PLG Weekly #10: Lessons for open-source companies from Gitlab, Getting started with PLG.
Welcome to the tenth edition of the PLG Weekly. This week we start by taking a look at Gitlab's fantastic growth story. Companies like JFrog, Confluent, MongoDB, and now Gitlab have shown that it is possible to monetize open-source and build a high-growth business on top of it. Let's dive in to see how.
🧪 Lessons for open-source companies from Gitlab
For the uninitiated, here's what Gitlab does in their own words from their S-1.
"Today, every industry, business, and function within a company is dependent on software. To remain competitive and survive, nearly all companies must digitally transform and become experts at building and delivering software.
GitLab is The DevOps Platform, a single application that brings together development, operations, IT, security, and business teams to deliver desired business outcomes. Having all teams on a single application with a single interface represents a step-change in how organizations plan, build, secure, and deliver software."
They began as an open-source project in 2011 and founded the company in 2014. Here's their timeline:
2014:Â Founded GitLab
2016:Â Pioneered the integration of SCM and CI into a single platform
2017:Â First $100,000 ARR customer
2018:Â Released our Ultimate Tier at $99 per month
2018:Â Reached more than 500 contributors and 20 $100,000 ARR customers
2019:Â First $1.0 million ARR customer
2020:Â Reached more than 1,000 contributors
2020:Â Established our enterprise sales team and reached more than 100 $100,000 ARR customers
and some crazy numbers at the time of IPO 🤯
Business model
They have a simple and easy-to-understand business model. They have
A liberal free tier that encourages the adoption of the DevOps platform and acts as lead generation.
Two paid tiers- Premium and Ultimate. Premium includes features relevant for managers and directors, while our Ultimate tier includes additional features relevant for executives. Each of their plans provides feature access across every stage of the DevOps lifecycle, making it easier for customers to adopt additional stages on The DevOps Platform and add more users.
Go-to-market
They offer the Free tier and/or a free trial to prospective customers, allowing them to try before they buy, allowing customers to see the strengths of The DevOps Platform and the business benefits.
They then engage with these users to encourage them to upgrade to a paid version. Once a customer is onboarded, teams identify additional business units and parent/child/subsidiary prospects that would benefit from The DevOps Platform.
This is a classic land and expand. As a result of this approach, their NRR was an incredible 148% in 2021.
Their GTM strategy today spans from self-serve to outbound. They have
A self-service buying experience
High velocity inside sales teams
Enterprise sales teams that focus on organizations with more than 2,000 employees.
Teams are further divided by region and a dedicated team who focus on our public sector customers.
Product velocity advantage because of being open-source
Gitlab has released a new version of their software for 118 months in a row and counting as of July 31, 2021. This incredible velocity is possible because of Gitlab being open-source.
As of June 30, 2021, more than 3,000 individuals have contributed to The DevOps Platform, and since April 30, 2019, community contributions have averaged more than 200 per month. Because people outside Gitlab can read their code, users can identify and solve issues, which accelerates the time they can release new software to market.
This monthly cadence of releasing new features iteratively also drives increased usage by existing users and increased adoption of The DevOps Platform by new users. As more users join within a single organization, those organizations standardize on The DevOps Platform and convert their plans into higher tiers with additional features, such as those within our Secure stage.
Open-source at scale is a force to reckon with!
Takeaways
If you're building an open-source product,
Build a fantastic community around your product.
Focus on excellent product experience.
You can always wait to go enterprise. Gitlab waited for 6 years before getting their first $100,000 ARR customer!
Be patient 😃
🕸 Good resources to get started on PLG
Pendo’s book on the product-led organization.
One of the best newsletters on PLG out there, Notorious PLG.
A fantastic read on product marketing in the era of PLG.
You can’t have PLG without talking about Wes Bush’s fantastic book.
Last but not the least, our newsletter!
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