Posted by kdow on Jun 4, 2018 12:31:14 PM

Mere hours after I published this, Microsoft acquired GitHub for $7.5bn in stock. Read more here.

Photo by Brina Blum on  Unsplash

GitHub has long been a darling of the tech scene. It was founded in 2008 (after I was in college studying Computer Science, which made life much harder for me, comparatively!). From it’s founding, it’s been a runaway train of success. It garnered use from thousands, soon millions, of coders across the globe; collaborating on everything from individual projects for college students all the way to enterprise software.

Later, GitHub took on funding and rolled out their software for individuals who want to keep some code private or companies who want to use GitHub’s tools to allow dev’s to collaborate.

Today, if you join a software company, begin a code course, start a Computer Science degree or decide to hack away at some projects, it’s really likely that in week one — if not hour one — you’ll need to learn the basics of git commands and how GitHub works.

GitHub is so ubiquitous that it’s a measure of success for reporting on how influential a project/programming language or product is: “stars,” “forks” & usage.

Language usage by popularity (source: octoverse)

It’s huge. In 2017 alone the company announced that it reaches over 64 million developers, contributing to 67 million repositories (a store of code). There were 1 billion commits (when a developer sends code into a repository) in a single year.

In those numbers we get to the business itself. Some companies pay for “private” enterprise accounts that allow developers to work collaboratively in a silo of sorts. GitHub boasts 52% of fortune 500 companies as customers.

In there, it seems (and I say seems because GitHub isn’t public, so leaks & generous conversations from insiders are all we have in terms of numbers) that the company grew from 2014 ARR (annually recurring revenue) of $70m to $95m ARR a year later. Continue on another year and they get to $110m.

However, in startup land you also measure your burn rate (the rate at which you “burn” money to fund growth). GitHub raised $250m over two rounds of VC funding, and burned around $30m in the same year they hit a run rate of $95m. In 2017, their burn rate was around double that, spurned by recent competition (from Atlassian’s BitBucket & GitLab) and a desire to grow at an increasing rate.

Comparison of Run rate to Burn rate YoY

In SaaS terms, they have a healthy business. They’ve hit a nice burn rate, have options to raise more money in future in a series-C should they need it, and their recurring revenue is increasing year-on-year. The burn spend is paying off, in other words.

A healthy company with a good product and some level of ubiquity is why we now have a situation whereby Microsoft are rumoured to be interested in buying GitHub. For $2bn. Which lots of folks reckon is a low number. Which is why I wrote this post. The business GitHub has built is great, but it’s not a rocketship the way LinkedIn (which cost Microsoft $26bn) is.