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 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
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What is Okta's Inorganic Growth Narrative?