GitHub: The first mover advantage

GitHub has created a platform for software development based on a freemium model.

This semester, I’ve been sitting in on the computer science course that HBS has that’s specifically targeted at MBA’s- aka what do we need to know about coding and programmers without having the skill ourselves- and the topic of the most recent seminar was GitHub.
GitHub is “the world’s leading software development platform”1 and is the current gold-standard in the world of programming for collaboratively working on code. The class focused on the benefits to using a more distributed version control system (where everyone has a copy of the history/changes to the code), but what I found interesting was how GitHub was able to take prominence as a platform* when the underlying Git version control system (VCS) was not a unique competitive advantage. Even the seminar itself focused entirely on GitHub rather than competitors like Bitbucket and GitLab. What value had GitHub created as a platform that allowed it to succeed amongst others?

Value Creation
When working on any collaborative project, being able to track changes is tremendously important. I compared this a lot to my former job as an accountant at EY, where in early days we would email each other back and forth different versions of the same file, just named v1, v2, v3, etc. Having the ability to have your local repository connected to a central repository is a much more convenient and accurate way of tracking these changes. GitHub facilitates easier review and product management processes to address any issues that may arise. Additionally, GitHub offers the flexibility regarding where your code is hosted (through, private cloud, or your own servers) and security features.1
However, this is all true of each Git VCS platform. For the past 10 years since GitHub’s founding in 20081, it has benefited tremendously from the direct network effects of it’s platform. As the first-mover in the space, GitHub was able to scale to 2 million repositories by April 2011.4 In comparison, Bitbucket didn’t even start providing a Git VCS option until October 2011 and GitLab also launched in October 2011. They were already too far behind to catch up. Given the value creation of the platform is in making a collaborative team work more effectively, there are immediate, strong network effects once a single user is on the platform. GitHub strengthened these network effects even further through providing social networking functions like feeds and followers- many developers even have links to their GitHub profiles on their other social networking profiles like Facebook. As someone hiring developers, reviewing someone’s GitHub has now become common place.

Value Capture
From a value capture standpoint, GitHub’s business model has been straightforward (and rumored to have been profitable) since the beginning. It’s pricing model is simple- free for open source projects, and a paid per user/per month fee for private projects with the option to sign up as individual, team, or business with features offered increasing at each tier. This twist on the freemium model allowed GitHub to gain scale and market share rapidly early on.

Winner take most?
While GitHub may be most popular among individual developers, it appears the market may be more divided when it comes to enterprise solutions. GitLab got its start in the enterprise space, and Bitbucket is an Atlassian product which integrates with other Atlassian products such as the popular Jira product management tool, thus adding to the stickiness of Bitbucket.3 GitHub is countering these by offering GitHub Enterprise and GitHub Marketplace Services with the goal to strengthen their existing network with similar offerings.3

While GitHub had the advantage of first-mover advantage and is still considered a gold-standard, other players have made name for themselves with similar offerings. Due to the network effects of the industry, I think it is likely to remain that a few big players dominate the space.

*Note: While I couldn’t find definitive market share information, the developer presenting the lecture responded that “everyone uses GitHub because that’s just the most popular” when asked what’s better about GitHub. Also, other developers have remarked that “it’s a well-known fact: GitHub has the market share when it comes to git hosting.”2

1. Basic information and tag line,


Grubhub: Delivering a Valuable Platform


Trust eats network effects at Airbed & Breakfast

Student comments on GitHub: The first mover advantage

  1. At one stage I thought that GitHub would struggle to get a firm grasp of the enterprise market. We used GitHub in my first job post-University in 2011. My company was a startup, and Github seemed like it was build for startups and individual developers as a collaboration tool. I just did not understand what value enterprises would see in it given that they are often working on highly-proprietary projects and there are a plethora of development collaboration tools built into existing enterprise offerings.

    Over time though, I realized that developers have a powerful voice in enterprises. Most developers work on projects outside of their day job and thus most will use GitHub at one time or another. So, when these same developers are advocating for a development platform for their companies, they will push for GitHub.

    Interestingly, there are parallels to be drawn with this and Microsoft’s Office strategy in the 1990’s. Microsoft effectively gave Office away to many schools and universities so that their students would become so accustomed to using Office products, that they would only want Office when they entered the work place.

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