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Bootstrapped GitHub Now Raising a Round from Andreessen Horowitz (pandodaily.com)
187 points by dylanvee on May 22, 2012 | hide | past | web | favorite | 124 comments

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.

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.

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.

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.

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.

Until I got sucked in to the whole iPhone "thing", which is how I met git, I generally worked in C++, on Windows, writing video games for consoles. (Am I allowed to raise an eyebrow when I hear of people who don't know a single assembly language?) This sector just doesn't really seem to attract command line fiends, at least not where I worked, and combined with the whole Windows "thing", that's naturally going to tamp down on people's potential enthusiasm for git.

But people in games probably wouldn't use git anyway on account of its poor handling of binary files, and limited scalability in the face of gigabytes of stuff. (I have a suspicion it might be a bit difficult to explain to many/most artists anyway. And a fair proportion of programmers too...)

Of course, this shows nothing more than that we both live in our respective little bubbles ;) But my impression, as a bit of an outsider, is that the HN hivemind is made up of the same people that frequent GitHub. That is, mainly (but of course, not exclusively) people who work with web-python-ruby-javascript-etc. - thus naturally magnifying the apparent importance of GitHub. But I suspect the HN population is not representative, and therefore GitHub's popularity amongst the HN readership probably does not extend to the programming population at large. And this is certainly backed up by my experience.

(All standard disclaimers apply.)

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.

I remember reading an interview with Pierre Omidyar (founder of Ebay) raised $5M from Benchmark, opened a separate bank account, and placed the $5M in there, untouched to this day because eBay was profitable from the very beginning.

He raised the money from Benchmark because he needed help recruiting executives to help run and expand the company. His recruitment efforts before that had been largely unsuccessful, and he openly admitted that no one took him seriously before he raised money.

Yes, the internet was a new and unproven phenomenon at the time, but there are other reasons to hitch up with a VC other than money.

> 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.

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

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

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?

Exactly what pops into my mind when people say things like that.

Please link to all these quality Github alternatives? I haven't seen anything which comes close.

I think it depends on your use case but Bitbucket is pretty close for simple usage. Of course, it's missing the network effects which make GH so compelling.

Having said that, switching costs are low because of the distributed nature of Git. Not sure what would happen if something genuinely better came along.

     switching costs are low because of the distributed 
     nature of Git
Switching costs from Google's search engine are low, because all it takes is to enter the URL of an alternative search engine. And nothing has shaken it, not even when this process is helped by the distribution network, like making Bing the default on Windows.

Lock-in is not measured only in regards to the potential switching costs. Lock-in is also possible by providing the best possible service. Along with real network effects (people recommending your service to other people) then the global lock-in becomes inescapable, even if the theoretical switching costs are low.

And quite the contrary, GitHub locks people in simply because most developers have a GitHub account. People use GitHub these days to put their portfolio on display. And I've worked with a couple of companies that manage their projects on GitHub and it was a pretty painless process to send me an invitation for joining their private repos.

Even Linux is mirrored on GitHub and even Linus Tolvards has a GitHub account. GitHub is not only a really good Git hosting service, but in case you haven't noticed, it's also a vertical social-network built for developers. And their service keeps improving by leaps and bounds, compared to their competitors, which are merely followers. I'm so happy with GitHub that even though I can have as many private projects as I want on Bitbucket, I still pay GitHub for the privilege to have private projects.

Yes, something better can always come along. But just as Google did for search engines, with GitHub around it's pretty hard to build something better. And this to me is the best possible kind of lock-in and the sign of a thriving and growing company: the product being popular, not because it's forcing users, but because it's simply the best.

Linux was dependent on BitKeeper for about three years. Git was written from scratch and hosting Linux in a period of three months. Linus's use of a technology he didn't create is closer to a death knell than an endorsement.

Would you rather have stock today in MySpace or a hypothetical 5-year-old SubversionHub? Obviously, the answer is different for different people, and there are good reasons to support and use Github and good reasons to invest in it. That programmers are good at product loyalty simply isn't one of them.

