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GitHub Seeks Funding At $2 Billion Valuation

Posted by Soulskill on from the accepting-pull-requests-from-the-bank dept.

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.

59 of 80 comments (clear)

  1. If Sourceforge is any example by opus_magnum · · Score: 4, Interesting

    does it mean they will become like them after they're bought?

    1. Re:If Sourceforge is any example by Anonymous Coward · · Score: 4, Interesting

      Let's hope not, it's been a great service up until today at least.

      SourceForge has gone so down that even their mirror hosts are evaluating whether they should provide them resources anymore. There's been a campaign aimed at SourceForge's mirrors to get them to cut their cooperation. It's been somewhat successful and got a lot of attention after people realized SourceForge had hijacked Firefox, too, among other big open-source projects.

    2. Re:If Sourceforge is any example by Anonymous Coward · · Score: 2, Interesting

      I don't see what open source project hosting site Github has to do with malware distribution site Sourceforge.

    3. Re:If Sourceforge is any example by Anonymous Coward · · Score: 1

      Sourceforge used to be a respectable open source project hosting website too.

    4. Re:If Sourceforge is any example by tburkhol · · Score: 1

      does it mean they will become like them after they're bought?

      Github is not selling out: they're offering a 10% stake. Even if the entire offering is bought by one entity, that entity will not have the power to force github to do anything the existing structure doesn't want.

      Possibly worth noting that Andreessen Horowitz already has a 13% stake, and he hasn't managed to make them Evil. Raising outside ownership to 23% isn't going to give the vultures control.

    5. Re:If Sourceforge is any example by _merlin · · Score: 1

      You're not taking preferential shares into account. They often have nasty conditions attached. For example the venture capitalists may be able to liquidate the company without needing a majority.

    6. Re:If Sourceforge is any example by gbjbaanb · · Score: 2

      See sourceforge - this is how you make money, get a VC to fund your 'exciting and innovative game-changing' service and get pots of cash. Revenue totally optional, advertising irrelevant.

      The trouble with businesses today is that some of them have a bricks-1.0 mindset that expects to receive revenue by selling stuff (even if its adverts and malware)! pffft.

    7. Re:If Sourceforge is any example by AmiMoJo · · Score: 2

      The massive over-valuation is looking bad. Investors will require growth and monetization, and their current premium accounts aren't going to cut it. It really isn't a good sign because no matter how well intentioned the staff are and how good they are to work with so far, shareholders demanding value will screw it up.

      Sad times. What happened to realistic valuations and growing a long term, responsible business? This just seems like wanting to hype the platform up as much as possible and then cash out at the top, before it all comes crashing down.

      --
      const int one = 65536; (Silvermoon, Texture.cs)
      SJW, n: "Someone I don't like, and by the way I'm a fuckwit" - AC
    8. Re:If Sourceforge is any example by cHiphead · · Score: 5, Insightful

      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.
    9. Re:If Sourceforge is any example by Dunbal · · Score: 2

      Hookers and blow.

      --
      Seven puppies were harmed during the making of this post.
    10. Re:If Sourceforge is any example by serviscope_minor · · Score: 1

      You say that like it's a bad thing!

      --
      SJW n. One who posts facts.
    11. Re:If Sourceforge is any example by Anonymous Coward · · Score: 3, Insightful

      Sad times. What happened to realistic valuations and growing a long term, responsible business? This just seems like wanting to hype the platform up as much as possible and then cash out at the top, before it all comes crashing down.

      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.

    12. Re:If Sourceforge is any example by CODiNE · · Score: 2

      It's a cash out. This is how web apps make money, by selling themselves to others. Will THEY then make any money? Who cares!

      --
      Cwm, fjord-bank glyphs vext quiz
    13. Re:If Sourceforge is any example by SScorpio · · Score: 1

      You do realize that VCs don't just give away money. There are revenue expectations that come along with it.

    14. Re:If Sourceforge is any example by gbjbaanb · · Score: 1

      they can expect as much as they like... but in these times, the money comes from pumping up expectations and selling overpriced shares to investors, and then selling the company to facebook or Google for way more than its worth!

    15. Re:If Sourceforge is any example by jakimfett · · Score: 1

      [citation needed]

      --
      Bits of code, random ramblings: jakimfett.com
    16. Re:If Sourceforge is any example by KGIII · · Score: 1

      They want 200 million, they are claimed to be worth 2 billion. They are not, of course, trying to get 2b dollars.

