How To Turn Your Hobby Into A Profitable Business – With Chris Wanstrath

by Tim Jahn on September 14, 2010

I met Chris Wanstrath at The Combine conference in Bloomington, IN last week after he gave a presentation on bad ideas and how they can actually be a good thing.

Chris is the co-founder of GitHub, a website that provides a place for developers to collaborate on projects together.  His company is profitable and 100% bootstrapped – no VC money at all.  He didn’t set out to create GitHub from day one.  As Chris explained in his presentation, he had plenty of bad ideas prior to GitHub.

Transcript

Chris Wanstrath:
I’m Chris Wanstrath. I’m one of the three cofounders of GitHub. So what GitHub is, is it’s a place for, it’s a website that developers and designers can build software together.

And so the example I like to use is delta.com. You go to delta.com and you want to book a flight, you put in all your information, there’s like a bunch of software running that, there’s a database and all this stuff behind the scenes and a team of people working on that to keep it up, to keep it fast and they’re always working on it, right. Adding new features, discounts whatever. So people use our site to build stuff like delta.com

Tim Jahn:
And you guys are 100% bootstrapped. Why bootstrap as opposed to VC, especially being in San Francisco. What made you go that route?

Chris Wanstrath:
We just wanted to have full ownership really. That’s what it was all about for us. We wanted to be in total control. And I think when you talk about collaborate software development and sort of like social coding, and distributed version control, we were always thinking a couple years out. And that’s not to say that investors aren’t on that same wavelength.

But I think our vision of the site and what it is today or what we thought it was going to be was a really hard sell. We weren’t good at expressing it and we were not sure — we weren’t really confident we were going to find someone who was on the same page as us. So we said, let’s just suck it up and do it ourselves and then we’ll be in charge. We all have confidence in each other, we know where we’re going to go and we don’t want someone who’s main idea is this conflicting concept to really try to get in the middle of it because we all working with each other.

And we were like this team of three people is great, let’s build out the team how we want to build it out and go from there. So I don’t think VC is bad. I mean, I would consider taking it in the future if I did another company. But hopefully I can just stick with GitHub until I die or something like that. I want it to be a really great company and I think we’re heading towards that.

Tim Jahn:
And you mentioned the reason you didn’t really seek VC is because you wanted to retain full ownership. Was that idea of taking full ownership more important then, than taking advice and council from outside parties like VC?

I mean, it’s like they would give you money, they would take ownership but at the same time they would give you this guidance. Was it more important to take ownership than you kind of sacrificed the guidance? Because I meant hat must have been hard on you three just jumping into this.

Chris Wanstrath:
It was hard. And we did it for a while part time while we did consulting and Tom worked at Powersite, which later got acquired by Microsoft. So some of us were working 40 hours a week while we were working on GitHub on the side as a launch project charging money for it. So that was really difficult. I think the main reason we didn’t take VC is because we were afraid of what it would do the corporate culture of having all of that money right away.

And we weren’t sure what we were going to do with it. Like, we needed to pay for servers, we needed to pay for employees but did we really need like 20 employees two years ago or could we just like us three sort of bear it? And yes, it would be difficult but I guess we just kind of reasoned that we could get through it. I don’t know, we were a little bit, I guess area incocture.

And in retrospect, it was crazy. A lot of things we tried didn’t work, but that was the idea. We thought like, we can do this. We can definitely do this, we’re going to work really hard and we’re going to do it. And then we’re going to keep ownership of the company and its going to be our company. We don’t want to sell the company right now. We don’t even really want to think about it right now. We don’t want to want anyone else to invest in it. We want to keep the company going the way its going and then maybe in five years or whatever say, “Okay, where are we? Is it a great company? Are we still happy here? Where is it going? Are we still making our customers happy? Are we still like innovating?”

If were doing all that stuff, that’s awesome. That’s what we want to be doing. But if we’re not then maybe we reevaluate where we’re at. But right now, we’re really happy with the way things are going and we just don’t really — I mean, advice is great.

We have friends that are VC’s. We have dinner with them and stuff and they give really good advice and they make introductions and we try to help them too. But, you know, I just didn’t think we needed another business partner. And I don’t think any of us thought we did. I mean, three people is a lot of ego already.

Tim Jahn:
Do you — I find a lot of entrepreneurs even after they build a successful company, they cant get rid of other ideas in their head and they feel that at some point they need to go act on them. Are you content with GitHub or do you have other ideas that keep popping in that you think at some point you’re going to need to go address?

