Billion Dollar Unicorns: How does GitHub make money? (A Timeline)
And everything else about it…
The greatest source of influence in the developer community is unquestionably, GitHub. Starting in 2008 as Logical Awesome, with over 40 million users and 100 million repositories (including 28 million public repositories), it has become a go to place of developers, start-ups and software giants like Microsoft.
Catering to services like code(Repositories, Pull Requests, Gists), planning(Issues, Projects), collaboration (Pages, Wikis, Discussions), community, code-to-cloud DevOps (Actions, Packages), learning & education (learning lab, Classroom, Student pack, teacher toolbox),client-apps(Desktop, Mobile), admin-server(features specific to GitHub Enterprise Server), admin-cloud(GitHub Cloud), ecosystem(Ecosystem and API features) and insights. It has taken the Software Development Process and software contributing user accounts to the moon.
GitHub.com was a bootstrapped start-up business, which initially was funded solely by its three founders. In July 2012, (four years after) Andreessen Horowitz invested $100 million in venture capital. Many companies that now regularly use GitHub — including Facebook and Google — joined GitHub during this period. In July 2015 GitHub raised another $250 million of venture capital in a series B round. Investors were Sequoia Capital, Andreessen Horowitz, Thrive Capital, SV Angel, and other venture capital funds. As of August 2016, GitHub was making $140 million in Annual Recurring Revenue. Sequoia with 12.5% and Horowitz with 13% which was a rare thing that an entrepreneur would still have 75% of the company for the founders, engineers and the people that have been given stock options in that company. Whereas, by this time for others it was completely flipped. Only about 25% left for management and the rest 75% in the hands of the investors that go through the sequential Series A Series B Series C. GitHub was doing splendidly.
By 2016, GitHub changed its pricing model from a repository-based one to a user-based one; in the process, it introduced unlimited private repositories for paying customers. It was indicated that they had actually had revenue of $99
million however they had a loss of $68 million which was okay, Twitter did it for a long time and Uber has been doing it since.
In 2018, GitHub docked a 7.5 billion dollar cheque which was written from Microsoft to buy the company. Microsoft, other 28 million developers
and the 1.8 million businesses that were working with GitHub at the beginning of this year, Microsoft was the most active among them. And eventually wrote a 7.5 billion dollar cheque which would add 3.75 times more of its value in just 3 years. Microsoft said, “We need to be developer focused and if this is the leading tool in the known universe for doing something like this, then we need to be in. And why wouldn’t we own it?”. Additionally, they took Nat. Friedman who’s the corporate VP of developer relations was plugged in as the division president or CEO of GitHub.
As of now, the business model of GitHub’s revenue stream includes:
- Freemium: GitHub offers both free and private repositories on the same account used to host open-source software projects
- SaaS: GitHub’s revenue comes 50% from GitHub Enterprise which 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. 37% of revenue is generated from their organization plan and 13% from their 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.
- Merchandising
GitHub has built a strong open-source community over the last few years. Along with big players like Google and Microsoft who have entered open-source code, GitHub has made history and wants to grow to 100 million users with a revenue target of $1 billion.
