Disruptive Innovation: Why OpsGenie was Bought for $295 Million

Jordan Wahl
Jordan Wahl  |  September 5, 2018

How do you become disruptive to the point where you must be acquired?

That’s the question we asked ourselves when thinking about Atlassian’s very recent acquisition of OpsGenie – among a few others:

  1. What things did OpsGenie do well?
  2. How do OpsGenie’s customers feel about its product?
  3. In what ways do the OpsGenie and Atlassian teams best align?
  4. What key lessons can we all learn from OpsGenie?

Atlassian acquires OpsGenie

When Atlassian acquired OpsGenie, it instantly shook up the incident management software industry, but what exactly is incident management? It’s essentially how an organization handles any outage or disruption on their website or piece of software. Incident management ensures sites are “always on” for communicating and collaborating on costly errors.

Incident management is highly competitive, and for good reason. For the Fortune 1000, outages or disruptions on a website or piece of software cost anywhere from $1.25 billion to $2.5 billion per year. That’s a serious amount of losses.

While incident management is often marketed for enterprises, OpsGenie focused on more flexible workflows for small and mid-market businesses at a fair price point. Now the six-year-old startup has been acquired by Atlassian for $295 million.

It’s a win-win situation for both OpsGenie and Atlassian, one of the largest software enterprises for devs and project managers. Atlassian announced the acquisition at its latest summit, and it comes at a great time for two specific reasons.

Atlassian was first looking for more verticals to attack with its cornerstone product Jira, and it also wanted to position themselves as a serious player in the incident management software industry – a lucrative market currently led by ServiceNow.

So how exactly did OpsGenie reach a point where an enterprise the size of Atlassian deemed it disruptive? As a startup, how do you identify opportunities and capitalize on them with limited resources?

What OpsGenie did well

In just a few years, Atlassian has made two major acquisitions: Trello for $425 million, and now OpsGenie. By acquiring these innovative startups, Atlassian has now strengthened its influence into new markets.

Similar to Trello, OpsGenie entered the industry with guns blazing ready to disrupt the market. So much so, that in just six years, it became one of the biggest threats in the incident management industry to Atlassian, next to ServiceNow.

How did OpsGenie become an attacker? By offering something that its competitors could not.

OpsGenie quickly won over thousands of customers simply by catering to their most important incident response needs.

“Prompt and reliable alerting is the critical first step in incident response,” said Atlassian co-founder, Scott Farquhar.

“And because today’s applications are more complex than ever, incidents often require complex coordination between operations and software development teams. OpsGenie helps notify all the right people through a sophisticated combination of scheduling, escalation paths, and notifications that takes things like time zones and holidays into account. And OpsGenie does all this with rock-solid reliability.”

Not only was OpsGenie listening to its customers’ wants and needs, but it consistently brought innovative features and reliable service to the incident management landscape.

What did OpsGenie customers enjoy most?

Take a look for yourself.

“Of all the tools we evaluated, OpsGenie is the most full-featured, while also having one of the best interfaces that I've seen….The routing and policy rules are powerful yet easy to understand. And on top of all that, their Support Team has been stellar! They are super quick to answer, knowledgeable, and make sure that our questions are resolved every time.” - Jesse, Validated OpsGenie Reviewer

“Intuitive interface and wide list of integrations and simple API make this a joy to use. Configuring on-call schedules and routing is a breeze, coupled with the simple yet very effective mobile app. You can also go beyond the basic functionality and set up complex rules to make alerting useful and not a noisy mess of false alarms. Price point is competitive and it’s certainly value for money.” - Matthew, Validated OpsGenie Reviewer

“OpsGenie's reliability has never been a concern. Alerts are timely and easy to manage.” - Andy, Validated OpsGenie Reviewer

So, it’s no surprise that OpsGenie quickly earned a spot as a Leader in the industry on G2 Crowd’s Grid for Incident Management. 

incident-management-software


High customer satisfaction was the key to OpsGenie securing a spot as one of its industry's top performers. In the figure below, you can see that OpsGenie’s feature ratings (right) surpassed Jira Service Desk’s ratings (left) in every category. Additionally, OpsGenie reviewers rated the product 4.6 out of 5 stars, while Jira Service Desk reviewers gave its product 4.1 out of 5 stars.
  

jira-vs-opsgenie

 
This is how disruptive startups take over established products. And OpsGenie nailed it. It was able to provide a more robust set of features at a lower price than its competitors, making it such a threat that Atlassian seemingly had no other option than to acquire it.

