Biggest risks


We frequently get asked questions like:

  • What are the biggest risks to the company?
  • What are your top concerns?
  • What are your biggest fears?
  • What keeps you up at night?

On this page, we document the biggest risks and how we intend to mitigate them. We also have a biggest tailwinds page to see what waves we are riding in our current market.

Biggest risks have numbers attached to them for ease of reference, not for ranking.

1. Lowering the hiring bar

As we continue to grow our company, there is pressure on departments to meet their hiring targets. It is better for us to miss our targets than to hire people who won't be able to perform to our standards since that takes much longer to resolve. To ensure the people we hire make the company better, we:

  1. Have a standard interview structure
  2. Have a standard scoring system within a function; in other words, a "Strong Yes" should mean the same thing to every interviewer in Marketing.
  3. Ensure that interviewers are scoring candidates consistently. Some teams are actively doing this
  4. Review the interview scores of new hires to look for trends
  5. Identify and take action on underperformance
  6. (make this unneeded) Have the CPO and CEO sample new hires and review manager, staff engineer, principal product manager and up hires
  7. Compare the external title with the new title being given
  8. Conduct bar raiser interviews
  9. Review cohort performance in the company (completion of onboarding tasks, bonuses, performance review, 360 feedback, performance indicators)

2. Underperformance

In a similar vein, it is important that we do not slow down, which means being very proactive in addressing underperformance. We should identify and take action as early as possible.

3. Ineffective onboarding

We are onboarding many people quickly, making it easy for things to fall behind. Therefore we:

  1. Measure the onboarding time
  2. Measure the time to productivity in sales (ramp time) and engineering (time to first MR, MRs per engineer per month)
  3. Make sure we work handbook-first, so the handbook is up to date.

4. Confusion about the expected output

As we add more layers of management to accommodate the new people, it's easy to become confused about what is expected of you.

To make sure this is clear we:

  1. Document who is the DRI on a decision.
  2. Have clear KPIs across the company
  3. Have Key Meetings
  4. Have each job family include specific performance indicators
  5. Have a clear org-chart where each individual reports to exactly one person
  6. Have managers regularly ask team members if they understand job expectations and close any gaps in understanding.
  7. Ensure that at least 90% of the population responds favorably to the Engagement Survey question "I know what is expected of me to be successful in my job."
  8. Celebrate our growth in revenue when we hit $100M in ARR instead of 1000 people. We put our attention in celebrating our output instead of input, per our results value.

5. Loss of the values that bind us

It's easy for a culture to get diluted if a company is growing fast. To make our values stronger, we:

  1. Regularly add to them and update them
  2. Find new ways to reinforce our values

It's possible that a lack of diversity, one of our values, could lead to building a product that is not inclusive. To mitigate this, we have many DIB initiatives, including diversity goals in leadership and throughout the company and referral bonuses for underrepresented groups.

When asked in an interview on GitLab Unfiltered to elaborate on this risk, GitLab co-founder and CEO Sid Sijbrandij offered the following context.

If you lose the values that bind a company, you lose the ability to coordinate. For example, take our Iteration value. If one person is iterating, and they have a minimal, ugly feature that they wish to add, while another person who came from another company insists that 'This is nowhere near finished!,' you have a conflict.

It's not that one approach is better than the other. It's about aligning. You set the company up for a lot of conflict if you don't have shared values.

6. Loss of the open source community

7. Loss of velocity

Most companies start shipping more slowly as they grow. To keep our pace, we need to:

We were voted The World's Most Productive Remote Team by HackerNoon.

8. Fork and commoditize

Since we are based on an open source product, there is the risk of fork and commoditize like what AWS experienced with ElasticSearch.

This risk is reduced, because we're application software instead of infrastructure software. Application software is less likely to be forked and commoditized for the following reasons:

Dimension of software Application software Infrastructure software Reason
Interface Graphical User Interface (GUI) Application Programming Interface (API) A GUI is harder to commoditize than an API
Compute usage Drives little compute Drives lots of compute Hyperclouds want to drive compute
Deployment Multi-tenant (GitLab.com) Single tenant managed service (MongoDB Atlas) Hyperclouds offer mostly managed services
Feature richness Lots of features Few features More features leads to more hard to commoditize proprietary features
Ecosystem activity Lots of contributions Few contributions Infrastructure is more complex to contribute to

What we need to do is:

9. Security breach

Our customers entrust their application code and data to GitLab. A security breach that erodes that trust is a significant risk. To ensure we safeguard our customers data, we:

10. Economic Downturn

An economic downturn will likely prolong our sales cycle. Our opportunity should still be there since GitLab saves companies money on licenses and integration effort.

