
Bootstrapped GitHub Now Raising a Round from Andreessen Horowitz - dylanvee
http://pandodaily.com/2012/05/21/bootstrapped-github-now-raising-a-round-from-andreessen-horowitz/
======
hemancuso
I think it's easy to over-estimate the success and ubiquity of GitHub if you
spend all day on HN. The real money-make for SCM is still Perforce, according
to schacon at a somewhat recent drink-up in Boston.

These questions about GitHub vs. Pinterest are revealing in that I think many
folk on HN don't realize what a relatively small community of developers this
is. Relative to the tens of millions of folk on Pinerest. Heck, GitHub's front
page reveals they have only 1.6 million users.

I wonder if their growth curve has started to flatten out. I hope they have a
great plan/vision for what to do with the money, because running GitHub ad
infinitum as an immensely successful small software company would seem to be a
dream to me.

~~~
to3m
Well, I'm not surprised Perforce wins the money-making contest... it IS quite
expensive, particularly compared to git.

Nevertheless, I'm inclined to agree about the apparent popularity of git vs
its actual popularity. I don't think I've ever met anybody who's used git
professionally, and in fact I don't even know that many people who've actually
used git at all. Everybody I meet (though I haven't met absolutely everybody!)
uses perforce if they can afford it, and SVN if they can't. SVN supports
binary files tolerably well, and perforce supports them fine. perforce keeps
working fine even when your depot's head revision (if that's the right term)
gets to 300GB. Well... SVN probably doesn't do that. But it's still cheap.

~~~
cracell
As a Ruby/JavaScript developer I find it very bizarre that you don't know
anyone that has used git professionally. Pretty much everyone I know uses it
professionally and I'm a bit taken aback when someone hasn't even tried it.

~~~
hemancuso
This is my point, exactly. Just because practically everyone on HN is a
Ruby/JS/Python dev doesn't mean the world at large reflects that breakdown. I
am a bit taken aback that you can't imagine a C# or Java dev who has never had
to touch git.

~~~
obtu
I've met someone who worked at two large and conservative workplaces where his
mission has been to set up an internal Git service (a slow task thanks to an
archaic IT) so they can move some of their projects to that. According to him,
institutionally this company prefers dealing with large vendors with big
support contracts, but there's strong demand for Git coming from developers
and contractors. The enterprise world isn't completely segregated, and
developers would be coming in contact with Git easily enough, for example
through the breadth and depth of GitHub projects.

------
SeoxyS
Two questions:

\- How is GitHub worth less than Pintrest?

\- What could GitHub possibly gain from raising money? It's clearly not about
money. Is this a liquidity event? Couldn't they just issue a dividend for
that, they've clearly got plenty of cash… Or is this about the credibility of
having a valuation. In that case, couldn't they have gone public? Amazon went
public at a sub-$500M valuation, and look at them now!

Edit: come to think of it, I can see the possibility of wanting to acquire
other companies, and not currently having the capital to do so. That's about
it.

~~~
fusiongyro
> How is GitHub worth less than Pinterest?

I'll speculate.

Github's fighting a losing game. They are trying to charge for something they
are also giving away for free, and their target market is people who are
uniquely qualified to replace them. There are plenty of quality Github
alternatives around right now. To stay on top they have to continue to be at
the forefront development-wise and they have to continue to have the majority
of developer attention to reap the network effects. It's precarious.

Compare to Pinterest. They make money, ostensibly, from every product someone
pins. People pin lots of products, and the people doing the pinning and the
browsing have higher conversion rates than people browsing Google or other
sites looking for things to spend money on. Pinterest is also a brand; it will
be hard to get everyone using Pinterest to switch just because a better
version exists somewhere else. People can collaborate with Git without using
Github; the only tangible loss is the pull request feature.

It takes Pinterest less work to convert a byte of bandwidth into profit. Not
only do they need less development effort moving forward, they also stand
better odds of making money on some random user.

~~~
patio11
If Github is losing sign me up for some of that please.

~~~
fusiongyro
I'm not saying they're losing, I'm saying they're fighting a losing game.

~~~
cracell
How is Pinterest not also fighting a losing game? I can see how it's harder
for Github to stay up with competitors because their target market is more
savvy and often tries out new tools. But doesn't Pinterest also suffer the
risk of some new social sharing site appearing that appeals to users in a
better or just different way?

------
markerdmann
I'm surprised by this. Tom Preston-Werner's talk at Startup School 2010, which
had a strong influence on me and many of my friends (we still refer to it
often), was very anti-VC.

