When Atlassian announced it was cutting 10 per cent of its global workforce on Thursday morning, other founders and tech industry insiders were surprised. Surprised that the cuts weren’t deeper.
As a result, “I think we will ultimately see many more waves of layoffs [at Atlassian],” one founder says.
While they empathised with staff, people in the industry have long seen Atlassian as bloated: throwing lavish parties, hiring rapidly, and building a $1.4 billion office tower next to Sydney’s Central Station while allowing staff to work from anywhere.
But even as it was facing major AI peril, Australia’s biggest technology company has been projecting a confidence that now looks questionable.
“Five years from now we’ll have more engineers working for our company than we do today,” Atlassian’s billionaire co-founder Mike Cannon-Brookes boasted on a podcast last October.
Five months later, on Thursday, he was axing 1600 jobs. “Days like these are among the toughest that we have as a company, and certainly the toughest that I have as a leader,” Cannon-Brookes said. “I am deeply sorry for the disruption this creates in your life.”
It was the biggest restructure in the company’s history, and one that follows a period of great tumult. It also makes Atlassian’s “Big Hairy Audacious Goal” of getting 100 million active users, which it touted back in 2022, look a distant dream. That goal remains, but has quietly disappeared from the firm’s website.
Five years ago, Atlassian was untouchable, a Nasdaq-listed Australian success story with a market capitalisation over $100 billion, two plucky and principled co-founders in Cannon-Brookes and Scott Farquhar, and an enviably casual, forthright internal culture.
Now, there is just one co-founder left after Farquhar (who remains on the board) departed as co-chief executive in 2024. The company hasn’t recorded a net profit since 2015. Atlassian’s share price has fallen 83 per cent since its late 2021 heyday to $US73.34, a trend accelerated by the seemingly unstoppable rise of AI.
The problem is structural, a domino effect. Atlassian built its fortune charging companies per login for its software development tools. Every new developer hired anywhere in the world was another potential customer. Wall Street loved it: sticky, predictable revenue with almost no selling required. It was a business model that allowed Atlassian’s founders to run the company alongside outside pursuits: buying mega-mansions, splashing out on sports teams and becoming increasingly political.
But now the opposite commercial dynamic appears true. The cuts at Atlassian follow similar AI-induced layoffs at Amazon, Block and WiseTech. Fewer software engineers at big tech companies means fewer customers for Atlassian. At the same time, start-ups are building similar software to Atlassian that is designed to be used with AI from the ground up.
And then there is the harder question: whether the man left holding the wheel is equal to the moment.
Staff in the firing line
Research released by leading AI lab Anthropic this month warns of a “Great Recession for white-collar workers”. Computer programmers, it found, are the most AI-exposed occupation in the economy: 75 per cent of their tasks are now covered by AI in real-world usage. Customer service representatives are close behind at 70 per cent.
When Anthropic last month released Claude Cowork, a new tool that allows speedy automation of vast amounts of legal grunt work, the market responded with a tech sell-off that slashed Atlassian’s value by 8 per cent in a day.
Plummeting valuations are a bitter pill that every single software company will have to swallow, says Geoffrey Huntley, a former Canva AI developer who gained infamy for “Ralph Wiggum” – an AI script he made that can clone commercial software for a fraction of what it costs to build it.
“For a lot of people, they haven’t noticed AI is knocking on their door because AI is burrowing under their house,” Huntley says.
Just four months ago, Cannon-Brookes had told the 20VC podcast that Atlassian was on track to hire more engineers, not less.
“[We will have] more software developers working for our companies,” Cannon-Brookes had said. “We will create far more, they will be more efficient.”
Staff who were let go on Thursday feel those words ring hollow.
“Before I joined it seemed like a fun place to work,” he said. “I was bought into the mission. And then came the email, and it felt like they’d just pulled names out of a hat.”
“It feels like [Mike] doesn’t really know maybe how to lead the company into the next wave of growth. And so cutting heads and making the optics look better for Wall Street was kind of the best available option.”
In fact, Wall Street was not delighted by the cuts, which were far smaller as a percentage than those by Block, the payments company led by Twitter co-founder Jack Dorsey. Block cut about 40 per cent of its staff early this month, leading its shares to jump up to 20 per cent. Atlassian’s were down 2.8 per cent after the cuts.
