GitHub Raises $250M at $2B Valuation

http://www.wsj.com/article_email/github-raises-250-million-at-2-billion-valuation-1438206722-lMyQjAxMTA1NjI1OTEyNzk0Wj

by icpmacdo • 11 years ago

569 387 11 years ago

Trufa• 11 years ago

Github seems to be a pretty good or "safe" investment. Developers have already entrusted them with something as precious as their code itself. They also have pretty clear pathways for being profitable with private repos and so on, I'm not that surprised they are getting a lot of funding.

hermanmerman4• 11 years ago

Well many companies are profitable (actually, it's the only prerequisite to stay alive). And arguably, Github isn't profitable enough to fuel its own growth, or they wouldn't need to take $250m from investors in exchange of shares. The question is: is it worth 2 billion dollars? As a developer my guts say yes, but I have no idea what their numbers look like...

fosk• 11 years ago

When you want to reach a monopoly position, fueling growth with only your profits it's not sustainable. They are getting (cheap) money to scale faster than their profits would allow them to do.

It's the same reason why Uber, although making billions of revenue, still raises money: cheap money that boosts growth.

justincormack4• 11 years ago

Not necessarily, they may well be profitable (I thought they are) but they may have wanted to sell some shares to get some value out.

andruby3• 11 years ago

Liquidity for the founders, early employees and previous investors can also be a reason to have another funding round.

aakilfernandes• 11 years ago

Sorry to say, but any time I need a private repo I just head to BitBucket. GitHub provides tremendous value, I hope they find a good way to capture some of it.

tswartz3• 11 years ago

When you need a private repo why do you use BitBucket? I've used the private repos on GitHub and found them to work just fine, but I'm new to coding...

lifeisstillgood3• 11 years ago

Really? I trust a private repo I am paying for to be there in a few years. Perhaps I am still of the "buying a cd" generation but someone somewhere has to pay for a saas service. It's just more real this way.

gabesullice2• 11 years ago

I get that when it's just a personal project, but the Github workflow is also very nice to have. When I want a buddy to access my private repo, I just add his/her GitHub user name, I don't need to have them create a BitBucket account. I don't need to figure out how issues and PRs work with BitBucket, etc. It's the network effects and UI that I'm paying for - one UI private or public. Plus, it supports a service I value very much.

On a more important note, you're probably not GitHub's target market. It's more like agencies and in-house dev teams.

bvrlt• 11 years ago

Repository hosting seem to be a market where multiple companies can strive. Both GitHub and Bitbucket can capture more value.

rokhayakebe2• 11 years ago

Sorry to say, but any time I need a private repo I just head to BitBucket.

By which you further validate the market for them and for investors.

rch• 11 years ago

I'd need to do some searching to dig up the reference, but I'm pretty sure GH has been making money since launch.

dorkrawk• 11 years ago

So, when you're looking to not pay for something to head to a BitBucket, but if someone else is footing the bill (like a company with a real budget for more than $7/month) you'd prefer GitHub? Sounds like a win-win for GitHub.

hueving8• 11 years ago

It's a bit like a social network. There are better technologies out there (e.g. bitbucket), but like you said, developers have chosen Github for now. However, it would be possible for a mass exodus as they turn up the enforcement on the offensiveness bans.

chucksmash• 11 years ago

Why do you say bitbucket is a better technology?

caffeineninja• 11 years ago

Soon, you can commit your genetic code to GitHub, then just do git diff master..offspring to see where your kid got his blue eyes from.

aggronn• 11 years ago

Our children will be taught to do all of their homework in git as the 2040 way of showing work! Github for 6th graders!

jessaustin2• 11 years ago

I wish more academics would do this... we'd be able to tell why those results aren't reproducible.

cshimmin• 11 years ago

I <3 github... anyone with more business sense than me care to speculate on what this means for us users?

hueving8• 11 years ago

More censorship to bring repos inline with what is politically correct for a business environment. Enterprises with the big money won't want to have their code on a site that could be associated with anything possibly offensive to anyone.

darkstar9993• 11 years ago

It doesn't directly mean anything to end users.

tswartz3• 11 years ago

There may be a reduction in features of the free version and a push to move more people to the paid version. Hopefully they won't move the free features, but build new ones that add additional value for premium users. Ideally, they will keep building for both sets of users.

darkstar9993• 11 years ago

“We want to make really big investments,” expanding internationally and investing in new products, he said.

Any speculation? Also, anyone know if they are currently profitable?

Jare• 11 years ago

A Slack type service would be my first guess for a next product. (rememeber that Slack was already valued at $2.8B ten months ago)

GauntletWizard2• 11 years ago

Github has already stumbled, and will fall soon. Their gaffes in conduct[1] and content[2] policies are already dividing the community. For a company that has thrived on being a monoculture, this spells doom.

[1] https://np.reddit.com/r/programming/comments/3e5c6f/why_the_... [2] https://news.ycombinator.com/item?id=9966118

darkstar9993• 11 years ago

You seriously think censoring the word "retard" will harm their business?

