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https://siliconangle.com/2024/06/03/gitlab-delivers-strong-earnings-beat-raises-guidance-investors-unimpressed/#:~:text=That%20earnings%20beat%20came%20on,to%20

https://siliconangle.com/2024/06/03/gitlab-delivers-strong-earnings-beat-raises-guidance-investors-unimpressed/#:~:text=That%20earnings%20beat%20came%20on,to%20profitability%2C%20instead%20going%20backwards https://siliconangle.com/2024/06/03/gitlab-delivers-strong-e.... Looks like they aren't profitable, they lack a real moat. Literally anyone can just spin up a competing service. I'm actually surprised GitHub/Microsoft hasn't eaten their lunch yet. Gitlab used to have a firm advantage in terms of build runners, but GitHub Actions have been out for a while. I strongly suspect GitHub loses money ( of course you pay in other ways, wouldn't surprise me if GitHub actively blocks other LLMs from scrapping public repos while allowing co pilot to.). How can anyone compete against a trillion dollar company that's fine with subsidizing an unprofitable business line? Ultimately I don't think Gitlab or anything like it can hope to actually make money. I'm open to being wrong through.

Uvix 2y ago
GitHub certainly isn’t making money on their open source hosting, but that’s what the enterprise side is for.
- guappa 2y ago
  I doubt it actually makes money there either.
lucideer 2y ago
> I'm actually surprised GitHub/Microsoft hasn't eaten their lunch yet. It's not for lack of trying. GitHub are aggressively pursuing the enterprise market from a sales perspective but there's been three problems with their approach: 1. They're pushing SaaS over on-prem: enterprise services in general are trending this way, but it only really works when you're in a dominant position - like e.g. Atlassian - when you're competing it's going to leave you with less leverage with potential clients. 2. They're leaning very heavily on AI - this is a double-edged sword as it's currently selling well to clients as a pitch but anyone doing functional evaluations is looking at benchmarks & it's not really mature enough to deliver there. 3. They're iterating really slowly on their roadmap. This seems to be GitHub's (not Microsoft's) typical approach, which I'm honestly a big fan of, but when you're entering a market with existing mature players it's going to slow down sales. I do think GitHub will ultimately take over - it'll just happen slower than expected.
- nicce 2y ago
  > They're pushing SaaS over on-prem You can perfectly run, identical, self-hosted version of GitHub on premise? Maybe sales is focusing SaaS, but otherwise, there isn't difference?
  - jjayj 2y ago
    I run an on-prem GitHub server. New features come 6-18+ months behind Cloud for the most part, our reps are always trying to get us to move to Cloud, and new features are often broken for weeks/months even after being released for on-prem.
    - 999900000999 2y ago
      I might be out of my element, but if your trying to run on prem anyway, why not just go full open source and self host?
      - lucideer 2y ago
        Subjective take: GH & GL are equally bad when it comes to bundled enterprise features, so the differentiator is going to be individual dev features & UX/DX. GH is much better at the latter - CICD might've been a differentiator in the past for GL but even before Actions a lot of companies were pretty happy going 3P here.
      - pixl97 2y ago
        I would assume they are running it for a company, in which if said user gets hit by a bus you want to be able to bring someone else in quickly that can run the operation.
      - jjayj 2y ago
        We have looked at GitLab in the past, but I wasn't involved in that process. Generally though: - Enterprise support is very important to us - Migrating thousands of repos and training hundreds of devs to use a new VCS is a huge and expensive task - We have custom integrations with GitHub that would need to be rewritten as well
jpalomaki 2y ago
