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Is it actually a good business model, though? My understanding is GitHub is not profitable, and relies on VC funding to keep operating. At this point it seems l

by eridius 12y ago

Is it actually a good business model, though? My understanding is GitHub is not profitable, and relies on VC funding to keep operating. At this point it seems like it will never be profitable unless they find some other significant source of income (as there's no reason to believe that there's hordes of companies out there just waiting to start paying GitHub for private repos). What's going to happen when the VC funding dries up?

chrismorgan 12y ago
In August 2010: https://signalvnoise.com/posts/2486-bootstrapped-profitable-proud-github https://signalvnoise.com/posts/2486-bootstrapped-profitable-.... That might imply that at that time at least GitHub was profitable? I have no knowledge one way or another.
- eridius 12y ago
  GitHub took VC funding in 2012. $100M from Andreessen Horowitz and SV Angel. I have no direct knowledge about their revenue stream, but profitable companies don't usually seek VC funding, and I've heard from other people (who may or may not actually know what they're talking about) that they're not profitable and are relying on the VC funding to operate. And they're certainly spending money like it's not their own. Check out their ridiculous office: https://customspaces.com/office/DhXb6EKlE9/github-office-san-francisco/ https://customspaces.com/office/DhXb6EKlE9/github-office-san.... And that bar. That's "we're spending VC money" behavior, not "we're spending our own revenue" behavior.
  - e98cuenc 12y ago
    Their offices are not that different from Google's por AirBnB's, which are definitely profitable. Taking VC's money is usually a sign of a company that wants to grow faster or want something else the VC may bring to the table (connections, expertise, ...) I have no idea if they are profitable or not, but your comment seems to be based entirely on heresay.
slgeorge 12y ago
I think it's a hard business model that's for sure. Most people here think that Freemium works because you have Open Source developers who have 'day jobs' which means they'll be more likely to buy the private services. That's a bit of a stretch because it's mostly development managers who choose the development tools at any reasonable size company and they have a lot of other concerns. There's also a scaling issue in model. A flat fee for a repository doesn't go much of a way towards paying for the total cost of developing and delivering a complete web platform where your costs scale by number of developers and infrastructure. The major thing in Githubs favour is they are now the place for Open Source development so they have other revenue opportunities. I can imagine good revenue opportunities with large partners (e.g Microsoft) that want to reach out to developers: separately their large database of developers is a big asset for other services. Presumably, the VC money is predicated on new revenue streams over time.
- eridius 12y ago
  I general, I agree with you. But I am concerned about their long-term profitability. Assuming that what I've been told is correct and they are relying on VC funding to operate, what happens when it dries up? There are indeed revenue opportunities with large partners, but who knows if that will ever actually pan out? I'm also a little skeptical about their ability to work with a large partner. I was told recently by an employee at a large tech firm (please forgive my vagueness) that said tech firm looked into using GitHub internally. But GitHub Enterprise was not suitable (it doesn't scale), and GitHub was hostile to the idea of providing a solution that did scale. This technology company needed a solution like the one that github.com uses (since that obviously scales) except completely in-house (like GutHub Enterprise). And they probably would have paid a rather absurd amount of money for it. But GitHub said no. I'm relating this story because it feels to me like GitHub's culture is such that they can't "play ball" with large companies that need custom solutions. Enterprise may be a fine product but it apparently is only suitable for small-to-medium businesses (I gather that it basically can only run on one server and so can't scale for a large deployment, though I haven't personally investigated the matter). My fear is that, assuming they are relying on VC funding to operate, in 5 years they'll run out of money and start shopping around for some large company to acquire them. Addendum: I really hope I'm wrong and that they are profitable. I want GitHub to stick around for a long time. Who knows, maybe they only took VC funding because they thought it was worth giving up a portion of the company in order to afford swanky new offices?

by eridius 12y ago

chrismorgan 12y ago

In August 2010: https://signalvnoise.com/posts/2486-bootstrapped-profitable-proud-github https://signalvnoise.com/posts/2486-bootstrapped-profitable-.... That might imply that at that time at least GitHub was profitable? I have no knowledge one way or another.

eridius 12y ago
GitHub took VC funding in 2012. $100M from Andreessen Horowitz and SV Angel. I have no direct knowledge about their revenue stream, but profitable companies don't usually seek VC funding, and I've heard from other people (who may or may not actually know what they're talking about) that they're not profitable and are relying on the VC funding to operate. And they're certainly spending money like it's not their own. Check out their ridiculous office: https://customspaces.com/office/DhXb6EKlE9/github-office-san-francisco/ https://customspaces.com/office/DhXb6EKlE9/github-office-san.... And that bar. That's "we're spending VC money" behavior, not "we're spending our own revenue" behavior.
- e98cuenc 12y ago
  Their offices are not that different from Google's por AirBnB's, which are definitely profitable. Taking VC's money is usually a sign of a company that wants to grow faster or want something else the VC may bring to the table (connections, expertise, ...) I have no idea if they are profitable or not, but your comment seems to be based entirely on heresay.

slgeorge 12y ago

I think it's a hard business model that's for sure. Most people here think that Freemium works because you have Open Source developers who have 'day jobs' which means they'll be more likely to buy the private services. That's a bit of a stretch because it's mostly development managers who choose the development tools at any reasonable size company and they have a lot of other concerns. There's also a scaling issue in model. A flat fee for a repository doesn't go much of a way towards paying for the total cost of developing and delivering a complete web platform where your costs scale by number of developers and infrastructure. The major thing in Githubs favour is they are now the place for Open Source development so they have other revenue opportunities. I can imagine good revenue opportunities with large partners (e.g Microsoft) that want to reach out to developers: separately their large database of developers is a big asset for other services. Presumably, the VC money is predicated on new revenue streams over time.

eridius 12y ago
I general, I agree with you. But I am concerned about their long-term profitability. Assuming that what I've been told is correct and they are relying on VC funding to operate, what happens when it dries up? There are indeed revenue opportunities with large partners, but who knows if that will ever actually pan out? I'm also a little skeptical about their ability to work with a large partner. I was told recently by an employee at a large tech firm (please forgive my vagueness) that said tech firm looked into using GitHub internally. But GitHub Enterprise was not suitable (it doesn't scale), and GitHub was hostile to the idea of providing a solution that did scale. This technology company needed a solution like the one that github.com uses (since that obviously scales) except completely in-house (like GutHub Enterprise). And they probably would have paid a rather absurd amount of money for it. But GitHub said no. I'm relating this story because it feels to me like GitHub's culture is such that they can't "play ball" with large companies that need custom solutions. Enterprise may be a fine product but it apparently is only suitable for small-to-medium businesses (I gather that it basically can only run on one server and so can't scale for a large deployment, though I haven't personally investigated the matter). My fear is that, assuming they are relying on VC funding to operate, in 5 years they'll run out of money and start shopping around for some large company to acquire them. Addendum: I really hope I'm wrong and that they are profitable. I want GitHub to stick around for a long time. Who knows, maybe they only took VC funding because they thought it was worth giving up a portion of the company in order to afford swanky new offices?