🌱How Github grows and makes money

As GitHub has grown to over 100 million developers, they've had to balance rapid growth with maintaining their developer-friendly culture.

Welcome to Productify. Today’s post has a reading time of 10-12 mins.

In 2018, Github Annual Recurring Revenue (ARR) was $250 million and it was being used by ~30 million software developers.

By end of 2022, it reached $1 billion ARR 📈📈and we estimate that by end 2023, the revenue to be between $1.4 billion to $1.45 billion, based on the 40-45% year-over-year growth.

And from 30 million developers in 2018, GitHub grew to over 100 million developers 🤯 using the platform in 2023.

Source: Octoverse: The state of open source and rise of AI in 2023 - The GitHub Blog

Today in this issue of Productify, we cover the more finer dynamics behind this growth story. We deep dive into how it happened, what are the monetization tactics in play, cultural aspects at Github that played a role and what lessons does Github model have for your product and/or organization.

Let us dive into it.

What’s central to Github’s story?

The 2018 to 2023 growth numbers did not happen by chance.

Of-course, an important event in 2018 was that Microsoft acquired GitHub in 2018 for $7.5 billion, which was initially met with some skepticism in the developer community. In the past, Microsoft had been perceived as hostile to open-source software. The company's former CEO, Steve Ballmer, once referred to Linux as a "cancer" in the early 2000s.

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This history made some developers wary of Microsoft's intentions for GitHub, a platform central to open-source development. Some also feared that Microsoft's corporate structure might alter the developer friendly culture which was GitHub's focus.

But that wasn’t the case.

By 2023, GitHub was used by 90% of Fortune 500 companies, indicating strong enterprise penetration and acceptance amongst developer communities. Github stuck to its positioning irrespective for Microsoft’s influence, and that is why this story is so important. This is about what do you stand for as a brand and a product.

Github’s developer-friendly positioning

By consistently prioritizing developer experience and evolving its features to match changing development practices, GitHub has maintained its position as a developer-friendly platform. Hence, the Github story is also about its positioning and how sticking to positioning no matter what has its big advantages.

Just as an example, an important jobs-to-be-done for software developers is to be able to share code. Before Github, lot of it was being done via exchanging patches of code via email, FPT servers etc.

There was no single, widely-adopted platform for hosting and sharing code. Developers had to rely on various methods, which led to fragmentation and inconsistency.

GitHub addressed these issues by providing a centralized, user-friendly platform that combined version control, collaboration tools, and social features.

This made it easier for developers to share code, collaborate on projects, and contribute to open-source initiatives, ultimately transforming the way software development teams work together.

GitHub's mission is to "accelerate human progress through developer collaboration". Despite being acquired by Microsoft in 2018, GitHub has maintained its identity and focus on being a developer-centric platform.

It continues to project and report on the future of developer productivity and tracks actively communities across the world.

Source: Octoverse: The state of open source and rise of AI in 2023 - The GitHub Blog

What’s central to Github’s culture?

Just like Microsoft’s acquisition had no impact on Github’s developer friendly positioning, the scale of reaching millions of developers using its platform had no impact on its cultural values.

As GitHub has grown to over 100 million developers, they've had to balance rapid growth with maintaining their developer-friendly culture. The fact that they continue to emphasize their values and culture in their careers page suggests they've made efforts to preserve their cultural identity even as they've scaled.

Let us analyze each cultural value, with an example of how Github demonstrates that.

1. Customer-obsessed:
   GitHub focuses intensely on developer needs and experiences. This is evident in their continuous improvement of features like pull requests, issue tracking, and GitHub Actions, which streamline developers' workflows.

   For example, the introduction of GitHub Copilot shows their commitment to enhancing developer productivity through AI assistance.

2. Ship to learn:
   GitHub frequently releases new features and improvements, gathering feedback from the developer community.

   The evolution of GitHub Actions from a basic CI/CD tool to a comprehensive automation platform demonstrates this iterative approach.

3. Growth mindset:
   GitHub encourages learning and development. Their GitHub Learning Lab and GitHub Skills initiatives provide free resources for developers to improve their skills, showcasing the company's commitment to fostering growth in the developer community.

4. Own the outcome:
   GitHub takes responsibility for the impact of its platform. Their focus on security features like Dependabot and code scanning shows how they own the outcome of providing a secure development environment for their users.

5. Better together:
   GitHub's platform is built on the principle of collaboration. The entire concept of pull requests and code reviews embodies this value, enabling developers to work together more effectively.

6. Diverse and inclusive:
   GitHub prioritizes diversity and inclusion across their platform, people, philanthropy, and policy. Their support for open-source projects and initiatives like the GitHub Sponsors program demonstrates their commitment to fostering a diverse and inclusive developer ecosystem.

How does Github make money?

Early Days: The Foundation

When GitHub was founded in 2008, it revolutionized the way developers collaborated on code. Initially, GitHub's revenue model was straightforward, relying primarily on subscription plans for private repositories.

The platform offered free public repositories to foster open-source development, while charging for private repositories used by businesses and individual developers who needed privacy and additional features.

Evolution and Expansion

Over the years, GitHub expanded its offerings and revenue streams significantly.

The acquisition by Microsoft in 2018 for $7.5 billion marked a pivotal moment, bringing additional resources and strategic direction.

This period saw GitHub evolving from a simple code hosting service to a comprehensive developer platform with multiple revenue sources.

Current Revenue Sources

1. Subscription Plans

   • Revenue Model: Subscription-based

   • Plans and Pricing:

     • Free Plan: Unlimited public and private repositories with basic features.

     • Pro Plan: Advanced tools for individual developers, typically priced at $7/month.

     • Team Plan: Collaborative tools for small to medium-sized teams, priced at $4/user/month.

