Not even a small developer would trust it for private, internal code
What a stupid thing to say. Many, many businesses use services like github, bitbucket, asssembla.
Apart from anything else there are a whole slew of tech/software companies who are virtual/decentralised... they don't have a central location or an office in which to put a server.
Keeping a backup separate is another story of course. As is the fact that with git, losing your 'central' server doesn't matter.
But a physical git server in your basement... you do realise that's just security through obscurity, right? The moment anyone does want to attack you, you are far more likely to have serious problems. "Close the git server from the web" isn't an option if you want to allow your developers to work remotely.