In order to counter this risk, GitLab:

  • Maintains a healthy amount of cash on our balance sheet
  • Makes short term commitments so we can correct course easily
  • Is as small as we can be, while still being able to execute our product vision
  • Can slow operating expense growth to match any decline in revenue, if required

COVID-19 and impact of a pandemic:

As a remote first company, we have the tools and culture to work from home and be productive during this unprecendent time of COVID-19.

Here are the things we can do at GitLab counter this risk:

  • Empower our team members to take care of themselves and their family so we keep them safe
  • When speaking with customers, lead with empathy and help support their transition to remote
  • Be the example for how to be even more effective as a remote company

11. Competition

There will always be competitive products. We tend to be much more cost effective because we build on open source, iterate quickly, get open source contributions, and only have to integrate new features with GitLab instead of a large number of tool combinations.

GitHub

After GitLab core and home-grown DIY devops platforms, GitHub is GitLab's biggest competitor. After the Microsoft acquisition they have started to follow the single application strategy pioneered by GitLab.

In order to counter this risk, GitLab will:

  1. While both GitLab and GitHub are single applications, GitLab has a much broader scope.
  2. GitLab is focused on the enterprise use cases, GitHub on open source projects.
  3. GitLab is independent of the hyper cloud providers and the best way to be multi-cloud.
  4. Leverage our community to deliver new stages, categories and features faster
  5. Continue to focus on operational excellence to out ship even substantially better financially resourced competition

Operational excellence

We will always have competition. To deal with competition, operational excellence can be a surprisingly durable competitive advantage.

We encourage operational excellence in the following ways:

High Ambition

Our focus on improvement and commitment to iteration keep us rooted in what's next. This could result in us lowering our ambition. While we focus on what's next, we must also maintain a level of ambition to compete in the future in places where others might not think it is possible today.

Serve smaller users

We have large competitors and smaller ones. The larger competitors naturally get attention because we compete with them for large customers. According to the innovators dilemma: "the next generation product is not being built for the incumbent's customer set and this large customer set is not interested in the new innovation and keeps demanding more innovation with the incumbent product". So it is really important that we also focus on the needs of smaller users since the next generation product will first be used by them. If we don't do this we risk smaller competitors gaining marketshare there and then having the community and revenue to go up-market.

We serve smaller users by having:

Infrastructure Bundling

The largest cost in application delivery is typically infrastructure. Large hyper-scale infrastructure providers could bundle their own native DevOps platform usage with their infrastructure. There are a couple of industry trends which limit this risk:

  1. Businesses are increasingly avoiding infrastructure vendor lockin and pursuing multi-cloud strategies.
  2. Infrastructure players have been slow to develop user friendly, complete DevOps platforms.

Also, see the fork and commoditize move that is available to hyper-scale infrastructure providers.

12. Founder Departure

Often startups struggle through the transition when founders leave the company, especially when those founders also serve as the CEO.

To ensure we avoid this risk we:

  1. Built a highly capable E-Group and Board of Directors
  2. Actively discourage a cult of personality around our CEO
  3. Have the CEO take normal vacations
  4. Actively help the CEO grow with the company, including training, coaching, and feedback

13. Handbook Second

We work Handbook First. As we say,

Having a "handbook first" mentality ensures there is no duplication; the handbook is always up to date, and others are better able to contribute.

If we work handbook second, we risk losing these benefits.

To ensure we avoid this risk, we:

14. Key people leave

Key people may leave as they vest and achieve their economic goals.

As reflected in our compensation principles, we don't want people to stay because they feel like they have golden handcuffs, but we do recognize the alignment that comes with options vesting. For team members who have been at GitLab for 3.5 years, we offer an option refresh program through which team members are granted a new option grant.

Alternatively, early team members may leave because working at a company the size of GitLab today or the size of GitLab in a year is different than working at an early-stage startup. Big companies are organizationally different than small startups, but there are many things about the spirit of a startup that we can maintain, notably:

Keeping the feel of a small startup, despite a growing headcount, may help retain employees who would otherwise leave.

15. Innovation and creativity are stifled

As the number of layers increase and middle management layers increase, innovation and creativity are stifled. While this could be reflected in loss of velocity, innovation is also about the ideas that are being brought to the table.

In addition to keeping our hiring bar high, we have the benefit of our community to help bring new insights and use cases creating issues. We can keep this momentum by continuing to value and engage with our community. We have Merge Request Coaches who help contributors to get their merge requests to meet the contribution acceptance criteria, and wider community contributions per release is a GitLab KPI.

