Our guest today is Sid Sijbrandij, CEO, GitLab.
Sid, 10 years ago, most investors were reluctant to invest in remote companies. Functions like finance, sales and marketing were seen as in-house only. How did you address those concerns?
When GitLab graduated from Y Combinator, our engineering team was already working remotely and there was no reason for the rest of the team to be in-house. Of course, there were people who were skeptical about it. Our VP of Sales initially thought that a remote set up won’t work for sales. At the time we had an office and I told him ‘’ Ok, bring your people in-office.’’ By nature, salespeople travel a lot all over the world because they have to be close to customers. Our VP of sales had to commute 4 hours a day as he was living near Sacramento. He came to the office for some time but for his own benefit, it was so much easier to work from home.
Then, the next point of skepticism was when we started to hire SDRs (sales development representatives). These are the people reaching out to customers and they were at the beginning of their careers, just out of college. Initially, we thought that we had to bring them to the office, but we ended up hiring SDRs in Utah, they were not even in San Francisco. Of course, an office in Utah was an option as we found great talent there in abundance, but our people preferred to work from home. They started to meet informally, work out of each other’s places and enjoyed the work-life balance as most of them had families.
Our Head of Finance joined very early. New executives were dropping by asking him ‘’ Hey Paul, how does this remote thing work?’’. Our people are all on Slack and it’s easy to communicate with them regardless if they work in finance, sales or some other department.
As the CEO of an all-remote company, I couldn’t agree more. Having people in an office is not a guarantee that they communicate seamlessly with each other. On top of the very efficient communication channels, GitLab has a rather unique CEO Shadowing program. Can you share more information about it?
We have people in over 50 countries. Our team is all over the US and all over the world. For the shadowing program, however, people come on site. We work remotely but to shadow, the participants of the program sometimes need to physically join a meeting with investors or clients. The CEO Shadow program helps our team to understand different aspects of the business and see the big picture. Those who shadow the CEO attend meetings, dinners, press conferences and share flights with me. Yesterday, we had such meetings in person with our investors which reminded me about our B round when most investors were skeptical about our ‘’all remote’’ concept. I was invited to present to the managing partner and he asked ‘’ This remote concept never worked for any company before, why shall it work for GitLab?’’. However, one of the associates had read our Handbook and was really impressed by it. To him, this was the best way to structure a company being it remote or not. It was the Handbook that convinced them to invest.
It’s surprising how fast this market has turned around. If before we had to explain ourselves, today the investors ask startups what their remote strategy is. They know how hard it is to recruit everyone in San Francisco.
Fantastic! In the EU, we are privileged as we are able to seamlessly relocate talent from one country to another, but it is a completely different story if you need to relocate someone to the US. It’s great to hear that investor’s preferences are moving into the right direction. Speaking of expanding globally, was it the remote working concept that helped you to scale the company?
For sure. There are three reasons why remote work helped.
Native language speakers and local network
We were able to hire people locally who had the network, were familiar with the culture and the way of doing business in that part of the world.
A much bigger talent pool
We are growing from 400 to 1000 people this year. That growth wouldn’t be possible had we hired in one location or a restricted set of locations.
A positive ‘’side effect’’
Being a remote company, we have to write things down and have clear processes and responsibilities in place and have documents like our Handbook. It turned out to be our biggest recruiting tool. Lots of people who found about our Handbook and used it a few times realized that they wanted to work for the company that had written the Handbook and applied. Often, during the interviews, the candidates were saying ‘’ This is the way I want to work and that’s why I applied for the job’’.
It’s great that the Handbook is public as many startups and entrepreneurs can learn from the best practices of a very successful company. It doesn’t matter if the company is remote or not, if there is no structure in place, it is very unlikely for it to succeed. Most startups don’t realize the importance of structure and written documentation early on and I believe that this is the root cause of many failures. What is your opinion about it?
I totally agree. Remote work forces you to do the things you have to do anyway, but earlier. Like describing your processes since the very beginning, defining tasks and the KPIs that are to be monitored. Because we did it all earlier, now, when we are in a high-growth phase, we are prepared. There is nothing nearly as effective as having a proper structure in place. Having everyone in the same room can’t compensate for the lack of it. If you are on the same floor, it may work. A couple of floors – it’s still manageable. Having people in two-three buildings is already a challenge. Expanding to new cities and new countries would bring pain for sure if processes, roles and responsibilities have not been addressed meanwhile.
All the remote practices we have do scale across different locations and time zones. As we get bigger, we benefit more and more from the structure that has been set early on. It’s a better way to run a multinational company.
Absolutely. I am of the same opinion. In the past, very big companies like IBM and Yahoo allowed remote work and then switched back to in-office arrangements due to a variety of reasons. Still, to me, this is the way to go for most companies as remote work saves costs and provides access to a much bigger talent pool.
