Pledge 1% AMA with Scott Farquhar

Good morning everyone or afternoon or evening wherever you are in the world and I see a few names that I recognize in the attendee list. So hi to those people I know and hi to those that are meeting for the first time. Feel free to ask your questions in the Q&A at any stage. We can collect them all. So don't feel like you have to wait to the end there. For me, I grew up in a probably lower middle-class family. You know, we didn't want for anything but holidays were really once a year up to Nelson's Bay was kind of our family holiday. And as part of that growing up I did a lot of scouts and Duke of Edinburgh and other things where I had to give back to other people in the world. And I knew that if Atlassian was successful that we would want to give back to just give back I guess. And then we sort of searched around for the best way to do that. And it turned out that the 1-1-1 model was the best way for us to do that. The idea is that if Atlassian's successful we want everyone else to be successful around us, our employees, but also the broader society. And so for that we took the pledge publicly and honestly that's what we did for the first few years is we put it on our website and just told our employees and told our customers and basically said this is our compact to everyone is you know pledge that we're going to do something good in the world and then over time as the 1% became worth something that's when we turned it to concrete programs.

I'm not exactly sure. I mean, Salesforce is well known for this. So maybe read an article from them a while ago. But we don't really recall how it came up. It just Mike and I were sitting down one day, how do we want to give back? And we thought, well, four ones makes sense. You know, 1% of product which really means giving your product away for free to not-for-profits, 1% of profit which was nothing at the start, 1% of product is nothing at the start too, I would love to have if anyone to use our product for free would have been great, and then 1% of employee time which we codified over time is basically one week a year that employees can go do something that's technically 2% of your employee time but most you know we find you know vastly half our employees take all of the days and so it works out to be about 1% also. And then 1% of equity and we set that aside to when we went public we managed to put that into a fund. And so it was probably the CRM article but I think we were one of the first people to do it globally or I guess the second person to do it globally.

A couple of things. I think our employees really rated it, you know, that was a real key reason why our employees chose to join Atlassian. I'd ask everyone like why did you choose to join? And top three reason was the pledge we'd taken that they wanted to join a company that gave back in the world. I also think that, so we did some crazy things in the early years. Back before we really had sort of per user SaaS pricing, like we had, you know, you could buy Atlassian for $1,200 bucks, but that was the cheapest you could buy Atlassian for was $1,200. And we did these things where we did what we called starter licenses where we did $5 starter licenses for five users for five days and we gave all the money to charity. And so in five days we raised I think a million dollars or something of that nature. I have to talk with the exact numbers but it was some stupendous amount of money we raised in five days and gave that all to charity. And so I guess it just inspired our employees to do interesting things and gave us a way in which to give back. And I think our employees really felt like in a world where there's less churches, community groups, sort of things outside of work, work sort of grown maybe with these mobile phone devices that follow us everywhere, it's kind of hard to get away from the office. People looking for a way in which that they can give back and it's been great for our employees to have sort of a mechanism to do that.

No. No, the opposite actually. Like for example, giving our products away free to not-for-profits is actually great business sense because a lot of people who work in not-for-profits work in businesses in their day job and they would get exposed to our products in their not-for-profit world and bring that into their day job. And again, I super firmly believe that the more people using your product the stronger your product has in terms of the data you collect or the signals or the network effects or anything like that. And so that made a huge difference. And then I don't know I think anyone saying that the 1% of profit or 1% of equity is going to make a difference in terms of it's going to make your company worse. I think I'd really struggle to see how 1% does that. But on the flip side, 1% of philanthropy makes a huge difference.

I think you would take all of you pledge to do all of them. It's just the order in which you do them is different right? For example equity you can just sign something and put your equity into a path or a lot of other mechanism to do that or even just pledge that you will do that at the right time when it's worth something. So again I think you do all these pledges really early on and it's just the order in which you implement them. I do think giving your employees some time off as a structured program probably you need an HR department or someone who's thought about that like just to give some guard rails around it but we did before we had a structured program we would as a company go do something for a day or people in their own time would go do something and sort of deal with as a one-off. The product stuff requires a bit of effort. I do know that defining what is a not-for-profit is actually something it took us many many years and if anyone wants it like Atlassian has a definition online of what we do because for example churches are technically not profit but many of them are huge multinational organizations with hundreds of millions or billions of dollars of revenue. So we count the philanthropic arm of the church as a philanthropy that we give away stuff to but the actual other arms of a church we don't. So we had to go through a whole journey that probably took us 10 years to sort of work out what is the definition of a not-for-profit for the purpose of giving our product away free. Again you don't need to go through that you can lift it off our website there but that requires a bit of a program around. And again profit, I'd be happy if anyone on this call is making significant enough profit that that's something they need to worry about now but usually that's after you get to a certain size and scale that you worry about that.

