> With 0 dollars, a couple of guys built something amazing. I can't wait to see what they can do with 100 million.
Since substantial funding wasn't a contribution to their first success, nor apparently even their goal, there's no reason to expect that throwing money at them would lead to something even more amazing.
Except that virtually every big company that we admire has successfully used the cash that they've raised to build awesome things that they otherwise couldn't have afforded without considerable risk or years of building up a war chest.
Cash is a tool. Disciplined companies CAN use cash intelligently.
Sometimes some cash can help you execute faster on the plan you already have. As illustrated by the scene form "The Social Network" where Zuckerberg says he wants to expand to 100 schools, and Parker says "'I'll put you on two continents."
So, with this $100M, they can really dominate the code hosting market?
There's a reasonable case to be made that they're either going to or already dominate the code hosting market anyways, depending on how big you define it. The only way $100M makes sense is if they're expanding into one or multiple other things.
Well, a natural focal point is enterprise. I could imagine (this is pure speculation) that there are a number of fairly cumbersome features holding back some large enterprise customers, but which has been de-prioritized in favor of the cloud product where gains are more immediate and viral. In general, there are probably many teams holding back on GitHub because of some missing feature which didn't make sense to build while they were bootstrapped.
And then, yes, there's expanding into adjacent verticals. They're already there with wikis and issue tracking, so it's not a virgin territory strategy.
I agree with your assessment. Deploying into enterprise takes a good chunk of money to deal with the countless "last mile" issues. Also, you start needing an enterprise sales team. Even if you use the Atlassian model, there's limited space for that now, because they were basically expanding into vacuum. I don't have a great sense of how big the available market is for "enterprise development management tools", but if Github wants to win there, it's going to have to put some marketing & sales resources into taking away mindshare from Atlassian.
Thinking too small - for a $100M raise to make sense, valuation has to be $1B or higher, and need a 10x total market for VCs to be interested. So $10B to $100B is the target, and they need very large goals to justify it.
[Edit - I guessed $1B-$10B valuation; WSJ says unnamed source cites $750M. If true, congratulations to A16Z, they got a steal.]
Most of github's mission is removing friction in collaboration around code.
Following this theme, likely expansions: removing transactional overhead to add liquidity to the development market ( http://en.wikipedia.org/wiki/Coase_theorem ) which is badly inelastic in the face of great demand. Less audacious, they may just domainate the recruiting market.
Still on the theme, continuing to push on the need to colocate to be productive - online editing, tools in support of code review, user testing, in-app feedback, platform building/distribution.
Build farms, integration tooling, and support markets also seem plausible but more difficult to see (in the current market) how they could get sufficient uptake to justify the target valuation.
One more, less optimistic: IP/patent/code provenance - lots of money attached to those things.
Not sure why an enterprise would want to host their source code at a separate company when it is just as easy to host their own source control system (git, mercurial, tfs, whatever) with their other cloud services (S3, Azure). I do not think enterprises see their source as a "social" connection, and do not see any benefit to thinking of it as such.
1: GitHub Enterprise is an internally hosted solution. They currently distribute it as a VM image.
2: GitHub >>> git
3: Enterprises very much love social in anything they do, they just call it collaboration. See Sharepoint. Also, the pressure from within to use something like GitHub is only going to increase as new hires have experience with it from the outside.
I do not follow this logic. They have enormously succeeded from the moment of Github's inception to this point. Does it not make sense to invest in them if they believe they can utilize new capital to expand their platform?
In any case the money believes in them. And they are already vetted.
They've never been a capital-intensive business, so it doesn't make great sense to invest substantial sums. Its more likely to change the business to one focused on maximizing profit, rather than improve the product.
Try the analogy where a startup is like a band (I'm not the first to use this). After the band sells out, do you expect better music? As the cliche goes, their artistic integrity is compromised, the members start in-fighting, and the lead singer grows increasingly strung-out on fame and drugs.
If anything, innovation on their product is going to speed up with the funding, then slow down because they hire a ton of engineers who need to be ramped. Then they will plateau.
With funding comes expectations. Github has never had to answer to anyone but their community and customers (and their board, but the board had no real monetary stake in the company outside of stock). Now A16Z has some control over their operations. Not sure what their terms were in the deal, but investment and board members change how a company operates.