GauntletWizard2• 11 years ago

I think you should think twice before investing or hosting data with companies that engage in tit-for-tat infantile behavior.

izolate• 11 years ago

Of course not, try not to think in such black and white terms. Missteps like these sow the seeds of disdain for companies. Developers are a fickle bunch, and easily hold grudges.

petercooper2• 11 years ago

I don't, but what I believe could worry many (especially business users) is the idea of needing to rapidly enact a change within 24 hours to not have a repo or even your entire account deleted. This is assuming https://imgur.com/QC51FZz is even true, though.

cheald3• 11 years ago

Well, it cost them my $7/mo. That decision was very disturbing to me - I've always viewed GitHub as a content-neutral platform which provided a code hosting and sharing service. Yesterday's incident seems to signal that they are willing to make political judgments about peoples' code and force their opinions into that code, and I'm just really not okay with that. This wasn't about removing something which posed a legal or material threat to GitHub or its users - this was about controlling expression to force compliance with a political agenda. Which, by the way, GitHub is well within its rights to do, but which I find extraordinarily distasteful.

I'm not willing to say it "will fall soon", but it has substantially damaged my opinion of GitHub as a company, and has diminished my trust in the integrity of their service as it serves the needs of open-source communities.

beambot• 11 years ago

What if I put other expletives in code comments....? Will I be banned too?

Uhhrrr• 11 years ago

I don't know that censoring a few words is enough to cause them to lose momentum, but I have similar concerns. What is the compelling advantage of using github instead of gitorious or gitlab or whatever? They have a few nice tools, but nothing that can't be replicated. And if there's no significant advantage, then they're only one data breach or PR fail from losing tons of customers. The very nature of git means they can't get user lock-in.

vezzy-fnord• 11 years ago

Network effects. There's entire subcultures that have de facto clustered themselves onto GitHub, like the Erlang community. Most web developers, as well.

You're right the actual GitHub interface is not as amazing as it is often heralded. I've always thought the issue tracker was a joke, for instance.

hipcactus• 11 years ago

Enterprise Customers cannot (and will not) attempt to transition from hosting hundreds (in some cases, thousands) of private repositories on gitHub in favor of another service.

The alternative would have to aggressively undercut gitHub's enterprise sales model while competing with gitHub's uptime.

Customers aren't going anywhere.

stonogo• 11 years ago

No "Enterprise Customer" is using github without a fallback plan. Github is in no way stable enough to rely on for business-critical work; fortunately, git is distributed and cnames exist, so it's easy to seamlessly fall back to competent hosting as needed.

ljk• 11 years ago

is this why github's been doing the censoring and making it a "safe" place? to appeal to a broader audience and please the investors? similar to what reddit recently went through

https://github.com/opal/opal/issues/941

http://readwrite.com/2014/01/24/github-meritocracy-rug

pluma• 11 years ago

I strongly disagree. These look more like intentional signals to indicate that they're trying to shed the kind of behaviour they had become known for previously[0][1].

It's understandable that they're concerned about how the "feminist community" sees them. They're this generation's SourceForge and "feminist" backed shitstorms against them are likely posing a considerable risk to their brand. Just look at Gittip[2] (now Gratipay)[3].

[0] http://geekfeminism.wikia.com/wiki/Category:GitHub

[1] https://news.ycombinator.com/item?id=2605739

[2] http://geekfeminism.wikia.com/wiki/Gittip_crisis

[3]: Gratipay lives and they had to change business models for unrelated reasons but I'm fairly certain the "crisis" has an impact on their brand and growth even if it didn't outright kill them.

drumdance• 11 years ago

I've always thought Google should buy them and make that the basis of Google+.

hrayr• 11 years ago

"The company’s co-founders were inspired by a tech talk given at Google Inc. in 2007 by Linus Torvalds" funny how many successful companies are founded after getting inspiration from a single talk.

maaaats• 11 years ago

Do you have more examples like this? Sounds interesting.

laxatives• 11 years ago

"I was inspired by a tech talk", or "I grew up doing this", etc. are better marketing than "I tried a couple things but this was the most successful". Most of these background stories are revisionist.

Fomite3• 11 years ago

Or easily traced. I could claim that my dissertation topic came from a single conversation in a hallway after a talk. And while technically true, that ignores all the effort that laid the groundwork - and the number of hallway conversations that didn't go anywhere.

chmaynard• 11 years ago

A video of this wonderful Google tech talk is available on YouTube:

https://www.youtube.com/watch?v=4XpnKHJAok8

GBond• 11 years ago

I recall one of the co-founders of posted a long comment on the origin of Github.

gamesbrainiac2• 11 years ago

Just $2Bn? Sound a little low to for something like Github.

paulpauper• 11 years ago

The problem is monetization. It's not like Snapchat where you have a potential $1+ billion advertising behemoth . I was surprised it was valued as high as it is

rokhayakebe2• 11 years ago

When placing an engineer in a company can net you $8,000 to $25,000 you can very well say Github is undervalued. I certainly think it should be more valuable to RHT.

joeblau2• 11 years ago

It's probably because it has 10 million registered users. When you compare that to something like Instagram, Twitter, or even mobile apps like WhatsApp; it's not a huge user base. That being said, I like GitHubs business model a lot more because their product actually provides me with a lot of value.

billmalarky• 11 years ago

Not all users are alike. 1 sr engineer is probably worth 1000 teenagers in regards to revenue potential.

hermanmerman4• 11 years ago

tablecloth math time: $2bn worth, assuming they're worth 10 times their revenue (let's be generous), that would require $200m in sales. they have 10m users, assuming 1% are paying, that means 100k users for $200m sales, meaning each user must spend 2000 dollars per year at Github. Sounds a little high considering the basic plan is $7/month, but with entreprise sales and growth rate, it sounds feasible.