And Atlassian’s cuts follow a period of seemingly unstoppable hiring. In 2016, Atlassian employed 1760 people. By 2025, that figure had ballooned to 13,813, nearly an eightfold increase in less than a decade. And those staff have been barely required to see their colleagues face to face outside of the occasional lavish party or Las Vegas employee summits. Atlassian’s “work from anywhere” policy, dubbed Team Anywhere, requires staff to attend their nearest office just four times a year.
That environment has made the job cuts appear even more abrupt to staff. “It just seems like very ‘end of days’ kind of thing,” the former Atlassian worker said.
For some, the latest cuts are a sign that Australian policymakers are ignorant about the scale of change that is coming for the workforce.
“Tech worker jobs were almost touted as ‘jobs for life’. If they’re not even safe now from AI, then surely it’s time to sit up and take notice,” says Labor MP Ed Husic, a former minister for industry and science.
“Government has to lead the work of identifying risk, managing risk, preparing societies for change,” says Husic, whose plans for AI regulation were abandoned by Labor after he was dumped from cabinet. “At the moment, we’re just telling Australians that AI is great, go ahead and use it. Good luck getting that approach to work.”
AI inside, AI outside
For decades, developers have switched to a new tab to log their progress in Atlassian’s Jira platform. And if they had a question, they could find answers in another tab; the company’s Confluence. Both tools were critical to ensuring bugs were caught quickly and coders could understand their colleagues’ work.
But a new breed of tools means the gap between doing the work and having it documented and described is closing. One of the most popular is Linear. Founded in 2019 and used by companies including OpenAI and Cash App, it emphasises clean design and keyboard shortcuts, using AI to triage 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 check or saving a cloud document.
Then there is a deeper threat from development environments, the software that engineers and coders use to build software products. Cursor, for example, 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, structure and libraries. Its new agent mode can write and test code in response to a prompt, updating logs, status and docs on its own.
Atlassian is hardly standing still. The company has developed a suite of its own AI tools that plug into and enhance its existing software. But it now faces the innovator’s dilemma. Does the company disrupt its existing business model – which is still growing revenue at double-digit percentages annually by some measures – to chase an uncertain AI future or try to tweak an approach that has worked for a decade?
Cannon-Brookes says the company is all-in on AI. When he announced the job cuts on Thursday, the billionaire said: “We are doing this to self-fund further investment in AI and enterprise sales, while strengthening our financial profile.”
The staff cuts were to ensure the business had people with the right skills in the right places for an AI future.
A lot on his mind
Cannon-Brookes may have no shortage of ambition for Atlassian on AI, but he would be forgiven for having other things on his mind. In the past three years, he has endured the dissolution of his marriage and the departure of co-founder Farquhar, but even before that, Cannon-Brookes had plenty of extracurricular activities.
In 2022, the clean energy evangelist bought an 11 per cent stake in AGL, Australia’s biggest polluter, and attempted a hostile takeover.
But his yearlong assault on the company yielded other success – helping scupper a planned demerger, and staging a boardroom coup that got four directors elected at the company’s AGM.
In 2023, he took over SunCable, a solar energy infrastructure project that was previously a joint venture with billionaire mining magnate Andrew “Twiggy” Forrest, before the pair had a falling out.
Fast forward to 2025, and Cannon-Brookes’ obsessions are more of the boy’s own adventure kind. Last year, in addition to donating millions to Climate 200 and teal independents, he spent $75 million on a Bombardier Global private jet. Already a minority owner of the NBA’s Utah Jazz, and with a 25 per cent stake in the South Sydney Rabbitohs, he also inked a deal with the Williams F1 team worth about $50 million a year.
In 2023, he declared that his external interests, which at the time included AGL and the dispute with Forrest, were not a distraction from running Atlassian.
“Ninety per cent of my hours are spent here (at Atlassian), 10 per cent are spent outside,” he said at the company’s ‘Team’ summit in Las Vegas.
“I have a lot of great teams of people outside, but this is something that’s a very intentional choice of how to spend my time, and that’s how I can have the greatest impact.”
In May, Cannon-Brookes will address Atlassian staff and tech industry insiders at Atlassian’s Team 26 bash in Anaheim, California. The theme? “Unlock human-AI collaboration at scale.”
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David Swan is the technology editor for The Age and The Sydney Morning Herald. He was previously technology editor for The Australian newspaper.Connect via X or email.
Kishor 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 federal parliamentary press gallery.Connect via X or email.
