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He Built A $1 Billion Business Where All 700 Employees Work Remotely

By marketingscoops on

Sid Sijbrandij knows a thing or two about building, scaling and even walking away from companies. His current venture is doing over $100 million in revenue and is valued at over $1 billion.

Originally from the Netherlands, Sid Sijbrandiij is now the founder of one of Silicon Valley’s unicorns that is powering the web through developers worldwide. It’s not his first startup rodeo either.

Sid Sijbrandij recently appeared on the DealMakers podcast. During the exclusive interview, he shared his entrepreneurial journey, the process of finding cofounders, bootstrapping versus raising millions, his addiction to fast-growth startups, and many more topics.

Seizing Opportunities

Sid Sijbrandi seems to have always had a gift for spotting business opportunities.

During high school, he studied applied physics and management science. He chose a kind of program that blends the benefits of an M.B.A., with getting good at several engineering disciplines.

In his first year at college, he also started his first company.

The idea came from a fellow Ph.D. student that had made an infrared receiver you could use to skip to the next song on your computer (the only thing that played an MP3 song at the time). He started buying these infrared receivers from him and selling them in the U.S. You’d send him an envelope of dollar bills, and he would then send you a printed circuit board.

Ultimately, his two cofounders didn’t agree on growth plans concerning hiring more people. Sid wanted to hire faster, so he didn’t have to spend as much time on it, while his cofounders wanted to optimize for free cash flow. They ended up parting ways amicably.

The Two Most important Things for Launching with Cofounders

Sid has experienced several startups and says his two big takeaways when it comes to cofounding a company are:

1) To be smart with the shares

2) To be sure you and your cofounders are aligned in vision

For example, automatically making everyone an equal cofounder, even if they come in way later in that process, can be a mistake.

Sid says it is important that shares “are aligned with their contribution to the company. It’s very important if you start a company to have vesting of your shares as well.”

This helps avoid the free rides, because if someone leaves with all the equity, then people that need to invest like VCs are going to be like, “Why am I investing for just 50% remaining of the business.”

In the Netherlands, Sid didn’t find the goal of local companies to grow really fast. If you do want to grow a company really fast, he says it is beneficial to be somewhere like the Bay Area, where everyone just assumes that is the goal.

Not just your cofounder, but also your accounts person and your lawyer, and everybody else requires the growth mindset.

Passion for Growth

After graduation, Sid spent a few months at IBM and could have stayed there. He had an interest in strategy consulting, as well as building a recreational submarine.

He made a balanced scorecard of all the different ways to make that decision. One of the criteria being, “Is this a good story to tell in a bar?” He showed his dad who said it was a ridiculous way to decide on your career but was very supportive either way.

So, he called someone interested in a submarine venture. His pitch was, “Look, you should really hire me because I have a job offer from IBM. Otherwise, I’ll start working there, and we both don’t want that.” He got the job.

He built the first onboard computer for the submarine. Today, U-Boat Worx is one of the biggest builders of recreational submarines. If you go on a cruise, and they have a submarine, it’s likely from U-Boat Worx.

Still, after five years, it just wasn’t growing at a pace that kept Sid interested. He then went on to do a part-time stint on an innovation project with the government as a civil servant.

During this time, he really got to know himself, and how fast-growing companies with a continuous string of problems to be solved were what kept him interested.

Funding Your Startup

After starting and selling app store Appappeal, Sid turned open-source software GitLab into a fast-growing venture that is on its way to an IPO in 2020.

He took the proceeds from his previous venture, doubled it in bitcoin, and began bootstrapping GitLab.com.

Sid got the first few hundred signups through an article posted on Hacker News. Then together with his cofounder applied and got into Y Combinator. The race to demo day, where they would present in front of top tier investors, was on.

Compressing their three-month plan into just two weeks, the GitLab team had a highly successful demo day, landing Ashton Kutcher as an investor.

There was so much interest in their seed round, they rolled right into the Series A financing round. They’ve since followed that up with a B, C and D financing rounds, raising a total of $158 million at $1.1 billion valuation.

