The rise of platform engineering, an opportunity for startups

The promise of increasing developer efficiency, not headcount

More than half of professional developers have CI/CD, DevOps and automated testing tools and services available at their organization, Stack Overflow’s 2022 developer survey uncovered.

However, Stack Overflow noted, only 38% of the 34,906 respondents reported having a developer portal to make it easy to find tools and services. Similarly, data observability tools are only available to a minority of developers.

The Exchange explores startups, markets and money.

Read it every morning on TechCrunch+ or get The Exchange newsletter every Saturday.

These findings show that best practices that have become the norm at startups and tech companies are gaining ground more broadly, but also that there is still a lot of margin for progress to improve the efficiency and work environment of developers.

“It’s kind of crazy that having CI/CD tooling in place, a DevOps function and Automated Testing are the only categories that are above 50%,” Boldstart Ventures partner Shomik Ghosh told TechCrunch. “That means [that] for what is considered table stakes at most startups and tech companies, more than half of developers (presumably in other industries) still don’t have these core building blocks in place.”

Subscribe to TechCrunch+While not all companies, especially legacy ones, are obsessed with creating an environment in which developers can deliver their best work, this need has become more pressing in recent months. Why? Because in a recession, increasing efficiency suddenly seems a lot more appropriate than increasing costly headcount.

Increased developer efficiency requires two key components: better team organization and better tools. To explore what it means in more detail, we collected the investor perspective from Ghosh, and on the entrepreneur side, from Barr Moses, co-founder and CEO of data quality startup Monte Carlo. Let’s dive in.

Increasing developer efficiency: The rise of platform engineering

When it comes to team organization, the main change at play is the shift from DevOps to platform engineering. The transition has already happened at many tech companies but is likely to gain wider adoption in 2023. But before going any further, let’s pause for a definition — we found a good one on the Platform Engineering community site:

“Platform engineering is the discipline of designing and building tool chains and workflows that enable self-service capabilities for software engineering organizations in the cloud-native era.” – Luca Galante, Humanitec

Alongside platform engineering, dedicated teams have emerged: platform engineering teams.

“These are groups within typically larger organizations that are given the role to improve the developer experience for other developers in the organization,” Ghosh explained. “That can include everything from putting in place basic tooling to having updated documentation and integrations maintained for core tooling that developers use to get their work done.”

While these tools and workflows can be built in-house, B2B startups are also seizing the opportunity to sell services to platform engineering teams. Humanitec, for instance, enables engineering teams to build their own Internal Developer Platform, the integrated product that platform engineering teams typically provide to developers across their organization. But there are plenty of other startups that are enabling the rise of platform engineering.

Ghosh and his partners know this opportunity well; their firm has backed several teams in this space:

Roadie, Env0, Cloudquery, Spectro Cloud and Jeli are a few examples of Boldstart portfolio companies that are seeing increasing growth,” Ghosh said, “as platform teams realize the efficiencies that these companies are delivering to their customers spanning developer service catalogs, infrastructure as code automation, cloud infrastructure data integration, Kubernetes management, and incident analysis and response.”

While these startups focus on different parts of the engineering stack, they have a lot in common. “All of these help improve the developer experience, improve the end-user product experience (putting in place resource management, security, observability and more), and by doing all of that help existing devs build faster with less headcount.”

Doing more without hiring more is clearly a key selling point of platform engineering:

“The most salient reason for the rise of platform engineering is the continued talent shortage gap for developers and the need for efficiency. [ … ] This is why even in a global recession, platform eng teams are seeing increased budgets allocated to them (at least from what we’re seeing in Boldstart companies that sell to them),” Ghosh observed.

It makes sense that increased budgets for platform eng teams would result in increased spending on third-party solutions. According to Moses, “as budgets tighten and companies are tasked with doing more with less, it will be critical for platform engineering teams to invest in processes and technologies that increase time to value as quickly and efficiently as possible.”

In-house versus SaaS

Building dev tooling in-house requires talent and time, which costs money — and that’s harder to justify in a downturn. Flipping the equation, it is easier for third parties to sell solutions that will boost efficiency.

“Software that automates away manual processes like testing and microservice deployments will make software development and data analytics more self-service, ensuring that existing employees are working on projects that move the needle for the business without increasing headcount,” Moses predicted.

In her view, “SaaS startups are in a prime position to fuel this shift from in-house builds maintained by large engineering organizations to more streamlined DevOps and data teams supported by managed solutions targeting specific problems.”

It is not just startups that are going after this opportunity, though. Larger tech companies have already been active in this space by open sourcing some of the products and services they have built in-house for their own platform eng teams, but there could be more to come.

Spotify comes to mind here. After releasing Backstage under an open source license in 2020, the music company is now commercializing a plugin bundle that sits on top of this platform for building developer portals.

Spotify’s move may seem surprising given that dev tools are not its core business, but the rationale is simple: Investing time and effort in projects that are later open sourced is easier to justify when they fund themselves at least partially.

Only time will tell if Spotify is an outlier or a sign of a new trend, but we are definitely curious to know which one it is.