Feeds

Atlassian's UK-IPO plans: Smart business isn't a disaster

Start-up advocates miss the point

The Essential Guide to IT Transformation

Australia's IT patriots' heads are spinning today, with news that Oz innovation poster-child Atlassian is going to move its head office to London, in preparation for an IPO it plans later this year.

The move has triggered an epic bout of hand-wringing at Australia's inability to keep its entrepreneurs at home. This, inevitably, re-ignites the “why can't we imitate Silicon Valley”, along with accusations that companies move offshore because this country is “unfriendly to business”.

Before I discuss the “Aussie! Aussie! Aussie! Oi! Oi! Oi!” patriotism that clouds peoples' thinking on such topics, I'd like to address Australia's alleged unfriendliness to business, particularly relative to England, where Atlassian is relocating its headquarters.

Australia's GDP has grown each year since 2007 – and from 2009-2012, the World Bank states the average growth has been 2.4 per cent. In the same period, the UK's GDP growth has been an average of -0.575 per cent. I fail to see how an under-performing economy can be described as “friendly for business”, except in this one characteristic, that the UK has lower corporate taxes than Australia.

What Atlassian is doing, in other words, is choosing to file its corporate tax returns in a country where it's cheaper to do so (with, we must assume, advice from the two Accel Partners Rich Wong and Kirk Bowman who sit on its board, courtesy of their $US60 million investment in the company).

The possibility that an IPO might mean a move offshore should have been foreseen since at least 2010, when Accel Partners first took its stake, since it would be looking for the best possible payout for its investment.

As El Reg noted in 2012, the addition of ex-Microsoftie Doug Burgum as chairman also hinted that the outfit was looking at strategies other than life forever as a hipster start-up.

Whether or not it had firm plans to relocate its head office, Atlassian was still happy to wrap itself in the flag during 2012. Here's how it was describing the Australian scene to the Sydney Morning Herald last June:

“Atlassian sees being an Australian company as a competitive advantage because there is less competition for talented engineers here. But they still cast a wide net for employees, recently driving a bus around Europe looking to hire 15 engineers in 15 days (over 1000 people applied)” (emphasis added).

So the first take-out from the Atlassian move is that like any other company anywhere in the world, when IPO time comes, it's structuring the business for the most favourable domicile. If that means seeking a better corporate tax rate, that's what's going to happen.

The Australian press is quick enough to slam the likes of Apple and Google for structuring their operations to minimise tax – but when a local golden-boy company does likewise, it's because Australian governments don't support our local startups.

Vulture South would also note that there's no apparent threat to the company's Australian operations – stories such as this, from Bloomberg, do not mention any intention to dump any local staff. The domicile is, at this stage, merely a convenience in the C-suite.

If Atlassian were to relocate its developers, it probably wouldn't be to London. The company already has operations in San Francisco, Amsterdam and Tokyo – but not London.

But that's purely speculative – and it's not something that would be accomplished easily. Given its oft-stated focus on the quality of its products, it would be foolish for Atlassian to sacrifice the continuity of its best and brightest.

As Vulture South has already noted, the relentless calls for Australia to try and recreate one of history's great accidents, Silicon Valley, are fruitless. Silicon Valley wasn't built by government or policy, and every attempt by governments to replicate the Valley experience has been a failure. ®

The Essential Guide to IT Transformation

More from The Register

next story
BBC goes offline in MASSIVE COCKUP: Stephen Fry partly muzzled
Auntie tight-lipped as major outage rolls on
iPad? More like iFAD: We reveal why Apple fell into IBM's arms
But never fear fanbois, you're still lapping up iPhones, Macs
Sonos AXES support for Apple's iOS4 and 5
Want to use your iThing? You can't - it's too old
Stick a 4K in them: Super high-res TVs are DONE
4,000 pixels is niche now... Don't say we didn't warn you
Philip K Dick 'Nazi alternate reality' story to be made into TV series
Amazon Studios, Ridley Scott firm to produce The Man in the High Castle
There's NOTHING on TV in Europe – American video DOMINATES
Even France's mega subsidies don't stop US content onslaught
You! Pirate! Stop pirating, or we shall admonish you politely. Repeatedly, if necessary
And we shall go about telling people you smell. No, not really
Too many IT conferences to cover? MICROSOFT to the RESCUE!
Yet more word of cuts emerges from Redmond
Joe Average isn't worth $10 a year to Mark Zuckerberg
The Social Network deflates the PC resurgence with mobile-only usage prediction
prev story

Whitepapers

Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
The Essential Guide to IT Transformation
ServiceNow discusses three IT transformations that can help CIO's automate IT services to transform IT and the enterprise.
Consolidation: The Foundation for IT Business Transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.
How modern custom applications can spur business growth
Learn how to create, deploy and manage custom applications without consuming or expanding the need for scarce, expensive IT resources.
Build a business case: developing custom apps
Learn how to maximize the value of custom applications by accelerating and simplifying their development.