justincormack4• 11 years ago

They are probably valued at much more than 10x revenue as a fast growing company. And "users" is the wrong metric as big companies probably make up 90% of revenues, and most of that is not even visible in the public repos.

gamesbrainiac2• 11 years ago

Sure, I can understand that. But that is based on the notion that Github will stay the way it is, simply a place for collaboration. However, it can amount to so much more, it can spin out its own careers site, like stackoverflow did. The point I'm trying to make is that Github has ludicrous potential, and if you value it based on that 2bn seems rather low.

wmoxam• 11 years ago

I pay them $7, and my employer also pays them. I only have one account ;)

tibbon• 11 years ago

It seems like a more realistic/useful current valuation than many of these pie-in-the-sky valuations or acquisitions, given that they actually have real revenue, do a useful thing, etc... seems about right to me for today. Surely that will grow- and that's what they are hoping on.

lifeisstillgood3• 11 years ago

In GitHub's position I would not even think of trying stuff myself. The leap from git repo hosting to almost any other profitable and aligned business seems huge.

But the leap to HN-style incubator, when you have direct daily connections to more and better coders than YC gets in a year, that makes sense to me.

Of course I would want to launch my own businesses, but the sensible money is on building remote working tools, incubators, conferences and so on dedicated to growing the next generation of distributed, remote and profitable companies. Intermediated through git and GitHub, of course.

fideloper• 11 years ago

What I am tremendously curious about is:

1. Is GitHub Profitable?

2. Is taking on funding ultimately heading towards an IPO? Getting sold? (Not that anyone can predict the future, but "just becoming profitable" isn't really a realistic goal of a VC funded company, right?). Is there a way to find out how much of GitHub is owned by whom?

roflmyeggo• 11 years ago

Ultimately headed towards an IPO? Probably.

How long? Probably a while.

More and more companies are staying private as VC/hedge fund/private equity firm valuations stay high, it's fairly easy to continually raise money through private avenues, etc. There is less of a need to go public for the founders and investors of these backed companies to get rich.

blizkreeg2• 11 years ago

What would the exit strategy for a company like Github be? Get acquired by a big co like say, Google or IPO? An IPO and the accompanying scrutiny of a public company sounds like an unlikely strategy for a Github. Thoughts?

hermanmerman4• 11 years ago

Google naturally comes to mind. Facebook / Parse, also. Amazon Web Services. Actually any company in this space (that is worth more than $20bn).

Why do you say an IPO is unlikely? I don't see why the public markets would be wary: Github is IaaS done right, has clear ways to make money and grow on its current offering, and can very well come up with innovations adjacent to its core services.

blizkreeg2• 11 years ago

Re: IPO I didn't mean to say that the public markets would be wary. Quite the opposite - the short-term scrutiny from Q to Q that a company faces after going public is not for every type of company. Look at Twitter, Yelp etc. I'm not sure if Github is profitable yet, but unlike an Amazon (eCommerce), the market would expect most other companies to show rapid revenue/profit growth once public.

discodave• 11 years ago

AWS already launched a competitor called CodeCommit.

jhund• 11 years ago

I have a hunch that Microsoft may want to purchase Github.

partiallypro• 11 years ago

I almost feel like a buyout would not be possible without alienating companies from using it. If Microsoft bought Github, Google might be hesitant to use it, and vice versa. I think they will likely stay private and take capital injections from institutions like Google/Microsoft which will own a small bit of equity in exchange for funding.

joeblau2• 11 years ago

This is actually one of the companies in SV that I really like; I would love to work there, but I don't think they have a lot of mobile application development; That being said I still congratulate them because I love their product.

calcsam• 11 years ago

Both this piece, and most commenters, seem to miss the point about where Github's value comes from.

It's not for being a social identity for programmers, or hosting open-source libraries. Those are worthy pursuits, but from a business perspective mostly serve as marketing.

Github is basically Microsoft Word for programmers, and is an essential part of their workflow. Companies that need enterprise functionality around security and flow configurability move to Github Enterprise and spend, not $7/month/organization, but $20/month per programmer.

That's why Github is being valued at $2B.

arikrak2• 11 years ago

Github currently may use the "social coding" part for marketing now, but it can build off it in the future. For example, StackOverflow built a whole careers site off Q&A, Github can choose to go further based on real code.

MarkPNeyer• 11 years ago

"github labs used machine learning to generate a simple english -> python translation algorithm. it crawled the millions of commits, looking at comments and commit logs to understand software"

hkmurakami2• 11 years ago

So it seems that the true test will whether a shop like HP would adopt Github Enterprise and pay $20/mo/programmer for 50,000 programmers and pay $1mm/mo to Github.

zzalpha• 11 years ago

Probably not. No deal at that scale is done at list rates.

But it'd still be a very lucrative deal for GH if it happened.

timr4• 11 years ago

Microsoft Word became a valuable monopoly because it was a proprietary standard. But git hosting is a commodity service. There are already a number of players doing exactly what GitHub does, for less money, and it's trivially easy to migrate a repository away from GitHub to those other providers.

Something tells me that the "facebook for programmers" angle is essential to selling the dream here. The so-called "network effect" of open-source projects has some inherent stickiness, but again, there isn't that much that ties a project to GitHub.

zachrose• 11 years ago

Except for all the things that Github builds on top of git to keep users coming back (wiki, issues, stars, etc.) which seem to be working.

nahname• 11 years ago

There is no one doing "exactly what GitHub does". If you think hosting git repos is all they are about, you are completely missing out.

blazespin2• 11 years ago

Agreed, the valuation makes no sense to me. There's really no switching costs that I see.

