How Gitlab CEO Sid Sijbrandij grew Gitlab to $634M revenue and 3.6K customers in 2024.

just got done editing this interview you guys are gonna love it before i do that though i want you to know that i'm going to be in the comments for the next 30 minutes or so answering your questions if there's additional questions you want me to ask the ceo next time i interview them leave them below or if you're just loving the data points i get ceos to share click the thumbs up button below that's your way of telling me you're loving this stuff and i'll get you more of it additionally again i'll be in the comments answering any questions you have all right for 30 minutes enjoy the interview hello everyone my guest today is sid c brandi he's passionate about empowering open source enabling great products and evolving global businesses a self-taught ruby developer a commercialized git lab with its creator in 2012 and graduated from yc in 2015. since then gila has grown to 800 remote team members across 55 countries and raised 188.2 million in funding city ready to take us to the top for sure so i always hate celebrating funding because sometimes it just means a lot of dilution and a big zero at the end why do you need to raise that much money to build the business oh yeah i think look you shouldn't celebrate funding or like a high people kind just by itself we raised 268 million dollars in our last round at a post valuation of 2.75 billion so it was dilutive but it wasn't too dilutive and we raised it because we want to make sure that every single part of gitlab gets to maturity we have the best version control the best ci on the planet but we want to make sure that deploying monitoring and securing applications that those parts of gitlab are also best in class now this round uh this was actually just i mean you just closed it earlier this month correct the 250. yes and so you you had just raised prior to that i think about 120 million-ish from goldman and between september and december last year right yes so so what's the thinking behind i mean when i look at a round like this right uh what i think is wow there's a lot of liquidity in the private markets um this is perfect for you it's better than an ipo you don't have to worry about the administrative burden a road show and all that allows you to double down and focus i mean do you kind of view this as this was the alternative to an ipo an easier alternative yes it could be um our plan is to become a public company next year and with this round we kind of have optionality whether we're going to do an ipo or direct listing yep so we structured this round with a lot of different investors in it and with a lot of investors that are very familiar uh in the public markets that are long-term holders so just to repeat what you already articulated you said you raised about 250 and used it was a 2.7 pre-money valuation a post post money okay so you sold maybe a little a tad more than 10 of the company exactly and was they need to go to the secondary or it's all balance sheet this is uh what we're talking about is whole primary oh prior okay that means all to the balance sheet correct correct have you done anything for early folks that put money in including early employees in terms of liquidity or they have to wait until direct listing or ipo we did one at the d round so the previous round and we're looking at another one [Music] based on this run can you explain how that worked in the d round there's a lot of ceos at 60 70 80 million in arr doing these 100 million dollar rounds and they're never quite sure how to structure the liquidity option for early folks how did you structure in your d round to the extent you can share yeah for sure we did it with nasdaq private market it was a great experience and we said you could sell up to 20 of your vested shares both current team members and xt members up to twenty percent so people sold between zero and twenty percent and how did you decide so basically did was it on nasdaq or did you do a 409 evaluation how did you come up with essentially the price uh the price was uh the same as the preferred price of the ramp so this is very rare i talked to a lot of founders where they get in really weird positions when they do these secondaries because you want the maximum valuation from the round but then you're going wait for employees to make the most on the spread between their exercise price right what they got it at many years ago and what they get today you actually want maybe a different potential valuation for tax purposes you just kept them both aligned so we did it's it's market like what does the market want and the market said look we want there was more demand than there was supply so we went it went all the way up to the maximum um it influences the 498 but it's a one-time event um so it it's in having having continuous trading at that price would influence the 409a uh way more than a one-time event yep so of that 120 that you raised in this seat well do you put the 20 from goldman in december and with the 100 million you did in september or no uh no that that was a separate round totally we now raised 400 more than 420 million yeah because you just did 268 million but going back to september what i'm trying to get at that september 19th oh sorry yeah those numbers know the public numbers we always try to talk about the public or the primary fundraise never about the secondary because i think if you talk publicly it's about we raise this money people gonna assume it's the primary fundraise and also that's what people care about people care about are you a sustainable company as in do you have the money to get to a cash flow break even well that's what you're signaling so i i think it's um i think it's better to just talk about the amounts in the primary fund raise when you're announcing a fundraiser what i'm trying to get at sid is how many people decided not to sell versus so took some chips off the table like how much money from those rounds actually went out from people that did decide to sell so all the all the amounts we announced are all primary fundraisers we were not we're not jumbling the secondary into that i see okay so just to be clear and this is what you're just trying to explain to me that 468 all went to your balance sheet million you've raised the you you how did you get the money then did you just do it off your balance sheet like where did you get the money from to pay off people that want to sell to 20 of their shares uh additional like investors mostly investors who participated in the rounds got it got it so nasdaq nasdaq essentially put this out there and anyone you didn't have to buy them back as a company anyone could go purchase those that wanted more upside exactly so nessec private market is is facilitates it um it's a bit tricky like we have people in over 20 countries participating so so there's a bit of paperwork there and then we have a couple of investors who said okay we want to buy at this price and maximum of this much they all sign up the people um uh offer their shares up um and then uh you've the transaction closes at the same point yep very good okay so uh just for those of you that might not be familiar with git lab i will tell you what we had sit on uh prior and so said last time we came on this was probably oh about 18 months ago um you obviously shared you founded the company in 2012 but at that point you were serving about 5 000 customers what are you up to now today so today gitlab is used in over a hundred thousand organizations so we got millions of users there's uh 10 000 paying customers it's an open source project so there's different versions and what we do is it's a single application for the devops lifecycle it's everything you need to build software delivered as a single application all the way from planning what you're going to do to securing that monitoring and defending that and if you've seen any patterns in terms of what you're seeing on your average kind of contract value so when you last came on you articulated average kind of acv was around the twenty thousand dollar mark across the full base has that increased or decreased drastically i think we're seeing a major uptick in like you're looking at the largest deals and in the over the last three years the larger seal kind of gone from ten thousands to a hundred thousands you know million plus you're talking about seats uh dollars oh okay dollars so just to repeat that vector you have many customers paying more than a million per year but if you look at your entire base on average is the arpu still about 20 000 a year it's it's about that range but i think that's um it covers a lot it's yeah it's not a good number to look at we could easily make that number higher just for example we have a very hybrid sales model so we do both like small medium businesses mid market and the enterprise market the enterprise market is 72 percent of our arr and those are the bigger deals so what most companies do they stop selling to the smaller companies um we don't think that is fitting for an open core project we think uh those uh we really appreciate smaller businesses also working with gitlab and that brings your uh our average revenue per customer down but i don't think that's a that's a metric we watch uh the metric we watch is just incremental acv and um growing that doubling that and it's good...