Today, some of their investors include Khosla Ventures, Google Ventures, August Capital, ICONIQ Capital, 500 Startups, and Sound Ventures to name a few. It doesn’t get much better than that as a hyper-growth startup.

In order to do this, Sid and his team had to master storytelling. This is being able to capture the essence of the business in 15 to 20 slides. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.

Embracing The Remote Work

Sid states they “don’t do in person.“ At Gitlab they encourage having meetings with webcam. They believe there’s something to see in the other person even if it is via video.

To put this into perspective, every day, employees have a company call, and it’s a thing you do with a limited set of people. In this regard, there are about 20 in each group, and they just hangout.

During the group calls there are all types of topics discussed that vary from movies to magazines. Topics are not necessarily work-related.

Sid and his team very much believe that their company is more than just, “Hey your work…”

As part of Gitlab‘s culture, the social interaction plays a key role and they have a lot of ways in which they facilitate this inside the company. Even if this happens remotely.

M&A Made Simple

Recently Sid and GitLab have been very active when it comes to acquisitions on the buy-side. That includes Gitorious in 2015, Gitter in 2017 and Gemnasium in 2018.

When it comes to acquiring companies, they’ve made the process incredibly simple, and are actively looking for more companies to buy.

In this regard, they like to acquire teams that have built a product before. Preferably a team that made a great product, but didn’t get distribution. Especially because typically they shut their existing product down.

To make things easier, they have an acquisition offer page. It even includes a calculator, so you can go online and calculate how much they’re offering.

Listen in to the full podcast episode to find out more, including:

  • When to pull the plug on your startup
  • The advantages of SAFE notes for raising money
  • How GitLab does meetings and culture around the globe
  • Why they pay based on where team members live
  • Tips for recruiting top engineers
  • Why you should read the GitLab handbook

Follow me on Twitter or LinkedIn. Check out my website or some of my other work here.

Alejandro Cremades

I am a serial entrepreneur and the author of the The Art of Startup Fundraising. With a foreword by ‘Shark Tank‘ star Barbara Corcoran, and published by John Wiley

Source: He Built A $1 Billion Business Where All 700 Employees Work Remotely

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Yields Up To 9.9% That Rich Guys Don’t Want You To Know About

By marketingscoops on
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Not yet as rich as you always wanted to be? Don’t worry, because today we’re going to dial you in for some “rich guy” dividend favorites that’ll pay you up to 9.9% every year.

Private equity is a lucrative and secretive world. It’s often limited to accredited investors, which means these funds require you to have $200,000 or more in annual income to qualify.

If you’re living on dividends alone, this might be challenging. Fortunately, there are some private equity plays that you can buy just like individual stocks. They trade for as cheap as $12 per share and they’ll pay you dividends from 8.8% to 9.9% along the way:

Contrarian Outlook

Contrarian Outlook

Private equity (PE)—funds that can invest in the equity and debt of privately held companies, which we typically can’t get our hands on—is generally touted as outperforming the stock market.

The American Investment Council, which advocates for private investment, points out that research from the 1990s and early 2000s showed that “private equity outperformed public markets by 3 to 4 percent each year,” and a 2019 paper investigating more recent “vintage years” finds that “that private equity continues to generate returns that are 2 to 3 percent above the returns of public markets.”

The downside? Privately held private equity firms aren’t exactly easy to tap, and you typically need to have seven digits to get in.

But here’s a back door that you and I can access. We can buy PE-esque investments just like regular stocks with a single-click! The trick is handful of little-known publicly traded companies called business development companies (BDCs).

Congress created BDCs in the 1980s to spur investment in America’s small and midsize businesses, the same way they created REITs in the ‘60s to help mom ‘n’ pop investors tap the real estate markets. And like REITs, BDCs get a generous tax break—if they dole out 90% or more of their profits as dividends to you and me.

Thus, business development companies not only let us access a big pool of investments you and I otherwise couldn’t otherwise dream of accessing, but also deliver sky-high yields that are among the highest you can find in the stock market. The caveat, of course, is that they do come with heightened risk, and not all BDCs are gems.