Github is a decent medium-term bet, but Pinterest is a much better lottery ticket.

Git is popular because of Linus's excellence and marketing skills. And yeah, it took three months, but it took a lot longer for it to became popular and it was helped by Linus' endorsement. The comparison of BitKeeper to Git is not fair - you should compare it with Perforce instead.

     Would you rather have stock today in MySpace or 
     a hypothetical 5-year-old SubversionHub
I never liked MySpace or SourceForge, so if I had the option in front of me, I would have passed even at the peak of their popularity.

This is the criteria after which I judge companies:

(+) is the product solving a real problem for me? (yes)

(+) are they a sustainable, profit-generating business yet? (yes)

(+) is the product forcing users to remain customers? (no)

(+) are they smart and hard-working enough to adapt to new market conditions? (yes)

(+) do they still have growth potential? (yes, because GitHub is lately a social network for professional developers, being preferred over LinkedIn by many)

     That programmers are good at product loyalty simply
     isn't one of them.
My point wasn't about loyalty. Developers tend to use the best tool for the job. I still use Google's search engine, even though alternatives are available, because Google still gives me the best results. And this creates a cycle - because I use Google and I optimize my websites for Google and because I use Google's Analytics and the Webmasters tool, Google gets more data with which it can optimize my results better than anybody else can.

The same goes for GitHub. Even if I stopped being a GitHub customer, I would still go to GitHub because most popular projects are managed on GitHub or have a mirror there. Popularity in turn helps GitHub get valuable feedback, which it can use to further improve my experience, which in turn makes me a happier customer and so on.

Bitbucket, as of the end of 2011, didn't have any concept of a "company account" like GitHub's organizations. From their pricing pages, it looks like they still don't. That's why my company pays for hosted JIRA and uses GitHub, we would much rather pay the lower costs for Bitbucket and keep everything with Atlassian, but the organizations feature on GitHub won us over (we currently have about 30 private repos and 12 users).

Churn for enterprise software like GitHub tends to be very low - once it becomes embedded in the workflow of BigCorp its not trivial to change that overnight.

If something genuinely better comes along, the network effects would still be a huge source of inertia given the FUD around switching.

Evernote is valuated at a billion + and as far as I know is not as profitable.

So something is surely off.

"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."

But they also need many more users to actually turn it into revenue.

I'll bite. Investors don't value early stage companies the same way they value mature companies - for example, a public utility company serves a defined population in a defined geographic region, and operates at some predictable margin. Their value is simply the net present value of future distribution to investors (in the form of dividends, stock buybacks, or share price appreciation). They can still be good investments if the risk/return profile looks good.

Contrast this with early stage companies (which is what we're talking about here). VCs don't care as much if a company has a proven business model - what they're looking for is GROWTH opportunity. The opportunity to completely disrupt a huge market or invent a new one. While profitable companies have better odds of surviving long enough to get to that point, they may not be the best investments in the end.

To give you a concrete example of how this could affect investor decision making. Let's say that the total opportunity for Source Code Management solutions is $2bn/year in corporate spending (completely making this number up) - even if GitHub captures 100% of this market, which they won't, they're capped at $2bn/year in revenue, unless they figure out another way to make money. Once they're done paying the sales guys, engineers, and otherwise supporting operations, they make maybe $500mm/year in profit. With a standard P/E multiple, they'd be worth something like $5-$10bn.

Pinterest, on the other hand, has the potential to be the "facebook of online shopping" to amazon's "google of online shopping". If people really engage with pinterest, and they spend a lot of time on the site, and they're more likely to buy stuff when they're looking at what their friends like and are buying, then it could be worth a lot more than that. The point is, while they don't yet have predictable revenues or earnings, their potential market (online shopping) is so much bigger than github's, that it's possible to justify a high valuation based on growth potential.

I'm not saying I buy the Pinterest hype. I'm just saying that there are criteria beyond current profitability and cash flow on which one can value an early stage business.

