From a submarine engineer to a successful CEO: How Sid Sijbrandij redefined the world of SaaS with GitLab

[00:00:30] - Constantijn: "Sid, how did a submarine engineer become the CEO and co-founder of a software Unicorn?"

[Sid] - I think I've always been drawn to entrepreneurial activities. When I notice an opportunity, my first thought often is: if that doesn’t exist, let’s start making it. That’s what also happened when I noticed GitLab, which was a really cool and promising project. But there was no company around it. So I went out and started a company. 

A year later - Dmitri - my co-founder, tweeted: "I want to work full-time on GitLab."
So I sent him an email to join forces and discuss further steps.

[00:01:56] Joe: "The founding and subsequent growth of GitLab is unique in the unorthodox way that you made the product successful. It’s about organic growth rather than ‘going out and building a big marketing team and doing a bunch of enterprise sales’. How did you know when the product-market fit was really there?"

[Sid] - I think most of the time entrepreneurs are having the right vision, but often have ideas too early in the journey. The most exciting alternatives on the market really focused on software as a service back then and to me, SaaS was the future. So when I saw GitLab, I thought ‘wow, I should be offering GitLab as a service’. I launched gitlab.com but at first, there weren’t many people interested in it. I continued with a post on Hacker News, and a few hundred people signed up for the product but were reluctant to pay for it. In the beginning, we were not creating sufficient extra value. Nevertheless, I started getting emails from the biggest companies in the world that were already running GitLab themselves. So I became convinced that GitLab would take off and, in fact, it did. We were lucky that customers shared their feedback with us on how to improve the product, based on their needs.

 [00:03:58] Joe: "So it was iterative - you went through several phases before you felt like ‘we’ve got it, now it's going to organically grow on its own’?"

[Sid] - Indeed. And I wouldn’t discount sales, because for us - our sales motion is super important. In a lot of companies, there’s a bottom-up adoption of GitLab as a DevOps platform - to do everything from planning to rolling out software. But then there’s the middle management that has spent the last five years making their own DevOps platform. Tons of money and time went into making custom integrations between all these point solutions, which can all be replaced by GitLab. It's a single interface and a single data store. It works way better, but it's displacing something they’ve spent a lot of resources in. Therefore, we frequently need that sales motion talking to the company’s leaders and explaining the benefits of GitLab in a way that removes their reluctance to switch from their current solution to ours.

[00:08:07] Constantijn: "You once told me that the reason why you actually attracted venture capital, is because of the cost of the best talent. So talent is absolutely critical in your company. Can you take us a bit through how you recruit and also some of the major recruitment decisions that you took?" 

[Sid] - The best talent in the market will want to have a stake in your company and they want to add value. So if you're going to give away parts of the company, you want that to be valuable as well. You either have to sell the company or become a public company. And if you want to become a public company, you have to keep growing really fast. And to keep growing really fast, you need external capital. 

As for hiring talent, I don’t think we do anything very special there. In my opinion,  the labour market is changing in the sense that companies have to proactively reach out to the best candidates. I think fewer and fewer roles will be performed by inbound people. Instead, companies have to reach out to the best talent. I guess that's also a great opportunity to increase the diversity within your company. 

And I think that the rise of remote work allows companies to be more differentiated.

If you have to hire within commuting distance from your office, in most cases you cannot easily differentiate yourself because you want to target a big portion of those people. We really love the transparency and the interaction in our company, but it might not be suitable for everyone. 

[00:11:34] Joe: "It must have been a real advantage for all the talent out there that you’ve always been remote?" 

[Sid] - It's a real advantage. And luckily, other companies are catching up now and are starting to be more open to hiring away from their offices or even deciding to close their offices. So there are far more opportunities available now. We used to be the only game in town if you wanted to join a unicorn for people that wanted to work remotely. But now, people have the opportunity to select more companies with remote opportunities.

[00:13:56] Constantijn - "Now with the pandemic, a lot of companies are struggling because they can't convey culture directly. There is no proverbial coffee machine talk as there is no physical location for companies anymore. That's actually the reason why a lot of companies want to bring their staff back. How do you make sure that your culture is truly lived by employees without it becoming a kind of a burden?"

[Sid] - I think it's really, really important to build the company’s culture, and we define it as a combination of our values and the way we work. That said, the way we work is pretty straightforward: it’s how we communicate and this can be written down easily. It is often more difficult to define values in a remote setting.