Here is a link to the talk, and a relevant quote from the introduction:

<http://www.justin.tv/startupschool/b/272031754>

"But for me, I don't have to worry about these things, because GitHub has
never taken any funding, ever. So I want to talk a little bit about how you
can avoid this mess of VC, if you so choose, by telling you a little bit of my
story."

~~~
danielharan
1- Andreesen Horowitz isn't just any VC

2- They already avoided most of the problems of VCs by getting to profit.

~~~
markerdmann
You're right. In his blog post about the talk[1], he makes it clear that his
emphasis is on bootstrapping to profitability.

"The ironic thing about bootstrapping and venture capital is that once you
demonstrate some success, investors will come to YOU. When this happens you
will be in a much better place to make a more reasoned choice about taking on
additional capital and all the complexities that come with it. Talking to VCs
with some leverage in your back pocket is an entirely different game from
throwing yourself in front of a conference table full of general partners and
trying to persuade them that you're worth their time and money. Power is
happiness."

[1]: [http://tom.preston-werner.com/2010/10/18/optimize-for-
happin...](http://tom.preston-werner.com/2010/10/18/optimize-for-
happiness.html)

------
ricardobeat
An "impressive" 600 or 800 million?

This makes the Instagram deal look even more out of proportion. Github ought
to be worth a _lot_ more, it's a profitable huge business with real assets,
used by millions everyday for _work_.

But the question is: what could they do with more money that they can't do
now?

~~~
diego
I heard that large companies expect a higher level of "enterprise" support
from Github. That's where the real money is, and a small company just cannot
scale easily in this respect.

Proper enterprise support requires customer representatives, phone lines,
sales people. All that is expensive and requires capital.

Of course, this is just a wild guess. I have no firsthand information.

~~~
onetwothreefour
Github's support for Enterprise is atrocious at best.

But we still pay for it, because what else is there? :)

~~~
daniel_levine
<http://www.atlassian.com/software/stash/overview>

~~~
fpgeek
Having used both github and some Atlassian products (though, to be fair, not
Stash), my instinctive reaction is: No. No. No, No, No. No, No. No.

That might be wrong, but I'd need to see a lot of evidence first.

~~~
earl
I can't recommend any Atlassian products. They removed the markup editor from
their wiki product; their sole remaining choice -- the rich text editor -- its
a piece of shit that is actively hostile to any dev stuck using it. They're
doing it to, in effect, crap on developers in order to prefer people who won't
use a markup language [1]. It sucks beyond belief for entering code or tables,
and is the usual very annoyingly broken rich text experience: tab and enter
don't do what you think they will and aren't consistent; they make chrome
freeze regularly; and you can't really use it without repeatedly taking your
hands of the keyboard to touch a mouse. Just awful.

[1] [http://blogs.atlassian.com/2011/11/why-we-removed-wiki-
marku...](http://blogs.atlassian.com/2011/11/why-we-removed-wiki-markup-
editor-in-confluence-4/)

------
gojomo
This makes sense in a "as go the alpha geeks, so goes the rest of the world...
eventually" sort of way.

Git and github-style content-management requires a mental model very different
from the mass/mass-enterprise market... but the tech-leaders way of thinking
will reach there over time via repeated exposure, _and_ Github is doing a
great job of providing the benefits in approachable steps, and a whole package
of related modern hosting/distribution/authoring assistance.

Why wouldn't presentations, spreadsheets, and all other forms of writing
eventually be amenable to dvcs-style revision control?

------
DigitalSea
I'm surprised that Github is taking on capital, they must have some pretty
hefty goals in mind because my understanding is that they're quite profitable.
It's like taking out a home loan after building your own home with your own
cash and labour.

What would the repercussions be from taking cash from Andreessen Horowitz?
Will the original Githubber's keep their control over the company? I'm
honestly a little worried, but at the same time if they want the cash to
expand and make Github better, then I am all for it.

------
latchkey
As the founder of a self-funded startup, I need to be careful with how I spend
my savings. So far, my costs are $20/month for cloudflare (ssl), $2/week on
AppEngine (still working off that free $50 credit I got for being an early
adopter) and $7/month happily paid for Github hosting. More power to them,
I've been around open source for a long time now and this is the first company
that has revolutionized software development for me.

------
jonursenbach
Given that they haven't ever taken any VC money, I wonder if they're doing
this so the founders can cash out.