The last line is truly indicative of the echo chamber that is Silicon Valley. Only in the Bay Area do companies without revenues generate valuations of $1B+ with simple hand-waving and conjecture. GitHub charges real money for real services and are thus valued less than someone with a Powerpoint presentation on "proposed revenue models." Quite frankly, it is sad.

Here's a bit more about perverse incentives that make VCs' decisions less rational: http://www.danshapiro.com/blog/2010/08/vc-insanity-economics...

The differences between Pinterest and GitHub are that: GitHub is more unique (it's not strictly social media and there's more homework to do); it's bootstrapped and negociates from a stronger position; VCs want to give start-ups more money than they need because that's how they get paid.

I've seen zero evidence that Pinterest can actually generate a profit. They do not make money from every product someone pins, and there's no reason to think they ever will. The only thing I've seen so far is speculation and theoretical future business models that may or may not pan out.

Github however is profitable and has a proven, functional business model. Github is absolutely not fighting a losing game, because they're providing a service companies obviously desperately want to outsource (thus the mass usage). Providing that service in a secure manner is worth a lot of money, as Github is protecting something extraordinarily valuable.

have you heard of affiliate links? you can make a good deal of money from them

Yep, I have. And I'm sure Pinterest can build a couple hundred million dollar business around it. And that's a fine business, it's just not going to be a juggernaut.

If you can't think of ways Pinterest can make money then you simply lack creativity.

There are plenty.

Would you care to elaborate on how you think Pintrest will make a suitable amount of profit to fit its evaluation?

Affiliate links could make Pinterest an insane amount of money. Did you know that when someone clicks an Amazon affiliate link, everything they buy in a 24 hour period the affiliate gets a cut of?

There are a LOT of people using Pinterest, and a LOT of Amazon products on pinterest.

An "insane amount of money" - care to be a lot more specific? That's about as vague and unsubstantiated as you could get.

1) The assumption is that the affiliate link model and market will scale to the size of Pinterest's eventual traffic maximums, that's a big assumption.

2) The assumption is that Amazon will want to allow Pinterest to suck profit out the door at that scale, instead of Amazon competing with Pinterest in one form or another instead, just like they're now competing with Groupon / Living Social (despite an investment in LS).

3) Amazon has a very long history of directly competing with companies that touch their platform.

That's an extraordinarily shaky business model to say the least.

That sounds great.

I'm sure if I can't think of ways that Twitter and Tumblr can make outsized profits from their massive respective user bases, then I'm not being creative either. Oh snap, some of the best business minds are already on the problem and they can't figure it out either.

The same holds true for Pinterest, they're stuck in the same monetization box, and they're not going to suddenly show massive profitability either. It's blatantly obvious that platform will never monetize to the scale of their traffic.

> - How is GitHub worth less than Pinterest?

The fact that the top two comments are saying this is a sure sign we are progressing into a full-fledged bubble.

See George Zachary's interview: http://techcrunch.com/2012/05/17/in-the-studio-crvs-george-z... -- it sure seems like we are entering "Stage 2" (check out the video, not the article)

When we start discussing what we feel one company is worth based entirely off of the valuation of another, unrelated, presumably inflated valuation, it's the beginning of the end.

It's not a bubble 'til my mom owns pinterest stock. Then the end is near.

Please write a post about it when that happens and link it from HN.

My mom is a software engineer, so you're saying if she buys a tech stock the end is near?

No, he referred specifically to his own mother.

If there's a bubble, and it's related to the Facebook IPO, then why did Facebook lose 11% of its value on Monday?

Because the bubble is already over. The Facebook IPO marks the zenith of this relatively modest bubble period.

Ditto for Groupon, Zynga, Pandora and the like having the insane valuations that they did, while generating zero profit - their valuations have imploded massively. Or a company like HomeAway, that was sporting a $4 billion market cap, and a 600 pe ratio; or LinkedIn with its 1,000 or so pe ratio. The bubble has already exploded for companies like Netflix, whose valuation has collapsed back to earth. A few more like CRM are temporarily defying gravity.

Public companies seem to be coming back to earth, but I'm not sure that's the case for private companies. The valuations there seem to be just getting more and more outlandish.

