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> 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

> How is GitHub worth less than Pinterest? I'll speculate. Github's fighting a losing game. They are trying to charge for something they are also giving away for free, and their target market is people who are uniquely qualified to replace them. There are plenty of quality Github alternatives around right now. To stay on top they have to continue to be at the forefront development-wise and they have to continue to have the majority of developer attention to reap the network effects. It's precarious. Compare to Pinterest. They make money, ostensibly, from every product someone pins. People pin lots of products, and the people doing the pinning and the browsing have higher conversion rates than people browsing Google or other sites looking for things to spend money on. Pinterest is also a brand; it will be hard to get everyone using Pinterest to switch just because a better version exists somewhere else. People can collaborate with Git without using Github; the only tangible loss is the pull request feature. It takes Pinterest less work to convert a byte of bandwidth into profit. Not only do they need less development effort moving forward, they also stand better odds of making money on some random user.

patio11 14y ago
If Github is losing sign me up for some of that please.
- drx 14y ago
  Exactly what pops into my mind when people say things like that.
- fusiongyro 14y ago
  I'm not saying they're losing, I'm saying they're fighting a losing game.
  - cracell 14y ago
    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?
ThomPete 14y ago
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.
- etrain 14y ago
  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.
adventureful 14y ago
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.
- raarky 14y ago
  have you heard of affiliate links? you can make a good deal of money from them
  - adventureful 14y ago
    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.
- taligent 14y ago
  If you can't think of ways Pinterest can make money then you simply lack creativity. There are plenty.
  - patrickod 14y ago
    Would you care to elaborate on how you think Pintrest will make a suitable amount of profit to fit its evaluation?
    - lachyg 14y ago
      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.
smiler 14y ago
Please link to all these quality Github alternatives? I haven't seen anything which comes close.
- njs12345 14y ago
  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.
  - kristianc 14y ago
    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.
  - bad_user 14y ago
    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.

patio11 14y ago

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

drx 14y ago
Exactly what pops into my mind when people say things like that.
fusiongyro 14y ago
I'm not saying they're losing, I'm saying they're fighting a losing game.
- cracell 14y ago
  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?

ThomPete 14y ago

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.

etrain 14y ago
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.

adventureful 14y ago

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.

raarky 14y ago
have you heard of affiliate links? you can make a good deal of money from them
- adventureful 14y ago
  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.
taligent 14y ago
If you can't think of ways Pinterest can make money then you simply lack creativity. There are plenty.
- patrickod 14y ago
  Would you care to elaborate on how you think Pintrest will make a suitable amount of profit to fit its evaluation?
  - lachyg 14y ago
    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.

smiler 14y ago

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

njs12345 14y ago
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.
- kristianc 14y ago
  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.
- bad_user 14y ago
  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.