Posted on Tuesday, May 15th 2018
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Billion Dollar Unicorn player GitHub was founded in 2008 by Tom Preston-Werner, Chris Wanstrath, and PJ Hyett to expand the open source operating system market that was developed by Linux.
The founders of GitHub were inspired by the need to bridge a gap that they noticed in Linux. Linux’s developer Linus Torvalds had already developed Git, a tool for software version control. But the platform did not offer much in terms of allowing developers to collaborate and contribute revisions on open source projects. GitHub was developed to bridge this collaboration tool and integrate a social layer within the open-source platform.
GitHub became a very popular social engine and was soon called the “Facebook for developers”. Today, more than 27 million people use GitHub to share code with friends, co-workers, and the developer community at large. It claims to have grown to become the largest code host in the world.
The service is free for public projects and earns revenue by charging for private software projects. It earns revenues from three key services – the personal plan where it charges developers a subscription fee of $7 per month; the organizational plan at a fee of $9 per user per month, and finally, the GitHub Enterprise priced $21 per user per month for enterprise customers. The GitHub Enterprise is offered as an on-premise or cloud service. All paying subscribers have access to unlimited public repositories, unlimited private repositories, 24×7 support team, and user permissions. The Enterprise plan also allows companies to keep their code private. Subscription from this service accounts for half of its total revenue.
GitHub is privately held and does not disclose detailed financials. But a leak revealed that the revenues would have grown to $200 million in 2017 from $95 million in 2015 and an estimated $131 million in 2016. GitHub is not profitable yet, and losses have been racking up at a faster pace. For fiscal 2015, it incurred net loss of $27 million, and that number grew to $66 million for the first nine months of fiscal 2016. Losses for the entire fiscal 2016 and 2017 are not known.
Despite the losses, GitHub has raised $350 million from investors at rising valuations. Investors include Thrive Capital, SV Angel, Sequoia Capital, Institutional Venture Partners, and Andreessen Horowitz. Its latest funding round was held in July 2015, when the company was valued at $2 billion. In 2012, it was valued at $750 million. More recent valuation is not known.
Questions for GitHub’s Board
GitHub has built a strong community over the last few years. It is not witnessing much competition from big players like Google and Microsoft who have entered open-source code. But there are several other players to compete with. There is startup GitLab that offers its services for free under an open-source license. Then, there is Atlassian that bought Bitbucket to enter the space. GitHub has maintained that it wants to grow to 100 million users with a revenue target of $1 billion. I would like to know what other services is GitHub evaluating to reach that goal? Some suggest that it could consider becoming a marketplace for developers to showcase their projects while earning a fee. Is that an option?
More investigation and analysis of Unicorn companies can be found in my latest Entrepreneur Journeys book, Billion Dollar Unicorns.
This segment is a part in the series : Billion Dollar Unicorns
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