Bitbucket is actually superior in many ways because of its tight integration with Atlassian - the real Microsoft Word of the Developer community.

Sourceforge had this kind of play at one point and look at it now.

Maybe they're going to start displaying ads for jobs for developers. Not sure that's worth 2B though...

Retric• 11 years ago

Which is why Microsoft is worth 366.8B and GitHub was only valued at less than 1% of that.

However, the name recognition that allows GitHub to charge a premium really is worth something, and I suspect they plan on leveraging that 250M to try and grow. In the end though it's not our money so we really don't have a lot of information on if it was a good bet or not.

PS: For an off the wall example, they may be planning to become a seed incubator.

dragonwriter• 11 years ago

Git hosting is a commodity, but GitHub is a proprietary and increasing dominant solution with strong network effects that had git housing as a central element, but also includes several differentiating features on top of git hosting.

sidi3• 11 years ago

From an employer's perspective, github profile has been one of the highest signal in our hiring decisions. Anecdotally, I have yet to see a gamed profile.

This builds a very tight feedback loop, and ends up with more developers using github. And I don't see anything disrupting this loop for the time being.

hyperpallium2• 11 years ago

Yes, the network effect of social programming is the heart of open source, so the leader dominates more and more.

But migrating issues is not so trivial. There are probably several other subtle points of incompatibility making switching a headache. If it ain't broke is the Enterprise mantra. They love to standardise. They will hang on for decades.

However, the real point is that $20/m/user is comparatively cheap for the enterprise. The github category is already far better than the old ways; to win, they merely need be slightly more attractive and/or better known than the category alternatives.

tomphoolery2• 11 years ago

GitHub still has the best UI for code hosting I've ever seen, and continues to improve their user experience in little bits throughout the year. The fact that open-source projects by and large have moved to GitHub now that SourceForge and Google Code are no longer reliable hosting options was probably the final nail in the coffin, although GitHub has been the major player in open-source code hosting for years in my opinion. But, you're probably correct in some way in saying that it's a "facebook for programmers"...it's relied on by companies to make hiring decisions, developers to find out what each other is up to, and projects to host their resources. GitHub is a great mixture between social media, infrastructure, and general workflow or development tools, and I think that's what has made it so valuable.

I can't think of a better place to host my code.

tomchristie• 11 years ago

There are already a number of players doing exactly what GitHub does

There are folks delivering similar services, but nothing remotely of the same standard.

there isn't that much that ties a project to GitHub

They don't need to have any stickyness if they continue to provide a service that's far superior to other's offerings.

New entrants will find it incredibly difficult to break through at this point because of the immense investment that'd be needed to rival GitHub's service, and the lack of achieving significant user base and income during that process.

Something tells me that the "facebook for programmers" angle is essential to selling the dream here.

The network aspect doesn't really need to be their main selling point.

GitHub's value to development companies is dead simple: It's a more productive tool than anything else out there.

bernardlunn• 11 years ago

I think it makes sense. Enterprise saas is great (direct moentization) but cost of sale sucks. Viral growth plus direct monetization is holy grail.

JimmaDaRustla2• 11 years ago

I was going to say exactly this - Word had very little competition, whereas GitHub has many equivalent competitors. I'm a fan of BitBucket - they allow free private repos, but the company as a whole offers multiple other enterprise solutions above and beyond what GitHub provides.

HyprMusic• 11 years ago

I see GitHub's monopoly being in the services that integrate with it. We couldn't switch from GitHub even if we wanted to, not without finding alternatives to all the integrated services we use. That's too much friction for little gain.

lojack3• 11 years ago

The analogy is closer to:

Git ~ Text Editor

GitHub ~ Microsoft Word

Sure, git is a commodity service, just like text editors are a commodity product. It's trivially easy to migrate a Git repository to a different service, but quite a bit less trivial to migrate all of the issues, integrations, hooks, wikis, CI services, etc.

When you look at the big picture, there are much fewer players doing exactly what GitHub does.

deniszgonjanin• 11 years ago

Except GitHub isn't selling Git hosting. Github is right now a central piece of infrastructure for a huge number of tech companies. Infrastructure-wise, so many pieces connect to GitHub. CI, deployment, bug tracking, releases, etc...

Yes git hosting is commodity, but if you switch away from GitHub you have to switch so many other things as well. That takes time (hence money) and can be very disruptive to your infrastructure.

So unless GitHub starts to suck while someone else comes up with a different awesome solution that solves most of it, GitHub it could be worth way more than $2B.

bjourne• 11 years ago

There are already a number of players doing exactly what GitHub does, for less money, and it's trivially easy to migrate a repository away from GitHub to those other providers.

What does "exactly" mean in this context? I've looked at competing code hosting sites and could find none that does exactly what GitHub does. For example GitHub very good search function which can quickly search through all commits, pull requests, tickets and wiki pages in a project in one go. It's a very useful feature no other code hosting site has. And that's just one of dozens of features (the repo branch visualization tool being another) that other sites doesn't have or doesn't do nearly as well as GitHub.

