• Guest Blog: The View from the Marketplace Frontier

    by  • November 7, 2012 • Guest Blog, JIRA • 0 Comments

    At Atlassian, we’re incredibly excited about the progress we’ve made developing the Atlassian Marketplace. Atlassian products have been highly extensible for years–it’s one of the reasons our users love them. It’s tempting to see the launch of the Marketplace last June as the culmination of years spent nurturing a plugin development community. We see it differently–launching the Marketplace was the first mile of the marathon.

    As a company, our goal is to develop the best enterprise collaboration software in the world. And we want to complement this by building a store for third-party add-ons that every other enterprise software vendor will seek to emulate. I’m excited to share some with you some of the progress we’ve made since June and the direction we’re heading, but before I do that let me delve into the underlying philosophy that girds our approach to the ecosystem.

    The Importance of a Vibrant Ecosystem

    Since Atlassian launched its first plugin framework in 2005, we’ve recognized that supporting a rich ecosystem of developers making third-party add-ons for our products would be critical to our success. Our ecosystem ensures that our products can meet the needs of different customers around the world while keeping our own development teams as small and nimble as possible. This allows us to focus on delivering an extraordinary core product experience while minimizing the chance that we might lose potential customers for lacking one feature or another.

    Developer ecosystems are incredibly valuable–they allow enterprise software companies to offer support for specific industry verticals or functional roles that would otherwise require custom solutions. They are a boon to customers as well–customers can select features a la carte via add-ons rather than demand a company introduce feature creep into its products. Finally, as Apple and Android have potently demonstrated, they can create full-fledged economies of developers, consultants, and companies who purely support third-party developers. Companies like Tapjoy and Admob grew up around the app development ecosystems of mobile platforms.

    Web APIs have proliferated over the past several years. ProgrammableWeb’s directory of APIs has seen exponential growth since 2006, and companies like TwilioStripe, and Urban Airship have built entire businesses based on a single API. Even as companies make data available by default, committment to building a true developer ecosystem remains elusive. Rich ecosystems that are profitable for platforms, developers, and customers require dedicated teams for developer relations, stable resources, and high-quality products that consumers or companies will invest in for years.

    3 Critical Features for An Ecosystem

    1. Virtuous Platform Cycle

    Charlie Kindel argues that a virtuous platform cycle exists in a multi-sided market when each side of the market both gives and receives positive value from the other sides.

    Simply put, strong ecosystems depend on every participant has something to gain from the other participant. For an enterprise add-on marketplace like the one we are building at Atlassian, this means we must provide a great product to our end users, an expansive set of resources for others to develop on our platform, and an effective marketplace for third-party developers to reach new customers.

    The launch of the Marketplace in June was the beginning of our effort to round out that third element. It’s easier than ever for developers to build businesses off of our parent products and Marketplace platform. Whether it’s innovative companies like Balsamiq and Zephyr or talented individual developers like Bob Swift or Andriy Zhdanov, the Marketplace is enabling our partners to reach Atlassian’s amazing customer base.

    2. End-users are the biggest winners

    More than anyone, our customers benefit. They benefit from the rich ecosystem more than anyone; it provides hundreds of great additional features and meets the most unique of use cases. Companies like K15t Software and Hindsight Software can take advantage of the Marketplace to market and sell their solutions for technical writers and Acceptance Test Driven Development, respectively.

    Customers also benefit because a consolidated platform like the Atlassian Marketplace makes the procurement and billing process easier, which is particularly crucial in the enterprise. In organizations where software procurement requires the approval of multiple managers, justifications, comparison of alternatives, and more, consolidating payments for a lot of different software on to one invoice can save significant paperwork. When a platform provider creates a market to bring together many different software vendors, it’s a win for end users. End users get a single destination for many different products, aiding discovery, and frequently the ability to compare several choices for any category of product. The competition among developers drives quality up and prices down, making the customer’s experience better at the end of the day.

