GitHub Tackles Growing Pains

GitHub Inc., the web-based repository hosting service designed for developers to store, share, and collaborate on their work, has grown rapidly—and that comes with bottom-line costs. Most recently, as Bloomberg reports, GitHub took a $66 million hit in the first nine months of 2016.

How GitHub Makes Money

GitHub’s model rests on two groups of users. Individual developers and open-source projects use it to host code, track changes and work together, much of it for free. Companies pay for private repositories and more advanced tools, including versions of GitHub they can run inside their own organizations.

The free side is what made GitHub the default home for open-source software, and it’s also what gives the paid side its value: developers already know the product before their employer buys it. The catch is that serving millions of free users, and hiring the staff to build enterprise features, costs money long before the paying customers arrive. That’s the squeeze behind the losses Bloomberg reported.

Balancing Coders and Companies

While GitHub has always focused on catering to coders, it also sells more advanced programming tools to companies, both large and small, and striking the right balance between these two aspects of the business may well be the key to the company’s success. As competitors emerge, GitHub’s relationships and approach are crucial to making the company stand out.

“I want us to be judged on, ‘Are we making developers more productive?’” GitHub CEO Chris Wanstrath tells Bloomberg. And with new features, new leadership, and an influx of fresh capital, Wanstrath is confident GitHub can remain a leader in the software category it essentially originated. “We’ve had a lot of ups and downs, and right now we’re definitely in an up.”

The Microsoft Deal

The growing pains didn’t last long. In August 2017, GitHub announced that Wanstrath would step down as CEO once a successor was found. Wanstrath was still in the job when a buyer came along.

On June 4, 2018, Microsoft announced it would acquire GitHub for $7.5 billion in Microsoft stock. At the time, Microsoft described GitHub as the world’s leading software development platform, with more than 28 million developers. Microsoft promised that GitHub would keep its “developer-first ethos” and operate independently, and that developers could keep using whatever languages, tools and clouds they liked.

That promise mattered because many developers were wary. Microsoft had once been seen as hostile to open source, and some worried the deal would tilt GitHub toward Microsoft’s own products. The deal closed in October 2018, and Nat Friedman, a Microsoft vice president who’d co-founded Xamarin, became GitHub’s CEO.

From Code Hosting to AI

Under Microsoft, GitHub’s biggest bet has been AI. In June 2021, Friedman announced a technical preview of GitHub Copilot, an “AI pair programmer” built with OpenAI that suggests whole lines or entire functions as developers type. Copilot became one of the first widely used generative AI tools for writing code.

Leadership changed again later that year. In November 2021, Friedman announced a move to the next adventure, with Thomas Dohmke, then GitHub’s chief product officer, taking over as CEO.

The user base kept climbing. GitHub’s Octoverse report in October 2025 said more than 180 million developers now build on GitHub, with over 36 million joining in the past year alone, and that 80% of new developers use Copilot in their first week.

What It Means for Growing Startups

GitHub’s 2016 losses look small next to a $7.5 billion sale two years later. The lesson isn’t that losses don’t matter, but that spending to win a loyal user base can pay off when that base becomes the thing a buyer wants. Wanstrath’s yardstick, whether GitHub made developers more productive, turned out to be the right one: the developers were the asset. For founders, that’s a reminder to know which number really measures your company’s value, and to keep the cost of reaching it under control along the way.