      --
      "So long and thanks for all the fish."
    17. Re:If Sourceforge is any example by topologicalanomaly47 · · Score: 1

      It's git, changing the origin is not hard, and you should already be keeping a local mirror copy up-to-date. The most that they could keep hostage is the issue trackers and wiki, migrating those in times of anger is not the end of the world.

      That's part of the appeal of github, they can't keep anything of value hostage.

  2. Enderle? by NaCh0 · · Score: 4, Interesting

    That Enderle guy is still around? He has been so discredited that it's amazing. One thing is for certain, whatever his opinion, the opposite will be true.

    1. Re:Enderle? by Anonymous Coward · · Score: 2, Interesting

      Github runs Linux man! That means Darl will be entitled to all the brazillions that github gets from the funding, and Rob can finally get paid. Good thing too, 'cause there's not as much money in drunken keynotes as there used to be.

  3. "Valuation" by fustakrakich · · Score: 1

    A better word: Fantasy... An even better word: Fraud! This is how bubbles are made.

    --
    “He’s not deformed, he’s just drunk!”
  4. $2b / 9m users by goose-incarnated · · Score: 5, Insightful

    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.
    1. Re:$2b / 9m users by Shados · · Score: 1

      The enterprise plans aren't cheap, and private github repos are pretty popular with startups (of which there's a bazillion of them now).

      Of course they aren't going to get 222/user per year. If they did, their valuation would be 5-10 billion, not 2. No company makes their entire valuation in revenue every year.

    2. Re:$2b / 9m users by Anonymous Coward · · Score: 1

      Bbbbbut... cash grab. Instant billionaire. Laugh all the way to the bank.
      It's the new business model.

    3. Re:$2b / 9m users by Anonymous Coward · · Score: 1

      oblig:

      https://www.youtube.com/watch?v=I6IQ_FOCE6I

    4. Re:$2b / 9m users by goose-incarnated · · Score: 1

      The enterprise plans aren't cheap, and private github repos are pretty popular with startups (of which there's a bazillion of them now).

      Of course they aren't going to get 222/user per year. If they did, their valuation would be 5-10 billion, not 2. No company makes their entire valuation in revenue every year.

      Firstly, I never claimed $222/year. Secondly, almost every commercial (i.e. have money to spend) dev team can have their own private enterprise git repo on a number of different VPS's out there for chump change. A few years ago it was different, it was expensive to host your own server. Now it's cheap. Host multiple ones in different sites and you also get redundancy and backup, probably for a lot less than the enterprise github plans.

      --
      I'm a minority race. Save your vitriol for white people.
    5. Re:$2b / 9m users by Shados · · Score: 1

      The time your devops will take to setup that stuff, unless they're way underpaid, is almost not worth it. Github also has brand recognition.

      Regardless of whats worth it or not, a TON TON TON of companies are using private github repos or github enterprise. Maybe it doesn't make sense, people still do it.

      Company i work for does it. And its not that we don't do VPS. We spend more money in hosting and VPS than we do on payroll (a few hundred employees, mostly engineers). Even if you just go and dump git on a host (thats what I do at home), you don't get all of github's features. You -can- easily get all of it with free tools, but thats work, and its debatable if its better (its better in some ways, worse in others).

    6. Re:$2b / 9m users by PPalmgren · · Score: 1

      I doubt the valuation is based purely on user count. Maybe moreso critical mass - unless they do something monumentally stupid, I can't see any situation in the near future that replaces GitHub as the go-to. I said the same thing about facebook during its IPO, and apparently I was wrong as hell.

    7. Re:$2b / 9m users by rl117 · · Score: 1

      While this is true, the value in github isn't in the git hosting alone. It's in the workflow it enables--PR submission, collaborative review, merging, and being able to hook the PRs into CI systems to test them prior to merging. These are unmatched by anything else. You could install gitlab as an alternative, but setting up all this stuff by hand and maintaining it can be a significant investment you might want to avoid.

    8. Re:$2b / 9m users by Dunbal · · Score: 1

      Doesn't matter. All that matters is that a bank can find someone dumb enough to pay for it. There's always one.

      --
      Seven puppies were harmed during the making of this post.
    9. Re:$2b / 9m users by Marginal+Coward · · Score: 1

      So each user is worth $222? Please... this has all the characteristics of a bubble.

      You're thinking of this the wrong way. Look, Google spent over $3 billion to buy Nest. So, a better way to value GitHub is in terms of fancy thermostats. Here's a back-of-the-envelope calculation: assuming Nest has more customers than GitHub - which is probably quite generous, if not downright wrong - then each user is worth 2/3 of a thermostat sale. Put in those terms, it sounds fairly reasonable.

