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Last year, Atlassian co-founder Scott Farquhar was lauding the benefits of artificial intelligence as he argued for changes to copyright law in a way that would suit AI businesses.
Farquhar, chair of the Tech Council of Australia, was pushing for a more expansive definition of “fair use” of creative and intellectual property of others, such as artists.
When asked on 7.30 if it would be fair if AI replicated Atlassian’s own software products, Farquhar replied: “If it was a new and novel way, then that’s fair.”
On Thursday, we saw some of the fallout of AI coming for Atlassian’s products when the company announced sweeping job cuts. When the 16,000 Atlassian workers opened their laptops on Thursday morning, they were faced with a 20-minute moment of abject fear. The company’s chief executive, Mike Cannon-Brookes, had warned them that one in 10 would lose their jobs and that an impending email would let them know if their career was about to be uprooted.
The great Atlassian 1600-strong staff cull illustrates the paradoxical effect of artificial intelligence. The company is one of Australia’s great corporate tech success stories, founded by two of our best-known billionaires, Cannon-Brookes and Farquhar. Now Atlassian is being disrupted by AI – the newer wave of technology.
The size of the cut is sure to frighten many in the already skittish labour market who subscribe to the doomsday dystopian predictions that AI will replace great swaths of workers.
How prescient those prophecies are is anyone’s guess, but software companies like Atlassian are particularly vulnerable to the early wave of AI, and so are their employees.
Investors have sold off the company (and many other software companies). Over the past year, the shares are down 66 per cent and have fallen more than 50 per cent since the start of the calendar year.
This increasingly ubiquitous technology and the velocity of its proliferation has now created competition for several Atlassian products, raising the spectre that it will eat into its revenue to a degree it must combat the problem by cutting costs.
And perversely, Atlassian’s use of AI is both providing cover for and enabling it to slash its headcount. Thus the world’s most feared and revered technology has become Atlassian’s nemesis and its enabler.
The move to lay off 10 per cent of its workforce is certainly a strategy to cut costs and improve performance in a world where its chief executive, Cannon-Brookes, admits the bar to what is considered a growth business has risen.
And it won’t come cheap. The move, which will include redundancy payments, will cost the company between $US225 million and $US236 million ($315.5 million – $331 million).
In its most recent quarterly earnings, released in February, Atlassian reported revenue rose year-on-year but continued to produce a loss – which in the December three-month period was $US42.6 million measured by GAAP (generally accepted accounting principles.) Investor reaction wasn’t kind, and in after-hours trading following the quarterly release, the share price fell another 5 per cent.
Meanwhile, on Thursday Cannon-Brookes said AI has changed the mix of skills the company needs and the number of roles it requires – and there is certainly truth in that.
“We are doing this to self-fund further investment in AI and enterprise sales, while strengthening our financial profile. We’re also changing the way we work and reorganising around our system of work to move faster.”
He was clearly uncomfortable with the narrative that AI is replacing people – saying instead that “people AND AI create the best outcomes”.
Cannon-Brookes clearly doesn’t want to be lumped into the corporate profiteer basket, telling the troops that “Decisions require heart (humanity, empathy, passion), and balance (pragmatism, trade-offs, decisiveness). In this moment, we are balancing making the right (hard) decision for Atlassian, while supporting our people through this change.”
Cannon-Brookes also noted that the bar for what investors expected from software businesses had risen, presenting the cuts as an offensive move as well as defensive one.
Ultimately, however, the company had to lean into AI to save itself from the AI tsunami of disruption.
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