On the other hand, if it's all VCs and funds of funds losing silly-money, then no harm no foul, I suppose.

The problem will occur once the JOBS Act kicks in and anyone can lose their money. That's when the bubble will really pop.

The effects always ripple, even from far away private financial sectors.

You do know that Groupon and Zynga have been making profits right ?

That's news to me.

For their last quarter (NY Times): "Zynga said its net loss was $85.4 million, or 12 cents a share, in the most recent three months."

Groupon has lost a lot of money the last four quarters. Their latest quarter could best be described as break-even, and negative with option expenses.

Reuters: "Groupon reported first-quarter pro-forma net income, which excludes option expenses, of 2 cents per share, versus a net loss of 41 cents a share, a year earlier."

No doubt the right direction. However, a company that's break even, with $2.x billion in annual sales, is not worth $8 billion. It's a lot better than the $20x billion they were formerly worth of course.

How is GitHub worth less than Pintrest

a) Media companies are generally pretty valuable. Pinterest allows users to show clear interests, which should be very easy to convert to commercial intent.

b) The potential market for Pinterest users is much larger, with much less competition than GitHub

c) Software development tools generally are difficult to make money on. Infrastructure can be slightly better, but still expensive. A16Z knows this market as well as anyone (http://www.hp.com/hpinfo/newsroom/press/2007/070723xa.html)

With regard to A, are we not seeing a major correction with the lackluster performance of Facebook on the public market? People have been "Liking" things on Facebook for some time, and they have not yet cracked that nut...

Not really. Google's shares have gone down in the past too.

Facebook's share price is very high compared to their current revenue. There are very valid questions about how quickly they can grow revenue, and those questions are reflected in the share price.

Pinterest's potential market is much, much bigger than Github's will ever be.

So? If I create a product that gives everyone in the world free power my market would be huge, problem is, this product would be founded on the premise that one day I'll work out how to cover the huge cost of generating enough power to satisfy the world's desires. A much more reputable way to start a power company would be to charge for one's services at a point where MR > MC, but that's just me.

Clearly free-to-air TV must be worthless too.

And I guess you think Newspaper profits (used to) come from the price people pay for them.

Underneath your sarcasm, I believe your point is that these models were sustained by paid advertising, thus Pinterest could become profitable by following the same model.

The cost of ads has plummeted in the last few years, and I seriously doubt Pinterest would remain profitable if its primary revenue stream is ads.

Untargetted advertising has always been cheap to buy, and worth roughly the same amount.

Google's search advertising has shown targeted advertising is one of the most profitable business models ever. In some ways Pinterest is even more targeted than search.

To #1, why does a paramedic earn less than a relatively unknown football player? There are lots of variables to take into account, many of them soft or cultural ones.

re: #1 - Pinterest has dramatically more users and potential users. Will it be able to monetize them as well as GitHub? Hard to say without knowing the details.

The other factor is hype. Pinterest is the next hot social company and their comps are Facebook, Twitter, LinkedIn, and Instagram. Easy to let your imagination go wild if you're an investor.

re: #2 - they would raise money to a) grow faster, b) acquire companies, and/or c) provide shareholder liquidity. b & c are self explanatory, so let's focus on a):

The wad of cash lets them hire faster. Let's say they have 70 employees today and they want to grow to 200 by year end (for enterprise support, for example). Hard to triple your salary expense that quickly if you're operating off cash flows. GitHub have a network-effect business, so why not lock-in every company on the planet as quickly as possible? It'll lead to a much, much greater profits in the long-run.

It's only worth the dilution if you expect your equity to be worth more than 1/(1 - n) [See PG's essay: http://paulgraham.com/equity.html]

> The other factor is hype ... Easy to let your imagination go wild if you're an investor.

hype investment is a poor investment, unless you are looking to cheat the late comers to the 'hype', instead of looking to create value (in which case, the investor is a blood sucker, and should be hated).

Poor investments looses society wealth. In other words, it should not be that a hyped up fad of the month company garners more investment monies than a real, profitable company.

