Developer Segmentation

As software continues to eat the world, software creators have increasingly more influence over our daily lives. It follows that the tools these software developers use in their daily work would become increasingly important.

Selling to software developers is notoriously difficult, as the population of developers globally is only ~25 Million and software developers are rather picky with the tools they adopt. The most productive software developers refine their tooling and workflow over decades, and adapt their workflow sparingly.

I recently wrote a blog-post length comment on HackerNews regarding Amazon’s recent acquisition of one of our competitors, Cloud9.

Many “learn-to-code” authors depended on Cloud9 and’s free offerings as an accessible way for beginners to start writing functioning web applications without needing to install and configure any programming languages or frameworks on their own laptops. One commenter remarked:

I used Cloud9 (pre-Amazon acquisition) for teaching high schoolers the basics of programming. It was super easy to set up and use. It really let me, as the teacher, focus on teaching syntax and principals and less on 'toolchain config', which is helpful for newbies right out of the box. I haven't used this new Amazon Cloud9 offering, but from the initial impression from the blog post, they've traded in the easy of use that Cloud9 once had for a deeper integration into the AWS ecosystem. The screenshots I saw were not something I'd want a greenhorn to have to walkthrough.

My response as to why Amazon decided to abandon servicing “learn-to-code” curriculums turned into a deeper analysis of Cloud development environment & Cloud IDE markets, and perhaps the broader dev tools market itself:

It's not surprising to see the common complaints from learn-to-code authors about disrupting their courseware. We heard this a lot at and struggled with the importance of the beginner market to our business.

When considering Nitrous as a viable business, I'd talk a lot about the "developer sophistication spectrum" and the challenges of one single product or service attempting to meet the needs of a lot of different types of developers.

On the beginner side of the spectrum, serving the hot "learn to code" market means scaling your potential market size by orders of magnitude. There is some product-market fit here as newbies don't really have substitutes ("what's a development environment?" they'd often remark), but the SaaS economics of selling tooling to beginners was atrocious. Selling to learn-to-code means you're dealing with an incredibly fickle audience where 95% abandon their plans to become a professional programmer within a few months. The other ~5% who become full-time programmers are dedicated enough to their craft to learn about their OS and their options to customize the local development workflow. So they naturally also churn.

(I don't have any knowledge of the market, but I'd imagine courseware providers attempt to charge 100% up-front to account for the extremely high churn. At least, that's how I'd charge.)

So basically all the cloud IDEs are getting hundreds of thousands of signups from a lot of newbies saying "We love [Nitrous, Cloud9, Koding, etc...]!" but not wanting to pay for the infrastructure and churning at unsustainable rates. On the less sophisticated side of the spectrum, I think there is potential for a viable cloud IDE business, but I think it needs to be closely coupled with a content platform like Treehouse, Coursera or CodeAcademy. I haven't looked at any of them recently, but I wouldn't be surprised if they have in-house teams working to improve the editor experience and provide stateful experiences with dedicated cloud compute & storage.

We had a tightly coupled integration with the Flatiron School and it was a pretty solid experience but just wasn't a big enough business for us to scale. So in reality these businesses really just look like a content / courseware business that has a really great cloud development experience. But it's clearly built for people learning to code and they're paying for the courseware, not for the editor.

As you move up the sophistication spectrum, developers begin to experience "cognitive dissonance" when considering how much their time is really worth. That is, when they know how to setup, configure or troubleshoot something themselves, they underestimate the time they spend every month performing those tasks. We spent a ton of time doing deep customer research with excellent engineering teams at Airbnb, LinkedIn, Shopify, etc...

You'd be extremely surprised at just how much time it takes for the average developer at a top-tier engineering org. In some cases, new developers took 3-4 weeks to setup their dev environment. But after setting up a new environment the other dev ops problems start to spider into a web of complex and proprietary issues that are difficult to create compelling marketing / sales presentations. It's like - everyone knows it sucks and it's broken, but nobody quite knows the solution. Which is why a lot of the solutions emerge from open source projects that solve specific issues organically and then expand into powerful platforms that cohesively solve a set of interesting ops problems (e.g. Hashicorp).

This is an oversimplification of the complexities of the developer market - as there is also a spectrum of sophistication within the professional developer market itself. The "intermediate" professional developer tends to be the best market fit right now for cloud development / IDEs, as they often are self-taught and know how to code, but are often not as versed in debugging low-level issues, but usually are more price sensitive to their more sophisticated counterparts (who don't want to use the service in the first place).

In any case, I remember reading a HN comment about the shutdown [1] and feeling bad about not opening up more so I suppose this will provide some color. People loved our service and we honestly loved building it, but the market is incredibly challenging and we weren't able to uncover the right strategic focus. Hopefully Coursera, Treehouse, CodeAcademy, etc... will continue to fill in the gaps for the beginner market - but since those will be tightly coupled with their courseware, it's going to be a difficult spot to be in for the independent educator who is attempting to monetize their own material.


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