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  • Jack Lau

Making Money by Letting People Download for Free? Try GitHub

Readers of this blog by now probably know that we are a firm believer of open collaboration. The technology world has gotten so complicated that folks who think they can do everything on their own will have a very difficult time completing any objective easily. The "not-invented-here" mentality that was so prevalent for such a long time should all become history.

On the other hand, it is then only fair to ask how could people really benefit from "sharing". If we all share, then how do we make any profit? Well, there are probably two levels of answers to that question. The first level is the people who provide a platform to share; and the second level is the ultimate holder of the shared project. The second level is a lot easier to understand. Brand name holders of products or services can easily market their products with superior reliability and service. Of course, the smart folks these days like to talk also about the eco-system.

From a society point of view, the first level is probably more important and have a more profound impact. In the past, many of the shared projects are maintained by a university. As such, profit is not an issue. However, profit does not always run against the concept of hosting a sharing platform.

And, here, let's discuss a very popular software sharing platform called GitHub. Founded in 2008, GitHub is a platform in which people upload their written software for other people to share their projects. (Please do ask WHY? Yeah, why would you let other people use your creation for FREE? But, thankfully this is the great culture in software: you download, but you also upload --- a subject discussed in another blog.

Now, this is the interesting part. How do they make money? Or do they? Let's get an analogy. This is almost like a municipal park operates a people park (think Hyde Park in London, or People's Park in Berkeley), residents can go into the park and share with other people what they think.

GitHub today has 33 million users every month. 8-year-old, GitHub has just received an injection of US$250M in July last year valuating it at US$2 billion. Together with the US$100M they had received in 2012, they had altogether received US$350M and all from very reputable sources, the like of Sequoia and Andersen Horowitz. And, yes, they have been profitable --- yes, making money. But, how?

Well, actually, it is like this if we use the same analogy of having a municipal park where people can go in and share their views and knowledge. You are somewhat passive if you go into the park, whatever people will be speaking and have spoken will be the things that you will hear. Now, sometimes you do have a question in mind and do want to work together with others. Say, if try to build a project (a software to do something). You want to solicit people to collaborate with you. That is when you pay GitHub. For as little as a few dollars (US$7 a month to be exact), you get to work with, say 5 parties. If you are a bigger organization, you can collaborate with more people. Still, it is a huge productivity gain and cost savings in hosting if you have a certain number of people. Going back to the analogy of a people park, it is like the park will charge you if you want to voice your opinion and find a few experts with you to work on a topic. Of course, each of you would put down your work leave in some special locker or space in the park so the project can be an ongoing one.

At a valuation of $2B, GitHub certainly is the largest unicorn, but with 33 million users using it for something so productive, GitHub certainly has one of the largest social-economic impact. In fact, readers of this blog has benefited from GitHub indirectly. How? Well, occasionally, when we need do some data mining on the web, the first thing we do is to look for some source code on GitHub to do the job. And, so, yeah, many of us have been a benefactor of GitHub without even being one of the 33 million users.

Before we leave this blog, can something please think of ways to learn from this model and apply it in different arenas. Not long ago, we visited a film school and learned that most of the videos clips they do just go wasted and it always take so much time to a brand new film. Will one day, people start deposit their video clips onto a repository and allow users to build new film themselves or with even artificial intelligence? The productivity savings will be huge. Just some crazy thoughts again.

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