GitHub is a $100M ARR revenue company that is probably (2 VC rounds where they had a lot of leverage) still controlled by the founders. They are in a healthy state right now, regardless of the high burn compared to most VC-backed companies.
They certainly made a lot of mistakes, had changes in the leadership team and are successful despite that not because of it, but I don't see them dying anytime soon.
$60M burn over 9 months after raising $250M isn't horrible either. If they continue to grow which seems to be the case, they will be break-even long before they run out of money.
The numbers aren't surprising to me; I'm more surprised why Bloomberg makes such a big deal out of it. GitHub's bigger problem is certainly that they stopped improving, had internal team issues, etc. but that's only a small part of the article (vs. a big focus on those numbers).
> If they continue to grow which seems to be the case, they will be break-even long before they run out of money
What are you basing that on?
The article says that in 2015 they had revenue of $95 million and lost $27 million.
For the first 3 quarters of 2016 the article says they “surpassed last year’s revenue […] with $98 million”, but also that they lost $66 million in that same period.
So while revenue doubled, the loss more than doubled, which does not look like they are on the path to break even.
Of course there are many unknowns, but going by the numbers in the article alone, it does not look like a slam dunk.
As an anecdote, I was called into a meeting with the CTO of a fairly large European bank, and a sales guy from GitHub a couple of month ago.
I got the feeling that they are selling rather aggressively right now.
It's a bit tricky because the Bloomberg article states different numbers. It's unclear what they mean with revenue (ARR? Recognized Revenue?).
But, let's take some of those numbers: $25M in Sep'14 (subscription revenue annualized => ARR), $95M in Sep'16 ("revenue" - let's assume it's ARR; recognized revenue would be even better) - that's very impressive growth.
If that continues slowly, let's say they went from $25M to $70M, then growth slowed and they grew to $95M and can get to $120M by the end of next year and grow from there - that's a lot of additional revenue to offset the burn.
Burning $88M per year ($66M in 9 months) after getting $250M from investors + probably a large credit line - even if they don't grow at all, don't reduce cost, that's cash for 3 years.
If they reduce their costs (let's say by $15M), make $25M more in revenue, then it's a $40M lower burn ($48M), and they would still have plenty of the $250M in the bank (+ credit line + what they had before they raised the round).
I'm not saying it's easy or that they are doing phenomenally well. I'm just saying that they can get it under control relatively easily compared to other companies that have high burn rates.
> I'm more surprised why Bloomberg makes such a big deal out of it.
They're probably sounding alarmist to try maximising attention. :/
Could be or they probably don't know the details of GitHub's business, product, etc. If you aren't an engineer, writing for Bloomberg and getting the financials of a hyped startup like GitHub, that article is the outcome in most of the cases. Imagine them writing about Docker - I doubt it would be different.
Which is a bummer. I wish there would be somebody more closely analyzing the industry. There's so much going on and I believe that surfacing more of that to the broader community would be beneficial for all of us and result in stronger companies. I think nobody wants to see GitHub going out of Business. We need health competition (as consumers of their products). That GitLab forced pressure on them to improve the product is awesome. I wish Bloomberg would have put more focus on the cultural/leadership issues because a more diverse/inclusive GitHub, again, is better for all of us.
> If you aren't an engineer, writing for Bloomberg and getting the financials of a hyped startup like GitHub, that article is the outcome in most of the cases. Imagine them writing about Docker - I doubt it would be different.
And it shouldn't be different. If the financials are not well, then the financials are not well. Docker, like github, DOES NOT have their future "locked up" 100%. There are a lot of reasons why both could ultimately fail and burning piles of cash seems pretty darn relevant despite the echo chamber that is Silicon Valley.
I think the financials aren't the actual problem & aren't as bad as the article frames them to be. Look at other SaaS companies at a large scale (eg. New Relic) - they also had huge losses after raising larger rounds. I'm not saying that burning such a huge amount is necessarily a good thing. I'm just trying to put it into perspective.
For me, it's especially not surprising because GitHub needed to heavily invest into GitHub Enterprise, start doing Sales, etc. to keep growing at the rate they wanted and they probably made a lot of mistakes when they started Sales. It's hard, and especially if you put Sales into a very developer-driven culture (=> takes you longer to figure it out => more mistakes => costs you more money). That all being said, some things they did are certainly a sign of being a bit too confident (office, etc.).
But, that's all not their biggest threat. You can get the burn easily under control and reduce cost especially if they are primarily in Marketing/Sales. The bigger issue is a decrease in product quality, a (perceived) slower pace for innovating/improving than their competitors (GitLab) and all the internal culture/team struggles. Having changes in your key positions, 2 out of 4 founders leaving, CEO change, etc. - that's all far more dangerous. A good leadership team can control the burn and reduce it if necessary. A good leadership team sets the right culture.
Studies have unfortunately shown that negative news gets more eyeballs. When's the last time you saw positive uplifting news on say, CNN?
"I'm more surprised why Bloomberg makes such a big deal out of it."
this is a pretty bad hit piece from Bloomberg, they should be ashamed
Github was founded in 2008. I think it's fairly reasonable to expect that an 8 years old company shows some kind of path to profitability, especially when you consider the popularity of the plarform an the amount of VC money it attracted. When you're near peak popularity and competition is heating up, being profitable or at least being cash flow positive is a good thing.