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Everybody in this specific social group of investors continues to list Developer Tools as, effectively, an Evergreen space. What’s baffling to me is that the a

Everybody in this specific social group of investors continues to list Developer Tools as, effectively, an Evergreen space. What’s baffling to me is that the amount of innovation in Developer Tool businesses (not tools, businesses) is surprisingly small. There are three factors that influence this, IMO: (1) The OSS community has trended towards an insular culture incentivized by OSS popularity where stars and Twitter followers are status signals. In this world, it’s hard for talented engineers to stop seeking “star status” and transition to the business ecosystem where they’re bottom rung of the ladder. (2) The space is extremely sophisticated — with longer R&D cycles — and VCs routinely incentivize suboptimal growth trajectories when they’ve identified apparent winners and miss opportunities with more practically iterative companies. (Expecting growth at all costs in a space where continuous delivery + R&D is the norm.) This blows up some companies early and prematurely kills other promising technologies. I think the 18mo expected cycle time probably needs to be adjusted for these companies, especially early stage. (3) Founders are heavily pressured towards exits. Long R&D cycle time, the pressure cooker of VC growth expectations, and the rarity of high-ownership, customer-oriented developer tool + engineering talent makes early exits extremely attractive for both founding teams and acquirers. How do we fix this? Between Daniel, Elad and a bunch of folks who keep writing this stuff — I think it’s time for a new developer-oriented fund, backed by the people and companies passionate about the space. I’ve been a major sponsor of Vue.js for years. I’d like to do more to help talented developers start businesses in the future, when possible. If anybody thinks something like this is interesting, give me a holler.

sansnomme 7y ago
Also more importantly: monetisation is hard. There has only been one Jetbrains.
- keithwhor 7y ago
  I think monetization is difficult IFF you don’t think about asking for money from the get-go. I’m actually of the opinion that open source projects are not well-equipped to build companies around, but can serve as an early guide to nascent market demand. Monetization looks difficult because people keep building free things and then trying to figure out how to charge for them. From my perspective, the better bet is to build a free thing, prove the market, and then figure out what the paid thing might look like — even if totally different. I think there’s a decade ahead of us where developers can start asking, “how can I turn this {useful tool} into a SaaS product?” We've been seeing this for years, I just think folks can start getting more ambitious about it. :)
reggieband 7y ago
There was a recent post here on HN for a medium article "Get Rich Slow And Steady" [1]. It seems like this is a space attracting the attention of investors. I think the developer tool business overlaps with the type of SaaS businesses described in the article. There is still space to tackle getting from a no-revenue idea to a stable cash-positive subscription service. My eyes water when I see ideas attracting 10+m in seed capital before they even have a viable product. I remember pitching an idea with a friend for a slow burn SaaS startup (in real-estate). We wanted under 1m and we were laughed out of every room. Everyone wanted to back a potential unicorn and not waste their time on guys thinking so small. Maybe things have changed but it seems right now there are two categories: startups with huge ideas that can get substantial venture capital to take moonshots and stable existing SaaS business that can slow burn on existing subscription revenue. I'm just not sure there will ever be a market for "Give us 1m and we'll build a company that generates 250k/year of profit". https://medium.com/@tom.kubik/get-rich-slow-in-software-57001f41f3a9 https://medium.com/@tom.kubik/get-rich-slow-in-software-5700...
- mamcx 7y ago
  Heck, you could start ideas with much less. Here in colombia you can do US3000/month * Dev to do whatever you say. But even the people here that give funds not do that!
- christiansakai 7y ago
  I find it amazing that people can find many small niche ideas that are profitable enough like this. I must have my head entirely in the wrong cloud.
  - reggieband 7y ago
    Well, to be fair, some (or even most) small niche ideas won't be that profitable (if they are profitable at all). That is the reason why I feel that the market for those small investments will never really flourish. The downside is the same, you lose all your investment. The upside is completely underwhelming, you recoup your investment after 4 or 5 years after which hopefully you see a profit. This is traditionally the space for friends-and-family investment or bank loans. If I was an investor then I don't think it is a space I would get into. It also explains why the article I mentioned is focused on established and profitable SaaS businesses. That means the filter for crash-and-burn has already taken place allowing investors to change their ROI calculation enough to make it viable.
mperham 7y ago
I'm the guy behind Sidekiq, also mentioned in the article. One person can still built amazing, successful tech with a slow and steady approach and little to no funding. My trick was to charge something reasonable ASAP and get to a sustainable "default live" state.
- redisman 7y ago
  How do you validate that some customers will pay for these small SaaS ideas?
mamcx 7y ago
Yeah, this hurt. I think you could find many talented developers with high interest in advance the state of art, but then remember need to put food in the plate and that is. ---- My dream is to build a foxpro/access kind of tool (starting as a relational lang), but this is purely a side of a side project that I still keep alive by purely fun. Having in the mind that the chance of being financially good is near zero and with more pressing needs, is hard to make it. I could totally take a small investment just to get "survival" for months, but who will invest it?. I think even much more skilled developers like http://journal.stuffwithstuff.com/ http://journal.stuffwithstuff.com/ will not get funds for a startup for dev tools, that is look to me anyone in the field must work for big corp to hace a chance to see it.
Roritharr 7y ago
VERY interesting. I have a few friends with companies in the "shovel industry" that are VC backed and they also raised very similar points to the ones you've mentioned, which is keeping me away, having experienced being in a business that was hit by a variant of (2). Technology-wise there is a great many approaches out there in their infancy, that usually die before they get a chance to be fleshed out into larger companies. The intersection between No-Code & Developer-Tools is to me one of the most-exciting spaces to watch. I can't imagine we'll design & document business-logic and requirements with so many breaks in the chain to production ten years from now.
glenngillen 7y ago
So maybe something like https://blog.matta.io/bye-aws-hello-baa19ff8d9f2 https://blog.matta.io/bye-aws-hello-baa19ff8d9f2 ?