Today, I’ll show you three notable BDCs—yielding between 8.8% and 9.9%—that should be on your radar screen.

PennantPark Floating Rate Capital (PFLT)

Dividend Yield: 9.7%

Let’s start out with a yield juggernaut: PennantPark Floating Rate Capital (PFLT), which will get investors awfully close to a double-digit yield at current prices.

PennantPark provides access to middle market direct lending with, as the name implies, a heavy focus on floating-rate loans, though it’ll invest anywhere across the capital structure (senior secured debt, subordinated debt and others).

Its primary target is private equity sponsor-backed companies with $10 million to $50 million in EBITDA. It avoids capex-heavy businesses, as well as fickle industries such as fashion and restaurants, but it still has plenty of sectors to play with. Portfolio companies include the like of primary-clinic operator Cano Health, marketing services provider InfoGroup, and WalkerEdison, whose furniture can be found online via companies such as Amazon.com (AMZN), Target (TGT) and Home Depot (HD).

PennantPark typically leans toward the low-risk but low-reward end of the BDC spectrum, which historically has served it just fine. However, the BDC’s last earnings report raised some credit-quality concerns. The company reported that four of its portfolio companies were on “non-accrual,” which essentially happens when a payment is more than a month overdue, or there’s some other concern about a company’s ability to make a payment.

The BDC was subsequently nailed in May on the news. That has me wary. And the floating-rate nature of its loans, while attractive during periods of rising rates, isn’t a significant advantage right now.

New Mountain Finance

Dividend Yield: 9.9%

New Mountain Finance (NMFC) targets companies middle-market companies, too, investing between $10 million to $50 million across the debt spectrum in businesses that generate annual EBITDA between $10 million and $200 million.

NMFC likes to say that it invests in “defensive growth” industries. It’s a silly, contradictory term, sure. But the qualities it covets in its portfolio companies are, in fact, pretty attractive: high barriers to competitive entry, recurring revenue, strong free cash flow and niche market dominance.

To be fair, New Mountain, like PennantPark, is heavily weighted toward floating-rate loans, which make up 93% of the portfolio. But NMFC is a few steps in the right direction. Its credit quality is stellar – only eight portfolio companies have gone on non-accrual since inception in 2008, and there were no new non-accruals over this past quarter. Better still, the company is a bastion of consistency when it comes to covering its healthy dividend with net interest income (a core measure of profitability for BDCs).

New Mountain, which trades at only a sliver of a premium to its net asset value right now, still should be fine in the current environment. Keep this BDC in mind should the Fed’s hawks ever take over again.

Ares Capital (ARCC)

Dividend Yield: 8.8%

Ares Capital (ARCC) is a slightly more modest yielder compared to the previous two picks, and you likely won’t snag it for a significant discount. But that’s OK—ARCC is worth a small premium.

I’ve beat the drum on ARCC a few times, including in February 2019, but also going back more than two years, in January 2017. I said at the time that the company’s investment spread, as well as a $3.4 billion merger with American Capital, “should benefit ARCC in just about any market environment,” and that “in short, ARCC is going places.”

Ares Capital, Wall Street’s largest BDC, invests primarily in first and second lien loans and mezzanine debt of middle-market companies. A high priority is placed on “market-leading companies with identifiable growth prospects that can generate significant cash flow.” Its portfolio of roughly 345 companies touches numerous sectors, including business services, food and beverage, healthcare, IT and light manufacturing.

Ares’ core earnings and net realized gains have exceeded dividends every year since 2011, by increasingly wide margins. In fact, the company’s operational performance has been so robust that it has hiked its payout twice since this time last year.

Bottom line: ARCC is a standout in what typically is a difficult industry to invest in.

However, I’m not sure I’d commit capital to this stock right now. Given its recent run up, I’d like to see a pullback for a lower risk entry point.

