A small subset of people build the majority of the technology in the world. In 2023, it is estimated that there are only 27.7 million software developers worldwide, less than half a percent of the global population. In the US, there are only ~30K computer science graduates each year.

In addition to education, one of the other limitations for software developers is the complexity of their work. A company’s tech stack can cost up to $100K and consist of dozens of different tools across the software development lifecycle. Both the cost and complexity limit the capabilities of newer developers who are facing significant hurdles in getting up to speed.

That’s where Replit* comes in. Replit is a collaborative integrated development environment (IDE) with the goal of offering the first fully integrated computing environment on top of simple components. Newer developers can more easily get access to the majority of tools they need to build software. By lowering these barriers, Replit can work towards its mission of “bringing the next billion software creators online.”

While Replit, as a company, was founded in 2016, an early version of Replit’s coding environment had been created five years previous to this. The idea for Replit came from a frustrating coding experience that Replit founder and CEO, Amjad Masad, had in 2011 when working for Yahoo! in Jordan. At Yahoo!, Masad spent his free time trying to learn four new programming languages every year. However, Masad realized the lack of a portable IDE made it difficult for him to achieve his goal.

With the help of his classmate, Max Shawabkeh, and future co-founder, Haya Odeh, Masad developed a solution to his problem by creating a program capable of supporting a cloud-based coding environment accessed from a web browser. Replit was born and the trio open-sourced the project. The co-founders of Codecademy, a coding education company founded in 2011, heard about Replit and realized the web-based programming environment would be the best way to teach beginners how to code. Zach Sims, the co-founder of Codeacademy describes it this way:

After spending two years at Codecademy, Masad joined Facebook in October 2013 as a software engineer. During his three years at Facebook, Masad’s side project continued to grow and, as Masad describes it, “[forced] itself into the world.” In 2016, Masad quit his job at Facebook and formally incorporated Replit as a company. The founding team consisted of Masad’s wife and VP of Design, Haya Odeh, and his brother and CTO, Faris Masad.

As of September 2023, Replit’s team has expanded to include previous founders, designers, and engineers from companies such as Google, Mozilla, Facebook, Spotify, Box, and Scratch. In addition, in June 2023, Replit hired Michele Catasta as the company’s VP of AI. Catasta had previously been the Head of Applied Research at Google Labs. He and Replit CEO, Amjad Masad, also co-authored the company’s AI Manifesto.

Masad describes the vision for Replit this way:

Replit’s core product is a browser-based integrated development environment (IDE) where users can code, compile, run, and host applications in all programming languages. Replit’s goal is to provide the easiest place for beginners to start coding and for more advanced programmers to test and build applications.

The company’s name is derived from a REPL which stands for Read-Eval-Print-Loop. More specifically, a REPL is an interactive environment that takes the inputs from the user, executes them, and returns the results back to the user. Masad described the product in a February 2021 blog post this way:

In addition to Replit’s IDE, the Replit platform provides a number of capabilities that are meant to encompass everything a software creator would need from beginning to end in building a software application. These features include collaborative multiplayer functionality, deployments, bounties, and AI-enabled code assistance.

Integrated Development Environment (IDE)

For any software developer, the primary operating environment is within their IDE. This is where developers write source code, debug, and compile. Different IDEs may be most popular for particular use cases, like PyCharm for Python, or Xcode for Mac and iOS development. Replit was unique in the first few years in providing a browser-based IDE. Popular IDEs include Microsoft’s Visual Code Studio (also known as VS Code), which has 14 million users and launched a lighter version of its code editor in October 2021 that runs in the browser.

Replit allows users to customize their environments, whether visually by changing the color schemes and configurations, or by utilizing the ability to add specific extensions to enable their environment with specific capabilities, like managing JSON editing, or streaming repl editing. In April 2023, Replit announced a “permissioned security model for an IDE extensions system with isolated permissions by tab” that would ensure extensions didn’t create access vulnerabilities to a user’s environment.

Source: Replit

Replit also provides an analytics function for every Repl to help Replit users better understand their user bases. With the analytics dashboard, Replit users can understand page views, browsers, traffic referrers, etc.