>How can anyone compete against a trillion dollar company that's fine with subsidizing an unprofitable business line? It sounds like impossible, but it's not always. Sometimes large companies loose the focus and become slow. There can be multiple competing products and teams are prevented from building the best product in order to not interfere more profitable business. Microsoft for example has both GitHub and Azure DevOps. One example of how the infinite resources do not always help. Year ago GitHub decided not proceed with adding support for Python packages in GitHub packages. "This is no longer planned due to a change in our strategic priorities and the allocation of our resources towards higher-priority initiatives." [1] [1] https://github.com/github/roadmap/issues/94#issuecomment-1581086839 https://github.com/github/roadmap/issues/94#issuecomment-158...
- nicce 2y ago
  > Microsoft for example has both GitHub and Azure DevOps. Not sure what you meant, but this is indeed visible in GitHub, maybe in positive way. GitHub Runners are specifically coded with C# and ASP.NET Core and designed to be used on Azure, while not limited so. Maybe the adaption of current GitHub Actions would not happened so efficiently without this.
- everfrustrated 2y ago
  >Microsoft for example has both GitHub and Azure DevOps. GitHub's Actions product was a rebrand of the Azure DevOps product. It wouldn't exist otherwise.
frognumber 2y ago
I think you are wrong. Not having a moat is a business model and a competitive advantage, and one which works well. As a customer, it gives me confidence that, if gitlab (or any similar company) screws up, I can host it myself. I go for open source precisely due to the lack of a moat. That's what most open models rely on. 1) Hosted services are cheaper than running it myself, once I include staff time, so by default, I will go to the source vendor. 2) Even if there's a cheaper alternative, I'll gladly pay e.g. 50% more to go to the organization which wrote / maintains the product. Many companies just aren't that price-sensitive. If you pay $200k for a SWE, is saving $100/year worth it to go for gitlabknockoff.com instead of gitlab.com? Most big organizations wouldn't. The risk only comes in if gitlabknockoff was AWS, Azure, or GCP, which we're still learning what to do about. 3) There is a shallow moat in the forms of things like brand recognition, canonical URLs, etc. If you're comfortable with e.g. a <100% profit margin, open models do just fine. Open models just mean you can't have a 10,000% markup or do an Oracle-style milking of customers. As a customer, that's why I pick open models. Open models also mean I'm not SOL if you go out-of-business. The friction comes in with a lot of hybrid models. Most things between open and proprietary don't work well. Datadog + gitlab are on opposite sides of this divide, and I don't see that working well.
- 999900000999 2y ago
  >. If you pay $200k for a SWE, is saving $100/year worth it to go for gitlabknockoff.com instead of gitlab.com? Arguably Gitlab sounds like a GitHub knockoff, although it's actually more expensive. No moat plus a clear dominant competitor. Now it's possibly Gitlab could still be a smaller player, but they'd probably have to accept a much lower valuation and trim costs.
  - frognumber 2y ago
    I think the key bug in gitlab is exactly that: out-of-control costs. One of the key things about moatless models is you do need to keep costs under control. Gitlab has 2,268 employees. That's probably an order-of-magnitude more than they need. With 226.8 employees, they would be wildly profitable. Now, once you take on employees, it's very, very hard to shrink. It takes a lot of disciplines not to overgrow workforce. So I'm not suggesting layoffs or anything specific to fix it. Regarding costs: Gitlab is $29/month. Github is $21/month (or $4/month). * If you're spending $200k on an employee, is it really worth saving $300 or whatever per year on tooling? Any difference in productivity will far overwhelm that. * If a devops employee runs $200k per year, are you going to "host your own" to "save" a few grand? Much of the market simply doesn't care about pennies, and bottom-feeders aren't super-profitable in either case. Bottom-feeders can be important from a network effects perspective, but for profit, going for the high-margin makes a lot of sense. Honestly, I have no idea how I'd value gitlab; that's another story. But all else being equal, I'll pick open-source over proprietary. That is a competitive advantage over github.