In a way, back then, Gmail did "exactly" what Hotmail did.. But not really.

hga4• 11 years ago

I'm not aware of Microsoft Word or any editor I've ever used or heard of forbidding me from using the word "retards" or any other. Heck, Gnu Emacs allows me to write proprietary software, a user freedom RMS is no doubt not entirely happy with.

I require that general freedom of expression in my tools and do no tolerate vendors who engage in these sorts of damaging stunts. I suspect I'm not alone, and I note GitHub has a further problem of not being all that sticky, e.g. I moved all my repos off it earlier today after we got confirmation of this.

seanflyon• 11 years ago

Could you explicitly state what it is you are referring to? I'm not familiar with github's content restrictions.

erics322• 11 years ago

Also not the first time Github has deleted a repo for ideological reasons. See: C+=

proveanegative• 11 years ago

If this is where the things are going the time may soon come for someone to launch a GitHub clone that deliberately only bans illegal content and provides technological means of protection against Twitter mobs.

Meanwhile, it would be nice to have a reusable code of conduct written with the same attitude. E.g., it would only forbid personal attacks, credible threats of violence against other contributors and violations of the law (like committing warez to the repository). It would deny any responsibility for what the contributors say elsewhere on the Internet and state an unwillingness to discuss their speech on the project grounds. It could include anti-blackmail clauses like that agitating people on social media to "support" your issue by shaming the maintainers will get you banned and the issue closed immediately and irrevocably. The latter would have to be carefully written, though, to not be exploitable.

serve_yay• 11 years ago

It's kind of crazy to me that its value even needs to be argued for. But then again, I use it every single day.

hueving8• 11 years ago

and how much money do you give them? Also, how painful would it be for you to switch to a different company (e.g. bitbucket)?

fragsworth• 11 years ago

That's why Github is being valued at $2B.

Also, keep in mind, we can't see the terms of this deal, and how much special treatment the investors will be getting from it.

The valuation is just an upper limit to the true measured value of the company until we can see the terms of the deal.

kevin_thibedeau• 11 years ago

There aren't enough programmers on the planet to justify this valuation.

bmir-alum-0072• 11 years ago

The value is a premium considering Atlassian was valued last year at $3.3B even though it has significantly more enterprisey features/ecosystem in the wiki/issue tracker/CI space, although it's not yet owned the social VCS enterprise/SaaS space.

Atlassian has an interest in dominating the enterprise-side with JIRA (issue tracker) & Confluence (wiki). Atlassian's Github non-Enterprise competitor, Bitbucket, has unlimited private repos for free or $200/enterprise. Atlassian also offers FishEye/Crucible and Stash to compete with GE.

The big plus with JIRA/Confluence are the plethora of free/paid plugins and lots of enterprisey features that aren't available in Redmine/Chili, Trac, etc. without significant work. In those circumstances, IT shops appreciate Active Directory provisioning, fine-grained permissions and such when any of mediawiki, google docs/quip, asana aren't often up to task without lots of extra work. (Yes, deploying Atlassian to production used to be a PITA, but it's much better than it was some years ago.)

Atlassian's HipChat is basically a 37signals' Campfire clone, and Slack/FlowDock are significantly better for most use-cases.

In the CI market, most shops end up deploying Jekins/Hudson because of it's cross-platform slave builder agents and massive plugin ecosystem. I wouldn't use Bamboo. CI needs to be deployed when enterprise can't use TravisCI or similar.

qwerqweq• 11 years ago

What is "Active Directory provisioning"? Is this just an alternative way to authenticate users with the wiki similar to LDAP?

mpdehaan24• 11 years ago

I'm a bit curious how much GitHub Enterprise is being adopted.

Obviously winning someone like IBM and HP (I don't know what they use) would be big.

But I see most companies using GitHub private organizations (paid per repo) even when they are sometimes quite large. I might be totally wrong here, but I'm kinda interested in what the split is.

Obviously every software company having a huge chance of keeping their private source control code in you is a big deal, and even "monetize way later" makes sense here considering the dominance they are showing.

And mostly showing without any major improvements to the product (.com) in a LOOOOONG time, but I will say the stability has gotten much better, and I do appreciate that at least.

cmullen• 11 years ago

HP has HP ALM and IBM has Rational. HP also uses CollabNet TeamForge for source control in some groups.

ratpik• 11 years ago

Paypal, SAP, Vimeo and lots of bug companies uses enterprise github.

danpalmer2• 11 years ago

A lot of companies have regulatory requirements which require them to host a lot of their support services, and for many companies with small dev teams (~1k-10k employees, 10-100 devs), management and policy is strict enough that they will just buy the enterprise version.

Remember that inside the enterprise version, you have full control over all the organisational structure - essentially giving you an extra level of granularity on permissions. That's quite important for many companies.

InclinedPlane• 11 years ago

But, if that's true, shouldn't they already be rolling in money already? Why do they need an injection of cash?

mynameishere• 11 years ago

Github is basically Microsoft Word for programmers

That makes no sense at all. It's like the "track changes" feature in Word, maybe. You know--one little feature on a much, much larger tool.

Retra2• 11 years ago

The point is that it is a standard, critical work tool.

ghuntley3• 11 years ago

    Yep, you are right on point. Developers use the commodity version at home and
    want to use the same (awesome) tools in the workplace. Enterprise companies 
    who wish to differentiate their hiring/talent pipeline recognise this and
    consider it a commercial advantage. Additionally these same enterprises have
    strict IP policies which prevent the IP from being hosted in the cloud. Win Win.

