The competition is often a company's Achilles' heel, unless you're GitHub.
The San Francisco-based open-source coding platform is frequently called the "Facebook for developers," because it has created a clearing-house of 29 million open-source code projects that are in use by an estimated 11 million customers, who also network with one another. In other words, it's not just the main player in the world of collaborative coding; it's practically the only game in town.
"So many people started using it because it focused on things like [creating] a real repository for code and collaboration tools for people who built code," says Dave Bartoletti, principal analyst for research company Forrester. "There's a lot of the fascination with GitHub because of its momentum."
That kind of interest has investors both sanguine and, frankly, a little nervous. With no serious rivals, the coding platform is enjoying something of a first-mover advantage. But like most young companies, it has to continue proving itself to customers in an industry it pretty much created.
For the uninitiated, open source refers to the means by which programmers can freely alter and distribute publicly available computer code. (One of the most famous examples is Linux.) Specifically, GitHub's platform appeals to individual developers, who use it to write and collaborate on code, while governments and businesses use it to host larger-scale software projects.
To be sure, plenty of companies, both private and public, have open-source projects that allow for collaboration. But until GitHub, says Bartoletti, there was no overarching sorting method that helped coders keep track of far-flung projects globally, and the different versions that coders continuously spin through, called 'forks.'
Still, the company needs to start proving its potential--helping justify its place in the 2015 class of unicorns. GitHub landed its $2 billion valuation in July following a $250 million Series B investment, led by Sequoia Capital. And the only way it can show its worth is to turn users into paying customers, Bartoletti says.
GitHub was launched in 2008 by Tom Preston-Werner, a coding engineer, along with P.J. Hyett and co-founder Chris Wanstrath, both former coders for CNet. In its early days, GitHub was really more like a pastime, and the goal was to create something more akin to Wikipedia, for instance. It would be free for all to edit, but it would have a business plan, the founders told Inc. in an earlier interview.
With that idea in mind, the hope was to attract users from all over the world. One branch of the service would largely be free, but the founders hoped to make money by allowing other users to place their projects behind a private wall to develop code for commercial purposes.
The idea caught on. "There are standards now based on GitHub, so everybody can come in to a new project and immediately know how to get the code, how to contribute code, how to review the code, how to submit issues to the code base," Preston-Werner told Inc. "The more people do that, the stronger the effects and the gains from having a uniform, well-known, standardized system."
Today, GitHub's basic service remains free, and the company does charge more involved users, which it started doing on day one. Enterprise users, for instance, might pay $50 per month per person. Some customers pay millions of dollars per year, to access a more powerful version of the service, the company told Inc.
Though a GitHub representative would only name two companies that use its services--General Electric and Target--a far-flung assortment of important tech companies, including Google, Facebook, Twitter, and Microsoft, reportedly use GitHub for their own shared coding efforts too. Further, GitHub claims governments around the globe use it, from local governments in the U.S. to agencies in Argentina and Singapore.
Meanwhile, investor dollars are flowing in. In 2013, GitHub received $100 million from Andreessen Horowitz in what was then the biggest funding event undertaken by the celebrated venture capital firm. GitHub, in Marc Andreessen's mind, represents a tectonic shift--that is, "software is eating the world." By that the investing luminary means that software companies are taking over large swaths of the nontech economy, per a 2011 editorial in the The Wall Street Journal.
Since then, the company has amassed millions more--bringing its grand tally to $350 million in total venture backing. With that, GitHub has nearly tripled its employee head count, to 390, since 2013. With this funding, it also hopes to expand its enterprise coding efforts and to expand internationally. (GitHub would not comment on its financials, nor did it make executives available to talk for this story.)
Despite all of the feathers in its cap, the company has met with plenty of controversy in its brief life so far. In 2014, an engineer named Julia Ann Horvath left GitHub amid very public claims of gender-based harassment, which included alleged pressure from Preston-Werner's wife to work pro bono for a nonprofit startup she had founded. The accusations prompted a self-led internal investigation, which GitHub said uncovered no legal wrongdoing. Yet Preston-Werner stepped down from his role as president in April of that year. The investigation, according to a blog post from that time, found that Preston-Werner had "acted inappropriately, including confrontational conduct, disregard of workplace complaints, insensitivity to the impact of his spouse's presence in the workplace, and failure to enforce an agreement that his spouse should not work in the office."
Since then, GitHub says it has created a task force for sensitivity training and awareness of gender issues, as well as a documented feedback process for complaints. Additionally, it has hired Nicole Sanchez, a former chief executive of diversity advisory Vaya, as vice president of social impact, which supports diversity and non-discrimination efforts at the company.
GitHub's biggest challenge these days--and in the near future--according to Bartoletti, is turning more of its free users into paying customers. One way it might do that is by following LinkedIn's model of charging for premium networking services, he suggests.
The company will also have to keep looking over its shoulder for emerging competitors, so it doesn't snatch defeat from the jaws of victory. For example, Atlassian, an enterprise software company based in Sydney, Australia, with offices in San Francisco, has assembled some of GitHub's code-sharing capabilities. Atlassian offers a web-based project support service called Bitbucket, which is quickly gaining steam among coders.
"In the public cloud market, it is all about size," Bartoletti says. "[GitHub's] growth could slow down, and someone else could find a way to tap into developer teams."