sansnomme 7y ago

Also more importantly: monetisation is hard. There has only been one Jetbrains.

keithwhor 7y ago
I think monetization is difficult IFF you don’t think about asking for money from the get-go. I’m actually of the opinion that open source projects are not well-equipped to build companies around, but can serve as an early guide to nascent market demand. Monetization looks difficult because people keep building free things and then trying to figure out how to charge for them. From my perspective, the better bet is to build a free thing, prove the market, and then figure out what the paid thing might look like — even if totally different. I think there’s a decade ahead of us where developers can start asking, “how can I turn this {useful tool} into a SaaS product?” We've been seeing this for years, I just think folks can start getting more ambitious about it. :)

reggieband 7y ago

There was a recent post here on HN for a medium article "Get Rich Slow And Steady" [1]. It seems like this is a space attracting the attention of investors. I think the developer tool business overlaps with the type of SaaS businesses described in the article. There is still space to tackle getting from a no-revenue idea to a stable cash-positive subscription service. My eyes water when I see ideas attracting 10+m in seed capital before they even have a viable product. I remember pitching an idea with a friend for a slow burn SaaS startup (in real-estate). We wanted under 1m and we were laughed out of every room. Everyone wanted to back a potential unicorn and not waste their time on guys thinking so small. Maybe things have changed but it seems right now there are two categories: startups with huge ideas that can get substantial venture capital to take moonshots and stable existing SaaS business that can slow burn on existing subscription revenue. I'm just not sure there will ever be a market for "Give us 1m and we'll build a company that generates 250k/year of profit". https://medium.com/@tom.kubik/get-rich-slow-in-software-57001f41f3a9 https://medium.com/@tom.kubik/get-rich-slow-in-software-5700...

mamcx 7y ago
Heck, you could start ideas with much less. Here in colombia you can do US3000/month * Dev to do whatever you say. But even the people here that give funds not do that!
christiansakai 7y ago
I find it amazing that people can find many small niche ideas that are profitable enough like this. I must have my head entirely in the wrong cloud.
- reggieband 7y ago
  Well, to be fair, some (or even most) small niche ideas won't be that profitable (if they are profitable at all). That is the reason why I feel that the market for those small investments will never really flourish. The downside is the same, you lose all your investment. The upside is completely underwhelming, you recoup your investment after 4 or 5 years after which hopefully you see a profit. This is traditionally the space for friends-and-family investment or bank loans. If I was an investor then I don't think it is a space I would get into. It also explains why the article I mentioned is focused on established and profitable SaaS businesses. That means the filter for crash-and-burn has already taken place allowing investors to change their ROI calculation enough to make it viable.

mperham 7y ago

I'm the guy behind Sidekiq, also mentioned in the article. One person can still built amazing, successful tech with a slow and steady approach and little to no funding. My trick was to charge something reasonable ASAP and get to a sustainable "default live" state.

redisman 7y ago
How do you validate that some customers will pay for these small SaaS ideas?

mamcx 7y ago

Yeah, this hurt. I think you could find many talented developers with high interest in advance the state of art, but then remember need to put food in the plate and that is. ---- My dream is to build a foxpro/access kind of tool (starting as a relational lang), but this is purely a side of a side project that I still keep alive by purely fun. Having in the mind that the chance of being financially good is near zero and with more pressing needs, is hard to make it. I could totally take a small investment just to get "survival" for months, but who will invest it?. I think even much more skilled developers like http://journal.stuffwithstuff.com/ http://journal.stuffwithstuff.com/ will not get funds for a startup for dev tools, that is look to me anyone in the field must work for big corp to hace a chance to see it.

Roritharr 7y ago

VERY interesting. I have a few friends with companies in the "shovel industry" that are VC backed and they also raised very similar points to the ones you've mentioned, which is keeping me away, having experienced being in a business that was hit by a variant of (2). Technology-wise there is a great many approaches out there in their infancy, that usually die before they get a chance to be fleshed out into larger companies. The intersection between No-Code & Developer-Tools is to me one of the most-exciting spaces to watch. I can't imagine we'll design & document business-logic and requirements with so many breaks in the chain to production ten years from now.

glenngillen 7y ago

So maybe something like https://blog.matta.io/bye-aws-hello-baa19ff8d9f2 https://blog.matta.io/bye-aws-hello-baa19ff8d9f2 ?