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Comment by jacquesm | Hacker News Reader

Paid subscriptions are a really good reason to start using gitlab because it promises that they'll be around in the long run.

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I mean, I get what you're trying to say but in no way does a paid subscription "promise" they'll be around any longer than if they were free. Sometimes transitioning from free to paid can backfire and actually shorten the lifespan of a product.

I don't think that's true. Companies that persist in giving away their product have only one route to safety: an exit. A company that charges for its product has an immediate extension of its runway, corporate credibility and both of those add up to being around longer than if they're free.

Transitioning from free to paid can backfire if you depend on the free users for some critical way and gitlab is leaving all that untouched.

They're charging for extras such as support and CI minutes, both of which are features that usually will be of use to corporate customers.

All in all I see this as a positive move for gitlab in the long run, lack of revenue streams was something that bothered me and made me wonder about their long term viability. For me at least those worries are now gone.

They've been selling GitLab Enterprise Edition for quite a while. Were you concerned that this wasn't enough of a revenue stream?

https://about.gitlab.com/gitlab-ee/

Recurring > one time revenue.

EDIT: My knowledge of their pricing is inaccurate. I thought EE was one-time on-prem charge.

GLE is also recurring ($199 / user / year).

But more is better.

Given how fast their free tier was growing, yes.

They're in no holds barred exponential growth territory and I don't know the ratio of corporate customers:free customers but I suspect that the free tier is growing faster. So they really need more sources of income, and preferably b2b ones.

Companies like gitlab become mission critical for the customers that depend on them (one reason why github (not gitlab) is now in the 'too big to fail' category, if they were to go under there would have to be a rescue operation of sorts).

Gitlab has a narrow base and broadening that base is really good.

GitLab as a company has had paying customers for a long time. If you take a look at our web site (https://about.gitlab.com/) you can see some amazing companies who license GitLab EE including IBM, NASA, Nasdaq, Sony and Uber to name just a few.

GitLab.com has become increasingly popular over time and we want to continue to not only provide a great self-hosted product, but also an amazing hosted (SaaS) solution.

There is a difference between having paying customers and being a profitable business. Now, you have access to the gitlab books and I don't but from where I'm sitting the more revenue streams you have the better I feel (because I really like gitlab...), on the off chance that you weren't profitable yet.

Not always. Often a revenue stream costs more time (money) than you get from it.

Note that the above is tricky. There are revenue streams that lose money by the books, but are worth having because they help something else. An example is a store sells milk at (or below) cost because people come for the cheap milk and buy lots of other things.

Yes, there is probably a contrived counter example for every action a company does that allows you to construe that action as a net negative. But on the whole companies are quite smart at allocating their resources, especially scrappy start-ups and given that bit of data you can make the (safe) assumption that they thought this through to make sure that it would not be a negative. For instance, by first asking their customers whether or not they would pay for such a product.

I feel like that's an edge case. Presumably given the stated growth of Gitlab they weren't going to get unlimited resources from Digital Ocean forever so they have to do something to cover the costs and, presumably, attempt to become a business that attempts to make a profit.

I don't think this holds as a general rule. A counterexample is App.net.

A b2c social network is not to be compared with a b2b service like gitlab. Totally different monetization possibilities.

I'd argue this is their own fault for failing to establish a business model and expectation of payment. Once you give things away for free for a long period of time and then begin to charge later the blowback is severe. Howerver, if you set expectations upfront, people are less likely to revolt. Note, I am not one of these people because I appreciate and respect paying companies for products that I use and love. I think this stems from my founder's mentality more than anything though.

They have a paid tier, just not for this part of their service.

This is a common meme, but unless you are privy to the company's internal financials, you really can't say whether a paid subscription model is more sustainable than others. Just ask newspapers and magazines.

There are many products and services I've paid for that are no longer provided.

Sometimes companies even cancel profitable services that are a distraction from their core business.

Having run a couple of companies both with and without an income stream judging by that experience I strongly believe that companies with an income stream are generally speaking more solid than those without. Yes, of course there are odd ducks but as a general rule it is a pretty good one.

And given that this is their core business I don't see them canceling it any time soon.

But is adding this subscription a sign that their previous subscription and other revenue efforts are insufficient, and therefore they are flailing for a viable business model and going under in N months unless this really takes off?

Or is it a sign that they are being conservative and responsible and taking the long view on their finances?

You simply cannot tell from the simple fact that they are adding a subscription option.

Edit: If Google or Facebook added a paid subscription model, would you say: "Paid subscriptions are a really good reason to start using [google/facebook] because it promises that they'll be around in the long run."? Would you interpret that to mean they were likely to be better off in a couple of months?

Profitability is the critical factor, not revenue. The Pets.com CEO /bragged/ about $45 million in revenue - with a loss of $150 million...

No, but you can tell that if this gains adoption that they will be better off than they were last week.

> Edit: If Google or Facebook added a paid subscription model, would you say:

They both do, they sell the ads and users data

Just ask newspapers and magazines.

They never made the majority of their money from subscribers. They made it from ads. And ad revenue has been under heavy assault of late, while publishing has been moving increasingly to the internet and away from the dead tree version. Your example does not really support your statement.

It absolutely supports the statement: where does the majority of gitlab's money come from?

Their strategy page (https://about.gitlab.com/strategy/) suggests that these subscriptions, at least for some time, will be a small part of the revenue (enterprise customers being the larger revenue source).

So with these subscriptions being a supplemental revenue source, it's pretty apt.

Have an upvote for supporting your POV, but I am not convinced that detail makes it apt.

Publications made money primarily from ads. A subscriber base was valuable for being able to prove audience size. Then ad costs were tied to that. Having enterprise customers plus individual customers is fundamentally a different model.

No, but I can tell that a company with a subscription model is more sustainable than the same company without.

With the self hosted CE offering so good, I see no reason to use the SaaS version.

See, that's exactly the reason why I'm happy about this. I figure many people reason exactly like you do and that makes their base possibly thinner than it looks from the outside. So if they can extract more value from the customers they have that's a really good thing.

When I compare gitlab and github I think gitlab is the better open source ecosystem citizen because they give back at least as much as they take but github has the momentum and is better at extracting value (so more solid) at the expense of not being such a good open source ecosystem citizen.

Tough choice just got a little easier.

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