The Developer Renaissance: An Investment Road Map For 2012
By Sarah Tavel (Senior Associate, Bessemer Venture Partners)
What an exciting time to be in this business. The “post PC era” and cloud computing are colliding to create a perfect storm. First, thanks to the post PC era, demand for software is exploding. Second, thanks to cloud computing, software development is becoming increasingly accessible.
There’s an interesting positive externality to these trends: The developer “citizenship” is exploding. Consequently, developers are finally a large enough community with enough purchasing power that you can actually build a company just by selling to developers. I’d love to invest in companies doing just that.
In this post, I’ll provide a little color on the two trends, and then, in the interest of feedback or thoughts, I’ll outline three areas in which I’m particularly interested. This is an investment road map in progress, so would ruly welcome any feedback.
In the late Mainframe Era, developing an application was a real team effort, access to mainframes was restricted, and given the expense to purchase a mainframe, not to mention maintain it, the number of computers for every person was exceedingly low. Then the PC era came upon us — computers got cheap enough that suddenly households could purchase them and the number of computers per person, while probably less than 1 computer: 3 people, started to rise. With that increase in the number of computers, demand for applications started to tick up. People needed a word processing application, a browser, some games… you get the picture. But because there was a very small number of application platforms (Windows, Apple), and a small number of computers relative to the number of people, demand was capped.
Now we’ve entered a new, fascinating era in software development: the alleged “post-pc” era. Computers are now a fraction of the cost for a multiple of the power. Even the computers we hold in our hands (smartphones) are more powerful than the computers we once had on our desks ten years ago. Consequently, the ratio of computers to people is inversing. Whereas multiple people used to share a single computer, now it’s not uncommon for a single person to have multiple computers. Compounding this trend, applications are no longer limited to just Windows or Apple’s OS. Everywhere you look there is a new application platform. iOS. Android. Blackberry. Facebook. Force.com. WordPress. Twitter. Drupal. Box. Shopify. Samsung. Heck – even automobiles like BMW are trying to get in the game!
Consequently, the demand for applications has exploded.
“Democratization” of Software Development
Increasing demand by itself will always create an increase in supply. But there is another trend that is making this process happen even faster: software development is getting democratized. It used to take a team of developers and sysadmins to build an application, and software development was a highly specialized skill. Now, self-taught programmers abound, and developers can launch new applications after just a weekend’s worth of work. As my colleague David Cowan outlined back in 2008 his Internet Law:
“The time and money required to produce (design, develop, secure, test, launch, scale) a typical data-oriented form application on the web drops in half every two years.”
Because software development has become more accessible, the number of developers worldwide has exploded. As my friend Art Chang pointed out – it’s a fascinating reversal of the industrial revolution – the means of production is being handed back to the masses. This population of developers is only going to grow from here.
Why I’m interested in this trend
Developers are finally a large enough community with enough purchasing power that you can build a company just by selling to developers. In particular, there are three types of companies that most interest me:
- Further Democratizing Software Development — To me, this means riding the trend of cloud disruption, but higher up on the stack. The first wave was on an infrastructure level such as Rackspace and Amazon Web Services. Then the second wave went slightly higher – platform as a service offerings like Heroku, Force.com, and Engine Yard. But the wave I’m most interested is the next – companies like Pantheon which make it stupid simple to deploy Drupal, or Bessemer portfolio company Wix, which makes it stupid simple to build Flash websites without any coding ability.
- “Developer Components” — I love Christina Cacioppo’s description of this opportunity as software developing a “component industry” in her post “What comes next” though I suppose I slice the market a little differently. We’ve already invested in a couple companies in this space including Twilio and a soon-to-be-announced company, and hope to do more.
- Developer “Picks and Shovels” — Developers need a new breed of web-based tools to help them build. This ranges from collaboration-centric tools like Pivotal Tracker and Flowdock, to code hosting or developer environments like Koding, to application monitoring like Nodeable.
The space is still early, but the trends are very clear. It will be exciting to see how this renaissance plays out in 2012.
This post was originally posted at Adventurista.
About the guest blogger: Sarah Tavel is a Senior Associate at Bessemer Venture Partners, where she focuses on the software and Internet sectors. Prior to joining Bessemer, Sarah was a consultant for a strategy-consulting firm and also founded a general-contracting business. While earning a degree in philosophy cum laude from Harvard University, Sarah captained the women’s rugby team and was a Harvard Scholar. She blogs at Adventurista. Follow her on Twitter at @sarahtavel.