I think it has to be done from the top. But I don't necessarily it needs to be hands-on. And so early on the biggest thing you can do as a CEO is just build your business. And that's why pledge is great and normally I don't like interrupting founders CEOs that are building their businesses. I'm like hey just spend your time doing that. But the pledge is one of those things that, you know, it can take an hour to understand about it and put on your website and say, 'We've taken the pledge and that's what we're going to do.' And then you go back to building a business and build the value of all four of those areas. Now, early on, you do that and then typically what happens, you get one person part-time who starts managing some aspect of it, right? Typically that's your office manager or an admin or someone that's passionate about this that does that. And then the third stage is where you graduate to having someone full-time who's in charge of philanthropy. And I have found that in the early days having that person report into the CEO allows them to have a lot bigger impact across the organization and sit on sort of the broader management team, you know like our top 50 people whatever, our head of philanthropy sat on so that they got all the information around where the company is going. So they're sort of the stages I think you would do.

I think Twilio has been a great one. So, Twilio, they provide messaging, SMS, all those types of things as an API and I think they've done a great job there. They do one of their Twilio.org was around human trafficking. And so, human trafficking, a lot of people, mostly women, unfortunately, get stuck in these situations where they're unable to, you know, modern day slavery. And a way to get out of that is, you know, you could maybe don't have access to go to a police station or anything like that, but you have access to a mobile device. And so having text messaging and apps for those things allowed people to sort of get out of human trafficking. I thought it was a great use case. At Atlassian we did a big thing called Mercy Ships where these ships go around and they do operations in third world countries for people often people have grossly disfiguring conditions that are very simple operations to fix up and these Mercy Ships would go around and they were all run on Atlassian's products so that the entire operation was run that way. So every organization has their own thing that they're passionate about or their employees are passionate about. For us a large part was women's education in the developing world. Like it turns out that a dollar invested in a girl learning to read write has huge spillover and positive benefits in the developing world. And so we do a lot of stuff with Room to Read and other organizations there. And the way I think about that is there's a couple of things. One is that I think every organization should have some sort of matching program where employees get to do whatever they want to do. Because employees have a lot of agency that they have things they're passionate about.

Yeah, matching of donations. And in some cases, hey, I want time off to help my favorite organization do something. I do encourage people with the time off to do as much highly skilled work as you can. In some cases, working that day and donating your salary is a bigger impact than going and working in a soup kitchen or something like that. Each to their own, but if you can do things that have material impact, a lot of people have highly skilled jobs that they could help out these charities. So, I think you got to have some self-directed, but I also think that an organization should, there's many employees that want to give back that don't necessarily know where and why. And so I do think that the majority of an employee's giving, particularly around the equity and employee time and the profit should be towards one or two major causes that the employees can get behind.

Well we set up the movement because no one else was doing it like it was Salesforce, it was us and then I looked around and I think there was I don't know a dozen other companies around the world that had somewhat said something similar to this and so we set out to evangelize this movement. And I don't know there's a couple things make me proud. One is that I think we've done about $3 billion in donations or pledges. Depends on what the stock market's doing any given day. But that's over 10 years. So I think that works out to be 3,000 days. So about a million dollars a day for 10 years has been done under this program. And that's a probably conservative number because that's really just our top 100 unicorns and their equity they've given and stuff like that not counting product and other things. So a million dollars a day feels like a pretty big impact and with every person that joins the movement, it gets stronger and the word gets out and more and more companies take that. So that's one thing I'm proud of. Two, is all the other companies like Twilio I talked about. But there's a whole list of what other companies are doing. And then the last one is I think some of our employees that have had great long-term relationships with philanthropy that they wouldn't have had otherwise. Where they say a couple of them have said actually I'm going to leave my job and go do something in the philanthropic world and they wouldn't have had that exposure without Atlassian and many of them are doing it outside, doing both or like work full-time and also on the weekends or nights or in those five days a year they go and make a meaningful impact to something that's meaningful to them and I don't know it feels great to be able to give employees that particular conduit.

And what do you mean by mobilizing groups for change?