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If Github is losing sign me up for some of that please.

Exactly what pops into my mind when people say things like that.

I'm not saying they're losing, I'm saying they're fighting a losing game.

How is Pinterest not also fighting a losing game? I can see how it's harder for Github to stay up with competitors because their target market is more savvy and often tries out new tools. But doesn't Pinterest also suffer the risk of some new social sharing site appearing that appeals to users in a better or just different way?

Please link to all these quality Github alternatives? I haven't seen anything which comes close.

I think it depends on your use case but Bitbucket is pretty close for simple usage. Of course, it's missing the network effects which make GH so compelling.

Having said that, switching costs are low because of the distributed nature of Git. Not sure what would happen if something genuinely better came along.

Churn for enterprise software like GitHub tends to be very low - once it becomes embedded in the workflow of BigCorp its not trivial to change that overnight.

If something genuinely better comes along, the network effects would still be a huge source of inertia given the FUD around switching.

     switching costs are low because of the distributed 
     nature of Git

Switching costs from Google's search engine are low, because all it takes is to enter the URL of an alternative search engine. And nothing has shaken it, not even when this process is helped by the distribution network, like making Bing the default on Windows.

Lock-in is not measured only in regards to the potential switching costs. Lock-in is also possible by providing the best possible service. Along with real network effects (people recommending your service to other people) then the global lock-in becomes inescapable, even if the theoretical switching costs are low.

And quite the contrary, GitHub locks people in simply because most developers have a GitHub account. People use GitHub these days to put their portfolio on display. And I've worked with a couple of companies that manage their projects on GitHub and it was a pretty painless process to send me an invitation for joining their private repos.

Even Linux is mirrored on GitHub and even Linus Tolvards has a GitHub account. GitHub is not only a really good Git hosting service, but in case you haven't noticed, it's also a vertical social-network built for developers. And their service keeps improving by leaps and bounds, compared to their competitors, which are merely followers. I'm so happy with GitHub that even though I can have as many private projects as I want on Bitbucket, I still pay GitHub for the privilege to have private projects.

Yes, something better can always come along. But just as Google did for search engines, with GitHub around it's pretty hard to build something better. And this to me is the best possible kind of lock-in and the sign of a thriving and growing company: the product being popular, not because it's forcing users, but because it's simply the best.

Linux was dependent on BitKeeper for about three years. Git was written from scratch and hosting Linux in a period of three months. Linus's use of a technology he didn't create is closer to a death knell than an endorsement.

Would you rather have stock today in MySpace or a hypothetical 5-year-old SubversionHub? Obviously, the answer is different for different people, and there are good reasons to support and use Github and good reasons to invest in it. That programmers are good at product loyalty simply isn't one of them.

Github is a decent medium-term bet, but Pinterest is a much better lottery ticket.

Git is popular because of Linus's excellence and marketing skills. And yeah, it took three months, but it took a lot longer for it to became popular and it was helped by Linus' endorsement. The comparison of BitKeeper to Git is not fair - you should compare it with Perforce instead.

     Would you rather have stock today in MySpace or 
     a hypothetical 5-year-old SubversionHub

I never liked MySpace or SourceForge, so if I had the option in front of me, I would have passed even at the peak of their popularity.

This is the criteria after which I judge companies:

(+) is the product solving a real problem for me? (yes)

(+) are they a sustainable, profit-generating business yet? (yes)

(+) is the product forcing users to remain customers? (no)

(+) are they smart and hard-working enough to adapt to new market conditions? (yes)

(+) do they still have growth potential? (yes, because GitHub is lately a social network for professional developers, being preferred over LinkedIn by many)

     That programmers are good at product loyalty simply
     isn't one of them.

My point wasn't about loyalty. Developers tend to use the best tool for the job. I still use Google's search engine, even though alternatives are available, because Google still gives me the best results. And this creates a cycle - because I use Google and I optimize my websites for Google and because I use Google's Analytics and the Webmasters tool, Google gets more data with which it can optimize my results better than anybody else can.

The same goes for GitHub. Even if I stopped being a GitHub customer, I would still go to GitHub because most popular projects are managed on GitHub or have a mirror there. Popularity in turn helps GitHub get valuable feedback, which it can use to further improve my experience, which in turn makes me a happier customer and so on.

Bitbucket, as of the end of 2011, didn't have any concept of a "company account" like GitHub's organizations. From their pricing pages, it looks like they still don't. That's why my company pays for hosted JIRA and uses GitHub, we would much rather pay the lower costs for Bitbucket and keep everything with Atlassian, but the organizations feature on GitHub won us over (we currently have about 30 private repos and 12 users).

