confluence, he pointed out.

Some customers have raised concerns about the impact of the new ownership on Trello, but Pryor offered reassurances that it largely will operate as a standalone service.

“We’re as committed to our original vision and brand as we were on launch day but we have more firepower to fulfill that mission,” Pryor maintained.

Seventy percent of the founders of the companies Atlassian has acquired have remained with the firm, a source familiar with the company told the E-Commerce Times.

Make It Work

Every successful startup must face the internal conflict between scaling up quickly through acquisition or growing organically, observed Charles King, principal analyst at Pund-IT.

“That either requires the company to double down, by acquiring additional funding and quite often bringing in more experienced management, or by seeking to be acquired by complementary business,” he told the E-Commerce Times.

It’s questionable whether Atlassian can sustain its large number of acquisitions over the long term, however.

“It is difficult to integrate different software teams and solutions,” said Jim Mcgregor, principal analyst at Tirias Research.

“As we have seen in the past, growth through acquisitions can be a dangerous strategy, especially if you lose critical talent or slow the pace of innovation,” he told the E-Commerce Times.

Technology mergers historically have been problematic, noted Rob Enderle, principal analyst at the Enderle Group.

That is because there’s an effort to make the acquired company look and work like the new parent, “rather than protecting the assets and unique creativity” of the firm being acquired, which is where the real value lies, he told the E-Commerce Times.

Atlassian so far has demonstrated that it can make its acquisitions work.

The company “is on solid footing with respect to both its corporate stability and technology direction,” said Rob Arnold, digital transformation industry principal at Frost & Sullivan.

“With almost 20 million users, it’s fairly clear that Trello is an asset that Atlassian will want to maintain and improve, rather than quickly dismantle for piece parts,” he told the E-Commerce Times.

It would be wise for Trello customers to ask about future plans for the company, Arnold said, but he saw little cause to worry about the firm being abandoned following this deal.