Sid Sijbrandij is the co-founder and CEO of GitLab which is a web-based open source Git repository manager with wiki and issue tracking features and built-in CI/CD. The company has raised over $158 million from Khosla Ventures, Google Ventures, August Capital, ICONIQ Capital, 500 Startups, and Sound Ventures. The valuation of Gitlab is over $1 billion.
In this episode you will learn:
- When to pull the plug on your startup
- The advantages of SAFE notes for raising money
- How GitLab does meetings and culture around the globe
- Why they pay based on where team members live
- Tips for recruiting top engineers
- Why you should read the GitLab handbook
For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.
Moreover, I also provided a commentary on a pitch deck from an Uber competitor that has raised over $400 million (see it here).
Remember to unlock for free the pitch deck template that is being used by founders around the world to raise millions below.
ACCESS THE PITCH DECK TEMPLATE
About Sid Sijbrandij:
Sids career path has been anything but traditional, which inspires GitLabs belief that everyone can contribute.
He first encountered GitLab while working as a self-taught Ruby programmer and quickly discovered his passion for open source.
In 2012, he commercialized GitLab in partnership with its creator, and graduated from Y-Combinator in 2015.
Since then, GitLab has grown from nine to 700+ remote team members across 50+ countries and raised $188.2 million in funding.
With GitLab, Sid is evolving the status quo for developer operations and open source collaboration.
Connect with Sid Sijbrandij:
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FULL TRANSCRIPTION OF THE INTERVIEW:
Alejandro: Alrighty. Hello everyone and welcome to the DealMakers show. Today, we have a guest that is going to tell us a thing or two, or many more, about building and scaling companies. He’s done it multiple times. The last one is definitely a big success. But without further ado, I want to welcome him to the show that we can know more about it. So, Sid Sijbrandij, welcome to the show today.
Sid Sijbrandij: Thank you very much for having me.
Alejandro: It’s very exciting to have another fellow European. I’m also from Spain, so I know the drill of coming to a place like the U.S. Let’s do a little bit of walkthrough of memory lane here with your story. You’re originally from the Netherlands. How was life growing up there?
Sid Sijbrandij: It was great. Although I didn’t enjoy high school very much, but the Netherlands is a beautiful place. I think they’re one of the happiest citizens in Europe. Everything is well taken care of. Everything is efficient and organized. It’s a great place to be born.
Alejandro: Really Cool. I believe that at some point, you got into physics. How did you develop the love for that?
Sid Sijbrandij: I really want to understand how things work. I thought in high school that physics was the most interesting. I was also pretty good at it. So, I figured I’d study that, applied physics. I realized during my first year there that it was very much applied math during the first three years, which neither was my interest nor my forte. So, I switched to management science.
Alejandro: What was that switch like? What was management science?
Sid Sijbrandij: Management science is kind of an MBA, combined with getting good with a few engineering disciplines. It was a lot of fun. I got to see a lot of different engineering disciplines, and I also really enjoyed the MBA part of the program.
Alejandro: Then, right out of that, I believe that when you were studying this, you created your first company. Tell us about this first company. I believe it was HackerNoon.
Sid Sijbrandij: Yeah. At the same point, I saw a fellow student, a Ph.D. student who made an infrared receiver, and you could use it to skip to the next song on your computer. At that time, the only thing that played an MP3 song was a computer, and he open-sourced the design and, on his webpage, it said that he wasn’t selling it, but on the internal marketplace, he was. I decided that that would be interesting to arbitrage. I started buying these infrared receivers from him and selling them to the U.S. We started off selling a printed circuit board. “If you just send us an envelope with dollar bills in it.” We ended up doing it a bit more professionally with proper packaging, and credit cards, and all those things. It was a really fun way to start the first company.
Alejandro: What year was this?
Sid Sijbrandij: It was my first year of university. It was ’98.
Alejandro: ’98. Got it. So, why did you decide to leave the company, Sid?
