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.
- 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.
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.
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.
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)
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]
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).
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.
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.
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.
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.
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.
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.
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?
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
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.
[+] [-] hemancuso|14 years ago|reply
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|14 years ago|reply
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.
[+] [-] SeoxyS|14 years ago|reply
- 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.
[+] [-] dlokshin|14 years ago|reply
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.
[+] [-] fusiongyro|14 years ago|reply
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.
[+] [-] drusenko|14 years ago|reply
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.
[+] [-] nl|14 years ago|reply
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)
[+] [-] jmonegro|14 years ago|reply
[+] [-] petercooper|14 years ago|reply
[+] [-] vm|14 years ago|reply
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]
[+] [-] dave1619|14 years ago|reply
[+] [-] raarky|14 years ago|reply
Markets aren't rational.
[+] [-] abraham|14 years ago|reply
[+] [-] markerdmann|14 years ago|reply
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."
[+] [-] Nate75Sanders|14 years ago|reply
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).
[+] [-] danielharan|14 years ago|reply
2- They already avoided most of the problems of VCs by getting to profit.
[+] [-] ricardobeat|14 years ago|reply
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|14 years ago|reply
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.
[+] [-] natrius|14 years ago|reply
[+] [-] kika|14 years ago|reply
[+] [-] gojomo|14 years ago|reply
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|14 years ago|reply
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|14 years ago|reply
[+] [-] jonursenbach|14 years ago|reply
[+] [-] joshu|14 years ago|reply
[+] [-] tosh|14 years ago|reply
* 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|14 years ago|reply
[+] [-] snprbob86|14 years ago|reply
[+] [-] endlessvoid94|14 years ago|reply
[+] [-] lancepantz|14 years ago|reply
[+] [-] dwynings|14 years ago|reply
[+] [-] ya3r|14 years ago|reply
As many has said it, Github > Instagram + Pinterest. I would say at least 5B$.
[+] [-] adrianwaj|14 years ago|reply
[+] [-] obtu|14 years ago|reply
[+] [-] almightygod|14 years ago|reply
[+] [-] ConstantineXVI|14 years ago|reply
[+] [-] wavephorm|14 years ago|reply
[+] [-] noahc|14 years ago|reply
[+] [-] culo|14 years ago|reply
Enjoy: http://www.youtube.com/watch?v=T4VtBcmbbSs
[+] [-] goronbjorn|14 years ago|reply
[+] [-] Oompa|14 years ago|reply