Source: Replit

While users are building applications of all shapes and sizes, in July 2023 Replit indicated an 80% quarter-over-quarter growth rate in AI projects on Replit; a 34x increase year-over-year. In April 2023, Replit announced a partnership with Chroma so that “developers can easily create AI applications with state and memory.” In September 2023, Replit announced Replit ModelFarm to enable users to create generative AI applications. Most generative AI applications require extensive API key management. With ModelFarm, users can assess 3rd-party generative AI models, such as Google Cloud Vertex AI.

Multiplayer

Source: Replit

Replit is browser-based, rather than locally hosted on a user’s machine. This allows users to access the same coding environment simultaneously, similar to Google Docs. Users can see each other interacting with a particular piece of code, but can also share a compute engine so they can run one function and see the same results.

Deployments

Once an application is developed, it needs to be deployed. Some IDEs, like VS Code, have integrations with Azure for cloud computing to deploy applications because both products are owned by Microsoft. However, other IDEs outside of the Microsoft ecosystem typically require users to leverage third-party remote hosts in order to deploy their code.

With Replit, a user can leverage Deployments to reserve a virtual machine that will provide server capacity for their applications and then set up autoscaling for their projects to make sure that their application can scale to meet traffic demand. Replit claims its reservations system ensures 99.9% uptime to avoid any application interruptions. With Replit Deployments, a user can scale the CPU and RAM of their app servers, set up custom domains, monitor their applications, leverage security via Google Cloud Platform (GCP), and run analytics on their applications’ usage and growth.

In March 2023, Replit announced a partnership with GCP that would enable Replit users to get access to infrastructure and services from GCP as part of Replit’s attempt to enable developers to go from an early idea to a full application in production. As part of the press release, Replit described the capabilities this GCP partnership would provide:

In July 2023, Replit announced several upgrades to Deployments, indicating a 3x increase in speed since the initial launch. The upgrades included additional RAM and CPU capacity, as well as logging functionality built directly into the Deployments pane to better manage both the build process and application performance.

Bounties

Source: Replit

As Replit users are building their applications they may sometimes run into a problem that they can’t solve on their own. In response, Replit set up a creator marketplace where Replit users can post a bounty where they describe what they need in order to receive submissions from the Replit community who attempt to solve the original problem in exchange for that bounty.

Within Replit’s ecosystem, the company leverages Cycles, a virtual token for users to purchase compute power and functionality for their Repls. When a Replit bounty hunter (or, in other words, someone who completes a Replit Bounty) is rewarded, they’re rewarded in Cycles. While these Cycles can be used within the Replit ecosystem for things like compute, they can also be cashed out.

Replit Bounties have been used to provide GPT internal context on a business, reproduce and challenge the results of an academic AI paper, and create a Gmail completion tool with GPT-3. Some Replit bounty hunters have earned thousands of dollars creating games and completing projects.

Ghostwriter

Source: Replit

In September 2022, Replit announced the launch of Ghostwriter, an ML-powered pair programmer that provides code completion, code explanation, a trouble-shooting chatbot, and an in-editor search capability that enables users to identify and import open-source code within the Replit ecosystem. Ghostwriter enables code suggestion and completion not only in the development of source code but also in the process of identifying and debugging errors in a user’s code. Amjad Masad, Replit CEO, describes the product this way:

Some coding assistants, like GitHub Copilot, leverage models from OpenAI based on the company’s GPT models, like Codex. Replit Ghostwriter, however, is instead built with an optimized version of Salesforce’s CodeGen model and CodeBERT, to generate code and queries. Some users of Ghostwriter have indicated that ~30% of the code they write is generated by Ghostwriter.

In February 2023, Replit announced some updates to Ghostwriter. These included a conversational chat functionality built directly into the IDE, rather than a separate chat interface that requires developers to leave their code in order to use it. In August 2023, Ghostwriter’s code generation, explanation, and edits went from appearing as a popover window to the side to being embedded directly inline within Replit. Replit describes its long-term vision for leveraging AI within its platform as creating “a fully autonomous pair programmer – one that feels like working with another teammate.”