Sid Sijbrandij: At a certain point, my two co-founders and I didn’t agree about hiring more people. I wanted to hire more people, so I had to spend less time. They wanted to optimize for free cash flow, and they didn’t want to hire any other people.
Alejandro: What was the takeaway for you in terms of co-founder relationships?
Sid Sijbrandij: I think it was good. These things can happen, so you could say in hindsight I should be aligned on the goal, but I think for us, we didn’t start this as a startup to become really big. I started it with one co-founder, a Ph.D. student. The other co-founder came in on equal terms to both of us later on. I think if I would do a company again, and I have done that, I wouldn’t automatically make everyone an equal co-founder if they come in way later in that process. But it’s a very hard thing. There is a lot of the sense of doing the right thing involved. I understand why he took the decision at the time and why we did that, but I think it’s always really important if you start a company that you make sure the shares (everyone gets shares there) are aligned with their contribution to the company. It’s very important if you start a company to have vesting of your shares as well.
Alejandro: Of course. If they’re coming in later, there’s less risk. That should also be represented on the cap table with their equity. For the people that are listening, Sid, based on what you’ve learned with Hackernoon and with co-founder relationships, for those that are now thinking about needing a co-founder are at the earlier phase of the incubation process of the idea, what would be the top three tips when seeking a co-founder that you would give to the folks that are listening?
Sid Sijbrandij: First of all, I think I got lucky with my co-founders. We had a good relationship. We started it in a good way, and we ended it in a good way, and that’s very hard. So, I got lucky with my co-founders. I think we always treated each other well. I’m very happy with how the company started and with how it ended. I think when you’re seeking out co-founders, make sure you try to work with them. Maybe there are all kinds of implications there. I think the vesting is the most important part. So, if you discover two weeks in that it’s not working out, that one of you can continue without owing anything to the other person, like it wouldn’t be [7:34] cliff. So, just like you do with options, have a one-year cliff and a four-year grant that after the one year goes per month. I think that takes away a lot of the co-founder problems I’ve seen in other companies.
Alejandro: Especially you avoid the free riding because if someone leaves with all the equity, then people that need to invest like VCs, they’re going to be like, “Why am I investing for just 50% remaining of the business.
Sid Sijbrandij: Exactly.
Alejandro: Any other recommendations that come to mind?
Sid Sijbrandij: I think that in the Netherlands, it’s not usual to grow really fast, so you’re very much a product of your environment. In the Netherlands, this wasn’t a goal of companies to grow really fast. It was something I wanted, but I could totally see my co-founders not wanting it. If you do want to grow a company really fast, it is beneficial to be somewhere like the Bay Area where everyone just assumes that is the goal. Not just your co-founder, but also your account person and your lawyer, and everybody else.
Alejandro: Got it. Then you finally left. You left in good terms, and then you graduated. What happened after you graduated?
Sid Sijbrandij: After graduation, I did a small stint at IBM for three months. It was IBM Extreme Blue. That was super cool. I also was interested in strategy consulting. I’ve done a couple of workshops. My third option for my career building was building a recreational submarine scene of an inventor with a submarine on a boat fair. So, I made a balance scorecard of all the different ways to take that decision. One of the criteria was, “Is this a good story to tell in a bar?” So, I showed my dad the balance scorecard, and he said it was a ridiculous way to decide on your career, but he was very supportive in whatever I would decide. I called a person that was considering starting a company around the submarine, the investor, and I said, “Look. You should really hire me because I have a job offer now from IBM. Otherwise, I’ll start working there, and we both don’t want that.” He said, “Okay.” He asked me for a wage, and I told him a wage I wanted to earn, and it was super reasonable. But he said, “I’ll give you half of that,” which was very unreasonable. He hadn’t been in business for 15 years, and he hadn’t taken into account inflation. I was living away from my parents the entire time I studied, but then I had to move back to them in order to start being an employee of this company.
Alejandro: So, how was that experience of now going out for dinners and having your father and mother looking at the watch when you came back home?
Sid Sijbrandij: They’ve been really good. It wasn’t a problem. They’ve been very supportive, and there was a lot of fun. So, they’re in the attic there. I built the first onboard computer for the submarine, and I was having a lot of fun.
