Other founders and tech industry insiders were surprised when Atlassian announced Thursday morning that it would cut 10 percent of its global workforce. I was surprised that the cut wasn’t that deep.
As a result, “I think we’ll end up with more waves of layoffs.” [at Atlassian]” says one of the founders.
While they sympathized with the staff, industry insiders have long seen Atlassian as bloated. They’re throwing lavish parties, hiring rapidly and allowing staff to work from anywhere while building a $1.4 billion office tower next to Sydney Central Station.
But despite facing a major AI crisis, Australia’s biggest technology companies have expressed confidence that now looks questionable.
Atlassian’s billionaire co-founder Mike Cannon-Brooks boasted on a podcast last October that “in five years, we’ll have more engineers working for the company than we do today.”
Five months later, on Thursday, he laid off 1,600 jobs. “Days like this are some of the toughest days as a company and certainly the toughest days for me as a leader,” Cannon-Brooks said. “I am deeply sorry for the disruption this has caused in your life.”
This is the largest reorganization in the company’s history and comes after a period of great upheaval. Atlassian’s touted “bold and audacious goal” of reaching 100 million active users in 2022 also looks like a distant dream. That goal remains, but it has quietly disappeared from the company’s website.
Five years ago, Atlassian was an untouchable company, a Nasdaq-listed Australian success story with a market capitalization of more than $100 billion, two brave and principled co-founders in Cannon Brooks and Scott Farquhar, and an enviably casual and candid company culture.
After Farquhar (who remains on the board) retires as co-chief executive officer in 2024, only one co-founder remains. The company has not recorded a net profit since 2015. Atlassian stock is down 83% from its heyday in late 2021 to $73.34, a trend accelerated by the seemingly unstoppable rise of AI.
The problem is structural and it’s a domino effect. Atlassian has created a company that charges wealth for each login to its software development tools. Every newly hired developer was another potential customer, no matter where they were in the world. Wall Street valued the recurring, predictable revenue with little need for sales. This was a business model that allowed Atlassian’s founders to run the company alongside outside businesses. Buying huge mansions, funding sports teams, and becoming increasingly political.
But now the opposite commercial dynamic appears to be true. The layoffs at Atlassian follow similar AI-driven layoffs at Amazon, Block, and WiseTech. With fewer software engineers at big tech companies, Atlassian will have fewer customers. At the same time, startups are building Atlassian-like software from scratch designed for use in AI.
And there’s an even more difficult problem. It’s about whether the man left behind the wheel equates to that moment.
firing line staff
Research results published this month by leading AI lab Anthropic Warning of a “great recession for white-collar workers.” It found that computer programmers are the most exposed profession to AI in the economy, with 75% of their tasks now covered by AI used in the real world. Customer service representatives follow closely at 70%.
When Anthropic released Claude Cowork last month, a new tool that can quickly automate vast amounts of legal red tape, the market reacted with a selloff in tech stocks, with Atlassian’s value dropping 8% in one day.
Plummeting valuations are a bitter pill for any software company to swallow, says Jeffrey Huntley, a former Canva AI developer of “Ralph Wiggum” notoriety. His AI scripts can be used to clone commercial software at a fraction of the cost of building it.
“Many people don’t realize that AI is knocking on their door because it’s under the roof,” Huntley said.
Just four months ago, Cannon-Brookes said on the 20VC podcast that Atlassian planned to hire more engineers, not fewer.
“[We will have] “We’re going to have a lot more software developers working for our company. We’re going to develop a lot more software developers, and they’re going to be more efficient,” Cannon-Brooks said.
Staff members who were laid off on Thursday feel their words rang hollow.
“Before I joined the company, I thought it would be a fun place to work,” he says. “I was bought into the mission. Then I got an email. It felt like they just pulled a name out of a hat.”
“It’s something like this [Mike] Perhaps you don’t actually know how to lead your company into the next wave of growth. So cutting back on heads and making the optics look better was in some ways the best option for Wall Street. ”
In fact, Wall Street wasn’t happy about the cuts. That reduction was much smaller than that of Block, the payments company led by Twitter co-founder Jack Dorsey. Block cut about 40% of its workforce earlier this month, sending its stock price up 20%. Atlassian fell 2.8% after the cuts.
And Atlassian’s layoffs come on the heels of a period of seemingly unstoppable hiring. In 2016, Atlassian employed 1,760 people. By 2025, that number would swell to 13,813, a nearly eight-fold increase in less than a decade. And these staff members rarely have to meet their colleagues in person, outside of the occasional lavish party or employee summit in Las Vegas. Atlassian’s “work from anywhere” policy, called Team Anywhere, requires staff to travel to their local office just four times a year.
