Dmitry Zaporozhets, GitLab: “I believe that GitLab can be called a Ukrainian startup”
Dmitry Zaporozhets is one of the founders of GitLab. Not so long ago, the company raised $100 million, its value increased to $1.1 billion, and the company itself became a unicorn. Many in the uanet began arguing: can the company be considered Ukrainian? The chief editor of AIN.UA, Ilya Kabachynskyi, and the publisher of AIN.UA, Ilya Boshnyakov, met Zaporozhets at Lviv IT Arena and asked him this, as well as other questions about the work of the billion-dollar company now.
Is Ukraine your permanent place of residence?
Yes, I live in Kharkiv. In Ukraine, besides me, there are two more people in the company.
How many people are there in the company?
Now there are 352 people total.
You have no offices, all people work remotely, right?
That’s right: there are no offices, everyone works remotely.
Based on the fact that you actually have no office, people work all over the world and this is 350 people, the main question of the last days is: what country’s company are you?
Since we have employees in more than 45 countries, we consider ourselves a global company.
Legally, we are also represented in different countries, because in each location, where there are more than 2-3 people, we open a small company in order to pay everyone a salary and there were no problems with that.
When you raised $100 million, you probably saw what was happening on Ukrainian Facebook and local media: many investors indicated that you are not a Ukrainian company. What is your opinion on this?
I myself completely ignored all these conversations, since this is a kind of empty words – everyone has its own pros and cons.
My opinion is the following: one founder is from Ukraine, so it is partly a Ukrainian startup. Another founder is from the Netherlands, so it is partly a Dutch startup. Later, investors from California came – now it is partly an American startup. Based on this, I believe that GitLab can be called a Ukrainian startup.
Have any Ukrainian foundations tried to invest in your project?
No, any of them tried. I talked to a couple of people at the very beginning, however, we did not find a common language. Then I wrote on Twitter, however, did not find support there either.
Well, theoretically: if local funds offered you investments, would you accept?
Sure, why not.
How much money are we talking about, meaning the sum of the initial investment: hundreds of thousands, millions of dollars?
It was just about any money at all. I am an engineer, I wrote a product. I needed not just money, but people with money that would help scale up the project, work on the business part.
The problem was also that six years ago I did not have any networking at all, I did not know anyone and really did not understand where to look for money. Now my social circle is completely different. In addition, I was making an opensource product, it scared away many investors. All of it summed up together, and at first it was difficult to find investments.
And later, when you attracted some investments, did Ukrainian funds start coming to you? GitLab has become a big and visible startup.
Not until the last moment: quite recently someone contacted us, however, as you see, it did not get any further.
When did you start your partnership with Syd Sibrange from the Netherlands?
In words, it was in 2013, but officially all the documents were signed in 2014.
Did you split the company equally?
I cannot comment on this question.
How do investors react on a fact that you have no offices? Were there any issues about it when raising funds?
No, there were no problems. They see that due to the absence of rental fees, we can save up funds. Renting an office somewhere in California can cost several millions and we don’t have these expenses. And since there are no offices, we are free to hire people all over the world.
It is also worth noting that despite the absence of offices, we have a full-fledged structure of a large company: we have managers in various areas, whether those are legal or financial issues, or any other. And when the task arises – for example, the search for investments – this is done by a specific person, whose responsibility is to work with investors. We are building a full-fledged big company with a clear structure.
GitLab raised investments almost every year – do you participate in communication with investors?
Practically no, these are other people’s tasks. My area of responsibility is the technical direction.
The raised $100 million is the last round, right? Is IPO going next?
According to the current plan, in 2020 the company will really be ready to enter the stock exchange. Now this is our next step, other rounds are not planned yet.
Do you have a rough estimate on which you are planning an IPO?
Yes, there is such an assessment, it is being adapted all the time, depending on various factors. Obviously, this will be above $1 billion since we are actively engaged in product development and business capitalization now. For example, we plan to grow up to 500 employees, invest in marketing, etc. I can’t say the exact figure.
How are you looking for people? What are the criteria?
Obviously, this should be a high-level specialist. At the same time, we try to hire people from places where the cost of living is not too high. This allows us not to overpay on salaries: even in one country, payment can strongly depend on geography, as in the USA. This helps to optimize our costs, same as absence of offices.
Why don’t you hire in Ukraine?
It’s simple: people do not apply. I would love to hire more here. We always have open positions, and even if a person did not succeed once, it is worth trying again. We do not have such tendency that now we are hiring in the USA only, then in Africa, then Asia. It all depends on the level of specialists and Ukrainians have the same chances as everyone else.
Does GitLab give employees stock options?
Yes, absolutely everyone. Everyone in our company has the right to a stock option, regardless of the country of residence. We have reserved a part of the shares of the company for it. As usual, in order to get your part at your disposal, you need to work in the company for some time – with us this is a year. After the first 12 months, a person receives a small share – about 25%. A year later, and so on, until he gets all his 100%. If desired, the employee can leave in a year, but then he/she will receive only a small part.
The fact that we are giving shares is, by the way, not a secret – there is even a page on the site about it.
Is the payroll budget the largest part of the company’s expenses?
Yes, although we also spend a lot on infrastructure maintenance.
After Microsoft bought GitHub, there was information that GitLab had grown a lot. Is this trend preserved?
Yes, indeed, the hashtag #movingtogitlab helped us a lot – users actively switched to us. More important is the fact that many world media outlets told us about it, this increased brand awareness. The Microsoft and GitHub deal was somewhat blurred the latter’s brand, which also played into our hands. Therefore, I would note that after the jump in transitions, we did not lose generally in the influx of new users.
Were you offered to sell the company before?
I can’t comment on this information.
Are you considering an option of a direct sale of the company, but not an IPO?
It would be wrong to say no. Everything depends on the amount that we can be potentially offered. Now we are considering an IPO option, since this will allow us to preserve the brand, the structure of the company, our rules of operation, but we will get resources for even more active development. This would not be possible in case of a company takeover. Therefore, this option is not a priority.