GitHub’s Business
Though the name GitHub is practically unknown outside technology circles, coders around the world have embraced the software. The startup operates a sort of Google Docs for programmers, giving them a place to store, share and collaborate on their work. But GitHub Inc. is losing money through profligate spending and has stood by as new entrants emerged in a software category it essentially gave birth to, according to people familiar with the business and financial paperwork reviewed by Bloomberg.
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The issue took on a new sense of urgency in 2014 with the formation of a rival startup with a similar name. GitLab Inc. went after large businesses from the start, offering them a cheaper alternative to GitHub. “The big differentiator for GitLab is that it was designed for the enterprise, and GitHub was not,” says GitLab CEO Sid Sijbrandij. “One of the values is frugality, and this is something very close to our heart. We want to treat our team members really well, but we don’t want to waste any money where it’s not needed. So we don’t have a big fancy office because we can be effective without it.”
Almost nine years old, revenue of almost $100 million per year, but losing money—I guess because they have 600 employees.
Previously: What It’s Like to Take on Venture Capital Investment.
Update (2016-12-20): Manton Reece:
These numbers seem fantastic except that GitHub is losing money overall. GitHub has transformed from a small profitable company to a large unprofitable VC-backed company.
Update (2016-12-21): Moritz Plassnig (via Hacker News):
Despite all the adoption and great numbers that I mentioned, GitHub is seeing more competition recently. GitLab is doing a wonderful job in challenging them on a product level. For many years, GitHub didn’t have any competition which naturally led to less pressure and a slower pace for releasing product improvements. This development combined with some troubling cultural issues, multiple changes in the leadership team, and an influx of cash from huge financing rounds caused a lot of employee turnover. Changing your company culture from bootstrapping, no managers, and “Optimizing for Happiness“ to being a VC-backed startup with a lot of money, directly translating into more employees, is hard - very hard.
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It’s hard to analyze GitHub’s financials and metrics without having direct access to the data. With what we know from Bloomberg, GitHub is to be doing very well financially. $140M in ARR with roughly 62% YoY growth makes them an IPO candidate. GitHub historically generated the majority of their revenue without Sales and outside of the enterprise market. Their ability to move up-market, close large deals and generating more than 50% of their revenue with their enterprise product is very promising and will allow them to maintain a high revenue growth rate.
What on earth are they doing with 600 employees?