    10. Re:$2b / 9m users by The+Raven · · Score: 1

      While I agree it's probably an overvaluation, I should point out that valuations also take into account the likely future growth of a service. Github is the dominant repository site, and still growing. Other repositories are being out-competed and shrinking or shutting down. If you put a valuation of $100 per user (more reasonable) with an expectation that they will double in size in the next few years then the valuation is understandable.

      --
      "I will trust Google to 'do no evil' until the founders no longer run it." Hello Alphabet.
    11. Re:$2b / 9m users by TFlan91 · · Score: 1

      Gitlab's Omni-installer makes it very easy for a standard installation of a private Git server. It's very simple and works great for basic installations.

    12. Re:$2b / 9m users by skovnymfe · · Score: 1

      And then someone has to take care of, and maintain that shit. That's time not spend making something useful.

    13. Re:$2b / 9m users by Anonymous Coward · · Score: 1

      AC because I've modded here.

      Utter bullshit. Take a look at Atlassian products. There are more companies that do the same thing better or worse than github. The biggest challenge github had to overcome was doing what they do aat the scale they do it at, not the PR or CI intergation systems.
      Merging and hooks to CI are at the core of git.
      There are Chef/Puppet/Ansible/Salt/etc cookbooks/manifests on github that will allow to stand up similar infrastructure in minutes.

    14. Re:$2b / 9m users by drewm19801927 · · Score: 1

      I probably paid at least that back when I had private repos to hold my unpublished research while at uni. We used svn on university servers for a while, but corrupted server databases and difficulty backing up the repo were a never ending source of trouble. git and github were rock solid.

    15. Re:$2b / 9m users by drewm19801927 · · Score: 1

      Github is really nice, but git itself is the core tech, and undermines the heck out of their lock-in. If they push too hard to monetize, a competitor will come along and everyone will just push their repos there or self-host. Some of the ticket stuff might not migrate well, but many of the nice activity plots, etc... that github provides are just visualizations of data that is in your repo.

  5. Git by Anonymous Coward · · Score: 2, Funny

    while the gittin's good...

  6. Who? by bmo · · Score: 3, Insightful

    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...

    --
    BMO

    1. Re:Who? by Demonoid-Penguin · · Score: 1

      Rob Enderle, principal analyst with Enderle Group.

      A highly speculative article on a pump-and-dump marketing site used as the basis of a highly speculative article on formerly popular social click-bait for technology site, Slashdot, said, um, basically, nothing of substance.:-

      [weasel-speak]
      A (un-named) spokeswoman for GitHub (allegedly)declined to comment. A representative for Andreessen Horowitz didn’t immediately respond to a phone call and e-mail seeking comment.
      [/weasel-speak]
      Emphasis and bracketed comments mine.
      tl;dr Merrill Lynch own a chunk of the publishers of the original article - which makes it almost as reliable as anything from the Murdock group.

      In other slow-news day non-news Slashdot posters (some of which are inanimate) further speculated on vaguely related subjects without reference to the original source of the (non) information?

  7. He got one thing right by towermac · · Score: 1

    "... a lot of money in the market looking for homes"

    Yeah. That's what happens when interest rates are zero.

    Analyst/consultant type smells money...

    1. Re:He got one thing right by antiperimetaparalogo · · Score: 1

      "... a lot of money in the market looking for homes"

      Yeah. That's what happens when interest rates are zero.

      Analyst/consultant type smells money...

      And one of the reasons that interest rates are so low currently is because banks are full with people's money, since they are trusted more than various "financial analysts/consultants" who mis-advised them recently - not so productive for the economy to have money buried in bank accounts instead of being invested directly to businesses, nor "healthy" for society to mis-trust its "money experts", but when i read about GitHub's "2 billions valuation"... i can only think: bubbles!

      --
      Antisthenes: "Wisdom begins by examining the words/names." - excuse my English, i am (slightly...) better with my Greek!
    2. Re:He got one thing right by Rich0 · · Score: 1

      "... a lot of money in the market looking for homes"

      Yeah. That's what happens when interest rates are zero.

      Well, that and the fact that everybody has a dream of spending half their life working overtime, and the other half of their life not working at all but living as if they had the same kind of income. Everybody wants investment growth and is investing a LOT of money, and that tends to create bubbles. I suspect that when all those people start trying to live off of all that saved money the results won't be pretty. Suddenly we move from labor surplus to labor shortage, but we still have that surplus of money lying around.

