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I have to imagine that a chunk of that money is to provide liquidity to the founders, which they very much deserve. I don't really see how this is a bad thing.

• eoghan 14y ago
  Totally. This is a great deal for everyone. The founders (probably) achieve some liquidity, the company gets to expand up and out in the market, with the guidance of some of the most experienced investors in the business, the customers get see more resources put towards what is now a very large product, and the investors get to ride the wave that I think will see GitHub reach a few billion dollars valuation.
• hollerith 14y ago
  >I have to imagine that a chunk of that money is to provide liquidity to the founders That helps explain why the founders sold the equity, but not why the VCs bought it.
  • taligent 14y ago
    Really ? Company with a proven modal, proven team, proven management and a massive growth opportunity (company hosted Github).
    • hollerith 14y ago
      I did not consider the growth opportunity represented by the enterprise market. Sorry for being dense! (I considered deleting my comment, but my hand was stayed by its having gotten an upvote.)
• atirip 14y ago
  "I don't really see how this is a bad thing." They were independent and profitable company. Now they are virtally deep in debt. Everything they do now will be focused on one thing only - how to pay back that debt. They have people on board who's only goal is to get that loan back in multiples. Every decision from now on will be waged against the question "will it pay back the loan". Independency is lost, now we have company in deep dept, doing desperate things to pay it back. Desperate people in desperate situations make desperate decisions... Yes, founders maybe took some money off he table, that's good for them, no question. But the company is now troubled.
  • bcambel 14y ago
    I think you're not talking about GitHub. Because I see A company which started from zero, revolutionized SCS, socialized coding. Makes a lot of cash, not from advertisement, but from an actual useful product. A Product that people love to use. I think A16Z is a very clever firm that invested in a very solid product. GitHub has 102 employees. Which means they're already paying around $10M wage in a year and they're profitable. I bet they're at least making $20M per year right now. They're going after the enterprise market which would make them much much more cash. Do the math. Is it really hard to pay that money back in a company like this ? Is AirBnB, Dropbox, Evernote in trouble ? Github is not troubled.
    • abalashov 14y ago
      $10M/year in wage? That would imply $100k per employee per annum. I understand that it was just a budgetary figure, and I understand the premium that employer-side payroll taxes and benefits add - it is very non-trivial. Still, do you suppose the median wage at GitHub is that high? For everyone? Salespeople, receptionists, accounts payable clerks? Are you sure? I should hope they are spending a good bit less on payroll, even gross and with overhead.
      • infinite8s 14y ago
        Yes. 100k for developers is definitely on the low end (not even including overhead), and for others it might be on the high end, so assuming most of their employees are developers, 10M is a pretty low estimate of their payroll.
        • abalashov 14y ago
          I would be very surprised if most of their staff were developers.
      • bcambel 14y ago
        No I am not sure and that's not the point...
    • deleted 14y ago