Source: Replit; as of February 2023

As part of Replit’s March 2023 announcement about its partnership with GCP, Replit users are also able to access foundation models from Google via Ghostwriter. In July 2023, Replit reported an 80% increase in projects on Replit leveraging OpenAI. In September 2023, Replit announced that Ghostwriter Chat will now default to “the most advanced model on the market.” As of the announcement, that model was GPT-4 from OpenAI. Replit also indicated it would continue tracking commercial models if that changes, and allows users to select alternative models as well.

Community

Source: Replit

Replit’s user base grew from ~10 million users in December 2021 to 20 million users by February 2023. From February to April 2023, Replit grew to 22.5 million users across 200+ countries and 235 million projects. That user base represents an active community that users can interact with while still in the Replit ecosystem. Masad describes the importance of community to Replit’s vision as follows:

Replit has continued to invest in its platform, not only by building out capabilities for community members to more easily engage and collaborate with each other, but also by launching initiatives like Replit Ventures, “a 10-week incubator program designed to give you the mentorship and tools needed to bring your startup to market.” Projects like Replit Ventures and enabling community members to invest in Replit directly through a WeFunder campaign signify the company’s efforts to more closely involve the community in Replit’s progress.

Customers

Replit is built to be a product with a “low floor and a high ceiling.” In other words, Replit’s intent is to be easy to use for newer developers and fully functional enough for established developers. The platform is meant to offer low friction for newer software creators and a feature-rich experience for established developers. As of December 2021, 50% of Replit’s users were under 18 and new to coding, while 80% were outside the US. In November 2021, Amjad Masad described that focus this way:

Part of Replit’s approach has been to address users across stages of the coding process.

Source: Jeff’s Newsletter

This includes not only functionality at different points but also addressing the needs of very different types of users. For example, since January 2021, Replit has had a specific focus on addressing an international user base, even going as far as to set up data centers in Mumbai and London. Replit’s CEO, Amjad Masad, emphasized the importance of these capabilities that would “lower the floor” for Replit users:

Replit also wanted to offer its product to a variety of users, regardless of their access to certain types of devices. In October 2022, Replit announced the launch of its mobile app, making coding available to users even if they didn’t have a laptop. Even non-technical users in fields like marketing or finance could use Replit to build bots and automate tasks.

Source: Jeff’s Newsletter

However, Replit is also focused on enabling more established developers. In December 2021, Packy McCormick described Replit’s product this way:

Instead, Replit’s value proposition to established developers is an all-in-one ecosystem to more easily develop, iterate, and deploy an application. Replit continues to ship products like in-repl devtools and faster repo clones to enable developers to more seamlessly build their applications.

Market Size

The market for IDEs specifically is estimated to grow from $3 billion in 2019 to over $23 billion by 2029. However, Amjad Masad doesn’t consider Replit to be a traditional IDE. In September 2020, he described the product this way:

Replit has focused on positioning itself to be a tool for developers, both amateur and experienced, to more easily spin up applications. In some ways, Replit is addressing the entire software development market, estimated at ~$142 billion in 2021. More specifically, Replit is packaging a number of software development tools into one ecosystem. The market for software development tools is expected to grow to over $9 billion by 2027.

Two key drivers behind the addressable market for Replit include (1) an increased demand for software, and (2) a related increase in the number of people who want to build software. However, an open question that may impact the growth of this market is whether generative AI will automate software development entirely, meaning fewer software developers.

In economics, there is a concept called Jevons paradox, with the core idea being that efficient production of a resource (like generative software code) actually increases demand for that resource:

So, as generative AI (like Replit Ghostwriter) makes code easier to produce, it could actually increase the demand for software, rather than reduce it. As software becomes easier to develop, because of tools like Replit, that will also likely increase the number of people who want to develop it.

Replit represents a suite of tools, each with its own competitive dynamics. While some of these tools have integrations with each other, one primary differentiation for Replit is to have all of these tools in one place.