    The enterprise product VMware/Xen/HyperV image is *the exact same* ruby/chef
    codebase as used in production on GitHub.com. They are making an absolute
    killing via price discrimination - have you seen the enterprise pricing? 

    https://enterprise.github.com/features#pricing

    - 10 developers -> $2,500 USD a year.
    - 50 developers -> $12,500 USD a year (+/- enterprise negotiations)
    - 150 developers -> $37,500 USD a year (+/- enterprise negotiations)
    - 500 developers -> Telephone number of a sales/account rep appears.

    IMHO this (cheap) cash is going to be used to grow their sales and enterprise
    support teams to accelerate this loop. https://jobs.github.com/companies/GitHub

peteretep3• 11 years ago

Any CTO signing off on $37,500USD a year for 150 developers, when you can get unlimited developers on Bitbucket for $2,400, probably needs to be fired.

andruby3• 11 years ago

Nope, the enterprise version is _not_ the exact same ruby/chef codebase. See for example this blogpost [1] where they announce LDAP sync. New features are often released on the public Github before they are included into a new github enterprise release.

That being said, the enterprise version is very close to the public version. They are probably branches of the same repositories.

[1] https://github.com/blog/category/enterprise

debaserab2• 11 years ago

I agree, but they are a bit of a phenomenon given the amount of marketshare they actually have. They have something else going for them, and I think it's that they are the default option for most new developers as their centralized repository.

It's interesting because bitbucket still offers free private repos yet doesn't seem to have nearly as much following as github.

spdionis3• 11 years ago

Imo it's because bitbucket UI is just bad. Especially issues and navigation among repositories. I have a really hard time to get used to it.

neya• 11 years ago

I agree, in fact, I don't understand why it's only valued at $2B, when a platform with no monetization model like Instagram was valued (and sold) at $1B.

hueving8• 11 years ago

instagram has a massive userbase. advertising potential is much larger.

people expect advertising on a social network. if github started doing that, developers would throw a shit-fit and bail

sytse3• 11 years ago

The social identity and open source hosting have strong network effects that would warrant a high valuation. The enterprise functionally has much less network effects and using the power of open source we're able to offer a compelling product for less than $5/month per user. I wonder what other people think, is the value in the GitHub.com offering that has a moat due to the network effects but doesn't generate much revenues or is the value in the enterprise product that generates revenues but has much smaller network effects.

NicoJuicy• 11 years ago

Microsoft Word as source control for programmers is Visual Studio Online, which also supports git.

Not Github ;-)

PS. Visual Studio Online is free up to 5 team members and costs 20€ / user / month for every additional team member ( so essentially saving 100 €/ month). It's also free for msdn subscribers

otis_inf2• 11 years ago

You too miss a vital point: every user of github who doesn't pay for using the service adds to the costs of running the service. The popular it gets among free users, the more costs github has. What you're referring to is precisely the reasons why users use the service for free, and of all these users github doesn't make a dime (well, in practice they might make indirect money of these users by selling profile information and perhaps because some users might purchase services because they know github, but that's not a given)

Companies that need enterprise functionality around security and flow configurability move to Github Enterprise and spend, not $7/month/organization, but $20/month per programmer.

This is not a given at all. Github is used by many because it's a great free service. When you have to pay for the service however (or better: you're going to use a service offered by github which costs money), there are other alternatives which might be cheaper or even free. E.g. private repositories are free on bitbucket. Private repositories don't need the social aspects of github at all, as they're private and the group of people using the repo is limited and known up front.

I find the article missing this point as well: sure they got funding and that's great, but their popularity among the users of the free service is not a reason to think they'll be a very profitable company: only the paying users can make that happen.

devy• 11 years ago

Github Enterprise is essentially a self-hosted version of Github. And there are similar open sourced alternatives like GitLab and Gitorious too. I wonder why those alternatives didn't threat Github Enterprise? First-mover advantage? Branding?

nivertech• 11 years ago

IBM acquired Rational Rose and was selling ClearCase to F500 companies for if I'm not mistaken: $13K/developer/year and ClearCase Lite for $2K/developer/year.

spectrum1234• 11 years ago

Maybe it was obvious? But maybe not. It's no different than any company offering a really solid app for free, and then even more amazing features for a cost.

jtwebman• 11 years ago

I wish they would say what they wanted the money for!

digikata• 11 years ago

Well, they could buy Sourceforge and Slashdot. Though that might end up a distraction...

mizzao2• 11 years ago

Buying SourceForge and apply a svn-to-git converter on top of everything; that would really cement the monopoly.

pla3rhat3r• 11 years ago

Congrats to the team. Good stuff. Hopefully this means a drop in price (wishful thinking).

danieltillett5• 11 years ago

The most interesting thing about all these massive fund raisings is why. It is almost as if the managers of these companies think we are about to enter a period where raising funds will be impossible, revenue from servicing the startup economy will dry up, and they will need a massive war chest to survive.

e402• 11 years ago

Sometimes fundraising is to get cash to founders, early investors.

danieltillett5• 11 years ago

mmm - insiders trying to get out is never a good sign.

hermanmerman4• 11 years ago

Why wait to find out, when there is money on the table right now?

