5 Reasons Why Atlassian Bought OpsGenie for $295M

OpsGenie is an IT incident management software that was bought by Atlassian for $295M at around a 20x revenue multiple. Atlassian has a market cap of more than $30B and has been active in the acquisition scene recently.

We discussed the reasons for the acquisition at an interview with the OpsGenie founder Berkay on Glocal Podcast. The huge market opportunity behind workflow automation in general and Atlassian’s desire to accelerate their time to market stand out as the main drivers of the deal. While the right timing in these strategic purchases creates these great multiples, mistiming in relation to market maturity can result in multiples that are even lower than the stock market averages for SaaS - even if the company is growing fast.

1. Focus on collaboration and orchestration

OpsGenie has focused on optimizing workflow and communication rather than pouring resources on artificial intelligence or predictive models like its competitors. OpsGenie’s model involved almost everyone in an organization, in line with Atlassian’s vision: teams that work faster and smarter together.

Atlassian had an appetite to add OpsGenie features to its project management tool Jira. Following the acquisition, the company launched JiraOps, a tool that automatically notifies incidents.

We have focused on the people side of things by optimizing the user experience and product for the ones that will first get notified during an incident - Berkay

2. Product synergies

Working in perfect harmony with Atlassian products, Opsgenie has helped its customers solve their downtime problems faster while also increasing operational efficiency. OpsGenie felt the need to create adjacent products on the value chain, standing before and after an incident has happened, like Confluence and Jira. But given the lack of resources, the company decided to play an ecosystem game from its earliest days.

OpsGenie had seamless integration with a number of Atlassian products such including Bitbucket, Statuspage and Bamboo. Already in the radar of potential acquirers, thanks to the ecosystem strategy, OpsGenie must have gathered Atlassian’s attention as well. With only a handful of companies that have created the newly emerging incident management market from scratch, Atlassian had to pour resources to acquire one of the leading players in the market.

3. Cultural harmony

Atlassian bootstrapped for a very long time rather than raising consecutive funding rounds, much like OpsGenie, up until its IPO. Pursuing a customer-first vision, both of the companies had very short feedback loops with their early customers and continuous iterations on the way towards a strong product-market fit. 

The product and customer-centric culture, together with the innovation mindset, resulted in a strong cultural harmony after the merger. I expect the team to give a taste of the Turkish culture to the broader Atlassian team as well :) 

4. Hot market

It is very difficult to estimate the potential size of the incident management market. Nevertheless, the customer touchpoints are growing rapidly and the end-users service quality expectations are at its peak. It is more important than ever to guarantee uptime. Large enterprises are aware of how interruptions affect their business and have begun to adopt system management products. There is no doubt that this trend will continue and expand into other markets.

5. Team and time to market

Parallel to Berkay’s comments on Glocal, OpsGenie does not have a non-repeatable technology or a very large customer base that would make it an attractive acquisition target. However, building such a comprehensive product would require a very long time and that lag in time to market has big opportunity costs. Short time to market made it an even more attractive target for Atlassian.

This acquisition was the result of time to market and our perfect service reliability thanks to the legendary OpsGenie team. In the past 7 years, we have only experienced a one-hour service interruption. – Berkay

OpsGenie has a killer team that has been working together in the infrastructure space for almost 2 decades - also very hard (if not impossible) to build internally from scratch. 

Our success was a result of a group of highly skilled engineers in Turkey that were eager to build superior products than their competitors. - Berkay

As robotic and business process automation companies gain rapid traction, it is inevitable that enterprise workflow software providers like Atlassian will pour resources to capture certain corners in the market. I am pretty certain that the acquisitions around automation and orchestration will continue as horizontal and vertical platforms gain rapid adoption.

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