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GitLab being all remote has been a problem during fundraises. We mentioned it since we're transparent and inevitably investors will want to visit your office.

by sytse 8y ago

GitLab being all remote has been a problem during fundraises. We mentioned it since we're transparent and inevitably investors will want to visit your office. During our latest D round it was a smaller problem since later rounds are more based on financial metrics and comparables (GitHub, Atlassian, Jfrog). But I wouldn't say that it is no longer a problem with VCs, many still have scaling concerns. As one of the best investors said that passed on us: we're in the pattern matching business and all remote doesn't match the pattern. It might very well work but we will invest only in a handful of businesses anyway, we might as well pick ones that are a complete match.

tixocloud 8y ago
That’s sad to hear given as I’m looking to raise funds but also hoping to build a distributed team given the abundance of worldwide talent. Does this change your strategy somewhat in that it limits your access to capital which forces you to look at profitability sooner?
- sytse 8y ago
  I think you can raise a comparable amount of funds for a distributed team, it will just be with fewer investors and at a lower valuation. The valuation will be lower since an acquisition is less likely. Most acquirers of companies under $100m want the acquired employees to join their office. Since this is unlikely with a distributed team there will be a discount on the acquisition price of up to 50%. There was an upside to this. Since distributed companies make for a less valuable acquisition target our investors are aligned with our plan to become a public company https://about.gitlab.com/strategy/#sequence- https://about.gitlab.com/strategy/#sequence- For public companies being remote is less of an issue since financial metrics are much more important and in the case of an acquisition they would likely stay as a separate entity.
  - tixocloud 8y ago
    This will be a challenge for me as my investors already feel the company has the potential to be an acquisition target for one of the big guys and feels we should be building it that way. We’re also based in the U.K. and am not sure how many Saas platform tech companies become public.
    - sytse 8y ago
      You will have to get to a liquidity event, 99% of the time this is an acquisition or going public. It is not very motivating for you and the team to build for an acquisition. If you want to go that route be careful how much you raise, every pounds has to paid back 3 to 10 times.
      - tixocloud 8y ago
        Which is why I have a slight headache. I’m really impressed and what you guys have done and am extremely interested in your journey so far. Would you be able to spare me 10 mins for a quick chat? I’m a first time founder and really want to learn as much as I can so I don’t screw it all up.
- bsder 8y ago
  > That’s sad to hear given as I’m looking to raise funds but also hoping to build a distributed team given the abundance of worldwide talent. Are you looking for VC funding or angel funding? If you have the ability to use foreign teams, you are probably better off taking angel funding and bootstrapping. Remember, VC's want "up or out". "Cheap remote workers" isn't really relevant to that to a first approximation. In fact, some VC's will look at it as a detriment. They wanted you to spend that couple million and succeed or go up in smoke. With cheap remote workers, you look at that couple million as 3+ years of runway for really solid organic growth.
  - AYBABTME 8y ago
    "cheap remote workers" isn't quite the point, it's more access to talent that's not geographically next to you. I know it's not your main point but I just wanted to add this note. :) Most companies who do remote and are successful at it, don't pay a discount on employees. In fact in many cases the pay is very competitive with SF/NY standards.
    - tixocloud 8y ago
      Exactly why we want to do remote. I find our concept is hard to parse amongst the talent in our geographic area whereas I’ve found folks across the world who completely get it and would like to help.
  - tixocloud 8y ago
    At the moment, embedded myself into an incubator. Haven’t really found any angel investors who would be willing to give us some runway as I don’t think many here get what we do. But it is a good thought and something to consider if things don’t pan out.
  - unusximmortalis 8y ago
    Good "cheap workers" either remote or in office don't exist anymore, and it is normal to be like that. You have to change your thinking.
TheOtherHobbes 8y ago
I'm curious how successful that investor is.
- sytse 8y ago
  Very successful. He's had a number 2 spot on the Midas list of best investors in a year.
  - sulam 8y ago
    Yeah, having a way to rapidly say no to a lot of otherwise-interesting opportunities is probably valuable to him. And honestly -- getting a 'no' and a clear reason for it is awesome investor behavior compared to the norm. :)
    - sytse 8y ago
      Indeed I was grateful that he passed fast and with a clear explanation. We asked him again when we raised our D-round but that came together to fast to make it work. In the one conversation I had with him he coined 'the emergent benefits' of a single application https://about.gitlab.com/handbook/product/single-application/#emergent-benefits-of-a-single-application https://about.gitlab.com/handbook/product/single-application... and he said we should call it a Development Operating System (OS). What do other people think of calling it that?
      - tixocloud 8y ago
        For me, it’s an interesting thought. Would your audience understand what it means? Are you trying to position GitLab into something more than what it is today. It would also be equally interesting to test what the term would mean to different people. For me, I still find it difficult to wrap my head around the original concept of what an OS is. And Development Operating System would mean an OS that is in development. At least based on first impressions. I am likely to try something similar with saying “DevOps for ML” or “CI for ML”. Will see how that goes.
      - 8y ago
pixelmonkey 8y ago
That’s disappointing to hear. Hopefully with the Elastic IPO and other public successes, the pattern matching algorithm will change. If you don’t mind the question, how many people is Gitlab now?
- sytse 8y ago
  I'm sure the being all remote will become more common. 359 people now, see https://about.gitlab.com/team/ https://about.gitlab.com/team/
raverbashing 8y ago
I guess/hope "remote only" objections will sound as ridiculous one day as Viaweb being questioned about their use of a "freeware OS"
- sytse 8y ago
  Indeed, I hope that one day you have to defend why you're spending money on an office, hiring only the 1% of people that live or can move to a certain place, and waste two hours of their day with a commute.
avip 8y ago
Let me get it straight: You are increasing potential hires pool tenfolds, save a fortune by not playing the real-estate bubble game, effectively double your work day to almost 24 hours by spreading over timezones, and likely enjoy a 6-days work week - and VCs are worried about your ability to scale? This is just astonishing to hear.
- TAForObvReasons 8y ago
  > save a fortune by not playing the real-estate bubble game I always thought that the real estate game was intentionally part of the deal. The idea would be for a group of VCs to pick a target location (say, San Francisco), buy up the local infrastructure (housing, office space, coffee shops, etc), and turn around and rent / sell to the startups that you just funded. This would pad the ROI, so even a company that crashes and burns after 5 years would still be profitable on the basis of the rents paid. This cycle wouldn't come into play with a remote team. And in that lens, the onerous zoning laws of the bay area make perfect sense
  - thaumasiotes 8y ago
    > buy up the local infrastructure (housing, office space, coffee shops, etc), and turn around and rent / sell to the startups that you just funded. This would pad the ROI, so even a company that crashes and burns after 5 years would still be profitable on the basis of the rents paid. You can never turn a profit on rent paid out of money you gave to someone, just like it's impossible to turn a profit on purchases your employees make from you with the wages you pay them. You're always better off just keeping the money.
    - TAForObvReasons 8y ago
      It's someone else's money. - VC raises money to invest - VC or the individual partners buy the infrastructure (or already owns it through different channels) - VC instructs companies it funds to use infrastructure it owns $$ Now, of course there's interest in successes in the fund, but even when a bet doesn't pan out the VC firm can profit

