What a great fuck up story! When you can reflect on your startup failure with such positivity and such insights you have succeeded nevertheless. ? Link to article in bio #entrepreneurship #fuckupstory #startup https://t.co/oJUguwxNvq
Fireside chat with GitLab CEO Sid Sijbrandij
We hosted a fireside chat with the CEO & Co-founder of GitLab Sid Sijbrandij about his journey after he left UtrechtInc and moved to Silicon Valley.
DISCLAIMER: This interview has been edited for clarity purposes. Watch the recording for the full conversation.
Pitch your startup like it’s going to conquer the world, because that’s the only way that it has a shot of doing so.
What do you consider to be your best result?
We run the company on revenue and in January 2020 we hope to pass €100M annual recurring revenue (ARR). It’s more than doubling every year.
November 18, 2023 we want to be at a billion dollars of annual revenue and cashflow breakeven. Hopefully, we’ll be a stock-listed company by then. Our plan is to go public next year.
How are you so relaxed with an upcoming IPO?
I don’t do my best work when I’m super anxious. Things will go always go right or wrong in a company, especially in a startup, so the only thing you’re responsible for is how you react to things. Not so much if they go right or wrong.
In the beginning I wanted everything to be perfect, when something went wrong, I got super annoyed by it. But at scale there are always things that are not going as planned, so it’s essential not to be very reactive, but to create an environment for things to get fixed. Don’t fix the incident, but fix the underlying cause.
How has your role changed over time?
My role now is CEO and chairperson of the board. In the beginning, in 2011 Dimitri founded GitLab, the open source project. In 2012 I started doing it by myself and started running gitlab.com. The first year was just keeping gitlab.com up and running.
After I hired Dimitri and we started with enterprise customers and from 2013 to 2015 we bootstrapped. Trying to do a lot with very little. After Y Combinator in 2015, we started growing a lot faster. You still want to be careful with your money, but it’s more about growing really fast. The classic thing is triple two years and double three years after that. When it’s all about growth, there’s a lot of turnover in the executive team. Every phase requires a different executive team.
I had to learn to delegate, so the last two years I’ve been delegating a lot more. Up to the point where I delegated too much and people started asking me back in, because they wanted to hear my opinion too. For the coming years, I want to focus more on leadership training.
And with regards to the IPO, it’s gonna be the GitLab roadshow, so there’s a lot of people involved.
You now have 1.100 team members and they all work remotely. How does that work?
This year we’re growing from 400 to 1.100 people, which is a lot for a single year and I think it was easier, because we’re all remote. We’ve always been very diligent in writing things down and recording materials. As you scale, that pays off. If it’s clear what your KPI’s are, if you have a clear onboarding process, if you have a place where people can find all the relevant materials, that saves tens of thousands of questions people otherwise would ask, or worse, not ask.
Having that culture of working asynchronous, and recording things has been super helpful as we scale.
Most of it is even public. If you Google GitLab handbook, you’ll find over 3.000 pages, including our strategy, our OKRs, and many many other things that other companies consider a secret.
Not everything’s public. If you Google GitLab not public, you’ll find a list of those, but we strive to make as much public as possible. The first reason we’re doing this is that the wider community around GitLab can build sympathy for GitLab, by knowing what we’re about, but it also helped us build our talent brand, and if it’s public it’s just easier to find. Even for people inside the company.
How do you reward early employees?
Like many startups in the beginning you pay less than later on. You give away more options, so people have a bigger stake in the company. Some people are attracted to those early phases of a startup. There’s a lot of opportunity for growth and the roles are very diverse.
As you get bigger, you make sure your compensation is on point, we want to pay at or above market, and we invested a lot of time to make a good calculator, we have a global compensation calculator, for hundreds of roles and more than 2.000 locations, you can find out exactly what we offer in base salary, bonus and stock options. Still, every single person has stock options.
Are the early stage employees still on board?
We haven’t had a phase where a lot of people left. We’ve done a great job to work on career planning, especially for engineering. For example, our first employee just got a promotion to director level. We’re able to retain 85% of our people YoY, which is twice as high as what’s normal in our sector.
The stock options helped, but generally outside of the US they are undervalued by people. We could’ve given less stock options to people outside the US, we intentially didn’t, because at our IPO we want a certain equality amongst how we treat people around the world.
Who has helped you in your transition from co-founder to the CEO you are today?