Alejandro: Really cool. Even though you were not the co-founder of this business, you very much were acting as one like being one of the first employees and as you were saying, developing the first prototypes for this. So, what ended up happening with U-Boat?
Sid Sijbrandij: I was the first full-time person to work on it. I eventually hired the general manager. It was a very interesting and long ride, and I can fill the entire broadcast with stories. After five years, I left. At that point, they were producing the most submarines in the world, and they still are. It’s called U-Boat Worx. For example, if you go on a cruise ship, if they have a submarine, it’s likely from U-Boat Worx. I’m very proud that’s still continuing.
Alejandro: What was your biggest lesson from this journey because it was four years?
Sid Sijbrandij: There were so many lessons.
Alejandro: You’ll have to pick one.
Sid Sijbrandij: The reason I left is I wanted a growing company. Although it was very interesting work, we were 50 people and growing with a couple of people a year. I very much discovered that I like the period of rapid growth more. That was a lesson I took away.
Alejandro: Then if you like the rapid growth, what happened? What led you into the public environment with the next chapter?
Sid Sijbrandij: I did a stint at the government as a civil servant. This was kind of a time-boxed thing. It was for a limited time. It was also part-time. I think it was about half my time. It was an innovation project. I got to run a couple of projects as an architect including kind of virgin control for law and a couple of other things. It was very interesting. Maybe I should clarify a bit. It’s not so much growth that I like; it’s interestingness. I want to do interesting things. I think in a growing company there are continually new problems and new challenges and new things to learn. I think that makes it a good fit. Although this project was with the government, it was extremely interesting, and it was interesting to see that side of the type of organization as well. I learned a lot. When I didn’t learn a lot anymore, it was also time to move on. So, I had a lot of fun there.
Alejandro: Would you agree with the statement that people say that typically this type of environment moves too slow? Is that right?
Sid Sijbrandij: Well, too slow would be saying that there’s something wrong. They move slow, for sure. I’m not a big fan of that. I like to move fast. It’s more interesting. But what we judge our government on is that they don’t make mistakes and that they weigh the interests of all the constituents correctly. They did that. I’m not sure how to do that. How to weigh all these different inputs and how to make fewer mistakes without slowing down. I think that’s really hard. The fact that they’re slow, it’s not something that you can fix in isolation. If you want to fix that, you also have to accept more mistakes. I wouldn’t say they’re too slow. They’re definitely slow, and they’re a lot slower than is interesting for me.
Alejandro: So, definitely not the type of mindset of a Mark Zuckerberg of move fast and break things because they don’t want to break things. I get that.
Sid Sijbrandij: They don’t want to break things, and that might be good. You don’t want your government to break things.
Alejandro: For sure. So, Sid, your second startup then comes as the next chapter, Appappeal. How did you incubate this idea, and how did you bring this to life? What happened there?
Sid Sijbrandij: It was with a friend. The friend had an idea for an app store for web applications. We saw the rise of the app store for the iPhone, and we thought there’s going to be this huge category of web applications. People will need discovery for all those applications as well. For all the SaaS; what we now know as SaaS applications. We should become a great site to compare those. We started that, but I think what happened is that Google kind of became the way you find and discover web applications. There are some great companies out there now. I like G2 Crowd, who do a great job. The market was much smaller than we thought, and we didn’t do a good enough job of winning the rest of the market.
Alejandro: Did you guys raise any money for this company, or it was fully bootstrapped. How was that?
Sid Sijbrandij: It was fully bootstrapped, and we ended up selling for a small amount to one of our competitors.
Alejandro: Got it. So, bootstrapping versus raising capital. Which one would you go about if you had to start another company?
Sid Sijbrandij: I would say bootstrap for as long as you can. Expect to lose all your money, but as long as you can pay for it yourself, it’s way less complex. I did that with my last company, with GitLab. I bootstrapped it for a couple of years with $100,000 that I had from my previous adventures, and I doubled up by speculating at Bitcoin. I think that was a great way to start it because it meant that we could invest for a long time in improving the product without a lot of pressure to immediately monetize it. Open source tends to be a great business model, but it tends to take a bit longer than proprietary software. I think in hindsight, that was great that we had a bit of extra time.