Also, sometimes they have to take a lot of money, as later-stage investors want to control a sizable chunk of the company (in this case, 12.5%).

danieltillett5• 11 years ago

Well I don’t think any company has to take any money, but I agree that it might not be a decision the founders have any control over (board level decision).

tptacek3• 11 years ago

If you build a machine that reliably turns $1.00 into $1.10, your next moves are (a) try to turn the next dollar into $1.15 and (b) find as many new dollars as you can to feed the machine.

idlewords• 11 years ago

Why not just loop the dollar through and live comfortably on the surplus?

danieltillett5• 11 years ago

This is assuming that there is no such thing as market saturation or diminishing returns :)

patio11• 11 years ago

revenue from servicing the startup economy will dry up

One of the salient differences between the 90s tech bubble and our current state of affairs is that in the 90s Yahoo sold to startups justifying a higher valuation for Yahoo justifying more startups... and this largely doesn't happen now.

I haven't worked with Github but I have worked with many companies which are "strikingly similar" to Github. Their median customer is a boring business which sells things to people for money. If the entire Bay Area slid into the sea, most software companies wouldn't notice until their pull requests stopped getting accepted.

danieltillett5• 11 years ago

I know SV is the center of the current tech boom, but one of the things this time around is the startup economy is much larger and more wide spread. There seems to be many more startups outside of the traditional centers which is good.

While I agree with you that things are different this time, I still suspect that there is a fair bit of growth acceleration coming from startup dollars being recycled back through the startup economy.

kyleblarson• 11 years ago

In huge late stage rounds like this is there typically any sort of liquidity provided for non-founder employees?

dkarapetyan• 11 years ago

Only $2B. It's definitely worth way more than that.

daemin• 11 years ago

While it's cool that Github is valued so highly in a business sense, some part of me worries that they'll fly too high and burn themselves from it, leading to the end of the service. I hope this does not happen.

benbojangles• 11 years ago

Can someone help me as i'm confused. This is free opensource code, being stored by a company who is now selling shares for profit?

robotnoises2• 11 years ago

Most of their revenues come from the enterprise market.

Taek• 11 years ago

Valuation aside, why does Githib want $250m? That seems like a lot of money given their current product.

I'm sure it's justified I just don't understand why.

robotnoises2• 11 years ago

Good question. My guess is expansion? Perhaps they switch into growth-by-acquisition-mode?

stephen• 11 years ago

I vaguely know (or assume) that GitHub employs some of the Git core committers, which is great.

But this makes me wonder if any of the founders have written Linus a check to show their thanks. Or maybe after they IPO. :-)

(Obviously they've done a ton on their own.)

skuhn• 11 years ago

Red Hat gave Linus some stock prior to their IPO, which was hardly required but a pretty nice gesture.

I don't know of any other public examples of a company making stock grants to developers of major building blocks of their ecosystem, but they might be out there. GitHub is under no obligation, but I think they owe as much to Linus as Red Hat did in 1999.

ihunter• 11 years ago

This actually seems undervalued to me. The potential for this app is huge, being the platform for all code/product development _ideally_ for every organization. I think they've sorta dropped the ball a bit in that I don't see a ton more integration into the corporate / programmer day to day, something that Atlassian seems to be picking up on. Still, this is an indespensible tool for engineering teams.

sidi3• 11 years ago

Any attempt to use revenues as justification of the valuation is missing the point, also comments regarding git hosting being a commodity misses it.

The valuation imho is a bet that GitHub will be ingrained in developer's workflow and continue to occupy developer mindshare for at least the next decade. Some reasons have already been mentioned in the comments here: * Revenues - It's already the dominant player in git hosting and has better enterprise plans, * Mindshare - GitHub is not just git hosting, it's wikis, issues, gh-pages, atom, and more to come. Each of them are good products in their own right and also create a lot of value by being under the same roof. * Platform - Github is no longer a product, it's an emerging platform. There are plugins / extensions that augment the power of GitHub; zenhub.io (as someone mentioned here) - a case in point.

And one point that every comment here has missed is Github's value as a latent hiring marketplace. Unlike LinkedIn / Resumes / Referrals, a github profile is a much better signal for an employer. Punchcards, followers, projects built and contributed to build a very comprehensive visual of a developer, his coding style, tools used. As Github gets more popular, more employers will find value in this providing a reinforcing loop getting more developers to be creating profiles and maintaining them.

n0us• 11 years ago

how convenient it would be if GitHub could host the repositories you have with the press of a button. I'm betting the investors have seen the success of AWS and think GitHub could capitalize on the convenience of lumping everything together.

turingbook• 11 years ago

Can not agree with you anymore. GitHub is two things: 1. LinkedIn for Programmers, 2. Development Platform/Toolchains for Programmers.

Considering Atlassian valued at 3.3B in last round, GitHub has more potential. However, GitHub should prove itself with real money sooner or later.

mrweasel• 11 years ago

Atlassian do have products that cater to non-programmers as well, like Jira, HipChat, Confluence and some service desk application. I think Atlassian would naturally be worth more than GitHub, simply due to the larger potential user base.

I don't think we know what profits either company has, and without that information it's hard to know if the valuations are realistic.

igonvalue• 11 years ago

value as a latent hiring marketplace

StackOverflow has been trying to monetize this aspect of its user base for a few years now [0], but has not made much headway as far as I can tell.

