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Billion Dollar Unicorns: GitHub Faces Growing Pains

Posted on Wednesday, Jun 8th 2016

Software has increasingly become pervasive in all kinds of businesses driven by the use of open source. It allows businesses to get high-quality programs while saving on licensing fees and programming costs. It has led to several disruptive companies that have gone on to become billion dollar businesses. GitHub is a Billion Dollar Unicorn that has risen due to the open source movement.

GitHub’s History and Offerings

Also called the “Facebook for developers”, GitHub was founded in 2008 by Tom Preston-Werner, Chris Wanstrath, and PJ Hyett. They were inspired by a tech talk given at Google in 2007 by Linus Torvalds, who developed the Linux open-source operating system. Linus had developed a tool called Git for software version control, but the process of collaborating and contributing revisions in open source projects was not defined and smooth. GitHub was then founded to provide a platform to collaborate on open source projects through a social layer. Developers are alerted by social media channels like Twitter and they then contribute to the revisions.

Today it has more than 15 million registered users using its platform to collaborate on over 35 million software projects. Individual developers use it to store, write, and collaborate on code, and businesses and government agencies use it to host and run software projects across their organizations. Today, GitHub is not only used by developers but also by customer service teams to collaborate with customers. It has also become an important way for companies to build credibility among potential hires.

The site is free for public projects and it charges for private software projects. It recently announced new pricing on paid plans. For access to unlimited private repositories, accounts for personal users cost $7 per month, and accounts for organizations cost $9 per user per month or $25 per month for the first five users. It also sells a service to enterprise customers, which allows corporate teams of software developers to privately work on their projects together, without sharing that code with the rest of the world. Enterprise accounts cost $21 per user per month, are sold in packs of 10 users, and are billed annually. It is used by organizations like NASA, PayPal, Etsy, Vimeo, Rackspace, Trainline, and SAP.

GitHub’s Financials

GitHub has reportedly always been cash-flow positive. It was expected to hit $25 million in revenue in the first quarter and revenue of $100 million this year.

It has raised $350 million from investors including Thrive Capital, SV Angel, Sequoia Capital, Institutional Venture Partners, and Andreessen Horowitz. Its latest round of funding was held in July 2015 when it raised $250 million at a valuation of $2 billion. An earlier round of funding in July 2012 had valued it at $750 million.

GitHub has grown to nearly 500 employees and is also seeing some growing pains. Chris Wanstrath took over as CEO in 2014 after Tom Preston-Werner resigned following charges of harassment. And to justify its billion dollar valuation, it has increased its focus on enterprise customers, which can be a trying segment with tougher competition from the likes of Amazon Web Services and Google Cloud Platform, as well as from Atlassian’s Bitbucket and open-source upstart GitLab.

More investigation and analysis of Unicorn companies can be found in my latest Entrepreneur Journeys book, Billion Dollar Unicorns. Unicorns will also be discussed with some special guests during our 1M/1M Roundtable programs over the next few weeks. To be a part of the conversation, please register here. The term Unicorn was coined in a TechCrunch article by Aileen Lee of Cowboy Ventures.