Alejandro: So, let’s talk about GitLab. At what point do you decide to really put an end to Appapeal and start to think about what’s going to be next, and how did GitLab come about?
Sid Sijbrandij: I think when Appapeal wasn’t working out, we stopped it. I think there was a period in-between where I was just consulting as a Ruby on Rails consultant. So, I wasn’t fulltime looking for a new thing. I was just browsing Hacker News, and I saw this GitLab project. I thought, “Wow. This makes so much sense that something you collaborate with is also something you can contribute to.” I was using Github at the time, and that was the only piece of proprietary software like non-open-source software that I used in my day-to-day as a developer. I thought it made a lot of sense that of all the things that your collaboration software is also open source.
Alejandro: Got it. Just really quickly, you said that Appapeal, you mentioned that at one point, you really saw that it was not working. Then you went into consultation, you saw the creation of GitLab on Hacker News, and that really sparked your interest. But before we continue that any deeper, to really understand more of the story behind GitLab, I’d like to know, and perhaps the other listeners are wondering, at what point do you decide it’s time to pull the plug from Appapeal?
Sid Sijbrandij: I must say, I don’t remember exactly. I think revenue was stagnating. I think that’s the primary reason people stop. If it’s not longer growing, then it’s no longer a startup. You go try to execute ideas. First, you start with the most plausible ideas, and then you work down that list. At a certain point, they’re very implausible ideas that you’re working on, and you just decide, “Okay. It isn’t likely we can turn this around. We cannot get to a high-growth rate anymore, so it’s time to start. At the current level, it’s not something that we want to dedicate our careers to any longer.”
Alejandro: Let’s fast-forward here. Hacker News, you see, and you have your first encounter with GitLab. What was the next step? What happened?
Sid Sijbrandij: I thought, “This makes so much sense.” At that point, you can only run GitLab yourself, self-managed. I thought, “Well, SaaS is the future. Salesforce, etc. So, I’m going to start GitLab.com. I did a Show Hacker News article where I said, “I’m going to start GitLab.com. Are people interested? If so, signup here. I got a couple of hundred people that signed up. It hit the homepage. I was super excited. I sent an email to the creator of GitLab, Dmitriy, and said, “Hey, you don’t know me, but I’m starting this GitLab.com without you. I hope that’s okay with you.” He sent a very nice email back where he said, “Yeah, that’s totally fine. I’m totally cool with you starting this without me. It’s open source. I hope you make it more popular. Thank you very much.”
Alejandro: Wow. Then what happened after that?
Sid Sijbrandij: I tried GitLab.com for a year. It turns out that the majority of GitLab usage was with people self-managed. GitLab, at the time, was used by big companies that wanted to host everything themselves. They were asking me for new features because I was very visible, I was running GitLab.com, they asked me, but I didn’t have a lot of GitLab programming expertise. At the same time, at that year, Dmitriy sent out a tweet, “I want to work on GitLab fulltime. So, I emailed him, “I’m the person from a year ago. I saw your tweet. Can I pay you to add more features to GitLab?” We agreed on a monthly wage. I went to the local Western Union, where I said, “I want to wire some money to Ukraine.” They asked me, “Do you know this person, or is this someone you know via the internet?” Because there were a lot of scams going on from the Ukraine at that point. I figured I knew him enough and made the wire, and we were in business.
Alejandro: At that point, was he an employee, a co-founder, what was the relationship?
Sid Sijbrandij: Yeah, he was a co-founder.
Alejandro: Got it. Then finally, the founding team is getting more shape. What were some of the early days like, Sid?
