1. Library
  2. Arrow Icon
  3. Heavybit’s James Lindenbaum on Developer Company Trends
FEB 3, 20159 MIN

Heavybit’s James Lindenbaum on Developer Company Trends

Dana Oshiro's Headshot

Dana Oshiro

General Partner, Heavybit

Every year at Heavybit, we meet a tremendous number of developer-oriented companies of all sizes, as well as a lot of enterprise customers and venture investors. We also have over 20 member companies and 50 founders of those companies who we work with regularly. As a result of all this interaction, we often see interesting patterns.

A few weeks ago, In his year-end wrap up for 2014, Heavybit founder James Lindenbaum discussed some of those patterns and what it may mean for the year ahead.

2014 saw a huge amount of activity in terms of dev companies starting, growing, hiring, and raising money. We also saw a lot of acquisitions and quite a few IPOs.

The perceived value of developer tools among business buyers is increasing rapidly.

As software eats the world, all companies become software companies, and all companies need to be agile in order to compete. Great dev tooling means better software development velocity, which means more captured opportunities. Businesses get this, and are increasing their investment in developers and their tools.

Marketing groups in particular are leading the charge.

Groups that are working to build the latest and greatest web and mobile experiences, and those working to launch campaigns are the most willing to buy new tools to reduce time to market. This increasingly includes digital agencies who are doing a large amount of this work on behalf of the largest companies.

On-premises models are evolving.

We’re starting to see more meeting in the middle between startups that want to be cloud-only, and large enterprises that want everything on-prem / behind the firewall. Two interesting trends we’re seeing are the hybrid SaaS model, where software is installed and run on-prem, but it’s managed remotely by the vendor as if it was running on virtual infrastructure at, say, AWS. This is an interesting compromise because it’s more compatible with the devops practices of the vendor (continuous delivery of updates, constant learning from operational behavior in production, etc.) while still satisfying the enterprise requirements.

For some, SaaS + VPC = On-prem.

This is an interesting move toward the definition of on-prem including VPC (virtual private cloud) at some large enterprises. VPC’s are essentially virtualized servers at an IaaS provider like AWS that are typically single-tenant, network isolated, and connected securely via VPN to an enterprise’s data centers. Some large enterprises have begun allowing a cloud service running on their VPC to satisfy their behind-the-firewall requirements. This is exciting for SaaS providers in markets where customers are reluctant to allow a public cloud service.

The outlook is excellent for developer startups in 2015.

Increased buying is pushing growth at these companies, and there is a tremendous amount of capital available to these companies going into 2015. We are aware of a ton of fundraising activity much of which is not yet announced, and with Y-Combinator specifically requesting developer company applications, and investors like Andreessen-Horowitz publishing their explorations into containers and devops (among other dev categories), expect to see more. James also talked about why 2015 will see higher M&A activity, and points to Redpoint Partner Tomasz Tunguz’s recent article, The Fertile Acquisition Environment for Startups in 2015. As further evidence, Heavybit member Librato was acquired by SolarWinds late last week.

James also detailed seven high-energy categories where we’ve seen particularly sharp increases in activity this year and expect them to be great areas of opportunity in 2015.

High Energy Categories

  1. Continuous Development and Delivery: Big companies want to develop and deliver software faster and more continuously, and they need new tools. The move to cloud and SaaS models, plus changes in app architecture mean that the whole toolchain must be replaced. Solutions for dev/prod parity (see Heavybit member Codenvy), API design (Apiary), build infrastructure (Gradleware), QA/CI/testing (Rainforest, Circle Ci), release management, reliability engineering (Librato, Iron IO, Runscope, Takipi) and incident response (Pagerduty) are all needed and growing. Dev tools startups are now shaping the way Fortune 500 companies build and deliver software.
  2. Big Data: Still a growing category as the amount of data to manage explodes, being pushed by more production software to monitor, larger userbases, and more IoT. While Hadoop remains the norm for managing big data, developers are frustrated with cluster management and query structure, and are seeking alternatives. People are rolling their own MapReduce solutions and others are focussing on specific verticals like custom analytics (Keen.io), production monitoring metrics (Librato), and SQL-like querying (Treasure Data). Cloudera, Mapr, and the recently IPO’d Hortonworks are helping companies operate Hadoop, while Mesosphere and others provide solutions for cluster management.
  3. Containers: This will be the year that containers begin to be used heavily in production, as the missing pieces begin to appear. Docker itself, Mesosphere, and CoreOS, along with others are starting to provide the most key ingredient: orchestration. While this is important, we believe the bigger winners in this category will be those who abstract away containers entirely, so that app developers can focus on writing software instead of managing containers.
  4. New Application Architectures: Mobile fragmentation means large companies (especially e-commerce and media companies) end up with separate teams for iOS, Android, mobile web, and traditional web. This is a hair-on-fire pain point with solutions needed. Companies like Famo.us try to solve for this with an all web-stack with native-like performance. Others provide portability solutions like cross-compiling Objective-C for Android (Apportable). More interesting is the move to smart client style models (all Javascript) with new frameworks (Meteor) or combinations (Angular + Firebase). The recent Firebase acquisition by Google is another indicator of the growing traction here.
  5. “Helping Scientists”: This is our internal name for an emerging category we don’t know what to call. Increasingly, developers are building solutions for technical non-programmers like scientists, statisticians, and mathematicians. Solutions include easier ways to use tools like R and Matlab, while also helping with scale-out for big data sets. We are seeing tons of algorithms-as-a-service or machine-learning-as-a-service solutions, some general, some vertically focussed, and some as marketplaces.
  6. Hardware & IoT: The intersection of hardware and software will continue to be the most interesting area. As hardware becomes much more accessible, we need better tools to enable rapid prototyping and give hardware developers the same continuous delivery tooling available to software developers. See Heavybit’s latest member addition, Spark. IoT continues to fuel this trend, also creating massive amounts of real-time data that need to be ingested and analyzed (Heavybit members Keen IO and Treasure Data are already working with many customers in this area).
  7. Security: The last 24 months has seen the Snowden revelations, a massive uptick in sovereign, commercial, and criminal cyber warfare, and this year’s streak of unprecedentedly bad vulnerabilities. The confluence of these events has resulted in a major rethinking of how we approach security. This war must be fought forever, with ever increasing stakes, so it’s increasingly important to think about how this affects your customers, your product, and your implementation decisions, but also about the major opportunities created by this set of challenges.

When we look at the opportunities in the space, there’s honestly never been a better time to be building developer products.

More from the libraryVisit Library