rsp1984 2y ago
Counterargument: Atlassian offers a very similar product and is worth $50B. Of course they've got JIRA but everybody hates it. GitLab (or whoever ends up buying it) could acquire Linear.app for example and eat Atlassian's lunch.
llamaLord 2y ago
As the person who runs one of the largest cloud CI/CD services around, I can tell you exactly how they're making money... Actions. GitHub would be making a VERY healthy margin on every minute of build time run on their platform, especially considering they don't have to pay a cloud platform for the compute like Gitlab or Bitbucket Pipelines do.
- deleted 2y ago
  [deleted]
- Aeolun 2y ago
  Running an amazon instance is around 10x cheaper than using an equivalent action runner. But for 99% of people it doesn’t matter because their usage never goes over the free allowance anyway.
  - llamaLord 2y ago
    You'd be surprised actually. Once you factor in network costs, running your own on AWS is only ~50% cheaper than paying for SaaS. Factor in the opportunity cost you pay by having to have a person manage a self-hosted CI/CD cluster rather than outsourcing it, and SaaS CI/CD is around 3x better value than self-hosted. Happy to share more detailed numbers if people are curious...
Jochim 2y ago
Gitlab's biggest issue has always been their ridiculous approach to pricing. It simply isn't worth paying ~20-30x more per developer than comparable tools. Feature segmentation can be entirely reasonable. However, gating something like "linking epics"[0] behind what used to be $99/month/user (now POA) is pure hubris. [0] https://docs.gitlab.com/ee/user/group/epics/linked_epics.html https://docs.gitlab.com/ee/user/group/epics/linked_epics.htm...
- apple4ever 2y ago
  > Gitlab's biggest issue has always been their ridiculous approach to pricing. Yes it has been. They literally refuse to take money and be smart about it. For example, all users must be licensed at the same level. So if you have the $99 / month level, and want people to just edit the wiki, it's the same price. Instead of a much cheaper price. So instead of people doing that and them making more money, people just say "nah" and they lose money. It's utterly ridiculous.
bdcravens 2y ago
In lieu of a moat, they've always relied on going to social media to say "but we did it first!" when a feature was "copied" by Github, which is retrospective isn't very effective.
smsm42 2y ago
> Literally anyone can just spin up a competing service. I don't think it's true, except in a very reductive meaning of "there's no legal or physical barrier to somebody making a competing service", which is true for most of the existing services. But making a repo service is much harder than just spinning up a git server. It's the surrounding UX story that makes it work - or doesn't. And anybody who uses these tools professionally would gladly pay for the low-friction UX that allows to remove handling of repos, permissions, builds, teams, CI/CD and all that from the list of worries. It's not easy to build such a system that works. It's not impossible - especially for the trillion-sized giants - but also trillion-sized giants repeatedly failed at projects like that (e.g. Google and social media) so there's a real niche for a company that does the right thing the right way, even without an impenetrable moat.
apple4ever 2y ago
> Ultimately I don't think Gitlab or anything like it can hope to actually make money. Oh they can absolutely make money. Stop chasing enterprise dollars which is always hard. Start chasing hobbyists and small to medium sized business. Let people pay money for what they use. They could make a KILLING with small dollars. But that doesn't sell IPOs and get you bought out.

