Atlassian CEO on the SaaS Apocalypse, AI Agents & What Comes Next

**Mike Cannon-Brookes** (0:00)
Give people a chat box that can do unlimited power, and they're like, tell me a dad joke. In the technology world, the underutilized capabilities are so big, it's almost trite now to say the models are far ahead of the value they're delivering.

**Alex Rampell** (0:11)
The whole history of software from 1960 until 2022 was, you would take a filing cabinet and you turn it into a database. The cool thing about everything that's happening in AI land is that the filing cabinet can do work.

**Mike Cannon-Brookes** (0:22)
The idea I would vibe code my own workday and then run it is terrifying. However, there is a great gain we are seeing internally in extensibility of software using things like vibe coding.

**Erik Torenberg** (0:33)
Everyone has been talking about the SaaS apocalypse. Some people call it the catastrophe. Why is there too much fear about this?

**Mike Cannon-Brookes** (0:38)
As I've said, not every SaaS company is going to thrive through the next decade. We're not here to defend all of software, obviously.

**Erik Torenberg** (0:44)
Herseep Pricing built software fortunes for two decades. It felt fair. More users, more money. But beneath the logic were very different kinds of businesses. Some seats were tied to work that AI can now do instead. Others were just a pricing proxy for headcount. And those companies may actually benefit from AI. The public markets so far haven't reliably told them apart. When the SaaS sell-off hit, valuations dropped across the board, regardless of whether a company looked more like Zendesk or Workday. That's the gap worth understanding. Companies that survive the transition face a harder job than adding an AI feature.
They have to redesign how humans and software work together. Where loops belong, when to interrupt, and how much trust an agent has to earn before it acts. Alex Rampell and I speak with Mike Cannon-Brookes, co-founder and CEO of Atlassian.

**Alex Rampell** (1:45)
The whole history of software from 1960 until 2022 was you would take a filing cabinet and you turn it into a database.
So, the first example of this is a company called Saber Systems, which was started in 1960 by IBM and American Airlines, because it took the reservation system, which literally was stored in like vaults of filing cabinets, manned or womaned by lots and lots of secretaries in like the 1950s and 1940s, airlines had been around for a long time, and then it put them in an early database, back when 10 megabyte hard drive probably cost $100 million. And then that's what happened with electronic health records, and the first one was called MOPs. It was built by Mass General Hospital, where the first CBL systems predating Salesforce, or actually the first CRM was called AXE Systems in 1987 So basically every single filing cabinet became a database, and there were benefits to that, but it didn't actually make the world that much more efficient, because whereas before you would have a human go fetch you the HR file for Erik, oh, go to the HR filing cabinet, get me that file. Now it's in Workday, but now you have to have a CISO to make sure that your Workday doesn't get hacked. You need to have IT people to provision accounts in your SSO to Workday. So did the world get that much more efficient? It did. If you have multiple offices, now people can collaborate. You could do complex joins in a database. Much, much harder to do that on pieces of paper, but that was kind of software from 1960 to 2022, because the filing cabinet couldn't think for itself. And now, this is the cool thing about everything that's happening in AI land, is that the filing cabinet can do work. Like QuickBooks can actually accomplish a task by itself, versus just relying on a human to retrieve the file from QuickBooks in the same way that the human in 1500 would retrieve a file from Ye Olde Filing Cabinet from the Ye Olde Accounting Department. So it's interesting.

**Erik Torenberg** (3:36)
It's actually a great segue into, of course, what is everyone talking about? The SaaS apocalypse, some people call it the catastrophe. Obviously, what's happening in the public markets, and a lot of people have different perspectives of how significant it is, what it means. I want to hear from both of you, how you interpret what's been going on, and more importantly, what it means or how we should make sense of it. Why is there too much fear about this or how should we make sense of this?

**Mike Cannon-Brookes** (3:58)
Look, I think the world is trying to work out how to rate or value software businesses in a highly disruptive stage, right? And everyone has hot takes about what the future is going to look like, right? And depending on the takes, you get a version of the future that's either really good or really bad for all of software, certain companies, certain categories in software. It's a really interesting thing. There's no doubt in my mind that the risk level has gone up. So if you think about it from an investor mindset, you're like, this used to be a very stable category. Now it's a more risky category, hence I'm going to step away and watch. And as I always say, investors are trying to work out not necessarily the DCF cash flow model of a company for all profits of history. They're really trying to work out, what are other investors going to do? And they're actually betting on what other people think that other people think they're going to do. And right now that it sort of logically makes sense, you have a interesting world where everyone has a version of what the future is likely to look like, and it seems likely to them. It's pretty disconnected from the reality on the ground, but the answer is always, what if I can do that in two years or three years? What does that mean? And I think it comes from a very static viewpoint, right? Like that people won't adapt, the world won't change. It's like one thing is going to change and everything else is going to remain static. So you have these interesting world at the moment where businesses like ours are doing very well, right? We've had three great quarters in a row and everybody says so, and then you're like, wait, you know, that used to equate to some value. And it's our job to prove that that's not the case for our business, right? We're not here to defend all of software, obviously. But for our business, we feel very good about the opportunities we have, the data we keep showing, the results we keep showing. And I always say this as well, it doesn't mean that we don't have to adapt. It's this weird world that like we are changing how we work radically and quickly as we always have, as we've been doing for a number of years. Some part of that, I think, assumes that we won't be able to change, right? There are strategic vectors, for sure. And look, the reality is, as I've said, not every SaaS company is going to thrive through the next decade, right? Just like a bunch didn't make it to the cloud, a bunch didn't make it from, I don't know, Windows to the internet era, whichever era you want to say, no one is going to say, I think, that 100 out of 100 SaaS companies are going to make it through and be thriving and growing on the other side. Also, we have this version that software kind of dies. A lot of it just ends up as a cash revenue stream.