Atlassian’s Trello Acquisition and the Three Principles for SaaS Market Expansion

SaaS companies that expand from selling to IT to selling to business teams (or, vice versa) rely on 3 principles, which I call The Three Principles of SaaS Market Expansion. It requires these companies to take a resolute approach that is similar to the crossing of the Rubicon. “The phrase Crossing the Rubicon means to pass a point of no return, and refers to Julius Caeser’s army’s crossing of the Rubicon River in the north of Italy in 49 BC, which was considered an act of insurrection and treason. Julius Caesar uttered the famous phrase alea iacta est—the die is cast—as his army marched through the shallow river.”—Wikipedia.


Atlassian Buys Trello for $425 Million

This week, Atlassian broke the news that it was acquiring Trello, a simple list-making software company, for $425 million. It’s an amazing price for Trello, 15 times TTM (trailing twelve months revenue). Forbes wrote about why Atlassian bought Trello, and the primary reason was, as CEOs know, an adjacent market move. Adjacency thinking leads CEOs to consider how to expand to a different buying group within the kinds of companies they already sell to. Atlassian has now expanded from selling to IT to selling to business teams. As Forbes wrote:

“Atlassian’s existing products, including Jira, sell mostly to software developers and IT departments. Trello, on the other hand, is popular not just with coders, but with marketers, HR departments, sales teams, media companies, and other non-technical groups.”


As the CEO of Dossier, and having made 17 acquisitions previously, we know a thing or two about making acquisitions work. Every day we have thousands of teams using Dossier, an app for organizing customer conversations. Our team, like that of any startup, is small—and made powerful by the way we use software to automate how we can communicate with our customers. We use many self-service products to run our business—we wrote 20 Affordable Tools to Run Your Sales, Marketing and Service Stack for a total $1,000/mo. Also, many teams that use Dossier have also attached CRM tools like HubSpot and Salesforce, and task management tools like Asana and Trello, so we’ve learned much from our common customers. Atlassian’s purchase of Trello is a textbook example of market expansion—a playbook that large companies employ to grow their market share. How do you make such an acquisition work?

You’ve got to hand it to the Atlassian management team—they weren’t content doing what they always do, but have taken a bold move to enter an adjacent market. As I wrote in my previous article, Your Corporate Strategy is a Prisoner of History (or, Why CEOs Should Listen to Their Inner Revolutionary), at our previous company, which we sold for $395 million, “The thinking behind our corporate (expansion) strategy was that our sales teams were selling products to IT teams only, and that we needed to expand our brand to business teams at Internet and e-commerce companies like Facebook, Amazon, eBay, and brand managers at Chase and FedEx—all customers”. How do you make such a strategy work?

Selling to IT and Selling to Business

How easy is it to expand from selling to IT to selling to Business, or vice versa? On paper, the thesis sounds great. Start by selling a niche, but highly differentiated, product to your first audience. Start with a departmental sale, rather than to the enterprise. Expand capabilities so that federation occurs—i.e. you land in one team (say, to an IT buyer), and then expand to another team (still, another IT buyer). And then when you’ve established a strong brand with a specific buyer persona, then make an acquisition of a company that knows how to sell to the other side (this time, a business buyer), and then rinse and repeat. It’s been done in the technology industry.

Adobe started with multimedia and creativity products, then acquired Omniture to sell to marketing teams. Since then, it has added several more acquisitions to deepen its footprint for marketing automation. Oracle started with the database business, selling only to IT, then acquired Siebel Systems to enter the CRM market, changing its persona from IT to business rapidly. Autodesk, on the other hand, has stuck to its knitting—once glance at Autodesk’s list of acquisitions tells you that these apples don’t fall far from the tree (of CAD automation). Salesforce has tried to expand from selling to business teams (it’s core CRM business) to selling to IT (by the acquisition of Heroku)—but it is not yet working to dislodge entrenched competitors like Amazon Web Services.

So what is the secret to adjacent market expansion? The Harvard Business Review provides insights in its seminal article, Growth Outside the Core. It identified six ways to expand outside a business’ core, and provides nuggets such as this: “One was that most sustained, profitable growth comes when a company pushes out the boundaries of its core business into an adjacent space. We identified six types of adjacencies, ranging from adjacent links in the value chain to adjacent customers to adjacent geographies“.