by sytse 8y ago

tixocloud 8y ago

That’s sad to hear given as I’m looking to raise funds but also hoping to build a distributed team given the abundance of worldwide talent. Does this change your strategy somewhat in that it limits your access to capital which forces you to look at profitability sooner?

sytse 8y ago
I think you can raise a comparable amount of funds for a distributed team, it will just be with fewer investors and at a lower valuation. The valuation will be lower since an acquisition is less likely. Most acquirers of companies under $100m want the acquired employees to join their office. Since this is unlikely with a distributed team there will be a discount on the acquisition price of up to 50%. There was an upside to this. Since distributed companies make for a less valuable acquisition target our investors are aligned with our plan to become a public company https://about.gitlab.com/strategy/#sequence- https://about.gitlab.com/strategy/#sequence- For public companies being remote is less of an issue since financial metrics are much more important and in the case of an acquisition they would likely stay as a separate entity.
- tixocloud 8y ago
  This will be a challenge for me as my investors already feel the company has the potential to be an acquisition target for one of the big guys and feels we should be building it that way. We’re also based in the U.K. and am not sure how many Saas platform tech companies become public.
  - sytse 8y ago
    You will have to get to a liquidity event, 99% of the time this is an acquisition or going public. It is not very motivating for you and the team to build for an acquisition. If you want to go that route be careful how much you raise, every pounds has to paid back 3 to 10 times.
    - tixocloud 8y ago
      Which is why I have a slight headache. I’m really impressed and what you guys have done and am extremely interested in your journey so far. Would you be able to spare me 10 mins for a quick chat? I’m a first time founder and really want to learn as much as I can so I don’t screw it all up.
bsder 8y ago
> That’s sad to hear given as I’m looking to raise funds but also hoping to build a distributed team given the abundance of worldwide talent. Are you looking for VC funding or angel funding? If you have the ability to use foreign teams, you are probably better off taking angel funding and bootstrapping. Remember, VC's want "up or out". "Cheap remote workers" isn't really relevant to that to a first approximation. In fact, some VC's will look at it as a detriment. They wanted you to spend that couple million and succeed or go up in smoke. With cheap remote workers, you look at that couple million as 3+ years of runway for really solid organic growth.
- AYBABTME 8y ago
  "cheap remote workers" isn't quite the point, it's more access to talent that's not geographically next to you. I know it's not your main point but I just wanted to add this note. :) Most companies who do remote and are successful at it, don't pay a discount on employees. In fact in many cases the pay is very competitive with SF/NY standards.
  - tixocloud 8y ago
    Exactly why we want to do remote. I find our concept is hard to parse amongst the talent in our geographic area whereas I’ve found folks across the world who completely get it and would like to help.
- tixocloud 8y ago
  At the moment, embedded myself into an incubator. Haven’t really found any angel investors who would be willing to give us some runway as I don’t think many here get what we do. But it is a good thought and something to consider if things don’t pan out.
- unusximmortalis 8y ago
  Good "cheap workers" either remote or in office don't exist anymore, and it is normal to be like that. You have to change your thinking.