My guess is that Github wants to expand more aggressively (probably into enterprise) and extra cash will speed that up.

What does "[going] into enterprise" mean? Almost every fortune 500 company is using GitHub in some capacity. Isn't "[going] into enterprise" simply marketing jargon when you're talking about SaaS products like GitHub.

> What does "[going] into enterprise" mean?

Going into enterprise means more than having just a behind-the-firewall solution. Deploying code behind the firewall means that you are at the mercy of the customer's environment and have to be much more forgiving than running in an "opinionated" SaaS environment.

To wit, here is a laundry list of things you have to deal with for enterprise customers, and they all require time, money, and support.

+ Slower release cycle than SaaS - you may not be able to push updates to customer environments at will. They may require that they decide when to take updates, which means their codebase could be several months behind. (Not always, but it can happen).

+ Data & privacy laws, particularly for European customers. Do you love S3? A lot of companies don't, and governments especially don't. This means potentially rolling your own elastic file storage which must also be deployed behind the firewall.

+ You get into managing a cluster for the customer, not just a single instance.

+ Your software must fit the security scheme of the customer. In a SaaS environment, you typically have a great deal of control over the network topology. Behind the firewall, company policy may require that only certain ports be open. This might mean re-writing code to either serve a lot of protocols over port 80 or being on long support calls while people file tickets and wait for IT to punch open holes for you. (And then sometimes close them right back up, requiring you to repeat the cycle every time you deploy).

+ It's also not uncommon to have a dedicated team just for the enterprise customers, or even a dedicated team just for one enterprise customer. This requires hiring people who must be trained and brought up to speed. As I'm sure you're aware, engineer salaries are a big cost factor.

+ If time differences are too large or too inconvenient, you may need to hire people in other parts of the world. This means needing to comply with local laws and regulations. Which usually means hiring lawyers, additional HR people, etc.

The list goes on and on. Deploying for the enterprise can be much more involved than what you might think.

Well, there is a vast difference between "every fortune 500 company is using Github in some capacity" and "every fortune 500 company is paying for the Enterprise version of Github." I think it'd be an easy sell on a lot of companies, since, as you say, many of the developers are already using it. Heck, I even want to convince my company to get the Enterprise version of GitHub, but we're a non-profit and too small for it.

That still doesn't answer why you need to raise VC money. How does VC money add value to a company which already has an "enterprise" solution and is a known brand to almost all Fortune 500 companies? GitHub is already making a lot of money via cash flow and VC money will only make them beholden to outside interests. Stack Overflow tried to spin why they were raising money after spending years railing against VC-backed ventures. This seems to be a similar scenario.

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

Last week, I deployed the GitHub Enterprise product in the company I work for (SME, 500+ employees but only 20~ developers). Though the setup process was rather painless, any time I wanted support the only point of contact was an email address[1]. To make things more difficult, because I'm located in Australia the time difference meant most of the time I'd have to wait until the next day to get a reply.

I'd imagine VC would help them create much better support options for the enterprise (the company I'm at usually don't even consider products without commercial support), such as 24/7 local support, support contracts etc.

[1] enterprise@github.com

I should clarify, I'm speaking as it relates to raising capital; not on the existence of 24/7 support at a premium price point. It still seems to be a common theme where companies raise venture capital for the sake of "going into enterprise". There is a big difference between using cash flows to add 24/7 support and raising VC money. The downside of bringing in outside money seems to outweigh the quick cash infusion.

My suspicion is the founders are taking money off the table in a similar manner as 37signals did when they took money from Bezos Expeditions [Jeff Bezos]. Considering the fact that they're bootstrapped, profitable and growing like a weed it seems reasonable to sell a portion of the company to the greatest advisor [Marc Andreessen].

I've been to their offices just a couple months ago. Github is pretty small, there was literally just 7 people there when we went over (granted most work from home). If they want to expand, they need to hire people for sales and support. VC money seems reasonable for that.

I could see there being a need to bolster the payroll for a growth strategy and needing to temporarily bankroll it with outside funds.

