I can't help but think that this investment marks the Pets.com point in this investment cycle.
GitHub is essentially a web interface to a single open-source DVCS. The switching costs to using another DVCS such as Mercurial (which I personally prefer) or another Git hosting provider are minimal. There are no barriers to entry since Git is and always will be free. There are very few network effect benefits to using GitHub for paying customers who by definition want to keep their code private.
GitHub is a good service and I use it myself, but I'm now increasingly cautious about using it since GitHub are now under serious pressure to deliver pretty spectacular returns to their investors.
In the end I think this investment has less to do with GitHub and more to do with the fact that e.g. yields on 10-year Treasuries are currently under 2%. Investors are desperately looking for any decent returns on their money and throwing it a company like GitHub is just a Hail Mary pass.
GitHub is essentially a web interface to a single open-source DVCS. The switching costs to using another DVCS such as Mercurial (which I personally prefer) or another Git hosting provider are minimal. There are no barriers to entry since Git is and always will be free. There are very few network effect benefits to using GitHub for paying customers who by definition want to keep their code private.
GitHub is a good service and I use it myself, but I'm now increasingly cautious about using it since GitHub are now under serious pressure to deliver pretty spectacular returns to their investors.
In the end I think this investment has less to do with GitHub and more to do with the fact that e.g. yields on 10-year Treasuries are currently under 2%. Investors are desperately looking for any decent returns on their money and throwing it a company like GitHub is just a Hail Mary pass.