Comment by jasode | Hacker News Reader

Comment by jasode | Hacker News Reader

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>, github sold out to investors,

>Investors were in this for a huge exit

I think these excerpts from your comment and also DHH's "VCs need their pound of flesh" are not helpful for readers on how to analyze the situation. They (maybe unintentionally) taint the discussion.

Github is an entity owned by human beings. The founders included Chris Wanstrath, Tom Preston-Werner, PJ Hyett, and Scott Chacon. Therefore, emphasizing that "investors wanted a big exit" is (inadvertently) omitting that those 4 founders may have also wanted a big exit as well. The DHH quote also misdirects people into thinking the VCs are the bad guys. Instead, we have to remember that the 4 founders have to sign off on the documents at closing to get the $350 million. They had to do presentations to convince investors to give them $350 million.

We have to include the founders' thinking about Github's future and not just outsource our frustration to those "evil VCs". VCs cannot give money to a startup if the founders don't want it. (E.g. Craig Newmark refuses VC money for craigslist.org.)

You are extrapolating an opinion that I don't have. I don't consider the founders, investors, or MS evil. The only mildly controversial thing here is that a big corporation like Microsoft with a long history of hostility towards anything OSS ended up buying the goto gathering place for the OSS community. I don't think that ever was a dream scenario for any of the early founders or early adopters of that company. It will be interesting to see if e.g. Linus Torvalds migrates his linux repository elsewhere.

But obviously, Github was never a charity. It is owned by a group of investors that invested hundreds of millions. An exit in the form of an acquisition or IPO are the only two reasonable happy endings for such a company. This was like this from the day the founders decided to sell ownership to investors. That's what it means to play that game. Usually a first round leads to follow up rounds. Which leads to revenue and ultimately to an IPO. That's the scenario you pitch to investors. In the end it is about shareholder value.

So, normally an acquisition is considered the less ideal outcome of those two. It implies some sort of failure to deliver. Github running without a CEO for a while, reported cash flow issues, and then getting acquired by MS sort of supports that kind of story. I'm assuming the founders did indeed well for themselves. I'm wondering if the same applies to their employee stock option programs since typically those are a bit lower in the pecking order. I don't really know enough about the ownership structure to say anything here but I imagine for most employees ending up working for Microsoft might not have been the dream outcome. And as for most Github users, this probably was a bit of an surprise/shock.

In my case, I'm a paying customer and I see no reason to change that. Love the product so far and MS seem to have the right intentions and strategy to keep it that way.

> I don't consider the founders, investors, or MS evil.

Fair point if I overstated your perspective on VCs.

I don't know if English is your primary language but if you didn't know, the phrase "sold out" is virtually always used in a derogatory manner. When one writes "<X> sold out to <Y>", the <Y> is the proverbial bad guy. It's also parsed as an insult to both <X> and <Y>. E.g. "It's a shame that guitarist sold out to BadMusic Record Company."

It seemed like "sold out to investors" emotionally taints the VCs as bad actors and poisoned the discussion. (Yes, some VCs are bad and unethical.)

In any case, people should think of VCs as one type of financing option. (Bootstrap is another, but that has its own risks and downsides. Bank loans are another finance option but most startup founders have no collateral.) If you don't want to pressure your company into a big exit, do not talk to VCs.

>So, normally an acquisition is considered the less ideal outcome of those two. It implies some sort of failure to deliver.

Maybe. One of the VCs I saw mentioned that acquisitions are actually the more common exits for B2B companies. Github (enterprise) was more B2B than B2C. If this is the consensus view, both a16z and Sequoia may have anticipated acquisition as the most likely (and successful) outcome at the time they invested.

Well, the founders certainly are (as near as I can tell) letting MSFT and their VCs take heat for a decision the founders alone made.

Taking $350m in VC means you promise to build a stupidly profitable company or sell it to a high bidder. That's the deal, and it's completely understood by anyone in a position to raise nine figures of VC.

I'm not native indeed but fluent enough to deal with the subtleties. I like to use strong language when making points in public fora. It's a style that is admittedly a bit over dramatic but tends to provoke people a bit more into engaging.

From my dealings with VCs my understanding is that they are mainly incentivized by investing and less by the success of those investments because the timelines are half a decade or more and they reap their rewards long before that happens. Basically the job of a VC is to spend money in some fund. It's a very competitive market to be in. Acquisitions are the tool of choice to make sure under-performing investments are not a total loss. A lot of acquisitions and acquihires are effectively investors consolidating their losses. It's common for them to have stakes in both the acquiring and acquired company. In this case, that's probably not what happened of course. But still, the investors are probably quite happy with this outcome.

From the standpoint of an end user (which is all of the people complaining about Microsoft acquiring Github) VCs and their money are the bad guys, because the dynamics of their investment is what causes the acquisitions which change the service in ways that I (the end user) do not like.

Not saying they're right or wrong (I think at the very least it's a limited point of view) but that's the argument being made.

>VCs and their money are the bad guys, because the dynamics of their [the VCs] investment

You're repeating the same "outsourcing of blame" to VCs that I was trying to short circuit.

VCs as an abstraction are a convenient target but that doesn't mean they are the correct target.

The founders of Github such as Chris Wanstrath, Tom Preston-Werner, et al have agency and autonomy. Why are they specifically not included in our analysis?

In other words, why aren't we saying this:

>CW & TPW's desire for VC money are the bad guys, because the dynamics of their request for VC investment

It seems wrong that analysis, blame, and frustration seems to gravitate towards VCs and terminates only at the VCs -- instead of the founders who willingly asked the VCs for the money.

Yes, DHH is against VC money. But maybe CW and TPW don't think about Github exactly the same way as DHH thinks about Basecamp.

VCs are a convenient abstract bogeyman. Yes, VCs do tend to encourage a grow big or go home mentality but it is, as you say, the founders who wanted that sort of investment.

It's also the case that, as soon as someone here suggests that a startup doesn't need to operate in that manner, someone--as certainly as the sun will rise in the east--will post Paul Graham's startup definition and argue that you're not a real startup without a growth-first mentality.

You're super-close. Money is the "bad guy". It might not appear to have agency or autonomy, but that is because humans are not good at perceiving intangible power structures.

In other words, why aren't we saying this:

>Money is the bad guy, because its presence, uneven distribution, cult of worshipers, fungibility, and inherent ties to social power structures are unhealthy influences on the founders of Github

Beyond money, it's the logic of commoditization that is the bad guy.

I feel like I should post Francisco D'Anconia's Money speech here....

Money by itself isn't the "bad guy"; its a store of value. Like Technology it can be used for good or bad. We have structured our society to reward greed with unbelievable wealth. Like how can someone spend billions of dollars of their wealth? What is the need for someone to own all that wealth? And yet we all take that as given and aspire to it.

Okay, but anyone making that argument should also consider that the existence of VCs and their money may well have been part of the reasoning that led the founders to create the service in the first place. Look at the almost total absence of such useful or interesting services created in places that don't have VCs.

Users love the VC's money. Uber handed out multiple billions of dollars subsidizing both riders and drivers from these massive investments, but even smaller investments often mean the same things. From photo sharing to local delivery most of these services are beloved in large part because they don't need to be directly profitable.

...yet. "Directly or indirectly profitable" eventually happens.

I can't think of anybody that would be better to acquire GitHub, if it had to be sold off.

At least Microsoft is heavily invested in developer tools, and making them better all the time.

The term, "github sold out to investors," adequately includes the founders as part of the equation to me. "Sold out," describes all that you mentioned about courting investors and whatnot.

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