Uvix 2y ago

GitHub certainly isn’t making money on their open source hosting, but that’s what the enterprise side is for.

guappa 2y ago
I doubt it actually makes money there either.

lucideer 2y ago

> I'm actually surprised GitHub/Microsoft hasn't eaten their lunch yet. It's not for lack of trying. GitHub are aggressively pursuing the enterprise market from a sales perspective but there's been three problems with their approach: 1. They're pushing SaaS over on-prem: enterprise services in general are trending this way, but it only really works when you're in a dominant position - like e.g. Atlassian - when you're competing it's going to leave you with less leverage with potential clients. 2. They're leaning very heavily on AI - this is a double-edged sword as it's currently selling well to clients as a pitch but anyone doing functional evaluations is looking at benchmarks & it's not really mature enough to deliver there. 3. They're iterating really slowly on their roadmap. This seems to be GitHub's (not Microsoft's) typical approach, which I'm honestly a big fan of, but when you're entering a market with existing mature players it's going to slow down sales. I do think GitHub will ultimately take over - it'll just happen slower than expected.

nicce 2y ago
> They're pushing SaaS over on-prem You can perfectly run, identical, self-hosted version of GitHub on premise? Maybe sales is focusing SaaS, but otherwise, there isn't difference?
- jjayj 2y ago
  I run an on-prem GitHub server. New features come 6-18+ months behind Cloud for the most part, our reps are always trying to get us to move to Cloud, and new features are often broken for weeks/months even after being released for on-prem.
  - 999900000999 2y ago
    I might be out of my element, but if your trying to run on prem anyway, why not just go full open source and self host?
    - lucideer 2y ago
      Subjective take: GH & GL are equally bad when it comes to bundled enterprise features, so the differentiator is going to be individual dev features & UX/DX. GH is much better at the latter - CICD might've been a differentiator in the past for GL but even before Actions a lot of companies were pretty happy going 3P here.
    - pixl97 2y ago
      I would assume they are running it for a company, in which if said user gets hit by a bus you want to be able to bring someone else in quickly that can run the operation.
    - jjayj 2y ago
      We have looked at GitLab in the past, but I wasn't involved in that process. Generally though: - Enterprise support is very important to us - Migrating thousands of repos and training hundreds of devs to use a new VCS is a huge and expensive task - We have custom integrations with GitHub that would need to be rewritten as well

jpalomaki 2y ago

>How can anyone compete against a trillion dollar company that's fine with subsidizing an unprofitable business line? It sounds like impossible, but it's not always. Sometimes large companies loose the focus and become slow. There can be multiple competing products and teams are prevented from building the best product in order to not interfere more profitable business. Microsoft for example has both GitHub and Azure DevOps. One example of how the infinite resources do not always help. Year ago GitHub decided not proceed with adding support for Python packages in GitHub packages. "This is no longer planned due to a change in our strategic priorities and the allocation of our resources towards higher-priority initiatives." [1] [1] https://github.com/github/roadmap/issues/94#issuecomment-1581086839 https://github.com/github/roadmap/issues/94#issuecomment-158...

nicce 2y ago
> Microsoft for example has both GitHub and Azure DevOps. Not sure what you meant, but this is indeed visible in GitHub, maybe in positive way. GitHub Runners are specifically coded with C# and ASP.NET Core and designed to be used on Azure, while not limited so. Maybe the adaption of current GitHub Actions would not happened so efficiently without this.
everfrustrated 2y ago
>Microsoft for example has both GitHub and Azure DevOps. GitHub's Actions product was a rebrand of the Azure DevOps product. It wouldn't exist otherwise.

frognumber 2y ago

I think you are wrong. Not having a moat is a business model and a competitive advantage, and one which works well. As a customer, it gives me confidence that, if gitlab (or any similar company) screws up, I can host it myself. I go for open source precisely due to the lack of a moat. That's what most open models rely on. 1) Hosted services are cheaper than running it myself, once I include staff time, so by default, I will go to the source vendor. 2) Even if there's a cheaper alternative, I'll gladly pay e.g. 50% more to go to the organization which wrote / maintains the product. Many companies just aren't that price-sensitive. If you pay $200k for a SWE, is saving $100/year worth it to go for gitlabknockoff.com instead of gitlab.com? Most big organizations wouldn't. The risk only comes in if gitlabknockoff was AWS, Azure, or GCP, which we're still learning what to do about. 3) There is a shallow moat in the forms of things like brand recognition, canonical URLs, etc. If you're comfortable with e.g. a <100% profit margin, open models do just fine. Open models just mean you can't have a 10,000% markup or do an Oracle-style milking of customers. As a customer, that's why I pick open models. Open models also mean I'm not SOL if you go out-of-business. The friction comes in with a lot of hybrid models. Most things between open and proprietary don't work well. Datadog + gitlab are on opposite sides of this divide, and I don't see that working well.