But before Atlassian acquired OpsGenie, it had to consider how the two companies would align successfully moving forward.

How OpsGenie and Atlassian align

Acquiring a business requires the alignment of company cultures, values, and objectives, which could be vastly different when talking about the nature of startups versus enterprises.

OpsGenie was founded on the belief that website and software outages were crucial losses of revenue for businesses. The mission of OpsGenie was to modernize tools like on-call management and multi-channel alerts like SMS and email, but it eventually grew into a platform to help dev teams plan and prepare for a variety of incidents.

The two companies also aligned in regards to market fits. While Atlassian has an established enterprise presence, it struggled to capture the attention of small and mid-market businesses. OpsGenie, according to a comparison of Jira Service Desk vs. OpsGenie on G2 Crowd, is clearly the preferred solution for small and mid-market businesses (in terms of user satisfaction, not number of users). This is due to a competitive price point, a product tailored for business needs, and unmatched ease of use.

Atlassian recognized that it could maintain its company culture through the OpsGenie acquisition, and it knew OpsGenie’s product was scalable too. So instead of putting efforts into refining its JIRA Service Desk product, it made the smart move by acquiring OpsGenie and its 3,000 customers.

What key lessons can we all learn from OpsGenie’s success?

There’s never a “one size fits all” approach to disruption, but there are a few things you can take away from disruptive businesses like OpsGenie and Trello.

  1. Break the industry mold – If your competitors are offering bloated software with a ton of features that are hardly used, then it’s worth taking note of that and figuring out ways to offer a simpler yet effective solution for your customers.
  2. Find your market fit – Don’t build enterprise-level software if a majority of your customers are small business or mid-market. Yes, every company wants to scale at some point, but find your market fit and run with it.
  3. Identify ambitious leaders – One thing nearly all disruptive businesses have in common is ambitious leaders who were passionate about discovering new solutions and breaking down barriers. Identify these leaders within your organization and foster their entrepreneurial ambition.
  4. Be fast, but calculated – Enterprise businesses may have the luxury to sit back and relax, but you don’t. Disruption is all about finding small pockets of opportunity and capitalizing on them.
  5. Customer centricity is key – Everyone wants to generate revenue, but it’s difficult to do so without satisfied, loyal customers. The only way to build these customers is by sympathizing with their experiences.

Wrapping up

So what does this acquisition mean for Atlassian?

Acquiring OpsGenie means that Atlassian has found the final piece for its “modern incident management” product called Jira Ops, which helps IT workers track outages and minimize downtime.

The release of Jira Ops and acquisition of OpsGenie will enable Atlassian to further penetrate a market that’s currently led by ServiceNow. This gives Atlassian the opportunity to boost efforts to sell in the IT market.

Atlassian will not only gain OpsGenie’s 3,000 customers, including companies like 7-Eleven, Expedia, and Hubspot, but it will also expand its reach into the small and mid-size business market.

Job well done to both OpsGenie and Atlassian.

Jordan Wahl
Author

Jordan Wahl

Jordan Wahl is a content marketing specialist who joined G2 Crowd after graduating with her BBA in Marketing from the University of Wisconsin-Whitewater. Originally a small-town girl from Wisconsin, Jordan is fairly new to Chicago and is loving exploring the city. In her free time, you can almost always find her bopping around to her favorite music or laughing at jokes that probably aren't that funny.