We defined 20 different practical ways to reinforce our values across teams. They go from pretty trivial, like using Zoom backgrounds with our values in them, to super important ones - like who you hire, who you promote, and who you reward.

For us, these values are not just a bunch of words. They are reflected in a living document with multiple examples & use cases. More than 200 updates were made to our values alone last year. 

Another reason why people want to head back to the office is that they're missing the informal communication. Many companies spend for example 10% of their budget on their office, facility management, and all other costs related to an office.

However, what they should do is spend a few percent of that budget, maybe even half of it on facilitating informal communication. And there are many ways to do it, you just need to spend time on that. Most companies have spent an enormous amount of time deciding when to go back to the office, but they’ve spent almost no time making sure that while they're not in the office yet, they're going to stimulate that informal communication in some way. You can't have trust and connection if you only talk about work subjects. Zoom meetings are super-efficient, but team members still need that informal face-to-face interaction. For example, we intentionally organize coffee chats, so for GitLab employees, it's super-normal to just book 25 minutes on someone's calendar to have a quick check-in with a cup of coffee.

 [00:18:49] Joe: "What advice would you give to other founders on these nuances of writing down the culture and of living company values? How much is that ‘the answer to success’ as opposed to ‘just a side job’?" 

[Sid] - I'll give the most technical answer possible. As a CEO, I've gone from programming the software, to programming the company.  CEOs are leading and designing the company, and as a part of that role, they're instituting the routines of the company. It's the highest leverage work you'll ever do. So it's a really good use of your time. You should be able to recruit people who can do the work you did previously. Otherwise, you're not a really good CEO.

[00:20:15] Joe: "One of the things I really admire about GitLab is how you've taken the concept of transparency to some astronomical level. What brought you to saying ‘look, this is just the way we have to run the company’ versus ‘well, we could keep quiet about some of the company’s decisions’? How did you arrive at what was right for you? "

[Sid] - We started being transparent because we were building a company around an open-source project. What happens frequently with that type of model is that as the company develops and grows, you can unintentionally alienate the contributors to that project. And we thought that transparency would be a good way to show empathy and also get early warnings if we were on the wrong path. In time, our approach became a really powerful talent branding advantage. People knew us because of our transparency, and they could make a clear decision on whether to join the company.

[00:22:47] Constantijn: "You were a submarine engineer and you also worked for the Dutch government. You founded GitLab and then decided to go to the U.S. for Y Combinator. Did you know all along this process how big you were going to go? Was this your dream?" 

[Sid] - Well, in the beginning, I was only thinking: this is promising and I would like to invest in GitLab. At a certain point, the business had momentum, and I wanted to go to the U.S. and visited Silicon Valley several times. The first time was actually a trip organised by the Dutch Embassy, for which I'm really still grateful. I thought ‘OK, I'll throw my hat into the ring’. I told my wife ‘I'm going to apply for Y Combinator if you don't mind. But it means that we'll have to go there for three months if we get in. However, it’s unlikely for us to get in as there is so much competition. She said: ‘You'll get in. I'll come with you’. 

Before we started with Y Combinator I also warned my wife to stop me if I wanted to accept outside investments because it means the outcome is ten times as big, while the failure mode is also ten times as likely. Eventually, we figured that in order for us to hire the best people, we had to accept external money and go for a really ambitious plan. And life is too short not to be working with the best people. So we ended up doing that. When we joined YCombinator, our plan was to hire 50 people in five years. It ended up hiring 500 people in five years.

[00:25:16] Constantijn: "What helped you, as a leader, evolve along the way? YCombinator probably opened your eyes to a higher ambition level, can you just take us through that path?"

[Sid] - Y Combinator was extremely helpful. One thing they say is ‘pick one metric, but make sure you're accountable for that metric every two weeks and do whatever it takes [within ethical and legal constraints, of course] to get there’. So that simplicity really helped. Other peers from our batch motivated us a lot, because they were moving much faster than us.

And so after the first two weeks, Dmitri and I were driving back and I said: ‘Look, we got to up our game. Everyone else is so much faster’. And then when you leave Y Combinator, they say something that's very true, but hard to appreciate. They say: ‘If you keep going at this speed, you'll be a very successful company’. And that's true, but it's so easy to get distracted by for example, conferences or fundraising. However, if you keep focusing on the core metric and keep increasing it, you'll get there. You have to be fortunate with your product, with your market, and everything else, but ultimately it is a matter of focus. 

Then as a person, as a CEO, you have to reinvent yourself every so often. You should find someone else to do the things you were doing before and then move on to new things that need to be done.