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The Cost of Developers

stratechery.com

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Re: The Cost of Developers

#31

Post by calferreira »

martin_drapeau wrote: post #12

The author talks about leverage an OS provides to the vendor: iOS for Apple (and its App Store) and Windows for Microsoft. It is only logical that when your leverage fades, you should find an alternative means for growth. Microsoft has been betting on the cloud for some time now. Part of that strategy is shifting enterprise from premise to Azure. In parallel investing in developers. VS Code, .NET Core and now GitHub…

I host all my side projects on VSTS.

Free source control TFS & GIT. Free builds. Free project management.

Heck, i have a complete pipeline to build my code and deploy it to the app store.

Costs me zero per month.

Please keep in mind that is "free" (has limits), but for my usage is more than enough.

I can't do the same on AWS AFAIK or even github.

Re: The Cost of Developers

#32

Post by jasode »

heydenberk wrote: post #22

> the App Store dramatically lowered the barriers to entry for developers Is there any platform with higher barriers to entry than the App Store? iOS development requires a proprietary toolchain only available on Apple hardware, programming languages hardly used elsewhere, not to mention the $99/year developer fee and the litany of vague and arbitrarily enforced rules and content guidelines for App Store release.

stratechery wrote: "the App Store dramatically lowered the barriers to entry for developers"

To which you replied: "Is there any platform with higher barriers to entry than the App Store? [...] , not to mention the $99/year developer fee"

His baseline for "lowered barriers" was retail channel distribution.[1] Think of shrinkwrapped packaged software like Quicken on the shelves of CompUSA, OfficeDepot, Costco, and boxes of videogames at GameStop.

Yes, $99 is a barrier but it's much less than the millions of dollars in capital required to get retail stores to carry your boxed software.

[1] if you click on the url link behind "lowered the barriers", you'll be directed to this page illustrating retail distribution: https://stratechery.com/2013/friction/

Re: The Cost of Developers

#33

Post by baxtr »

mgc092 wrote: post #5

Great analysis, although I don't completely agree with this statement: "GitHub, a company that, having raised $350 million in venture capital, was not going to make it as an independent entity." If it is referring to the fact that, in the crazy VC spiral of the startups world, once you have received such a big investment, a sale to a big corp is the only choice, then I sadly agree. But GitHub could have been an indep…

I agree. But, there is this narrative in the VC world that the tech game is different than ordinary economy. In tech, you have to create a monopoly due to network effects. Brian Arthur has been the first to formulate that [1], and it has become SV folklore ever since.

If you believe in that worldview, there is no space for a market with several players. The only goal must be to become the number 1 as fast as possible. See also “From zero to one” by Thiel. Needless to say that this is a depressing worldview, but either they right and then it won’t help to whine about it. Or they ain’t right, but they still gonna operate like it is true. Both sad.

[1] http://a16z.com/2018/05/16/network-effects-positive-feedback...

Re: The Cost of Developers

#34

Post by hsribei »

jillesvangurp wrote: post #28
mgc092 wrote: post #5

Great analysis, although I don't completely agree with this statement: "GitHub, a company that, having raised $350 million in venture capital, was not going to make it as an independent entity." If it is referring to the fact that, in the crazy VC spiral of the startups world, once you have received such a big investment, a sale to a big corp is the only choice, then I sadly agree. But GitHub could have been an indep…

Correct, github sold out to investors, which then owned them, which then sold them out to get an exit when it turned out the company was in no shape for an IPO which is the only reasonable other exit if you are looking for a 10x ROI on a company that burned through hundreds of millions. Investors were in this for a huge exit and they just got it. In fairness, MS bought a valuable social network of essentially the ent…

Gitlab also took VC money and have an exit as their only option. Doubt they'll get as far as GitHub did though, and the option to just grow slowly into a solid independent business is off the table. Probably an acquihire with small return to investors.

Re: The Cost of Developers

#35

Post by ozim »

chaosite wrote: post #10
nathankunicki wrote: post #7

Earlier quoted context omitted.

In my view it's a longer term proposition to gain more customers for Azure/Microsoft Cloud. Google, Microsoft, and Amazon all see the future of computing as being in the cloud. If Microsoft can integrate Azure and GitHub to make it easier for developers to deploy and run their code in the cloud, then that means more Azure customers. This likely means that GCP and AWS integrations will take second place.

