Everything we learned about IPOs in taking GitLab public - Part 4

Oct 14, 2022 · 14 min read
Sid Sijbrandij GitLab profile

It was this time last year that GitLab (NASDAQ: GTLB) went public and was the first company to publicly live stream the entire end-to-end listing day at Nasdaq. To celebrate our 1 year anniversary, I shared an overview of what we learned through our S-1 filing and initial public offering (IPO) process with Sifted, a media outlet focused on topics for startups and innovators (and invested in by the venerable Financial Times), in a three-part series:

  1. Going public in the US? This is the most important document in the process
  2. ‘More cowbell!’: Publicly livestreaming GitLab’s Nasdaq listing day & celebrating
  3. Powered by cookies, not airplanes: Pricing and allocating IPO shares

But there is so much more to share around preparing the S-1 filing and initial steps for setting the IPO in motion, including how to work with insurance providers, what to expect from your board, and more - all of which I am including in this blog post.

Part 4 of the series below will cover these areas.

GitLab team celebrating IPO Team members celebrating in NYC and remotely

Preparing the S-1 filing

To get started, here are some things we learned throughout the GitLab IPO:

GitLab branding in NYC GitLab branding outside the Nasdaq building in Times Square

Setting the IPO in Motion

Our banking partners who were experienced in IPOs commented that it was one of the most efficient S-1 drafting processes that they’ve seen. We were happy that this process, which typically takes six months, happened in four. To set up a right foundation for a successful IPO requires that the right processes and people (internally and externally) are in place:

Be transparent with Directors and Officers (D&O) insurance providers. Directors and Officers insurance is expensive and the institutions which provide these services bid for your business after learning about your company through their own research as well as presentations and time spent with company representatives, usually from the Legal and Finance teams. We were unsure how our transparency would be perceived by the D&O insurers. However, our public handbook made it easier for D&O insurance providers to understand our business and processes. The GitLab Legal team created a bug bounty program that gave all team members a way to contribute to public company readiness by assisting in spotting and fixing “bugs” in our handbook. Bug bounty participants were rewarded with company swag.

Some board members might leave you. Once a company IPOs, board members are subject to restrictions on their overall trading activities (e.g. tighter trading windows) with regard to the company’s stock. Due to these restrictions, earlier board members/investors may shift off the board, as new board members come on. This can add fresh perspectives on the board and help guide the company during the important post-IPO growth stage

Analysts depend on the bank you pick. Banks that help with IPOs will make analysts available to cover your company. Therefore, we looked for banks that were associated with analysts whom we wanted to cover GitLab. This is significant as it supports increased brand and marketing awareness. Once that’s determined, you should consider analyst coverage when selecting additional banks to help with your IPO.

Lead-left bank. The lead-left bank, also called the managing underwriter, is listed first among the other underwriters, in the upper left-hand corner of the cover page of the S-1 filing. In our case it is Goldman Sachs per our S1 cover page. Getting left placement is a big deal because it means the bank receives the largest percentage of the deal allocation and generally leads the process from the banking side. Their industry reputation reflects on the company choosing them for this role. You will have several other banks involved to spread the risk of underwriting, reduce single bank exposure, and lower financial commitment to the IPO.

SAFE Framework. We worked hard to educate team members early on to ensure they were empowered to make responsible decisions as a public company. Our SAFE framework is an acronym and mnemonic for how team members should think about transparency and what they can share publicly. (It stands for Sensitive, Accurate, Financial, and Effect.) GitLab team members have embraced the SAFE Framework including creating a SAFE Slack channel staffed by our Legal team where team members can seek answers as well as flag things that are of concern. In terms of company communications, when we want to keep something internal, we say, “Keep this information SAFE.” We’ll also put this flag in decks, videos, Slack messages, and other communications. It is also a required part of our onboarding and training process. We’ve even created a SAFE Slack emoji:


Reg FD training. In addition to our SAFE framework, to prepare our team members we also took into account that we are a geographically diverse group, with more than a third of our company based outside of the U.S. We wanted to be mindful that not everyone would be familiar with U.S. Securities laws and may not understand some of the requirements GitLab would be subject to as a public company. This is why we created and had all team members go through Regulation Fair Disclosure (Reg FD) training as well as How to Avoid Insider Trading training. (We also have this training set up to recur annually.) We are not aware of another company that trains their entire company on Reg FD, as it is usually just provided to certain individuals who are authorized to speak on behalf of the company.

Timing an IPO. The timing of an IPO requires a mixture of art and science. There are a number of conversations between the company’s retained investment bankers and buy side investors surrounding market conditions. An element of this involves the company’s investment bankers learning in which types of companies these investors may be interested. For example, if the growth rate of a potential new IPO is less than X, and/or the new IPO is unprofitable, then there may be no appetite for that particular IPO and naturally, a better outlook would likely inspire greater interest. Through continuous conversations, overall investor appetite is gleaned. Then it comes down to picking a specific day of the week and time of year, avoiding holidays. Companies must consider a time in which the most investors are available and paying attention. IPO days typically take place Tuesday through Thursday. And they don’t tend to be priced in the summer as investors are usually on vacation and not paying as much attention to the market. Labor Day through Thanksgiving is a popular time for IPOs. You also want to be mindful of the timing of your IPO relative to quarterly results as you want investors to consider your next fiscal year as the basis of valuing your company.

When choosing a date for GitLab, we knew if we waited until after October 31, 2021, we would need to re-file, because of the filing date of our S-1 filing. We took all of these factors into consideration and chose October 14, 2021, as our IPO day. The date was serendipitous as GitLab’s Friends & Family Day took place on Friday, October 15, 2021, and the company was also celebrating its 10 year anniversary in that time frame since the first commit to the GitLab open source project took place on October 8, 2011.

Bring down call. Each time a company is about to file an amended Form S-1, investment bankers and attorneys gather on a “bring down” call. During this call, attorneys will ask a series of questions about material information, permissions, security, risks, concerns, etc., with the goal to achieve an “all clear.” With each new call, they’ll ask if the company has anything materially new to disclose. This was all done remotely.

Securing the Opening Bell. Choosing the opening bell is generally preferred over the closing bell to provide a full day of celebration. We approached our listing day as a marketing event and a way to celebrate with team members and contributors globally, so securing the opening bell was important. This would allow us to reach the maximum amount of time zones. If you have a date in mind and stick with that date in the days leading up to the listing, you’ll be more likely to attain the opening vs. closing bell.

While the timing at the moment for IPOs may not be in many companies’ favor, I know many amazing companies have been founded during times of economic uncertainty, such as Electronic Arts (1982) and Slack (2009). I’m looking forward to seeing the next generation of innovative ideas come to market and experience the same growth and excitement that we were able to capture and I hope that this educational series may help them when the time is right.

Thank you again, sincerely, to everyone who helped us along the road.

“@sytses on one-third of what we learned about IPOs from taking @gitlab public” – Sid Sijbrandij

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