GitLab is eyeing a direct listing in November 2020, but its CEO explains why the $2.75 billion company could still go the traditional IPO route

Jason Henry for Business Insider

Sid Sijbrandij highlighted why a direct listing may be the best option for GitLab next year.

• GitLab, the development platform that raised $268 million in September, plans to go public next November.
• CEO Sid Sijbrandij told Business Insider that he's leaning toward a direct listing but is still open to a traditional initial public offering.
• While GitLab has fostered a nontraditional corporate culture - it has an all-remote workforce and a public 3,000-page employee handbook - Sijbrandij said he's not looking to innovate in the IPO process.
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GitLab is looking to go public next November, just over a year after raising $287 million.

But just how the 1,100-person company will make its public debut is still being worked out, GitLab CEO Sid Sijbrandij told Business Insider.

"It's easier to change your plan from direct listing to IPO," Sijbrandij said. "We'll aim for direct listing for now, but we haven't made a decision."

CNBC first reported on Tuesday that GitLab is leaning toward a direct listing.

The development platform with a commitment to radical transparency, including a public 3,000-page employee handbook, laid out its ambitions on a page highlighting November 18 as when it wants to go public.

Spotify and Slack have chosen to go public through direct listings, though that route is still relatively niche. In a direct listing, a company can start trading shares on public markets with lower costs and no multi-month lockup period that accompanies an IPO.

Sijbrandij highlighted both of those considerations, as well as the added transparency that comes with direct listings, as advantages over an IPO.

However, he noted that Wall Street understands the traditional IPO better and companies can raise fresh capital that way.

'We will not try to innovate on an IPO'

GitLab is in the midst of explosive growth, financed in part by a $287 million Series E fundraise in September. Investors in the round, which was led by ICONIQ Capital and Goldman Sachs, included big asset managers like BlackRock and Franklin Templeton.

GitLab is using some of that capital to bolster its ranks, growing from 400 to 1,100 employees this year. Next year, Sijbrandij said, it is planning to add another thousand employees.

On Monday, GitLab announced it hired a chief people officer - Sung Hae Kim - and added Karen Blasing to the board of directors.

Sijbrandij said GitLab, which already did a non-deal roadshow, will hire a senior director of investor relations. For a company known for bucking corporate trends by having an all-remote staff, it's a sign that its path to operating publicly will look relatively traditional.

"We will not try to innovate on an IPO or a direct listing process," Sijbrandij said.

Mid-November is the goal for going public, but he said timing could be sooner or later. When GitLab first took external capital in 2015, executives always had a goal to return that money in five years and avoid being acquired.

Sijbrandij said that when his chief financial officer asked about a specific time to go public next year, the CEO had no opinions. The CFO then wanted to time the listing "as late as possible," but with an eye toward avoiding slower markets after Thanksgiving.

November 16 was the original listing date, chosen because it's the CFO's twins' birthday. But when the CFO realized it was a Monday - "not a good date" - he delayed it by two days, "to help people trying to process the weekend," Sijbrandij said.

The CEO noted that he does not view going public as the capstone to GitLab's growth, but rather a mile marker. Echoing commentary on GitLab's public page about the IPO, he recalled an adviser's analogy about the process.

"She said going public is like graduating from high school: It's great, but it shouldn't be the biggest thing you achieve in life," Sijbrandij said.

"That's what we're trying to signal to the company. This another fundraising ... but it's not why we're running the company. We're running the company to add value to our customers and to get part of that value revenue. That's been our goal before and that will be a goal after going public."

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