
GitHub Raises $250M at $2B Valuation - icpmacdo
http://www.wsj.com/article_email/github-raises-250-million-at-2-billion-valuation-1438206722-lMyQjAxMTA1NjI1OTEyNzk0Wj
======
calcsam
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.

~~~
timr
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.

~~~
blazespin
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...

~~~
mszyndel
Yet to meet a developer who's as excited about using Jira as about using
Github issues...

~~~
mpdehaan2
Despite having a gazillion issue trackers, something halfway between the two
would be welcome.

GitHub issue tracking is not good enough to manage any kind of large project,
JIRA is a bit of a beast.

I'd prefer having an integrated JIRA any day, though I do still strongly
_DISLIKE_ JIRA. There's still opportunity for something better IMHO.

(For very small teams, I find that's Trello, but Trello isn't really for large
groups)

~~~
kschrader
We're working on something to split the middle at
[http://Clubhouse.io](http://Clubhouse.io)

As easy to use as Trello for small teams, but scales up as you grow (although
we probably cap out at 100-ish devs right now, not quite to Jira's level yet.)

(Full disclosure: CEO/Founder)

~~~
annnnd
Looks awesome - but please tell me you will have download-and-install option?
Hosting solution is not acceptable to us and this could differentiate you from
hundreds of others in this area.

~~~
kschrader
No download and install option... yet.

We deploy multiple times a day right now. Clubhouse is built with the option
of a hosted version in mind, but we'd have to get to the point where we felt
that things were stable and complete enough to say "ok, let's call this 1.0
and ship it."

------
sidi
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.

~~~
igonvalue
> 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/](http://careers.stackoverflow.com/)

~~~
tim333
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.

------
Trufa
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.

~~~
aakilfernandes
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.

~~~
gabesullice
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.

~~~
gelatocar
My agency is considering switching to bitbucket from github because
bitbucket's pricing per team member would cost us 10 times less than github's
pricing per repository.

~~~
purephase
That's the reason we use it. I love GH and use it personally, but the pricing
for companies with a lot of private repos (like agencies) is not ideal. We
save a considerable amount of money using BB over GH.

BB is pretty great though, so aside from the social factor, the functionality
is pretty much the same.

------
danieltillett
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.

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

~~~
tptacek
More money > less money?

Don't look at me. We didn't raise VC either. Nor will we, until I take off
this "WWMCD" bracelet.

~~~
nulltype
I'm pretty sure he'd go to Antarctica.

~~~
cpach
Starfighter should take funding, open up a local antarctic branch and hire
Maciej as the office manager.

------
hrayr
"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.

~~~
laxatives
"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.

~~~
Fomite
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.

------
daemin
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.

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

~~~
hermanmerman
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.

~~~
justincormack
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.

~~~
scott_karana
Are they still fast-growing? I would have thought that their growth curve
would be flattening out at this point.

Most of the big tech companies already have a presence there, and they've been
the go-to for VCS-using developers for a few years now.

~~~
rurounijones
That is a pretty Anglo-Centric viewpoint I would say. I know of companies in
Japan that are moving onto GH:E with users ranging from 20 -> 300+ of which
there are probably tens of thousands similarly sized around the world that are
not yet on GH or GH:E.

Github recently created a Japanese subsidiary which is telling.

~~~
scott_karana
It's an anglo-centric viewpoint, for what was (until recently it sounds) an
anglo-centric company.

Glad they're growing internationally! :-)

------
fideloper
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
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.

------
darkstar999
“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
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)

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

~~~
tswartz
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.

------
crc32
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](https://github.com/blog/817-behold-image-view-modes)

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

------
tomphoolery
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
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?

------
lifeisstillgood
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.

------
kriro
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).

------
ihunter
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.

------
Taek
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.

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

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

------
techtivist
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 ;)

------
stephen
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
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.

------
blizkreeg
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?

~~~
hermanmerman
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.

~~~
blizkreeg
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.

------
ed_blackburn
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?

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

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

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

------
tn13
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.

------
pla3rhat3r
Congrats to the team. Good stuff. Hopefully this means a drop in price
(wishful thinking).

------
melted
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
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.

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

------
joeblau
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.

------
ryandaigle
Does this mean gists can have comment notifications again?

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

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

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

~~~
tomschlick
And be completely useless. No one wants to use SF anymore.

~~~
mizzao
But what if all SF users had a free and painless transition of their projects
to GitHub?

~~~
mhaehnel
Would be great.

------
vasilakisfil
I thought they could fund themselves...

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

------
GauntletWizard
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_...](https://np.reddit.com/r/programming/comments/3e5c6f/why_the_open_code_of_conduct_isnt_for_me/)
[2]
[https://news.ycombinator.com/item?id=9966118](https://news.ycombinator.com/item?id=9966118)

~~~
darkstar999
You seriously think censoring the word "retard" will harm their business?

~~~
petercooper
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](https://imgur.com/QC51FZz) is even true, though.

~~~
DanBC
Let's assume for a moment that email is true: how many businesses have
policies that allow their staff to use language in that particular way?

And Github, like most other providers, have catch-all clauses in the ToS. This
one, perhaps:

> We may, but have no obligation to, remove Content and Accounts containing
> Content that we determine in our sole discretion are unlawful, offensive,
> threatening, libelous, defamatory, pornographic, obscene or otherwise
> objectionable or violates any party's intellectual property or these Terms
> of Service.

I suppose my point is that if you're a business you shouldn't rely on Github
etc.

~~~
petercooper
I 100% believe GitHub has the right to police and enforce their own standards
on their system - just wanted to make that clear first. This is not about the
r-word issue for me.

What I find unsettling is that what they could consider "objectionable" is
wide open _and_ resolution of raised issues is expected so rapidly. Silly
story time..

A developer in MajorCorp leaves a code comment (which is eventually committed)
saying "// TODO: Fix this later, GitHub is down again, GitHub is trash!".
GitHub could fairly request its removal as it is likely to be objectionable to
them.

However, the main contact on the account is away at a conference and gets to
their email a couple of days later. Is their repo or even their entire account
now toast? How much would someone want to bet against that?

This is a farfetched contrived story, but now there's a demonstrated (again,
assuming the screenshot is legit) attempt to enforce this clause and evidence
of "24 hours" being the timeframe allowed for resolution, the tiny risk of
such an outcome is going to hit sentiment and get legal departments twitching.

(My personal suspicion is paying and enterprise users will not receive such
threats, but in the above example I'm being idealistic and assuming everyone
gets equal treatment.)

~~~
DanBC
Okay, but this is again about single points of failure. Don't have just one
person who is able to make the changes, don't rely on Github.

I agree that the ToS clause is very broad, and that (if the email is real)
that the timeframe is short.

But that seems to be standard across different providers.

For example, Google will close several types of account without warning.

------
benbojangles
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?

~~~
robotnoises
Most of their revenues come from the enterprise market.

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

