3 ms·
I presume there’s a lot of companies out there paying GitHub very large sums to host all their private repos.
by madeofpalk 1mo ago
I presume there’s a lot of companies out there paying GitHub very large sums to host all their private repos.
- OJFord 1mo agoNo doubt. ...You can have non-zero revenue and still be loss-making though.
- conductr 1mo agoConversely, what suggests GitHub has a huge operating cost? Running a GitHub clone at their same scale as a customer on cloud pricing would likely be insane. But y’all know infra is actually quite cheap when you run it yourself right? It’s usually the case with these M&A deals that the profit just never quite makes sense to justify the purchase price, unless you can truly scale up the user base or revenue model. GitHub was already so mature as a solution when they bought it, I don’t know that they could have added that type of value just by slapping a Microsoft logo in the footer.
- boldlybold 1mo agoIt used to be, and buying a few servers was a cheap way to get off the cloud (if you can manage them efficiently). But with RAM and other costs these days... I've had to rethink it a lot.
- inigyou 1mo agoIt's at worst ten times as expensive as it should be. But AWS was already ten to a hundred times as expensive, so even in the computer parts crisis, self hosting is still ahead.
- boldlybold 1mo agoI agree for personal projects, do you still think buying hardware makes sense for business use case at the current time?
- otterley 1mo ago> what suggests GitHub has a huge operating cost? They just added 3 million CPU cores to the fleet. That’s a lot of cheddar.
- conductr 1mo agoAbsolute numbers aren’t useful in this analysis. We know capital is easily available for the expenditure. You have to consider it as a relative number to revenue or users otherwise big numbers always look scary.
- otterley 1mo agoI agree - however, I was responding to your direct question about whether GitHub's operating cost was high, and there's some data that suggests that it is!
- conductr 1mo agoIf this is one of their major expenses and only represents 5% of annual revenue, it’s not. Often SaaS companies can run at 90%+ gross margins even with a highly utilized free user tier. Their selling expenses and labor/opex and SG&A run rates can be all over the map but these are extremely controllable and represent the operating strategy being executed more than the cost of service.
- otterley 1mo agoWould you say that the operating cost of running an airline is high or low?
- conductr 1mo agoI don’t know that industry as well. But I can look at it through a similar lens and would guess that it’s high. I say that because every thing that goes into the service is expensive. Large capital expenses (planes, probably a lot I don’t even know about), large variable operating costs (fuel, flight specific labor, airport fees, and all the other stuff that is required for every flight). A large portion of their expenses scale with revenue. Meanwhile, there is high revenue pressure (customers are price sensitive and competition is fierce and often a direct substitute). SaaS is inherently more scalable than practically any other business/industry. Comparing to an industry that is exceedingly financially constrained, often to the point of requiring government subsidies, is frankly a bit silly if you’re trying to make any point here. Let’s also look at it from a risk of growth perspective to highlight how different things are. If GitHub invests in a new server/rack/datacenter to support growth it likely breaks even once it’s at <20% capacity (or could, lots of variables). Even if it takes longer than they expected to use the new capacity it’s not too big of a deal. The unused part is bought but can be powered down until needed. So it’s not burning a hole in their P&L. However, what does an airline have to do to rollout service to a new city? They need to buy new planes, sign contracts with the new airport, hire pilots and crew, launch a marketing campaign informing customers to generate demand, and probably some other sunk costs. Once service begins, they want to be at full capacity immediately. They can’t power down 80% of fuel or labor. It will burn cash until they reach a much higher utilization rate. Closing the city is a major public failure for the airline that will be discussed in media, among customers, and could easily lose people their jobs. It’s very risky in comparison is my point.