Producing value is not capturing it

In its simplest form, a business is a value exchange. You produce value, and then you capture something from that production. The two are related, but they're not the same, and that gap is where I sense most of the frustration when developers venture into business. We're good at producing value, so we assume we should capture something close to what we produce. It rarely works that way.

Take something like Vite. The value produced is immeasurable, but capturing some of it through the service they were trying to build might not have worked as expected. Within Cloudflare, who acquihired them, the capturing has likely compounded.

Value production has gotten cheaper with AI, and many people might think that means they can capture more. I don't think producing more, faster, or broader changes anything in that equation. You still need people and companies to perceive a high value, and not only that, but a value they think is worth paying for. Trying to approach this logically, like we developers tend to do, might not yield the expected results, especially towards other developers, who will undervalue anything you build because they think they can replicate it themselves, more so now with coding agents. So if the perceived value of developers is less, and they're not used to paying for the tools they use, how does one sell to developers? Psychology.

I can't think of a better example than RevenueCat. I'm bringing it up because their VP of growth mentioned it in an interview. When he joined, he asked what the biggest challenge to sell was, and he was told it was that developer in the corner who thought he could build RevenueCat himself. His proposed solution? Throw money at the problem, build the most stunning booth, be at every conference, until the brand became cool enough that developers wouldn't even ponder the idea of building anything like it. Pair that with we can help you get rich, and you've pressed the most attractive button. Who doesn't want to make a living out of their apps. Incentive alignment.

I think Supabase is a good example too. Most indie projects are probably fine with a SQLite in a durable storage layer. Costs are just server and storage costs, and you can go long distances with it. But sales to developers aren't logical, and understanding Supabase's success from that angle doesn't get you there. What they played was the card of building a convenient layer upon Postgres. One click to deploy, one string to set up the connection, and you're good to go. That convenience turned out to land right when people started spinning up many more projects than before, each one needing a database, so there you go, the reference. Both Supabase and RevenueCat kept adding features that make an account more valuable over time, from edit your paywall on our server to run functions as a side effect of queries. Then the marketing gravitates around how betting on those solutions is the right way to become rich, or to be a successful indie developer. Note the common denominator? FOMO. I want to be rich, I want to be an indie developer, and I need a database and revenue infrastructure. If their marketing is effective, I'll psychologically think those are synonymous with me being successful at that.

Then there are coding subscriptions for inference. Who would have thought developers would subscribe to a 200 euros monthly subscription years ago? But they made it work, because it reached critical mass quickly, and the fear of missing out and being left behind or fired hit hard. The decision of paying or not paying the subscription felt like a decision about keeping one's job in a few months, and with fear, decisions like paying that amount per month become irrational.

Then there are domains that don't lend themselves that well to psychological trickery, or at least not without a good amount of creativity. CI and CI runners are a good example of that. It's something that has been accepted as something everyone needs. Margins have compressed, and there's little space to bring additional value through which companies could expand their revenues. A CEO of one of those companies told me they were different, because they had bought the hardware and designed the racks, while I could see a handful of competitors saying something similar on top of AWS. I don't bring that up as a criticism, it's what that market pushes you towards. It also explains why companies keep throwing new models at it, from convincing developers or their employers that they should develop in remote environments and pay per minute, to the wave of sandboxes as a service. Charging per minute is attractive because it grows with usage, and it also adds a dimension of complexity. As if selling wasn't hard already, you're now asking someone to accept a bill they can't fully predict. For the smaller players, capturing a small portion of the market is sufficient to make a living. Reaching the hyper growth expectations that many might have promised to investors is a different story.

So what do I take from all this. Producing value and capturing it are two different jobs. Being good at the first gives you very little for free on the second, and AI made the first cheaper for everyone at the same time, so it doesn't move the second either.

The value that gets paid for is the perceived one. Every company above delivers real value, they just got good at attaching it to something the buyer already wanted. Be independent. Make money out of your own apps. Don't get left behind. That's the button, and pressing it well is a skill I don't think we developers respect enough.

Some domains give you room for that, others give you almost none, and it's worth knowing which one you're in before writing any plan. Being in a category that everyone accepts as necessary doesn't mean you get rewarded for it. You just compete inside it.

I don't have this figured out. I've mostly stopped expecting value production to be rewarded on its own, and started paying more attention to what people are buying when they pay.