  8. GitHub is brilliant by Martin+Spamer · · Score: 1

    However 2Billion is a big stretch.

  9. Like Google, they missed some big opportunities by MikeRT · · Score: 1

    Just as Google basically ceded the high end enterprise market to companies like Autonomy by refusing to package their software for individual and group licensing, GitHub's enterprise fees were ridiculous for what you got from them. When they openly advertised the prices, it was like $5000/year/20 users. $10000 for 50 users for a perpetual license? A lot of companies could have gotten into that, but a subscription is ridiculous especially when you consider that things like issue tracking are terribly simplistic compared to systems like Jira. You'd have to run something like Redmine in many environments and at that point, what are you really paying for except a bunch of slickness and coolness on top of Git?

  10. Re:How the fuck is it "hijacking"? by danbob999 · · Score: 3, Insightful

    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.

  11. Re:How the fuck is it "hijacking"? by GuB-42 · · Score: 4, Insightful

    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.

  12. I am surprised by Daniel+Hoffmann · · Score: 3, Interesting

    I am surprised that github still does not have a job board on the site, not only is it a MAJOR money income, it is also quite useful for the devs themselves. It is one of the few win-win monetization situations as long as the user can opt-out of seeing the job ads. Pretty much any job ad that asks you to send your github profile would be advertising there.

    1. Re:I am surprised by netsavior · · Score: 1

      Honestly, as a hiring manager of developers, a github profile link (that contains actual work) will get you hired faster than anything else on your resume.

      A job board/partnership would be pretty reasonable imo.

    2. Re:I am surprised by dristoph · · Score: 1

      They do: https://jobs.github.com/

    3. Re:I am surprised by Daniel+Hoffmann · · Score: 1

      Huh, I was not aware of that. They should put those job ads when you are checking out repositories cross-reference the job positing with the repository files for better matches (and of course put a "disable job ads" option on your profile)

    4. Re:I am surprised by Actually,+I+do+RTFA · · Score: 1

      I never liked the concept that developers either have to volunteer help people (at stackoverflow) or donate time (at github) in order to be considered a valuable employee. I mean, for someone with no work history, but beyond entry level??

      --
      Your ad here. Ask me how!
    5. Re:I am surprised by Daniel+Hoffmann · · Score: 1

      It is kind of unfair really, some jobs allow you to contribute to opensource, others do not. Those who can work on open source projects at the job will have more notable github accounts, that does not necessarily mean they are better than the guy who does not have a github account. It is unfair, but the hiring manager position is understandable, it is one thing to hear about a project and another to see the code.

    6. Re:I am surprised by dave420 · · Score: 1

      If you work with open source packages in your job, chances are you'll come across something which can be improved. If you improve it for your own use, you might as well try to get your changes included in the package by issuing a pull request. It just shows a conscientious developer who understands the value of open source, and you get to look at their code as well. It's pretty clever, really.

  13. Sorry by Holi · · Score: 1

    But in what world does GitHub have a value of 2 Billion dollars? Do they have some hidden patent portfolio we don't know about?

    --
    Sorry, teleporters just kill you and then make a copy. A perfect, soul-less copy.
  14. Re:How the fuck is it "hijacking"? by Junta · · Score: 1

    The point being that it is perfectly legal for them to do so, and no one is saying 'SUE SOURCEFORGE FOR INFRINGMENET'.

    They are saying 'BOYCOTT SOURCEFORGE FOR BEING DECEIPTFUL'. It's completely valid to call them out for being misleading about content they are manipulating for reasons that are not at all aligned with the enduser benefit.

    --
    XML is like violence. If it doesn't solve the problem, use more.
  15. Re:Github blows by Anonymous Coward · · Score: 1

    The "git flow" is a godsend to anyone who has more than one feature/bugfix in flight at a time.

    BTW, does svn have a feature like rebase that stops me at exactly WHICH commit conflicted so I can figure out why, or is it like cvs where I run an update and it gives me a report listing all the files that conflicted and "fuck you, that's why".

  16. Re:How the fuck is it "hijacking"? by vilanye · · Score: 1

    The problem is that Sourceforge, and other sites, are using OSS projects to spread malware.

    Maybe GPLv4 will have a "third party sites can't inject malware into the download" clause. What Sourceforge is doing is far more harmful than 'Tivoization'

    Seriously, an anti-Sourceforge/Download.com open source license is needed.

  17. Re:How the fuck is it "hijacking"? by vilanye · · Score: 1

    Sadly, the installer is not part of the F/OSS program and no license that I can think of makes injecting malware via the installer a license violation.