SaaS Interviews with CEOs, Startups, Founders
1190 The 1 Metric GitLab CEO Follows Thats Driven $10m+ in ARR
27 Oct 2018
Chapter 1: What is the background of Sid Sijbrandij and GitLab?
Everything will be fine. Calm down, relax, enjoy life. He was working on some cool stuff related to submarines, then decided to go freelance, then fell in love.
He almost got married, this beautiful thing called Ruby on Rails, and eventually found the open source community in 2012, launched GitLab, which is now helping over 5,000 customers, about 100 seats per logo, so call it 500,000 paying customers, doing somewhere between $10 million and $100 million.
In ARR, growing rapidly with their team, their distributed team of 267 people, healthy economics, 90% logo retention annually and over 175% net annual expansion with their team of 267 folks. Again, 12-month payback period on a revenue basis, cash basis. He tries to keep that to zero as they scale and try and double year over year in terms of net revenue expansion.
This is the Top Entrepreneurs Podcast, where founders share how they started their companies and got filthy rich or crash and burn.
Chapter 2: How did GitLab grow from a small team to a large company?
Each episode features revenue numbers, customer counts, and other insider information that creates business news headlines. We went from a couple of hundred thousand dollars to 2.7 million.
I had no money when I started the company. It was $160 million, which is the size of many IPOs.
We're a bit strapped. We have like 22,000 customers. With over 5 million downloads in a very short amount of time, major outlets like Inc. are calling us the fastest growing business show on iTunes. I'm your host, Nathan Latka, and here's today's episode. Hello, everyone. My guest today is Sid C. Brondy.
He's the CEO and co-founder of a company called GitLab, a software company that supports the entire DevOps lifecycle in a single application. Originally a computer programmer for a personal submarine company, Sid was first introduced to GitLab while working as a self-taught Ruby programming developer.
Under Sid's leadership, the company has grown from 49 to 267 employees, closed 20 million in Series B funding, and delivered on promises to solve the complete developer lifecycle.
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Chapter 3: What is the significance of ARR in GitLab's business model?
Sid, are you ready to take us to the top?
Yes. Thanks for having me.
You bet. So first things first here. So was, it sounds like you, you joined the company after it was 40 or so employees. Is this not your baby?
Um, well, the open source project is not my baby. Um, it is a co-founder and my co-founder Dimitri, our CTO started that, but I actually started the company at, at, at one person. So, um, uh, all the way from that to, uh, I guess an inflection point was joining Y Combinator in 2015 with nine people. But I grew up from the start.
That's good. Now, we just had Matt on from Automatic, and we had a few other people that have tried to build on top of open source communities. Sometimes it goes beautifully and wonderfully well. Other times the whole community backlashes, again, when they hear dollar signs, right? How did you manage that transition? And tell us how you built a business around GitLab.
Yeah, I don't think that open source communities are against dollar signs, but what they do want to see is you being a good steward of the project and acting in the interest of the project. And that's a balance.
That's a balance between things that generate revenue, like new proprietary features, and things that push the open source project further, making sure that it's easy to accept contributions, making sure that there's still features landing in the open source version. I think we had a great balance there. And sometimes when we're off, we listen and we correct.
But Matt has been a great inspiration there. And I'm very thrilled that he joined our board. So as a board member, he can make sure that long term, we keep being a good steward.
So of the 267 employees you currently have, whoever is dedicated to engineering, you're not only building a business, but they're also contributing code back to the open source project to keep adding value there.
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Chapter 4: How does GitLab maintain a balance between open source and proprietary features?
I'm a team of 100 people. I'm paying 19 grand per year. You want to double that to 40 grand the year after. That would be really healthy growth. That's what you care about.
No, I want to more than double that.
Sorry, my point is that's how you measure it. Am I getting that right? Maybe you want to triple it, but that's how you measure it.
If we go from zero to 10 in the first year, the next year we don't want to go from 10 to 20. We want to we want to, the first year we had 10 in incremental, the second year we want to do 20 in incremental plus the 10 we already had. So we end up at 30.
Yes. And I understand that. I just want to make sure that's how you're measuring it though. It's, there's a first year ACV, then there's a second year ACV and you want to expand that. I don't care whether it's two, three, four, five X, but that's generally how you're measuring it. Yep.
Okay.
Got it. So what about churn? I mean, it seems like you're focused on the right things and churn should be fairly minimal. Maybe you're at net negative revenue churn, but how do you manage churn?
We don't have a lot of growth churn. We have way more than 90% of the people staying with us.
That's on a logo basis and a revenue basis?
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Chapter 5: What is GitLab's pricing strategy and customer acquisition model?
Good stuff, Sid. Let's wrap up here with the famous five. Number one, what's your favorite business book?
High Output Management.
Number two, is there a CEO you're following or studying right now?
I'm just amazed that Amazon is being able to compete in so many categories.
Number three, what's your favorite online tool for building your business?
Good luck.
Besides your own.
We love Zoom. We love Zoom video calls. They've been a game changer for us.
Number four, how many hours of sleep do you get every night?
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