A lot of that comes from your executives. They’ve luckily been very frank about their feedback. I’ve also always had a CEO coach, different ones over time. I commonly find them among board members, so if you’re a VC-funded company, your board members are probably your best bet to find a good coach. Most board members provide feedback themselves, but it’s important to realize they are your boss, so don’t treat them as a coach.
If you could write an email to yourself in 2012, what would the subject line be?
Do this GitLab thing. There’s a market for it. If it could be more of an extensive email, it would say, invest a bit more in gitlab.com early on to make sure it’s as good as your self-hosted product.
How did you motivate your remote employees early on?
We’ve always been a remote company. The only exception has been the three months we were in Y Combinator when we lived in the same house in Mountain View. All the interviews were through video calls. When it comes to motivation, I don’t think we’re different from any other company. If you can have a conversation about something in person, you can also have that conversation via video call.
What’s also motivating is knowing very clear what your goals are, how you can reach them and having team members you can relate to, that are supportive of you. Some of our teams are now doing team socials, once a week they hang out for an hour. Also, four days a week we do breakouts with team members of different teams.
What’s your suggestion about the difference between Europe and the US?
If you want to grow your company to a billion dollar valuation or over, the Valley is the place to be. The flipside is also true. If that’s not your aspiration, you shouldn’t be there.
When we got into YC, there were 113 companies in our batch and they told us only three would be a billion dollar company. If they knew which three that would be, there would only be three companies in this room. Don’t go there if you don’t have that ambition.
There’s bi-weekly sessions where you say what you do, because it changes often, what you did the last two weeks and what you will do the next two weeks. Our peers were going so much faster than us. It was just mind-boggling. We thought we were fast, but we were slow compared to them. That night we drove back and said, we have a three month plan. Let’s make it happen in two weeks. Obviously we couldn’t do everything, but we did things as scrappy as possible, but get things out the door. There’s where our iteration value comes from.
Every company that leaves Y Combinator is on a fast-growing trajectory and the ones that make it keep that pace and focus, that iteration going.
Would you develop your product first, then find a team, or the other way around?
I would say neither. Find a customer. In order to iterate, you need to have something. Iterate doesn’t mean changing stuff. Iterating means someone using something and giving you feedback. As long as you don’t have your product in use by someone, you’re not iterating. You’re just messing about. So, get a customer. And if they like it, soon you’ll be overwhelmed by all kinds of requests and demands. Then you’ll know you’ll need a team.
Ever thought about stepping down?
You always wonder whether you’re still the right person. I’ve never seriously considered stepping down. For a while I was scared of getting fired, because as the company matures, you have to learn all these new skills and it was kind of nice when the goal was to become a unicorn. After that, I was like, well, even if I get fired, I’ll be very proud about what we achieved so far. That made me so much more relaxed about it, so then I was open for so much more feedback and because I was open for it, I was able to improve so much faster. So I’m still here.
What’s very important is that you hire good board members who are not affraid to replace you when that is necessary. A great hiring question for a board member is for example to let them tell you about a time they had to fire a CEO. Don’t be affraid to get fired.
It’s not nice to get fired too early, but at a certain point, you could think, hey, it’s good enough. It’s a bit like you’re in extra time.
How does it feel to be very rich?
I’m not sure I’m what you call very rich, but it’s a weird feeling. I have more than I am likely to spend in a useful way. The nice thing is that I like startups a lot, so now I get to invest in them. And it’s cool to enable other startups as well. We are very frugal people, at least we used to be. I remember a friend who shopped at eye level in the supermarket, which we thought was very wasteful, because you know all the good stuff is in the bottom shelves.
It’s just really weird to have to optimize on very different things. Time is now everything. Anywhere I can save time is very important.
How do you look at having money on your bank account?
Money is like toilet paper. It’s a problem when it’s not there. The risk is that you spend it and that you run out of it sooner than necessary. We’ve always lived by our financial models. We’ve always underspent. Don’t spend more than necessary. Don’t increase burn because you can.
We’ve always fundraised relatively early. That dilutes you more, but the problem is you tend to chicken out if you get close to zero and take your foot of the accelerator. Because we’ve never done that, we’ve always been able to go at full speed and that builds a certain intuition in the company.
If you suddenly stop hiring and then start hiring again, it takes a year to get back up to speed. In the end that doubles the valuation looking at the other scenario.
Also, many of our investors are diversified, we are not, so we like to reduce risks as much as we can.