The primary alternative to Replit is Microsoft’s VS Code (described below). VS Code is unique among Replit’s competitors because the platform has competitive offerings to the majority of Replit’s features (e.g. Visual Studio Web Browser compared to Replit’s IDE, integrations with Azure compared to Replit Deployments, Visual Studio IntellliCode compared to Replit Ghostwriter).

One key difference that is unique to Replit when compared to most of its competitors is the community dynamic that exists among Replit users. VS Code obviously has a community of users as well that are active on forums, but Replit’s concentrated community-centric user base enables capabilities like Replit Bounties, where users can transact to help each other solve problems.

Interactive Development Environment (IDE)

Visual Code Studio (also known as VS Code): Launched by Microsoft in 2015, VS Code has grown to 14 million users. In addition to a local application, VS Code also launched a lighter version of its code editor in October 2021 that runs in the browser. Some estimates indicate that Visual Studio’s market share has dropped from ~37% in September 2022 to ~25% as of September 2023.

Eclipse: Eclipse is an open-source IDE developed by the Eclipse Foundation. The product supports 44 languages and has individual desktop and cloud IDEs that can support languages like C/C++, JavaScript/TypeScript, and PHP. Eclipse also offers a number of integrated IDE platforms that offer connections to extensions and tools from the Eclipse Marketplace.

PyCharm: PyCharm is an IDE specifically built for programming in Python, developed by JetBrains which is a company based in Prague with 1.9K employees as September 2023. The product was initially released in 2010. While JetBrains as a whole has 10 million users across its suite of 30 different products, its unclear how many specifically use PyCharm. In particular, Python is a popular language for AI projects. In July 2023, Replit reported that Python was the most popular language in AI development, followed by Javascript.

In addition to these, there are a broad number of other popular IDEs available.

Replit Deployments

AWS, Azure, and GCP: Major cloud providers represent the most common alternative to deploying applications. While these are technically alternatives for users to deploy their own apps, Replit announced a partnership in March 2023 with Google Cloud Platform to provide hosting for Replit users. However, integrations like VS Code with Azure (both of which are owned by Microsoft) represent a competitive threat to Replit.

Replit Ghostwriter

GitHub Copilot: GitHub was acquired by Microsoft in 2018, and subsequently launched GitHub Copilot in June 2021. The pair programmer is trained on OpenAI’s Codex model, described as a “descendent of GPT-3.” Copilot can be used in IDEs such as Visual Code, Neovim, VS Code, or any JetBrain IDE. In November 2022, a lawsuit was filed against Microsoft, GitHub, and OpenAI claiming that, because Copilot was trained on billions of lines of other people’s code available on the internet (like GitHub repos), it was effectively piracy. Though Microsoft and GitHub had attempted to get the lawsuit thrown out, that effort was dismissed in May 2023. As of September 2023, the lawsuit is still ongoing.

Visual Studio IntelliCode: While GitHub Copilot is also available in Visual Studio and VS Code, in July 2018 Microsoft launched IntelliCode to offer AI-generated code assistance and auto-completion for Python, TypeScript/JavaScript, and Java. Unlike Copilot, which leverages OpenAI’s Codex, IntelliCode is powered by “a large-scale transformer model specialized for code usage (GPT-C).” In October 2022, one Visual Studio blog quoted Microsoft documentation that described IntelliCode’s infrastructure, but has since been obfuscated:

Amazon CodeWhisperer: In June 2022, Amazon announced the launch of CodeWhisperer. Similar to other coding assistants, CodeWhisperer is “based on a large language models (LLMs) trained on billions of lines of code, including Amazon and open-source code.”

Cody by Sourcegraph: Cody by Sourcegraph is an AI coding assistant provided by Sourcegraph, a code management platform. Sourcegraph announced the launch of Cody in June 2023. Cody is unique in that, it is not only leveraging a general-purpose LLM for code completion (Anthropic’s Claude in this case), but is also training its product on a customer’s existing codebase, which Sourcegraph is already helping to manage.