"How is GitHub worth less than Pintrest?"

Markets aren't rational.

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:


"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."

If they're really looking to use the money to expand into Enterprise territory, I think it's a really different game.

I think the bootstrapped B2C game is ALL about saving money/not going broke. It's most accurately about making great decisions (it always is, at any level), but I think for what they were doing, that meant not spending. Their management/founders might have been great at that. I think it's very much an engineer's mentality, anyway.

However, B2B is a different animal, I think, and one that Tom Preston-Werner might not be geared to hunt -- at least not until someone turned him on to how much bigger GitHub could be. It's not cheap to get the attention of big companies, neither in pursuing them at all, nor in buying the people you need to pursue them -- engineers usually can't do this by themselves. You need veterans of _that_ game and it's a different game (at least from what I've seen).

1- Andreesen Horowitz isn't just any VC

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

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...

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?

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.

A friend recently tried to go for a github enterprise install at his >$1B market cap company. He really wanted it, they made it hard.

Some specific gripes included very slow support response time and poor options for installs (vm based only). There were others but it boiled down to the ops guys asked to set up and maintain the system weren't happy with the way they were treated.

I don't think 'going enterprise' is good for the culture of any company, but if they want to do it, they definitely have to kick up their game.

An important lesson to learn in dealing with enterprise is to make sure the decision makers are happy. They have to feel they're being taken care of and are in control.

Trying to win on purely technical merits won't work. Being unresponsive especially during an evaluation is the kiss of death.

You'd be surprised how big a small company can appear. And it's really all about appearances more than reality.

I worked for a smaller outfit that sold to enterprise sometimes directly and sometimes through larger partners (CA primarily). Except when we told them they had no idea of our size.

Github's support for Enterprise is atrocious at best.

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

There's also Kiln: http://www.fogcreek.com/kiln/

Disclaimer: I work at Fog Creek.

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.

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...

Microsoft-stack employees may soon be stuck with this:


Self hosted git using gitolite. But you won't get all that Jazz GUI/Web stuff.

You have to put a lot more on top of that: gitweb, authentication, authorisation, notifications, maybe other kinds of hooks. Granted gitolite supports it, but you have to write a bit of glue.

There's also the option of Gerrit which puts most of this in a single WAR (not gitweb, though as with gitolite the integration is documented), with a code review workflow on top.

git ;-)

Support and sales, if they're interested in growing (and why wouldn't they be?)

Instagram was worth $1 billion to Facebook, not in the abstract.

That's the problem: not millions, but a million (1.6). And there're not so many millions left (if any at all). While for Pinterest it's just the beginning.

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?

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.

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.

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

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

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

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..)

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.

Generally, to grow more quickly.

Where have they said they were against it? I think they are often held up as an exemplar of bootstrapping by other folks, but I don't recall too much from them directly either way.

They have plans to grow, which they need money for. If it was obvious they were just trying to cash out no VC would invest.

Agreed. I'm thinking they're looking to expand Github's services outside of "code".

You can do a little of both. I've seen companies do rounds that put cash in the founders pocket but still want to grow.

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.

Andreessen Horowitz is a GitHubber!

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.

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

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

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.

> Who cares?

It's not correct.

Because he's the only one with an AngelList profile.

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$.

Did they consider a loan?

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.

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

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

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?

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

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

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.

Presumably the founders are committed to growing the product line and potentially creating a new publicly traded developer tools company.

As far as I know GitHub is very profitable. I'm sure they have taken plenty of money off the table as dividends already.

They can sell some of their shares to private investors. A VC expects to earn many times their money on the investment... which requires dramatic and risky expansion of the business.

Private investors of all types have their own problems. Everyone from the local angel group to friends and family to private equity firms all have advantages and disadvantages.

A VC wants 10x, I see no better way to allow this than to let a founder take some money off the table and shoot for the moon.

As far as risk is concerned with expansion, as long as the founders and the VC want the same outcome I dont see what the big deal is with taking on more risk, particularly for founders with other peoples money. Even better after theyve taken money off the table!

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

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.

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

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.

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