
The Cost of Developers - djug
https://stratechery.com/2018/the-cost-of-developers/
======
mgc092
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 independent
entity with a sustainable business, if they had not fallen into VC's startups
trap. I have to agree with DHH here:
[https://twitter.com/dhh/status/1003611913924894720](https://twitter.com/dhh/status/1003611913924894720).
We need more independent software companies instead of only having 5 big
players.

~~~
jillesvangurp
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 entire OSS and developer community.

As an independent entity, Github would have had to evolve in a very different
way and gone more aggressively after making money, fixing their cost
structure, like most of their competitors like Atlassian, Gitlab, and other
companies selling developer tools as a SAAS service. So, even though these are
comparable companies with comparable offerings, the value proposition is very
different. There is no way in hell Gitlab is worth anywhere near what MS just
paid for Github.

Being based in silicon valley means Github paid a premium for being there and
burned through loads of cash paying for expensive developers, fancy office
space, etc. Much cheaper if you are based elsewhere, have less emphasis on
wanting to have every OSS project on your platform and more emphasis on
selling tools to corporations. This is in a nutshell the strategy for
Atlassian and Gitlab. Both also offer freemium layers for OSS but mostly their
deal is upselling to their paid offerings. Growth that way is much slower.
Though, I would say, Gitlab is now pretty well positioned to succeed where
Github struggled.

~~~
coldcode
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.

~~~
foobarbazetc
We switched from GitHub Enterprise to BitBucket Server several years ago and
are pretty (80%) happy with the decision. Saved an absolute truck load of
money.

The only issue with BitBucket Server is that it (inexplicably) does not have a
commit compare view.

[https://jira.atlassian.com/plugins/servlet/mobile#issue/BSER...](https://jira.atlassian.com/plugins/servlet/mobile#issue/BSERV-2550)

This is such a massive oversight I have to conclude Atlassian themselves don’t
use this product.

It annoys us but not enough to pay GH.

We don’t like GitLab as it was slow when we tested it and the UI wasn’t
designed as nicely as the other two (tbh it looks like it was designed by
programmers). Something about GitLab feels off and I don’t really know what it
is.

If MS changes the cost structure of GH Enterprise we’d probably switch back
(haven’t looked into how well it integrates with Jira etc recently).

~~~
mercutio2
There are many things I find frustrating about BitBucket Server (it’s super
slow, for one, it’s insistence on clobbering commit strings during merges is
the biggest), but I’ve never wanted a commit compare view; I don’t even know
what that is.

Care to explain what you would use it for?

~~~
Xaena
I'd be interested to hear about the slow behavior you're seeing. There are
some tips and tricks for improving that.

~~~
mercutio2
Generally speaking, I have found Atlassian’s tools don’t scale well to
megacorp usage. When there are thousands to tens of thousands of users
connecting at peak times, stuff just gets extremely slow. Noticeably slower
than when we all put up our own team-level Phabricator instances, although I’m
obviously not adjusting for Phabricator downtime when inevitably the
unofficial team sysadmin went on vacation and the server fell over.

I’m sure people involved in infrastructure are working on making this better,
but I don’t have any visibility into that layer.

~~~
Xaena
From a speed standpoint, I'll say the obvious thing, "it's architecture
dependent".

For thousands to tens of thousands of users, most folks need data center with
1+n nodes (w/ larger diminishing returns at 8 nodes). There's a few tips and
tricks with that, like pointing CI/CD tools to a smart mirror instead of the
primary instance and only mirroring specific build projects. Putting smart
mirrors in the same physical location as a primary instance could also help
reduce the impact of CPU-intensive requests like git fetch or clone.

Another common issue is apps/plugins. Bitbucket 5.9 added a way to get app
diagnostics so infra folks can see if there's a long-running process or other
weirdness. Vanilla Bitbucket needs about a 1gb heap (java) and with apps, you
want around 4gb (give or take).

If you want a longer read to share, this still has some good info despite
being 2~ years old: [https://developer.atlassian.com/blog/2016/12/how-we-
built-bi...](https://developer.atlassian.com/blog/2016/12/how-we-built-
bitbucket-data-center-to-scale/)

------
heydenberk
> 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.

~~~
jasode
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/](https://stratechery.com/2013/friction/)

~~~
0xfeba
Interesting. In hindsight, the retail store distribution model of software
lasted far longer (and still does) than it ever should have.