This environment has made layoffs seem even more abrupt to employees. “It really feels like an ‘end of days’ kind of thing,” said one former Atlassian employee.
For some, the cuts are a sign that Australian policymakers are ignorant of the scale of change to the workforce.
“Technology workers’ jobs were almost touted as the ‘job of a lifetime’. If we’re still not safe from AI, then it’s time to stand up and take notice,” said Labor MP Ed Husich, former industry and science minister.
“Governments must lead the effort to identify risks, manage risks, and prepare society for change,” Husic said. His plans to regulate AI were abandoned by Labor after he was expelled from cabinet. “At the moment we’re just telling Australians that AI is great, keep using it. Good luck with that approach.”
Internal AI, external AI
For decades, developers have been switching to a new tab to track their progress on Atlassian’s Jira platform. If you have a question, you can find the answer in a separate tab. The company’s Confluence. Both tools were essential for finding bugs quickly and helping programmers understand the work of their colleagues.
But new kinds of tools are closing the gap between doing the work and documenting and explaining it. One of the most popular is linear. Founded in 2019 and used by companies like OpenAI and Cash App, it focuses on clean design and keyboard shortcuts, and uses AI to prioritize bugs, predict project ship dates, and automate status updates. In theory, it’s the kind of platform that could make project management an invisible background task like spell-checking or saving cloud documents.
Additionally, there are more serious threats from development environments, the software that engineers and programmers use to build software products. For example, Cursor is a so-called “vibe coding” platform built for AI that can make its own inferences about what each worker is doing and match it with project-specific logic, structures, and libraries. The new agent mode allows you to respond to prompts, write and test code, and independently update logs, status, and documentation.
Atlassian isn’t standing still. The company has developed a proprietary suite of AI tools that connects and enhances existing software. But now we face an innovator’s dilemma. Will the company disrupt its existing business model (which by some metrics is still growing revenue at double-digit annual rates) to follow an uncertain AI future, or will it seek to tweak an approach that has worked for a decade?
Cannon-Brookes says the company is fully committed to AI. In announcing the layoffs on Thursday, the billionaire said: “We are doing this to strengthen our financial position while self-funding further investments in AI and enterprise sales.”
The job cuts were to ensure we have people with the right skills in the right places for an AI future.
there’s a lot on his mind
Cannon-Brookes may have no shortage of ambitions for Atlassian when it comes to AI, but he could be forgiven for having other things in mind. Over the past three years, he has endured the dissolution of his marriage and the retirement of co-founder Farquhar, but even before that, Cannon-Brookes had a number of extracurricular activities.
In 2022, the clean energy evangelist bought an 11 per cent stake in Australia’s biggest polluter, AGL, in a hostile takeover attempt.
But his year-long attack on the company yielded other successes. He helped thwart the planned demerger and staged a coup d’etat on the board of directors, electing four directors at the company’s general meeting.
In 2023, he took over Suncable, a solar energy infrastructure project that was previously a joint venture with billionaire mining magnate Andrew “Twiggy” Forrest, but the two have since fallen out.
Fast forward to 2025, and Cannon-Brookes’ obsession becomes something of a boy’s own adventure. Last year, he spent $75 million on a Bombardier Global private jet, in addition to millions of dollars in donations to Climate 200 and Thiel Independence. Already a minority owner of the NBA’s Utah Jazz and a 25 percent stake in the South Sydney Rabbitohs, he also signed a contract worth about $50 million a year with the Williams F1 team.
In 2023, he declared that outside interests, including disputes with AGL and Forest at the time, would not get in the way of running Atlassian.
“Ninety percent of my time is spent here[at Atlassian]and 10 percent of my time is spent outside,” he said at the company’s Teams summit in Las Vegas.
“I have a lot of great teams outside of the company, but this is a very intentional choice of how I spend my time, and that’s how I can make the biggest impact.”
Cannon-Brookes will speak to Atlassian staff and technology industry stakeholders at Atlassian’s Team 26 gathering in Anaheim, California, in May. What is the theme? “Enabling human-AI collaboration at scale.”
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David Swan is technology editor at The Age and The Sydney Morning Herald. He was previously technology editor at The Australian Newspapers.Connect via X or Email.
Kishore Napier-Raman is a senior business writer for the Sydney Morning Herald and The Age. Previously, he worked as a CBD columnist and reporter in the Congressional Press Gallery.Connect via X or Email.
Tim Biggs is a writer covering consumer technology, gadgets, and video games.Connect via X or Email.
