What does "[going] into enterprise" mean? Almost every fortune 500 company is using GitHub in some capacity. Isn't "[going] into enterprise" simply marketing jargon when you're talking about SaaS products like GitHub.
Going into enterprise means more than having just a behind-the-firewall solution. Deploying code behind the firewall means that you are at the mercy of the customer's environment and have to be much more forgiving than running in an "opinionated" SaaS environment.
To wit, here is a laundry list of things you have to deal with for enterprise customers, and they all require time, money, and support.
+ Slower release cycle than SaaS - you may not be able to push updates to customer environments at will. They may require that they decide when to take updates, which means their codebase could be several months behind. (Not always, but it can happen).
+ Data & privacy laws, particularly for European customers. Do you love S3? A lot of companies don't, and governments especially don't. This means potentially rolling your own elastic file storage which must also be deployed behind the firewall.
+ You get into managing a cluster for the customer, not just a single instance.
+ Your software must fit the security scheme of the customer. In a SaaS environment, you typically have a great deal of control over the network topology. Behind the firewall, company policy may require that only certain ports be open. This might mean re-writing code to either serve a lot of protocols over port 80 or being on long support calls while people file tickets and wait for IT to punch open holes for you. (And then sometimes close them right back up, requiring you to repeat the cycle every time you deploy).
+ It's also not uncommon to have a dedicated team just for the enterprise customers, or even a dedicated team just for one enterprise customer. This requires hiring people who must be trained and brought up to speed. As I'm sure you're aware, engineer salaries are a big cost factor.
+ If time differences are too large or too inconvenient, you may need to hire people in other parts of the world. This means needing to comply with local laws and regulations. Which usually means hiring lawyers, additional HR people, etc.
The list goes on and on. Deploying for the enterprise can be much more involved than what you might think.
Well, there is a vast difference between "every fortune 500 company is using Github in some capacity" and "every fortune 500 company is paying for the Enterprise version of Github." I think it'd be an easy sell on a lot of companies, since, as you say, many of the developers are already using it. Heck, I even want to convince my company to get the Enterprise version of GitHub, but we're a non-profit and too small for it.
That still doesn't answer why you need to raise VC money. How does VC money add value to a company which already has an "enterprise" solution and is a known brand to almost all Fortune 500 companies? GitHub is already making a lot of money via cash flow and VC money will only make them beholden to outside interests. Stack Overflow tried to spin why they were raising money after spending years railing against VC-backed ventures. This seems to be a similar scenario.
Last week, I deployed the GitHub Enterprise product in the company I work for (SME, 500+ employees but only 20~ developers). Though the setup process was rather painless, any time I wanted support the only point of contact was an email address[1]. To make things more difficult, because I'm located in Australia the time difference meant most of the time I'd have to wait until the next day to get a reply.
I'd imagine VC would help them create much better support options for the enterprise (the company I'm at usually don't even consider products without commercial support), such as 24/7 local support, support contracts etc.
I should clarify, I'm speaking as it relates to raising capital; not on the existence of 24/7 support at a premium price point. It still seems to be a common theme where companies raise venture capital for the sake of "going into enterprise". There is a big difference between using cash flows to add 24/7 support and raising VC money. The downside of bringing in outside money seems to outweigh the quick cash infusion.
My suspicion is the founders are taking money off the table in a similar manner as 37signals did when they took money from Bezos Expeditions [Jeff Bezos]. Considering the fact that they're bootstrapped, profitable and growing like a weed it seems reasonable to sell a portion of the company to the greatest advisor [Marc Andreessen].
I've been to their offices just a couple months ago. Github is pretty small, there was literally just 7 people there when we went over (granted most work from home). If they want to expand, they need to hire people for sales and support. VC money seems reasonable for that.