    3. Minimal startup costs

    Great ecosystems have low barriers to entry, which means it’s easier for lots of developers to join the ecosystem. Lots of participants makes the ecosystem more complex, and hence more difficult to replicate. Hence, platform providers should realize that the strength of ecosystems is in their complexity. In the multi-sided market in the graphic above, the more participants there are on the end user and developer sides of the triangle, the more difficult the ecosystem is to replicate, increasing the platform provider’s competitive advantage.

    So it is in the best interests of the platform provider to ensure that as many developers can participate in the ecosystem as possible. The first step is to have a great product. Without a best-in-class product and devoted customer base, it’s impossible to attract developers to build for those customers. Companies frequently try to build marketplaces for third-party add-ons before their platforms are ready for it. It’s a chicken or egg dilemma–how do you get developers to start building on your platform when you don’t have any prior examples to show them. The best way to solve the problem is to have great promise as a platform and a customer base aching to buy third-party products.

    On top of a great product, platform providers must offer excellent developer resources so that the path from conception to launch is as short as possible. Developers don’t want to have to invest time in learning new languages, frameworks, and libraries before they can’t start coding. Ease of participation combined with market opportunity is the key to ecosystem success.

    What we’ve achieved at Atlassian so far

    When we started building the Atlassian Marketplace a year ago, many of the pieces necessary for success were already in place. We had several proven products in JIRA, Confluence, and our developer tools and a fantastic, customer base of 21,000 customers and over 5 million passionate end users. Moreover, we already had years of experience with plugins–we had the plugin exchange, the Atlassian SDK, and five years of AtlasCamps (our developer conferences). Our developer community was sizable–because our products are highly extensible, companies write custom plugins for internal use, so in many cases our customers were our developers, or vice versa.

    We developed and launched the Atlassian Marketplace under the hypothesis that if we made the process of discovering, installing, evaluating, and purchasing add-ons for our products easier for our customers, they would buy more add-ons and have a better experience with them. Our customers would get more value out of Atlassian products. Our developers could stop worrying about trying to set up payment systems and focus on their code. And Atlassian would have more loyal customers. And so we kicked off the Marketplace at Atlassian Summit 2012 on June 1 with 59 developers as launch partners.

    When we gathered our developer community back together for AtlasCamp 2012 in Half Moon Bay at the end of September, we were excited to announce that in just a little over three months, we had sold $1 million worth of add-ons on the Atlassian Marketplace and doubled the number of paid add-ons available. Our pace of development didn’t skip a beat after the Marketplace launch. All through the summer and into the fall we continued to improve the Marketplace and plugin manager experiences. We launched awesome new features like an in-product version of the Marketplace for non-admins. End users can browse the Marketplace for plugins and send requests straight to their JIRA or Confluence administrator. From big features like this to little improvements like search suggestions and corrections, we’re tightening the user experience to support both our developers and our users.

    What’s coming

    As I said in the beginning, our team’s goal is to build the best developer ecosystem of any enterprise software company, and support that ecosystem with the best marketplace for their products. Our highest priority for developers is to improve the experience of vendors in the Marketplace–more evaluation and sales data, faster approvals, more resources during development. For our customers, we are tightly integrating the Marketplace experience into our products, with smoother installations, evaluations, and updates and enhanced visibility. Finally, we are going to bring the incredible plugin development community we’ve been building for six years and integrate it fully with Atlassian OnDemand.

    We’re thankful for the support of awesome developers like Zephyr. Their team has built a fantastic add-on for JIRA that makes it even more valuable for dev teams around the world. Supporting our customers and partners is why each and every Atlassian comes to work in the morning. If you haven’t stopped by in a while, I highly encourage you to check out the Atlassian Marketplace and see if there’s an add-on that’s perfect for your team.

    Dave Meyer is the marketing guru for the Atlassian Marketplace and a member of Atlassian’s product marketing team. He lives in San Francisco. His favorite programming language is English.

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