124: GitHub: Tom Preston-Werner - From dead-broke to a multi-millionaire.

**Vijay Peduru** (0:01)
Hello, friends and zoomers. Vijay Peduru here, and welcome to episode 124 of How They Made Their millions from ideasu.com.
This is where I talk about the mind-blowing true stories of super successful multi-millionaire and billionaire entrepreneurs, along with their struggles and successes. My goal is to make you a successful entrepreneur.
Today's multi-millionaire founder story is about GitHub founder Tom Preston-Werner and how he went from dead broke to a multi-millionaire. Three things you could learn today. 1 How Tom made the decision whether to quit college or not. 2 What did he do when he failed to sell his first idea the first time. 3 What personal problems they had which made them start GitHub. GitHub is a well-known website that brings together developers from all over the globe to work together on code. But how did Tom Preston-Werner and Chris Wanstrath took GitHub from a weekend project started in a bar to one of the world's most powerful software development services that Microsoft purchased for $7.5 billion.
Let's check out their story. Tom Preston-Werner was born on May 27, 1979 and grew up in Dubuque, Iowa. His father was an independent contractor who used to demolish houses and buildings destroyed in a fire.
His parents got him a TRS-80 computer when he was a kid. Playing with this, he dreamt of becoming a programmer when he grew up. Chris Wanstrath grew up in ohio and ever since he was a little boy, he had a strong desire to succeed. He always loved playing video games and even wanted to create one himself. Chris's fascination with gaming only grew in high school as he watched them build websites to organize online battles. I wanted to be a developer, make video games and websites. I always wanted to be part of a team building things that people love, he told Entrepreneur magazine in 2017 In 1997, Tom enrolled at Harvey Mudd College. However, when he was in his second year, he got a summer internship and they offered him a full-time job as a Java developer. He wasn't sure if he should continue his education for two more years or drop out and get a position at a hot tech company. Since he concluded he would just end up looking for a similar job after graduation, Tom took the offer and quit college. Meanwhile, the other founder, Chris, who even though had already began teaching himself to code, chose to go to the University of Cincinnati and study English. I figured whatever I did in life, I would have to speak read-write English, he said in an interview with Fortune. During his time in college, he attended some programming courses which pushed him to become more serious about coding. He felt like it was time to make programming his career. He loved programming and soon found himself skipping classes and studying to spend more time programming. For Tom, dropping out of college turned out to be a bad decision. Shortly after he started working, the dot-com bubble burst and the company he was working for was bought in a fire sale. Unfortunately, that meant that Tom lost his job. Meanwhile, in 2005, after nearly two years in college, CNET, a CBS-owned tech site, offered Chris a job. At first, he had some doubts because he was a self-thought programmer. But he left school and relocated to San Francisco to work as a developer. Meanwhile, Tom and a handful of his friends, who were also laid off at the same time, banded together to form CubeSix Media, a computer consulting firm named after his cubicle number at his previous job. They did a bit of everything from creating flyers and websites to photography of products and media strategy. But the business wasn't really taking off. So Tom's other two friends left CubeSix Media to get real jobs. Still, Tom decided not to give up so easily, which proved to be yet another bad decision. The next three years were a challenge. Tom actually believed he was doing well by the end of the first year, until he received a $23,000 tax bill. As a sole proprietor, he was expected to pay estimated taxes monthly, but being only 22 and a rookie, he had no idea about it. After three years in business, Tom was $50,000 in debt, owing primarily to the IRS and the eight credit card companies he had used to make ends meet. However, he still didn't want to give up on CubeSix Media, which is why he took on more debt. Around 2003, the housing market was booming, so Tom decided to take on some equity debt. As it happened, Tom's landlord was selling the house he was renting, and he bought it. The plan was to utilize a portion of the equity gain, i.e. the rise in property value to settle down his 50,000 payment. But the housing market was not that kind to Tom in the years that followed. In 2006, he refinanced his mortgage just in time and used the cash back to pay off part of his credit card debt. While Tom was doing his best to help his consultancy business stay afloat, the Ruby on Rails programming movement was just starting to gain favor. Tom fell in love with this new framework and was an active member of the ROR community in San Diego. He still had lots of debt to pay off. Ruby on Rails was fast growing in popularity among developers and every few weeks, Tom would go to the San Diego ROR meetups to catch up with other enthusiasts. There, people would sometimes talk about what they were working on. Tom also started to work on one of his side projects called Gravatar. Gravatar was a web-based avatar that followed you across the internet. When you establish an account on a website that utilizes Gravatar, the service then captures your avatar. Also, when you modify it on one website, it is reflected on all other websites. The only difficulty was that it wasn't profitable. Being an early Gravatar adopter did not provide considerable benefit to businesses. Gravatar's true worth only emerged when it was integrated with a statistically significant percentage of the web. So monetization was impossible until Tom managed to reach that critical mass. Gravatar gradually increased to more than 32,000 users as did the operating expenses. By the end of 2006, Tom spent 2-3 hours each day personally approving the 300 to 400 new Gravatar profile pictures that users posted a day. He survived thanks to the donations users gave him. The motivating factor to keep going with Gravatar was that Tom saw it as the gateway from his crippling debt. If someone out there could find some value from this global profile picture service, just 50k worth of value, all his problems would be solved. He could finally be a debt-free man. On top of his hit list for companies that could potentially acquire Gravatar was Automatic, the parent company behind WordPress. Thanks to his Ruby on Rails meetup contacts, he arranged a meeting with the exec team at Automatic in San Francisco. A few weeks later, Tom flew to San Francisco to meet the team at Automatic. Unfortunately though, the meeting did not go as well as Tom had hoped. Automatic was intrigued, but not that interested in acquiring Gravatar. Still, the trip to San Francisco wasn't entirely in vain. The one positive thing that came out of it was, Tom's buddy, also a Ruby on Rails fan, who persuaded him to go for an interview at the new hot firm, PowerSet, where he was working. PowerSet was a search engine that used natural language processing and aimed to be the new Google. Tom was hesitant but agreed to try. Finally, after a few rounds of interviews, Tom secured a job and a steady source of income. However, accepting the position wasn't as simple a decision as one would think. Admittedly, CubeSix media struggled and never really took off, but Tom also bought a house in San Diego with more debt. His plan was to remodel and sell it to make a profit and clear off his debt. To make matters worse, he expected to complete the Gravatar acquisition on this trip. So he invested even more money he didn't have in refurbishing the kitchen and flooring of the house. If Tom took the offer and became a junior software developer at PowerSet, he would have to give up his company. He would also have to complete remodeling the house by himself because he couldn't afford contractors anymore. In the end, he concluded that the timing wasn't right for him to take the job. Tom decided to return to San Diego to work at CubeSix Media for a few more years. He still didn't reject the job offer. But shortly after arriving at the San Francisco airport, he had a change of heart. Over the next couple of days, he would return to PowerSet and negotiate a three-month-later start date. That way, he would have enough time to tie up any loose ends in his consulting firm and he needed to try to pull off a miracle by finishing up his kitchen and floor repairs on his own.