Explaining the rise of developer-centric startups

Stripe, the largest private company in the US at $95 billion. Twilio, goes public at a $1 billion valuation. 5 years later, worth $60 billion.

These are just a few companies in the technology space that are on fire right now. So what's the common theme that links them? Developers.

Why are developer-centric companies so hot right now? Take a step back.

First, what do these developer tools allow for? They enable developer productivity. This is really important. Developers love trying new technology to solve their problems. New technology is much better than old technology in one important dimension. But it's also true that new technology is initially much worse in a ton of other ways than the old technology. Ben Horowitz, co-founder of one of the best-performing Venture Capital firms (a16z) describes this concept here. So developer tools help correct the areas where the new technology is much worse.

For instance, the internet (new technology) allowed us to transact online. But accepting payments online was a real bitch. Maybe you used PayPal (bad technology & bad customer service). Maybe you wanted to build it yourself (slow, expensive, complex). Using our framework above, it was easier to accept payments in person than on the internet. Then Stripe came around.

And developers loved them. The API was easy-to-use, the documentation was clear. People who wanted to start accepting payments could do it within an hour with Stripe. But the best evidence is revenue, so I'll let this tweet do the rest of the talking.

But why is developer productivity important?

Anytime a business can get more productivity out of their employees in a positive ROI fashion, they will take that bet. So why isn't marketing productivity as hot right now? finance productivity? human resources productivity?

2 reasons (which are correlated):

  • Developer salary
  • Developer shortage

Developers today are the highest paid individuals in tech companies. Yes, they bring a lot of value to a company. But, developers are in short supply. It was estimated that ~1 million developer jobs in the US went unfilled in 2020. That imbalance of low supply & high demand gives developers the leverage to make the big bucks.

How do employers view developers?

Exec 1: These developers are getting paid the most out of anyone in this company! We better make damn sure we get our money's worth. They have to work on what will deliver the biggest monetary impact to our company.

Exec 2: Yeah too bad they're working on ______ (non-value add project)

Exec 1: What the hell! They should be working on _____ (differentiated feature that brings in boat loads of revenue)

It's critical for employers to make sure their developers are spending their time on the right projects. But there is just so much to do. But hey...what if there was a way we could take some work off these developers plates. Ya know, to make them more....productive.

And now you understand why developer-centric startups are a great place to build your career & work for a hyper-growth company.

  • Some of the fastest-growing B2B companies are increasingly developer-focused
  • Enterprises are looking to unlock developer productivity as these are their highest-paid, shortest-staffed teams
  • New technology is always around the corner, which means there’s a need for developer tools to support that new technology

And this is why we focus on getting Tech Sales Mentors students jobs at these startups.