Brett Owens is chief investment strategist for Contrarian Outlook. For more great income ideas, click here for his latest report How To Live Off $500,000 Forever: 9 Diversified Plays For 7%+ Income.

Disclosure: none

Brett Owens

I graduated from Cornell University and soon thereafter left Corporate America permanently at age 26 to co-found two successful SaaS (Software as a Service) companies.

Source: Yields Up To 9.9% That Rich Guys Don’t Want You To Know About

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The Philippines’ Per-Capita GDP Has Reached An All-Time High Under Duterte

By marketingscoops on
Photographer: SeongJoon Cho/Bloomberg

Photographer: SeongJoon Cho/Bloomberg

Philippines President Rodrigo Duterte has a terrible human rights record. But the average Filipino is doing better under Duterte.

When it comes to per-capita gross domestic product (GDP), that is. That’s a measure of the total output of a country divided by the number of people in that country.

The Philippines’ per-capita GDP was last recorded at an all-time high of 2,891.36 U.S. dollars in 2017, according to Tradingeconomics.com. That’s well above the average of 1,627.98 USD for the period 1960-2017.

Also, Filipinos are doing better under Duterte when per-capita GDP is adjusted by purchasing power parity (PPP). That measure, too, reached a record 7,599.19 U.S. dollars in 2017, well above the average of 4969.71 USD for the period 1990-2017.

Statistic 2015 2017
Per Capita GDP $2615.7 $2891.36
Per Capita GDP PPP 6874.4 7599.19
GDP Annual Growth Rate 6.5% 7.2%

Source: Tradingeconomics.com 10/26/2018

To be fair, comparing per-capita GDP in USD for different time periods is a tricky exercise. Numbers can be distorted by population growth and currency fluctuations. For instance, the climb in the Philippines per capita GDP has been helped by a slow-down in population growth. It’s also an ongoing trend that can be traced back to the Aquino administration, which brought macroeconomic stability to the country.

“Aquino is delegating power to competent technocrats and seems to understand what needs to be done to get the lights back on,”  wrote Ruchir Sharma in Break Out Nations.

Macroeconomic stability has helped the Philippines economy demonstrate a great deal of resilience in recent years. At the end of 2017, it grew at an annual 6.9% in the September quarter. That’s the strongest growth since the third quarter 2016. And the Philippines’ economy was still growing at 6% at the end of 2018.

Tracing per-capita GDP growth back to the Aquino period certainly raises the question: Who should take credit for the record per-capita GDP, Aquino or Duterte?

Philippines iShares MSCI ETF

Philippines iShares MSCI ETF

Meanwhile, a recent McKinsey Global Institute (MGI) study places the Philippines among the few emerging market economies that are well-prepared to achieve sustained growth over the next decade.

That’s thanks to a rise in gross fixed-capital formation (investment). It reached 695,414.08 PHP million in the second quarter of 2018 from roughly 450,000 PHP million in July of 2015–well above the 303,138.16 PHP million for the period 1998 until 2018, and an all-time high.

Still, the Philippines’ per-capita GDP is equivalent to 23% of the world’s average, which makes Filipinos poor. And a resurgence in the cost of living in recent months makes things worse for them. The Philippines’ annual inflation rate rose to 6.7% in September of 2018 from 6.4% in the August, and compared to market expectations of 6.8%.

That’s the highest reading since February 2009, thanks to soaring food, transportation and utility prices.

Inflation, together with revolution and corruption, has suspended Philippines economic progress before, and it will do it again, if they aren’t addressed effectively.

Pilippines Corruption Rank

Pilippines Corruption Rank

So rather than celebrating record per capita GDP, Duterte’s administration should keep an eye on the price of bread and rice. And he should look at his human rights record, which cannot be balanced by any economic record.

My recent book The Ten Golden Rules Of Leadership is published  by AMACOM, and can be found here. 

Panos Mourdoukoutas

Contributor

I’m Professor and Chair of the Department of Economics at LIU Post in New York. I also teach at Columbia University.

