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GitHub Seeks Funding At $2 Billion Valuation
itwbennett writes: GitHub, the most popular Git hosting site, is reportedly seeking $200 million in an upcoming private funding round that values the company as high as $2 billion. "GitHub is an interesting company," said analyst Frank Scavo, president of Computer Economics. "It is partly a hosting service for developers and partly a social media site." And it's a great place to recruit developers. But company-specific factors aside, there's also a lot of money in the market "looking for homes," said Rob Enderle, principal analyst with Enderle Group.
So each user is worth $222? Please... this has all the characteristics of a bubble. There is no way they are ever going to be able to monetize users to the tune of $222/user.
I'm a minority race. Save your vitriol for white people.
Rob Enderle, principal analyst with Enderle Group.
This fucking clown? This guy who sided for years and years with SCO? This guy who gets things more wrong than even Dvorak, and at the same time is sincerely not trying to troll (unlike Dvorak) thereby exhibiting his utter incompetency?
Since when does his fucking opinion fucking matter? How the fuck does one get a gig doing what he does and get even NPR to pay cash money for idiotic punditry?
>group
OF ONE FUCKING PERSON. Self-importance, bloviation, and inaccuracy all rolled up into one neat douchebag.
WHY DOES SLASHDOT, OF ALL PLACES, LEND THIS GUY ANY SORT OF CREDIBILITY BY BLOGGING HIS CRAP HERE?
Oh, I know, Dice.
Hnnnnggggghhh...
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BMO
2 billion dollars of funding will bring the same sharks around.
Wtf does github need funding for exactly?
This is my sig. There are many like it, but this one is mine.
It's hijacking when you try to distribute your modified software as the original. Sourceforge is free to fork Firefox and call it SourceFox or whatever. But that's not what they are doing.
Firefox may be open source software but the name "Firefox" and the logo are not.
So you can freely change and redistribute Firefox but if you want to call it Firefox, you need Mozilla's permission. Only if you decide to call it something else, like "Iceweasel", you are free to do whatever you want as long as you respect the copyleft.
Because in a bubble, lifestyle businesses are a waste of capital. If it's more important to have the word "founder" on your business card than it is to make money, the founder should sell the business at a bubble valuation and use the money to start another.
Which of these companies would you rather own shares in? A small business that earns, say, $10M/y in sales and $1M/y in profits and has a reasonable P/S of 3 and P/E of 30 for a $30M valuation? Or that same business with a bubble-tier P/S of 10-20, a P/E of 100 and a $100-200M valuation?
In the former case, that stable business might last 20 and produce $20M of earnings that could be distributed to the shareholders before it peters out. If you're lucky, it might double those earnings towards the end of that timeframe and be worth $40M to a potential acquirer, or spin off another $20-30M over the next 20-30 years. Best case scenario is the shareholders realize $50-60M.
(How profitable is GitHub anyways? Can anyone hazard a guess?)
In the latter case, selling the company immediately produces a $100M payday, returning at least twice what the lifestyle business would have returned, with practically no risk. If you're lucky, they do a round or two to inflate the valuation to the point where it's big enough that the only exit rounds that can work are either an IPO at a $10B valuation or to to sell to a well-heeled acquirer like GOOG or AAPL.
If you can sell for $10B, it doesn't matter whether GitHub is profitable or not. All that matters from an investment perspective is whether its shareholders can get a better return on their investment by selling out than remaining small. Even if the company falls 95% from its IPO valuation, the shareholders make $500M (5% of $10B) in 3-5 years instead of 30-40 years.
And if you sell to Google and the same thing happens, Google's shareholders eat the loss but it's barely a ripple on the balance sheet. (cf. Dice writing down the value of the Slashdot acquisition). If you're something like Oculus Rift, it may have been worth it to keep you out of the hands of the competition. If you're GitHub, I'm not sure who the potential bidders would be. Neither Google nor Apple are really into the development tools business. Oracle vs. IBM? Maybe the exit strategy is an IPO and let the chips fall where they may.