Why Most Dev Tools Are Dying (And What We Can Learn From the Survivors)

"We're building Figma for API testing!"

"It's like GitHub but for DevOps!"

"Think Notion, but specifically for developers who code on Tuesdays!"

Every month I study dozens of dev tools startups. Each one more "revolutionary" than the last. Each one destined to join the great tech startup cemetery in the sky.

And after analyzing hundreds of cases, reading countless pitch decks, and building Movestax (yes, another serverless platform - but bear with me), I see both sides of this story. We're building a full-stack serverless platform for builders, not just developers. Why? Because I've learned the hard way that dev tools alone don't solve real problems.

Before I tell you why most dev tools are dying (IMHO), let me share some insights from both sides of the table - as someone who analyzes this space AND builds in it.

The Gold Rush Nobody Asked For

Remember when crypto bros were everywhere in 2021?

"But bro, this is Web3 bro, we're decentralizing everything bro!"

2024's version? Dev tool founders.

Every week I read about at least five new developer tools. They all follow the same script:

1. It's X for Y
2. Built by ex-[FAANG] engineers
3. Raised seed from [insert fancy VC]
4. "And we're adding AI!"

(If I had a dollar for every time someone said they're adding AI, I'd have enough to fund another doomed dev tool startup. Maybe I should build an AI-powered funding platform for AI-powered dev tools? ??)

The Numbers Don't Lie

Let's look at some sobering numbers:

GitLab (NYSE: GTLB):

• Stock is trading at ~$55, down from its IPO price of $77.
• Growth slowed to 24% YoY in 2024.

HashiCorp (NYSE: HCP):

• Trading at less than half their IPO price
• Struggling post-IPO, focusing on monetizing Terraform Cloud
• Making their open source users very nervous

"But Thiago," you say, "GitHub shows massive growth! 90 million new repositories! That must mean something!"

Yeah, and I have 50 repos too. Know how many have more than 10 stars? None.

The Three Acts of a Dev Tool Tragedy

Let me share what typically happens when you launch a dev tool these days:

Act 1: The Honeymoon

• Launch on Product Hunt
• Hit #1 on Hacker News
• "We're the next Figma!"
• VCs sliding into DMs
• Founders practicing their CNBC interviews

Act 2: The Reality Check

• Free users not converting
• CAC higher than LTV
• "Maybe we should add AI?"
• First layoffs
• VCs ghosting harder than your ex

Act 3: The Enterprise Pivot

• Hiring first sales rep
• "Enterprise features" roadmap
• Security certifications panic
• "We were always enterprise-first"
• Founder starts posting LinkedIn motivation posts

Why The Old Model Is Dying

The traditional dev tools playbook is failing for three key reasons, in my opinion:

1. Market Saturation

The developer tools space is bursting at the seams. With thousands of companies competing, most tools look and feel the same. The result? Differentiation is a pipe dream, and standing out is harder than ever. When everything’s “best-in-class,” nothing really is.

2. Distribution Challenges

GitHub Marketplace might have 10,000+ apps, but how many can you name? Exactly. Less than 5% gain meaningful traction, and acquisition costs are rising faster than a Monday morning standup. It’s no longer enough to just exist in a marketplace—you need to dominate it.

3. Changing Developer Behavior

Developers are burned out from endless tool options. Tool fatigue is real, and teams are opting for simplicity: fewer tools, more integration. Add security and compliance headaches, and the trend is clear—consolidation wins. Platforms beat point solutions every single time.

What's Actually Working

In the sea of failing dev tools, some companies are actually crushing it. Let's look at why:

1. Platform Players

Take Datadog:

• $0 to $2.2B ARR in 14 years
• 30,000+ customers
• Full observability platform

Why? They're not selling a monitoring tool. They're selling a complete observability platform. The difference matters - they solved the entire problem space, not just one small piece of it.

2. AI-Native (Not AI-Washed)

GitHub Copilot:

• 1.5M+ paying users
• $200M+ ARR
• 46% of code suggested by AI
• Now integrates across the Microsoft ecosystem (Azure, Visual Studio, etc.)

The difference? It's not "AI-enhanced" or "AI-powered." It's AI-native. The entire product wouldn't exist without AI. That's the bar now.

3. Enterprise-First

Take Wiz:

• $0 to $100M ARR in 18 months (fastest SaaS company ever)
• $12B valuation
• 35% of Fortune 100 as customers
• Built for enterprise security from day one

They didn't pivot to enterprise - they started there. Built their product, sales motion, and entire company culture around enterprise needs from day one. And it paid off spectacularly.

The New Reality

The dev tools market isn't dying. It's growing up. And like any awkward teenager, it's painful to watch.

A 2023 JetBrains' research shows 83% of developers prefer integrated platforms over point solutions. Gartner Report 2024 predicts that by 2026, 70% of new developer tools will be integrated into broader platforms.

In other words, nobody wants your standalone tool that does one thing slightly better than the 50 other tools that do the same thing.

The Future of Dev Tools

Want to know what's actually coming? Here's my prediction based on what we're seeing at Movestax:

1. The Great Consolidation

• Point solutions die or get acquired
• Platforms dominate
• Features become products, products become platforms

2. The Real AI Revolution

Not: "AI-powered status updates"

But: Actual developer augmentation that:

• Reduces cognitive load
• Automates real work
• Provides 10x improvements

3. The Build vs. Buy Evolution

Companies will stop asking:

"Should we build or buy?"

And start asking:

"Which platform can grow with us?"

So You Still Want to Build a Dev Tool?

Fine. Here's my personal checklist:

1. Are you solving a real problem?

Not: "Making standups 10% better"

But: "Cutting deployment time by 80%"

2. Do you have a real moat?

Not: "We have better UI"

But: "We have network effects that compound"

3. Can you actually make money?

Not: "We'll figure out monetization later"

But: "Here's our path to $100M ARR"

The Hard Truth

The dev tools gold rush is over. The winners will be:

• Platforms that solve real problems
• Solutions that focus on builders, not just developers
• Companies that understand monetization isn't optional

The losers? Everyone else scrambling to add AI to their Kubernetes monitoring tool.

Wrapping Up

2024 isn't the death of dev tools. It's the death of unnecessary dev tools. And as someone building in this space, I couldn't be happier.

The market is maturing. The winners are emerging. The losers are pivoting to web3 or whatever the next hype cycle brings.

And me? Well, I'll keep building Movestax , focusing on what builders actually need, not what VCs think developers want.

Cheers,

- Thiago

P.S.: Building a dev tool and think I'm wrong? The comments section is yours. Prove me wrong – I'd love to be.