     • Enterprise Plan: Advanced security, compliance tools, and administrative controls for large organizations, priced at $21/user/month.

   • User Base: Millions of individual developers and small to medium-sized teams.

2. Enterprise Solutions

   • Revenue Model: Subscription-based

   • Description: GitHub Enterprise offers advanced features tailored for large organizations, including GitHub Copilot Business.

   • User Base: 50,000 organizations, including major enterprises like Goldman Sachs, Etsy, and Dell Technologies.

   • Pricing: Typically priced per user per month, billed annually.

3. AI-Powered Tools

   • GitHub Copilot:

     • Revenue Model: Subscription-based

     • Description: An AI-powered coding assistant that helps developers write code faster and more efficiently.

     • User Base: 1.8 million paid subscribers, with a 35% quarter-over-quarter growth.

     • Enterprise Adoption: Used by organizations like Accenture, which plans to roll out the tool to 50,000 developers.

   • Impact: GitHub Copilot is a significant revenue driver, contributing to over 40% year-over-year revenue growth.

4. Marketplace and Additional Services

   • GitHub Marketplace:

     • Revenue Model: Commission-based

     • Description: Allows third-party developers to sell tools and extensions, with GitHub earning a commission on sales.

   • Additional Services:

     • GitHub Actions: Automation and CI/CD services, likely monetized through usage-based fees or included in higher-tier plans.

     • GitHub Packages: Package management services, potentially monetized similarly to GitHub Actions.

Revenue Breakdown and Growth

• Major Contributors:

  • GitHub Copilot: With 1.8 million paid subscribers and rapid growth, Copilot is one of the fastest-growing revenue sources.

  • Enterprise Solutions: The adoption by 50,000 organizations, including large enterprises, makes this a significant revenue contributor.

• Steady Contributors:

  • Subscription Plans: While not growing as rapidly as Copilot, subscription plans for individuals and teams provide a steady revenue stream.

• Growing Segments:

  • Marketplace and Additional Services: These are smaller revenue sources but have potential for growth as more developers and organizations adopt third-party tools and automation services.

Product and Engineering Culture at Github

GitHub's product and engineering culture is a fascinating blend of innovation, collaboration, and developer-centric thinking. Let's dive into some of the fun and interesting aspects that make GitHub's culture unique:

1. Open Source at Heart:
   GitHub's DNA is deeply rooted in open source. It's not just a platform for open source projects; it's a way of life for Hubbers (GitHub employees). Many GitHub employees contribute to open source projects as part of their job, embodying the "ship to learn" value.

   This open approach extends to their own products too - for instance, the Atom text editor was open-sourced and became a beloved tool in the developer community.

2. Remote-First Pioneers:
   Long before it was cool, GitHub embraced a remote-first culture. They've mastered the art of asynchronous communication, using their own platform for collaboration. Imagine using pull requests to suggest changes to company policies - that's how GitHub rolls!

3. Octocat Obsession:
   GitHub's mascot, the Octocat, is more than just a logo. It's a cultural icon that has spawned countless variations and even has its own "Octodex" (https://octodex.github.com/). Employees often create their own Octocat avatars, adding a playful touch to the corporate environment.

4. Meritocracy in Action:
   At GitHub, your ideas matter more than your title. The company has a history of implementing great ideas regardless of where they come from. For example, the "GitHub Student Developer Pack" started as a hackathon project by an intern!

5. Continuous Learning:
   GitHub's "Growth mindset" value isn't just talk. They have a dedicated learning platform called "GitHub Skills" (https://skills.github.com/) where developers can learn by doing, right on GitHub. It's like they're constantly eating their own dog food - or should we say, "drinking their own champagne"?

6. AI Integration:
   With the introduction of GitHub Copilot, GitHub has shown its commitment to pushing the boundaries of developer tools. The engineering team behind Copilot had to grapple with complex AI ethics questions, showcasing how GitHub tackles cutting-edge challenges.

7. Hackathons and Innovation Time:
   GitHub regularly hosts internal hackathons, encouraging engineers to work on passion projects. Some of these have evolved into full-fledged features, like the GitHub CLI.

8. Community-Driven Development:
   GitHub's product decisions are heavily influenced by its user community. The GitHub Discussions feature, for instance, was developed in close collaboration with open source maintainers to address their specific needs.

9. Inclusive Design:
   GitHub's commitment to diversity extends to its product design. For example, they've put significant effort into making the platform accessible to developers with disabilities, including keyboard navigation improvements and color contrast adjustments.

10. Fun with Features:
    GitHub occasionally sneaks in fun easter eggs. Remember when they added a "Squirrel" tab next to "Pull requests" for April Fools' Day? It's this kind of playful spirit that keeps the platform engaging for developers.

To dive deeper into GitHub's culture, check out their engineering blog (https://github.blog/category/engineering/). These resources offer a window into the thinking and practices that drive GitHub's product and engineering teams.

Key Takeaways from Github’s growth strategy:

1. Unwavering Developer-Centric Focus and Positioning:
   GitHub maintained its developer-friendly positioning and culture even after the Microsoft acquisition in 2018. Despite initial skepticism, GitHub continued to prioritize developer needs and experiences, which led to strong enterprise adoption and user growth.

2. Building relevant products for its user problems
   GitHub evolved from a simple code hosting service to a comprehensive developer platform.This continuous innovation helped GitHub stay relevant and attractive to developers and organizations alike.

3. Strong Cultural Values and Community Engagement:
   GitHub's culture, built around values like being customer-obsessed, embracing a growth mindset, and fostering collaboration, played a crucial role in its growth. This cultural alignment with its user base helped GitHub grow from 30 million developers in 2018 to over 100 million by 2023.

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