Your competitor GitHub was acquired by Microsoft. What kind of exists are there for your company?
We like to talk about a liquidity event instead. Which is not the end of the road, but it’s giving investors the opportunity to cash out their position. If you accept a VC investment, the only two liquidity events are being acquired or becoming a public company. That’s why in 2015, we set the goal of becoming a public company in 2020.
But that’s not an exit. It’s not the end of the company. We will go on and we hope in hindsight to look at it like graduating high school, but it’s not the greatest thing in life.
Would you have considered selling your company if it were located in The Netherlands, other than where it is now?
I was based in The Netherlands at that time. It was 2014 and we were offered 10 million dollars and the company was owned by me and Dimitri. My account said, you should sell, because you’ll never have to work again. Then I told my accountant I really liked working, so I sent my co-founder a message and he sent a one-word reply, so we were aligned on this.
How did you find your first clients?
The first enterprise clients found us. That’s the power of open source. We had a Fortune 10 company using our service and we were really surprised. They knew the state of it, but they also knew that because it was open source they had a lot of control and they could fix things.
Many of the best companies have a preference for open source these days because they have more control, the speed of innovation is faster and they know they have the option that if the company behind it is wrong, it can get forked.
I still remember that company wanted to buy support and some features and I quoted them 1.500 dollars and they immediately said ‘deal’. So I was way too low with my quote. Afterwards they told me they had reserved tens of thousands of dollars for that. They required me to take on insurance, so that when I went there and broke something, I would be insured. And only that insurance cost more than the 1.500 dollars.
We also did two years of engineering for them, but luckily what they requested also turned out to be what other customers appreciated.
How do you pitch open source to executives?
We’re rarely pitching open source to executives. If we’re pitching to an executive, we tend to highlight features of our high plan. For example, how good would it be to have a company-wide overview of all initiatives. You can see of every single project in their company when they last did it, what the status is, how long it takes them to follow up on things. How good would it be if instead of taking days or weeks to deploy something, it takes hours or minutes. Because you don’t have to go through different applications. Then they say that would be great if it works. We simply reply by saying they’re already using it, there are already teams that are using it. So let’s do a formal proof of concept. The way open source comes into the conversation is by mentioning their people are already using it. Other attributes of open source are more important to middle management.
Who was and is your role model?
I don’t believe in role models, because every person has good and bad things. You should learn from both good and bad things, but you shouldn’t idolize a person or a company. When I came to the Valley, we were in universal awe of Elon Musk doing both rocket ships and electric cars, which is insane. In our company value we quote a lot from the Amazon values. We don’t think everything Amazon does is great, but we do think there’s a couple of values we appreciate. Especially their frugality and their customer obsession.
Is there a CEO network in the Valley?
There are different network events, I never met Bezos or Musk by the way, but they’re commonly organized by investors. There you meet CEOs of other unicorn startups. If you want, you can get an audience with almost everyone, even if you’re not running a company, but it depends on what do you want to achieve in the meeting. One of the highlights for me was meeting Bill Gates, my favorite book is a book called MicroServes and when I was younger, Microsoft was everything.
If you want to meet those people and you have a purpose, you can probably meet them, but I don’t have a lot to add to them.
Who I did meet and really liked, was Patrick Collison (co-founder & CEO @ Stripe). We share a passion for macro economics.
What was the most fun? What stage was the most fun for you personally?
This one. Fun is a difficult term. In the beginning it’s more intense. The ups and downs are bigger. And the self-doubt, whether the company’s gonna make it is much bigger. Right now, we’re in a more steady trajectory, where the ups and downs are less, but it’s still very interesting.
Do you translate personal interests into your company, like your interest in macro economics?
A bit. I think there’s things we can change about rules and regulations and how we think about progress that could be super beneficial.
Any last recommendations?
All advice is content dependent, but still, if you have investors, send an investor update every month around the same time. With what you need, who you want to thank, core financial metrics, highlights, lowlights and what the schedule is for next month. I think that’s great discipline. Sending it at the same time of each month tells them a lot about how you run your business.
I think iteration has been our greatest discovery and is therefore our biggest value. I do iteration office hours at GitLab where we always try to reduce the scope of what we’re doing. Can we create the same value with less. The most important question is always, can you get something out there for a user or customer to get feedback on. Anytime you can take a smaller step, you get better feedback. So it’s better to take many small steps than one giant leap. This will also keep the momentum going.
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