[Carpetsmoker]

It only works well if you have a decent amount of large enterprise customers (like RedHat); I don't think it will work out well for GitLab, which is mostly aimed at small-to-medium businesses. I don't think it's viable for most projects (otherwise they would be using it).

Even if it is viable, you're usually leaving a lot of money on the table, and even Red Hat – the poster child of this model – does stuff like releasing updates to paying customers first.

[cycloptic]

You are always leaving money on the table. The choice of business model is only a decision of whose table you are going to leave it on. The downsides of the open core model have already been mentioned here. I am not suggesting that GitLab change their business model, I don't have any opinion about what they should do. But I will say that releasing updates to paying customers first is still consistent with being 100% open source, as long as those updates are still released to them under an open source license.