Alternative Competitors

Outside of alternative solutions within Replit’s core IDE market, Replit CEO Amjad Masad points to a fairly different subset of companies like Roblox and Minecraft as competitors to Replit. Game creation environments like Roblox and Minecraft let kids use code to build games. Users who develop games on Roblox can monetize their creations for fairly significant money. Although coding in environments such as Roblox is limited to games, it is still a point of competition because young developers are writing their first bits of code or monetizing their work, but not on Replit.

Another lens through which Replit views game creation environments as competitors is the constant battle to win a young person’s attention. This is reminiscent of a famous quote from Reed Hastings about Netflix’s competition, “We’re competing with sleep, on the margin. And so, it’s a very large pool of time [and attention].” In a March 2021 interview, Amjad Masad described that competition for attention this way:

As of December 2021, Replit generated the majority of its revenue from the $7 per month “Hacker” plan. In August 2023, Replit announced changes to its pricing plans citing continued product upgrades, such as deployments, Ghostwriter, and access to other databases like PostgreSQL. As of September 2023, Replit leverages a variety of pricing plans for individuals, businesses, and students, across certain types of storage, performance, and functionality.

Source: Replit

Replit also has additional pricing around Replit Deployments. Within the Hacker and Pro plans, users can get access to a Static Deployment offering that includes 50 GiB of outbound data transfer per month, while pro includes 100 GiB per month across 100 static sites.

Source: Replit

Replit’s long-term intention is not to push monetization through subscriptions. In November 2020, Replit CEO, Amjad Masad, indicated that the company intends to make its coding environment free for every user, and instead generate revenue from programmers that host and run their applications from the cloud. Today, that vision will likely be executed by pushing for more monetization via Replit Deployments.

Source: Not Boring, Replit; Contrary Research

Over the course of 2021, Replit doubled its user base from 5 million to 10 million by December and as of April 2023, Replit’s user base has grown to 22.5 million users across 200+ countries. These users have contributed to building 235 million projects that collectively have 25 billion monthly external visits to apps and sites hosted on Replit as of April 2023. In July 2023 Replit indicated an 80% quarter-over-quarter growth rate in AI projects on Replit; a 34x increase year-over-year.

In October 2016, Replit raised a $600K pre-seed round from Bloomberg Beta at a $6 million valuation. Around the same time, the company received its first rejection from Y Combinator. Eventually, in January 2018 Replit was accepted into Y Combinator before eventually raising a seed round from a16z in October 2018. In the spring of 2019, when Replit had less than 5 million users, the company received a $1 billion acquisition offer, which it turned down.

Replit raised a $20 million Series A about two years later from A.Capital Ventures. Later that same year, in December 2021, the company raised an $80 million Series B from Coatue at an $800 million valuation. In April 2023, after significant correction in the private tech market, Replit raised a $97.4 million Series B extension at a $1.2 billion valuation led by a16z with participation from investors like Khosla Ventures, Naval Ravikant, ARK Ventures, and Contrary.

Compounding a Young, Diverse User Base

As of December 2021, 50% of Replit’s users were under 18 and new to coding, while 80% were outside the US. Amjad Masad explains the importance of Replit’s younger user base this way:

In 2017, just a year after Replit was incorporated, Masad discovered some of Replit’s early users were using Replit as their everyday programming tool. Initially, Replit had been intended as a learning environment for newer developers. Instead, Masad realized some users were able to leapfrog a traditional IDE:

With a large portion of Replit users being younger, and coming from countries outside the U.S. (like the 2 million Replit users in India), there is compounding power as these types of users become a bigger part of the market for software creation. Replit will already be entrenched in these users’ workflows and preferences. As they mature and become part of larger companies, they may take Replit with them into more sophisticated developer environments.

Affordability of Access

Replit’s product has been purpose-built for users across all types of internet connection and device access. In India alone, there were 200 million people who became internet users between 2022 and 2023. Products like Starlink will only increase internet access globally. Replit’s offerings, such as international data centers, and a fully functional mobile app play on these trends towards increased internet access and interest in software development. Increased emphasis on access to laptops, and low-cost products like Chromebooks, will only accelerate that access.

Many of the users who are benefitting from increased internet and device access are already within Replit’s target demographic. As these demographics grow, there is an opportunity for Replit to continue to expand its international penetration.

