Distributed startups often use a 3rd party to do the actual employment/compliance of people across N countries. Those providers are called Professional Employer Organization (PEO) and serve as Employers of Record (EOR) - handling employee/contractor agreements, payroll, compliance, tax, etc. The startup itself does not even register a legal entity in the country, and everything is managed by the likes of Papaya Global, Globalization Partners, etc.

Right but the default case is that every country is okay, minus the exceptions.

This whole debacle is Gitlab choosing to add China and Russia to their list of exceptions.

For physical offices, it's a whitelist: if we didn't decide your country gets an office, too bad