One-third of what we learned about IPOs in taking GitLab public

Oct 14, 2022 · 11 min read · Leave a comment
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’m sharing an overview of what we learned through our S-1 filing and initial public offering (IPO) process. It’s my hope that these learnings may help others.

For part 1 in this 3-part series, we will focus on considerations for an IPO and setting the IPO in motion.

Preparing the S-1 Filing

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

For example, I couldn’t respond to people who sent their congratulations publicly on social media the day we listed. However, if you look at the #EveryoneCanContribute hashtag, you’ll notice we did have a flurry of team member celebration tweets on October 14, 2021. To ensure compliance, celebration tweets were pre-written by our communications team and approved by our Legal team.

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:

:safe-tanuki:

All of these steps led to greater understanding among GitLab team members.

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.

In part two of this series, I’ll share what we learned with the virtual livestream of our listing day and how we made it more inclusive to team members.

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

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