[0] http://careers.stackoverflow.com/

tim333• 11 years ago

Some quotes from their CEO:

The sites are still growing like crazy.
The company itself has passed 200 employees worldwide, with big plush offices in Denver, New York, and London, and dozens of amazing people who work from the comfort of their own homes. (By the way, if 200 people seems like a lot, keep in mind that more than half of them are working on Stack Overflow Careers).
We could just slow down our insane hiring pace and get profitable right now, but it would mean foregoing some of the investments that let us help more developers.

Which implies they are making a few bob from careers etc if they could slow hiring and be profitable with 200 employees.

melted• 11 years ago

What's so "awesome" about Github? It doesn't even have proper codesearch like Google used to have before they shut their code hosting down. I seriously don't get it. For my own needs I just host my own Mercurial and hgweb. It takes all of 5 minutes to set up, and provides all I need.

embik• 11 years ago

I can only speak for myself, but I love GitHub because it's easy accessible for me. When I was learning how to use git and code in general (well, I'm still in that process to be fair), it's great to have a visualitation of what you're actually doing. It's even better when that interface is well-designed (at least I consider GitHub to be great UX), so you don't have to learn using another UI on top of all the new stuff you already learn as well. I think that's a factor you underestimate when you've been working with revision control and code for a long time.

Additionally, the collaboration aspect of GitHub is great as well - As it's a big plattform, a lot of developers already have a GitHub account and it's very easy to contribute with forks and pull requests. Submitting patches via mailing lists isn't everyone's cup of tea.

tomphoolery2• 11 years ago

JIRA/Stash/et. al isn't so bad, but I definitely prefer using GitHub Issues or Trello for my own projects. ZenHub looks pretty cool too. Definitely think the way that we use JIRA at my office is the only way to use it "right", in the sense that we basically track everything with JIRA tickets, from IT maintenance requests to operations bugs and project management tasks. The automation between JIRA and Stash is also 10% awesome, with that other 10% lost because you can't specify a code reviewer in a Stash pull request and have that person be automatically assigned to the JIRA ticket you're working on in the branch. Little failures like this are commonplace among the Atlassian toolset, which is why I don't like using it quite as much.

mindsocket• 11 years ago

I'm a product manager for Stash, and was curious about your expected Stash/JIRA workflow. Why would a reviewer be assigned to the JIRA ticket? They're assigned to the pull request for the issue that the author is assigned to (who did the work). Are you wanting to have a JIRA-only view of work that needs doing, including review?

techtivist• 11 years ago

If this valuation is based on the "future potential" of GitHub, I would keep track of GitHub's data ownership policy. I wouldn't be surprised if all of a sudden GitHub decides it owns the commercial rights to all code hosted on GitHub, at least for the free plan ;)

kgc• 11 years ago

I thought they already raised enough money to never need to raise again?

crc32• 11 years ago

Is anyone else just waiting for GitHub to capitalise on its brand with a move into source control for the rest of the enterprise?

Stuff like the swipable image diff: https://github.com/blog/817-behold-image-view-modes

or map diffing: https://github.com/blog/1772-diffable-more-customizable-maps

are truly fantastic features; I imagine they already have some sophisticated diffing algorithms and visualisations in the pipeline for word docs, spreadsheets etc.

I guess there are some ease of use issues; (minor, imho) and there is a - possibly better - paradigm in collaborative editing a la Google Docs? But otherwise i'm sure a "github appliance" would work pretty well in a lot of non-software environments.

DrMJG_HN• 11 years ago

Congrats to the Github team from Livecoding.tv. Keep the good job up!

kriro• 11 years ago

Apart from being really easy to use and taking some pain out of git (arguable since we're talking about developers but could be worth more if they branch out to authors etc.) the major value of GitHub is the brand name.

It's a tool based network effects grab of sorts which is why the social components of GitHub are very important (imo). However I'm not sure the network effect is as big as it needs to be. Theoretically it's not that hard to migrate the entire network (-the revenue generating parts but it's the OS stuff that generates the network effect).

I'm not entirely sold that the brand is strong enough and can't be overtaken by competition. So far they seem to have a friendly relationship with GitLab et al. but it will be interesting to see how they'll handle those in the future. My guess it they'll try to acquire whoever they perceive to be the biggest fish.

That being said, the valuation seems acceptable to me given the current standing of GH. While the switching cost is low in monetary terms (and technically not hard) if you compare it to other brands where the switching cost is low in monetary terms like Coke vs. Pepsi the valuation makes more sense. I'd also argue that developers tend to not switch around wildly as long as the tool is perceived to do it's job well (which GH does).

tn13• 11 years ago

I have 0 expertise on valuations so would not comment on that but I do think that github has a near monopoly when it comes to hosting a popular open source project.

Git* sites are pretty much same as Github but they simply dont have the traction and are unlikely to have till github does something stupid. This is very similar to the fact that while Android is open source any any device manufacture can make an Android phone, only Samsung seems to be winning while everyone seems to be a minor fish in the pond.

I will really really be surprised if investors did not assign a value to this.

vasilakisfil• 11 years ago

I thought they could fund themselves...

ed_blackburn• 11 years ago

If the could nail "issues" like they have "wiki" and can add a chat product of similar quality the $2B valuation looks not just plausible but perhaps an undervaluation.

They have a kick arse API and there's a busy ecosystem around it, but I wouldn't mind seeing github write a few new client / products that supersede issues themselves. If they dogwood issues with collaborating external organisations in private perhaps they'll find the nirvana we all crave?

ryandaigle• 11 years ago

Does this mean gists can have comment notifications again?

GitHub Raises $250M at $2B Valuation

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