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Microsoft has been talking about buying GitHub, a startup at the center of the software world last valued at $2 billion

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GitHub_Keynote_Day_1 2 Chris Wanstrath
GitHub co-founder and CEO Chris Wanstrath announced his resignation in August 2017, but the company has struggled to hire a replacement.
GitHub


Microsoft has recently held talks to buy GitHub, reviving on-and-off conversations the two have had for years, according to people close to the companies.

The talks have come as GitHub, a popular platform for software developers, has struggled to hire a new CEO.

GitHub was last valued at $2 billion in 2015, thanks to a $250 million funding round led by Sequoia Capital, and it is doing well financially, multiple people tell us. But the price tag for an acquisition could be $5 billion or more, and it’s not clear that Microsoft is willing to pay that much. It’s also not clear whether the talks are ongoing.

In August, founder and CEO Chris Wanstrath said that GitHub was on a $200 million run-rate in annual revenues.

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If Microsoft were to acquire GitHub, it would mark a significant change of course from where the startup stood just six months ago. As recently as late 2017, insiders said GitHub was fully committed to staying independent and to eventually going public. It is also possible that instead of striking a deal to buy GitHub outright, Microsoft may make an investment, possibly with an option to buy, and allow one of its top engineers to be poached as CEO.

Microsoft declined to comment. GitHub did not respond to multiple requests for comment.

A protracted CEO search has left the company rudderless

GitHub has been looking for a new CEO for the past 10 months, since Wanstrath announced he would be stepping down.

In February company executives told employees they were close to hiring someone. The internal rumor was that this person was a senior manager with an engineering background from Google. One person with knowledge of the matter told Business Insider that Google SVP of Ads and Commerce Sridhar Ramaswamy was in discussions with GitHub about the CEO job.

Those discussions appear to have ended, and Ramaswamy is now in active discussions about joining GitHub’s board — a role that could be tricky, given his job at Google, should Microsoft acquire GitHub.

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There is also an internal rumor at GitHub that a Microsoft executive could be in the running for the CEO job, with or without an acquisition by the software giant. The person rumored to be in the running is Nat Friedman, a well-known leader in the programmer world. Friedman cofounded a popular developer tools company called Xamarin, bought by Microsoft in 2016 for a reported $400+ million, and he has since been running Microsoft’s huge developer’s tools unit. Friedman did not return requests for comment.

The CEO search was first announced in August 2017. But now it’s June. Wanstrath remains as the CEO, although multiple people have said that he rarely shows up at the office and the company has been rather rudderless, with Chief Strategy Officer Julio Avalos running most units from HR to sales to legal to business development.

There have been past flirtations

A combination of Microsoft and GitHub would make a lot of sense from a product and customer perspective, and could provide stability to GitHub, which has found plans to monetize its popular products more challenging than expected and has suffered a lot of turnover in its executive ranks.

GitHub is a company that allows developers to host their software projects on the cloud and work on them with other programmers. It’s also a social network of sorts for developers, where they can follow each other and see each other’s work. Microsoft and GitHub have become close partners as it is the technology Microsoft uses to manage Windows development.

Microsoft has explored an acquisition of GitHub before. At one point last year, a $5 billion acquisition was floated, multiple people told Business Insider. But things didn’t get far or serious, we heard.

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Are you a Github insider? We want to hear from you, jbort@businessinsider.com and bpeterson@businessinsider.com

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