999900000999 2y ago
>. If you pay $200k for a SWE, is saving $100/year worth it to go for gitlabknockoff.com instead of gitlab.com? Arguably Gitlab sounds like a GitHub knockoff, although it's actually more expensive. No moat plus a clear dominant competitor. Now it's possibly Gitlab could still be a smaller player, but they'd probably have to accept a much lower valuation and trim costs.
- frognumber 2y ago
  I think the key bug in gitlab is exactly that: out-of-control costs. One of the key things about moatless models is you do need to keep costs under control. Gitlab has 2,268 employees. That's probably an order-of-magnitude more than they need. With 226.8 employees, they would be wildly profitable. Now, once you take on employees, it's very, very hard to shrink. It takes a lot of disciplines not to overgrow workforce. So I'm not suggesting layoffs or anything specific to fix it. Regarding costs: Gitlab is $29/month. Github is $21/month (or $4/month). * If you're spending $200k on an employee, is it really worth saving $300 or whatever per year on tooling? Any difference in productivity will far overwhelm that. * If a devops employee runs $200k per year, are you going to "host your own" to "save" a few grand? Much of the market simply doesn't care about pennies, and bottom-feeders aren't super-profitable in either case. Bottom-feeders can be important from a network effects perspective, but for profit, going for the high-margin makes a lot of sense. Honestly, I have no idea how I'd value gitlab; that's another story. But all else being equal, I'll pick open-source over proprietary. That is a competitive advantage over github.

rsp1984 2y ago

Counterargument: Atlassian offers a very similar product and is worth $50B. Of course they've got JIRA but everybody hates it. GitLab (or whoever ends up buying it) could acquire Linear.app for example and eat Atlassian's lunch.

llamaLord 2y ago

As the person who runs one of the largest cloud CI/CD services around, I can tell you exactly how they're making money... Actions. GitHub would be making a VERY healthy margin on every minute of build time run on their platform, especially considering they don't have to pay a cloud platform for the compute like Gitlab or Bitbucket Pipelines do.

deleted 2y ago
[deleted]
Aeolun 2y ago
Running an amazon instance is around 10x cheaper than using an equivalent action runner. But for 99% of people it doesn’t matter because their usage never goes over the free allowance anyway.
- llamaLord 2y ago
  You'd be surprised actually. Once you factor in network costs, running your own on AWS is only ~50% cheaper than paying for SaaS. Factor in the opportunity cost you pay by having to have a person manage a self-hosted CI/CD cluster rather than outsourcing it, and SaaS CI/CD is around 3x better value than self-hosted. Happy to share more detailed numbers if people are curious...

Jochim 2y ago

Gitlab's biggest issue has always been their ridiculous approach to pricing. It simply isn't worth paying ~20-30x more per developer than comparable tools. Feature segmentation can be entirely reasonable. However, gating something like "linking epics"[0] behind what used to be $99/month/user (now POA) is pure hubris. [0] https://docs.gitlab.com/ee/user/group/epics/linked_epics.html https://docs.gitlab.com/ee/user/group/epics/linked_epics.htm...

apple4ever 2y ago
> Gitlab's biggest issue has always been their ridiculous approach to pricing. Yes it has been. They literally refuse to take money and be smart about it. For example, all users must be licensed at the same level. So if you have the $99 / month level, and want people to just edit the wiki, it's the same price. Instead of a much cheaper price. So instead of people doing that and them making more money, people just say "nah" and they lose money. It's utterly ridiculous.

bdcravens 2y ago

In lieu of a moat, they've always relied on going to social media to say "but we did it first!" when a feature was "copied" by Github, which is retrospective isn't very effective.

smsm42 2y ago

> Literally anyone can just spin up a competing service. I don't think it's true, except in a very reductive meaning of "there's no legal or physical barrier to somebody making a competing service", which is true for most of the existing services. But making a repo service is much harder than just spinning up a git server. It's the surrounding UX story that makes it work - or doesn't. And anybody who uses these tools professionally would gladly pay for the low-friction UX that allows to remove handling of repos, permissions, builds, teams, CI/CD and all that from the list of worries. It's not easy to build such a system that works. It's not impossible - especially for the trillion-sized giants - but also trillion-sized giants repeatedly failed at projects like that (e.g. Google and social media) so there's a real niche for a company that does the right thing the right way, even without an impenetrable moat.

apple4ever 2y ago

> Ultimately I don't think Gitlab or anything like it can hope to actually make money. Oh they can absolutely make money. Stop chasing enterprise dollars which is always hard. Start chasing hobbyists and small to medium sized business. Let people pay money for what they use. They could make a KILLING with small dollars. But that doesn't sell IPOs and get you bought out.