Evernote is valuated at a billion + and as far as I know is not as profitable.

So something is surely off.

"It takes Pinterest less work to convert a byte of bandwidth into profit. Not only do they need less development effort moving forward, they also stand better odds of making money on some random user."

But they also need many more users to actually turn it into revenue.

I'll bite. Investors don't value early stage companies the same way they value mature companies - for example, a public utility company serves a defined population in a defined geographic region, and operates at some predictable margin. Their value is simply the net present value of future distribution to investors (in the form of dividends, stock buybacks, or share price appreciation). They can still be good investments if the risk/return profile looks good.

Contrast this with early stage companies (which is what we're talking about here). VCs don't care as much if a company has a proven business model - what they're looking for is GROWTH opportunity. The opportunity to completely disrupt a huge market or invent a new one. While profitable companies have better odds of surviving long enough to get to that point, they may not be the best investments in the end.

To give you a concrete example of how this could affect investor decision making. Let's say that the total opportunity for Source Code Management solutions is $2bn/year in corporate spending (completely making this number up) - even if GitHub captures 100% of this market, which they won't, they're capped at $2bn/year in revenue, unless they figure out another way to make money. Once they're done paying the sales guys, engineers, and otherwise supporting operations, they make maybe $500mm/year in profit. With a standard P/E multiple, they'd be worth something like $5-$10bn.

Pinterest, on the other hand, has the potential to be the "facebook of online shopping" to amazon's "google of online shopping". If people really engage with pinterest, and they spend a lot of time on the site, and they're more likely to buy stuff when they're looking at what their friends like and are buying, then it could be worth a lot more than that. The point is, while they don't yet have predictable revenues or earnings, their potential market (online shopping) is so much bigger than github's, that it's possible to justify a high valuation based on growth potential.

I'm not saying I buy the Pinterest hype. I'm just saying that there are criteria beyond current profitability and cash flow on which one can value an early stage business.

The last line is truly indicative of the echo chamber that is Silicon Valley. Only in the Bay Area do companies without revenues generate valuations of $1B+ with simple hand-waving and conjecture. GitHub charges real money for real services and are thus valued less than someone with a Powerpoint presentation on "proposed revenue models." Quite frankly, it is sad.

Here's a bit more about perverse incentives that make VCs' decisions less rational: http://www.danshapiro.com/blog/2010/08/vc-insanity-economics...

The differences between Pinterest and GitHub are that: GitHub is more unique (it's not strictly social media and there's more homework to do); it's bootstrapped and negociates from a stronger position; VCs want to give start-ups more money than they need because that's how they get paid.

I've seen zero evidence that Pinterest can actually generate a profit. They do not make money from every product someone pins, and there's no reason to think they ever will. The only thing I've seen so far is speculation and theoretical future business models that may or may not pan out.

Github however is profitable and has a proven, functional business model. Github is absolutely not fighting a losing game, because they're providing a service companies obviously desperately want to outsource (thus the mass usage). Providing that service in a secure manner is worth a lot of money, as Github is protecting something extraordinarily valuable.

have you heard of affiliate links? you can make a good deal of money from them

Yep, I have. And I'm sure Pinterest can build a couple hundred million dollar business around it. And that's a fine business, it's just not going to be a juggernaut.

If you can't think of ways Pinterest can make money then you simply lack creativity.

There are plenty.

Would you care to elaborate on how you think Pintrest will make a suitable amount of profit to fit its evaluation?

Affiliate links could make Pinterest an insane amount of money. Did you know that when someone clicks an Amazon affiliate link, everything they buy in a 24 hour period the affiliate gets a cut of?

There are a LOT of people using Pinterest, and a LOT of Amazon products on pinterest.

An "insane amount of money" - care to be a lot more specific? That's about as vague and unsubstantiated as you could get.

1) The assumption is that the affiliate link model and market will scale to the size of Pinterest's eventual traffic maximums, that's a big assumption.

2) The assumption is that Amazon will want to allow Pinterest to suck profit out the door at that scale, instead of Amazon competing with Pinterest in one form or another instead, just like they're now competing with Groupon / Living Social (despite an investment in LS).

3) Amazon has a very long history of directly competing with companies that touch their platform.

That's an extraordinarily shaky business model to say the least.

That sounds great.

I'm sure if I can't think of ways that Twitter and Tumblr can make outsized profits from their massive respective user bases, then I'm not being creative either. Oh snap, some of the best business minds are already on the problem and they can't figure it out either.

The same holds true for Pinterest, they're stuck in the same monetization box, and they're not going to suddenly show massive profitability either. It's blatantly obvious that platform will never monetize to the scale of their traffic.