Sid Sijbrandij: It was me in the Netherlands. Then Marin in Servia, and Dmitriy in the Ukraine. We didn’t really have a feel for how we looked. We didnt do video calling. Dmitriy was even reluctant to send a picture of himself. I applied some pressure at some point. He sent one with sunglasses on. But we were able to deliver the features that people wanted. So, it kept growing, and we were able to generate a bit of income and able to hire a few more people. Between 2012 and 2014, we grew to nine people working on the project. Then the next big change came when we joined YCombinator.
Alejandro: What was that process like for you guys?
Sid Sijbrandij: We applied. We didn’t know anybody in Silicon Valley, so we didn’t have any references or anything else. Nobody vouched for us. It was just an application, but we had a lot of users and products. They were intrigued. I was able to fly out. Dmitriy couldn’t make it because he couldn’t get a visa in time. That’s not something you particularly like, but we managed to get into the program, and we flew the entire company out for three months to all be able to participate. Although only the founders are invited to YCombinator, it was fun getting home after every event and explaining to the rest of the company what we learned.
Alejandro: I guess from the three months at YCombinator, what was like a Wow moment for you? Like, “Wow! This is how they do it here.”
Sid Sijbrandij: That Wow moment happened after two weeks. Every two weeks you have a talk with your mentors. Then there are a couple of people in your particular group. We went company-by-company. After me was Les Wessel what’s now called WayUp. They did so much more than us in those two weeks that we had a Wow moment like “We’re really not cutting it.” We drove back; we took a car that fit the entire company that was Dmitriy and me. We said, “Look. We’ve got to start going faster.” So, we took the roadmap we had for the next three months, and we said, “What of this can we fit into the next two weeks?” Just cut scope in order to make it fit and did as much as possible to do all the things that we thought would make a difference. We started working on that. That’s where our value of iteration came from, which means we do scope and ship it way sooner than you think was ever possible so that you have time to iterate and improve it over time. That worked really well, and it became a core company value, so that’s the most important takeaway from that program.
Alejandro: If we had to look at YCombinator as let’s say plastic surgery where you see the pictures of the before and after, what would you say was the before picture of GitLab and the after picture of GitLab, post-YCombinator?
Sid Sijbrandij: A couple of things changed. The first thing is the speed at which we operate it. The second thing was our ambition level. They told us, “They won. There are 100 companies here. Many of you will be a billion-dollar-plus company if we knew what three, there would be three companies here.” So, it’s very clear. You come to Silicon Valley to start a big company, not a small one. The third thing is that we learned a lot. We were both technical co-founders, and we learned a lot about sales and marketing, presentations, fundraising, that otherwise would have been very time-consuming to learn.
Alejandro: Right after the program, did you guys make the decision of staying in the Bay Area, or how did you finally stay there.
Sid Sijbrandij: After the program, I decided to stay in San Francisco for a month to do fundraising, and after two weeks, we already had our seed round allocated, so I asked our coach what we should do? He said, “Is there interest in an A?” I said, “Yeah, for sure.” He said, “Well, lots of companies fail because they don’t raise an A. If you can, go do it.” I raised an A, and if you do that, then there’s a commitment to stay in the Bay Area and invest in local companies. With that came my commitment to live here, and I love it here. There are so many talented people with a lot of ambition. Being able to realize that I never want to leave.
Alejandro: Got it. What was it like for you? You’re from Europe, and then all of the sudden you see yourself doing a seed round where Ashton Kutcher is investing, the guy you see in the movies?
Sid Sijbrandij: It was unreal. That all happened on demo day. On demo day, I met Michael Errington. I meet Lee Chong Wei and Ashton Kutcher. It is like living in a movie. I’ve only read TechCrunch back at home and read about all these people. There they are in the flesh, and they’re interested in talking about your company. It was very much an exciting experience.
Alejandro: How long did it take from that until you finally closed the seed round in the bank?
Sid Sijbrandij: When you close a seed round, you have two steps: you sign the SAFE, which happened immediately. That was kind of two weeks. I think technically in those two weeks we were allocated 80%. We had more than enough interest for the last 20%. We took a bit of extra time, but those SAFEs were signed after two weeks. Then comes money in the bank. The equity gets distributed when you do your A Round. The money in the bank was days after signing. So, in those two weeks basically.
