the table: developer tools takeaways & predictions
In March, we brought together a group of women founders, operators, and investors all focused on dev tools. The discussion was framed around three key trends —the rise of open source, the growth of point solutions vs. end-to-end platforms, and the need to collaborate on development remotely. Below, we highlight our key takeaways and predictions for developer tools coming out of the roundtable discussion.
On open source models:
Open source has become an increasingly popular business model for companies building for developers. As with other product-led growth strategies, companies building with an open source model are focused on winning customers and driving adoption by getting the product in the hands of their users, without the friction posed by procurement and /or IT. Open source could be seen as the engineer’s version of “try before you buy”, giving would-be users the ability to easily clone a project’s repo and test the tool within the context of their own workflow in a matter of minutes.
Unlike other product-led growth strategies, however, pursuing an open source model enables companies to turn users into co-creators of the product. Not only do users commonly submit feedback to product teams at open source companies in a highly normalized and visible way (Github issues), those users or others in the community can then take action to proactively address the feedback.
To motivate this kind of pro-social behavior, companies pursuing an open source model place a strong emphasis on building community around their projects. It’s common to see projects spin up communities on platforms like Slack or Discord to facilitate discussion and collaboration amongst their users; dedicated developer-focused community platforms like Orbit have also emerged to deliver value for this specific use case. Companies building around an open source project should lower the barriers to contribution as much as possible—while community channels often help to surface frequently asked questions about contribution or feature requests to be built, creating quality documentation on contribution standards and expectations is critical.
Active contributors is without a doubt one of the most important metrics for open source companies to optimize for—others include active participants on community platforms, Github issues, and to a lesser extent Github stars.
Apart from these metrics, one metric any company cares about is revenue—for open source companies, it’s critical to be mindful of paths to monetization from the get go. Once you’ve given away an open source product for free, it can be difficult to begin charging for an enterprise version that is close to the original. While enterprise still often entails hosting and support, the enterprise offerings of today’s developer tools companies can differ dramatically from the open source projects they are built around.
On point solutions vs. end-to-end platforms:
As in many other spaces, developer tools may be subject to a constant cycle of bundling and unbundling. The developer tools space is particularly conducive to unbundling because, unlike many non-technical workers, developers are capable of building new tools for themselves. The builder’s mindset inherent to developers naturally leads to the creation of different flavors of tooling as developers seek to solve for their own pain points and workflows.
However, managing so many disparate solutions can be difficult for companies at the organizational level, especially when it comes to cross-team dependencies and infrastructure. As companies mature they may want to standardize their stack to reduce maintenance and overhead, though enforcing organizational compliance comes with its own challenges.
Separately, larger tech companies have captured meaningful developer mindshare—Microsoft owns both Github and VSCode, while Amazon has built an entire suite of developer tools that readily integrate with AWS. For a subset of developers, the allure of “good enough” centralized solutions may outweigh the desire to stitch together the best-in-class point solutions.
On remote development and collaboration:
While developers have been one of the most distributed workforces since before COVID, the pandemic prompted a shift in many teams’ development tooling and workflows. Companies have had to adopt and change agile processes to support the remote environment, with a particular focus on rituals like standups and retrospectives that are key to maintain a sense of connectivity amongst teams.
While git is inherently suited for distributed teams, some developers have turned to collaborative developer tools to mimic experiences like pair programming. Others place an emphasis on solutions that support knowledge sharing and onboarding for new team members who don’t otherwise have the opportunity to learn the context behind certain decisions and other accumulated tribal knowledge. For both developer and non-developer use cases, teams have found documentation and regular communication key to support effective remote development and collaboration.
In conclusion:
Companies have realized that developers represent a large and growing market, with increasing share of wallet and of organizational mindshare. Some startups seek to appeal to developers with open source solutions, balancing value creation with value capture, while others pursue proprietary alternatives. Best-in-class point solutions compete with increasingly standardized and centralized platforms from the companies employing some of the best developers themselves. While heads-down development has been increasingly remote, the holistic development process still requires active cross-functional collaboration and the tooling to support it, within and across geographies.
With the power firmly in the hands of the developers, there may have never been a better time to build a developer tools company.
Know someone building an exciting new company in developer tools? Get in touch @ brittany@crv.com.
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