Alex Williams is joined by co-host, Donnie Berkholz, analyst at RedMonk, Tom Drummond of Heavybit, Matthew Wong of CB Insights, and by Gil Penchina, co-founder of Fastly.

The recent news that Docker and Fastly received $40M funding each spurs Alex’ curiosity about the evolving status of developer tools as investments. With the acceleration of open source proliferation of developer tools and a history of tepid ROI outcomes for venture-funding in this market, questions remain as to the worthiness of investment in these services.

Matthew’s research points to $800M invested in 65+ deals in this sector in 2013. The bigger players in this space are really building core developer communities and are drawing a lot of interest from venture capitalists such as Benchmark, Greylock and Sequoia. It's still very early in this space, and the substantial valuations of Docker, GitHub, New Relic and App Dynamics seem to promise a formidable market.

Donnie believes that the developer tools market has seen lots of investment fluctuation due to changing perceptions. Open source has gained domination and in the past has dissuaded investors, but the growth and maturation of the developer community has offset this perception, and the space has proved its legitimacy.

Heavybit is focused on developer tools and Tom says they are seeing huge amounts of opportunity. However, Tom cautions that looking at the exit market in the rear-view mirror is a poor indicator of the kind of market that is going to exist in the future. Tom observes that developers individually are now willing to invest in good tools and products, that the key drivers to good adoption and loyalty are simplicity and ease of use, and that more and more companies are building products for developers, leaving no doubt that the developer market will become more lucrative.

Donnie agrees on the importance of simplicity, and asserts that low barrier to entry is one of the common factors in making successful developer products. Developer experience is quite under-appreciated, says Donnie, citing the success of iOS as predicated on developers creating apps.

Gil says that the developer market has globalized, and that ease of entry is indeed important, but there are also development teams who are interested in more control over features, and these enhancements are gaining traction.

Tom bases his dissection of the market on a developer's workflow: writing, testing and running software. He categorizes the market three ways: tools for managing and collaboration; products that support continuous integration and delivery (and provide for load testing, performance testing, functional testing, Q-A testing, etc.); and tools for managing large deployments of machines and software. This final category has seen most of the recent investment, and it represents a wholesale reinvention of the enterprise software market. It used to be that only wealthy enterprises could afford these large-scale deployments but now this power is widely available.

Gil says that Fastly has seen more early traction within the DevOps community, but also with developers who are using Varnish, the open source platform on top of which Fastly runs.