Alejandro: Ultimately, the SAFE is a form of debt, and that debt is going to convert in equity which you guys did the round in 2015. Before we talk about the A Round, obviously at this seed round the business model was coming together. These folks were investing because they got it. So, what was the business model of GitLab, so people listening get it.
Sid Sijbrandij: A small point about the SAFE just for other people listening. A SAFE kind of works very much like convertible debt, but it’s technically not that, which helps, for example in California in order to hand out debt in a commercial way, there are regulations. Although it’s similar, the economics are similar to a convertible note. It is not a convertible note, which is handy in a couple of different ways. So, I definitely recommend a SAFE process.
Alejandro: And more flexible too. You don’t have the maturity date. Especially when you have people that are not very well aligned, then they can ask you for the money back with the interest. And obviously, for a cash-strapped business, that could be the death. I’ve seen many businesses closing down because of their not being able to repay the debt. I agree with you. I think that the SAFE is a great method. So, let’s talk about the business model of GitLab. At the seed stage, what was that business model, or what has evolved the business model to be so that people listening can understand?
Sid Sijbrandij: The business model has always been to add features on top of the open-source version and charge for those features with a per-user fee. You pay per user per year to use these additional features. How it’s evolved over time is that we added more tiers. We started with our lowest tier. Then we introduced new tiers at higher price levels as we added more features. The hard thing was trying to figure out how do you differentiate these tiers? One way that people differentiate them is by the size of the companies buying them, but we found out that wasn’t a great way. What worked really well for us is what we call Buyer-Based Open Court where all the features that are aimed at individual contributors are in an opened-sourced version. Then features aimed at managers are in our lowest-priced version. Features aimed at directors are in our mid-tier. Features aimed at executives, for example, compliance and governance, are in our highest-priced tier. It turns out that if the person you sell to is higher up in the organization, it’s harder to reach them, so you have to spend more on sales and marketing. They’re less likely to contribute back to your product, but also, they have more budget to pay for things.
Alejandro: For the company, Sid, how much capital have you guys raised to date?
Sid Sijbrandij: 158 million.
Alejandro: 158 million, and I’ve seen reportedly over a billion-dollar valuation. So, really impressive. What were some of the expectations that you have seen from financing milestone to financing milestone from some of those incredible investors that you have onboarded?
Sid Sijbrandij: I think your seed round, you tend to raise on the team if you’re in Silicon Valley, but because our team was not very impressive, we raised it on our users, our customers. The A Round, you tend to raise on the product you’ve developed. Then the B Round and every later round is financial metrics. It’s very much like, what is your margin? What is your net retention? How fast are you adding new customers and try to paint that picture?
Alejandro: The investors that you have Impressive! Some are: Khosla Ventures, Google Ventures, August Capital, and even ICONIQ Capital, which is the vehicle of Mark Zuckerberg, Jack Dorsey, Marc Andreessen, and so forth. First and foremost, how did you meet these investors and for the people that are listening, what would you say is the most effective method to get in front of these kinds of people?
Sid Sijbrandij: The most effective way is to go to YCombinator. It’s amazing how they set you up for success there. All of our seed investors were interested because we came out of that program. Khosla was a seed investor. They did half of our seed round. Then they were also interested in investing more, so they did our A. I think in the B Round, we reached out to the people that have shown interest before. There was a lot of inbound interest. I think we augmented that with people we were interested in ourselves. We ran a process in both the C and the D Round were kind of pro-active. We weren’t particularly interested in fundraising at that moment, but there was a strong interest, and we decided to take the money as the opportunity was there.
Alejandro: Typically for additional introductions and really helping open those doors to build meaningful relationships with other investors, what would you say was more effective for you? I know you touched on YCombinator, but would you say that typically the best introductions come from founders or from existing investors?