Programming Education

The demand for software engineering education is unlikely to go away. Software developer employment is projected to grow 21% by 2028, which is faster than the average projected rate of growth for all occupations (5%). In addition to beginning with a focus on education, as of September 2023, Replit provides a product specifically built for educational use cases.

Although Replit does not target schools exclusively, there is a sizable library of public Repls from different users that represents a valuable educational resource. Users can begin with example templates from Replit, or they can fork another user’s public Repl to have a base code to build off of. The ability to fork code from other Replit users would fit well with an educational aspect as beginners can see other people’s code and apply what they have learned to remix the code.

Issues With Replit’s User Community

Although there is value in Replit’s younger user base, there is still a risk that more mature developers will start to outgrow Replit’s product if it doesn’t maintain pace with the needs of sophisticated developers. Replit will have to continue to push advances in its product to maintain pace with these types of users. If Replit is unable to improve the flexibility and power of its coding environment, the goal of growing alongside young users becomes difficult to maintain.

In addition, Replit has already had at least one instance of its user base pushing back against the company’s ownership over its own ecosystem. A community of engaged and energetic users can be both a blessing and a curse. Replit will have to continuously maintain the balance of making its community of users feel heard and respected, while also trying to build a product that generates revenue and addresses more established developers.

Regulatory Headwinds For Generative AI

After the launch of GitHub Copilot in June 2021, GitHub, as well as parent company Microsoft, and AI partner OpenAI, are all the targets of a lawsuit “alleging Copilot regurgitates licensed code without giving credit to creators.” If the lawsuit results in an unfavorable decision against code assistants, like Copilot, that could have negative ramifications for Replit Ghostwriter.

As of September 2023, Microsoft has indicated that, if any users of GitHub Copilot face legal action, they can turn to the company, and Microsoft will “assume legal responsibility.” While this could potentially limit the concerns of users of Copilot, the same may not be true of smaller companies like Replit. Replit may not be able to bear the burden of legal action against Ghostwriter users.

Limitations of Generative AI

With the launch of Ghostwriter Chat, Replit has indicated significant adoption of the code assistant solution:

However, despite the cited positive experiences, there are still some users who indicate that generative AI tools like Ghostwriter or GitHub Copilot have significant mistakes. Those same users indicate that these types of tools produce code that is “generally flawed and requires a thorough review.” So while Replit Ghostwriter can be a powerful assistant for software creators, if the performance of these generative models does not improve it may ultimately create a more negative user experience.

Evolving Competitive Landscape

While Replit experienced some first-mover advantage in providing a browser-based IDE, there is still a lot that competitive products have done to keep up. Products like Microsoft’s VS Code have launched a number of competitive offerings to the majority of Replit’s features (e.g. Visual Studio Web Browser compared to Replit’s IDE, integrations with Azure compared to Replit Deployments, Visual Studio IntellliCode compared to Replit Ghostwriter).

Replit has seemingly surpassed Visual Studio in the number of users with 22.5 million users (compared to Visual Studio’s 14 million users). However, Microsoft has repeatedly demonstrated its willingness to compete with a number of popular products by launching alternatives, including Microsoft Teams vs. Slack, Microsoft Loop vs. Notion, and Microsoft Designer vs. Canva. Microsoft’s unified distribution could pose a threat to Replit.

Replit incorporated as a business in 2016 to provide an all-in-one development environment that was browser-based and collaborative. Since then, the company has grown to 22.5 million users and products that extend outside coding to include application deployment, generative AI, and community-based bounties.

A large portion of Replit’s user base consists of newer software creators. In addition to its existing customer base, Replit also continues to launch new products that appeal to more established developers in order to provide one environment where users can take a project from code to deployed application.

As the need for software development continues to increase, Replit will have to traverse a competitive landscape of alternative solutions from large companies such as Microsoft. The company’s early efforts to drive user adoption have paid off, but the ability to maintain a competitive advantage will require a continued expansion of the product portfolio, all while keeping the learning curve of the product low enough for each new generation of potential users.

*Contrary is an investor in Replit through one or more affiliates.