~~~
Veelox
I think you are underestimating how much easier high speed internet enabled
downloading of software over buying a CD

~~~
vvanders
Yeah, I very clearly remember a "the sky is falling" sentiment when Steam
launched a download only version of Half-Life 2.

Or take Netflix, very few thought that would be the streaming juggernaut that
it is into today. Alas poor Blockbuster, we knew you well.

------
SideburnsOfDoom
MS paid $7.5 Billion for Github, along with its 28 Million users - it's in the
first paragraph of the announcement (1)

That's around $268 per Github user.

Now MS could have probably made a site comparable to Github for 0.1% of that
cost - e.g. revive codeplex, pump a few million into the design, backend, git
support and user interactions.

But it wouldn't have 28M users. That's what they're paying for. That's the
hard part.

1) [https://news.microsoft.com/2018/06/04/microsoft-to-
acquire-g...](https://news.microsoft.com/2018/06/04/microsoft-to-acquire-
github-for-7-5-billion/)

~~~
schimmy_changa
> That's around $268 per Github user.

That seems like a decent deal for MS... Assume on average a user is an active
engineer for 5 years (of course this is back-of-the-envelope and not even
taking into account the growth of the field, and new engineers are likely to
use Github for it's network effects).

Is the value of owning the central platform of an individual engineer worth
more than $50 / year? Even if all you did was run basic ads I'd say yes -
although I'd expect more services including edging in on Atlassian's turf as
an upsell opportunity for MS.

All this, not even counting future value... If Slashdot is still around and
somewhat valuable, Github will probably also still be around and somewhat
valuable at least a decade from now.

~~~
SideburnsOfDoom
> That seems like a decent deal for MS..

Indeed, as cost of acquisition of an active developer, it doesn't seem either
absurdly high or absurdly low.

------
rsp1984
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, is precisely why Microsoft is the best possible acquirer
for GitHub, a company that, having raised $350 million in venture capital, was
not going to make it as an independent entity._

Seriously? GitHub could have easily gone out for more VC. They could have
IPOed. "Not going to make it as an independent entity" is so far detached from
reality, what was he thinking when writing that?

~~~
ealexhudson
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 be interesting for their VC backers. Their market
cap at IPO wouldn't have been much more than $1B (absent some growth story).

It's a great problem to have, to be sure, but the MS purchase is a great deal
for Github investors.

~~~
rsp1984
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.

~~~
dd36
Agree. There are some easy project management wins for Github. It’s
flabbergasting that they’ve ignored them. Issue complexity and time estimates.
Burn downs. Github is only part way there, why not get all the way?

~~~
icc97
Sometimes it's worth it to stick to what you're good at.

If Github burnt a ton of cash to try and compete with Jira, ended up making a
product that didn't attract enough people over at the same time as ignoring
problems that users were already grumbling about, this could have led to them
being in a worse state and easier for MS to pick up on the cheap.

~~~
dd36
If it cost a ton of cash, that would be ridiculous. It is adding some fields
and charts. Do you think Zenhub has or had a ton of cash?

~~~
megaman22
If it was so easy to make a decent project management tool, there would be
one...

~~~
dd36
There are many. We built one in Google Sheets. Zenhub layers over Github. We
love it too. But I am sure it didn't require tens of millions of dollars to
accomplish.

------
throwawayqdhd
Solid analysis as always.

As a Windows user, I'm finding it increasingly harder to justify using the OS.
Pretty much every single software I use to get my work done works in my
browser.

The only software that runs natively is Ableton, which works perhaps even
better on Mac. If I haven't switched, it's simply because of laziness: it
would be too much of a hassle to copy all my samples to another device and
reinstall all my plugins

~~~
Mary-Jane
The bigger challenge, if you're a long time Windows user, will be overcoming
your own muscle memory. Apple's keyboard layout and shortcuts are similar but
different enough to cause problems. It can be quite distracting for instance
if you're in the zone and hit the shortcut to replace some text, and then
suddenly every window on your desktop disappears!

~~~
isostatic
Biggest problem I have with a mac is the " mark. On a PC (GB keyboard) it's
shift-2, on a mac shift-2 is @, and " is shift-'

~~~
chillacy
You can customize your key mappings. I found a dvorak keyboard with esperanto
key bindings on the internet. If that exists, I'm sure anything else can be
done (assuming you touch type).