TheOtherHobbes 8y ago

I'm curious how successful that investor is.

sytse 8y ago
Very successful. He's had a number 2 spot on the Midas list of best investors in a year.
- sulam 8y ago
  Yeah, having a way to rapidly say no to a lot of otherwise-interesting opportunities is probably valuable to him. And honestly -- getting a 'no' and a clear reason for it is awesome investor behavior compared to the norm. :)
  - sytse 8y ago
    Indeed I was grateful that he passed fast and with a clear explanation. We asked him again when we raised our D-round but that came together to fast to make it work. In the one conversation I had with him he coined 'the emergent benefits' of a single application https://about.gitlab.com/handbook/product/single-application/#emergent-benefits-of-a-single-application https://about.gitlab.com/handbook/product/single-application... and he said we should call it a Development Operating System (OS). What do other people think of calling it that?
    - tixocloud 8y ago
      For me, it’s an interesting thought. Would your audience understand what it means? Are you trying to position GitLab into something more than what it is today. It would also be equally interesting to test what the term would mean to different people. For me, I still find it difficult to wrap my head around the original concept of what an OS is. And Development Operating System would mean an OS that is in development. At least based on first impressions. I am likely to try something similar with saying “DevOps for ML” or “CI for ML”. Will see how that goes.
    - 8y ago

pixelmonkey 8y ago

That’s disappointing to hear. Hopefully with the Elastic IPO and other public successes, the pattern matching algorithm will change. If you don’t mind the question, how many people is Gitlab now?

sytse 8y ago
I'm sure the being all remote will become more common. 359 people now, see https://about.gitlab.com/team/ https://about.gitlab.com/team/

raverbashing 8y ago

I guess/hope "remote only" objections will sound as ridiculous one day as Viaweb being questioned about their use of a "freeware OS"

sytse 8y ago
Indeed, I hope that one day you have to defend why you're spending money on an office, hiring only the 1% of people that live or can move to a certain place, and waste two hours of their day with a commute.

avip 8y ago

Let me get it straight: You are increasing potential hires pool tenfolds, save a fortune by not playing the real-estate bubble game, effectively double your work day to almost 24 hours by spreading over timezones, and likely enjoy a 6-days work week - and VCs are worried about your ability to scale? This is just astonishing to hear.

TAForObvReasons 8y ago
> save a fortune by not playing the real-estate bubble game I always thought that the real estate game was intentionally part of the deal. The idea would be for a group of VCs to pick a target location (say, San Francisco), buy up the local infrastructure (housing, office space, coffee shops, etc), and turn around and rent / sell to the startups that you just funded. This would pad the ROI, so even a company that crashes and burns after 5 years would still be profitable on the basis of the rents paid. This cycle wouldn't come into play with a remote team. And in that lens, the onerous zoning laws of the bay area make perfect sense
- thaumasiotes 8y ago
  > buy up the local infrastructure (housing, office space, coffee shops, etc), and turn around and rent / sell to the startups that you just funded. This would pad the ROI, so even a company that crashes and burns after 5 years would still be profitable on the basis of the rents paid. You can never turn a profit on rent paid out of money you gave to someone, just like it's impossible to turn a profit on purchases your employees make from you with the wages you pay them. You're always better off just keeping the money.
  - TAForObvReasons 8y ago
    It's someone else's money. - VC raises money to invest - VC or the individual partners buy the infrastructure (or already owns it through different channels) - VC instructs companies it funds to use infrastructure it owns $$ Now, of course there's interest in successes in the fund, but even when a bet doesn't pan out the VC firm can profit