Sid Sijbrandij: I think existing investors are really, really great. I think because they’ve seen the business for some time; they are a great way to get introductions. Basically, the problem of enter investing is that what they’re really scared of you invest, and then it turns out different than what you thought it was. To prevent that, you want to see progress over time. So, you want to invest in the line, not a dot. If it’s an existing investor, they can vouch for, “Look. I’ve been here for three board meetings, and there’s no surprise stuff. They do what they say. They meet plans, and if there’s bad news, we hear it immediately.” That is so important that a new investor believes that the case because they hate to invest in a company and then end up at the first board meeting, there are like five surprises.
Alejandro: Absolutely. One thing that I’ve seen as well here is that in the past couple of years, you guys have been very active when it comes to acquisitions on the buy-side with Gettering in 2017, with Gemnasium in 2018. How do you guys think about acquisitions?
Sid Sijbrandij: That’s a great question. There’s more detail in our acquisition offer page. The gest of it is we’d like to acquire more teams that have built a product before that is on our roadmap. If you go to our homepage, there are a lot of things that aren’t in GitLab today that we still want to add to GitLab. If a team has built up before, we’d love to acquire them. Preferably a team that made a great product, but that didn’t get distribution because we’re going to shut their existing product down. GitLab is a single application for the entire DevOps life cycle. They will have to reimplement the product in GitLab, and that’s much easier if there weren’t a lot of sales yet and if there aren’t a lot of customers yet. You won’t have disappointed customers. You don’t have to maintain it very long. Plus, it’s more affordable for us to acquire the company. An example is Gemnasium. An amazing product, but there wasn’t a lot of revenue. They’ve been able to build out the security vision of GitLab very rapidly. If there are people who threat detection, behavior analytics, vulnerability management, or release governance, or system testing, or any of these things on the home page, we have an acquisition offer page. It includes a calculator. You can calculate how much we’re offering. It’s not a lot. It’s up to a million dollars, but it’s a great exit because, for those teams that don’t have a lot of sales, the other option is frequently closing down.
Alejandro: Acqui-hires are for sure a good method I would say to build a team faster. Especially for the folks that are listening, I’m sure that we have a lot of business people that are thinking about “How do I recruit my first top-tier engineers, and how do I find those that are worth it?” Based on what you’ve seen, you’ve probably dealt with a lot of engineers, what would you say this is an open-ended question, but perhaps we can address this one for whoever is listening who is dealing with this. What would you say are the top three traits that they should be looking in a rock-star engineer?
Sid Sijbrandij: I wouldn’t hire rock stars. They show up late, and they tend to be high. But we look for a couple of things. First of all, you have to understand code, reason about it well, and have a feeling for what good code looks like. Second, you have to be able to shift and iterate. At GitLab, on average, we hope that people make ten improvements to the code every month that they get out the door. You have to be able to collaborate well, to review someone else’s code and then make sure that you help them make their code better, and become a better developer. It’s really hard to assess engineers. We grade them as a great asset which is, we don’t know who the top coder in the world is because the only way to assess someone is to have worked with them for a while, and there’s some truth to that. I think it’s a popular proxy nowadays is have people contribute to open source code because that’s a visible thing and most open source projects are pretty critical for code they accept and are able to get their code in apparently. It’s a high enough quality to meet that part. It’s a hard process, and the best thing is to start out with one great coder who can then assess the people coming in. Of course, the hard thing is finding that first person, so I suggest you be generous with your accuracy if you don’t have a technical co-founder yet.
Alejandro: Do you think doing code challenges or code tests might be a good way to see and to measure the quality of that engineer?
Sid Sijbrandij: Yes, for sure.
Alejandro: How big is GitLab today?
Sid Sijbrandij: The open source project has gotten more than 2,000 contributions from people outside GitLab the company. GitLab, the company, is 700 people in more than 50 countries all around the world, all remote companies. So, we don’t have any shared offices.
Alejandro: Wow. So, you guys don’t embrace the Facetime mentality that a lot of corporations do. Tell us about this culture. How did you guys build this up and what kind of guidelines do you follow or what does it look like to be part of a corporation that doesn’t really have that Facetime mentality?