Source: The Philippines’ Per-Capita GDP Has Reached An All-Time High Under Duterte

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2019 Tax Refund Chart Can Help You Guess When You’ll Receive Your Money

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If anyone tells you that they have the 2019 tax filing season all figured, they’re lying. By all accounts, the upcoming tax season is going to be tricky. Despite a shoestring staff due to the shutdown, new tax forms and new tax rules, the 2019 tax season is still set to open on January 28, 2019. The Internal Revenue Service (IRS) claims that the season will operate as close to normal as possible—including issuing tax refunds. So when are those tax refunds coming……….
Source: https://www.forbes.com/sites/kellyphillipserb/2019/01/21/2019-tax-refund-chart-can-help-you-guess-when-youll-receive-your-money/#6522e9684ba2

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DoorDash Is Now Worth Nearly As Much As Grubhub After $400 Million Funding Infusion

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Investor appetite in food delivery companies is growing, notwithstanding a rash of customer complaints about how these startups pay contract workers. On Thursday, DoorDash announced it had raised another $400 million in a Series F funding round led by Temasek and Dragoneer Investment Group. The cash infusion brings DoorDash’s total capital raised to $1.4 billion, of which $978 million came from funding rounds in the last year.

Source: https://www.forbes.com/sites/bizcarson/2019/02/21/doordash-funding-400-million-grubhub-7-billion-valuation/#3df12b267e10

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Free Money for Everyone Sounds Great, But Finland Proves Basic Income is a Bust

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Universal basic income experiments and other plans that seek to distribute free money seem wonderful considering so many people struggle to make ends meet because of their limited incomes. In the U.S., many legislators have called for federal and or/state governments to trial these economic policies. One recent proposal actually calls for people to receive money from the government even if they are unwilling to work……….

Source: Free Money for Everyone Sounds Great, But Finland Proves Basic Income is a Bust

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Tesla Says Plant Worker Injuries Stayed Flat In 2018 Amid Production ‘Hell’

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Tesla’s push to more than double production of its electric vehicles last year wasn’t pretty; in fact CEO Elon Musk said it would be “hell.” In 2018 the injury rate at its main assembly plant stayed flat as the company expanded safety procedures and contended with news stories that highlighted worker injuries and questioned the thoroughness of its injury reporting practices……….

Source: Tesla Says Plant Worker Injuries Stayed Flat In 2018 Amid Production ‘Hell’

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Apple Today, Powell Tomorrow: Busy Earnings And Fed Week Continues

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It’s a fully packed day with earnings from Apple, the start of a Fed meeting, several other major companies reporting, and more concerns about U.S. relations with China. U.S. stocks had a mixed tone in pre-market trading following a similar pattern in Europe and Asia. A development just after the closing bell yesterday could be a factor, as U.S. prosecutors filed criminal charges against Chinese smartphone maker Huawei Technologies. One thing markets tend to dislike is uncertainty, and this might create even more. Asian markets took some heat Tuesday, and the Chinese government told Reuters the charges were unfair……….

Source: Apple Today, Powell Tomorrow: Busy Earnings And Fed Week Continues

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The Business Case for Positive Company Culture

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Carin Taylor, chief diversity officer at Workday, shared some of the results during a Business Leader Forum at the most recent Workday Rising. Nearly 40 percent of all respondents indicated that unfairness or mistreatment played a major role in their decision to leave a company; 30 percent of women of color felt they had been passed up for a promotion; and a large percentage of Asian and Caucasian men and women felt they were treated unfairly by leadership and management…………

Source: The Business Case for Positive Company Culture

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How Bloomingdale’s Is Reinventing The Beauty Shopping Experience

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Department stores are in the battle for their lives. Classed in the category of general merchandise stores in Census Department’s Monthly Retail Trade Survey, department stores, excluding discounters, shrunk 2.1% year-over-year through October 2018, as compared to the entire general merchandise category, which posted healthy 3.5% growth. In the last ten years, department stores have experienced a massive 30% drop in sales…….

Source: How Bloomingdale’s Is Reinventing The Beauty Shopping Experience

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