16. More layers of middle management creating problems

As a company expands, you get more layers of middle management. This can cause the following problems:

  1. With growing middle management, people start focusing on being liked by others more than results because it's hard to attribute results to a specific manager.
  2. When there are more middle managers, it's harder to attribute success to the right person. The manager takes the credit for success but blame gets pushed downwards.
  3. There is a natural tendency to focus on underperforming team members and help them improve at the cost of focusing on your highest performers and making them more successful.
  4. It's lower risk to give all team members the same increases, because you don't have to defend the logic behind it and no goal setting is needed.
  5. A mistake can be more detrimental for your career than a good decision can help it, because mistakes draw more attention than success and mistakes are easier to attribute to a person.
  6. The more layers of management there are, the further the distance from the average individual to the customer.

Each one of the problems above has a specific solution:

  1. We address this by prioritizing our results value in our value hierarchy and by not playing politics.
  2. Drive praise downward in the organization. When something is a success, attribute that success to the DRI. It can be as easy as telling someone they did a good job.
  3. Focus disproportionately on the best performers by explicitly identifying the high performance. Leaders need to judge whether investment can help bring someone up to a higher level. If an investment of time adds value to the team member, the team, and the organization, invest in the team member. A meritocracy means that we invest in folks who are performing.
  4. Raises should not be spread evenly (there should be variability and dispersion).
  5. Incent folks to take calculated risks. Make failure acceptable. There is a thin line between incentivizing risk and recklessness, so draw the line carefully. For example, when team-member1 accidentally dropped our production database, they were still promoted because we promote based on performance.
  6. Focus on customer centricity.

17. Technical debt ineffectively managed

This is especially a problem if there are acquisitions of new technologies. We address this for acquired technology by having acquired organizations remake their functionality inside our single application.

Otherwise, we have a clear and consistent prioritization framework across engineering and product that helps ensure we are continuously making progress on the most important issues.

18. Loss of customer centricity

As more folks work away from customers, it is easy to lose sight of whom we are serving. We can address this by:

19. Loss of great end-to-end experience

Due to the breadth of our product scope, and the fact that our product and engineering teams work in isolation in stages and groups, there is a risk that the end-to-end experience in the application will break down.

In order to avoid this negative outcome, we:

  • Have research team interview personas to ensure a good end-to-end workflow for specific persona types - doing
  • Ensure adequate product leadership that is focused across the entire product line (Growth Director, Enablement Director, Product VP) - doing

20. Enterprise product management

While building enterprise software, we run the risk of optimizing the software for the buyer only while creating a bad experience for the end-users of the software. This is seen in the Concur effect

In order to prevent this effect, we will:

21. Frankenstein product

Not following our acquisition strategy, not rebuilding what we acquire, could lead to poorly integrated acquisitions. As we continue to grow and potentially acquire additional companies, we want to rebuild their product inside of GitLab to avoid needing to maintain different code bases and applications. In order to manage this risk:

  • Follow our acquisition strategy
  • For Engineering, the deciding factor is whether the senior-most technical stakeholder–who is not a founder–is on board or not. Because this person will either get the engineers on board or foment resistance.

22. Ineffective Management

Ineffective management could lead to decreased team member retention and team member satisfaction, as well as make functioning difficult.

In order to address this, we:

  • Maintain the minimum number of layers to be effective
  • Train, coach, and publicly recognize good management
  • Set goals for management success (helping managers become great managers)

23. Setting expectations incorrectly

If we don't set targets appropriately and communicate about those expectations effectively, team members, investors, and other community members may not understand how we're performing. Missing a super-high goal while acheiving really, really high results is still something to be acknowledged and celebrated. We need to set and communicate targets that both drive the highest possible results and also ensure constituents understand the business results and in context.

Our value of iteration keeps us from marrying ourselves to timelines and product features that get planned years before development.

As more customers depend on GitLab.com instead of self-managed instances, the reliability and security of GitLab.com is crucial to the success of the organization. Even customers who use a self-managed GitLab instance are affected by GitLab.com outages because of the negative effect of the organization's reputation. Outages not only cost customers money, they also affect the company's valuation and have led to lawsuits. Disruption to GitLab.com's availability is a reputational risk.

We mitigate this risk in a number of ways:

26. Functional Silos

GitLab is a functionally organized company. Projects in Sales are worked on by Sales. Projects in Marketing are worked on by Marketing. This could lead to functional silos, which could lead to loss of efficiency, duplicative work, or miscommunication.

We mitigate functional silos by encouraging cross-functional communication and relationship-building through:

  • Being public by default, enabling all functions to have simultaneous visibility into OKRs, direction, issues, and milestones within the handbook.
  • Coffee chats, including letting Donut help intro you to team members
  • Take a Break call (formerly the Company Call)
  • Getting together in-person every 9 months for our Contribute
  • Contribute is multi-function; we try to do every in-person event as a multi-function event. An exception would be Sales Kick Off (SKO). SKO is an anti-pattern, though some cross-functional groups are invited to SKO that support sales (product, legal and marketing, for example).