The Latest from SaaStr: 5 Interesting Learnings from GitLab at $500M

So at Team SaaStr, we flag certain startups as “hero companies”.

The ones founders really look up to, and especially want to learn from. 

We try to get as many of their founders and CROs and CMOs to speak at our events as possible.

One of the top ones is GitLab. 

Whether you use GitLab or not to build and manage your software, you’ve at least looked at it and learned from them.  They’ve also paved the way in running distributed teams at scale, and in ethical leadership.

And now … they’ve crossed $500,000,000 (!) in ARR, growing a jaw-dropping 58% (!).  And yet, Wall Street didn’t like their latest results.  \

Why? 

Because as blow-out as those results are, GitLab is worried about revenue for the next 12 months.  If they’re worried, maybe it’s a sign for everyone to be a bit conservative, too.

Because they’re one of the best of the best.

 A few I’ve made and watched others around me make:

Investing in a startup with good traction with a pretty good but not great CEO. A so-so CEO with good traction usually … ends up not scaling to something all that big.  The market changes, competition changes, etc., and the good-but-not-great CEO can’t keep up. 

And that good growth slows to … not so good growth.  I’ve only made one investment where this didn’t happen, and the startup had incredible product-market fit … and still ended up going through 4 CEOs.

Investing when you aren’t sure but someone else really successful is investing. You gotta do your own homework.

Investing when it’s something you don’t quite know. I haven’t been that successful in investing outside of SaaS, even in founders I knew were good. Others can make this work, but not me.

Investing when growth is strong but the burn rate is too high. Yes, a large VC fund can make this work sometimes, but for me, if the burn rate is too high, I find they tend to run out of money as they scale to $5m-$10m ARR.

This edition of the SaaStr Daily is sponsored in part by SAP

The key to success in any business is growth. Growing your bottom line. Growing your operations. Growing your culture.

But sustained growth requires the right blend of forward-thinking management, intelligent cloud-based technology investments, and strategic financial planning.

Attend the Growth Summit hosted by Fast Company, Inc. and SAP on March 21

If you’re on the path to building a startup, you know what it means to fail. In last week’s Workshop Wednesday, Tracy Young, CEO and Co-Founder of TigerEye and PlanGrid, said that “everything is going to fail.” 

Young took PlanGrid from nothing to $100M ARR before passing the baton and shares the biggest lessons learned, the biggest failures, and how to navigate them. 

As a rough rule: the larger the check, the less likely a VC will invest in a direct competitor.

If you are Ycombinator or another top accelerator, you kind of can’t help it. You invest so early, sometimes it’s not totally even clear what the company will really do.

By contrast, if you do Series D investing with $50m+-$100m+ checks, and put the whole fund at risk on that deal … it’s very rare you’d do a competitive investment.

In between, most VCs try not to do competitive deals on purpose. Founders don’t like it, it creates perceived (if not actual) confidentiality issues, and it creates “mental” conflict as the partners share details around their companies.

But, the reality is, things change and companies tilt. You can often end up with 2 semi-competitive companies this way, even if they didn’t start that way.

This edition of the SaaStr Daily is sponsored in part by LARK

Lark is a collaboration tool designed to improve team productivity. Get chat, email, video conferencing, calendar, and docs together in one place.

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