Chris Wanstrath:
Yeah, it’s like a poison really. It’s both of those things. I have lots of ideas about GitHub all the time. Things that are crazy ideas and not crazy ideas for what I wanted to make it better. Everyone in the company does absolutely. And then we all have ideas of other things we want to do, little things on the side like iPhone is hot right now and iPhone development is really different from the stuff I’ve worked on classically. So that excites me, I want to work on an iPhone app. Maybe that’s me working on a GitHub iphone app in my spare time. Maybe it’s me working on some sort of other crazy thing in my spare time.

But that’s what going back to programming as a hobby. Like I’m always thinking about stuff not necessarily things that I want to create as a business, but just like fun ways to get out creativity. So yeah, it sucks sometimes because sometimes it’s really easy to start but really hard to finish something, right. I heard Kevin J. Anderson is this New York Times best-selling author said, “To begin is human and to end is divine.” Right.

So, it’s really easy to start stuff. And sometimes you can get sort of bored with your idea halfway through it but it’s really important that you finish it. And I guess that’s one of the skills you have to acquire and the thing you have to fight with every day, is like I have all the other great ideas, I’m just going to put a list somewhere. And maybe that list goes in the garbage can, but I need to put it down on paper and then just forget about it until I finish what I’m working on.

But that’s really hard for me especially when you’re going around traveling and stuff, meeting people, getting really inspired and finding out like lots of great like opportunities either for businesses or just things that are creative tools. It’s hard to balance that. But I think the most important thing is that you’re happy. And so if you’re not happy with your website, if you’re not happy with GitHub after x years, then maybe it is time to move on. But I’m really happy right now.

Tim Jahn:
And your business model is, I mean, you said anything public on your site people can host for free. And then any private companies or something with projects have to pay. So you obviously only make money from the private companies I assume? There’s no other sources of revenue?

Chris Wanstrath:
We have other sources of revenue. We have a shop so we sell T-shirts and now mugs. So you get a GitHub mug with the GitHub logo on it. Mainly because you can’t really order like ten, so we had to order like 300 and then we’re going to put them on the shop and share them with everyone. But, because we just wanted them for ourselves, right. So we do that.

And we have an on-premise version of the site. Like it’s called the GitHub: Firewall Install. So a company that doesn’t want to use SAAS, they don’t want to put their stuff up on their website. They can pay us and then run it internally on a Linux Os X. So some bigger companies do that either because they have a lot of red tape, or they’re just paranoid, or they’re a government thing and it’s against the law for them to put it on the site. So there’s that. And then we have a job board.

So we’re all about like collaborative software development I think. And so one of the ideas was like, oh, you know, we can make some money by connecting employers and people that are looking for good jobs. So we have a job board and employers pay us to put stuff up there. And yeah we have a couple different streams of revenue. But the main one is definitely private companies paying. And we don’t charge, there’s no like real heavy upsell on the free stuff. We’re not — I don’t really think of us as a freemium model. Because if you go for your entire GitHub career and its never paying us anything, that doesn’t really bother us.

And we like that and we want to make those people happy because that’s the type of people we are. Like we’re hobbyists too. And if that person is just doing hobby stuff or if there’s an awesome business running their whole thing off open source, that’s even better and they can — because we love open source.

But yeah, we want to just charge companies. It really goes back to the idea that if you’re going to share your code with people, you’re probably not making money off of it. If you’re going to keep it private, it’s probably because you’re making money off of it. So it just makes sense that if you want your private code, you’re making money, you can pay us. If your stuff is open, free, you’re not making money, it would be kind of crazy for us to charge you.

I wouldn’t pay to host my open source code anywhere. I’m not making money off of it. I already have to pay for like a website if it’s on some, hosting somewhere or if I’m running it and it’s like some dynamic thing. Thank heavens for like WordPress.com and stuff like that where you can just go run a blog now.

Because before you had to go have like a hosting account and all this sort of stuff. So we just don’t want to charge people that aren’t making any money. And it gets us a lot of users, it gets us a lot of good will, and it gets us a really, really great community I think that we’re all really proud of and we want to be a part of and we are a part of. But that was the idea.

We built the site as a hobby for ourselves and it turned into this business. And so I guess we kind of had that spirit of how do we keep it something that we like. And I guess like pissing people off and charging people things that we shouldn’t charge them for, those are the things that we don’t like about giant companies. I don’t want to name any names but like AT&T and Verizon.

But you know you feel like not treated awesome by them and there’s all these other charges. And we just want to be like, look, this is how we charge you and so this. If you’re making money, you pay us money and if you’re not then you don’t. And it just seems fair and it’s working really well. So we want to keep like that idea going.

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