The top 5 challenges for developer tools companies and how to overcome them

We’re living in the Developer Tools Gold Rush. From DevOps and containers to security and AI, enhancing developers’ productivity is tech’s latest trend and investors are jumping on the bandwagon. Last year, JFrog’s value jumped 62% on the company’s Nasdaq debut leading to a $6.3 billion valuation. In the last year, Qualtrics, Snowflake and UiPath all raised over $1billion in their company’s IPOs, while Snyk brought in a $530 million Series F. 

However, like the actual Gold Rush, the huge opportunities also bring a range of new challenges that dev tool businesses need to overcome. Here’s our top five. 

1. Cutting through the noise

The dev tools landscape is vast. When your market is literally anything that developers don’t have to do manually, competition for attention is sky-high and dev tools companies need to cut through the noise. That means getting the basics right - your tool must be easy-to-use, useful and highly responsive - narrowing down your target market and structuring your value proposition to fit their needs. What are their pain points? What are they trying to solve? How does your tool help them achieve that? Developers will only take a few seconds to make a decision on your product, so you have to be clear about the benefits and features to pique their interest. 

Yet, developers need to be aware of your product first. Developers have a notorious DIY mindset with most preferring to build not buy, so initially prioritizing adoption over revenue helps spread the word. Take GitHub , for instance. The world’s most downloaded dev tool app offers a basic package to individual developers for free with incremental rises for teams and enterprises. 

1. Honing a bespoke product strategy

Dev tools are not comparable to their physical counterparts - you’re not simply selling a ladder to a window-cleaner - but you should be looking to make the problem-solution connection just as simple in your customers’ heads. 

A successful product strategy should therefore focus on the ‘what, who, how’: what problem does your tool solve (e.g. fixes code vulnerabilities); who benefits (e.g. developers and security teams); and how do they benefit (e.g. more secure development lifecycle). It should outline the product’s USPs, how it compares to others in the market and why it’s a ‘must-have’, not a ‘nice-to-have’. It should also consider current trends and how best to exploit them. For example, with the increasing popularity around continuous integration and continuous delivery (CI/CD), there’s a growing need for tools that help development teams share information and work together. 

What’s more, don’t forget the user experience. Like any product, your tool might be useful, but if it isn’t enjoyable to use - think a weirdly-shaped hammer or thin-handled saw - then your target market is going to look for alternatives.

2. Developing an adaptable go-to-market (GTM) strategy

A GTM strategy finds and persuades the people most likely to benefit from your product, but with dev tools there are also some idiosyncrasies to consider. Firstly, are you a traditional b2b business selling to managers or are you a b2d business trying to convince developers? While managers want to see metrics, cost savings and efficiency gains, developers want a product that works. They are less interested in the hype and more concerned with the features. The GTM is therefore different. For example, companies selling to developers should focus on the development community by writing highly-targeted content on dev-specific forums and offering digital demos.  

Secondly, a robust dev tools GTM strategy needs to be continuously monitored and adapted. The dev tools market is full of innovation and so you may need to pivot if, for instance, the pain points your product solved six months ago are no longer an issue or you’ve made enough sales to introduce a new monetization model. For example, Kaleido initially offered their tool for free, attracting vast media attention and millions of users. They subsequently adapted their GTM strategy, introduced a scaling monthly subscription plan and now subscriptions are their fastest-growing revenue segment.

3. Scaling your service

Product - fitted. Market - gone to. It’s now time for dev tools companies to put the processes in place that enable them to commercialize the product, scale the business and service their growing customer base. 

Dev tools tend to start small - narrow target market, fast feedback cycles, agile iteration, simple pricing - but going for enterprise is when it gets complicated. How are you going to process thousands of payments and pay the required sales tax? How do you maintain customer records and personal data safely and securely? How do you ensure compliance with a stream of financial and legal regulations?

This is where your revenue infrastructure comes into play. If you’re not careful, it can become a complex web of disparate tools that require constant maintenance and further work as you scale. This is why many SaaS businesses opt for an all-in-one solution or single provider that does more of the heavy lifting for you. 

4. Building a solid team

No matter if you built the tool single-handedly and are the best multitasker on the planet, as your business grows, you need to expand the team. The problem is, so does everyone else. According to the US Bureau of Labor Statistics , the demand for software developers will grow 21% by 2028 compared to 5% for all other roles. What’s more, you’re fishing in the same small talent pool as the tech giants with limitless pockets. But, fear not, there are ways to get ahead of the pack:

• Think far afield: You’re not confined to local talent, so look for the best developers around the globe. For example, around a quarter of UiPath’s almost 4,000 full-time employees are based in Romania.
• Define your need: Full-time or contractor? Project-based or part-time support? It’s often easier to outsource or make short-time hires to fill a particular need. 
• Know the skills required: Developers have a wide range of abilities and knowing exactly what you’re looking for, helps you narrow your search and look in places that others might have missed. For example, AppSumo built its core product in one weekend for $60 by outsourcing to freelancers with the necessary skills in Pakistan. 

Grow with Paddle

Given the world’s insatiable appetite for software, the demand for development tools is only going to move in one direction. Successfully addressing these growth challenges will help your business become a fundamental part of that growth; the pan manufacturers in the Gold Rush. For advice on nailing your growth strategy, get in touch with Paddle.