By Alex Heber. Originally published in Business Insider Australia.
About 10 years ago Atlassian founders Scott Farquhar and Mike Cannon-Brookes pledged 1% of their company to invest in philanthropic ventures. That 1% is now worth about $40 million.
“We’ve since helped over a quarter-of-a-million children just with our partnership with Room to Read. None of that would’ve happened without us originally pledging 1% back when it was really worth nothing,” Farquhar said. “Now that 1% of nothing is worth about $40 million.”
The pledge took the form of the 1-1-1 model which was formed by Salesforce CEO Marc Benioff. The model involves allocating 1% of employees’ time, 1% of product and 1% of equity or profit to charitable causes.
“When you start a business you’re hugely optimistic that you want to change the world and one thing that Mike and I knew we wanted to do as well as run a business was in some way give back,” Farquhar said.
“It was one of the smartest decisions that we made without really knowing it at the time.
“If you asked us now how are you going to give $40 million out of your own dollars to a foundation, you may have to think twice about it. When it’s worth nothing it’s a really easy decision.”
Atlassian co-founders Scott Farquhar and Mike Cannon-Brookes.
At the time Atlassian had less than 100 staff. Fast forward a decade and at the end of last year it had almost 1,000 staff and was still madly hiring. Last financial year Atlassian’s total revenue was $US215 million, it has a valuation of about $3.3 billion and preparing for a US listing, possibly as soon as this year.
Farquhar is now on a mission to get other companies to pledge 1%. It’s his passion project and he’s teamed up with Salesforce to make it happen.
To date, Salesforce has contributed 800,000 hours in time, $80 million in grants and has 25,000 non-profits using its products. Atlassian has to date donated $US3.9 million to charities and given away $41 million worth of product to non-profits.
The two companies are aiming to secure 500 1% pledges from companies before the year is out. So far they’ve received almost 100 pledges and Farquhar has a vision of having half of the ASX100 participating.
Suzanne DiBianca, president of the Salesforce Foundation, said the simple model of giving 1% of a company’s time, equity and product had been popular in the tech scene.
“I’ve got Pinterest calling me, and Yelp, and Workday, and all of these next generation companies,” she said. Yelp and Workday’s pledges generated about $120 million in their foundations last year.
Farquhar said they’ve split the task up between “whale hunting”, which is going after companies that are pre-IPO and will have the biggest impact in a short period of time, and looking at smaller companies that will be worth more in 10 years.
“The goal for us is that in my lifetime more than half the ASX 100 would’ve pledged 1% at some stage,” he said.
DiBianca is focussing on getting the program in front of companies which are about to have big exits and wants to generate about $500 million for the projects. On her list includes companies like Docusign and Pinterest.
Atlassian now works with some of the biggest companies in the world, but Farquhar says he doesn’t lose sight of the amount of impact you can have by working with startups. He is a big investor in Queensland-based startup SafetyCulture and regularly turns up to work in the company’s office.
Atlassian co-founder Scott Farquhar. Image: Supplied.
His hands on approach and experience in the trenches is something which gives him an insight into how to get these usually under-resourced companies to stop and think about the future and consider pledging.
“It’s trying to work out the right way to work out the right way to reach out to some of these companies. The great part about it is pledging 1% is easy,” he said. “The goal is you can sign up and pledge in under 15 minutes.”
Salesforce and Atlassian have seen upside in company morale and culture from their investments in philanthropy.
“It’s important to get talent, it’s important for your brand and it’s important for your culture,” DeBianca said. “The brand is almost the least important thing. One thing I’ve seen is a real shift of philanthropy is it’s moving out of marketing and into HR. What CEOs are finding is it’s a talent issue.”
Hiring talented engineers and developers is competitive both in Australia and the US. DiBianca said the new generation filtering into tech companies don’t always distinguish between their work lives and social lives and in many cases both are merged. Because of this, it’s becoming important to many recruits that they work for good companies, she said.
Farquhar says one of the biggest challenges Atlassian faces globally is hiring talent, particularly around computer science.
Atlassian APAC recruiting boss Caitriona Staunton.
“We never thought about [philanthropy] as something that is good at recruiting but when I do chat with people around why they joined Atlassian, our philanthropic efforts are the top three of why they joined,” he said.
“We do find that the people who are most aligned with philanthropy are also some of our highest performers.”
DiBianca agrees, saying figuring out which employees are putting their hand up is also a good indicator for leadership.
“We’ve found the people who have given the most time or raised the most money equate to the top performers in the company,” she said.
“If you’ve got an employee who’s volunteering, taking on new projects that wants to go over and above, it’s a really early indicator of high performance and leadership skills.”
She said two of the causes the foundation has supported include Room to Read and boosting the number of women in the tech sector. Both require more than money to get off the ground and volunteering employee time has been critical.