This segment is a part in the series : Billion Dollar Unicorns


. How Marketo Is Faring In The Public Market
. Workday's Ramp to Multi-Billion Valuation
. Gaurav Dhillon, Founder of Informatica and SnapLogic (Part 1)
. ServiceNow's Expanding Market Opportunity
. Gaurav Dhillon, Founder of Informatica and SnapLogic (Part 2)
. Gaurav Dhillon, Founder of Informatica and SnapLogic (Part 3)
. Gaurav Dhillon, Founder of Informatica and SnapLogic (Part 4)
. Tableau's Valuation Increases to $6 Billion
. A Rare Media Venture Called Vice
. Gaurav Dhillon, Founder of Informatica and SnapLogic (Part 5)
. Gaurav Dhillon, Founder of Informatica and SnapLogic (Part 6)
. Gaurav Dhillon, Founder of Informatica and SnapLogic (Part 7)
. Will Box Implode Post IPO?
. Net-a-Porter Cracks The Luxury Fashion Market
. Outbrain Prepares for an IPO
. Palantir's Skyrocketing Valuation May Be Justified
. Online Education Player Lynda.com
. Pluralsight's Impressive Rise
. Snapchat Explores Revenue Generating Options
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. ServiceNow Expands Addressable Market
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. Mixpanel Provides Advanced Analytics for SMBs
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. Auction.com in Expansion Mode
. Nutanix Gives VMWare Tough Competition
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. Adyen is on a Roll
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. Bullhorn is in the Making
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. Evernote Trying to Recover Lost Ground
. Modernizing Medicine Is A Prospect
. Instacart Looks Shaky
. Mogujie's E-Commerce Pivot Pays Off
. Zalando Takes the Lead in European Etail
. BlaBlaCar Expands Internationally with Acquisitions
. Square Files for IPO Below Last Round of Financing
. Secretive Infinidat Makes its Way to the Club
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. Ele.Me Shows Online-2-Offline Works
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. ZocDoc Should Be Able To Withstand Public Market Scrutiny
. Thumbtack Joins the Ranks
. Beibei the Baby of the Club
. Online Lender SoFi Puts Off IPO Plans
. Warby Parker Joins the Club
. DraftKings Looks Worried as Fantasy Sports Come Under Scrutiny
. Tujia Offers Vacation Rentals in China
. Hortonworks Struggles to Stay in the Club
. Atlassian, A Legitimate One, Delivers A Great IPO
. Reconsider Your Aspirations
. Will Docker Sustain?
. Veeva Delivers Strong Fundamentals
. OfferUp Still Needs to Figure out Revenue Model
. Mozido Delivers Mobile Payment to Non-Banking Customers
. SimpliVity a Prospect
. WePiao Succeeds in Online Ticketing in China
. Uptake Joins the Club
. For Magic Leap, Unicorn Status No Longer Virtual
. Udacity Leans on Industry Giants for Monetization
. ForeScout Does Not Want To Go Public Yet
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. Age of Learning Monetizing in Educational Apps
. Square Post Its IPO
. Decolar is the Latin American Entry to the Club
. Japan's Mercari Joins the Club
. Yello Mobile Acquires its Way into the Club
. TutorGroup Enters the Club
. Souq.com the Middle East Entry to the Club
. WeWork Riding the Sharing Economy Wave
. Moderna Therapeutics A Promising, Unproven Bet
. GitHub Faces Growing Pains
. Africa Internet Group the First African Entry to the Club
. Paytm Plans Rapid Expansion
. Oscar Plans to Expand Its Network
. Razer Leads the Gaming Accessory Market
. GuaHao Targets China's Healthcare
. AUTO1 Group Plans International Expansion
. TransferWise Makes Money Transfer Simpler and Cheaper
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. MindMaze Channels Virtual Reality into Healing
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. Square Eyeing Large Sellers
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. Liepin, China's Homegrown Recruitment Platform
. Hike is the Latest Entrant from India
. Go-Jek Hails its Way into the Club
. Quanergy Rides Into the Club
. Aiwujiwu Rides High on Chinese Real Estate Sector
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. Line Delivers a Successful IPO
. Grab from Singapore is the Next Big One
. Didi Chuxing Monopolizing Chinese Ride-Sharing Market?
. Blippar Bets on Its Visual Browser
. Two Years Post the IPO, Globant Continues to Soar
. Nutanix Delivers a Strong Performance in the First Week of Listing
. Coupa Has a Successful IPO
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. Russian Avito Gearing up to go Public
. Guazi Leading the Chinese Online Used Car Market
. Slack Delays IPO to Next Year
. Sprinklr Acquiring to take on Big Brands
. Infor Accumulates ERP Providers to Build an Empire
. Royole Corporation Flexes its Way into the Club
. Rong360.com Joins the Club
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. Nutanix Delivers Upbeat Performance, Stock Still Down
. Procore Joins the Club
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. SimpliVity Exits in HPE's Arms
. Kendra Scott Shows that Women CAN Build Unicorns
. Zhihu Imitates Quora to Build a Valuation Without Revenue Company
. Putting Flipkart's Struggles in Perspective
. BlackLine Continues to Grow Post IPO
. Global Switch Wants to be Leader in Data Centers
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. MuleSoft Delivers Successful IPO
. Alteryx has a Successful IPO
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. Actifio Focuses on Profitability, not IPO
. In Uptake, Groupon Founder Shows He Has Learnt His Lesson
. Will Cisco buy Nutanix?
. Zoom Video Communications Enters the Club
. C3 IoT Joins the Club
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. Stripe is in no Rush to List
. Cloudera Fails to Keep the Market Happy
. Stitch Fix Delivers a Surprisingly Fresh Take on Shopping for Fashion
. Bill.com Has Scaled Quietly
. Toutiao Snags a Big Round, But Growth and Revenues Remain Tricky
. Taboola and Outbrain Exploring a Merger
. Looker Counts on Big Data Analytics
. Katerra Tackles the Construction Industry with Technology
. Peloton Cycles Into the Club
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. Clover Health Reaches Milestone Valuation
. Careem Focused on MENA
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. Yext Makes it to the Club and on the Exchange

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