~~~
isostatic
Sure, but if you work from machine to machine to machine customisation is
fairly terrible.

------
martin_drapeau
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 are good examples of those
investments.

What I haven't seen are non-enterprise developers, even hobbyists, using Azure
as their cloud. When I talk to fellow devs, they have experience with AWS not
Azure. My impression is that the Linux/CLI environment is much more familiar
that Azure cloud portal with buttons à la Windows. Less black box. Curious to
know if my impression is right.

~~~
cavisne
The hobbyiest/ side project angle of this is the most interesting to me.

Most side projects end up in github at some point (especially if Microsoft
makes private repos free - very likely). Azure’s PaaS offering is actually
pretty good so having a simple deploy to azure button when creating the
project could be a huge boost.

~~~
acdha
That’s my expectation, too: they don’t change anything except that there’ll be
a super easy path to deploy on Azure and probably some nice CI tools, etc.
with great VSCode integration. (“You have a Dockerfile. Click here to deploy
on Azure free tier.”)

Simply making sure they’re considered along with AWS would be big, especially
since experience on small or side projects factors into many business
decisions.

------
IloveHN84
Pretty Apple-oriented article.

Sure, Apple has created a platform, but at which cost? You are obliged to
develop for iOS, OSX only having an Apple computer. The platform has no escape
rooms.

Windows has extended the .Net to run even on Linux and you can build Windows
applications from other OSes as well. The flexibility is in the tooling and MS
knows it - see how dramatically improved Visual Studio in latest releases and
now compare it with Xcode: what's new in Xcode 10? The Dark mode, what else?

The author still forgets that actually the ultimate gaming platform is still a
PC with Windows. Mobile gaming has improved, but the best gaming experience
(VR and not) runs on bare metal PCs.

Apple just decided to ditch OpenGL and OpenCL in favour of Metal - this will
backfire in the near future, because developers look for easy tooling which
allow them to use fewer but high quality APIs and not three thousands (e.g.
Vulkan, UWP).

------
future1979
The purchase of github doesn't make immediate financial sense to me. This
article posted a reason - to stave off Windows decline. While it is plausible,
I still don't see it.

~~~
avip
Which MS acquisition did make sense? Skype? Nokia? LI? Yammer?

~~~
clbrook
Xamarin

~~~
evilmushroom
I have literally had a mobile team threaten to quit if we adopted Xamarin
after they built a small app in it lol.

~~~
dagaci
Xamarin can be pretty tough if you don't have a good appreciation of Xcode,
iOS and UWP development and tooling, and underlying differences.

~~~
evilmushroom
Oh, they understood it, top tier mobile devs, they just thought it was trash.
Drastically preferred to do native. I went to bat for them, and we shipped a
beautiful app on time.

------
markm248
I don't understand the last sentence:

"That, though, is exactly why Microsoft had to pay so much: buying in directly
is a whole lot more expensive than using leverage, which can produce
equivalent — or better! — returns for much less investment."

~~~
mattnewport
I think his point was that Apple has leverage over developers (you have to go
through the app store to access iOS users) and therefore doesn't have to care
about investing in a good developer experience. Microsoft doesn't have
equivalent leverage to get developers to develop for Windows or Azure so they
have to instead invest more in winning developers over by offering them better
tools and services, hence the expensive GitHub acquisition.

------
forgotAgain
My experience is that developers are hardcore in their opinion on Microsoft:
they are either all in or have no interest in dealing with them.

I don't see Microsoft being able to move developers with this purchase.

~~~
ascorbic
I'd imagine there are a significant number of developers using VS Code and no
other Microsoft products.

------
test6554
I thought Azure is the platform that Microsoft is planning to pull developers
into?

Step 1: Buy github

Step 2: Integrate Azure and Visual Studio

Step 3: Profit

------
mathattack
Interesting to see Microsoft playing nice with vendors. I’ve seen many play
less than nice. (ISVs who host on Azure and badmouth Microsoft products)

~~~
themacguffinman
Woah I had no idea that when you use Azure, you're morally obligated to like
the company too.

~~~
mathattack
If you’re in a partnership with them that both of you use as Marketing on your
websites, you shouldn’t badmouth each other.