~~~
joshu
They had ~ 70 employees. This implies real revenues. What makes you think the
founders couldn't cash out?

~~~
jonursenbach
Why else would they be raising money at this point after being so staunchly
against it in the past?

~~~
petercooper
Acquisitions? There are quite a few developer tools (and the developers of
such) that would be useful to the company. For example, things like
<https://sifterapp.com/> or even developers of apps like TextMate, Sublime
Text 2, companies like <http://www.panic.com/>, time tracking apps, etc -
anything that the average GitHub developer would be likely to use, even.

My list might be a bit frivolous, but money would give options, at least.

(Edit: Actually, why not Heroku style cloud hosting too? The code's already on
the service ready to roll..)

~~~
iamleppert
That's exactly what is wrong with companies. You don't need to acquire every
whiz-bang app there is. Focus on your core competencies and on improving your
product. Acquiring stuff for show and because it's "in your market" seems
strategic on the surface but often times (unless for the talent) is the first
mistake.

------
tosh
If you browse through github's blog you can easily see what happened the last
few months:

* github managed to hire & acquihire top talent like crazy

* their UI/UX people really focused on making github's UI more consistent and usable

* they spent time to go native

* the enterprise solution got a lot of love

so they have huge momentum and spend their time very well. personally I think
they should look into making jobs.github.com THE resource to hire great
talent. In a way github already is very relevant in the hiring process but
similar to carreers.stackoverflow there is huge untapped opportunity to
disrupt the hiring market.

Anyway I think github has a bright future ahead and I'm very curious about
what will happen in the coming months.

------
luigi
Andreessen Horowitz is a GitHubber!

~~~
snprbob86
Blah. I hate those blog posts. I try to keep my RSS feeds extremely light, but
I really want GitHub feature announcements. I wish their product "broadcasts"
had a feed separate from the company log.

~~~
Aethaeryn
For just the features, subscribe to broadcasts[1] rather than the entire
blog.[2] I couldn't find a mention of this on the website itself; instead, I
just guessed the URL and it seems to work.

[1] <https://github.com/blog/broadcasts.atom>

[2] <https://github.com/blog.atom>

------
endlessvoid94
Why is defunkt the only listed founder of github on pandodaily?

~~~
lancepantz
Who cares? Pando Daily is a startup, funded by venture capitalists, that
covers startups and venture capitalists. I love how at the end they mention
that they are funded by Andreessen Horowitz, feigning journalistic integrity.
This is just the silicon valley machine at work.

~~~
endlessvoid94
> Who cares?

It's not correct.

------
ya3r
I don't believe this. Github and Particularly TPW, and their successful
bootstrap was the main inspiration for me to startup.

As many has said it, Github > Instagram + Pinterest. I would say at least 5B$.

------
adrianwaj
Did they consider a loan?

~~~
obtu
I'd like to think so, but I imagine that as a fast-growing company in a tech
niche they are unusual enough that a bank wouldn't be qualified to evaluate
their credit-worthiness.

------
almightygod
No doubt Atlassian sees GitHub quickly approaching in their rear view mirror

~~~
ConstantineXVI
They did a while ago; hence buying BitBucket and coming out with Stash.

------
wavephorm
This is pretty light on details and it kind of makes no sense. Everyone loves
the product and it's a (apparently very) profitable business. What can
Andreesen Horowitz do to help them other than come in and do another bubbly
ol' flipparoo?

~~~
noahc
It allows founders to take money off the table without selling out to a
company who would have interests other than growing github.

~~~
jmathai
How does that make sense for the VC though? They're not in the business of
cashing founders out.

~~~
noahc
One senerio would be give the founders enough that if they swing for the
fences and strike out they still have enough. This aligns incentives and
removes risk from founders.

In addition, if founders want to take cash off the table and that is what it
takes to make a great investment in github you do it.

------
culo
I still remember the founder Tom speaking at the Startup School (2010) and
advising around 1000 people on why NOT raise funds. As I still remember the
old About page of Github: "VC FUNDING = 0". LOL

Enjoy: <http://www.youtube.com/watch?v=T4VtBcmbbSs>

------
goronbjorn
If I were to guess, this is probably to help them move off of Rackspace onto
their own hosting solution in order to appeal to that enterprise customer
segment that keeps getting mentioned.

~~~
Oompa
But GitHub's enterprise application is something enterprises can host
themselves, inside their firewall. <https://enterprise.github.com/>

~~~
goronbjorn
I'm referring to the use-case where it's something that's truly cloud-
based–think more like Salesforce. Most enterprises are (slowly) shifting to
this.