That doesn't make sense to me. GitHub integration is already pretty easy, the GitHub API is fine. Heroku for example is already pretty well integrated with GitHub, and they didn't have to buy anything.

Maybe you know next year it will by coincidence get harder to integrate with Heroku. If they would buy it, somehow it could get harder to integrate with Azure.

Re: The Cost of Developers

#36

Post by rsp1984 »

ealexhudson wrote: post #25
rsp1984 wrote: post #13

There are times when I really like the thoughtful analysis on Stratechery and there are other times when I think it's a complete pile of detached-from-reality horsesh!t. Today is of the 2nd kind. What it also has is a potentially fatal weakness: no platform with user-based leverage. Sorry, what? Windows still has > 90% market share on desktop. If that isn't "user-based leverage" I don't know what is. This, by the way…

Github would have had trouble getting more VC investment. According to Bloomberg, there are ~21M software developers in the world, and Github has ~24M user accounts. There's little userbase growth possible there; they would have had to start increasing revenue per user rapidly to be interesting for another VC round. Equally, on their $200M revenue (or whatever it was), they would struggle to get a multiple that would…

They could have easily become a formidable competitor to Atlassian if they extended their offering beyond just code hosting. Competing with Atlassian is actually not that hard considering how bad Atlassian is at times (I'm a customer myself). Atlassian today has a market cap of 15B.

There's a lot of growth opportunities if you have >20m users.

Re: The Cost of Developers

#38

Post by coldcode »

jillesvangurp wrote: post #28
mgc092 wrote: post #5

Great analysis, although I don't completely agree with this statement: "GitHub, a company that, having raised $350 million in venture capital, was not going to make it as an independent entity." If it is referring to the fact that, in the crazy VC spiral of the startups world, once you have received such a big investment, a sale to a big corp is the only choice, then I sadly agree. But GitHub could have been an indep…

Correct, github sold out to investors, which then owned them, which then sold them out to get an exit when it turned out the company was in no shape for an IPO which is the only reasonable other exit if you are looking for a 10x ROI on a company that burned through hundreds of millions. Investors were in this for a huge exit and they just got it. In fairness, MS bought a valuable social network of essentially the ent…

At where I work we use Github Enterprise, which costs way more than Gitlab Enterprise, is not scalable, and barely cares about enterprise customers like ourselves. Gitlab on the other hand is much cheaper, is highly scalable, runs in AWS, and is responsive to requests. Ultimately to make it as a business you need to provide what the customer wants and is willing to pay. Github never did.

Re: The Cost of Developers

#39

Post by scarface74 »

rsp1984 wrote: post #13

There are times when I really like the thoughtful analysis on Stratechery and there are other times when I think it's a complete pile of detached-from-reality horsesh!t. Today is of the 2nd kind. What it also has is a potentially fatal weakness: no platform with user-based leverage. Sorry, what? Windows still has > 90% market share on desktop. If that isn't "user-based leverage" I don't know what is. This, by the way…

Sorry, what? Windows still has > 90% market share on desktop. If that isn't "user-based leverage" I don't know what is.

In the grand scheme of things. No one cares about desktop development. Walk into a VCs office and tell them that you have the next great idea for a Windows app and watch how fast you get laughed out of the office.

How many developers are going to flock to writing Windows apps?

As much as I hate it, most of the popular desktop apps are written using cross platform toolkits like Electron. The only companies making serious money on the desktop are Microsoft and Adobe.

Games don't count as "desktop apps". They are mostly using cross platform game engines and not dependent on being part of the Windows desktop.

As far as IPOing, if they couldn't make money as a public company, they would have been an acquisition target either way.

Re: The Cost of Developers

#40

Post by alter_eco123 »

rsp1984 wrote: post #13

There are times when I really like the thoughtful analysis on Stratechery and there are other times when I think it's a complete pile of detached-from-reality horsesh!t. Today is of the 2nd kind. What it also has is a potentially fatal weakness: no platform with user-based leverage. Sorry, what? Windows still has > 90% market share on desktop. If that isn't "user-based leverage" I don't know what is. This, by the way…

> Seriously? GitHub could have easily gone out for more VC.

Making it as an independent company generally involves not taking on more debt on top of a massive pile of debt.

What's necessary is, you know, profits and stuff.

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