Tuesday, July 10, 2012

Cash For Code: Github Raises $100 Million From Andreessen Horowitz

Startup Github, which provides tools for programmers to collaborate on software code, has raised $100 million in financing from venture firm Andreessen Horowitz–the largest investment the firm has ever made.

The funding shows how software development has grown to be a major critical need of a wide range of companies outside of the technology industry. I previously covered how that trend has helped Github competitor Atlassian. Also participating in the Github round was SV Angel.

Github has more than 1.7 million developers on its platform and more than three million software repositorise. The San Francisco company, with 100 employees, has been bootstrapped for more than four years and been profitable, growing by word of mouth because of its popularity among programmers. Github has turned down venture capital in the past because it valued its independence. But Tom Preston-Werner, CEO of GitHub, says the company was won over by Andreessen Horowitz, particularly Netscape cofounder Marc Andreessen and Peter Levine, who is joining Github’s board.

“We never found a partner who shared our vision with us and had a passion for software development that we do until we met Marc and Peter Levine,” Preston-Werner says. The startup, which has a strong focus on open-source software, also appreciated the partners’ focus on open source.

The funding will enable the company to expand into a number of new areas. “Github Everywhere” is the company’s strategy to get the service used for individuals, small businesses, students, universities and enterprises. Github’s offering for large enterprises is still in its infancy. Workings seamlessly across platforms such as Mac, Windows, Linux or mobile devices is also a priority. International expansion is on the agenda, as well as making Github more common for more programming languages. Right now it’s common for Ruby on Rails or Javascript, but the company wants it to be as common for coders writing Java or C++.

Finally, the company wants the service to have tools that are easy for non-programmers to use–such as technical writers, designers, or managers, so that they can easily find out what’s going on in a project.

Peter Levine of Andreessen Horowitz says Github has revamped an old technology category, source code management, by moving it all to the cloud. Github has also made it social, so that programmers often use their Github account as a kind of resume for recruiters. “By orienting around people rather than repositories, GitHub has become the de facto social network for programmers,” Levine writes in a blog post. “If you are using another programmer’s open source libraries, are interested in what she’s doing or just a fan of her work, you can follow her on GitHub. If you need to hire great programmers, why look at resumes when you can view a candidate’s actual work on GitHub?”

Github is free for people to use publicly to collaborate on code. The service has been popular for open source applications–and the company contributes some of its own code to open source. People only pay to have private use of the service, say for development inside a company. Github has a sales team but it’s not a traditional one.

The company tries to get people at a company to use the service first for open source or their own personal projects for free, hoping they will then ask their managers to buy Github for the company. In a way it’s similar to the freemium model of companies like Dropbox. Sales people are not paid on the typical commission basis at Github so that they focus on selling only what is the best for each customer, not just on making the most money. ”We want the decisions to come from customers not a heavy sales process,” Preston-Werner says. “We want to make the best product possible and have it sell itself.”

Github can also be used for people to collaborate on non-technical projects. Preston-Werner even used it to post a list of top vegetarian restaurants in San Francisco, which others have also added to.

Github differentiates from others such as Accel Partners-backed Atlassian by focusing on open source, Preston-Werner says. “When we got started we were the only ones doing collaborative tools around open source,” he says. Github also is different from Atlassian because it has built all of its tools internally rather than doing acquisitions, he adds.

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