Sid Sijbrandij: What we say is we don’t do in person. We do very much encourage people to look at each other in the face. Although we started with Dmitriy refusing to send a picture of himself, we try to have meetings with web cam even if you’re doing something else, that’s fine. But we do believe there’s something to see in the other person. For example, every day, we have a company call, and it’s a thing you do with a limited set of people. I think there are 20 in our group, and we just hangout. Today, we talked a bit about movies and magazines. It turns out someone subscribes to the Hollywood Reporters, so it’s interesting to hear from her what she found interesting. But we just chat about things. We very much believe that our company is more than just, “Hey your work ” The social interaction and we have a lot of ways in which we facilitate that inside the company.
Alejandro: In a future, Sid, where the vision of GitLab is fully realized, what does that look like?
Sid Sijbrandij: Do you mean regarding our product or do you mean overall?
Alejandro: The vision that you have for GitLab. What does it look like when it’s fully implemented or realized?
Sid Sijbrandij: We think it should be way easier to create and maintain software. Today, if you want to do what’s called DevOps, Develop and Operate your software, you need to stitch together more than ten tools, sometimes even 30 different tools in order to make software. That has to become easier. Not only does it have to become easier, you want to get down your cycle time. The cycle time is the time between deciding to do something and having that out there. At GitLab, because it’s a single application, it helps people to not take so long to hand it over from different DevOps tools to a different DevOps tool. We want to make sure that GitLab becomes best in class in all the different products it replaces. November 18, 2023 we hope to be a 500 million dollars of AR, and we hope that we have all those different parts of GitLab that are already there, that those are loved by customers because they’re the best in the business.
Alejandro: I love it. Talking from a strategic level and obviously, you are in this world of engineers, and obviously, great problem-solvers. When you’re thinking about a problem that it is more at a strategic level, how do you go about solving it?
Sid Sijbrandij: I do what I do for other problems as well. Write things down. Try to feature it, and then share that with others, and have them vet it. That strategy that I talked about, I wrote it up yesterday, and today I announced it on our company call and have already received some comments. Over the next couple of days, people will come up and address those comments, and then we’ll put it live, and we’ll have our next goal that goes beyond our plans to become a public company next year.
Alejandro: Very cool. One question that I always ask the guests that participate in the show is now you’ve done all these companies with the most recent one, GitLab, and it’s incredible the amount of experiences and lessons learned that you have been able to achieve and get. If you had the opportunity to go back in time and have a chat with your younger self, Sid, what would be that one piece of business advice that you would give to yourself before launching a business and why?
Sid Sijbrandij: I think if it was available at the time, I would read our handbook. We try to make sure that everything we learn, we write down. By now, the GitLab handbook is over 3,000 pages. I’m very proud that it’s open, and it is even creative comments, so people can just copy whatever part they want from that handbook and benefit from all the things we learned already. I think if you’re starting a company today, and it’s a startup, and it’s focused on technology, or it’s using technology, I really recommend you have a look at that. That’s all the lessons we’ve learned so far.
Alejandro: Just out of curiosity, we were talking about Hacker News before and how things started. If we were to put the 3,000 pages on Hacker News, which page would you say would get the most amount of votes and comments?
Sid Sijbrandij: Hacker News loves controversy. So far, the most controversy has been us paying local rates. We pay our people depending on the market rate where they live. I think that will probably get the most votes. I’m also a student of business, so I like our leadership page. You can Google GitLab leadership, or you can Google GitLab why we pay local rates depending on what your interest is.
Alejandro: Cool. Well, Sid, it has been a pleasure. Just out of curiosity, probably the people that are listening are thinking, “How do I get in touch with Sid?” So, for the folks that are listening, what is the best way for them to reach out and say hi?
Sid Sijbrandij: The best way is Twitter. My DMs are open.
Alejandro: And your Twitter handle is?
Sid Sijbrandij: #sytses
Alejandro: Amazing. Sid, thank you so much for being on the DealMakers show today.
Sid Sijbrandij: Great. Thanks for having me.
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