Market expansion for SaaS businesses may follow these six strategies, and any MBA worth her $200,000 degree, will tell you—business expansion is a time-honored tradition. Yet, like any industry, the technology industry, and, in particular, software-as-a-service companies (I’ve worked for no other type since I left Oracle), have a different set of rules. To make such a market expansion work, consider these characteristics of the companies acquiring, and being acquired:

1. Transactional Sales

When two SaaS companies both have transactional sales, rather than expertise-driven consultative sales, market expansion is much easier. Atlassian sells ticketing software like JIRA, and it’s a transactional sale—i.e. it does not require a high degree of domain expertise for the sales team that is selling it. Prospective buyers sign up for or download the software, learn how to use it or get some general assistance in getting the software to work, and then they buy it for a per user price. Trello also has a transactional sale, marketing and HR teams that purchase its software also follow the same pattern as the JIRA sale. The synergies between the two businesses are all about operational effectiveness—making the sales process more efficient. Expect a lot of consolidation of IT infrastructure costs between the companies as they merge their teams. On the other hand, consider why Salesforce, which sells to business teams, isn’t able to effectively compete in the AWS market. Selling an enterprise-level CRM is a consultative sale, but selling cloud infrastructure services is a very transactional sale—hence, there are no sales synergies.

2. Inbound Marketing

SaaS companies thrive when marketing teams generate a large number of inbound leads. Companies like HubSpot have perfected this approach, practically writing the playbook for inbound lead generation that is then fulfilled by inside sales teams. As long as the combined marketing teams are able to use their expertise to generate relevant content, the success of market expansion is increased. On the other hand, if the acquired company’s marketing team is decimated under the false assumption that the acquiring company’s marketing team will be able to handle the marketing, then the acquisition has a high chance of failing. Inbound lead generation is an expertise-driven business—your marketers have to understand the content that generates interest, the experts to be interviewed, the guest blog authors to be invited, etc. If a marketing team understand how to sell to the business buyer, they are not likely to know how to sell to to the IT buyer, and vice versa. So, Atlassian, I imagine you’ll be sweetening the deal for the Trello CMO.

3. Internationalization

Traditional companies can expand in other markets if they expand the geographies in which they sell. The same happens for SaaS companies, virtually overnight, if they can internationalize their software. Think, for example, about the signup workflow of any transactional SaaS application. If it can be translated into a dozen languages, that’s another 30 countries it could sell in. Online advertising makes it a cinch to enter these markets. A caution, though—the product must not require telephone calls to sell or support the product. It must be done online, via email and chat, because then it can be done in countries which specialize in customer service—such as the Philippines, or Ireland.

When SaaS Market Expansion Fails

SaaS companies that require expertise-driven sales, rather than transactional sales, are not likely to be able to successfully expand markets when they cross the Rubicon with the buyer persona. We once acquired a company that sold primarily to business audiences, and the sale was highly consultative. When the COO of the acquired company decided to not come along with the acquisition, that caused a ripple effect in the sales organization and many of the expertise-holding salespeople left. And with it, went their customer relationships, and the acquisition we made failed to yield any market expansion results. Note that this is different from non-consultative salespeople leaving the company. It’s because the salespeople had expertise that the clients relied upon, such as presenting findings from quarterly reports to their management team, that the customers were happy. Take away these salespeople, and the customers walked as well.

However, if the above 3 characteristics match between companies as they acquire their way to market expansion, the acquisition has a high rate of success. We’re going to be watching Atlassian and Trello work this one during the integration—the signals look great because the 3 fundamental factors for successful SaaS mergers are present in both companies.


About Vik Chaudhary

Vik Chaudhary is the CEO of Dossier ( in San Francisco. To business professionals and teams, Dossier is an app for organizing communications with customers. In his copious spare time, Vik—well—asks CEOs to not screw up large acquisitions.

Dossier is an app for organizing customer conversations, no matter where it happens, with zero disruption to the ways you already communicate. Based in San Francisco, Dossier is helping business owners, business professionals and teams around the globe intelligently sync their customer communication channels and organize documents, tasks and more. Welcome to a new way to build better customer relationships and a better business. Sign up for a free account today at

Dropbox drops Mailbox. Or, How Foresight is 20-20.