My next question is related to expansion. As an angel investor, I see many failures related to inadequate marketing strategy. Startups tend to burn their marketing budget quickly investing in a limited number of channels that may not be the right channels for them. Typically, these are Facebook, Instagram and Twitter. What was your experience on that side, having in mind that marketing was one of the functions your investors were skeptical about being managed remotely?
For us, we were lucky as from the beginning a significant part of our revenue came through enterprise sales. Many companies start selling to small and medium clients and have to re-invent themselves later to serve enterprise clients.
Marketing wise, our focus was on empowering our salespeople. Another focus was being present on social media. So, instead of buying ads on Facebook or Twitter, we had people speaking with our followers and engaging in discussions online. New practices like account-based marketing are also very helpful. Our salespeople are trying to reach out to specific companies and if you know who those companies are, you can focus your marketing efforts there. We have been so tactical and focused on who do we reach, when and how, that it was hard to spend our marketing budget at times.
Speaking of very generic marketing, we haven’t done any of it. It’s against our DNA to invest in things we cannot trace. There is a big hesitance to do that as we have been so performance-focused so far.
To me, this is the right way to go and you have already proven that it is indeed the right way to go. Just spending budget having no clear strategy and without asking ‘’Are my potential customers there?’’ is a recipe for disaster.
It may sound funny, but our Marketing Director is very proud of being able to spend our marketing budget recently. We were so selective in our targeting that spending the marketing budget was not an easy task at all and he had trouble spending everything. Instead of spending too much on Facebook and Twitter, we had the reverse problem.
That’s a problem nice to have. I can only wish that more tech companies will end up having this problem versus running out of cash due to inefficient marketing strategies. Is there something you encountered on your journey with GitLab that you believe would help other companies as well?
I will go back to Series B when investors said ‘’ We like all about GitLab except for that remote thing. It’s not going to work.’’ Luckily, we were able to find investors who had confidence in us and now, these investors are specifically searching for all remote companies because they believe that these companies have a disruptive advantage. On the other hand, the companies hiring in-office in Silicon Valley have trouble hiring for the right skill sets as the talent pool is so small. The expenses related to people and offices are enormous, not to mention the churn rate when these people get headhunted by other companies.
In most cases, you focus your seed on your team, Series A on your product, Series B on your product-market fit, Series C on unit economics and as you grow bigger, it is the financials that matter. The numbers clearly show that a remote strategy leads to better results and I am proud that we found the right investors who had confidence in GitLab early on instead of abandoning our remote strategy.
A piece of advice I would give to all companies that are already going remote is ‘’Close your office’’.
What about having co-working offices somewhere in the world when people travel? Transformify has a global partnership with WeWork and it’s convenient to have a meeting room anywhere in the world when I travel and meet with clients. Some companies like this set up while others believe that no office costs need to be involved if it is an all-remote company and the team needs to find a place where to meet with clients and partners. Do you believe that an office is needed from time to time or there shall be no office at all?
What we tend to do is to go to the customer’s location and our customers prefer that too. There are more people on their side who can attend the meeting and their team does not need to commute.
GitLab encourages everyone to travel. Can you tell more about the Visiting Grant?
Even if people have no business reason to travel, we encourage them to go and visit another team member elsewhere in the world. Some people organize their holiday visiting other GitLab team members. Sometimes they combine a bit of work and a bit of holiday but it’s always good to get to know each other. The program has been working really well as it facilitates informal communication and brings people together.
In a co-located setting this happens naturally as people tend to hang out together. In a remote company, you have to put an effort to make sure that these bonds are built. At GitLab, we ask people to have ‘’coffee chats’’. A ‘’coffee chat’’ is putting 25 minutes on someone’s calendar having no real agenda. It is a breath of fresh air versus a business meeting that has an agenda. It’s an opportunity to talk about life, sports, hobbies or whatever else comes to mind. The beauty of it is that as an all remote company scales, you can build bonds naturally. In a corporate set up, it is very unlikely that a person in Dallas will build a personal bond with a person in Singapore as it is not orchestrated that way. In our case, as everyone is on Slack, we are on an equal distance from each other, we are a chat message away from being on the same video call.
We also do ‘’group social calls’’. Once per month we get all team members working in a specific department to join a call together for a session of ‘’show and tell’’. Last month, we had the entire marketing team in front of their webcams to showcase what they were working on and communicate with the rest of the team. That’s the beauty of all remote companies as you can easily have everyone together, but you have to be intentional about it.
About the author
Lilia Stoyanov is CEO and angel investor at Transformify. A fintech and digital transformation expert, she is also a professor at Zigurat Business School and expert evaluator Horizon 2020 at the European Commission.
Trusted by recruiters from 150+ countries, Transformify offers an integrated solution comprising of HR Software, freelance platform and billing & payments.