There’s a saying in mergers & acquisitions circles: companies are bought, not sold. This could not be more apparent in the case of much ballyhooed mobile email startup Mailbox. It was only a few months old, funded by Marc Andreessen from blue-clip VC firm Andreessen Horowitz, when it was wooed by and sold to Dropbox for, reportedly, over $50 million in cash, and with stock options, potentially valued at $100 million. With the Dropbox IPO looking uncertain, especially since Box is valued in the public market at $1.66 billion, much less than the $10 billion Dropbox was reportedly last privately valued at, much of this valuation was on paper. Yet, $50 million in cash is some heckuva lot of cash.

Dropbox announced today that they have shut down Mailbox. And the reason is “As we’ve increased our focus on collaboration, we realized there’s only so much an email app can do to fundamentally improve email. We’ve come to believe that the best way for us to improve people’s productivity going forward is to streamline the workflows that generate so much email in the first place.” Here’s the email that I received from Dropbox an hour ago:

There are of course reasons by Mailbox didn’t work; but that doesn’t mean that Dropbox was wrong in its instincts. They were just so early in their thinking about collaboration that they didn’t make the right choice. But it learnt a lot along the way, and is now poised to address the problem again. Note they said:

                …to streamline the workflows that generate so much email in the first place.

To understand why Dropbox faltered with the acquisition, understand what product guys know for a fact:

The world rarely needs another new product. One reason new products fail is that they try to change the behavior of the buyer. Remember the Segway – the self-propelled human driving machine? Or the Roomba, the self-propelled vacuum cleaner? There are plenty of early adopter buyers for these machines – I own a Roomba and it is collecting dust in my house (no, it is not cleaning up the dust, it is sitting in the corner collecting dust). The reason is – these machines required an unnatural change in behavior. I couldn’t just turn on the Roomba and leave the house and expect that it would do its job properly. I knew from experience that it would get caught in wires, or get stuck under the couch, or go round and round in circles. I ended up changing my behavior to use it – I would have to turn on the Roomba, then babysit it as it went around the home. I ended up doing much less physical work than vacuuming the house myself, but a lot more mental work watching the machine. In the end, I stopped using it and now use it only rarely.

The business world rarely needs another new application. This is at the heart of our company, Dossier. Our product helps businesses talk to their customers faster than anything they could do themselves. But when we built it, we wanted to make sure that Dossier worked beautifully with all applications that were already in use by sales, marketing and customer success teams. So if you use any of these products at your company – Gmail, Outlook, Salesforce, Zendesk, and even your own web site, or your own custom app like a sales quoting application, or a packaged application like Netsuite – you don’t have to learn how to use Dossier. You get trained on how to set it up and refine it, and then, you just use email to talk to your customers, Salesforce to manage the system of record, Zendesk to handle customer service requests. Dossier acts like the marshall, sending information from one group of people to others, helping customers talk to your employees, employees talk to each other, application users talk to IT teams, and so on. We make IT click.



In my previous life, I made 17 acquisitions for a public company, and our last deal was to sell our company for $400 million. Many of these acquisitions did not pan out the way that we expected. So the Dropbox team didn’t really make a mistake that was different than many mistakes that all companies make. Hindsight is 20-20, as they say.

What is important is foresight. As entrepreneurs around the world build the next great mousetrap, they should think hard, as we had to do – whether we’re making it really easy for the product to be adopted in today’s business environment. And that environment requires that whatever you build fits into the hearts and hands of the people that will use the product every day. Build with foresight, and your hindsight will be 20-20. Build without it, and the myopia will have far-reaching consequences. For Dropbox/Mailbox, some people have with $50 million more and the others, less. At least Dropbox understood what makes enterprise users tick and made the right decision. And now it really has their work cut out for them. Companies like Slack are streamlining the workflows that cause employees to generate email. Companies like Dossier are streamlining the workflows that cause customers to generate email. Email is dozens of years old, but it won’t just go away. Reimagine the problem that customers, partners and employees face in collaborating with each other.

Build with foresight, and your hindsight will be 20-20.